ASSET
PURCHASE AGREEMENT
BY AND BETWEEN
THREE GROVE PARTNERS
SELLER,
AND
LAKE GROVE FAMILY GOLF CENTERS, INC.,
PURCHASER
PREMISES:
000 XXX XXXXXXXX XXXX
XXXXXXX XXXXXX, XXX XXXX
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INDEX OF EXHIBITS:
EXHIBIT A LEGAL DESCRIPTION OF PREMISES
EXHIBIT B PARTIAL DESCRIPTION OF IMPROVEMENTS AND PERSONAL PROPERTY
EXHIBIT C CONTRACTS
EXHIBIT D GROUND LEASE AGREEMENT
EXHIBIT E ESCROW AGREEMENT
EXHIBIT F PERMITTED EXCEPTIONS
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ASSET
PURCHASE AGREEMENT
------------------
ASSET PURCHASE AGREEMENT (this "Agreement"), made effective as of the
1st day of June, 1997 (the "Effective Date"), by and between THREE GROVE
PARTNERS, a New York limited partnership having an address at c/o Xxxxxx X.
Xxxxxx, Xx., 00 Xxxxxx Xx., Xxxxxx Xxxxx, Xxx Xxxx 00000 ("Seller"), and LAKE
GROVE FAMILY GOLF CENTERS, INC., a New York corporation having an address at
000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000 ("Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller is the owner of certain real property located at 000
Xxx Xxxxxxxx Xxxx Xxxxxxx Xxxxxx, Xxx Xxxx, and more particularly described on
Exhibit A attached hereto and made a part hereof (the "Premises");
WHEREAS, Seller operates a golf course and related facilities at the
Premises under the name "The Ponds at Lake Grove" (the "Business"); and
WHEREAS, Seller wants to lease the Premises (the land only), and sell
the improvements upon and to the Premises and certain other assets, to
Purchaser, and Purchaser wants to lease the Premises (the land only), and
purchase the improvements upon and to the Premises and certain other assets,
from the Seller, on the terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of the respective premises, mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and
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sufficiency of which are hereby acknowledged, the parties hereto agree to the
foregoing and as follows:
1. Agreement to Sell and Purchase the Improvements and Certain Other
Assets.
1.1 Property to be Purchased by Purchaser. Seller agrees to sell
and convey to Purchaser, and Purchaser agrees to purchase and acquire from
Seller, upon the terms and conditions hereinafter set forth, all of Seller's or
its affiliates' right, title and interest in and to the following property
(collectively, the "Property"):
1.1.1 all buildings, furnishings, fixtures, machinery,
equipment, vehicles, inventories, supplies, sales, marketing and instructional
materials, trade names, logos, and other property and improvements located
upon, attached or appurtenant to, or otherwise used in connection with the
occupancy and operation of the Premises and/or Business, that are owned by
Seller or its affiliates, wherever located, including without limitation the
items described on Exhibit B attached hereto and made a part hereof (the
"Improvements and Personal Property"), but excluding improvements to the golf
course such as cart paths, roadways, greens, sprinkler systems and the like
(the "Golf Course Improvements");
1.1.2 the files, books, notices, records, reports, studies,
plans, drawings, pictures, correspondence, and other records received, used or
maintained by Seller or its affiliates in connection with the ownership and/or
operation of the Premises and the Business (collectively, the "Records");
1.1.3 any consents, authorizations, variances, waivers,
licenses, certificates, permits, approvals or similar items held by or granted
to Seller or its affiliates in connection with
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the ownership of the Premises or operation of the Business except permits or
licenses which are not assignable (collectively, the "Permits");
1.1.4 the contracts, leases and other agreements of or
relating to the Premises and/or Business described on Exhibit C attached hereto
and made a part hereof, except to the extent the same relate solely to any
Retained Assets or Retained Liabilities (as hereinafter defined) (the
"Contracts");
1.1.5 all accounts receivable of Seller arising out of the
sale of goods or services rendered in connection with the Business on or after
the Effective Date;
1.1.6 any manufacturers' and vendors' warranties and
guarantees, and all other claims, rights, and actions relating to the Premises,
Property or Business, except to the extent the same relate solely to any
Retained Assets or Retained Liabilities (the "Claims"); and
1.1.7 any other properties and assets of every kind and
nature, real or personal, tangible or intangible, relating in any way
whatsoever to possession, use and operation of the Premises or the Business,
except to the extent the same relate solely to the Retained Assets or Retained
Liabilities.
