EXHIBIT 2B
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of ________________, 1997 ("Execution Date") by and among ▇▇▇▇▇▇ ▇▇▇▇▇, an
individual resident in the State of Georgia ("▇▇▇▇▇") doing business as
Classic Golf Shops," "Hydroturf" and "Golf 101" (except where the context
requires otherwise, collectively referred to herein as the ("Companies")
Classic Golf Management, Inc., a Georgia corporation ("Buyer") and CEC
PROPERTIES, INC., a Delaware corporation ("CEC").
R E C I T A L S
(l ▇▇▇▇▇ owns of record and beneficially all right, title and interest
in and to the Companies.
(m Buyer is a wholly-owned subsidiary of CEC
(n ▇▇▇▇▇ desires to sell the assets (as that term is defined in
Section 1) to the Buyer, and the Buyer desires to purchase the Assets from
▇▇▇▇▇, upon the terms and subject to the conditions contained in this
Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing recitals and premises,
and the mutual promises, agreements, representations and warranties herein
contained, the parties hereto agree as follows:
(i) CERTAIN DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the meaning indicated unless the context requires
otherwise.
"Assets" means and includes all assets of the Companies, whether tangible
or intangible, including without limitation, all trademarks; tradenames;
service marks; inventory; fixed assets; fixtures, furnishings and equipment;
packaging materials and supplies' prepaid items; customer lists;
transferable licenses, permits and registrations; and all work-orders and
contract rights. An inventory of such items set out by each of the entities
which comprise the Companies is attached hereto as Exhibit 1. "Assets" do
not include cash or accounts receivable.
"Balance Sheet" means the individual balance sheets of each of the
entities which comprise the Companies.
"Closing" refers to the closing of the Asset purchase transaction and the
exchange and delivery of all of the documents and consideration generally
described in this Agreement.
"Closing Date" means _____________, 1997 or such earlier date as provided
in Section 10 below.
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"Execution Date" refers to the date all parties have agreed to have
signed this Agreement, which date is set forth above.
"Interim Period" refers to the period from the Execution Date to and
including the Closing Date.
(ii) AGREEMENT TO SELL AND TRANSFER THE ASSETS. Upon the terms and
subject to all of the conditions contained herein and upon the performance
by the parties hereto of their obligations hereunder, ▇▇▇▇▇ hereby agrees to
sell, assign, transfer and deliver to the Buyer, on and as of the Closing
Date, all of the Assets, by delivering to the Buyer at the Closing
appropriate assignments, conveyances and bills of sale validly transferring
the Assets to the Buyer as required by the terms of this Agreement.
(iii) PURCHASE PRICE FOR THE ASSETS.
PURCHASE PRICE AND ADJUSTMENT. As a consideration for the Buyer's
purchase of the Assets, and upon and subject to all of the terms and
conditions contained herein and upon the performance by each of the parties
hereto of their obligations hereunder, the Buyer agrees to pay to ▇▇▇▇▇ the
following ("Purchase Price"):
Subject to the hereinafter described conditions Buyer shall pay to ▇▇▇▇▇
the following payments and shall deliver to ▇▇▇▇▇ shares of CEC Common
Stock, $.10 par value in the following amounts at the following times:
On The 13th Month Anniversary On the 25th Month
Date Of Closing Anniversary
Consideration At Closing --------------- Date of Closing
------------- ---------- ---------------
Cash $71,750 $10,250 $10,250
Shares of CEC Common Stock 20,500 10,250 10,250
In the event the "Net Revenues" to Buyer as a result of the acquisition
of the Companies for each of the two full fiscal years of Buyer subsequent
to the Closing Date commencing with the fiscal year ending October 31, 1998,
shall not aggregately equal at least one hundred thousand dollars ($100,000)
per year (the "Target Income") then and in that event the number of shares
to be delivered to ▇▇▇▇▇ pursuant to subparagraph 3.1.1. hereinabove shall
be reduced by a percentage determined as follows:
Projected revenues: $100,000
41% of ▇▇▇▇▇'▇ annual compensation: 32,800
Payment pursuant to Sec. 3.11: 10,250
--------
$43,050
========
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Assume as an example that annual revenues are $90,000 then the following
calculations shall take place:
Projected annual revenues: $100,000
Actual annual revenues: ( 90,000)
---------
10,000
90,000 / 100,000 = .9
---------
43,050
x .9
---------
38,745
43,050 - 38,745 / $3.00
= 1,435 shares
Accordingly, the number of shares delivered or to be delivered would be
reduced by 1,435. In the event the number of shares to be delivered is
insufficient to meet the shortfall then ▇▇▇▇▇ shall return a sufficient
number of shares from the shares already received as is necessary so as to
meet the difference. "Net Revenues" shall mean the net income from
Companies revenues received after all expenses of the Companies, including a
prorata portion (41%) of the compensation to be paid to ▇▇▇▇▇ pursuant to
his Employment Contract with Classic Golf Management, Inc. Notwithstanding
the foregoing, no deductions against revenues shall be made for any expenses
incurred by CLASSIC in connection with its obtaining of additional business
opportunities so long as such expenses are approved by the Boards of
Directors of CLASSIC and PURCHASER.
