[EXHIBIT 10.1]
OPTION TO PURCHASE ASSETS
In consideration of the certain financing provided to Mack's
Sport Shop, LLLP, an Arkansas limited liability limited
partnership, a/k/a Xxxx'x, Mack's Sport Shop and Xxxx'x Prairie
Wings (all entities, enterprises and operations are collectively
referred to herein as "Seller") by Ram Venture Holdings Corp., a
Florida corporation ("Purchaser"), and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, Seller hereby grants to Ram Venture Holdings Corp.
an option to purchase substantially all of the assets of Seller's
business (the "Business") under the terms herein:
1. Purchase Price. The purchase price for the Business,
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subject to adjustments described below, shall be payable as
follows:
a. $500,000.00 payable to Seller in cash at closing.
b. Purchaser will either assume or refinance Sellers bank
debt (exclusive of any debt associated with the real
estate owned by Seller where the Business is operated
(the "Real Estate")) and which shall be identified and
disclosed on Exhibit A hereto (the "Bank Debt") within
thirty (30) days of this Option. In addition,
Purchaser will assume the payables and accrued
liabilities which are not included as Bank Debt and
which are to be identified on Exhibit "B" (the
"Liabilities") as of the Closing Date. The list of the
Liabilities shall be identified and disclosed on
Exhibit B within thirty (30) days of the execution of
this Option. The aging of such Liabilities shall be
disclosed and attached as Exhibit C within thirty (30)
days from the date of this Option. The list of
Liabilities and aging shall be updated from time to
time upon request to keep Purchaser informed as to the
status of each of the Liabilities.
c. Purchaser will have the right to verify and audit
Seller's financial statements during the due diligence
period, which will continue throughout the term of this
Option. All of the Assets (defined below) shall be
assigned and transferred to Purchaser by Seller on the
Closing Date as defined below (the "Closing").
d. Purchaser will pay down the Bank Debt by $2,000,000.00
and negotiated an asset based line of credit using
inventory and receivables as set forth herein (the
"Asset Based Loan"). The Asset Based Loan will be a
revolving line of credit using a fixed rate of 5% and
based on 80% of Seller's accounts receivable and 75% of
inventory valued at Seller's cost. It is anticipated
the Asset Based Loan for the revolving line of credit
will have a principal balance of approximately
$3,650,000.00 as of the date of this Option using the
above referenced formula. Any equity needed above and
beyond the $2,000,000.00 (which, at this time is
estimated to be $850,000.00) will be paid in cash or
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negotiated with Xxxxxx's lender based on the formula
set forth above and the reasonable efforts of both
parties negotiating with Xxxxxx's lender.
e. Purchaser will lease the Real Estate for $17,500.00 per
month pursuant to a mutually acceptable lease agreement
executed between Seller and Purchaser. Such lease
payment shall approximate the debt service on the loan
secured by the Real Estate (the "Real Estate Loan") to
be negotiated between Seller and Xxxxxx's lender. The
Real Estate Loan is currently being negotiated with
Seller's lender in an amount equal to 85% of the new
appraised value of the Real Estate with terms that are
at a 4% interest rate, 40 year amortization and a 5
year balloon payment. Purchaser shall have an option
to purchase the Real Estate for the amount of the then
existing mortgage balance owed to Xxxxxx's lender at
any time during the term of the Real Estate Loan and
Seller may not sell or further encumber the Real Estate
during the term of the lease with Purchaser.
f. Purchaser will assume indebtedness for a loan to be
secured by Furniture, Fixtures and Equipment (the "FFE
Loan"), which FFE Loan shall have terms which are a 7
year term, fixed rate of 5% and a principal balance of
$467,500.00.
g. No additional guaranty or release of guaranties is
anticipated in connection with the purchase of the
Business. Purchaser or Purchaser's assignee shall be
the only additional obligor required to assume any
indebtedness of Seller or Seller's lender.
2. Assets. The assets to be purchased by Purchaser shall
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include all personal property, tangible and intangible,
including, but not limited to, inventory, customer lists, marks,
trademarks, copyrights, and any other intellectual property (but
not real property on which the store is located which shall be
leased by Purchaser pursuant to a mutually acceptable lease)
owned by Seller which is used by Seller in the operation in
Seller's Business (the "Assets"), including current Assets such
as cash, cash equivalents, prepaid items and accounts receivable,
tax refunds, refunds/settlements from past credit card disputes
or other claims from prior years; provided, however, the "Assets"
shall not include the private clubhouse located offsite and which
will remain the property of Seller.
3. Assumed Liabilities; Liens And Encumbrances. At
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Closing, Purchaser shall assume all contracts, leases and other
liabilities of the Business as of the closing date, including
trade and bartered liabilities, as disclosed on Exhibit "B".