1.2 Assets to be Retained by Seller. Anything herein to the
contrary notwithstanding, Seller shall not sell, and Purchaser shall not
acquire, the following assets of Seller (the "Retained Assets"):
1.2.1 fee simple title to the Premises (land only) and all
Golf Course Improvements;
1.2.2 all trade accounts receivable arising out of the sale
of goods or services prior to the Effective Date;
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1.2.3 any rights of Seller with respect to insurance
policies owned by Seller or for which Seller is the named insured; and
1.2.4 all cash, funds in bank accounts and cash equivalents
existing as of the Effective Date.
1.3 Assumption of Certain Liabilities. Purchaser shall assume and
agree to pay and discharge when due, all liabilities and obligations of Seller
under the Contracts to the extent the same arise from and after the Closing
Date (as hereinafter defined) (the "Assumed Liabilities"), including equipment
leases for, and financing secured by, equipment transferred to Purchaser.
1.4 Liabilities to be Retained by Seller. Seller shall retain,
indemnify and hold Purchaser harmless against, and Purchaser shall not assume,
perform, discharge or pay, any liabilities or obligations of any nature
whatsoever in connection with or relating to the Property, Premises, Seller or
Business, or any predecessor owner or operator of the Premises, Property or
Business, which liabilities or obligations accrue prior to the Closing Date
(the "Retained Liabilities"). Notwithstanding the foregoing, operating expenses
incurred by Seller in the ordinary and customary course of the possession, use
and operation of the Premises, Property and Business on or after the Effective
Date and prior to the Closing Date shall be included in the Adjustment as
defined and provided below.
2. Lease Of Premises. Concurrently with or prior to the closing of the
transactions described herein (the "Closing"), Seller shall lease the Premises
to Purchaser pursuant to the Ground Lease Agreement attached as Exhibit D
hereto (the "Lease").
3. Consideration. In consideration for the sale and conveyance of the
Property, Purchaser shall pay to Seller at Closing $2,000,000.00 (the "Purchase
Price"), payable in cash,
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certified or bank check or wire transfer of funds, $100,000.00 of which shall
be placed in escrow to be held and distributed in accordance with the Escrow
Agreement, attached hereto as Exhibit E (the "Escrow Agreement").
4. Seller will convey the Property to Purchaser, free and clear of any
and all liens, charges, encumbrances, pledges, security interests, agreements
and other interests and adverse claims (collectively, "Encumbrances"), other
than the matters set forth in Exhibit F attached hereto and made a part hereof
(the "Permitted Exceptions").
5. Apportionments.
5.1 Possession and operation of the Premises, Property and
Business shall remain with Seller until the Closing Date; however, the benefits
and burdens of the possession, use and operation of the Premises, Property and
Business shall be apportioned to the Effective Date as hereinafter provided. As
an adjustment to be made at Closing, (i) all operating expenses incurred by
Seller in the ordinary and customary course of the possession, use and
operation of the Premises, Property and Business (i.e., real estate taxes,
utilities, cost of inventories, advertising, collections, hired services,
insurance, miscellaneous expenses, postage, repairs and maintenance, supplies,
taxes and wages, but specifically not including interest or principal on
indebtedness, professional fees and expenses, travel, lodging, or
depreciation), and (ii) all income of Seller relating to the possession, use or
operation of the Premises, Property and Business, shall be apportioned between
Seller and Purchaser as of the Effective Date based on the portion of each such
expense or revenue attributable to the period falling before the Effective Date
on the one hand, for which Seller shall bear the responsibility and receive the
benefit, and the portion of each such expense or revenue attributable to the
period falling on or after the Effective Date, on the other hand, for which
Purchaser shall bear
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the responsibility and receive the benefit (the "Adjustment"). Notwithstanding
the foregoing, while all operating expenses incurred by Seller in the ordinary
and customary course of the possession, use and operation of the Premises,
Property and Business incurred on or after the Effective Date shall be included
in the Adjustment, such liabilities and obligations, and all other liabilities
and obligations for which Seller shall be liable pursuant to this Section,
shall be included within the meaning of the term "Retained Liabilities" for
which Purchaser shall not be liable or responsible.
5.2 To the extent that any of the prorations made pursuant to
Section 5.1 are based upon estimates of any expense or revenue incurred or
received prior to Closing, or either party discovers any errors or omissions in
respect of the Adjustment, Seller and Purchaser agree to adjust such prorations
and make any resulting payments promptly upon confirmation by Seller or
Purchaser, as the case may be, of the actual amount of any such expense or
revenue provided notice of such adjustment is given by one party to the other
within one (1) year after Closing.
5.3 Seller and Purchaser shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article shall survive Closing.
6. The Closing.
6.1 The Closing of the transaction provided for in this Agreement
shall take place simultaneously with the execution and delivery of this
Agreement (the actual date of the Closing being referred to herein as the
"Closing Date").
