ASSIGNMENT AND ASSUMPTION OF LEASE
----------------------------------
ASSIGNMENT AND ASSUMPTION OF LEASE, made as of the __ day of April __,
1997 (this "Agreement"), by and between American Golf Corporation, a California
corporation having an address at 0000 00xx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx
00000 ("Assignor"), and SAN BRUNO FAMILY GOLF CENTERS, INC., a Delaware
corporation having an address at 000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxxx,
Xxx Xxxx 00000 ("Assignee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, by Amended and Restated Lease and Settlement Agreement (the
"Lease"), dated December 17, 1993, by and between San Bruno Park School
District, as landlord (the "Landlord") and Assignor, as tenant (which Lease is
attached as Exhibit A hereto). Assignor leased certain real property, together
with the improvements thereon (together the "Premises") located in the City of
San Bruno, County of San Mateo, State of California (and commonly known as the
"Engvall School Site"), on which Assignor now operates a driving range and
related facilities under the name "San Bruno School District Golf Center".
WHEREAS, Assignor desires to assign to Assignee its entire interest as
tenant under the Lease and Assignee desires to accept such assignment and
assume Assignor's obligations under the Lease on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the terms
and conditions set forth herein, and other good and valuable consideration, the
mutual receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree to the foregoing and as follows:
1
1. Assignment and Assumption. Assignor assigns, sets over and
transfers to Assignee all right, title and interest of Assignor in and to the
Premises and the Lease and, Assignee assumes and agrees to perform any and all
of the obligations to be performed by the tenant under the Lease, (as if
Assignee executed the Lease originally as tenant thereunder). Assignee further
agrees to be bound by and fully responsible for all of the covenants,
agreements, terms, provisions, and conditions of Assignor under the Lease. At
the closing, Assignor shall deliver possession of the Premises to Assignee,
free of all tenancies or rights of possession other than those subleases set
forth on Exhibit B hereto (the "Subleases").
2. Xxxx of Sale. Assignor does hereby sell, assign, transfer and
convey to Assignee and Assignee does hereby purchase and acquire from Assignor,
all of Assignor's right, title and interest in and to the following property
(collectively, the "Property"):
2.1 all furnishings, fixtures, machinery, equipment, vehicles and
personalty attached or appurtenant to and used in connection with the Premises
that are owned by Assignor, and all inventories, supplies, sales, marketing and
instructional materials of every kind and description owned by Assignor
relating to the business conducted at the Premises (the "Business"), wherever
located, including without limitation, the items described on Exhibit C
attached hereto and made a part hereof but excluding all range balls with the
AGC logo appearing thereon, the AGC point of sale system, the Kronos time clock
and any personal computers located at the Premises (the "Personal Property");
2.2 the files, books, notices and other correspondence from any
governmental agencies, and other records used, employed or held by Assignor or
its affiliates solely in connection with the ownership and/or operation of the
Premises or the Business (collectively, the "Records");
2.3 any consents, authorizations, variances, waivers, licenses,
certificates, permits and approvals held by or granted to Assignor solely in
connection with the ownership of the Lease or the Business (collectively, the
"Permits");
2.4 the contracts, leases and other agreements relating to the
operation of the Business described on Exhibit D attached hereto and made a
part hereof (the "Contracts");
2.5 any manufacturers' and vendors' warranties and guarantees
held by Assignor which relate solely to the Lease, the Premises or the Business
except to the extent the same relate solely to any Retained Assets or Retained
Liabilities (as hereinafter defined) (the "Claims"); and
2.6 all accounts receivable of Assignor arising solely out of the
sale of goods or services rendered at the Premises or otherwise in connection
with the Business on or after the Closing Date (as hereinafter defined);
2
2.7 any other properties and assets of every kind and nature,
real or personal, tangible or intangible, owned by Assignor relating solely to
the Lease, the Premises, or the Business, except to the extent the same relate
solely to the Retained Assets or Retained Liabilities.
