EXHIBIT 10.2
AMERICAN INTERNATIONAL GOLF, INC.
NATIONAL GOLF PROPERTIES, INC.
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
0000 00XX XXXXXX, XXXXX 0000
XXXXX XXXXXX, XX 00000-0000
July 22, 2002
American Golf Corporation
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000-0000
Re: Rent Deferral Agreement
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Ladies and Gentlemen:
Reference is hereby made to that certain Agreement and Plan of Merger
and Reorganization (as it may be amended or supplemented from time to time, the
"REORGANIZATION AGREEMENT"), dated as of March 29, 2002, among American
International Golf, Inc. ("NEWCO"), National Golf Properties, Inc. ("NGP"),
National Golf Operating Partnership, L.P. ("NGOP"), American Golf Corporation
("AGC"), Golf Enterprises, Inc. ("GEI"), Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, the
Xxxxx X. Xxxxx Trust and the Dallas P. Price Trust, the AGC Contributors and the
Transferred Entity Contributors. Capitalized terms used but not defined herein
shall have the meanings as set forth in the Reorganization Agreement.
On July 23, 2002, AGC entered into a Restructuring Agreement and
Limited Waiver (the "RESTRUCTURING AGREEMENT"), with Bank of America, N.A.
("BANK OF AMERICA") relating to the Credit Facility, dated as of July 30, 1996,
between Bank of America, AGC (the "BOFA CREDIT FACILITY"), and the holders (the
"NOTEHOLDERS") of the 9.35% senior secured notes due July 1, 2004 issued by AGC.
In connection with the Restructuring Agreement, Newco, NGP and NGOP have agreed
to forbear from enforcing payment of certain rent now or hereinafter delinquent
and lease termination fee receivables due from AGC on the terms and subject to
the conditions set forth herein. In accordance with such intention, the parties
to this letter agreement hereby covenant and agree to the conditional waiver of
certain rights and obligations under the Reorganization Agreement and to the
performance of certain additional obligations, in each case subject to the terms
and conditions set forth below.
1. Newco, NGP and NGOP waive the provision of Section 10.8 of the
Reorganization Agreement to the extent set forth in this agreement. NGOP and NGP
agree to forbear from enforcing payment of rent and lease termination fee
receivables that may now or hereinafter be due from AGC and GEI to NGOP or NGP,
but only to the extent necessary and for the period of time necessary to permit
the following payments to be made in the order set forth in paragraph 2 below,
up to a "MAXIMUM DEFERRAL AMOUNT." The Maximum Deferral Amount as of any date
shall equal the amount of delinquent rent and lease termination fee receivables
on June 28, 2002 plus, as of any date, the "MAXIMUM DEFERRAL PERCENTAGE" times
all "AGC/GEI
BASE RENT" due from April 1, 2002 through such date. The AGC/GEI Base Rent is
set forth on EXHIBIT 1 hereto and shall be adjusted to take into account both
rent reductions due to sales of properties and rent escalations and rent
increases on account of capital expenditures by NGOP. The Maximum Deferral
Percentage is 22.82% (based on a projected $24 million deferral in the aggregate
for the year ended March 31, 2003 out of a projected aggregate AGC/GEI Base
Rental of $105,192,499 payable for such period, as set forth on EXHIBIT 1
hereto). It is agreed and understood that such rent deferral is being granted
only to the extent required for AGC and GEI to make the payments set forth in
paragraph 2 below and that any excess net operating income of AGC and GEI after
such payments are made shall be paid to NGOP or NGP in respect of any unpaid
rent (including any rent that had previously been deferred). Notwithstanding
anything herein to the contrary, the parties hereto acknowledge and agree that
Costs and Expenses (as defined in the Restructuring Agreement) will be included
as an expense item for purposes of calculating net operating income of AGC and
GEI.
2. This forbearance and rent deferral is conditioned upon (x) AGC not
making any payments to Bank of America or the Noteholders except as required by
the Restructuring Agreement and (y) AGC's, GEI's and Xxxxx X. Xxxxx'x agreement
to apply the net operating income of AGC and its subsidiaries, GEI and its
subsidiaries, American Golf of Glendale, a California corporation, Kansas 19th
Hole Corporation, a Kansas corporation, and private liquor clubs related to the
properties operated by the aforementioned entities (collectively, the "AGC
COMPANIES") on a combined basis after payment of taxes and overhead from April
1, 2002 to the earlier of (i) March 31, 2003 and (ii) the termination of this
agreement pursuant to paragraph 6(e) (such period, the "AMENDMENT PERIOD") as
follows:
a. to meet bonding obligations and to make capital expenditures and
reserves needed to maintain the courses operated by the AGC
Companies (including without limitation NGOP's properties) at an
appropriate level of quality, anticipated to be approximately
$20,500,000 in the aggregate during the Amendment Period for
remedial maintenance and on-going expenditures;
b. to payment of its current monthly rental obligations, less, if
and only if there is not sufficient cash flow to pay the current
monthly amounts payable under clauses (c), (d) and (e), that portion
of the Maximum Deferral Amount needed to enable AGC and the AGC
Companies to pay such current monthly amounts in full;
c. to payments of current monthly interest due during the Amendment
Period to the AGC Companies' bona fide creditors (other than NGP or
NGOP) (it being understood that failure to make such payments shall
constitute an event of default on the indebtedness due to such
creditors whether or not amounts listed in prior clauses of this
paragraph have been paid);
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d. to ratable principal payments to Bank of America and the
Noteholders, as set forth in the Restructuring Agreement, not to
exceed $22,050,510 so long as any delinquent rent and lease
termination fee receivables due to NGOP shall be outstanding (it
being understood that failure to make such payments shall constitute
a Major Default under the Restructuring Agreement whether or not
amounts listed in prior clauses of this paragraph have been paid);
e. reserves for interest and principal payments coming due on such
debt to bona fide creditors of the AGC Companies (other than NGP or
NGOP) during the Amendment Period and for minimum rental obligations
during such period, unless reasonably projected future net operating
income after taxes, and overhead will be sufficient to make such
payments when due; and
f. to payment of the balance of the full rent due to NGOP for such
month and then to repayment of any deferred rent owing to NGOP for
prior months from and after April 1, 2002.
