MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of May 5, 1998, by and among Callaway Golf Company, a
California corporation ("Callaway Golf"), CGV, Inc., a California corporation
("CGV"), Saint Xxxxxxx Golf Corporation, a Nevada corporation ("Saint
Xxxxxxx"), All-American SportPark, Inc., a Nevada corporation ("SportPark"),
All-American Golf LLC, a California limited liability company ("AAG"), and Xxx
Xxxxxx, an individual. Callaway Golf, CGV, Saint Xxxxxxx, SportPark, AAG and
Boreta are sometimes collectively referred to herein as the "Parties" and
individually as a "Party." Capitalized terms used herein and not otherwise
defined herein have the meaning given to such terms in Section 10 below.
RECITALS
A. Saint Xxxxxxx and Xxxxxxxx Golf are members of AAG and have entered
into the Operating Agreement for All-American Golf LLC, a Limited Liability
Company dated June 13, 1997 (the "Operating Agreement"). Currently, Saint
Xxxxxxx owns an 80% membership interest in AAG and Callaway Golf owns a 20%
membership interest in AAG. Boreta is a principal shareholder of Saint
Xxxxxxx and has been responsible as an employee of Saint Xxxxxxx for managing
AAG.
B. On or about June 13, 1997, AAG executed and delivered to Callaway
Golf a Secured Promissory Note in the original amount of Five Million Two
Hundred Fifty Thousand Dollars ($5,250,000.00) (the "AAG Note"), evidencing a
loan from Callaway Golf to AAG. The AAG Note is secured pursuant to a
Continuing Security Agreement dated June 13, 1997 by and between AAG and
Callaway Golf (the "AAG Security Agreement"), a Membership Interest Security
Agreement dated June 13, 1997, by and between Callaway Golf and Saint Xxxxxxx
(as amended as set forth below, the "Membership Interest Security Agreement"),
and a Leasehold Deed of Trust, Assignment of Leases, Rents and Profits,
Security Agreement and Fixture Filing dated June 13, 1997 executed by AAG in
favor of Callaway Golf encumbering the Indenture of Lease dated June 13, 1997
by and between Urban Land of Nevada, a Nevada corporation and AAG (the "Deed
of Trust"). There is now outstanding under the AAG Note the principal amount
of $5,250,000.00 and accrued and unpaid interest as of May 5, 1998 of at least
$300,000.
C. Under the terms of the AAG Note, AAG was obligated to commence making
payments of interest accrued on the principal outstanding thereunder on
December 21, 1997 and to make monthly installments of interest accrued on the
principal outstanding on the same day of each month thereafter until the
Maturity Date (as defined in the AAG Note). As a result of the failure by AAG
to make the payments referred in the AAG Note, a default occurred under the
AAG Note. In connection therewith, on March 18, 0000, XXX, Xxxxx Xxxxxxx and
Xxxxxxxx Golf entered into a Forbearance Agreement (the "Forbearance
Agreement") pursuant to which Callaway Golf agreed to forbear from proceeding
against AAG and Saint Xxxxxxx under the AAG Note and related loan documents on
the terms and conditions set forth therein (The AAG Note, the AAG Security
Agreement, the Membership Interest Security Agreement, the Deed of Trust and
the Forbearance Agreement are collectively referred to as the "AAG Loan
Documents").
D. Saint Xxxxxxx owns all of the outstanding capital stock of SportPark.
On or about March 18, 1998, at the time of entering into the Forbearance
Agreement, SportPark executed and delivered to Callaway Golf a Promissory Note
in the original principal amount of Three Million Dollars ($3,000,000.00) (the
"SportPark Note") evidencing a loan from Callaway Golf to SportPark. The
SportPark Note is guarantied pursuant to a Guaranty executed as of March 18,
1998 by Saint Xxxxxxx in favor of Callaway Golf (the "Guaranty"). The
Guaranty is secured by the Membership Interest Security Agreement as set forth
and evidenced by, among other documents, the Amendment to Membership Interest
Security Agreement entered into on March 18, 1998 by Saint Xxxxxxx and
Xxxxxxxx Golf (the "Amendment to Membership Interest Security Agreement").
(The SportPark Note and Guaranty are hereinafter collectively referred to as
the "SportPark Loan Documents"). There is now outstanding under the SportPark
Note the principal amount of $3,000,000.00 and accrued and unpaid interest as
of May 5, 1998 of at least $26,178.
E. The Forbearance Agreement is in default and other defaults exist
under the AAG Loan Documents and the SportPark Loan Documents (collectively
the "Loan Documents"). As a result of these defaults, among other rights and
remedies, Callaway Golf has the immediate and unconditional right to proceed
against AAG under the AAG Note, to collect amounts due thereunder and to
exercise upon or enforce its rights to its collateral as set forth in the Loan
Documents; and further, Callaway Golf has the immediate and unconditional
right to proceed against SportPark under the SportPark Note, to collect
amounts due thereunder and to exercise upon or enforce its rights under the
Guaranty and the collateral therefor as set forth in the Loan Documents.
F. Saint Xxxxxxx, SportPark and AAG have requested that Callaway Golf
forbear from proceeding against such parties under the Loan Documents and to
enter into the transactions contemplated by and as set forth in this
Agreement. Among other things, Saint Xxxxxxx has requested that CGV purchase
Saint Xxxxxxx' membership interest in AAG, and in connection therewith, have
agreed to certain terms and conditions to provide the inducement to Callaway
Golf and CGV for such purchase.
G. CGV is the wholly owned subsidiary of Callaway Golf.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained, the Parties hereby agree as follows:
1. Transaction.
1.1 Purchase of Membership Interest. Subject to the terms and
conditions and in reliance on the representations and warranties set forth
herein, Saint Xxxxxxx shall sell, assign, transfer, and deliver its entire
Eighty Percent (80%) membership interest (the "Membership Interest") in AAG to
CGV, at the Closing in return for the Purchase Price.
1.2 Unconditional and Absolute Transfer. The grant, assignment,
conveyance and transfer of Saint Xxxxxxx' Membership Interest in AAG shall be
unconditional and absolute and Saint Xxxxxxx shall not have (and does not
reserve) any right, title or interest of any kind whatsoever in or to any part
of its Membership Interest. Saint Xxxxxxx hereby forever waives and releases
any all rights of redemption and other rights, if any, which it might have or
have had in connection with its Membership Interest, whether arising from the
grant, assignment, conveyance and transfer of the Membership Interest, or
arising from any foreclosure sale which Callaway Golf might have elected to
hold or may hereafter hold pursuant to the Loan Documents. CGV does not
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assume, directly or indirectly, any liability, obligation, duty or
responsibility whatsoever for the payment, discharge or other resolution of
any liability, obligation, indebtedness, lien, security interest, encumbrance,
claim or other problem, condition or matter which has been or may hereafter be
created or assumed by Saint Xxxxxxx, anyone associated with Saint Xxxxxxx or
any of Saint Xxxxxxx' predecessors in interest or which may otherwise
presently exist with respect to the Membership Interest. Subject to the
Option Agreement referred to in Section 6.8, herein, CGV may at any time sell,
transfer, lease, assign or abandon the Membership Interest transferred to it
pursuant to this Agreement and may take or omit to take any action which
either of them in their discretion may deem to be in their respective best
interests, and Saint Xxxxxxx shall have no right, title or interest in or to
any portion of any consideration received by CGV in connection with any such
sale, transfer, lease, assignment or abandonment of the Membership Interest.
1.3 Purchase Price. The total purchase price ("Purchase Price") to
be paid by CGV for the Membership Interest shall be Four Million Five Hundred
Twenty Six Thousand One Hundred Seventy Eight Dollars ($4,526,178). One
Million Dollars ($1,000,000) of the Purchase Price shall be paid in cash at
the Closing and Five Hundred Thousand Dollars ($500,000) of the Purchase shall
be held back (the "Holdback") and paid pursuant to Section 9.2 below. The
remaining Three Million Twenty Six Thousand One Hundred Seventy Eight Dollars
($3,026,178) shall consist of the release from personal liability by Callaway
Golf of the SportPark under the SportPark Note and of Saint Xxxxxxx under the
guaranty thereof. The cash portion of the Purchase Price shall be paid by
Callaway Golf company check or wire transfer at the option of Saint Xxxxxxx.
1.4 Closing. The closing of the transaction (the "Closing") shall
take place at the principal offices of Callaway Golf or at such other place as
may be mutually agreeable to each of the Parties, on May 5, 1998 or at a time
and date mutually agreeable to the Parties (the "Closing Date").
2. Deliveries at Closing by Saint Xxxxxxx and SportPark.
2.1 Saint Xxxxxxx, shall deliver the following to Callaway Golf and
CGV at the Closing:
2.1.1 Assignment of Membership Interest. Delivery of an
Assignment of Membership Interest in the form acceptable to the Parties, duly
executed by a duly authorized officer of Saint Xxxxxxx.
2.1.2 Resolutions of Saint Xxxxxxx. Certified copies of the
resolutions duly adopted by Saint Xxxxxxx' board of directors authorizing the
transfer of the Membership Interest and the execution, delivery and
performance of this Agreement and each of the other agreements contemplated
hereby;
2.1.3 Resolutions of SportPark. Certified copies of the
resolutions duly adopted by SportPark's board of directors authorizing the
execution, delivery and performance of this Agreement and each of the other
agreements contemplated hereby;
2.1.4 Certificate from Officer of Saint Xxxxxxx. Delivery by
Saint Xxxxxxx of a certificates, duly executed by a duly authorized officer,
in form and substance satisfactory to CGV, certifying that each of the
representations and warranties of Saint Xxxxxxx contained in this Agreement
is true and correct and that each of the covenants of Saint Xxxxxxx have been
performed.