If the average bid and asked price of the CEC common stock as traded in
the public market in which such stock trades shall for ten (10) days
preceding the twenty-fourth (24th) month anniversary date of the Closing
Date (the "Average Price") be less than three dollars ($3.00) per share then
CEC shall, within forty-five (45) days, pay ▇▇▇▇▇ the difference between the
Average Price and $3.00 per share in cash, subject to any pro rata reduction
as a result of the effect of Section 3.1.2 hereinabove on the aggregate
shares then held by ▇▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇ shall provide his personal guaranty of the payments required
pursuant to this Section 3.1 in the form of Schedule 3.1 attached.
CLOSING DELIVERY. At the Closing Date, the Buyer will delivery the
required shares to ▇▇▇▇▇ to be held pursuant to the terms of this Agreement.
ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated to
the Assets on the basis set forth in the attached Schedule 3.3. All parties
to this Agreement agree to utilize that allocation for tax and accounting
purposes.
NO LIABILITIES ASSUMED. The Buyer has not assumed, voluntarily or
otherwise, or agreed to perform, discharge, satisfy or be responsible for,
any indebtedness, obligation or liability of ▇▇▇▇▇ of any nature whatsoever,
whether known or unknown, suspected or unsuspected, and whether or not
accrued, contingent or otherwise.
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(iv) REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇. The following
representations and warranties of ▇▇▇▇▇ are true and correct as of the
Execution Date and will be true and correct as of the Closing Date:
VALIDITY AND ENFORCEABILITY OF AGREEMENT. All proceedings or actions
required to be taken by ▇▇▇▇▇ relating to the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been properly taken. This Agreement has been duly executed, and is a valid
and binding obligation of ▇▇▇▇▇ enforceable in accordance with its terms
(except as enforcement may be affected by (i) laws of general application
relating to the enforcement of creditors' rights or (ii) the availability of
equitable remedies which are subject to the discretion of the court before
which any proceeding therefor may be brought.)
EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. Neither the execution,
delivery nor performance of this Agreement by ▇▇▇▇▇ will, with or without
the giving of notice or the passage of time, or both, conflict with, result
in a default, right to accelerate or loss of rights, under, or result in the
creation of any lien, charge or encumbrance pursuant to, any provision of
any of the Companies's organizational provisions, or any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule or regulation or any order, judgment or decree to which
▇▇▇▇▇ or any of the Companies is a party or by which it or they may be bound
or affected which effects the Assets.
ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the entities
which comprise the Companies is owned entirely by ▇▇▇▇▇. ▇▇▇▇▇ has all
requisite power and authority and is entitled to carry on the Companies's
business as now being conducted.
