ASSIGNMENT AND ASSUMPTION OF LEASE
----------------------------------
ASSIGNMENT AND ASSUMPTION OF LEASE, made as of the __ day of June,
1997 (this "Agreement"), by and among DIVOT CITY, a California limited
partnership having an address at c/o Xxxxxx Xxxxxx Distribution, 0000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000 ("Assignor"), D.C. MANAGEMENT, INC. having the same
address as the Assignor (the Managing Partner) and MILPITAS FAMILY GOLF
CENTERS, INC., a Delaware corporation having an address at 000 Xxxxxxxxxxx
Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000 ("Assignee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, by Lease dated March 30, 1993 (the "Lease") by and between
Santa Xxxxx County (the "County"), and Assignor, as tenant (which Lease is
attached as Exhibit A-1 hereto), County leased to Tenant a portion of County's
property located in the City of Milpitas, consisting of 16.124 acres, which
property is more particularly described in Exhibit A attached hereto (the
"Premises");
WHEREAS, by License Agreement dated as of December 9, 1993 (the
"License") by and between County and Assignor (which License is attached as
Exhibit A-2 hereto), County granted Assignor a license to landscape and
maintain the property located between the Assignor's golf center and I-880;
WHEREAS, Assignor desires to assign to Assignee its entire interest as
tenant under the Lease and licensee under the License and Assignee desires to
accept such assignment and assume Assignor's obligations under the Lease and
License on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the mutual receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree to
the foregoing and as follows:
1. Assignment and Assumption. On the Closing Date (as hereinafter
defined) Assignor shall assign, set over and transfer to Assignee all right,
title and interest of Assignor in and to the Premises, the Lease and the
License, and Assignee shall assume and agree to perform any and all of the
obligations to be performed by the tenant under the Lease and License (as if
Assignee executed the Lease and the License originally as tenant or licensee,
respectively, thereunder) accruing from and after April 1, 1997 (the "Effective
Date"). Assignee further agrees to be bound by and fully responsible for all of
the covenants, agreements, terms, provisions, and conditions of Assignor or
tenant under the Lease and as licensee under the License to be performed by
Assignor from and after the Effective Date. Assignee agrees that the
obligations assumed hereunder and agreements contained herein shall benefit the
County and its successors and assigns as well as Assignor. At the Closing, ,
Assignor shall deliver possession of the Premises to Assignee, free of all
tenancies or rights of possession.
1
2. Xxxx of Sale. On the Closing Date, Assignor shall sell, assign,
transfer and convey to Assignee, and Assignee shall purchase and acquire from
Assignor, all of Assignor's right, title and interest in and to the following
property (collectively, the "Property"):
2.1 all furnishings, fixtures, machinery, equipment, vehicles and
personalty attached or appurtenant to or used in connection with the Lease that
are owned by Assignor, and all inventories, supplies, sales, marketing and
instructional materials of every kind and description relating to the business
conducted at the Premises (the "Business"), wherever located, including without
limitation, the items described on Exhibit B attached hereto and made a part
hereof (the "Personal Property");
2.2 the files, books, notices and other correspondence from any
governmental agencies, and other records used or employed by Assignor or its
affiliates in connection with the ownership and/or operation of the Business,
other than accounting records, but including copies of such accounting records
relating to the period on or after April 1, 1997 (collectively, the "Records");
2.3 any consents, authorizations, variances, waivers, licenses,
certificates, permits and approvals held by or granted to Assignor in
connection with the ownership of the Lease or operation of the Business
(collectively, the "Permits");
2.4 the contracts, leases and other agreements of or relating to
the operation of the Business described on Exhibit C attached hereto and made a
part hereof (the "Contracts");
2.5 any manufacturers' and vendors' warranties and guarantees,
except to the extent the same relate solely to any Retained Assets or Retained
Liabilities (as hereinafter defined) (the "Claims"); and
2.6 any other properties and assets of every kind and nature,
real or personal, tangible or intangible, relating in any way whatsoever to the
Lease, the License, the Premises or the Business, except to the extent the same
relate solely to the Retained Assets or Retained Liabilities.