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2.1.5 Release of Liens. Evidence satisfactory to CGV that
Saint Xxxxxxx has obtained releases of any and all Liens encumbering or
purporting to encumber the Membership Interest, other than those Liens in
favor of Callaway Golf.
2.1.6 Resignation of Saint Xxxxxxx. Delivery of a written
resignation by Saint Xxxxxxx as manager of AAG duly executed by a duly
authorized officer of Saint Xxxxxxx.
2.1.7 Third Party Approvals. Copies of any and all third
party consents and approvals that are necessary for the consummation of the
transactions contemplated hereby or that are required in order to prevent a
breach of or default under, a termination or modification of, or acceleration
of the terms of, any contract, agreement or document required to be listed on
the Contracts Schedule attached hereto (collectively, the "Third Party
Approvals"), in each case on terms and conditions reasonably satisfactory to
CGV.
2.1.8 Other Documents. Such other documents relating to the
transactions contemplated by this Agreement as Callaway Golf or CGV or their
respective special counsel may reasonably request.
2.1.9 Waver. Any delivery specified in this section 2.1 may
be waived if consented to in writing by Callaway Golf and CGV.
2.2 Deliveries at Closing by Callaway Golf and CGV. Callaway Golf
and CGV shall deliver the following to Saint Xxxxxxx at the Closing:
2.2.1 Purchase Price. The Purchase Price in the manner and
amount set forth in Section 1.3.
2.2.2 Resolutions. Certified copies of the resolutions duly
adopted by Callaway Golf's and CGV's respective board of directors authorizing
the execution, delivery and performance of this Agreement and each of the
other agreements contemplated hereby.
2.2.3 Other Documents. Such other documents relating to the
transactions contemplated by this Agreement as Saint Xxxxxxx or their special
counsel may reasonably request.
2.2.4 Waiver. Any delivery specified in this Section 2.2 may
be waived if consented to in writing by Saint Xxxxxxx.
3. Representations and Warranties of Saint Xxxxxxx and Xxxxxx. As a
material inducement to Callaway Golf and CGV to enter into this Agreement and
purchase the Membership Interest hereunder, Saint Xxxxxxx and Xxxxxx jointly
and severally hereby represent and warrant to Callaway Golf and CGV as
follows:
3.1 Organization. Saint Xxxxxxx and SportPark are each
corporations duly organized, validly existing and in good standing under the
laws of Nevada and are qualified to do business in every jurisdiction in which
its ownership of property or conduct of business requires them to qualify as
foreign corporations. Saint Xxxxxxx and SportPark have all necessary
corporate powers and corporate authority to carry on their business as now
conducted presently and presently proposed to be conducted and to execute,
deliver and perform this Agreement and any related agreements to which they
are a party.
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3.2 Membership Interest and Related Matters. As of the date
hereof, the Membership Interest represent Saint Xxxxxxx' entire ownership
interest in AAG and is held beneficially and of record by Saint Xxxxxxx free
and clear of all Liens other than those in favor of Callaway Golf. The
assignment of its Membership Interest by Saint Xxxxxxx as provided for herein
is an absolute conveyance to CGV of all of the right, title and interest of
Saint Xxxxxxx to the membership interest in effect as well as in form, and is
not intended as security for the payment or repayment of any indebtedness or
the performance of any other obligation of Saint Xxxxxxx of any kind or nature
whatsoever; Saint Xxxxxxx has no equity in the Membership Interest and the sum
of (i) the current fair market value of the Membership Interest (taking into
consideration all liens and encumbrances against the Membership Interest) and
(ii) the value of any rights assigned to CGV pursuant to this Agreement, does
not exceed the net amount of the obligations from which Saint Xxxxxxx is
released pursuant or the consideration paid by Saint Xxxxxxx to this
Agreement.
3.3 Authorization; No Breach. The execution, delivery and
performance of this Agreement and all of the other agreements and instruments
contemplated hereby to which either Saint Xxxxxxx or SportPark is a party have
been duly authorized by Saint Xxxxxxx or SportPark, respectively. This
Agreement constitutes a valid and binding obligation of Saint Xxxxxxx and
SportPark, enforceable in accordance with its terms, and all other agreements
and instruments contemplated hereby to which either Saint Xxxxxxx or SportPark
is a party, when executed and delivered by Saint Xxxxxxx and SportPark in
accordance with the terms hereof, shall each constitute a valid and binding
obligation of Saint Xxxxxxx and SportPark, enforceable in accordance with
their respective terms. The execution and delivery by Saint Xxxxxxx and
SportPark of this Agreement and all other agreements and instruments
contemplated hereby to which either Saint Xxxxxxx SportPark or AAG is a party
and the fulfillment of and compliance with the respective terms hereof and
thereof by Saint Xxxxxxx SportPark or AAG do not and shall not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under (whether with or without the passage of time, the
giving of notice or both), (iii) result in the creation of any lien upon the
Membership Interest or material assets pursuant to, (iv) give any Person the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption
or other action by or notice or declaration to, or filing with, any Person or
any court or administrative or governmental body or agency pursuant to, Saint
Xxxxxxx' or SportPark's respective certificate of incorporation or bylaws, or
any material law, statute, rule or regulation to which Saint Xxxxxxx or
SportPark is subject, or any agreement, instrument, order, judgment or decree
to which Saint Xxxxxxx or SportPark is subject.
3.4 Latest Balance Sheet. Attached hereto as the Latest Balance
Sheet Schedule is the unaudited balance sheet of AAG as of March 31, 1998
(the "Latest Balance Sheet") and the related statements of earnings for the
period then ended. The Latest Balance Sheet (including in all cases the notes
thereto, if any) is accurate and complete in all respects, is consistent with
the books and records of AAG (which, in turn, are accurate and complete in all
respects), fairly presents the financial condition and operating results of
AAG and has been prepared in accordance with GAAP consistently applied as of
the date of the Latest Balance Sheet.
3.5 Absence of Undisclosed Liabilities. Except as set forth on the
attached Liabilities Schedule, AAG does not have any obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
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or to become due and regardless of when asserted) arising out of transactions
entered into at or prior to the date hereof, including, without limiting the
generality of the foregoing, wrongful dismissal claims filed by former
employees, any outstanding or pending long or short-term disability claims and
any pending labor relations boards unions certification applications, or any
action or inaction at or prior to the date hereof, or any state of facts
existing at or prior to the date hereof, other than: (i) liabilities set forth
on the liabilities side of the Latest Balance Sheet (including any notes
thereto), (ii) liabilities and obligations which have arisen after the date of
the Latest Balance Sheet in the ordinary course of business (none of which is
a liability resulting from noncompliance with any applicable laws, breach of
contract, breach of warranty (in excess of any warranty reserve specifically
established with respect thereto and included on the Latest Balance Sheet),
tort, infringement, claim or lawsuit) and (iii) other liabilities and
obligations expressly disclosed in the Schedules referred to in this Section
4.
3.6 Accounts Receivable. Except as set forth on the attached
Accounts Receivable Schedule, all accounts receivable reflected on the Latest
Balance Sheet and all accounts receivable to be reflected on AAG's books and
records as of the Closing Date (net of allowances for doubtful accounts as
reflected thereon and as determined in accordance with GAAP consistently
applied) are or shall be valid receivables arising in the ordinary course of
business, and are or shall be current and collectible, subject to no valid
counterclaims or setoffs. No person has any Liens on such receivables or any
part thereof (except for Callaway Golf), and no agreement for deduction, free
goods, discount or other deferred price or quantity adjustment has been made
with respect to any such receivables.
3.7 Liability. Except as set forth on the attached Liabilities
Schedule, AAG does not have any liability (and, to Saint Xxxxxxx' Knowledge,
there is no reasonable basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
it giving rise to any liability) arising out of any injury to individuals or
property as a result of the ownership, possession or use of any products or
equipment manufactured, sold, leased or delivered by AAG or with respect to
any services rendered by AAG.
3.8 No Material Adverse Effect. There has occurred no fact, event
or circumstance which has had or would reasonably be expected to have a
Material Adverse Effect.
3.9 Assets.
3.9.1 The attached Assets Schedule contains a list of all of
the properties and assets, tangible or intangible, used by AAG wherever
located or shown on the Latest Balance Sheet (the "Assets"). Except as set
forth on the attached Assets Schedule, AAG has good and valid marketable title
to, a valid leasehold interest in, or a valid license to use, the Assets, free
and clear of all Liens except for those of Callaway Golf.
3.9.2 Except as set forth on the attached Assets Schedule, all
of AAG's buildings, equipment, machinery, fixtures, improvements and other
tangible assets (whether owned or leased) are in good condition and repair
(ordinary wear and tear excepted) and are fit for use in the ordinary course
of AAG's business as presently conducted and as presently proposed to be
conducted. All such assets have been installed and maintained in accordance
with all applicable laws, regulations and ordinances.
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3.9.2.1 The Intellectual Property currently used by AAG
constitutes all of the Intellectual Property necessary in the conduct of the
businesses of AAG, and there are no other items of Intellectual Property that
are material to AAG or its business.