3. Assets to be Retained by Assignor. Anything herein to the contrary
notwithstanding, Assignor shall not sell, and Assignee shall not acquire, the
following assets of Assignor (the "Retained Assets"):
3.1 any rights of Assignor with respect to insurance policies
owned by Assignor or for which Assignor is the named insured;
3.2 all cash, funds in bank accounts and cash equivalents
existing as of the Closing Date; and
3.3 any patents, trademarks, trademark registrations, copyrights,
copyright registrations, trade names and all registrations thereof and all
applications for any of the foregoing, whether issued or pending, if any, and
all goodwill associated with any of the foregoing (the "Intangible Assets").
4. Assumption of Certain Liabilities. Assignee hereby assumes and
agrees to pay and discharge when due all liabilities and obligations of
Assignor under the Lease, the Subleases and the Contracts to the extent the
same arise from and after the Closing Date (the "Assumed Liabilities").
Assignor shall retain, and Assignee shall not assume, perform, discharge or
pay, and shall not be responsible for, any and all liabilities or obligations
of any nature whatsoever in connection with or relating to the Lease, the
Premises, the Business or the Property, Assignor or any predecessor owner of
the Lease, the Premises, the Business or the Property other than the Assumed
Liabilities (collectively, the "Retained Liabilities").
5. Consideration.
5.1 In consideration for the assignment of the Lease and the
purchase of the Property , Assignee shall:
5.1.1 pay to Assignor on the Closing Date the sum of
$2,400,000.00, subject to adjustment as hereinafter provided, payable in cash,
by certified or bank check or by the wire transfer of funds; and
5.1.2. assume the Assumed Liabilities.
5.1.3. pay to Assignor with respect to each Operating Year
(defined below), (i) an amount equal to twenty-five percent (25%) of the
portion of Net Operating Income (defined below) from subleases at the Engvall
School Site in excess of $406,076.00 and (ii) twenty-five percent (25%) of any
Termination Fee (defined below) paid to Assignee by the San Bruno School
District or a third party during the Operating Period (defined below). As used
herein, the term "Termination Fee" means any fee or similar compensation paid
to Assignee in
3
connection with the termination or purchase of all or a portion of Assignee's
interest in the Lease where such termination or purchase relates to the planned
future development of the portion of the Engvall School Site that is not used
as a golf driving range. As used herein, the term "Operating Year" means each
annual period commencing on the Closing Date and ending on the day immediately
preceding the third anniversary of the Closing Date. "Operating Period" means
the three year period commencing on the Closing Date and ending on the day
immediately preceding the third anniversary of the Closing Date. As used
herein, the term "Net Operating Income" means all rent and other payments made
by subtenants under all subleases less normal and customary operating expenses
(excluding capital expenses) incurred by Assignee with respect to the subleased
premises. Payments under Subsection (i) above shall be made to AGC with thirty
(30) days after the end of each Operating Year. Payments to AGC under
subsection (ii) above shall be made concurrently with the receipt of payment by
Assignee. In order to monitor Assignee's obligations to Assignor pursuant to
this Paragraph 5.1.3., Assignee shall submit to AGC, within thirty (30) days
after the end of each Operating Year, a statement signed by Assignee showing in
reasonable detail the amount of sublease income received by Assignee in such
Operating Year and the expenses incurred by Assignee with respect to such
subleases. Assignor shall have the right, upon reasonable prior notice to
Assignee, to examine Assignee's records relating to the foregoing and to verify
the accuracy of all statements delivered to Assignor. At Assignor's request,
Assignee shall provide Assignor with any additional information necessary to
establish the amounts payable to Assignor hereunder.
6. Closing; Adjustments.
6.1 The closing of the transactions provided for in this
Agreement shall take place simultaneously with the execution and delivery of
this Agreement (the "Closing"). (The actual date of the Closing shall be
referred to herein as the "Closing Date").
6.2 The parties hereto agree that (i) all compensation payable to
Landlord under the Lease and all other operating expenses of Assignor relating
to the Premises or the Business (i.e., cost of goods sold, advertising,
collections, fees, hired services, insurance, miscellaneous expenses, postage,
repairs and maintenance, supplies, taxes, utilities, but specifically not
including wages and interest on indebtedness, professional fees and expenses,
travel and lodging or depreciation), and (ii) all income of Assignor derived
from Assignor's operation of the Business or relating to the Premises,
including accounts receivable and rent and other charges under the Subleases,
shall be apportioned between Assignor and Assignee as of the Closing Date based
on the portion of each such expense or revenue attributable to the period
falling on or before the Closing Date on the one hand, which Assignor shall
bear the responsibility and benefit of, and the portion of each such expense or
revenue attributable to the period falling after the Closing Date, on the other
hand, which Assignees shall bear the responsibility and benefit of (the
"Adjustment"). The net Adjustment will be paid by the party owing the same to
the other in cash or by certified or official bank check or wire transfer. The
expenses and liabilities for which Assignor shall be liable pursuant to this
Section shall be included within the meaning of the term "Retained
Liabilities".
