STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made as of October 30, 1996 (this
"AGREEMENT"), by and between XXXXXX XXXX, having an address at 00 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "SELLER"), THE SEVEN IRON, INC., a
Colorado corporation having an address at X.X. Xxxxxxx Golf Course, 00000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 ("ACQUIRED CORPORATION"), and FAMILY
GOLF CENTERS, INC., a Delaware corporation having an address at 000 Xxxxxxxxxxx
Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000 ("PURCHASER").
W I T N E S E T H :
WHEREAS, Seller is the owner of all of the outstanding shares of
capital stock of Acquired Corporation (the "STOCK"); and
WHEREAS, Seller wants to sell to Purchaser, and Purchaser wants
to purchase from Seller, the Stock on the terms, and subject to the conditions,
set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and other good and valuable consideration, the
mutual receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Agreement to Sell and Purchase. Seller shall sell,
assign, transfer, and convey to Purchaser all of the outstanding shares of
capital stock of Acquired Corporation and shall deliver to the Purchaser at the
Closing (as hereinafter defined) certificates representing such shares duly
endorsed in blank or accompanied by stock powers duly
endorsed in blank, in each case in proper form for transfer, and
with all stock transfer and any other required documentary stamps affixed
thereto.
2. Consideration. In consideration for the Stock, at the
Closing Purchaser shall:
2.1 pay to Seller the sum of $4,000,000.00, subject
to adjustment as hereinafter provided, payable by the wire transfer of funds;
2.2 issue 75,000 validly issued, fully paid and
non-assessable shares of common stock, par value $.01 per share, of Purchaser
(the "FGC STOCK") and to deliver at Closing, free and clear of all liens,
claims and encumbrances: (i) a certificate representing 65,000 shares of FGC
Stock registered in the name of the Seller, and (ii) a certificate representing
10,000 shares of FGC Stock to the Escrow Agent (the "ESCROW AGENT") under the
Escrow Agreement (the "ESCROW AGREEMENT") to be held and dealt with as provided
in the Escrow Agreement; and
2.3 pay to Guaranty Bank & Trust Company (the "BANK")
the sum of $750,000.00, representing all amounts owed by Acquired Corporation
to Bank as of the Closing Date.
3. Apportionments.
3.1 The parties hereto agree that (a) all operating
expenses of Acquired Corporation (i.e., cost of goods sold, rent, advertising,
collections, fees, hired services, insurance, miscellaneous expenses, postage,
repairs and maintenance, supplies, taxes, utilities and wages, but specifically
not including professional fees and expenses, or other indebtedness of Acquired
Corporation, travel and lodging or depreciation), and (b) all income of
Acquired Corporation, including accounts receivable, shall be apportioned
between Seller and Purchaser as of July 15, 1996 (the "EFFECTIVE
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DATE") based on the portion of each such expense or revenue
attributable to the period falling on or before the Effective Date on the one
hand, which Seller shall bear the responsibility and benefit of, and the
portion of each such expense or revenue attributable to the period falling
after the Effective Date, on the other hand, which Purchaser shall bear the
responsibility and benefit of (the "ADJUSTMENT"). The net Adjustment will be
paid by the party owing the same to the other by wire transfer at Closing.
3.2 To the extent that any of the prorations made
upon the Closing Date pursuant to this Article are based upon estimates of
payments to be made and/or expenses to be incurred by Purchaser subsequent to
the Effective Date, or either party discovers any errors in or omissions in
respect of the Adjustment, Seller and Purchaser agree to adjust such prorations
promptly upon receipt by Seller or Purchaser, as the case may be, of such
payments or of bills or other documentation setting forth the actual amount of
such expenses.
3.3 Seller and Purchaser shall maintain and make
available to each other any books or records necessary for the adjustment of
any item pursuant to this Article. The provisions of this Article 3 shall
survive the Closing.