3.9.2.2 With respect to any license and sublicenses for
Intellectual Property licensed or sublicensed to AAG:
(i) such license or sublicense is valid and binding and
in full force and effect and represents the entire agreement between the
respective licensor and licensee with respect to the subject matter or such
license of sublicense;
(ii) the rights of AAG, in or to any Intellectual
Property owned by or licensed to AAG do not conflict with or infringe on the
right of any other Person.
3.9.3 Except as set forth on the attached Assets Schedule, AAG
owns, has a valid leasehold interest in, or has a valid license to use, all of
the assets, properties and rights, (including water rights) whether tangible
or intangible, necessary for the conduct of its business as presently
conducted and as presently proposed to be conducted.
3.10 Tax Matters. AAG has timely filed any and all required Tax
Returns and has paid any and all Taxes due and has withheld and paid over all
Taxes required to be withheld for all periods ending on or before the Closing
Date. Each such Tax Returns filed are complete and correct and have been
prepared in compliance with all applicable laws and regulations.
3.11 Contracts and Commitments.
3.11.1 Except as expressly contemplated by this Agreement or
as set forth on the attached Contracts Schedule, the attached Employees
Schedule, or the attached Employee Benefits Schedule, AAG is not a party to or
bound by any written or oral:
3.11.1.1 pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or material
arrangement or practice;
3.11.1.2 collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs, policies or
arrangements;
3.11.1.3 management agreement, contract for the
employment of any officer, individual employee or other Person on a full-time,
part-time, consulting or other basis;
3.11.1.4 contract or agreement requiring the consent of
any party thereto upon a change in control of AAG, containing any provision
which would result in a modification of any rights or obligations of any party
thereunder upon a change in control of AAG or which would provide any party
any remedy (including rescission or liquidated damages) in the event of a
change in control of AAG;
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3.11.1.5 contract under which it has advanced or loaned
monies to any other Person or otherwise agreed to advance, loan or invest any
funds (other than advances to AAG's employees in the ordinary course of
business consistent with past practice);
3.11.1.6 agreement or indenture relating to borrowed
money or other Indebtedness or the mortgaging, pledging or otherwise placing a
Lien on any material asset or material group of assets of AAG or any letter of
credit arrangements;
3.11.1.7 guaranty of any obligation for borrowed money or
otherwise (other than endorsements made for collection in the ordinary course
of business);
3.11.1.8 lease or agreement under which AAG is lessee of
or holds or operates any property, real or personal, owned by any other
Person;
3.11.1.9 lease or agreement under which AAG is lessor of
or permits any third party to hold or operate any property, real or personal,
owned or controlled by AAG;
3.11.1.10 license or royalty agreements;
3.11.1.11 nondisclosure or confidentiality agreements
(other than those entered into in the ordinary course of business with
customers, suppliers and employees);
3.11.1.12 contract or group of related contracts with the
same party or group of affiliated parties for the purchase of raw materials,
commodities, supplies, products, equipment or other personal property or for
the receipt of services (other than purchase orders entered into in the
ordinary course of business or contracts disclosed elsewhere in connection
with this Section 3);
3.11.1.13 contract or group of related contracts with the
same party or group of affiliated parties for the sale of raw materials,
commodities, supplies, products or other personal property or for the
furnishing of services (other than purchase orders entered into in the
ordinary course of business or contracts disclosed elsewhere in connection
with this Section 3);
3.11.1.14 other contract or group of related contracts
with the same party or group of affiliated parties continuing over a period of
more than six months from the date or dates thereof, not terminable by AAG
upon 30 days' or less notice without penalty (other than purchase orders
entered into in the ordinary course of business or contracts disclosed
elsewhere in connection with this Section 3);
3.11.1.15 contract or group of related contracts
requiring the payment of any fee, penalty or other amount by AAG in the event
of any failure to perform or late performance of such contract or contracts by
AAG;
3.11.1.16 contract relating to the marketing, sale,
advertising or promotion of its products or services;
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3.11.1.17 agreements relating to the ownership of or
investments in any business or enterprise, including investments in joint
ventures and minority equity investments;
3.11.1.18 assignment, license, indemnification or other
agreement with respect to any intangible property;
3.11.1.19 power of attorney or other similar agreement or
grant of agency;
3.11.1.20 contract or agreement prohibiting it from
freely engaging in any business or competing anywhere in the world; or
3.11.1.21 other agreement which is material to its
operations or business prospects or involves an annual consideration in excess
of $5,000.00 whether or not in the ordinary course of business.
3.11.2 All of the contracts, agreements and instruments set
forth or required to be set forth on the attached Contracts Schedule are
valid, binding and enforceable in accordance with their respective terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and other laws of general application effecting
enforcement of creditors' rights generally, rules of law governing specific
performance, injunctive relief or other equitable remedies, and limitations of
public policy; and shall be in full force and effect without penalty in
accordance with their terms upon consummation of the transactions contemplated
hereby. Except as set forth on the Contracts Schedule, AAG has performed all
material obligations required to be performed by it and is not in default
under or in breach of nor in receipt of any claim of default or breach under
any contract, agreement or instrument set forth or required to be set forth on
the attached Contracts Schedule; no event has occurred which with the passage
of time or the giving of notice or both would result in a default, breach or
event of noncompliance by AAG under any such contract, agreement or
instrument; AAG does not have any present expectation or intention of not
fully performing on a timely basis all such obligations required to be
performed by AAG under any contract, agreement or instrument to which AAG is
subject; no partially-filled or unfilled customer purchase order or sales
order is subject to cancellation or any other material modification by the
other party thereto or is subject to any penalty, right of set-off or other
charge by the other party thereto for late performance or delivery; and Saint
Xxxxxxx does not have any Knowledge of any cancellation or anticipated
cancellation or any breach by the other parties to any contract, agreement,
instrument or commitment to which it is a party. AAG is not a party to any
contract, agreement or commitment the performance of which could reasonably be
expected to have a Material Adverse Effect.
3.11.3 CGV's special counsel has been supplied with a true
and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral arrangements,
contracts and agreements which are referred to on the attached Contracts
Schedule, together with all amendments, waivers or other changes thereto.
3.12 Litigation, etc. Except as set forth on the attached
Litigation Schedule, there are no (and, during the two years preceding the
date hereof, there have not been any) actions, suits, proceedings (including
any arbitration proceedings), orders or, to Saint Xxxxxxx' Knowledge,
investigations or claims pending or, to Saint Xxxxxxx' Knowledge, threatened
against AAG (or to Saint Xxxxxxx' Knowledge, pending or threatened against any
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of the members, managers, or employees of AAG with respect to its business or
proposed business activities), or pending or threatened by AAG against any
Person, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality (including any actions,
suits, proceedings or investigations with respect to the transactions
contemplated by this Agreement); AAG is not subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to Saint
Xxxxxxx' Knowledge, any governmental investigations or inquiries; and, to the
Saint Xxxxxxx' Knowledge, there is no basis for any of the foregoing. The
foregoing includes, without limitation, actions pending or threatened
involving the prior employment of any of AAG's employees, their use in
connection with AAG's businesses of any information or techniques allegedly
proprietary to any of their former employers or their obligations under any
agreements with prior employers. Except as set forth thereon, AAG is fully
insured with respect to each of the matters set forth on the attached
Litigation Schedule. AAG is not subject to any judgment, order or decree of
any court or other governmental agency, and AAG has not received any opinion
or memorandum or advice from its legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability which could have a Material
Adverse Effect.
3.13 Insurance. The attached Insurance Schedule contains a
description of each insurance policy maintained by AAG with respect to its
properties, assets and business, and each such policy shall be in full force
and effect as of the Closing. AAG is not in default with respect to its
obligations under any insurance policy maintained by it, and AAG has never
been denied insurance coverage. Except as set forth on the attached Insurance
Schedule, AAG has no self-insurance or co-insurance programs and the reserves
set forth on the Latest Balance Sheet are adequate to cover all anticipated
liabilities with respect to any such self-insurance or co-insurance programs.
All materials assets, properties, and risks of AAG and for the past year has
been, covered by valid and, except for the policies that have expired under
their terms in the ordinary course, currently effective insurance policies or
binders of insurance (including, without limitation, general liability
insurance, property insurance, and workers' compensation insurance) issued in
favor of AAG, in each case with responsible insurance companies in such types
and amounts and covering such risks as are consistent with customary practices
and standards of companies engaged in business and in operations similar to
those of AAG. At the time of the Closing, all insurance policies currently in
effect will be outstanding and duly in force.
3.14 Employees. To Saint Xxxxxxx' Knowledge, as of the date hereof,
no executive or key employee of AAG and no group of employees of AAG has any
plans to terminate employment with AAG. AAG has no labor relations problems
(including any union organization activities, threatened or actual strikes or
work stoppages or material grievances). The Employees Schedule attached hereto
contains a correct and complete list of all employees of AAG. None of AAG's,
to Saint Xxxxxxx' Knowledge, employees or consultants are subject to any
noncompete, nondisclosure, confidentiality, intellectual property assignment,
inventory assignment, employment, consulting or other agreement or judgment,
decree or order of any court or administrative agency, relating to, affecting
or in conflict with the present or proposed business activities of AAG or such
Person's duties to AAG, except for agreements between AAG and its present and
former employees. AAG has not received any notice alleging that any violation
of any such agreements has occurred. The Employees Schedule attached hereto
contains a correct and complete list of all employees and consultants of AAG
which have executed and delivered to AAG any agreement providing for the
10
nondisclosure by such Person of any confidential information of AAG. AAG has
made no oral or written representation to any employee regarding the length of
notice such employee would receive on termination of his or her employment.