3. Assets to be Retained by Assignor. Anything herein to the contrary
notwithstanding, Assignor shall not sell, and Assignee shall not acquire, the
following assets of Assignor (the "Retained Assets"):
3.1 any rights of Assignor with respect to insurance policies
owned by Assignor or for which Assignor is the named insured; and
3.2 all cash, funds in bank accounts and cash equivalents
existing as of the Closing Date.
4. Assumption of Certain Liabilities. Assignee shall assume and agree
to pay and
2
discharge when due all liabilities and obligations of Assignor under the Lease,
the License and the Contracts to the extent the same arise from and after the
Effective Date (the "Assumed Liabilities"). Assignor shall retain, and Assignee
shall not assume, perform, discharge or pay, and shall not be responsible for,
any and all liabilities or obligations of any nature whatsoever in connection
with or relating to the Lease, the License, the Premises or the Property,
Assignor or the Business or any predecessor owner of the Lease, the License,
the Premises or the Property or the Business other than the Assumed Liabilities
(collectively, the "Retained Liabilities").
5. Title; Permitted Exceptions.
5.1 Within five days after the execution of this Agreement,
Assignor shall furnish Assignee with a Preliminary California Land Title
Association Report of the title to the property. Within fifteen days of receipt
of the said report, Assignee shall notify Assignor, in writing, of any
objection to any exception therein. If Assignee makes a timely objection to any
exception, and the exception is not eliminated within ten days of Assignor's
receipt of the objection, this Agreement shall be terminated. Assignee's
failure to object in this manner to any exception shall be deemed an approval
by the Assignee of that exception. All approved exceptions are hereinafter
referred to as "Permitted Exceptions".
5.2 If a search of the title discloses judgments, bankruptcies or
other returns against other persons having names the same as or similar to that
of Assignor, Assignor will on request deliver to the Title Company or Assignee
an affidavit showing that such judgments, bankruptcies or other returns are not
against Assignor, in form sufficient to permit deletion of such exception from
the title policy.
6. Consideration.
6.1 In consideration for the assignment of the Lease, License and
the sale of the Property, at the Closing Assignee shall:
6.1.1 pay to Assignor the sum of $2,200,000.00, subject to
adjustment as provided in this Section 6 and in Section 7.2, payable by the
wire transfer of funds, $100,000.00 of which shall be held in escrow and
distributed in accordance with the Escrow Agreement, in the form attached
hereto as Exhibit F (the "Escrow Agreement"); and
6.1.2 assume the Assumed Liabilities.
6.2 The purchase price shall be reduced by the amount of all
outstanding gift certificates, debit cards, discount cards, prepaid golf
lessons and all other commitments which have not been performed as of the
Closing Date, as reflected on the Settlement Statement.
6.3 The value of the golf ball inventory as of the date hereof is
$4,500 and the value of the food and beverage inventory as of the date hereof
is $350. To the extent that the value of the said inventories on the closing
date is less than the just mentioned values, the purchase price shall be
reduced by such amount and reflected on the Settlement Statement. The said
inventories shall be valued by the parties at cost or market value, which ever
is the lower at
3
the time of closing.
6.4 The parties hereby agree that $ 2,141,885.00 of the purchase
price shall be allocated to the assignment and assumption of the Lease and the
License and that the balance shall be allocated to the Property, including the
Personal Property, Permits, Contracts and Claims.
6.5 The purchase price shall be increased by the net profit of
the business for the period beginning on the Effective Date and ending on the
day immediately preceding the Closing Date. If during such period there is a
loss, no adjustment shall be made.
7. Closing; Adjustments.
7.1 The closing of the transaction provided for in this Agreement
(the "Closing") shall take place as soon as practicable after each of the
conditions set forth in Section 8 have been fulfilled or waived in accordance
herewith (the actual date of the Closing being referred to herein as the
"Closing Date"); provided, however, that in no event shall the Closing Date be
subsequent to July 15, 1997. In the event that the Closing Date does not occur
on or prior to July 15, 1997, this Agreement shall automatically be deemed
terminated and neither party shall have any further liabilities or obligations
hereunder except that each party shall be responsible for paying their own
expenses, including legal fees and Assignee shall pay the cost of the ALTA
Survey and the Phase I environmental study.