BALANCE SHEETS. The Balance Sheets: (i) was/will be prepared from the
books and records of the Companies; (ii) was/will be prepared on a basis
consistent with all previous statements; (iii) sets forth fairly the
financial position of the Companies as at the respective dates of the
Balance Sheets; and (iv) contains and reflects all necessary adjustments
(which consist only of normal recurring accruals) for a fair presentation of
the Companies's financial positions as at the respective dates of the
Balance Sheets. The Balance Sheets show no liabilities. ▇▇▇▇▇ represents
and warrants that the Net Revenues for the last fiscal year for each of the
Companies was no less than:
Classic Golf Shops $70,000
Hydroturf $35,000
Golf 101 $35,000
TAXES AND TAX RETURNS. All taxes, duties, fees and imposts (collectively
"Taxes"), imposed, levied or assessed by the United States or by any state,
municipality, subdivision or instrumentality of the United States, or by any
other taxing authority, which are due and payable by the Companies and which
affect the Assets, and all interest and penalties thereon, whether disputed
or not, have been paid in full; all tax returns and other information,
certificates and declarations required to be filed in connection therewith
and which affect the Assets have been accurately prepared and duly and
timely filed; and all deposits required by law to be made by the Companies
with respect to any Taxes and which affect the Assets, or ▇▇▇▇▇'▇ ability to
convey the Assets, have been duly and timely made.
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TITLE TO THE ASSETS. ▇▇▇▇▇ has good and marketable title to all of the
Assets. ▇▇▇▇▇ will disclose to Buyer, in writing, at or prior to the
Closing, any of the Assets not in the Companies's possession. None of the
Assets is subject to any mortgage, pledge, lien, charge, security interest,
purchase money or otherwise (perfected or unperfected), encumbrance,
restriction, lease, license, easement, liability or adverse claim of any
nature whatsoever, direct or indirect, whether accrued, absolute, contingent
or otherwise. To the best of ▇▇▇▇▇'▇ knowledge, all of the Assets are in
good operating condition and repair, ordinary wear and tear excepted, are in
all material respects suitable for the purposes used, and are in all
material respects capable of utilization by the Companies and the Buyer
after the Closing Date for the purposes for which they are now being
utilized.
TRADE NAMES, TRADEMARKS AND COPYRIGHTS. The Schedule of Trade Names
attached hereto as Schedule 4.7 contains a complete and accurate list of all
trademarks, service marks, trade names, copyrights, trademark registrations
or applications or copyright registrations or applications owned or utilized
by ▇▇▇▇▇ with respect to the Companies. To the best of ▇▇▇▇▇'▇ knowledge,
none of the trademarks, service marks, trade names, copyrights, trademark
registrations or applications or copyright registrations or applications
described on the Schedule of Trade Names violate or infringe upon the
trademark, copyright or other proprietary right of any other corporation,
entity or individual, or have been abandoned or are the subject of any
cancellation petition or proceeding and ▇▇▇▇▇ has not received any notice of
such alleged violation or infringement.
CUSTOMERS. To the best of ▇▇▇▇▇'▇ knowledge, the Schedule of Customers
attached as Schedule 4.8 contains an accurate and complete list of the
current customers of each of the Companies, by entity. ▇▇▇▇▇ has no
information, nor is he aware of any facts, indicating that any of its
current customers intends to cease doing business with the Companies or to
materially lower the amount of the business that each such customer is
presently doing with the Companies.
CONTRACTS AND AGREEMENTS. To the best of ▇▇▇▇▇'▇ knowledge, the Schedule
of Contracts attached as Schedule 4.9 contains an accurate and complete list
setting forth a description of each material indenture, agreement, contract,
royalty agreement, license agreement, work-order, marketing agreement or any
other services purchased or sales contract, agreement or arrangement,
whether written or oral, or other material obligation, if any, to which each
of the Companies by entity or ▇▇▇▇▇ is a party, or by which they are bound
as of the date hereof relating to the Assets to be sold. To the best of
▇▇▇▇▇'▇ knowledge, each of the contracts, agreements or arrangements
described on the Schedule of Contracts is a valid and binding obligation of
the parties thereto and to the best of ▇▇▇▇▇'▇ knowledge no party to any
such contract, agreement or arrangement is in material default with respect
to any material term or condition thereof, nor has any event occurred which,
through the passage of time or the giving of notice or both, would
constitute a material default thereunder or would cause the acceleration of
any material obligation of any party thereto, or the creation of a lien or
encumbrance upon any of the Assets. The consummation of this Agreement will
not constitute a default under or otherwise materially adversely affect the
rights of the Companies under any contract, agreement or arrangement
described on the Schedule of Contracts or require the consent of any party
thereto. True and complete copies of all contracts, agreements or
arrangements described on the Schedule of Contracts have been attached as
exhibits or made available to the Buyer.