AAG has made no oral or written representation to any employee regarding the
length of time during which he or she would be employed by AAG. None of the
employees of AAG have been hired for a fixed term. Except as set forth in the
Employees Schedule, all of the employees of AAG have been hired on a full-time
basis.
3.15 Employee Benefit Plans.
3.15.1 Except as set forth on the attached Employee Benefits
Schedule, AAG does not maintain or have any obligation to contribute to (or
any other liability with respect to) any plan or arrangement, whether or not
terminated, which provides medical, health, life insurance, or any
welfare-type or other similar benefits for current or future retired or
terminated employees or any dependents of such employees. All required
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to or as of the Closing Date shall have been made or properly
accrued. None of the plans has any material unfunded liabilities which are
not reflected on the Latest Balance Sheet.
3.15.2 Except as set forth on the attached Employee Benefits
Schedule, AAG does not maintain, contribute to or have any actual or potential
liability under (or with respect to) any material plan or arrangement
providing benefits or remuneration to current or former employees or any
dependents of such employees or independent contractors, including (but not by
way of limitation) any employment contract, bonus or incentive plan, plan for
deferred compensation, employee health or other welfare benefit plan,
severance arrangement or other material policy, program or arrangement,
whether or not terminated. All required payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the
Closing Date shall have been made or properly accrued. None of the plans has
any material unfunded liabilities which are not reflected on the Latest
Balance Sheet. The attached Employee Benefits Schedule sets forth the
aggregate amount of bonuses and other incentive compensation expected to be
paid by AAG for its fiscal year ending December 31, 1998.
3.15.3 The plans set forth on the Employee Benefit Schedule
and all related trusts, insurance contracts and funds have been maintained,
funded and administered in compliance in all material respects with the
applicable provisions of applicable federal, provincial, and local laws. AAG
has timely complied with all reporting and disclosure obligations as they
apply to such plans. To Saint Xxxxxxx' Knowledge, none of AAG or any trustee
or administrator of any plan has engaged in any transaction with respect to
the plans which would subject AAG or any trustee or administrator of the
plans, or any party dealing with any such plan, nor do the transactions
contemplated by this Agreement constitute transactions which would subject any
such party, to either a civil penalty assessed under the applicable laws. No
actions, suits or claims with respect to the assets of the plans (other than
routine claims for benefits) are pending or, to Saint Xxxxxxx' Knowledge,
threatened which could result in or subject AAG to any liability and there are
no circumstances which would give rise to or be expected to give rise to any
such actions, suits or claims.
3.16 Compliance with Laws, Permits; Certain Operations. Except as
set forth on the attached Compliance Schedule:
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3.16.1 AAG has complied and is in compliance with all
applicable laws, ordinances, codes, rules, requirements and regulations of
foreign, federal, provincial and local governments and all agencies thereof
relating to the operation of its business and the maintenance and operation of
its properties and assets. No notices have been received by and, to Saint
Xxxxxxx' Knowledge, no claims have been filed or threatened against AAG
alleging a violation of any such laws, ordinances, codes, rules, requirements
or regulations.
3.16.2 AAG holds and is in compliance with all permits,
licenses, bonds, approvals, certificates, registrations, accreditations and
other authorizations of all foreign, federal, provincial and local
governmental agencies required for the conduct of its business and the
ownership of its properties, and the attached Permits Schedule sets forth a
list of all of such material permits, licenses, bonds, approvals,
certificates, registrations, accreditations and other authorizations. No
notices have been received by AAG alleging the failure to hold any of the
foregoing. All of such permits, licenses, bonds, approvals, accreditations,
certificates, registrations and authorizations will be available for use by
AAG immediately after the Closing.
3.17 Environmental and Safety Matters.
3.17.1 Except as set forth on the attached Environmental
Schedule:
3.17.1.1 To the Knowledge of Saint Xxxxxxx and Boreta,
AAG has complied with and is in compliance with all Environmental and Safety
Requirements. AAG has not received any oral or written notice, report or
information regarding any actual or alleged violation of Environmental and
Safety Requirements or any liabilities or potential liabilities relating to it
or its facilities arising under Environmental and Safety Requirements.
3.17.1.2 To the Knowledge of Saint Xxxxxxx and Xxxxxx,
neither this Agreement nor the consummation of the transactions contemplated
hereby will result in any obligations for site investigation or cleanup, or
notification to or consent of any government agencies or third parties under
any Environmental and Safety Requirements (including any so called
"transaction-triggered" or "responsible property transfer" laws and
regulations).
3.17.1.3 To the Knowledge of Saint Xxxxxxx and Boreta,
none of the following exists at any property or facility owned, occupied or
operated by AAG: (i) underground storage tanks; (ii) asbestos containing
material in any form or condition; (iii) materials or equipment containing
polychlorinated biphenyls; or (iv) landfills, surface impoundments or other
disposal areas.
3.17.1.4 To the Knowledge of Saint Xxxxxxx and Xxxxxx,
AAG has not treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled or Released any substance (including any
hazardous substance) or owned, occupied or operated any facility or property
in a manner that has given or could give rise to any liabilities (including
any liability for response costs, corrective action costs, personal injury,
natural resource damages, property damage or attorneys fees or any
investigative, corrective or remedial obligations) pursuant to applicable
Environmental and Safety Requirements.
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3.17.1.5 To the Knowledge of Saint Xxxxxxx and Boreta,
AAG has not, either expressly or by operation of law, assumed or undertaken
any liability or corrective, investigatory or remedial obligation of any other
Person relating to any Environmental and Safety Requirements.
3.17.1.6 To the Knowledge of Saint Xxxxxxx and Xxxxxx, no
Environmental Lien has attached to any property owned, leased or operated by
AAG.
3.18 Real Property. AAG does not own any real property. The Real
Property Schedule attached hereto sets forth a list of all of the leases,
subleases and licenses ("Leases") of real property (the "Leased Real
Property") in which AAG has a leasehold, sublease hold and licensed interest.
AAG holds a valid and existing leasehold, sublease hold or license interest
under each of the Leases. With respect to each Lease listed on the attached
Real Property Schedule, there are no disputes, oral agreements, or forbearance
programs in effect as to such Lease and AAG has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease
except pursuant to Callaway Golf's leasehold deed of trust. Except for the
Leased Real Property, there is no real property which is leased or otherwise
used in AAG's business.
3.19 Existence and Power. AAG is a limited liability company duly
formed. validly existing, and in good standing under the laws of the State of
California, and has all requisite power and authority to own, operate, or
lease the properties owned, operated or leased by AAG and to carry on its
business as it has been and is currently conducted as of the date hereof and
as contemplated by the Operating Agreement.
3.20 Activities. AAG has not engaged in any business or activity
of any kind, other than the business and activities expressly contemplated and
permitted by the Operating Agreement dated June 13, 1997 between Callaway Golf
and Saint Xxxxxxx. AAG is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by
it or the operation of its business makes such licensing or qualification
necessary or desirable.
3.21 Subsidiaries. There are no corporation, partnerships, joint
ventures, associations or other entities in which AAG owns, of record or
beneficially, any direct or indirect equity or other interest or any right
(contingent or otherwise) to acquire the same, or in which AAG otherwise
participates.
3.22 Use of Proceeds. All expenditures made by AAG since its date
of organization were for the sole benefit of AAG or the Golf Center and not
for the benefit of Saint Xxxxxxx, SportPark or any other person or entity.
3.23 Disclosure. All written statements, faxes, data, information,
projections and materials made, furnished or provided from time to time by or
on behalf of AAG or Saint Xxxxxxx to Xxxxxxxx Golf and CGV relating to AAG or
Saint Xxxxxxx shall be true and correct in all material respects, all material
facts relating to AAG or Saint Xxxxxxx have been fully disclosed to Callaway
Golf and CGV, and neither this Agreement, any of the Exhibits or Schedules
attached hereto nor any of the written statements, documents, certificates or
other items prepared and supplied to Callaway Golf and CGV by or on behalf of
AAG or Saint Xxxxxxx with respect to the transactions contemplated hereby,
when taken together as a whole, contain any untrue statement of a material
13
fact or omit a material fact necessary to make each statement contained herein
or therein, in light of the circumstances in which they were made, not
misleading. There is no information which Saint Xxxxxxx have not disclosed to
Callaway Golf and CGV in writing and of which any of its stockholders,
officers, directors or executive employees is aware which has had or would
reasonably be expected to deter Callaway Golf and CGV from completing the
transactions contemplated in this Agreement on the terms and conditions
hereof.
4. Representations and Warranties of Callaway Golf and CGV. As a
material inducement to Saint Xxxxxxx to enter into this Agreement and take the
actions set forth in Section 1, Callaway Golf and CGV hereby represents and
warrants to Saint Xxxxxxx as follows:
4.1 Organization, Power and Authority. Callaway Golf and CGV are
each duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. Callaway Golf and CGV possess all requisite
power and authority necessary to carry out the transactions contemplated by
this Agreement.