4. The Closing. The closing of the transaction provided for in
this Agreement (the "CLOSING") shall take place simultaneously with the
execution and delivery of this Agreement (the actual date of the Closing being
referred to herein as the "CLOSING DATE"), at the offices of Squadron,
Ellenoff, Plesent & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other place as may be mutually agreed to by Seller and Purchaser.
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5. Representations and Warranties of Seller.
The Seller hereby represents and warrants to Purchaser as
of the date hereof as follows:
5.1 Organization and Qualification. Acquired
Corporation is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Colorado, with all requisite power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities and all
courts and tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in which it is now engaged and to perform this
Agreement. Acquired Corporation is duly qualified to transact the business in
which it is engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets or the conduct of its business makes such qualification necessary. The
Acquired Corporation does not own or have the right to vote at least a majority
of the shares of stock, partnership interests or other securities with voting
rights in any corporation, partnership, trust, or other entity ("Subsidiaries")
and does not own any interest in any other enterprise (whether or not such
enterprise is a partnership, trust, corporation or other entity).
5.2 Capitalization. The authorized capital stock of
Acquired Corporation consists of 50,000 shares of common stock, no par value
per share, of which 4,000 shares are outstanding. Each of such outstanding
shares of Acquired Corporation is validly authorized, validly issued, fully
paid and nonassessable, has not been issued and is not owned or held in
violation of any preemptive right of stockholders, and is owned of
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record and beneficially by the Seller free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and voting
trusts. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of Acquired Corporation or any security or other
instrument convertible into, exercisable for, or exchangeable for capital stock
of Acquired Corporation. There is outstanding no security or other instrument
convertible into or exchangeable for capital stock of Acquired Corporation.
5.3 Financial Condition. Acquired Corporation has
delivered to the Purchaser true and correct copies of: (a) a balance sheet and
income statement of Acquired Corporation compiled as of December 31, 1995
("CLOSING BALANCE SHEET"); (b) unaudited statements for the quarters ended
March 31, June 30 and September 30, 1996, and (c) internal reports for the
months of July, August, September and October, 1996. Except as provided in
Schedule 5.3 hereof, the above-referenced balance sheets present fairly in all
material respects the financial condition, assets, liabilities, and
stockholders' equity of Acquired Corporation as of its date and each of the
above-referenced income statements presents fairly in all material respects the
results of operations of Acquired Corporation for the period indicated and
presents fairly the information purported to be shown therein. The financial
statements referred to in this Section 5.3 are in accordance with the books and
records of Acquired Corporation. Since December 31, 1995 (the "CLOSING BALANCE
SHEET DATE"):
5.3.1 There has at no time been a material
adverse change in the financial condition, results of operations,
business, properties, assets or liabilities of Acquired
Corporation.
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5.3.2 Acquired Corporation 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 Acquired Corporation, except as set forth in Schedule 5.3
hereto.
5.3.3 The operations and business of Acquired
Corporation have been conducted in all respects only in the
ordinary course.
5.3.4 Acquired Corporation has not suffered an
extraordinary loss (whether or not covered by insurance) or
waived any right of substantial value.
5.3.5 Acquired Corporation has not paid or
incurred any tax, other liability, or expense resulting from the
preparation of, or the transactions contemplated by, this
Agreement, it being understood that Seller shall have paid or
will pay all such taxes (including stock transfer taxes resulting
from this Agreement or the transactions contemplated hereby),
liabilities, and expenses.
5.4 Tax and Other Liabilities. Except as set forth on
Schedule 5.4 hereto, the Acquired Corporation does not have any liability of
any nature, accrued or contingent, including without limitation, liabilities
for federal, state, local, foreign, income, estimated, excise, sales, gross
receipts, franchise, employment and payroll related, property and import taxes
and penalties, interest, and additions to tax ("TAXES") and liabilities to
customers or suppliers, other than liabilities for which full provision has
been made on the Closing Balance Sheet and except for normal accrued Taxes and
liabilities incurred in the ordinary course of business and not yet due but
which are disclosed in this
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Agreement or the Schedules hereto. The Acquired Corporation has filed all
federal, state, local and foreign tax returns required to be filed by it; has
delivered to Purchaser a true and correct copy of each such return which was
filed in the past six years; has paid, or has established on the Closing
Balance Sheet a reserve for (except as provided above), all Taxes, assessments,
and other governmental charges payable or remittable by it or levied upon it or
its properties, assets, income, or franchises which are due and payable; and
has delivered to Purchaser a true and correct copy of any report as to
adjustments received by it from any taxing authority during the past six years
and a statement as to any litigation, governmental or other proceeding, formal
or informal, or investigation pending, threatened, or in prospect with respect
to any such report or the subject matter of such report.