Except, however, Seller shall be liable for any and all taxes
arising from the sale of assets pursuant to the exercise of this
Option. Purchaser shall assume all of Seller's obligations for
vacation and personal days and the employees' past service for
purposes of any future severance. Purchaser is not obligated to
hire any employees except as provided in this Option. As of the
closing date, the Assets shall be free and clear of all liens and
encumbrances, except as expressly agreed by Purchaser.
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4. Employment, Consulting and Non-Competition Agreements.
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As a condition of Purchaser's willingness to close the purchase
of the Business, Purchaser requires assurance of the continued
involvement of Xxxxxx XxXxxxxx (the "Key Employee") with the
Business. As a result, at the Closing, Purchaser will enter into
an employment agreement with the Key Employee substantially in
accordance with the terms set forth in Schedule 1 attached hereto
and incorporated herein. The parties will use good faith efforts
to agree on which, if any, other employees of Seller will be
offered severance packages and the terms thereof.
5. Due Diligence, Exclusive Dealing. While this Option
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remains in effect, Seller will permit Purchaser, its
representatives, accountants, employees and counsel to examine
the Business, the Business' contracts, and the Business'
finances, and interview key officers and employees of Seller, it
being understood that Purchaser shall maintain the
confidentiality of all information received and shall not provide
such information to any third parties, other than to Purchaser's
investors, potential investors, financiers, shareholders, counsel
and accountants, and that Purchaser will promptly return to
Seller all information (including all copies made by Purchaser)
delivered by Seller to Purchaser if Purchaser does not exercise
this Option. Seller agrees that it shall not, directly or
indirectly, attempt to sell, offer to sell, advertise for sale,
entertain offers for sale, or take any steps to sell the
Business, between the date of this Option and the date that is
the later of (1) Closing from the exercise of this Option, or
(2) expiration without exercise of this Option.
6. Cooperation. Each of the parties agrees to cooperate
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in obtaining all the necessary approvals from all governmental
authorities to the transfer of the Business from Seller to
Purchaser.
7. Operation of Business. Until closing, Seller agrees to
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operate the business in the ordinary course of business in a
manner consistent with the past practices.
8. Assignment. Seller agrees that Purchaser may assign
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its rights and obligations hereunder to an affiliated entity as
long as such assignment does not hinder or delay in any manner
the granting of any governmental consent to the transfer of the
Business.
9. Publicity. The existence of this Option and all terms
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contained in this Option shall be kept in the strictest
confidence by Purchaser and Seller until after Closing of a sale
pursuant to Purchaser's exercise of this Option; however,
Purchaser may disclose the existence and terms of the Option to
investors, potential investors, financiers, shareholders,
counsel, and as otherwise required by law or regulation. If this
Option expires without the closing of a sale pursuant hereto,
Purchaser and Seller will make good faith efforts to prevent
public knowledge of the existence of this Option. Following the
Closing of a purchase of the Business pursuant to this Option,
the parties shall jointly announce the transaction and the
statement approved by both of them. Thereafter, each shall be
free to make separate statements and comments.
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10. Term. This Option shall expire at midnight Central
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Standard Time on June 30, 2004 (the "Expiration Date"). If
exercised, Purchaser shall provide written notice of its exercise
of this Option by delivering said notice to Seller at its
principal place of business at P.O. Box 1290, 0000 Xxxxxxx 00,
Xxxxxxxxx, Xxxxxxxx 00000. If this Option is exercised, Closing
shall occur on or before July 31, 2004. If the Option is
exercised, then the parties shall use good faith efforts to
negotiate a mutually acceptable asset purchase agreement and
lease for the Real Estate prior to Closing.
11. Non-Binding Understanding. Unless and until a definate
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asset purchase agreement is fully executed, neither party shall
be obligated to consummate the sale of the Business.
The Option granted herein is subject to the ability of the
Seller and Buyer to agree upon the terms and conditions of a
definitive asset purchase agreement, employment agreement, annual
bonuses or earn outs, stock options and a lease agreement for the
Real Estate. Specifically, this Agreement is not to be construed
as a contractual offer or acceptance or a legally enforceable
obligation, but summarizes the terms and conditions pursuant to
which Seller would be willing to sell and Purchaser would be
willing to buy substantially all of the assets of the Business
upon the exercise of the option by Purchaser; provided, however,
that the provision of Section 9 shall be binding upon the
execution thereof.
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Seller hereby grants this option as of the 8 day of
June, 2004.
Xxxx'x Sport Shop, LLLP, an Arkansas
limited liability limited partnership,
a/k/a Xxxx'x, Xxxx'x Sport Shop,
and Xxxx'x Prairie Wings.
By: /s/Xxxxxx XxXxxxxx
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Xxxxxx XxXxxxxx, President
Acknowledged and Accepted:
Ram Venture Holdings Corp.
A Florida corporation
By: /s/Xxxx Xxxxx
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Xxxx Xxxxx, Chairman
Date: 6-8-04
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