4.2 Authorization; No Breach. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby to
which Callaway Golf and CGV are parties have been duly authorized by Callaway
Golf and CGV. This Agreement and all other agreements contemplated hereby to
which Callaway Golf and CGV are parties, when executed and delivered by
Callaway Golf and CGV in accordance with the terms hereof, shall each
constitute valid and binding obligations of Callaway Golf and CGV ,
enforceable in accordance with its terms. The execution and delivery by
Callaway Golf and CGV of this Agreement and all other agreements contemplated
hereby to which Callaway Golf and CGV are parties, the purchase of the
Membership Interest hereunder, and the fulfillment of and compliance with the
respective terms hereof and thereof by Callaway Golf and CGV, do not and shall
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under (whether with or without the
passage of time, the giving of notice or both), (iii) give any third party the
right to modify, terminate or accelerate any obligation under, (iv) result in
a violation of, or (v) require any authorization, consent, approval, exemption
or other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the organizational
documents of Callaway Golf and CGV, or any material law, statute, rule or
regulation to which Callaway Golf and CGV are subject, or any material
agreement, instrument, order, judgment or decree to which Callaway Golf and
CGV are subject.
5. Release of Obligations. Upon execution of this Agreement, Saint
Xxxxxxx, Xxxxxx and SportPark and each of their successors, heirs, assigns,
agents, officers, directors, employees, agents, representatives, attorneys,
subsidiaries, divisions, affiliates, and all persons acting by, through, under
or in concert with them, or any of them hereby irrevocably and unconditionally
release and forever discharge Callaway Golf, CGV, and AAG and each of their
predecessors, successors, assigns, agents, officers, directors, employees,
agents, representatives, attorneys, subsidiaries, divisions, affiliates, and
all persons acting by, through, under or in concert with them, or any of them,
from any and all manner of actions, causes of action, suits, debts, liens,
contracts, rights, agreements, obligations, promises, liabilities, claims,
demands, damages, controversies, losses, costs and expenses of any nature
whatsoever, known or unknown, suspected or unsuspected, fixed or contingent
14
which they now have, own or hold or claim to have, own or hold at any time,
heretofore had, owned or held, or claim to have had, owned or held, or may
hereafter have, own or hold or claim to have, own or hold, from the beginning
of time to the date hereof; provided, however, nothing contained in this
release is intended to release Callaway Golf and CGV from their obligations
under this Agreement or the Option Agreement referred to in Section 6.8.
This release shall apply to all unknown or unanticipated results of
the foregoing, as well as those known and anticipated, and upon advice of
legal counsel, each of Saint Xxxxxxx, SportPark and Boreta, do waive any and
all rights under California Civil Code Section 1542, which section has been
explained to each of such Parties, hereto, and reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
Any claim released by Saint Xxxxxxx, SportPark or Boreta pursuant to this
Section 5 shall be deemed a capital contribution by Saint Xxxxxxx.
6. Conditions to Closing.
6.1 Consulting Agreement. Saint Xxxxxxx shall enter into a
separate consulting agreement with AAG, the terms of such consulting agreement
being acceptable to AAG in its sole and absolute discretion, whereby Saint
Xxxxxxx shall cause Xxx Xxxxxx and Xxxx Xxxxxx to agree to provide to AAG
consulting services on an as-needed basis for a period of ninety (90) days
immediately following the Closing. No compensation shall be payable by
Callaway Golf, AAG or CGV for such consulting services.
6.2 Tenant Leases. All existing tenant leases shall continue in
place, except that the Saint Xxxxxxx Golf Shop lease will be amended to
provide more specific operating standards acceptable to Callaway Golf in its
sole discretion.
6.3 Phase I Environmental. CGV shall have conducted a Phase I
Environmental assessment on the premises occupied by AAG and the results of
such assessment shall be acceptable to CGV in its sole discretion.
6.4 Sierra Sportservice, Inc. Agreement. The Lease and Concession
Agreement with Sierra Sportservice, Inc. ("Sportservice Agreement") shall be
amended or a separate agreement will be entered into between AAG and
Sportservice to remove AAG from any liability for Sportservice improvements on
the premises operated by SportPark. Such amendment or separate agreement
shall be acceptable to Callaway Golf in its sole and absolute discretion and
shall also provide for ongoing food service at the premises operated by AAG.
6.5 Covenant Not to Compete. Saint Xxxxxxx and Xxx Xxxxxx shall
each have entered into a noncompetition agreement with CGV for a period of two
(2) years, the terms of which shall be acceptable to CGV in its sole and
absolute discretion.
6.6 Ground Lease. The Parties shall have obtained the consent of
Urban Land of Nevada, Inc. to the transfer of the Membership Interest from
Saint Xxxxxxx to CGV.
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6.7 Consulting Agreement for Xxxx Xxxxxx. Xxxx Xxxxxx shall have
entered into a Consulting Agreement with AAG for a period of six months to
provide consulting on an as needed basis at the monthly rate of $4,166.67 per
month. The Consulting Agreement shall be acceptable to AAG in its sole and
absolute discretion.
6.8 Repurchase Option. The Parties shall have executed a separate
Option Agreement whereby Saint Xxxxxxx shall have the option for a period of
two (2) years after the Closing Date to repurchase the Membership Interest on
the terms and conditions set forth in the Option Agreement.
The conditions set forth in this Section 6 are for the exclusive benefit of
Callaway Golf and CGV and may be waived by Callaway Golf and CGV in whole or
in part on the Closing Date; provided, however, such conditions may be waived
by Callaway Golf and CGV in writing and any such waived conditions shall
become post-closing covenants pursuant to Section 9.1. Notwithstanding any
such waiver, the completion of the purchase and sale contemplated by this
Agreement by Callaway Golf and CGV shall not prejudice or affect in any way
the rights of Callaway Golf and CGV in respect of the representations and
warranties of Saint Xxxxxxx and Xxxxxx set forth in this Agreement and the
representations of Saint Xxxxxxx and Boreta set forth in this Agreement shall
survive the completion and payment of the Purchase Price, as set forth in
Section 7.1.
7. Indemnification and other Agreements.
7.1 Survival of Representations and Warranties. Notwithstanding
any investigation or inquiries made by Callaway Golf and CGV prior to Closing,
Saint Xxxxxxx, SportPark and Boreta each acknowledge and agree that Callaway
Golf and CGV have entered into this Agreement and has purchased the Membership
Interest in reliance upon the representations and warranties by Saint Xxxxxxx
and Xxxxxx contained in this Agreement. Saint Xxxxxxx and Boreta further
acknowledge and agree that the representations and warranties made by them and
contained in this Agreement and in other documentation relating to the
transaction contemplated hereby shall be true at the date of this Agreement
and on the Closing Date as if such representations and warranties were made at
such time. The representations and warranties in Section 3.1, 3.2, 3.3, 3.9
and 3.12 shall survive the Closing indefinitely. All other representations
and warranties in this Agreement and the Schedules and Exhibits attached
hereto or in any writing delivered by any Party to another Party in connection
with this Agreement shall survive until expiration of the applicable statutes
of limitations.
7.2 General Indemnification.
7.2.1 Indemnification by Saint Xxxxxxx and SportPark. Saint
Xxxxxxx, ("Indemnifying Party") shall defend and indemnify each of AAG,
Callaway Golf and CGV and their respective affiliates, stockholders, partners,
officers, directors, employees, agents, representatives, successors and
permitted assigns (collectively, the "Indemnified Parties") and save and hold
each of them harmless against and pay on behalf of or reimburse such
Indemnified Parties as and when incurred for any loss, liability, demand,
claim, action, cause of action, cost, damage, deficiency, Tax, penalty, fine
or expense, whether or not arising out of third party claims (including
interest, penalties, reasonable attorneys' fees and expenses and all amounts
paid in investigation, defense or settlement of any of the foregoing)
(collectively, "Losses"), which any such Indemnified Parties may suffer,
16
sustain or become subject to, as a result of, in connection with, relating or
incidental to or by virtue of: (a) any breach of any representation or
warranty of Saint Xxxxxxx, or Xxxxxx in this Agreement or in any of the
Schedules or Exhibits attached hereto or in any of the certificates or other
instruments furnished by Saint Xxxxxxx, SportPark or Boreta pursuant to this
Agreement; (b) any nonfulfillment or breach of any covenant or agreement by
Saint Xxxxxxx, SportPark or Boreta under this Agreement or any of the
Schedules and Exhibits attached hereto required to be performed or complied
with by Saint Xxxxxxx, SportPark or Boreta at or prior to the Closing; (c) any
nonfulfillment or breach of any covenant or agreement by either Saint Xxxxxxx,
SportPark or Boreta under this Agreement required to be performed or complied
with by either Saint Xxxxxxx, SportPark or Boreta after the Closing; (d) any
claim for failure to pay overtime or other employee compensation or benefits
incurred on or prior to the Closing Date; or (e) the failure of AAG to possess
the Required Assets. If and to the extent any provision of this Section 7.2
is unenforceable for any reason, Saint Xxxxxxx, hereby agrees to make the
maximum contribution to the payment and satisfaction of any Loss for which
indemnification is provided for in this Section 7.2 which is permissible under
applicable laws.
7.2.2 Procedure for Indemnification - Notice of Claims. If an
Indemnified Party becomes aware of facts or circumstances establishing a claim
("Claim") that an Indemnified Party has experienced or incurred any Loss or
may experience or incur any Loss which will give rise to a right of set-off or
indemnification under this Section, then such Indemnified Party shall give
written notice to the Indemnifying Party of such Claim ("Indemnification
Notice"). The Indemnification Notice shall be provided as soon as reasonably
practicable, but in no event more than thirty (30) days after the Indemnified
Party has received written notice or actual knowledge of such facts or
circumstances (provided that failure to give an Indemnification Notice shall
not limit the Indemnifying Party indemnification obligation hereunder, except
to the extent that the delay in giving, or failure to give, the
Indemnification Notice materially adversely affects the Indemnifying Party's
ability to defend against a Claim). To the extent reasonably practicable, the
Indemnification Notice will describe the nature, basis and amount of the Claim
and include any relevant supporting documentation. Any Claim described in
the Indemnification Notice shall be deemed final and binding (hereinafter, a
"Permitted Indemnification Claim") if the Indemnifying Party does not object
in writing to the propriety of the Claim or the amount of the Loss by
delivering a notice of objection to the Indemnified Party (an "Indemnification
Objection Notice") within thirty (30) days after receipt of the
Indemnification Notice. The Indemnification Objection Notice shall detail the
specific objections of the Indemnifying Party the Claim. If the parties are
unable to resolve the disputed issues concerning the Claim within twenty (20)
business days after the date the Indemnified Party received the
Indemnification Objection Notice, the disputed issues shall be settled
pursuant to Section 8.