6.2 At the Closing, Seller shall deliver or cause to be delivered
to Purchaser physical possession of the Property (receipt of which may be
actual or constructive) and the following:
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6.2.1 a xxxx of sale conveying, transferring and selling to
Purchaser all right, title and interest of Seller in and to all of the Property
which is personal property, and a deed conveying, transferring and selling to
Purchaser all right, title and interest of Seller in and to all of the Property
which is real property, which xxxx of sale and deed shall each contain a
warranty that such property is free and clear of all Encumbrances other than
the Permitted Exceptions, duly executed and acknowledged by Seller;
6.2.2 an assignment and assumption agreement (the
"Assignment and Assumption Agreement") assigning to Purchaser all of Seller's
right, title and interest in and to the Contracts, the Permits and the Claims,
duly executed and acknowledged by Seller;
6.2.3 a settlement statement (the "Settlement Statement")
setting forth the amounts paid by or on behalf of and/or credited to each of
Purchaser and Seller pursuant to this Agreement;
6.2.4 the Escrow Agreement, duly executed and acknowledged
by Seller;
6.2.5 the Lease, duly executed and acknowledged by Seller;
6.2.6 evidence that the Management Agreement between the
Seller and Leisure Complexes, Inc. has been terminated;
6.2.7 a Certificate or Certificates of Occupancy for all
Improvements;
6.2.8 original counterparts of each of the Contracts;
6.2.9 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;
6.2.10 keys to all locks relating to the Property,
appropriately labeled;
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6.2.11 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Seller to Purchaser pursuant
to any of the other provisions of this Agreement; and
6.2.12 such other documents as may be reasonably required by
Purchaser's counsel in connection with this transaction.
6.3 At Closing, Purchaser shall deliver or cause to be delivered
to Seller the following:
6.3.1 the cash consideration referred to in Section 2
hereof;
6.3.2 the Assignment and Assumption Agreement, duly executed
and acknowledged by Purchaser;
6.3.3 the Settlement Statement, duly executed and
acknowledged by Purchaser;
6.3.4 the Escrow Agreement, duly executed and acknowledged
by Purchaser;
6.3.5 the Lease, duly executed and acknowledged by
Purchaser;
6.3.6 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Purchaser to Seller; and
6.3.7 such other documents as may be reasonably required by
Seller's counsel in connection with this transaction.
7. Representations and Warranties.
7.1 Seller represents and warrants to Purchaser as follows:
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7.1.1 Organization; Power and Authority. Seller is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of New York, and has all requisite power and authority to carry on
its business as it is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
7.1.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary action required to be taken on the part of Seller.
This Agreement has been duly and validly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable in
accordance with its terms, except to the extent that such enforceability (a)
may be limited by bankruptcy, insolvency, or other similar laws relating to
creditors' rights generally; and (b) is subject to general principles of
equity.
7.1.3 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been obtained and
except as provided in Schedule 7.1.3 attached hereto and incorporated herein.
7.1.4 Compliance with Applicable Laws. To the best of
Seller's knowledge, Seller is not engaging in any activity or omitting to take
any action as a result of which Seller is in violation of any material law,
rule, regulation, ordinance, statute, order, injunction or decree, or any other
requirement of any court or governmental or administrative body or agency,
applicable to the
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Premises, Property or Business, and neither the execution and delivery by
Seller of this Agreement or of any of the other agreements and instruments to
be executed and delivered by it pursuant hereto, the performance by Seller of
its obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby will result in any such violation. Seller is in
compliance with all material requirements imposed in writing by any insurance
carrier of Seller to the extent such carrier is an insurer or indemnitor of the
Property. Neither the Premises, Property nor Business are subject to any notice
of violation of law, municipal ordinance, orders or requirements issued by any
building department or other governmental agency or subdivision having
jurisdiction.
7.1.5 Permits. All Permits required by any federal, state,
or local law, rule or regulation and necessary for the operation of the
Premises, Property and Business as currently being conducted have been obtained
and are currently in effect. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby (a)
to avoid the loss of any Permit or the violation of any law, regulation, order
or other requirement of law, or (b) to enable Purchaser to continue the
operation of the Premises, Property and Business as presently conducted after
the Closing, except that Permits listed on Schedule 7.1.5 attached hereto and
incorporated herein are not assignable. The current use and occupation of any
portion of the Premises and Property does not violate any of, and, where
applicable, is in material compliance with, the Permits, any applicable deed
restrictions or other covenants, restrictions or agreements including without
limitation, any of the Permitted Exceptions, site plan approvals, zoning or
subdivision regulations or urban redevelopment plans applicable to the
Premises.
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7.1.6 Title to Assets. Seller has good and marketable title
to the Property free and clear of all encumbrances other than the Permitted
Exceptions.