7.2 The parties hereto agree that (i) all compensation payable to
the County under the Lease and all other operating expenses of Assignor
relating to the Lease (i.e., cost of goods sold, advertising, collections,
fees, hired services, insurance, miscellaneous expenses, postage, repairs and
maintenance, supplies, taxes, utilities, wages and interest on indebtedness,
but specifically not including professional fees and expenses, travel and
lodging or depreciation), and (ii) all income of Assignor, including accounts
receivable, shall be apportioned between Assignor and Assignee 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,
which Assignor shall bear the responsibility and benefit of, and the portion of
each such expense or revenue attributable to the period falling on or after the
Effective Date, on the other hand, which Assignee shall bear the responsibility
and benefit of (the "Adjustment"). The net Adjustment will be paid by the party
owing the same to the other in cash or by certified or official bank check or
wire transfer. The expenses and liabilities for which Assignor shall be liable
pursuant to this Section shall be included within the meaning of the term
"Retained Liabilities".
7.3 To the extent that any of the prorations made pursuant to
this Article are based upon estimates of payments to be made and/or expenses to
be incurred by Assignee subsequent to the Closing Date, or either party
discovers any errors in or omissions in respect of the Adjustment, Assignor and
Assignee agree to adjust such prorations promptly upon receipt by Assignor or
Assignee, as the case may be, of such payments or of bills or other
documentation setting forth the actual amount of such expenses.
4
7.4 The Assignor hereby agrees that any and all property taxes
which become due and owing on the Premises or Property and which relate to a
period prior to the Effective Date shall upon notice by Assignee to Assignor,
shall be paid promptly by Assignor.
7.5 Assignor and Assignee shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article shall survive the
Closing.
8. Closing Conditions.
8.1 Assignee's obligation to consummate the transactions
contemplated hereby are conditioned on the delivery at or prior to the Closing
of physical possession of the Premises (receipt of which may be actual or
constructive) and the following:
8.1.1 a xxxx of sale conveying, transferring and selling to
Assignee all right, title and interest of Assignor in and to the Personal
Property, which xxxx of sale shall contain a warranty that such property is
free and clear of all Encumbrances other than the Permitted Exceptions;
8.1.2 a settlement statement (the "Settlement Statement")
setting forth the amounts paid by or on behalf of and/or credited to each of
Assignee and Assignor pursuant to this Agreement;
8.1.3 a Certificate or Certificates of Occupancy for all
improvements;
8.1.4 original counterparts of each of the Contracts
described on Exhibit C;
8.1.5 a landlord estoppel and consent to assignment with
respect to the Lease, in the form of Exhibit D attached hereto and signed by
the Lessor under such Lease.
8.1.7 an affidavit (the "FIRPTA Affidavit") duly executed
and acknowledged by Assignor pursuant to Section 1445 (b)(2) of the Internal
Revenue Code of 1986, as amended, stating that Assignor is not a foreign person
within the meaning of such provision;
8.1.8 keys to all locks relating to the Premises,
appropriately labeled;
8.1.9 the Escrow Agreement, executed by Assignor and the
escrow agent named therein, in the form attached hereto as Exhibit E.
8.1.10 evidence that the lease with Golf Mart has been
terminated;
8.1.11 Assignor shall have performed, in all material
respects, all of its agreements contained herein that are required to be
performed by Assignor on or prior to the Closing Date, and Assignee shall have
received a certificate of an Executive Officer of Assignor, dated the Closing
Date, certifying to such effect.
5
8.1.12 The representations and warranties of the Assignor
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct, in all material respects, as of the
Closing, and Assignee shall have received a certificate from Assignor, dated
the Closing Date, certifying to such effect.
8.1.13 an ALTA Survey of the Premises, satisfactory to
Assignee;
8.1.14 a Phase I environmental report disclosing no evidence
of Hazardous Material at, under or on the Premises, or any other environmental
conditions requiring remediation or further testing;
8.1.15 title insurance insuring the leasehold interest of
Assignee;
8.1.16 payment of the cost of all work done through the
Closing with respect to installing and repairing the nets and poles on the
Premises; and
8.1.17 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Assignor to Assignee
pursuant to any of the other provisions of this Agreement.