7.2.3 Defense of Third Party Claims. Callaway Golf and/or CGV
shall have the right to control the defense or settlement of any third party
claim ("Third Party Claim"). Any legal and related expenses, and any
judgment or settlement paid by Callaway Golf and/or CGV in connection with a
Third Party Claim shall be included as part of the indemnification obligations
of the Indemnifying Party under this Agreement. Saint Xxxxxxx shall have the
right to participate in, but not control the defense of any Third Party Claim.
Callaway Golf and CGV shall periodically apprise Saint Xxxxxxx of the progress
of such defense. Callaway Golf and CGV shall not consent to the entry of any
17
judgement or enter into any settlement (except with the written consent of
Saint Xxxxxxx which consent shall not be unreasonably withheld) which does not
include as an unconditional term thereof, the giving by the claimant to Saint
Xxxxxxx a release from all liability in respect of such Third Party Claim
(which release only may exclude any obligations incurred in connection with
any such settlement).
8. Dispute Resolution.
8.1 Direct Discussion. In the event of any dispute, claim,
question, or disagreement arising out of or relating to this Agreement (a
"Dispute"), the Parties involved in such Dispute shall use their best efforts
to settle such Dispute. To this effect, senior management of the parties
involved shall consult and negotiate with each other in good faith to attempt
to reach a just and equitable solution satisfactory to both Parties. Any
dispute which cannot be resolved within thirty (30) days may be submitted to
binding arbitration as provided below.
8.2 Requirement of Arbitration. Any Dispute which cannot be
resolved through mutual consultation and negotiation, shall be settled by
final and binding arbitration conducted by the San Diego office of
JAMS/Endispute. Nothing stated herein, however, shall preclude Callaway Golf
or CGV from seeking and obtaining immediate injunctive relief (whether
temporary, preliminary, or permanent) to prevent or restrain a breach by Saint
Xxxxxxx or SportPark of this Agreement or to seek enforcement of this
arbitration provision or to seek or enforce prejudgment or ancillary remedies.
8.3 Number of Arbitrators. The number of arbitrators shall be
three (3). The three arbitrators shall be selected as follows: (a) within
ten (10) days of delivery of any demand for arbitration, each party shall
submit to the other party the name of three (3) candidates nominated from the
then-current list of retired judges or justices at the San Diego office of
JAMS/Endispute; (b) within five (5) days of delivery of the opposing party's
list, each party shall submit to the other party the names of two (2)
candidates proposed by the opposing party which are to be stricken from the
opposing party's nomination list, with the non-challenged candidates serving
as two (2) of the three (3) arbitrators; (c) the parties will then confer on
the selection of a third arbitrator and, if no agreement can be reached within
five (5) days, JAMS/Endispute shall appoint the third arbitrator from the list
of retired judges or justices at the San Diego office of JAMS/Endispute.
8.4 Location; Commencement. The arbitration shall take place in
San Diego, California, and shall be commenced within thirty (30) days of the
selection of the arbitrator(s), unless otherwise agreed to by the parties or
ordered by the arbitrator(s) for good cause shown. The arbitration hearing
shall last no longer than two (2) days.
8.5 Discovery. It is expressly understood that the parties have
chosen arbitration to avoid the burdens, costs and publicity of a court
proceeding, and the arbitrators are expected to handle all aspects of the
matter, including discovery, in a manner so as to minimize the expense, time,
burden and publicity of the process, while assuring a fair and just result.
The arbitrator shall limit and restrict the scope of discovery (e.g., number
of depositions, document requests, etc.) to only those matters clearly
relevant to the dispute. Subject to this limitation, the provisions of
California Code of Civil Procedure section 1283.05 are incorporated into, made
part of and are applicable to any arbitration conducted pursuant to this
clause.
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8.6 Arbitrator's Award. The arbitrator(s) shall issue a written
award within twenty (20) days after the matter is submitted for decision. The
arbitrator(s) shall apply the law of the State of California (excluding
California choice of law provisions.) The arbitrator(s) shall not have the
authority to award punitive or exemplary damages to any party.
8.7 Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be awarded to
the prevailing party, in the discretion of the arbitrators, or may be
apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
8.8 Confidentiality. Except as set forth below, the parties shall
keep confidential the fact of the arbitration, the dispute being arbitrated,
the decision of the arbitrators, and any documents produced by the parties in
the course of the arbitration. Notwithstanding the foregoing, the parties may
disclose information about the arbitration to persons who have a need to know,
such as directors, trustees, management employees, witnesses, experts,
investors, attorneys, lenders, insurers, and others who may be directly
affected. Once the arbitration award has become final, if the arbitration
award is not promptly satisfied, then the prevailing party may,
notwithstanding the foregoing, disclose information about the arbitration only
to the extent necessary to obtain judicial enforcement of the award.
8.9 Enforcement of Award. The arbitration award shall be final and
shall bind the parties. Any award may be enforced by an action filed in the
San Diego Superior Court or the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx of
California. For purposes of this arbitration provision, the parties hereby
agree to submit to the jurisdiction of these courts and hereby waive any or
all objections as to personal jurisdiction, subject matter jurisdiction and/or
venue with respect to such courts. In the event any award cannot be satisfied
by Saint Xxxxxxx, SportPark or Boreta, Callaway Golf in its sole discretion
may elect to have the award added to the option price in accordance with the
terms of the Option Agreement.
9. Post-Closing Covenants.
9.1 Remaining Conditions to Closing. Saint Xxxxxxx shall use its
best efforts to satisfy any Conditions to Closing set forth in Section 6 that
have not been satisfied prior to or at the time of Closing.
9.2 Holdback. The Holdback shall be retained by CGV until it has
determined, in its sole discretion, that AAG has all rights, entitlements, and
other tangible and intangible assets reasonably necessary to operate the
business of AAG (the "Required Assets") and that the conditions set forth in
Sections 6.3 and 6.4 have been satisfied. Any deficiency in the Required
Assets shall be treated as a Loss under Section 7.2.1; shall be subject to the
notice and dispute resolution provisions of Sections 7.2.2 and 8; and any such
Loss may be offset against the Holdback. If the conditions set forth in
Section 6.3 and 6.4 have been satisfied by June 5, 1998, then Two Hundred
Fifty Thousand Dollars ($250,000) of the Holdback after deduction for Losses,
shall be released to Saint Xxxxxxx. If the conditions set forth in Section
6.3 and 6.4 have been satisfied by August 5, 1998, then the balance of the
Holdback after deduction for Losses, shall be released to Saint Xxxxxxx. The
amount of any Claim for a Loss, including, without limitation, a Loss related
to a deficiency in the Required Assets, which has not been finally determined
19
pursuant to Section 7.2.2 or Section 8 shall not be subject to the preceding
two sentences and no distribution, if any, shall be made until the Claim is
resolved. If the conditions set forth in Section 6.3 and 6.4 have not been
satisfied by June 5, 1998 or August 5, 1998, no release of the balance of the
Holdback, if any, shall be made until the conditions set forth in Section 6.3
and 6.4 have been satisfied. Release of the Holdback, or any portion
thereof, shall not release Saint Xxxxxxx from any of its indemnity obligations
under this Agreement.
9.3 Pepsi Sponsor Agreement. Saint Xxxxxxx and Pepsi-Cola Company
("Pepsi-Cola") entered into a Sponsor Agreement, dated December 4, 1997
("Sponsorship Agreement") whereby Pepsi-Cola agreed to pay to Saint Xxxxxxx a
sum of $1,250,000, payable in installments, in return for Saint Xxxxxxx'
granting exclusive rights to Pepsi-Cola to have Pepsi-Cola's beverage products
distributed, represented, and promoted throughout the All-American SportPark.
Of the sum due Saint Xxxxxxx under the Sponsorship Agreement, AAG will be
allocated and Saint Xxxxxxx will pay $25,000 to AAG for the period from
January 1, 1998 to June 30, 1998 from the first payment received by Saint
Xxxxxxx. After June 30, 1998 all payments received by Saint Xxxxxxx shall be
allocated between AAG and SportPark based upon the number of gallons of syrup
used at each facility. For example, if the total syrup used for the period
ending December 31, 1998 was 1,000 gallons and 250 gallons has been used at
the Golf Center, AAG would be entitled to 25% of any payment received by Saint
Xxxxxxx. Within ten (10) days of Saint Xxxxxxx' receipt of monies from
Pepsi-Cola pursuant to the Sponsor Agreement, Saint Xxxxxxx shall remit to AAG
its share of the revenue from Pepsi-Cola sales.
9.4 Press Release and Announcements. Unless required by law (in
which case each Party agrees to consult with the other Parties prior to any
such disclosure as to the form and content of such disclosure), no press
releases or other releases of information related to this Agreement or the
transactions contemplated hereby will be issued or released without the
consent of AAG, Callaway Golf, and CGV.