4
6.3 To the extent that any of the prorations made pursuant to
this Article are based upon estimates of payments to be made and/or expenses to
be incurred by Assignees subsequent to the Closing Date, or either party
discovers any errors in or omissions in respect of the Adjustment, Assignor and
Assignees agree to adjust such prorations promptly upon receipt by Assignor or
Assignee, as the case may be, of such payments or of bills or other
documentation setting forth the actual amount of such expenses.
6.4 Assignor and Assignee 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 shall survive the
Closing.
7. Representations and Warranties of Assignor. Assignor hereby
represents and warrants to Assignee as follows:
7.1 Organization; Power and Authority. Assignor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, 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.
7.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Assignor of this Agreement and the
consummation by Assignor of the transactions contemplated hereby have been duly
authorized by all necessary corporate action required to be taken on the part
of the Assignor. This Agreement has been duly and validly executed and
delivered by Assignor and constitutes the valid and binding obligation of
Assignor, enforceable in accordance with its terms. The execution, delivery and
performance by Assignor of this Agreement and the consummation by Assignor of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Assignor is subject; (b) violate any order,
judgment or decree applicable to Assignor; or (c) conflict with or result in a
breach of or a default under any term or condition of Assignor's Certificate of
Incorporation or By-laws or any term or condition of any agreement or other
instrument to which Assignor 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.
7.3 Consents. No consent, approval or authorization of, exemption
by, or filing with, any governmental or regulatory authority or any third party
is required in connection with the execution, delivery and performance by
Assignor of this Agreement, except for consents, approvals, authorizations,
exemptions and filings, if any, which have been obtained.
7.4 Compliance with Applicable Laws. To Assignor's actual
knowledge, (i) Assignor is not engaging in any activity or omitting to take any
action as a result of which Assignor is in violation of any law, rule,
regulation, ordinance, statute, order, injunction or decree, or any other
requirement of any court or governmental or administrative body or agency,
applicable to the Premises or the Business, and (ii) neither the execution and
delivery by Assignor
5
of this Agreement or of any of the other agreements and instruments to be
executed and delivered by it pursuant hereto, nor the performance by Assignor
of its obligations hereunder or thereunder nor the consummation of the
transactions contemplated hereby or thereby will result in any such violation.
To Assignor's actual knowledge, Assignor is in compliance with all material
requirements imposed in writing by any insurance carrier of Assignor to the
extent such carrier is an insurer or indemnitor of the Premises. Assignor has
not received any notice that the Lease is in violation of any law, municipal
ordinance, orders or requirements issued by any building department or other
governmental agency or subdivision having jurisdiction.
7.5 Permits. All Permits required by any federal, state, or local
law, rule or regulation and necessary for the operation of the Premises and the
Business as currently being conducted have been obtained and are currently in
effect. To Assignor's actual knowledge, no registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers or other actions of any kind are required by virtue of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby (a) to avoid the loss of any Permit or the violation of any
law, regulation, order or other requirement of law, or (b) to enable Assignee
to continue the operation of the Business and Premises as presently conducted
after the Closing. To Assignor's actual knowledge, the current use and
occupation of any portion of the Premises does not violate any of, and, where
applicable, is in material compliance with, the Permits, any applicable deed
restrictions or other covenants, restrictions or agreements including without
limitation, any of the Permitted Exceptions, site plan approvals, zoning or
subdivision regulations or urban redevelopment plans applicable to the
Premises.