8.2 Assignor's obligation to consummate the transactions
contemplated hereby are conditioned on the delivery at or prior to the Closing
of the following:
8.2.1 the purchase price referred to in Section 6.1 hereof;
8.2.2 the Escrow Agreement, executed by Assignee and the
escrow agent named therein, in the form attached hereto as Exhibit E;
8.2.3 the Settlement Statement, executed by Assignee;
8.2.4 Assignee shall have performed, in all material
respects, all of its agreements contained herein that are required to be
performed by Assignee on or prior to the Closing Date, and Assignor shall have
received a certificate of an Executive Officer of Assignee dated the Closing
Date, certifying to such effect;
8.2.5 the representations and warranties of Assignee
contained in this Agreement and in any documents delivered in connection
herewith shall be true and correct, in all material respects, as of the
Closing, and Assignor shall have received a certificate of an Executive Officer
of Assignee, dated the Closing Date, certifying to such effect;
8.2.6 the Assignee shall deliver a certificate of deposit or
other instrument with a face value of Fourteen Thousand Dollars ($14,000.00)
with the County as required under the Lease; and
6
8.2.7 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Assignee to Assignor
pursuant to any of the other provisions of this Agreement.
9. Representations and Warranties of Assignor. Each of the Assignor
and the Managing Partner, jointly and severally, hereby represents and warrants
to Assignee as of the date hereof and as of the Closing Date as follows:
9.1 Organization; Power and Authority. Assignor is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of California, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
9.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Assignor of this Agreement and the
consummation by Assignor of the transactions contemplated hereby have been duly
authorized by all necessary partnership action required to be taken on the part
of the Assignor. This Agreement has been duly and validly executed and
delivered by Assignor and constitutes the valid and binding obligation of
Assignor, enforceable in accordance with its terms. The execution, delivery and
performance by Assignor of this Agreement and the consummation by Assignor of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Assignor is subject; (b) violate any order,
judgment or decree applicable to Assignor; or (c) conflict with or result in a
breach of or a default under any term or condition of Assignor's organizational
documents or partnership agreement or any term or condition of any agreement or
other instrument to which Assignor is a party or by which it or its assets may
be bound, except in each case, for violations, conflicts, breaches or defaults
which in the aggregate would not materially hinder or impair the consummation
of the transactions contemplated hereby.
9.3 Consents. Except for the Alcohol Beverage License, no
consent, approval or authorization of, exemption by, or filing with, any
governmental or regulatory authority or any third party is required in
connection with the execution, delivery and performance by Assignor of this
Agreement, except for consents, approvals, authorizations, exemptions and
filings, if any, which have been obtained on or prior to the Closing Date.
9.4 Compliance with Applicable Laws. Assignor is not engaging in
any activity or omitting to take any action as a result of which Assignor is in
violation of any law, rule, regulation, ordinance, statute, order, injunction
or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Lease, the License, the
Premises or the Business, and neither the execution and delivery by Assignor of
this Agreement or of any of the other agreements and instruments to be executed
and delivered by it pursuant hereto, the performance by Assignor of its
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby will result in any such violation. The Lease is
not subject to any notice of violation of law, municipal ordinance, orders or
requirements issued by any building department or other governmental agency or
7
subdivision having jurisdiction.
9.5 Permits. Except for the Alcohol Beverage License, all Permits
required by any federal, state, or local law, rule or regulation and necessary
for the operation of the 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 Assignee to continue the
operation of the Business as presently conducted after the Closing. The current
use and occupation of any portion of the Premises does not violate any of, and,
where applicable, is in material compliance with, the Permits, any applicable
deed restrictions or other covenants, restrictions or agreements including
without limitation, any of the Permitted Exceptions, site plan approvals,
zoning or subdivision regulations or urban redevelopment plans applicable to
the Lease.
9.6 The Lease and the License. Attached hereto as Exhibits A-1
and A-2 are true and correct copies of the Lease and License, respectively. The
Lease and the License are in full force and effect, have not been modified or
amended in any way except as stated above and neither the County nor Assignor
is in default, or sent or received any notice of default, in respect of the
Lease and the License. No event has occurred or circumstance exists which, with
the giving of notice or the passage of time, or both, would constitute a
default under the Lease or the License. Neither Assignor nor County has
exercised any right or option, or stated its intent, to terminate or cancel the
Lease or the License. Assignor has not assigned, transferred or conveyed the
Lease or the License or any interest therein, or granted any right or option
with respect thereto, to any party other than Assignee. The initial expiration
date of the Lease is March 29, 2008 and the initial expiration date of the
License is December 8, 2008.