7.1.7 Contracts. Except as set forth on Exhibit C, Seller is
not a party to any leases, contracts, orders or agreements relating to the
Premises, Property or Business (written or otherwise). Exhibit C sets forth a
full and complete description of the Contracts described therein, and none of
such Contracts have been amended or modified except as reflected on said
Exhibits. Seller is not holding any security deposits under any of said
Contracts. Each of the Contracts are in full force and effect and no party
under any such Contract, including Seller, is in default, or has sent or
received notice of default, in any respect of any such Contract.
7.1.8 Condition of the Improvements and Personal Property.
To the best of Seller's knowledge the Improvements and Personal Property are in
good operating condition and repair, ordinary wear and tear excepted, there are
no material structural, mechanical or other defects in the Improvements and
Personal Property, including without limitation any roof leaks.
7.1.9 Environmental Matters.
7.1.9.1 As used in this Agreement "Hazardous Material"
shall mean: (i) any "hazardous substance" as now defined pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. ' 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. ' 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil
and any fraction thereof; (v) natural or synthetic gas usable for fuel; (vi)
any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (vii) any
asbestos, asbestos containing material, polychlorinated biphenyl ("PCB"), or
isomer of dioxin, or any material or thing containing or composed of such
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substance or substances; and (viii) any other pollutant, contaminant, chemical,
or industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Law (as
hereinafter defined) and any other toxic, reactive or flammable chemicals.
7.1.9.2 To the best of Seller's knowledge, there is no
Hazardous Material at, under or on the Premises and or Property and there is no
ambient air, surface water, groundwater or land contamination within, under,
originating from or relating to the Premises and or Property. To the best of
Seller's knowledge, Seller has not, and has not caused to be, manufactured,
processed, distributed, used, treated, stored, disposed of, transported or
handled any Hazardous Material at, on or under the Premises.
7.1.9.3 To the best of Seller's knowledge, Seller has
no obligation or liability imposed or based upon any provision under any
foreign, federal, state or local law, rule, or regulation or common law, or
under any code, order, decree, judgment or injunction applicable to Seller, the
Premises or the Property or any notice, or request for information issued,
promulgated, approved or entered thereunder, or under the common law, or any
tort, nuisance or absolute liability theory, relating to public health or
safety, worker health or safety, or pollution, damage to or protection to the
environment, including without limitation, laws relating to emissions,
discharges, releases or threatened releases of Hazardous Material into the
environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes (hereinafter collectively
referred to as "Environmental Laws").
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7.1.9.4 Seller has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under any Environmental Laws in
respect of the Premises or Property.
7.1.9.5 To the best of Seller's knowledge, the Premises
are not (a) listed or proposed for listing on the National Priority List or (b)
listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List ("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. '
9601(9), or any comparable list maintained by any foreign, state or local
government authority.
7.1.9.6 To the best of Seller's knowledge, there
currently are no, nor have there ever been, underground storage tanks within
the Premises or included in the Property.
7.1.10 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises.
7.1.11 Utilities. All water, storm and sanitary sewer, gas,
electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Purchaser, and the Premises are
serviced by facilities of for all such utilities and the cost of installation
of such facilities has been fully paid.
7.1.12 Access. There are no federal, state, county,
municipal or other governmental plans to change the highway or road system in
the vicinity of the Premises which could materially restrict or change access
from any such highway or road to the Premises or any pending or threatened
condemnation or eminent domain proceedings relating to or affecting the
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Premises or Property. All roads bounding the Premises are public roads and the
Lease is the only instrument necessary to convey to Purchaser full access to
and the right to use such roads freely, as well as to convey all rights
appurtenant to the Premises in such roads.
7.1.13 Insurance Requirements. All requirements or
recommendations by any insurer or by any board of fire underwriters or similar
body in respect of the Premises and Property have been satisfied.
7.1.14 Litigation. Except as set forth on Schedule 7.1.14
attached hereto and incorporated herein, there is no claim, action or
proceeding (zoning, condemnation, insurance claim/adjustment or otherwise) or
governmental investigation pending, or, to the best of Seller's knowledge,
threatened against, or relating to, Seller (insofar as it relates to the
Premises, Property or Business), the Premises, Property or Business or the
transactions contemplated by this Agreement, nor to the best of Seller's
knowledge is there any basis for any such claim, action, proceeding or
investigation. The matters reflected on Schedule 7.1.14 are Retained
Liabilities.
7.1.15 Assessments. There are no special or other
assessments for public improvements or otherwise now affecting the Premises nor
does Seller know of (a) any pending or threatened special assessments affecting
the Premises or Property, or (b) any contemplated improvements affecting the
Premises or Property that may result in special assessments affecting the
Premises or Property.
7.1.16 Employee Agreements. There are no union or employment
contracts or agreements (written or oral) involving any employees of Seller or
its affiliates affecting the Premises, Property or Business which will survive
the Closing.