7.6 The Lease. Attached hereto as Exhibit A is a true and correct
copy of the Lease. The Lease is in full force and effect, has not been modified
or amended in any way except as stated above and, to Assignor's actual
knowledge, Landlord is not in default, or sent any notice of default, in
respect of the Lease. Assignor is not in default, and has not received any
notice of default, in respect of the Lease. To Assignor's actual knowledge, 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 Lease. The
Landlord has not notified Assignor that the Landlord has exercised any right or
option, or stated its intent, to terminate or cancel the Lease. Assignor has
not exercised any right or option, or stated its interest, to terminate or
cancel the Lease. Assignor has not assigned, transferred or conveyed the Lease
or any interest therein, or granted any right or option with respect thereto,
to any party other than Assignee. The expiration date of the Lease, assuming
all options to extend the Lease are timely exercised, is December 31, 2013.
7.7 The Subleases. Attached hereto as Exhibit B are true and
correct copies of the Subleases. Each of the Subleases are in full force and
effect, has not been modified or amended in any way and, to Assignor's actual
knowledge, none of the Subleasees are in default, or sent any notice of default
under their respective Sublease. Assignor is not in default and has not
received any notice of default under any Sublease. To Assignor's actual
knowledge, no event has occurred or circumstances exist which, with the giving
of notice or the passage of time, or both, would constitute a default under any
of the Subleases. None of the Subleasees have notified Assignor that it has
exercised any right or option, or stated its intent, to terminate or cancel its
respective Sublease. Assignor has not exercised any right or option, or stated
its intent, to
6
terminate or cancel any of the Subleases. Assignor has not assigned,
transferred or conveyed any of the Subleases or any interest therein, or
granted any right or option with respect thereto, to any party other than
Assignee. The expiration date of each of the Subleases is listed on Exhibit B
hereto.
7.8 Personal Property. Exhibits C sets forth a complete list of
all Personal Property currently used by Assignor in the operation of the
Business.
7.9 Title to the Lease and Property. The Lease and the Property
are free and clear of any and all liens, charges, encumbrances, mortgages,
pledges, security interests, easements, agreements and other interests and
adverse claims (collectively, "Encumbrances"), other than the matters set forth
in Exhibit E attached hereto and made a part hereof (the "Permitted
Exceptions").
7.10 Contracts. Except for the Lease, the Subleases and the
Contracts (as defined in Section 2.4 and listed on Exhibits D), Assignor is not
a party to any leases, contracts, orders or agreements relating to the
Premises, the Property or the Business (written or otherwise) that will survive
the Closing.
7.11 Condition of the Improvements. To Assignor's actual
knowledge, (i) there are no material structural or mechanical defects in the
Improvements, and (ii) there are no leaks in any roof on any Improvement.
7.12 As-is-Conveyance. Except as set forth in Section 7.9 above,
the Personal Property shall be conveyed in its "AS IS AND WITH ALL FAULTS
CONDITION," without warranty, express or implied, of any kind whatsoever
(including, without limitation, without any warranty of merchantibility).
7.13 Environmental Matters.
7.13.1 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
("CERCLA"), 42 U.S.C. ' 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. ' 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 any Environmental Law (as hereinafter defined).
7.13.2 To the actual knowledge of Assignor, there is no
Hazardous Material at, under or on the Premises in violation of any
Environmental Law and there is no ambient air, surface water, groundwater or
land contamination within, under, originating from or relating to the Premises
in violation of any Environmental Law. Assignor has not, and has not
7
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 any Environmental Law.
7.13.3 To the actual knowledge of Assignor, Assignor has no
obligation or liability imposed or based upon any provision (i) under any
foreign, federal, state or local law, rule, or regulation or common law, or
(ii) under any code, order, decree, judgment or injunction applicable to
Assignor or the Premises or (iii) under any notice, or request for information
issued, promulgated, approved or entered under the items listed in clause (ii)
above, or (iv) under the common law, relating to public health or safety,
worker health or safety, or pollution of, damage to or protection of 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 Hazardous Material (hereinafter collectively
referred to as "Environmental Laws").
7.13.4 Assignor has not been subject to any civil, criminal
or administrative action, suit, claim, hearing, notice of violation,
investigation (to Assignor's actual knowledge), 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.
7.13.5 To the actual knowledge of Assignor, the Premises is
not (a) listed or 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. '
9601(9), or any comparable list maintained by any foreign, state or local
government authority.