9.7 Personal Property. Exhibit B sets forth a complete list of
all Personal Property currently used in the operation of the Business as
currently conducted.
9.8 Title to the Lease, the License and Property. To the best of
Seller's and Managing Partner's knowledge, the License, the Lease and the
Property are free and clear of any and all liens, charges, encumbrances,
mortgages, pledges, security interests, easements, agreements and other
interests and adverse claims (collectively, "Encumbrances"), other than the
Permitted Exception.
9.9 Contracts. Except for the Lease, the License, the Contracts
listed on Exhibit C attached hereto and the lease with Golf mart to operate the
pro shop, which will be terminated on or prior to the Closing Date and any
other contracts which will be terminated on or prior to the Closing Date,
Assignor is not a party to any leases, contracts, orders or agreements relating
to the Premises, the Property or the Business (written or otherwise) for which
it has not or shall not satisfy its obligations in whole.
9.12 Environmental Matters.
8
9.12.1 As used in this Agreement "Hazardous Material" shall
mean: (i) any "hazardous substance" as now defined pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. ' 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. ' 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil
and any fraction thereof; (v) natural or synthetic gas usable for fuel; (vi)
any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (vii) any
asbestos, asbestos containing material, polychlorinated biphenyl ("PCB"), or
isomer of dioxin, or any material or thing containing or composed of such
substance or substances; and (viii) any other pollutant, contaminant, chemical,
or industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of any Environmental Law (as
hereinafter defined) and any other toxic, reactive or flammable chemicals.
9.12.2 To the best of Assignor's knowledge, there is no
Hazardous Material at, under or on the Premises and there is no ambient air,
surface water, groundwater or land contamination within, under, originating
from or relating to the Premises. Assignor 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.
9.12.3 To the best of Assignor's knowledge, Assignor 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 Assignor or the
Premises 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").
9.12.4 Assignor has not been subject to any civil, criminal
or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.
9.12.5 To the best of Assignor'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.
9.12.6 To the best of Assignor's knowledge, there are no
underground storage tanks at the Premises and Assignor further warrants and
represents that any prior use
9
and operation of underground storage tanks has been in compliance with all
Environmental Laws.
9.13 Tax Proceedings. There are no proceedings pending regarding
the reduction of real estate taxes or assessments in respect of the Premises.
9.14 Utilities. To the best of Assignor's knowledge, 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
Assignee and the Premises is furnished by facilities of public utilities and
the cost of installation of such utilities has been fully paid.
9.15 Access. Other than as set forth on Schedule 9.15, 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 Premises.
9.16 Insurance Requirements. To the best of Assignor's knowledge,
all requirements or recommendations by any insurer or by any board of fire
underwriters or similar body in respect of the Premises have been satisfied.
9.17 Litigation. There is no action or proceeding (zoning or
otherwise) or governmental investigation pending, or, to the best of Assignor's
knowledge, threatened against, or relating to, Assignor (insofar as it relates
to the Lease, the License, the Premises or the Business), the Lease, the
License, the Premises, the Business or the transactions contemplated by this
Agreement, nor is there any basis for any such action, proceeding or
investigation.
9.18 Assessments. Other than the Permitted Exceptions, there are
no special or other assessments for public improvements or otherwise now
affecting the Premises nor does Assignor know of (a) any pending or threatened
special assessments affecting the Premises or (b) any contemplated improvements
affecting the Premises that may result in special assessments affecting the
Premises.
9.19 Employee Agreements. There are no union or employment
contracts or agreements (written or oral) involving employees of Assignor or
its affiliates affecting the Premises or the Business which will survive the
Closing. All employees of Assignor who are employed to work at the Premises
will have been terminated as of the Closing Date.
9.20 Work at the Premises. Except as set forth on Schedule 9.20,
no services, material or work have been supplied to the Premises for which
payment has not been made in full.