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INSURANCE COVERAGE. To the best of the ▇▇▇▇▇'▇ knowledge, the Schedule of
Insurance set forth at Schedule 4.10 attached contains a complete and
accurate description of each insurance policy maintained by ▇▇▇▇▇ affecting,
relating to or covering the Assets. To the best of ▇▇▇▇▇'▇ knowledge, each
such insurance policy described on the Schedule of Insurance is a valid and
binding obligation of the insurer, and neither ▇▇▇▇▇ nor the insurer is in
material default with respect to any material term or condition thereof, nor
has any event occurred which, through the passage of time or the giving of
notice or both, would constitute a material default thereunder or give rise
to a right to cancel such policy. The insurance policies of the Companies
are in amounts deemed to be sufficient in view of the business of the
Companies.
INVENTORY. The inventories of goods ("Inventories") shown on the Balance
Sheets consist of items of a quality and quantity useable and saleable in
the ordinary course of business by the Companies, except for obsolete and
slow-moving items and items below standard quality, all of which have been
written down on the respective books of the Companies, to net realizable
market value or have been provided for by adequate reserves. All items
included in the inventories are the property of the Companies, except for
sales made in the ordinary course of business since the date of the Balance
Sheets; for each of these sales either the purchaser has made full payment
or the purchaser's liability to make payment is reflected in the respective
books of the Companies. No items included in the Inventories have been
pledged as collateral or are held by the Companies on consignment from
others. The inventories shown on all Balance Sheets are based on quantities
determined by physical count or measurement, taken within the preceding 12
months, and are valued at the lower of cost (determined on a first-in,
first-out basis) or market value and on a basis consistent with that of
prior years.
OTHER TANGIBLE PERSONAL PROPERTY. Schedule 4.12 to this Agreement is a
complete and accurate schedule describing and specifying the location of,
all vehicles, machinery, equipment, furniture, supplies, tools, molds,
patterns, drawings, and all other tangible personal property owned by, in
the possession of, or used by the Companies in connection with their
respective businesses, except Inventories. The property listed in Schedule
4.12 constitutes all tangible personal property necessary for the conduct by
the Companies of their respective businesses as now conducted. All of the
vehicles listed in Schedule 4.12 are in good condition and repair and have
current smog certifications.
Excepted as stated in Schedule 4.12, no personal property used by the
Companies in connection with its business is held under any lease, security
agreement, conditional sales contract, or other title retention or security
arrangement, or is located other than in the possession of ▇▇▇▇▇.
TRADE SECRETS. Schedule 4.13 to this Agreement is a true and complete
list, without extensive or revealing descriptions, of the Companies's trade
secrets, including all customer lists, processes, know-how and other
technical data. The specific location of each trade secret's documentation,
including its complete description, specifications, charts, procedures, and
other material relating to it, is also set forth with it in that Schedule.
each trade secret's documentation is current, accurate, and sufficient in
detail and content to identify and explain it, and to allow its full and
proper use by Buyer without reliance on the special knowledge or memory of
others.
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▇▇▇▇▇ is the sole owner of each of these trade secrets, free and clear of
any liens, encumbrances, restrictions, or legal or equitable claims of
others, except as specifically stated in Schedule 4.13. ▇▇▇▇▇ has taken all
reasonable security measures to protect the secrecy, confidentiality, and
value of these trade secrets; any of its employees and any other persons
who, either alone or in concert with others, developed, invented,
discovered, derived, programmed, or designed these secrets, or who have
knowledge of or access to information relating to them, have been put on
notice and, if appropriate, have entered into agreements that these secrets
are proprietary to ▇▇▇▇▇ and not to be divulged or misused.
All these trade secrets are presently valid and protectible, and are not
part of the public knowledge or literature, nor to ▇▇▇▇▇'▇ knowledge have
they been used, divulged, or appropriated for the benefit of any past or
present employees or other persons, or to the detriment of ▇▇▇▇▇ or the
Companies.