5.5 Litigation and Claims. There is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending, or to the best knowledge of Seller threatened or in
prospect (or any basis therefor known to Acquired Corporation or any Seller),
with respect to Acquired Corporation, the Seller, or any of its or his
respective businesses, properties, or assets. Acquired Corporation is not
affected by any present or threatened strike or other labor disturbance nor to
the knowledge of the Seller is any union attempting to represent
any employee of Acquired Corporation as collective bargaining agent. Acquired
Corporation is not in violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree; nor is Acquired Corporation or
the Seller required to take any action in order to avoid such violation or
default.
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5.6 The License. Attached hereto as EXHIBIT A is a
true and correct copy of the Concession License, dated July 20, 1988 as amended
by the First Amendment to the Concession License, dated June 28, 1993 (the
"LICENSE") by and between the City and County of Denver (the "CITY") acting by
and through its Manager of Parks and Recreation, and Acquired Corporation, as
concessionaire. The License is in full force and effect, has not been modified
or amended in any way and neither the City nor Acquired Corporation is in
default, or sent or received any notice of default, in respect of the License.
No event has occurred or circumstance exists which, with the giving of notice
or the passage of time, or both, would constitute a default under the License,
except as set forth on Schedule 5.6 hereto. Neither Acquired Corporation nor
the City has exercised any right or option, or stated its intent, to terminate
or cancel the License. Acquired Corporation has not assigned, mortgaged,
pledged, transferred or conveyed the License or any interest therein, or
granted any right or option with respect thereto, to any party other than
Purchaser.
5.7 Properties. Acquired Corporation does not have any
interest in any real property other than under the License. Acquired
Corporation has good title to all other properties and assets used in its
business or owned by it, free and clear of all liens, mortgages, security
interests, pledges, charges, and encumbrances.
5.7.1 Except as set forth on Schedule 5.3, all
accounts and notes receivable reflected on the Closing Balance
Sheet, or arising since the Closing Balance Sheet Date, have been
collected, or are and will be good and collectible, in each case
at the aggregate recorded amounts thereof without
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right of recourse, defense, deduction, return of goods,
counterclaim, offset, or set off on the part of the obligor.
5.7.2 Ninety-five percent of all inventory is
merchantable and fit for the particular purposes for which it is
intended.
5.7.3 Attached as EXHIBIT B is a true and
complete list of all properties and assets owned by Acquired
Corporation or leased or licensed by Acquired Corporation from or
to a third party, including with respect to such properties and
assets leased or licensed by Acquired Corporation, a description
of such lease or license. All real and other tangible properties
and assets owned, leased, or licensed by Acquired Corporation are
in good and usable condition (reasonable wear and tear which is
not such as to affect adversely the operation of the business of
Acquired Corporation excepted).
5.7.4 No real property owned, leased, or
licensed by Acquired Corporation lies in an area which is, or to
the knowledge of Acquired Corporation or the Seller will be,
subject to zoning, use, or building code restrictions which would
prohibit, and no state of facts relating to the actions or
inaction of another person or entity or his or its ownership,
leasing, licensing, or use of any real or personal property
exists or to the best knowledge of Seller will exist which would
prevent, the continued effective ownership, leasing, licensing,
or use of such real property in the business in which Acquired
Corporation is now engaged.