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7.1.17 Work at the Premises. No services, material or work
have been supplied to the Premises or Property for which payment has not been
made in full except in the ordinary course of the Business.
7.1.18 Full Disclosure. None of the information supplied by
Seller herein or in the exhibits hereto contains any untrue statement of a
material fact or omits to state a material fact required to be stated herein or
necessary in order to make the statements herein, in light of the circumstances
under which they are made, not misleading.
7.1.19 Financial Condition. Seller has delivered to
Purchaser, or will promptly upon their becoming available, true and correct
copies of audited year-end financial statements consisting of balance sheets
and income/expense statements for the Business as of December 31, 1996. Seller
has delivered to Purchaser, or will promptly upon execution hereof deliver,
true and correct copies of monthly operating income/expense reports for the
Business for each full calendar month to date in 1997.
7.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
7.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
7.2.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Purchaser of this Agreement and the
consummation by
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Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary corporate action required to be taken on the part of Purchaser.
This Agreement has been duly and validly executed and delivered by Purchaser
and constitutes the valid and binding obligation of Purchaser, enforceable in
accordance with its terms. The execution, delivery and performance by Purchaser
of this Agreement and the consummation by Purchaser of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (a) violate any provision of any law, rule or regulation to
which Purchaser is subject; (b) violate any order, judgment or decree
applicable to Purchaser; or (c) conflict with or result in a breach of or a
default under any term or condition of Purchaser's Certificate of Incorporation
or By-Laws or any agreement or other instrument to which Purchaser is a party
or by which it or its assets may be bound, except in each case, for violations,
conflicts, breaches or defaults which in the aggregate would not materially
hinder or impair the consummation of the transactions contemplated hereby.
7.3 Survival. The representations and warranties of the parties
made in this Article 7 shall survive the Closing for a period of one (1) year.
8. Further Assurances. At any time and from time to time after the
Closing, Seller shall, at the request of Purchaser, execute and deliver any
further instruments or documents and take all such further action as Purchaser
may reasonably request in order to transfer into the name of Purchaser any and
all Property contemplated to be sold pursuant to this Agreement and to further
consummate the transactions contemplated by this Agreement. This Article shall
survive the Closing.
9. Brokers. Seller and Purchaser warrant and represent to each other
that they dealt with no broker, finder or similar agent or party who or which
might be entitled to a commission or
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compensation on account of introducing the parties, the negotiation or
execution of this Agreement and/or the closing of the transaction provided for
herein. Purchaser and Seller hereby respectively agree to indemnify and hold
harmless the other party from and against all loss, liability, damage and
expense (including, without limitation, attorneys' fees) imposed upon or
incurred by the other party by reason of any claim for commissions or other
compensation for bringing about this transaction by any broker, finder or
similar agent or party who claims to have dealt with the indemnifying party in
connection with this transaction. The provisions of this Article shall survive
the Closing or any termination of this Agreement.
10. Costs and Fees. Documentary stamps or conveyancing taxes, if any,
shall be payable by Seller, and in no event be payable by Purchaser. Any other
similar costs not expressly provided for elsewhere in this Agreement shall be
divided and borne in accordance with the usual practices in the jurisdiction
where the Premises are located. The provisions of this Article shall survive
the Closing.
11. Indemnification.
11.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their respective
successors and assigns, from, against and in respect of any and all losses,
liabilities, deficiencies, penalties, fines, costs, damages and expenses
whatsoever (including without limitation, reasonable professional fees and
costs of investigation, litigation, settlement, and judgment and interest)
("Losses") that may be suffered or incurred by any of them arising from or by
reason of (i) any Retained Liability or other liability or obligation of Seller
which is not an Assumed Liability; (ii) the breach of any representation,
warranty, covenant or agreement of Seller
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contained in this Agreement or in any document or other writing delivered
pursuant to this Agreement; and (iii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses (including without
limitation, interest, penalties, reasonable legal fees and accounting fees)
incident to the foregoing and the enforcement of the provisions of this Section
11.1.
11.2 Subject to the further provisions of this Article, Purchaser
shall protect, defend, hold harmless and indemnify Seller, its partners,
employees and agents, and its successors and assigns from, against and in
respect of any and all Losses that may be suffered or incurred by any of them
arising from or by reason of (i) any of the Assumed Liabilities on and after
the Closing Date, (ii) the breach of any representation, warranty, covenant or
agreement of Purchaser contained in this Agreement or in any document or other
writing delivered pursuant to this Agreement; and (iii) any and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs and expenses
(including without limitation, interest, penalties, reasonable legal fees and
accounting fees) incident to the foregoing and the enforcement of the
provisions of this Section 11.2.