7.13.6 To the actual knowledge of Assignor, there are no
underground storage tanks at the Premises and Assignor further warrants and
represents that, to Assignor's actual knowledge, any prior use and operation of
underground storage tanks has been in compliance with all Environmental Laws.
7.14 Tax Proceedings. There are no proceedings pending regarding
the reduction of real estate taxes or assessments in respect of the Premises.
7.15 Utilities. All water, storm and sanitary sewer, gas,
electric, and telephone (i) adequately service the Premises, and (ii) enter the
Premises through lands as to which valid public or private easements exist that
will inure to the benefit of Assignee. The cost of installation of such
utilities has been fully paid.
7.16 Access. To Assignor's actual knowledge, there are no (i)
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
8
road to the Premises, or (ii) pending or threatened condemnation or eminent
domain proceedings relating to or affecting the Premises.
7.17 Insurance Requirements. To Assignor's actual knowledge, 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.
7.18 Litigation. There is no action or proceeding (zoning or
otherwise) or governmental investigation pending, or, to Assignor's actual
knowledge, threatened against, or relating to, Assignor (insofar as it relates
to the Lease, the Premises, or the Business), the Lease, the Premises, the
Business or the transactions contemplated by this Agreement, nor, to Assignor's
actual knowledge, is there any basis for any such action, proceeding or
investigation.
7.19 Assessments. There are no special or other assessments for
public improvements or otherwise now affecting the Premises nor does Assignor
know of (a) any pending or threatened special assessments affecting the
Premises or (b) any contemplated improvements affecting the Premises that may
result in special assessments affecting the Premises.
7.20 Employee Agreements. There are no union or employment
contracts or agreements (written or oral) involving employees of Assignor or
its affiliates affecting the Premises or the Business which will survive the
Closing. All employees of Assignor employed to work at the Premises will have
been terminated as of the Closing Date.
7.21 Work at the Premises. No services, material or work have
been supplied to the Premises for which payment has not been made in full.
7.22 Financial Condition. Assignor has delivered to Assignee true
and correct copies of: (i) audited financial statements consisting of balance
sheets and income statements of Assignor as of December 31, 1995 and December
31, 1996 for the Business; and (ii) monthly internal reports for the months of
January and February and the period from March 1, 1997 through the date hereof.
Each balance sheet presents fairly the financial condition, assets and
liabilities of Assignor with respect to the Business as of its date; each
statement of income presents fairly the results of operations of Assignor for
the period indicated. The financial statements referred to in this Section are
in accordance with the books and records of Assignor. Since December 31, 1996:
(a) 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 Assignor, the Premises, the Property or Business; (b)
the Business has been conducted in all respects only in the ordinary course;
and (c) Assignor has not suffered an extraordinary loss (whether or not covered
by insurance) or waived any right of substantial value.
7.23 Full Disclosure. To the best knowledge of Assignor, none of
the information supplied by Assignor 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 or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.
9
As used in this Agreement, the term "Assignor's actual knowledge"
means the actual knowledge of Xxxxx Xxxxxxxxx, who is the Regional Operating
Executive of Assignor for the Northwest United States, and Xxxxxx X. Xxxxxx,
the Executive Vice President of Assignor.
8. Representations and Warranties of Assignee. The Assignee hereby
represents and warrants to Assignor as follows:
8.1 Organization; Power and Authority. The Assignee 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.
8.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Assignee of this Agreement and the
consummation by Assignee of the transactions contemplated hereby have been duly
authorized by all necessary corporate action required to be taken on the part
of Assignee. This Agreement has been duly and validly executed and delivered by
Assignee and constitutes the valid and binding obligation of Assignee,
enforceable in accordance with its terms. The execution, delivery and
performance by Assignee of this Agreement and the consummation by Assignee of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Assignee is subject; (b) violate any order,
judgment or decree applicable to Assignee; or (c) conflict with or result in a
breach of or a default under any term or condition of Assignee's Certificate of
Incorporation or By-Laws or any agreement or other instrument to which such
Assignee 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.
9. Survival. The representations and warranties of the parties made in
Articles 7 and 8 shall survive until the second anniversary of the Closing Date
except for Section 7.13 which shall survive until the expiration of the statute
of limitations applicable to claims that may be asserted against Assignee, the
Premises or the Business in respect of the matters covered thereby.