5.7.5 The real and other properties and assets
(including Intangibles) owned by Acquired
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Corporation or leased or licensed by Acquired Corporation from a
third party constitute all such properties and assets which are
necessary to the business of Acquired Corporation as presently
conducted.
5.8 Corporate Instruments. Acquired Corporation has
furnished to the Purchaser true and correct copies of: (a) the articles of
incorporation (or other charter document) and by-laws of Acquired Corporation
and all amendments thereto, as presently in effect, certified by the Secretary
of the corporation and (b) all contracts, agreements, leases and licenses to
which Acquired Corporation is a party, each of which is listed on EXHIBIT C
hereto. The stock ledgers and stock transfer books and the minute book records
of Acquired Corporation relating to all issuances and transfers of stock by
Acquired Corporation and all proceedings of the stockholders and the Board of
Directors and committees thereof of Acquired Corporation since its
incorporation made available to the Purchaser's counsel are the original stock
ledgers and stock transfer books and minute book records of Acquired
Corporation or exact copies thereof. Acquired Corporation is not in violation
or breach of, or in default with respect to, any term of its articles of
incorporation (or other charter document) or by-laws. Xxxxxx Xxxx, Xxxxx Xxxxx
Xxxx and Xxxx X. Xxxx are the officers and directors of the Acquired
Corporation and each of them will tender their resignation at the Closing.
5.9 Employees. Acquired Corporation does not have or
contribute to any pension, profit-sharing, option, other incentive plan, or any
other type of Employee Benefit Plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or have any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, vacations, severance pay, insurance, or other benefits. Acquired
Corporation does not have any obligation to
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provide post-retirement medical benefits or life insurance coverage to any
present or former employees. Acquired Corporation neither currently contributes
to or since September 16, 1980 has effectuated either a complete or partial
withdrawal from any multiemployer Pension Plan within the meaning of Section
3(37) of ERISA. There are no union or employment contracts or agreements
(written or oral) involving employees of Acquired Corporation.
5.10 Patents, Trademarks, Et Cetera. Acquired
Corporation does not own or have pending, or is licensed under, any patent,
patent application, trademark, trademark application, trade name, service xxxx,
copyright, franchise, or other intangible property or asset (all of the
foregoing being herein called "INTANGIBLES"). Acquired Corporation has not
infringed, is infringing, or has received notice of infringement with asserted
Intangibles of others.
5.11 Authority to Sell. Acquired Corporation and Seller
have all requisite power and authority to execute, deliver, and perform this
Agreement. All necessary corporate proceedings of Acquired Corporation have
been duly taken to authorize the execution, delivery, and performance of this
Agreement by Acquired Corporation. This Agreement has been duly authorized,
executed, and delivered by Acquired Corporation, has been duly executed and
delivered by Seller, constitutes the legal, valid, and binding obligation of
Acquired Corporation and Seller, and is enforceable as to them in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by Acquired Corporation or any Seller for the execution, delivery, or
performance of this
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Agreement by Acquired Corporation or any Seller, except as set forth on
Schedule 5.11. No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which Acquired Corporation or
any Seller is a party, or to which it or he or any of its or his respective
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement, except for the consent of the City,
which consent has been obtained, and for approval of the transfer of the
Acquired Corporation's liquor license to Purchaser; and the execution,
delivery, and performance of this Agreement will not violate, result in a
breach of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default
under, entitle any party to rights and privileges that such party was not
receiving or entitled to receive immediately before this Agreement was executed
under, or create any obligation on the part of Acquired Corporation that it was
not paying or obligated to pay immediately before this Agreement was executed
under, any term of any such contract, agreement, instrument, lease, license,
arrangement, r understanding, or violate or result in a breach of any term of
the certificate of incorporation (or other charter document) or by-laws of
Acquired Corporation or violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on Acquired
Corporation or any Seller or to which it or he or any of its or his respective
businesses, properties, or assets are subject. Upon the Closing, Purchaser will
have good title to all the capital stock of Acquired Corporation, free and
clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts.