EXISTING EMPLOYMENT CONTRACTS. Schedule 4.14 to this Agreement is a list
of all employment contracts and collective bargaining agreements, and all
pension, bonus, profit-sharing, stock option, or other agreements or
arrangements providing for employee remuneration or benefits to which ▇▇▇▇▇
or the Companies is a party or by which ▇▇▇▇▇ or the Companies is bound; all
these contracts and arrangements are in full force and effect, and neither
▇▇▇▇▇ or the Companies, nor any other party is in default under them. There
have been no claims of defaults and, to the best knowledge of ▇▇▇▇▇, there
are no facts or conditions which if continued, or on notice, will result in
a default under these contracts or arrangements. There is no pending or, to
▇▇▇▇▇'▇ knowledge, threatened labor dispute, strike, or work stoppage
affecting the Companies' business.
INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as set forth in
Schedule 4.15 neither ▇▇▇▇▇ nor any employee of the Companies, nor any
spouse or child of any of them has any direct or indirect interest in any
competitor, supplier, or customer of the Companies or in any person from
whom or to whom the Companies are doing business.
PERSONNEL IDENTIFICATION AND COMPENSATION. Schedule 4.16 is a list of
the names and addresses of all employees, agents, and manufacturer's
representatives of the Companies, stating the rates of compensation payable
to each. At the Closing there shall be no obligation of any kind owed to or
related to the employees or their employment.
COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. To the best of ▇▇▇▇▇'▇
knowledge, ▇▇▇▇▇ and the Companies have complied in all material respects
with all existing laws, rules, regulations, ordinances, orders, judgments
and decrees now applicable to their respective businesses, properties or
operations as presently conducted which affect the Assets or the Companies'
ability to convey the Assets to Buyer hereunder. To the best of ▇▇▇▇▇'▇
knowledge neither the ownership nor use of the Assets nor the conduct of the
Companies' businesses conflicts in any material respect with the legal
rights of any other person, firm or corporation.
BROKERAGE AND FINDER'S FEES. Buyer has not incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement.
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LITIGATION. There are no known claims, legal actions, suits,
arbitrations, or to best of ▇▇▇▇▇'▇ knowledge governmental investigations or
other legal or administrative proceedings or orders, decrees or judgments in
progress, pending or in effect, or, to the best knowledge of ▇▇▇▇▇'▇
knowledge threatened against or relating to ▇▇▇▇▇ or the Companies, the
Assets or the transactions contemplated by this Agreement.
CONSENTS TO ASSIGNMENT Except as otherwise set forth in this Agreement
no written consents to assignment of any lease, contract or agreement to
which the Companies is presently a party or by which they are bound is
required in connection with the transactions contemplated by this Agreement.
INVESTMENT. ▇▇▇▇▇ has reviewed the CEC filings with the Securities and
Exchange Commission ("SEC"), is an accredited investor as defined by the SEC
and agrees that any CEC shares which he receives pursuant to this Agreement
are taken by him for investment and not for resale. He understands and
agrees that such shares will carry a restrictive legend indicating they are
held for investment purposes and can only be resold pursuant to applicable
securities laws.
BENEFIT PLANS; ERISA.
None of the Companies has ever established, adopted, maintained,
sponsored, contributed to, participated in or incurred any liability with
respect to any Employee Benefit Plan.
The Companies have not advised any of its employees (in writing or
otherwise) that it intends or expects to establish or sponsor any Employee
Benefit Plan or to provide or make available any fringe benefit or other
benefit of any nature in the future.
ENVIRONMENTAL MATTERS.
Neither ▇▇▇▇▇ nor the Companies are liable or potentially liable for any
response cost or natural resource damages under Section 107(a) of CERCLA, or
under any other so-called "superfund" or "superlien" law or similar legal
requirement, at or with respect to any site.
▇▇▇▇▇ has never received any notice or other communication (in writing or
otherwise) from any governmental body or other person regarding any actual,
alleged, possible or potential liability arising from or relating to the
presence, generation, manufacture, production, transportation, importation,
use, treatment, refinement, processing, handling, storage, discharge,
release, emission or disposal of any Hazardous Material. No person has ever
commenced or threatened to commence any contribution action or other
proceedings against the Companies in connection with any such actual,
alleged, possible or potential liability; and no event has occurred, and no
condition or circumstance exists, that may directly or indirectly give rise
to, or result in the Companies becoming subject to, any such liability.