11.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision of
this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such facts
within the Indemnified Party's knowledge with respect to such claim and the
amount thereof (a "Notice of Claim") and, in all events, within one (1) year
after the Closing Date. If, prior
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to the expiration of fifteen (15) days from the mailing of a Notice of Claim,
the Indemnifying Party shall request, in writing, that such claim not be paid,
the Indemnified Party shall not pay the same, provided the Indemnifying Party
proceeds promptly, at its or their own expense (including employment of counsel
reasonably satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the Indemnifying Party
requesting the Indemnified Party not to pay such claim and the Indemnifying
Party's assumption of the defense of such claim at its or their expense, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or other expense subsequently incurred by the Indemnified Party in connection
with the defense thereof. However, the Indemnified Party shall have the right
to participate at its expense and with counsel of its choice in such
settlement, compromise or litigation. The Indemnified Party shall not be
required to refrain from paying any claim which has matured by a court judgment
or decree, unless an appeal is duly taken therefrom and execution thereof has
been stayed, nor shall the Indemnified Party be required to refrain from paying
any claim where the delay in paying such claim would result in the foreclosure
of a lien upon any of the property or assets then held by the Indemnified
Party. The failure to provide a Notice of Claim as provided in this Section
11.3 within one (1) year after the Closing Date shall render such claim void.
11.4 Notwithstanding the foregoing provisions of Section 11,
Seller's liability hereunder shall be limited to $100,000.00. In addition,
Seller shall have no liability hereunder until the aggregate of all claims made
by Purchaser hereunder exceed $10,000.00, in which case Seller shall be liable
for all of such claims and not just the amount thereof in excess of $10,000.00.
12. Bulk Sales. The parties agree to waive the requirements, if any,
of all applicable bulk sales laws. As an inducement to Purchaser to enter into
such waiver, Seller represents and warrants
19
that (a) it will not be rendered insolvent by the transactions contemplated by
this Agreement, (b) all debts, obligations and liabilities relating to the
Property and Business that are not expressly assumed by Purchaser under this
Agreement will be promptly paid and discharged by Seller as and when they
become due, and (c) the sale of the Property pursuant to this Agreement does
not constitute a "bulk sale" within the meaning of applicable law. Seller
agrees to indemnify and hold Purchaser harmless from, and reimburse Purchaser
for, any loss, cost, expense, liability or damage which Purchaser may suffer or
incur by virtue of the noncompliance by Seller or Purchaser with any law
pertaining to fraudulent conveyance, bulk sales or any similar law which might
make the sale or transfer of any part of the Property or Business ineffective
as to creditors of or claimants against Seller.
13. Notices. All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to give
to the other hereunder shall be in writing and shall be delivered by hand,
overnight express carrier, or sent by registered or certified mail, return
receipt requested, postage prepaid, in either event, addressed to the parties
at their respective addresses first above set forth. A copy of any Notice given
by Seller to Purchaser shall simultaneously be given in either manner provided
above to Family Golf Centers, Inc., 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxxx, Esq, General Counsel. A copy of any
Notice given by Purchaser to Seller shall simultaneously be given in either
manner provided above to Ruskin, Moscou, Xxxxx & Faltischek, 000 Xxx Xxxxxxx
Xxxx, Xxxxxxx, XX 00000, ATTN: Xxxxxxx X. Xxxxx. Notices given in the manner
aforesaid shall be deemed to have been given three (3) business days after the
day so mailed, the day after delivery to any overnight express carrier and on
the day so delivered by hand. Either party shall have the right to change its
address(es) for the receipt of Notices by giving Notice to the other party in
either
20
manner aforesaid. Any Notice required or permitted to be given by either party
may be given by that party's attorney.
14. Miscellaneous.
14.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
14.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of New York.
14.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
14.4 This Agreement has been fully negotiated by the parties and
rules of construction construing ambiguities against the party responsible for
drafting agreements shall not apply.
14.5 It is agreed that, except where otherwise expressly provided
in particular Articles or Sections of this Agreement, none of the provisions of
this Agreement shall survive the Closing.
14.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
14.7 This Agreement may not be modified, changed, supplemented or
terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized in
writing or as otherwise expressly permitted herein.
21
14.8 No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof or of any other agreement or provision herein contained. No extension
of the time for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or acts.
14.9 This Agreement may be executed in one or more counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which taken together shall constitute but one and the same original.
[signatures appear on following page]
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SELLER:
THREE GROVE PARTNERS, a New York limited
partnership
By: Grayside Partners, Inc., a New York
corporation, general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PURCHASER:
LAKE GROVE FAMILY GOLF CENTERS, INC., a
New York corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
23
EXHIBIT E
---------
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of __________________________, 1997 (this
"Agreement"), by and among THREE GROVE PARTNERS, a New York limited partnership
having an address at c/o Xxxxxx X. Xxxxxx, Xx., 00 Xxxxxx Xx., Xxxxxx Xxxxx,
Xxx Xxxx 00000 ("Seller"), FAMILY GOLF CENTERS, INC., a Delaware corporation
having an address at 000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000
("Purchaser"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, incorporated
under the laws of the United States of America with executive offices at 0
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (together with its successors, the "Escrow
Agent").