9.5 Confidentiality. Upon the Closing, the Saint Xxxxxxx shall
return to Callaway Golf and keep confidential all information and materials
regarding Callaway Golf reasonably designated by Callaway Golf as confidential
(except to the extent (i) disclosure of such information is required by law,
(ii) the information was previously known to Saint Xxxxxxx or (iii) the
information becomes publicly known except through the actions or inactions of
Saint Xxxxxxx). Saint Xxxxxxx agrees not to disclose or use at any time,
either during Saint Xxxxxxx' consultancy with AAG or thereafter, any
Confidential Information (whether or not such information is or was developed
by Saint Xxxxxxx), except to the extent that such disclosure or use is
directly related to and required by the performance of Saint Xxxxxxx' duties
to AAG. Saint Xxxxxxx further agrees to take all appropriate steps to
safeguard such Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft. In the event Saint Xxxxxxx is required by
law to disclose any Confidential Information, it shall promptly notify
Callaway Golf in writing, which notification shall include the nature of the
legal requirement and the extent of the required disclosure, and shall
cooperate with AAG and Callaway Golf to preserve the confidentiality of such
information consistent with applicable law.
9.6 Maintenance of 3-Acre Vacant Land. If used by Saint Xxxxxxx
and/or SportPark, Saint Xxxxxxx and/or SportPark shall maintain the
approximately 3-acre vacant parcel of land located at the south entrance to
the Golf Center so that it shall be free of garbage, mobile trailers and
debris and shall have a clean, neat and orderly appearance.
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9.7 Signage. Saint Xxxxxxx and SportPark acknowledge that neither
shall have any right to place any signs, billboards, or other advertising
(including, without limitation, the proposed entry pylon sign with 40'
electronic message board) on the premises occupied by AAG premises unless AAG
gives its prior written consent which shall be in AAG's sole and absolute
discretion.
9.8 Severance Obligations. Saint Xxxxxxx shall be pay all known
severance obligations related to the employees of AAG employed as of the
Closing Date.
9.9 No Contracting. Saint Xxxxxxx, SportPark and Boreta shall not
at any time after the Closing enter into any contract, agreement or lease
which binds or purports to bind AAG, Callaway Golf, CGV or the Golf Center.
Saint Xxxxxxx, SportPark and Boreta acknowledge they have no right to bind or
purport to bind AAG, Callaway Golf, CGV or the Golf Center.
9.10 Multiparty Contracts. The parties hereto acknowledge that
certain contracts licenses, accounts and/or entitlements (i) for the benefit
of AAG or the Golf Center may be in the name of Saint Xxxxxxx or SportPark or
(ii) for the benefit of Saint Xxxxxxx or SportPark may be in the name of AAG.
Such contracts may be, by way of example and not be way of limitation,
contracts for trash removal, pay phones, water entitlement, the Sponsorship
Agreement, the Agreement between and Saint Xxxxxxx and Xxxxxxx, etc. The
Parties agree to use their reasonable best efforts to cause individual
contracts, licenses, accounts and/or entitlements to be assigned to the Party
which will benefit from the services or rights after the Closing.
9.11 Water Rights. SportPark and Saint Xxxxxxx recognize the
unique need for water required by the Golf Center and covenant and agree not
to engage in or permit any activity related to the All-American SportPark
which will restrict the amount of water required by AAG or the Golf Center to
operate the Golf Center in a first class, well maintained and garden green
manner. SportPark and Saint Xxxxxxx shall cause this covenant regarding water
rights to pass to all successors-in-interest to the All-American SportPark
and/or any other lessor of the premises upon which the All-American SportPark
is located.
9.12 Encroachment of Parking. The parking lot for the SportPark
encroaches upon the property of AAG. After the Closing, AAG and SportPark
will negotiate in good faith to agree upon a license whereby SportPark may use
the encroachment for as long as Saint Xxxxxxx or SportPark operate the
All-American SportPark.
9.13 Irrigation Computer System. The irrigation computer system
for the Golf Center is located on the property of the SportPark. SportPark
hereby grants AAG a license to access the irrigation computer system at all
times. AAG and SportPark shall execute a license for this purpose after the
Closing.
9.14 Right of First Refusal. After the Closing, AAG and Saint
Xxxxxxx shall enter into a Right of First Refusal Agreement which grants AAG a
right of first refusal to designate the name of the putting green at the
SportPark.
9.15 Further Assurances. If at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement or the transactions contemplated hereby, each of the Parties will
21
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party may reasonably request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 7 above).
10. Definitions. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"GAAP" means generally accepted accounting principles.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Confidential Information" means all information of a confidential
or proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that is or was disclosed to, or
developed or learned by, any Seller and that relates to the business,
products, services or research or development of the Company or its
Subsidiaries or their respective suppliers, distributors or customers.
Confidential Information includes, but is not limited to, the following: (i)
internal business information (including information relating to strategic and
staffing plans and practices, business, training, marketing, promotional and
sales plans and practices, cost, rate and pricing structures and accounting
and business methods); (ii) identities of, individual requirements of,
specific contractual arrangements with, and information about, the Company's
suppliers, distributors and customers and their confidential information;
(iii) trade secrets, know-how, compilations of data and analyses, techniques,
systems, formulae, research, records, reports, manuals, documentation, models,
data and data bases relating thereto; (iv) inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and
all similar or related information (whether or not patentable) and (v) other
Intellectual Property Rights. Confidential Information shall not include
information that a Seller can demonstrate is publicly known through no
wrongful act or breach of any obligation of confidentiality or was rightfully
received by such Seller from a third party without a breach of any obligation
of confidentiality by such third party.
"Environmental Lien" shall mean any Lien, whether recorded or
unrecorded, in favor of any governmental entity, relating to any liability of
the Company arising under any Environmental and Safety Requirements.
"Environmental and Safety Requirements" shall mean all federal,
provincial, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law, in
each case concerning public health and safety, worker health and safety and
pollution or protection of the environment (including, without limitation, all
those relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, Release, threatened Release, control or cleanup of any
hazardous or otherwise regulated materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise,
radiation or radon), each as amended and as now or hereafter in effect.
"Golf Center" means the business operated by AAG.
22
"Indebtedness" means at a particular time, without duplication, (i)
any indebtedness for borrowed money or issued in substitution for or exchange
of indebtedness for borrowed money, (ii) any indebtedness evidenced by any
note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than
trade payables and other current liabilities incurred in the ordinary course
of business which are not more than six months past due), (iv) any commitment
by which a Person assures a creditor against loss (including contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including guarantees in the
form of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a Lien on a Person's assets and (viii) any unsatisfied obligation
for "withdrawal liability" to a "multiemployer plan" as such terms are defined
under ERISA.
"Intellectual Property" means (a) inventions, whether ir not
patentable, whether or not reduced to practice, and whether or not yet made
the subject of a pending patent application or applications, (b) ideas and
concepts of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application or
applications, (c) national (including the United States) and multinational
statutory invention registrations, patent, patents registrations and patent
application (including all reissue, division, continuations,
continuations-in-part, extensions, and reexaminations) and all rights therein
provided by international treaties or conventions and all improvements to the
inventions disclosed in which such registration, patent, or application, (d)
trademarks, service marks, trade dress, logos, trade names, and corporate
names, whether or not registered, including all common law rights, and
registration and applications for registration thereof, including, but not
limited to, all marks registered in the United States Patent and Trademark
Office, the Trademark Offices of the States and Territories of the United
State of America, and the Trademark Office of other nations throughout the
world, and all rights therein provided by international treaties or
conventions, (e) copyrights (registered or otherwise) and registrations and
applications for registration thereof, and all rights therein provided by
international treaties of conventions, (f) computer software, including,
without limitation, source code, operating systems and specifications, data,
data bases, filed, documentation and other materials related thereto, (g)
trade secrets and confidential, technical and business information (including
idea formulas, compositions, inventions, and conceptions of inventions where
patentable or unpatentable and whether or not reduced to practice), (h)
whether or not confidential, technology (including know-how and show-how),
manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works,. financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (i) copies and tangible embodiments of all the
foregoing, in whatever form or medium, (j) all right to obtain and right to
apply for patens, and to register trademarks and copyrights, and (k) all
rights to xxx or recover and retain damages and costs and attorney's fees for
present and past infringement of any of the foregoing.
23
"Knowledge" or the phrase "to the Knowledge" means the actual
knowledge, information and belief of Saint Xxxxxxx, its officers, directors
and employees after due inquiry as a reasonably prudent person and/or
corporation would conduct or commission in light of prevailing facts and
circumstances.
"Lien" or "Liens" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any filing or agreement to file
a financing statement as debtor under the Uniform Commercial Code or a similar
statute (other than to reflect ownership by a third party of property leased
to the Company under a lease which is not in the nature of a conditional sale
or title retention agreement), or any subordination arrangement in favor of
another Person.
"Membership Interest" means (i) Saint Xxxxxxx' entire interest as a
member in AAG, including all right, title and interest of Saint Xxxxxxx as a
member in AAG and all rights and interests of any kind or nature under the
Operating Agreement as a member, including without limitation all voting,
inspection, management and rights in specific AAG property; (ii) any and all
obligations of AAG to Saint Xxxxxxx as a member or on account of Saint
Xxxxxxx' membership interest of any kind whatsoever, including without
limitation all accounts, fees, general intangibles, chattel paper, documents,
and promissory notes and other instruments, including all rights with respect
any security therefore or guaranties or other securities in respect thereof;
and (iii) all dividends, distributions and earnings arising out of any of the
foregoing and all additions, replacements and substitutions to any and all of
the foregoing.