9.21 Financial Condition. Assignor has delivered to Assignee true
and correct copies of (i) audited financial statements consisting of balance
sheets and income statements of Assignor as of December 31, 1995 and December
31, 1996; (ii) unaudited financial statements
10
for the quarter ended March 31, 1997; and (iii) internal monthly reports for
the period April 1, 1997 through the date hereof. Such balance sheet presents
fairly the financial condition, assets and liabilities of Assignor as of its
date; such statement of income presents fairly the results of operations of
Assignor for the period indicated. The financial statements referred to in this
Section are in accordance with the books and records of Assignor. Since
December 31, 1996 and since March 31, 1997: (a) there has at no time been a
material adverse change in the financial condition, results of operations,
businesses, properties, assets, liabilities or future prospects of Assignor,
the Premises, the Property or Business; (b) the Business has been conducted in
all respects only in the ordinary course; and (c) Assignor has not suffered an
extraordinary loss (whether or not covered by insurance) or waived any right of
substantial value.
9.22 Full Disclosure. To the best knowledge of Assignor, none of
the information supplied by Assignor herein or in the schedules or 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.
10. Representations and Warranties of Assignee. Assignee hereby
represents and warrants to Assignor as of the date hereof and as of the Closing
Date as follows:
10.1 Organization; Power and Authority. Assignee is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to carry on its
business as it is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
10.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Assignee of this Agreement and the
consummation by Assignee of the transactions contemplated hereby have been duly
authorized by all necessary corporate action required to be taken on the part
of Assignee. This Agreement has been duly and validly executed and delivered by
Assignee and constitutes the valid and binding obligation of Assignee,
enforceable in accordance with its terms. The execution, delivery and
performance by Assignee of this Agreement and the consummation by Assignee of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Assignee is subject; (b) violate any order,
judgment or decree applicable to Assignee; or (c) conflict with or result in a
breach of or a default under any term or condition of Assignee's Certificate of
Incorporation or By-Laws or any agreement or other instrument to which Assignee
is a party or by which it or its assets may be bound, except in each case, for
violations, conflicts, breaches or defaults which in the aggregate would not
materially hinder or impair the consummation of the transactions contemplated
hereby.
10.3 Full Disclosure. None of the information supplied by
Assignee herein 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.
11
11. Survival. The representations and warranties of the parties made
in Articles 9 and 10 shall survive the Closing.
12. Further Assurances. At any time and from time to time after the
date hereof, either party shall, at the request of the other party, execute and
deliver any further instruments or documents and take all such further action
as the requesting party may reasonably request in order to transfer into the
name of Assignee the Lease, the License and any and all Property contemplated
to be sold pursuant to this Agreement and to further consummate the
transactions contemplated by this Agreement. This Article shall survive the
Closing.
13. Assignor's and Assignee's Covenants. Assignor and Assignee hereby
covenant and agree as follows:
13.1 Access to Information. From the date hereof through the
Closing Date, Assignor shall afford to Assignee and Assignee's accountants,
counsel and other representatives reasonable access, upon reasonable notice and
in such a manner as will not unreasonably interfere with the conduct of
Assignor's business, to the Property. Assignee will provide Assignor with
copies of all studies, tests, surveys and reports which Assignee has obtained
in connection with the Premises.
13.2 Cooperation by the Parties. Each of the parties will use its
bests efforts to secure all necessary consents, approvals, authorizations,
exemptions and waivers from third parties as shall be required in order to
enable such party to effect the transactions contemplated hereby, and will
otherwise use its best efforts to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof.
13.3. Operation of the Premises Prior to Closing. During the
period from the date hereof through the Closing Date, Assignor agrees that
(except as expressly specified or permitted by this Agreement or to the extent
that Assignee shall otherwise consent in writing):
13.3.1 Assignor shall operate the Premises in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
and shall use all reasonable efforts to preserve intact its present business
organization, keep available the services of its present employees and preserve
its relationships with customers, suppliers and other having business dealings
with it to the end that its goodwill and ongoing business shall not be impaired
in any material respect at the Closing Date.
13.3.2 Assignor shall maintain all existing insurance policies in
respect of the Property in full force and effect.
13.3.3 Assignor shall not commit a breach of, or default under,
any Permit or violate any applicable law, regulation, ordinance, order,
injunction or decree or any other requirement of any governmental body or
court, relating to the Premises and the Property.
13.3.4 Assignor shall maintain its inventory at ordinary,
customary
12
levels, consistent with past practices.