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5.12 Exemption from Registration. The offer, sale, and
delivery of the Stock as contemplated by this Agreement constitute exempted
transactions under the Securities Act of 1933 (as amended, the "SECURITIES
ACT"), and registration of such shares under the Securities Act is not required
in connection with any such offer, sale, or delivery of such shares.
5.13 Contracts. Except for the License and the other
contracts listed on EXHIBIT C hereto, Acquired Corporation is not a party to
any leases, contracts, orders or agreements (written or otherwise).
5.14 Environmental Matters.
5.14.1 As used in this Agreement "HAZARDOUS
MATERIAL" shall mean: (i) any "hazardous substance" as now
defined pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601(33);
(ii) any "pollutant or contaminant" as defined in 42 U.S.C.
ss. 9601(33); (iii) any material now defined as "hazardous waste"
pursuant to 40 C.F.R. Part 261; (iv) any petroleum,
including crude oil and any fraction thereof; (v) natural or
synthetic gas usable for fuel; (vi) any "hazardous chemical" as
defined pursuant to 29 C.F.R. Part 1910; (vii) any asbestos,
asbestos containing material, polychlorinated biphenyl ("PCB"),
or isomer of dioxin, or any material or thing containing or
composed of such substance or substances; and (viii) any other
pollutant, contaminant, chemical, or industrial or hazardous,
toxic or dangerous waste, substance or material, defined or
regulated as such in (or for purposes of any Environmental Law
(as hereinafter defined) and any other toxic, reactive or
flammable chemicals.
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5.14.2 There is no Hazardous Material at, under
or on the premises covered by the License (the "PREMISES") except
for materials utilized in the normal operation of the Acquired
Corporation's business. Acquired Corporation has not, and has not
caused to be, manufactured, processed, distributed, used,
treated, stored, disposed of, transported or handled any
Hazardous Material at, on or under the Premises in violation of
Environmental Law.
5.14.3 Acquired Corporation has no obligation or
liability imposed or based upon any provision under any foreign,
federal, state or local law, rule, or regulation or common law,
or under any code, order, decree, judgment or injunction
applicable to Acquired Corporation or the Premises to the best of
its and Seller's knowledge and there has not been any notice, or
request for information issued, promulgated, approved or entered
thereunder, or under the common law, or any tort, nuisance or
absolute liability theory, relating to public health or safety,
worker health or safety, or pollution, damage to or protection to
the environment, including without limitation, laws relating to
emissions, discharges, releases or threatened releases of
Hazardous Material into the environment (including without
limitation, ambient air, surface water, groundwater, land surface
or subsurface), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes
(hereinafter collectively referred to as "ENVIRONMENTAL LAWS").
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5.14.4 Acquired Corporation has not been subject
to any civil, criminal or administrative action, suit, claim,
hearing, notice of violation, investigation, inquiry or
proceeding for failure to comply with, or received notice of any
violation or potential liability under the Environmental Laws in
respect of the Premises.
5.14.5 The Premises are not (a) listed or to the
best knowledge of Seller proposed for listing on the National
Priority List or (b) listed on the Comprehensive Environmental
Response, Compensation, Liability Information System List
("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. ss.
9601(9), or any comparable list maintained by any foreign, state
or local government authority.
5.14.6 There are no underground storage tanks
at the Premises.
5.15 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises.
5.16 Utilities. All water, storm and sanitary sewer,
gas, electricity, telephone and other utilities adequately service the
Premises, enter the Premises through lands as to which valid public or private
easements exist that will inure to the benefit of Purchaser and the Premises
are furnished by facilities of public utilities and the cost of installation of
such utilities has been fully paid.
5.17 Access. To the best of Seller's knowledge, there
are no federal, state, county, municipal or other governmental plans to change
the highway or road system in the vicinity of the Premises which could
materially restrict or change access from any such highway or road to the
Premises or any pending or threatened
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condemnation or eminent domain proceedings relating to or affecting the
Premises. All roads bounding the Premises are public roads.
5.18 Work at the Premises. No services, material or
work have been supplied to the Premises for which payment has not been made in
full.