"Material Adverse Effect" means a material and adverse effect upon
the business, operations, assets, liabilities, financial condition, operating
results, cash flow, prospects, net worth or employee, customer or supplier
relations of the Company.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Release" shall have the meaning set forth in CERCLA.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity
of which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof, or (ii) if a
limited liability company, partnership, association or other business entity,
a majority of the partnership or other similar ownership interest thereof is
at the time owned or controlled, directly or indirectly, by that Person or one
or more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general
24
partner of such limited liability company, partnership, association or other
business entity.
"Tax" or "Taxes" means federal, provincial, state, county, local,
foreign or other income, business, assets, corporate capital, social services,
gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or
add-on minimum, estimated and other taxes, assessments, or levies of any kind
whatsoever (including deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.
"Tax Return" means any return, information report, election forms,
or filing with respect to Taxes, including any schedules attached thereto and
including any amendment thereof.
11. Miscellaneous.
11.1 No Merger/Ratification. It is the intent of the Parties that
upon execution and delivery of the Assignment of Membership Interest and the
consummation of the transactions contemplated by this Agreement, that Callaway
Golf's and CGV's interest in the Membership Interest shall not merge with
Callaway Golf's security interest in such Membership Interest as created by
and as set forth in the Loan Documents and that Callaway Golf and its
successors and assigns, shall continue to enjoy all rights and remedies set
forth in the Loan Documents, including the right to foreclose on the
Membership Interest. Callaway Golf and CGV hereby acknowledge and agree that
the Membership Interest is pledged to Callaway Golf under the Loan Documents,
agree to be bound by the Membership Interest Security Agreement and to any
original parties thereto, and agree to execute such other documents as
Callaway Golf shall request to further evidence the foregoing or validity
thereto, including without limitation financing statements. The Parties
hereby ratify and affirm all of their respective obligations under the Loan
Documents.
11.2 Fees and Expenses. Each Party shall pay all of its own fees
and expenses (including fees and expenses of legal counsel, accountants,
investment bankers and other representatives and consultants) in connection
with this Agreement and the consummation of the transactions contemplated
hereby. If any legal action or other proceeding relating to this Agreement,
the agreements contemplated hereby, the transactions contemplated hereby or
thereby or the enforcement of any provision of this Agreement or the
agreements contemplated hereby is brought against any Party, the prevailing
Party in such action or proceeding shall be entitled to recover all reasonable
expenses relating thereto (including attorneys' fees and expenses) from the
Party against which such action or proceeding is brought in addition to any
other relief to which such prevailing Party may be entitled.
11.3 Special Remedies and Enforcement. Each Party recognizes and
agrees that a breach by one of the Parties ("Breaching Party"), of any of the
covenants set forth in this Agreement could cause irreparable harm to the
other Parties, that the Parties' remedies at law in the event of such breach
would be inadequate, and that, accordingly, in the event of any such breach a
restraining order or injunction or both may be issued against the Breaching
Party in addition to any other rights and remedies which are available to the
Parties. If this Section 11.3 is more restrictive than permitted by
applicable Law, this Section 11.3 shall be limited to the extent required by
such Law.
25
11.4 Entire Agreement. Modifications. This Agreement, together
with exhibits and schedules attached hereto, contains the entire agreement
between the parties hereto with respect to the transactions contemplated
hereby, and contains all of the terms and conditions thereof and supersedes
all prior agreements and understandings relating to the subject matter hereof.
No changes or modifications of or additions to this Agreement shall be valid
unless the same shall be in writing and signed by each party hereto.
11.5 Waivers. No waiver of any of the provisions of this Agreement
shall be deemed to be or shall constitute a waiver of any other provision of
this Agreement, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver of any provision of this Agreement shall be
binding on the parties hereto unless it is executed in writing by the party
making the waiver.
11.6 Successors and Assigns.
11.6.1 This Agreement and all covenants and agreements
contained herein and rights, interests or obligations hereunder, by or on
behalf of any of the Parties hereto, shall bind and inure to the benefit of
the respective successors and assigns of the Parties hereto whether so
expressed or not.
11.6.2 Callaway Golf, CGV and AAG may assign their rights
under this document. Saint Xxxxxxx, SportPark and Boreta may not, voluntarily
or by operation of law, assign or otherwise transfer any of his, her or its
rights or obligations under this Agreement, without obtaining the prior
written consent of all other parties hereto. Any attempted assignment in
violation of this Agreement shall be void and of no effect.
11.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
to be prohibited by, illegal or unenforceable under applicable law in any
respect by a court of competent jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or illegality or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.8 Counterparts. This Agreement may be executed simultaneously
in counterparts (including by means of telecopied signature pages), any one of
which need not contain the signatures of more than one Party, but all such
counterparts taken together shall constitute one and the same Agreement.
11.9 Descriptive Heading; Interpretation. The headings and
captions used in this Agreement and the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized terms used in any Schedule
or Exhibit attached hereto and not otherwise defined therein shall have the
meanings set forth in this Agreement. The use of the word "including" herein
shall mean "including without limitation." The Parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
26
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty or covenant.
11.10 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties and their permitted successors and assigns and nothing
herein expressed or implied shall give or be construed to give any Person,
other than the Parties and such permitted successors and assigns, any legal or
equitable rights hereunder.
11.11 Schedules. Nothing in any Schedule attached hereto shall be
adequate to disclose an exception to a representation or warranty made in this
Agreement unless such Schedule identifies the exception with particularity.
Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be adequate to
disclose an exception to a representation or warranty made in this Agreement,
unless the representation or warranty has to do with the existence of the
document or other item itself. No exceptions to any representations or
warranties disclosed on one Schedule shall constitute an exception to any
other representations or warranties made in this Agreement unless the
substance of such exception is disclosed as provided herein on each such other
applicable Schedule or a specific cross-reference to a disclosure on another
Schedule is made.
11.12 Cooperation on Tax Matters. The Parties shall cooperate
fully, as and to the extent reasonably requested by each Party and at the
requesting Party's expense, in connection with any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon any Party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. The Parties agree (i) to retain all books and records with respect
to Tax matters pertinent to AAG relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by any Party, any extensions thereof) applicable
to such taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give each Party reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if any Party so requests, the other party as the case may be,
shall allow such party to take possession of such books and records.
11.13 Schedules and Exhibits. All Schedules and Exhibits attached
hereto or referred to herein are hereby incorporated in and made a part of
this Agreement as if set forth in full herein.
11.14 Governing Law. This Agreement is made and shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of California, without regard to the conflict of laws principles
thereof, as the same apply to agreements executed solely by residents of
California and wholly to be performed within California. This Agreement shall
be interpreted in accordance with and any disputes hereunder governed by the
laws of the State of California.
11.15 Authority. Each of the persons executing this Agreement
represents and warrants that it is authorized to execute this Agreement and
the entity on whose behalf they are signing is bound by the terms hereof.
27
11.16 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, one day after being sent to the recipient by
reputable overnight courier service (charges prepaid), upon machine-generated
acknowledgment of receipt after transmittal by facsimile or five (5) days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Parties at the addresses indicated below
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
To Callaway Golf, Callaway Golf Company
CGV or AAG: 0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxx, President and Chief
Executive Officer
With a copy to: Callaway Golf Company
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. XxXxxxxxx, Executive Vice
President, Licensing, Chief Legal Officer
and Secretary
To Saint Xxxxxxx, Saint Xxxxxxx Golf Corporation
SportPark, or Boreta: 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxx Xxxxxx, President
With a Copy to: Xxxxxx X. Xxxxxxx, Esq.
Gondecki & Del Xxxxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
11.17 No Strict Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties, and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
11.18 Incorporation of Recitals. The Recitals to this Agreement
are incorporated herein by this referenced with the same force and effect as
if set forth in full herein.
11.19 Brokers. No broker, finder, or investment banker is entitled
to any brokerage, finder's, or other fee or commission in connection with the
transactions hereunder based upon arrangements made by or on behalf of any
party to this Agreement.
[The balance of this page has been intentionally left blank]
28
IN WITNESS WHEREOF, the parties hereto have executed this Membership
Interest Purchase Agreement on the date first written above.
BORETA
By:/s/ Xxx Xxxxxx
Xxx Xxxxxx
CGV, INC., a California corporation
By:/s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx, President and Chief
Executive Officer
By:/s/ Xxxxxx XxXxxxxxx
Its: Secretary and Chief Legal Officer
CALLAWAY GOLF COMPANY, a California
corporation
By:/s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx, President and
Chief Executive Officer
By:/s/ Xxxxxx XxXxxxxxx
Its: Secretary and Chief Legal Officer
SAINT XXXXXXX GOLF CORPORATION, a
Nevada corporation
By:/s/ Xxx Xxxxxx
Xxx Xxxxxx, President
By:/s/ Xxxx Xxxxxx
Its: Chairman of the Board
ALL-AMERICAN SPORTPARK, INC., a
Nevada corporation
By: /s/ Xxx Xxxxxx
Its: General Manager, CEO, Secretary and Treasurer
By:/s/ Xxxx Xxxxxx
Its: Assistant General Manager
ALL-AMERICAN GOLF LLC, a California
limited liability company
By:/s/ Xxx Xxxxxx
Xxx Xxxxxx, President
Saint Xxxxxxx Golf Corporation,
a Nevada corporation, Manager
29