It is agreed and understood for purposes of this agreement that
payments made by AGC to NGOP or NGP at the direction of The Badlands Golf Club,
Inc. ("BADLANDS") in satisfaction of Badlands' interest obligations on its
mortgage with NGOP do not constitute interest hereunder but rather constitute
rent.
3. It is agreed and understood that by granting this limited waiver
Newco, NGP and NGOP are not waiving or subordinating any of their respective
claims against AGC for any unpaid rent and lease termination fee receivables.
The existing formula for calculating lease termination fees due to or from AGC
on the sale of properties shall continue to be used in calculating such fees
during the term of this agreement, provided that, notwithstanding anything in
paragraph 2 to the contrary, during the Amendment Period, AGC may continue to
accrue any lease termination fees due to NGOP or NGP (and not pay such fees in
cash or offset) so long as any lease termination fees due to AGC or GEI are not
paid in cash or offset.
4. NGOP agrees to release to AGC the capital expenditure funds set
forth on EXHIBIT 2 hereto (which have previously been committed to AGC for
capital improvements on the NGOP Properties) in accordance with the terms of the
NGOP Leases (subject to Section 7.29 of the Amended and Restated Credit
Agreement, dated as of July 30, 1999, among NGOP, NGP, Bank One, NA, as
Administrative Agent, and the lenders named therein, as amended). NGP, NGOP, AGC
and GEI agree that the previously agreed rent increases set forth in the NGOP
Leases shall become effective on the date set forth therein. The "NGOP
PROPERTIES" shall mean any real estate asset owned or operated by NGP or NGOP
and operated or intended to be operated as, or ancillary to, a golf course.
5. Representations and Warranties. Each of NGP, NGOP, Newco, AGC, GEI,
the Xxxxx X. Xxxxx Trust and Xxxxx X. Xxxxx represent as follows:
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(a) such entity or person has the requisite corporate or other
power and authority to execute, deliver and perform this letter
agreement and to consummate the transactions contemplated hereby, and
the execution and delivery of this letter agreement by it and the
consummation by the entities of the transaction contemplated by this
letter agreement have been duly authorized by all necessary corporate
or other action on the part of such entity and no additional approval
is necessary to approve this letter agreement or the transactions
contemplated hereby;
(b) this letter agreement has been duly executed and delivered by
it and constitutes a valid and binding agreement of it enforceable in
accordance with the terms thereof; and
(c) the execution and delivery of this letter agreement by such
entity or person do not, and the performance of this letter agreement
by it will not, (i) require any consent, approval, authorization or
permit of, or filing with or notification to, any domestic or foreign
governmental, administrative, judicial or regulatory authority or any
other person or (ii) require any consent or approval under, result in
any breach of, any loss of any benefit under or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, vesting,
amendment, acceleration or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of such entity
or person pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license or permit (other than any such consent,
approval, authorization or permit that has been obtained, or any such
filing or notification that has been made, prior to the date hereof).
6. Miscellaneous.
(a) This letter agreement may be amended only by an instrument in
writing signed by each of the parties to this letter agreement. Each of the
parties hereto has received a copy of the Restructuring Agreement and understand
that an amendment of this letter agreement without the consent of each Creditor
(as defined in the Restructuring Agreement) is a "Major Default" thereunder.
(b) Except as otherwise provided herein, all of the terms and
provisions of this letter agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the respective successors of the parties
hereto. This letter agreement shall be binding upon and inure solely to the
benefit of each party hereto and its successor(s), and nothing in this letter
agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this letter agreement.
(c) The parties agree that irreparable damage would occur in the
event that any of the provisions of this letter agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
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(d) Notwithstanding anything to the contrary in the Reorganization
Agreement, this letter agreement shall not be superseded or merged into the
Reorganization Agreement and shall continue as an independent obligation of the
parties hereto.
(e) This agreement shall terminate on the earlier of (x) March 31,
2003, (y) the occurrence of a Major Default under the Restructuring Agreement
and (z) upon the occurrence of a breach of paragraph 1 or paragraph 2 hereof at
the election of NGP; provided that any payment made pursuant to paragraph 2 in
good faith by or on behalf of any of the AGC Companies but that is later
disputed in good faith as having been made in breach of this agreement shall not
be deemed a breach hereof so long as, within thirty calendar days after such
payment is disputed, such payment is repaid to the applicable AGC Company or
offset by future payments to be made to the applicable AGC Company.
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Please indicate your acceptance and agreement to the foregoing by
signing and returning to us one copy of this letter agreement.
Very truly yours,
AMERICAN INTERNATIONAL GOLF, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Secretary and Treasurer
NATIONAL GOLF PROPERTIES, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
Title: CFO and Secretary
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: National Golf Properties, Inc., its
General Partner
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: CFO and Secretary
Accepted and Agreed
as of the date first above written:
AMERICAN GOLF CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: CFO
GOLF ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
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XXXXX X. XXXXX, as an individual
By:/s/ Xxxxx X. Xxxxx
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XXXXX X. XXXXX TRUST
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Trustee
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