5.19 Insurance. Seller has delivered to Purchaser or
its counsel true and correct copies of all insurance policies carried by Seller
or Acquired Corporation for the benefit of Acquired Corporation or relating to
the Premises. All such policies have been fully paid for and are and have at
all times since their commencement date been in full force and effect. Seller
or Acquired Corporation have at all times since the formation of Acquired
Corporation maintained such policies or substantially similar policies in
effect. All requirements or recommendations by any insurer or by
any board of fire underwriters or similar body in respect of the Premises have
been satisfied.
5.20 Investment Intent. The Seller is acquiring the FGC
Stock for his own account (and not for the account of others) and not with a
view to the distribution or resale thereof. The Seller understands that (i) the
FGC Stock is deemed to be "restricted securities" as such term is defined under
Rule 144 of the Securities Act; (ii) that he may not sell or otherwise transfer
the FGC Stock in the absence of an effective registration statement covering
such shares or an exemption from the registration provision of the Securities
Act; and (iii) that the FGC Stock shall contain a legend to the foregoing
effect.
5.21 Full Disclosure. To the best knowledge of Seller,
none of the information supplied by Seller herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein
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or necessary in order to make the statements herein, in light of the
circumstances under which they are made, not misleading.
6. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
6.1 Organization; Power and Authority. Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
6.2 Due Authorization and Execution; Effect of
Agreement. The execution, delivery and performance by Purchaser of this
Agreement and the consummation by Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action required to
be taken on the part of Purchaser. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms, except to
the extent that such enforceability (a) may be limited by bankruptcy,
insolvency, or other similar laws relating to creditors' rights generally, and
(b) is subject to general principles of equity. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (i) violate any provision of any law,
rule or regulation to which Purchaser is subject; (ii) violate any order,
judgment or decree applicable to Purchaser; or (iii) conflict with or
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result in a breach of or a default under any term or condition of Purchaser's
Certificate of Incorporation or By-Laws or any agreement or other instrument to
which Purchaser is a party or by which it or its assets may be bound, except in
each case, for violations, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
6.3 Full Disclosure. To the best knowledge of
Purchaser, none of its reports on Form 10-KSB for the year ended December 31,
1995 or on Form 10- QSB for the quarters ended March 31, 1996 and June 30, 1996
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and since June 30, 1996 through the date hereof, there has at no
time been a material adverse change in the financial condition, results of
operations, business, properties, assets or liabilities of the Purchaser.
7. Survival. The representations and warranties of the parties
made in Sections 5.5, 5.7, 5.9, 5.10, 5.12, 5.15, 5.16, 5.17 and 5.19 shall
survive for a period of one year from the Closing Date; the representations and
warranties made in Section 5.3, 5.13 and 5.18 shall survive for a period of
three years from the Closing Date; and the representations and warranties made
in Sections 5.1, 5.2, 5.4, 5.6, 5.8, 5.11, 5.13, 5.20, 5.21, 6.1, 6.2, and 6.3
shall survive indefinitely.
8. Post Closing Covenants.
8.1 Further Assurances. At any time and from time
to time after the Closing Date, each of the parties hereto shall, at the
request of any of the others, execute and deliver any further instruments or
documents and take all such further action as may
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be reasonably requested in order to further consummate the transactions
contemplated by this Agreement.
8.2 Registration of FGC Stock. The Purchaser hereby
agrees to register all of the FGC Stock being transferred to Seller, other than
the FGC Stock being held in escrow, in a registration statement on Form S-3
which the Purchaser intends to file with the Securities and Exchange Commission
within the next 90 days of the date hereof. In the event that such registration
statement is not filed within the next 90 days, the Purchaser shall deliver a
Registration Rights Agreement to the Seller, granting the Seller the right to
demand that a registration statement be filed by the Purchaser registering such
FGC Stock, at the Purchaser's expense.