10. Further Assurances. At any time and from time to time after the
date hereof, either party shall, at the request of the other party, execute and
deliver any further instruments or documents and take all such further action
as the requesting party may reasonably request in order to transfer into the
name of Assignee the Lease and any and all Property contemplated to be sold
pursuant to this Agreement and to further consummate the transactions
contemplated by this Agreement. This Article shall survive the Closing.
11. Brokers. Assignor and Assignees 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. Assignees and Assignor
hereby respectively agree to indemnify and hold harmless the other party from
and against all loss,
10
liability, damage and expense (including, without 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. The provisions of this Article shall survive
the Closing or any termination of this Agreement.
12. Costs and Fees.
12.1 Assignor shall pay (a) the costs and expenses incurred in
connection with the preparation of the audited financial statements referred to
in Section 7.22 hereof, and (b) transfer or conveyancing taxes, if any.
12.2 Assignee shall pay for (a) the examination of title, (b) the
policy of title insurance for Assignee, (c) an ASTM Phase I environmental
survey of the Premises, and (d) all other costs and expenses incurred by
Assignee in conducting its due diligence of the Premises.
12.3 Each party shall pay for its own legal costs and expenses.
Any other costs expressly provided for elsewhere in this Agreement shall be
divided and borne in accordance with the usual practices in the jurisdiction
where the Premises is located.
12.4 The provisions of this Article shall survive the Closing.
13. Indemnification.
13.1 Subject to the further provisions of this Article, Assignor
shall protect, defend, hold harmless and indemnify Assignee, 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 Retained Liability or other liability or obligation of
Assignor which is not an Assumed Liability; 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 13.1.
13.2 Subject to the further provisions of this Article, Assignee
shall protect, defend, hold harmless and indemnify Assignor, its officers,
directors, shareholders, employees, agents and affiliates and their respective
successors and assigns 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) any
of the Assumed Liabilities on and after the date hereof, 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 13.2.
11
13.3 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 thirty
(30) 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 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 13.3 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 13.3.
13.4 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.
14. Bulk Sales. The parties agree to waive the requirements, if any,
of all applicable bulk sales laws. As an inducement to Assignee to enter into
such waiver, Assignor represents and warrants that (a) it will not be rendered
insolvent by the transactions contemplated by this Agreement, and (b) all
debts, obligations and liabilities relating to the Premises and Business that
are not expressly assumed by Assignee under this Agreement will be promptly
paid and discharged by Assignor as and when they become due. Assignor agrees to
indemnify and hold Assignee harmless from, and reimburse Assignee for, any
loss, cost, expense, liability or damage which Assignee may suffer or incur by
virtue of the noncompliance by Assignor with any law pertaining to fraudulent
conveyance, bulk sales or any similar law which makes the sale or transfer of
any part of the Property or Lease ineffective as to creditors of or claimants
against Assignor.
12
15. 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 Assignor to the Assignee shall simultaneously be given in either manner
provided above to the General Counsel of Assignee. A copy of any Notice given
by the Assignees to Assignor shall simultaneously be given in either manner
provided above to the General Counsel of Assignor. 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.
16. Miscellaneous.
16.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
16.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of California.
16.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
16.4 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.
16.5 It is agreed that, except where otherwise expressly provided
in particular Articles or Sections of this Agreement, none of the provisions of
this Agreement shall survive the Closing.
16.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
16.7 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
16.8 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 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.
16.9 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.
16.10 Either party may cause this Agreement to be recorded in the
appropriate public office.
16.11 In the event of any action for breach of, to enforce the
provisions of, or otherwise involving this Agreement, the court in such action
shall award a reasonable sum as attorneys' fees to the party who, in light of
the issues litigated and the court's decisions on those issues, was more
successful in the action The more successful party shall not necessarily be the
party who recovers a judgment in the action.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
AMERICAN GOLF CORPORATION
By:
--------------------------------
Name:
Title:
SAN BRUNO FAMILY
GOLF CENTERS, INC.
By:
--------------------------------
Name:
Title:
15
INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A LEASE
EXHIBIT B SUBLEASES
EXHIBIT C PERSONAL PROPERTY
EXHIBIT D CONTRACTS
EXHIBIT E PERMITTED EXCEPTIONS
16