13.3.5 Assignor shall maintain the Premises and the Property
in as good a state of operating condition and repair as they are on the date of
this Agreement, except for ordinary wear and tear.
13.3.6 Assignor shall not enter into any contract,
agreement, lease or occupancy agreement with respect to any of the Premises,
the Property, the Business or the Lease.
13.4 Employees. All employees at the Premises will be terminated
by Assignor as of the Closing; provided, however, that all employees will be
immediately considered for re-hire by the Assignee as of the Closing on the
terms to be determined by Assignee.
13.5 Contracts. Except for the Lease, the License and those
contracts described on Exhibit C attached hereto and made a part hereof,
Assignor will terminate all leases, contracts and agreements relating to the
Premises and the Property, including, without limitation, all maintenance,
service or utility contracts, as of the Closing.
14. "As Is".
14.1 Assignee represents that it has inspected the Premises and
the Property and is familiar with the physical condition thereof, and that it
agrees to accept the Premises and the Property "as is", in its condition at the
date of this Agreement, subject to reasonable use, wear, tear and natural
deterioration between the date hereof and the Closing Date, subject to the
provisions of Article 15 hereof.
15. Condemnation: Fire or Other Casualty. Between the date hereof and
the Closing, the risk of ownership and loss of the Premises and the Property
shall belong solely to the Assignor. If, between the date hereof and the
Closing, all or any portion of the Property is condemned, taken by eminent
domain, damaged by fire or other casualty or by any other cause of nature,
Assignor shall promptly give Assignee notice thereof. After receipt of notice
of such condemnation, taking or damage (from Assignor or otherwise), Assignee
shall have the option either:
15.1 to require Assignor to assign, transfer and/or convey the
Premises and the Property in accordance with the terms and provisions hereof on
the date of the Closing to Assignee in its damaged condition upon and subject
to all of the other terms and conditions of this Agreement, including payment
of the purchase price without adjustment on account of such condemnation,
taking or damage, and to assign Assignee all of Assignor's right, title and
interest in and to any claims Assignor may have under the casualty insurance
policies, condemnation awards and/or any causes of action with respect to such
condemnation or taking of or damage to the Premises and the Property and to pay
the Assignee by certified or bank check all payments theretofore made under
such insurance policies plus any deductible amount under its insurance
policies, or by such condemning or taking authorities; Assignor shall not
13
settle any fire, casualty, condemnation or eminent domain claim without the
prior written consent of Assignee; or
15.2 to terminate this Agreement by giving notice to Assignor,
whereupon this Agreement shall be terminated, and neither party shall have any
further rights, claims, liabilities or obligations to the other except for
those rights, claims, liabilities and obligations specifically surviving the
termination of this Agreement.
16. Default. Assignor and Assignee agree that, if either party shall
default in the performance or its obligations under this Agreement, the other
party shall be entitled to all rights and remedies available at law or in
equity, including specific performance.
17. Brokers. Assignor and Assignee warrant and represent to each other
that they dealt with no broker, finder or similar agent or party who or which
might be entitled to a commission or compensation on account of introducing the
parties, the negotiation or execution of this Agreement and/or the closing of
the transaction provided for herein. Assignee and Assignor 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.
18. Costs and Fees. Conveyancing taxes, if any, shall be payable by
Assignor, and in no event be payable by Assignee. The Assignor shall pay (a)
half of the cost of obtaining the audited financial statements of the Assignor
and the other financial information required by Section 9.21 hereof, (b) the
cost of an ALTA Survey and CLTA standard title insurance policy (if the
transaction contemplated hereby is consummated), (c) the cost of a Phase I
environmental study (if the transaction contemplated hereby is consummated),
and (c) its own legal expenses. The Assignee shall pay (a) half of the cost of
obtaining the audited financial statements of the Assignor; (b) the cost of the
difference between a CLTA standard title insurance policy and an ALTA policy,
and (c) its own legal fees. 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.
19. Indemnification.
19.1 Subject to the further provisions of this Article, Assignor
shall protect, defend, hold harmless and indemnify Assignee, its officers,
directors, shareholders, employees, agents and affiliates, and their respective
successors and assigns, from, against and in respect of any and all losses,
liabilities, deficiencies, penalties, fines, costs, damages and expenses
whatsoever (including without limitation, reasonable professional fees and
costs of investigation, litigation, settlement, and judgment and interest)
("Losses") that may be suffered or incurred by any of them arising from or by
reason of (i) any Retained Liability or other liability or obligation of
Assignor which is not an Assumed Liability; (ii) the breach of any
representation, warranty, covenant or agreement of Assignor contained in this
Agreement or in any document or other writing prepared by Assignor and
delivered pursuant to this Agreement;
14
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 19.1.