8.3 Audited Financial Statements. The Purchaser
hereby agrees to furnish Seller with the audited financial statements of the
Acquired Corporation as soon as they are made available. The Seller shall
thereupon be given an opportunity to review and comment on such audited
financial statements; provided however, that notwithstanding anything contained
herein to the contrary, the Purchaser shall not be prevented from, or delayed
in, filing such audited financial statements as required under the rules and
regulations of the Securities Exchange Act of 1934.
9. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein. Purchaser and Seller hereby
respectively agree to indemnify and hold harmless the other party from and
against all loss, liability, damage and expense (including, without
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limitation, attorneys' fees) imposed upon or incurred by the other party by
reason of any claim for commissions or other compensation for bringing about
this transaction by any broker, finder or similar agent or party who claims to
have dealt with the indemnifying party in connection with this transaction. The
provisions of this Article shall survive the Closing or any termination of this
Agreement.
10. Indemnification.
10.1 Indemnification by Seller. Subject to the
further provisions of this Article, Seller shall protect, defend, hold harmless
and indemnify Purchaser, its officers, directors, shareholders, employees,
agents and affiliates, and their respective successors and assigns, from,
against and in respect of any and all losses, liabilities, deficiencies,
penalties, fines, costs, damages and expenses whatsoever (including without
limitation, reasonable professional fees and costs of investigation,
litigation, settlement, and judgment and interest) ("LOSSES") that may be
suffered or incurred by any of them arising from or by reason of (i) any
liability which was not adequately disclosed in this Agreement or on the
Closing Balance Sheet; (ii) the breach of any representation, warranty,
covenant or agreement of Seller contained in this Agreement or in any document
or other writing delivered pursuant to this Agreement; and (iii) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs and
expenses (including without limitation, interest, penalties, reasonable legal
fees and accounting fees) incident to the foregoing and the enforcement of the
provisions of this Section 10.1.
10.2 Indemnification by Purchaser. Subject to the
further provisions of this Article, Purchaser shall protect, defend, hold
harmless and indemnify each Seller, and their respective partners, employees
and agents, and its successors and assigns
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from, against and in respect of any and all Losses that may be suffered or
incurred by any of them arising from or by reason of (i) the breach of any
representation, warranty, covenant or agreement of Purchaser contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement; and (ii) any and all actions, suits, proceedings, claims, demands,
assessments,
judgments, costs and expenses (including without limitation, interest,
penalties, reasonable legal fees and accounting fees) incident to the foregoing
and the enforcement of the provisions of this Section 10.2.
10.3 Notice and Defense of Claims. Whenever a party
hereto (such party and each of its affiliates which is entitled to
indemnification pursuant to any provision of this Agreement, an "INDEMNIFIED
PARTY") shall learn after the Closing of a claim that, if allowed (whether
voluntarily or by judicial or quasi-judicial tribunal or agency), would give
rise to an obligation of another party (the "INDEMNIFYING PARTY") to indemnify
the Indemnified Party under any provision of this Agreement, before paying the
same or agreeing thereto, the Indemnified Party shall promptly notify the
Indemnifying Party in writing of all such facts within the Indemnified Party's
knowledge with respect to such claim and the amount thereof (a "NOTICE OF
CLAIM"). If, prior to the expiration of fifteen (15) days from the mailing of a
Notice of Claim, the Indemnifying Party shall request, in writing, that such
claim not be paid, the Indemnified Party shall not pay the same, provided the
Indemnifying Party proceeds promptly, at its or their own expense (including
employment of counsel reasonably satisfactory to the Indemnified Party), to
settle, compromise or litigate, in good faith, such claim. After notice from
the Indemnifying Party requesting the Indemnified Party not to pay such claim
and the Indemnifying Party's assumption of the defense of such claim at its or
their expense, the
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Indemnifying Party shall not be liable to the Indemnified Party for any legal
or other expense subsequently incurred by the Indemnified Party in connection
with the defense thereof. However, the Indemnified Party shall have the right
to participate at its expense and with counsel of its choice
in such settlement, compromise or litigation. The Indemnified Party shall not
be required to refrain from paying any claim which has matured by a court
judgment or decree, unless an appeal is duly taken therefrom and execution
thereof has been stayed, nor shall the Indemnified Party be required to refrain
from paying any claim where the delay in paying such claim would result in the
foreclosure of a lien upon any of the property or assets then held by the
Indemnified Party. The failure to provide a timely Notice of Claim as provided
in this Section 10.3 shall not excuse the Indemnifying Party from its or their
continuing obligations hereunder; however, the Indemnified Party's claim shall
be reduced by any damages to the Indemnifying Party resulting from the
Indemnified Party's delay or failure to provide a Notice of Claim as provided
in this Section 10.3.