W I T N E S E T H:
- - - - - - - - -
WHEREAS, simultaneously with the execution hereof, Seller and
Purchaser are consummating the transactions contemplated by the Asset Purchase
Agreement dated as of the date hereof (the "Purchase Agreement"), between
Seller and Purchaser;
WHEREAS, pursuant to the Purchase Agreement, Seller is required to
deposit $100,000 into an escrow account to be maintained by Escrow Agent to be
held against any claims for indemnity under Article 11 of the Purchase
Agreement; and
WHEREAS, this is the Escrow Agreement referred to in the Purchase
Agreement. Capitalized terms used in this Escrow Agreement and not otherwise
defined herein shall have the respective meanings given to them in the Purchase
Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Escrow.
1.1 Appointment of Escrow Agent.
1.1.1 Seller and Purchaser hereby appoint Escrow Agent, and
Escrow Agent hereby agrees to serve, as Escrow Agent in accordance with, and
pursuant to, this Agreement.
1.1.2 Escrow Agent shall establish a separate Federally insured,
interest bearing account (the "Escrow Account") for any amounts received by it
hereunder.
1.1.3 All monies, including interest thereon, held by Escrow
Agent in the Escrow Account pursuant to the terms hereof shall be hereinafter
referred to as the "Escrowed Funds".
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1.1.4 Seller shall be responsible for the payment of any income
taxes payable in connection with any interest earned in the Escrow Account.
1.2 Operation of Escrow Account. The parties hereto agree that the
Escrow Account shall operate as follows:
1.2.1 At the Closing, Seller shall deliver or cause to be
delivered to Escrow Agent $100,000.00. Escrow Agent shall hold such amount as
Escrowed Funds in the Escrow Account.
1.2.2 At any time prior to the one (1) year anniversary of the
Closing Date (the "Escrow Period"), Purchaser shall be entitled to give a
notice to Escrow Agent, signed by Purchaser's President or any Vice President
(with a copy to Seller), to the effect that there has been an event entitling
Purchaser to indemnification from Seller pursuant to Article 11 of the Purchase
Agreement, which notice shall specify the amounts owed by Seller pursuant to
the Purchase Agreement, the calculation of such amounts and the basis
therefore.
1.2.3 Twenty (20) days after Escrow Agent has received a notice
pursuant to Section 1.2.2 hereof (or, if not a business day, on the next
business day following such twentieth day) Escrow Agent shall deliver to
Purchaser such portion of the Escrowed Funds as is specified in such notice
unless Seller shall have notified Escrow Agent (with a copy to Purchaser) in
writing before such date that Seller disagrees with Purchaser's determination
that Purchaser is entitled to indemnification with respect to the Purchase
Agreement, which notice shall be set forth in reasonable detail the basis for
such disagreement.
1.2.4 Should any dispute arise with respect to the delivery,
ownership, or right of possession of any of the Escrowed Funds during the
Escrow Period, Escrow Agent, as more fully set forth in Section 3.11 hereof, is
authorized and directed to retain in its possession without liability to anyone
all or any part of the Escrowed Funds until such dispute shall have been
settled either by mutual agreement by the parties concerned or by a final
order, decree, or judgment of a court of competent jurisdiction in the United
States of America and time for appeal has expired and no appeal has been
perfected, but Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings, and may, in its discretion, deposit such Escrowed
Funds with a court of competent jurisdiction in the United States of America
and be relieved of any and all liability to any of the parties hereto upon such
deposit.
1.3 Distribution of Escrowed Funds. Unless a notice under Section
1.2.2 hereof has been given and Escrowed Funds in satisfaction of such notice
have not been delivered to Purchaser, either because the 20-day period has not
yet run out or because a dispute relating to the claim made by such notice is
then pending, the Escrowed Funds or such portion of them as at the time remain
in escrow and is not in dispute, together with all dividends and distributions
received by Escrow Agent with respect thereto, shall be returned to Seller on
the first anniversary of the Closing Date.
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1.4 Termination of Escrow Account. This Agreement and the Escrow
Account will terminate at 5:00 P.M., New York City local time, on the date on
which all of the Escrowed Funds contained in the Escrow Account shall be
distributed as set forth above.
2. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b)
facsimile, or (c) over-night delivery with proper postage prepaid, and
addressed as follows:
If to Purchaser to:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller to:
Three Grove Partners
c/o Xxxxxx X. Xxxxxx, Xx.