19.2 Subject to the further provisions of this Article, Assignee
shall protect, defend, hold harmless and indemnify Assignor, its partners,
officers, directors, shareholders, 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 date hereof, (ii) the breach of any
representation, warranty, covenant or agreement of Assignee contained in this
Agreement or in any document or other writing prepared by Assignee and
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 19.2.
19.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision of
this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such facts
within the Indemnified Party's knowledge with respect to such claim and the
amount thereof (a "Notice of Claim"). If, prior to the expiration of 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
timely Notice of Claim as provided in this Section 19.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder; however,
the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 19.3.
19.4 For purposes of this Article, any assertion of fact and/or
law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to
15
this Agreement or make operational an indemnification obligation hereunder,
shall, on the date that such assertion is made, immediately invoke the
Indemnifying Party's obligation to protect, defend, hold harmless and indemnify
the Indemnified Party pursuant to this Article.
19.5 The obligation of the Assignor under Section 19.1 hereof
shall be satisfied first from the Escrowed Funds (as defined in the Escrow
Agreement, and, if the Escrowed Funds are inadequate to provide indemnification
to Assignee, then from Assignor directly.
20. Bulk Sales. The parties agree to waive the requirements, if any,
of all applicable bulk sales laws. Assignor represents and warrants that (a) it
will not be rendered insolvent by the transactions contemplated by this
Agreement, and (b) all debts, obligations and liabilities relating to the Lease
and Business that are not expressly assumed by Assignee under this Agreement
will be promptly paid and discharged by Assignor as and when they become due.
Assignor agrees to indemnify and hold Assignee harmless from, and reimburse
Assignee for, any loss, cost, expense, liability or damage which Assignee may
suffer or incur by virtue of the noncompliance by Assignor or Assignee 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 Lease
ineffective as to creditors of or claimants against Assignor.
21. Notices. All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to give
to the other hereunder shall be in writing and shall be delivered by hand,
overnight express carrier, or sent by registered or certified mail, return
receipt requested, postage prepaid, in either event, addressed to the parties
at their respective addresses first above set forth. A copy of any Notice given
by Assignor to Assignee shall simultaneously be given in either manner provided
above to Family Golf Centers, Inc., 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: General Counsel. A copy of any Notice given by Assignee to
Assignor shall simultaneously be given in either manner provided above to The
Eagle Law Firm, 2166 the Alameda, Xxx Xxxx, Xxxxxxxxxx, 00000-0000, Attention:
Xxxxxxxxx X. Eagle III. Notices given in the manner aforesaid shall be deemed
to have been given three (3) business days after the day so mailed, he day
after delivery to any overnight express carrier and on the day so delivered by
hand. Either party shall have the right to change its address(es) for the
receipt of Notices by giving Notice to the other party in either manner
aforesaid. Any Notice required or permitted to be given by either party may be
given by that party's attorney.
22. Miscellaneous.
22.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
22.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of California.
22.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
16
22.4 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.
22.5 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.
22.6 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.
22.7 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.
22.8 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.
22.9 Either party may cause this Agreement to be recorded in the
appropriate public office.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
DIVOT CITY
By: D.C. MANAGEMENT, INC.,
its general partner.
By:
-----------------------------------
Name:
Title:
D.C. MANAGEMENT, INC.
By:
-----------------------------------
Name:
Title:
MILPITAS FAMILY GOLF CENTERS, INC.
By:
-----------------------------------
Name:
Title:
18
INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A-1 LEASE
EXHIBIT A-2 LICENSE
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C CONTRACTS
EXHIBIT D ASSIGNMENT AND FIRST AMENDMENT OF LEASE
EXHIBIT E ESCROW AGREEMENT
SCHEDULE 9.15 ACCESS--GOVERNMENTAL PLANS FOR ROADWAYS
SCHEDULE 9.20 WORK AT PREMISES
19