10.4 Assertions Deemed True. For purposes of this
Article, any assertion of fact and/or law by a third party that, if true, would
constitute a breach of a representation or warranty made by a party to this
Agreement or make operational an indemnification obligation hereunder, shall, on
the date that such assertion is made, immediately invoke the Indemnifying
Party's obligation to protect, defend, hold harmless and indemnify the
Indemnified Party pursuant to this Article.
10.5 Escrow. The obligations of Seller under Section
10.1 shall be satisfied first from the Escrow Account and, if the Escrow
Account is inadequate to provide indemnification to Purchaser, then from Seller
directly.
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11. Costs and Fees. The parties shall pay for their own
legal and other advisers retained in connection with this transaction. The
provisions of this Article shall survive the Closing.
12. Notices. All notices, demands, requests, consents or other
communications ("NOTICES") which either party may desire or be required to give
to the other hereunder shall be in writing and shall be delivered by hand,
overnight express carrier, or sent by registered or certified mail, return
receipt requested, postage prepaid, in either event, addressed to the parties
at their respective addresses first above set forth. A copy of any Notice given
by Seller to Purchaser shall simultaneously be given in either manner provided
above to Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxx, Esq. A copy of any Notice
given by Purchaser to Seller shall simultaneously be given in either manner
provided above to Ireland, Xxxxxxxxx, Xxxxx & Xxxxxx, P.C., 0000 Xxxxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx Xxxxxx, Esq. Notices
given in the manner aforesaid shall be deemed to have been given three (3)
business days after the day so mailed, the day after delivery to any overnight
express carrier and on the day so delivered by hand. Either party shall have
the right to change its address(es) for the receipt of Notices by giving Notice
to the other party in either manner aforesaid. Any Notice required or permitted
to be given by either party may be given by that party's attorney.
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13. Miscellaneous.
13.1 Successors and Assigns. This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
13.2 Governing Law. This Agreement shall be
governed by, interpreted under and construed and enforced in accordance with,
the laws of the State of New York.
13.3 Captions. The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
13.4 Construction. This Agreement has been fully
negotiated by the parties and rules of construction construing ambiguities
against the party responsible for drafting agreements shall not apply.
13.5 Entire Agreement. This Agreement (including the
Exhibits annexed hereto) contain the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior understandings,
if any, with respect thereto.
13.6 Amendments. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the party to be charged or by
its agent duly authorized in writing or as otherwise expressly permitted
herein.
13.7 No Waiver or Extension. No waiver of any breach
of any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement or provision
herein contained. No
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extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.
13.8 Counterparts. This Agreement may be executed
in one or more counterparts, each of which when so executed and delivered shall
be deemed an original, but all of which taken together shall constitute but one
and the same original.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
----------------------------
XXXXXX XXXX
THE SEVEN IRON, INC.
By: _______________________
Name:
Title:
FAMILY GOLF CENTERS, INC.
By: ______________________
Name:
Title:
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A THE LICENSE
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C CONTRACTS AND AGREEMENTS
SCHEDULE 5.3 FINANCIAL STATEMENT ADJUSTMENTS
SCHEDULE 5.4 LIABILITIES
SCHEDULE 5.6 EXCEPTIONS TO NO DEFAULT UNDER LICENSE
SCHEDULE 5.11 OTHER CONSENTS
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