00 Xxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Ruskin, Moscou, Xxxxx & Faltischek
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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If to Escrow Agent, to:
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is to be given
may have previously furnished to the others in the above-referenced
manner. Except as otherwise provided herein, no notice or
communication shall be effective until received.
3. Concerning Escrow Agent. To induce Escrow Agent to act hereunder, it is
further agreed by each of Seller and Purchaser that:
3.1 Escrow Agent shall not be under any duty to give the Escrowed
Funds held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Agreement.
3.2 This Agreement expressly sets forth all the duties of Escrow Agent
with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against Escrow Agent. Escrow
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
3.3 Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent from and against any and all losses,
liabilities, claims, actions, damages, and expenses, including reasonable
attorneys' fees and disbursements, arising out of, and in connection with, this
Agreement. Without limiting the foregoing, Escrow Agent shall in no event be
liable in connection with its investment or reinvestment of any cash held by it
hereunder in good faith, in accordance with the terms hereof, including,
without limitation, any liability for any delays (not resulting from gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrowed Funds; or any loss of interest incident to any such delays. This
Section shall survive notwithstanding any termination of this Agreement or the
resignation of Escrow Agent.
3.4 Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument, or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
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3.5 Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in good faith and in accordance with such
advice.
3.6 Escrow Agent does not have any interest in the Escrowed Funds
deposited hereunder, but is serving as escrow holder only. Any payments of
income from the Escrow Account shall be subject to withholding regulations then
in force with respect to United States taxes. This Section shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
3.7 Escrow Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other documents or
instrument held by, or delivered to, it.
3.8 Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
3.9 Escrow Agent at any time may be discharged from its duties and
obligations hereunder by the delivery to it of notice of termination signed by
Purchaser and Seller or at any time may resign by giving written notice to such
effect to Purchaser and Seller. Upon any such termination or resignation,
Escrow Agent shall deliver the Escrowed Funds to any successor escrow agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction if no such successor escrow agent is agreed upon,
whereupon Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Escrow Agreement. The termination
or resignation of Escrow Agent shall take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or (b)
the day that is thirty (30) days after the date of delivery: (i) to Escrow
Agent of the other parties' notice of termination or (ii) to the other parties
hereto of Escrow Agent's written notice of resignation. If at that time Escrow
Agent has not received a designation of a successor escrow agent, Escrow
Agent's sole responsibility after that time shall be to keep the Escrowed Funds
safe until receipt of a designation of successor escrow agent or a joint
written disposition instruction by the other parties hereto or an enforceable
order of a court of competent jurisdiction.
3.10 Escrow Agent shall have no responsibility for the contents of any
writing of any third party contemplated herein as a means to resolve disputes
and may rely without any liability upon the contents thereof.
3.11 In the event of any disagreement among or between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Funds, or in the event that Escrow Agent in good faith is in
doubt as to what action it should take hereunder, Escrow Agent shall be
entitled to retain the Escrowed Funds until Escrow Agent shall have received
(a) a final and non-appealable order of a court of competent jurisdiction in
the United States of America directing delivery of the Escrowed Funds or (b) a
written agreement executed by the other parties hereto directing delivery of
the Escrowed Funds, in which event Escrow Agent shall disburse the Escrowed
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Funds in accordance with such order or agreement. Any court order referred to
in (a) above shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to Escrow Agent to the effect that said court
order is final and non-appealable. Escrow Agent shall act on such court order
and legal opinions without further question.
3.12 As consideration for its agreement to act as Escrow Agent as
herein described, Purchaser shall pay the Escrow Agent's fees determined in
accordance with the terms set forth on Exhibit A hereto (and made a part of
this Escrow Agreement as if herein set forth). In addition, Purchaser and
Seller agree to reimburse Escrow Agent (on a 50/50 basis) for all reasonable
expenses, disbursements, and advances incurred or made by Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses, and
disbursements of its counsel).
4. Miscellaneous.
4.1 Binding Effect. This Escrow Agreement shall be binding upon, and
inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators, and representatives, and shall
not be enforceable by, or inure to the benefit of, any other third party,
except as provided in Section 3.9 hereof with respect to the termination of, or
resignation by, Escrow Agent. No party may assign any of its rights or
obligations under this Agreement without the written consent of the other
parties.
4.2 Choice of Law. This Agreement shall be construed in accordance
with, and governed by, the internal law of the State of New York (without
reference to its rules as to conflicts of law).
4.3 Modification. This Agreement may only be modified by a writing
signed by all of the parties hereto.
4.4 Headings. The section headings herein are for convenience only and
shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles are to Sections and Articles, respectively,
contained herein.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and
the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
THREE GROVE PARTNERS
By: Grayside Partners, Inc., a New York
corporation, general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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