The Companies have never generated, manufactured, produced, transported,
imported, used, treated, refined, processed, handled, stored, discharged,
released or disposed of any Hazardous Material (whether lawfully or
unlawfully). The Companies have never permitted (knowingly or otherwise)
any Hazardous Material to be generated, manufactured, produced, used,
treated, refined, processed, handled, stored, discharged, released or
disposed of (whether lawfully or unlawfully):
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(i) on or beneath the surface of any real property that is, or
that has at any time been, owned by, leased to, controlled by or used by any
of the Companies;
(ii) in or into any surface water, groundwater, soil or air
associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment,
ditch, landfill, building, structure, facility, improvement, installation,
equipment, pipe, pipeline, vehicle or storage container that is or was
located on or beneath the surface of any such real property or that is or
has at any time been owned by, leased to, controlled by or used by any of
the Companies.
MATERIAL MISSTATEMENTS OR OMISSIONS. None of the representations or
warranties set forth in this Section 4 are false or misleading in any
material respect, or omits to state any fact required to be stated therein
or necessary in order to make any of the statements therein not misleading
in any material respect in light of the circumstances under which they are
made.
(v) CERTAIN COVENANTS AND AGREEMENTS OF ▇▇▇▇▇.
CONDUCT OF BUSINESS BEFORE THE CLOSING. Prior to the Closing (a) ▇▇▇▇▇
shall cause the Companies to conduct their businesses diligently, in good
faith and in the ordinary and usual course, consistent with past practices;
and (b) none of the Assets will be sold, assigned, conveyed, transferred,
encumbered, pledged or subjected to any lien, right or security interest of
any third party.
ACCESS AND INFORMATION. Prior to the Closing ▇▇▇▇▇ will afford the
Buyer, its counsel, accountants and other representatives, reasonable access
to all of the properties, books, contracts and records of the Companies and
any records concerning the Companies maintained and accumulated by the
counsel and/or accountants to the Companies pertaining to the Assets, and
will furnish such persons and entities with all information, including
copies of books, contracts and records, concerning the affairs of the
Companies as they relate to the Assets which the Buyer or its
representatives may reasonably request.
NON-COMPETITION. For a period of three (3) years from and after the
Closing Date ▇▇▇▇▇ agrees that he will not engage in the same business as
the Companies within the State of Georgia. In the event the covenants,
conditions or limitations of this provision are invalid or unenforceable in
part by reason of being too broad in scope, too long in duration or
applicable to too wide a geographic area, such covenants, conditions and
limitations shall not totally fail but shall be deemed and construed in all
respects to be limited to the maximum scope, duration and area permitted by
law, and in such manner to be specifically enforceable to carry out the
intent of the parties.
SALES AND USE TAXES. Any sales or use taxes imposed on or as a result of
the transfer of the Assets from the Companies to the Buyer shall be the sole
responsibility of, and shall be paid by ▇▇▇▇▇ and ▇▇▇▇▇ shall indemnify and
hold Buyer harmless on account thereof.
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(vi) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The following
representations and warranties of the Buyer are true and correct as of the
Execution Date and will be true and correct as of the Closing Date:
VALIDITY AND ENFORCEABILITY OF AGREEMENT. All proceedings or corporate
actions required to be taken by the Buyer relative to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein have been or will shortly be properly taken. This
Agreement has been duly executed on behalf of the Buyer and is a valid and
binding obligation of the Buyer, enforceable in accordance with its terms,
except as such enforcement may be affected by (i) laws of general
application relating to the enforcement of creditors' rights, or (ii) the
availability of equitable remedies which are subject to the discretion of
the court before which any proceedings therefor may be brought.
EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. Neither the execution,
delivery nor performance of this Agreement by the Buyer will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or result
in the creation of any lien, charge or encumbrance pursuant to, any
provision of the Buyer's Articles of Incorporation or Bylaws, or any ▇▇▇▇-
chise, mortgage, deed of trust, lease, license, agreement, understanding,
law, ordinance, rule or regulation or any order, judgment or decree to which
the Buyer is a party or by which it may be bound or affected.
ORGANIZATION AND GOOD STANDING. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Georgia. To the best of Buyer's knowledge, the Buyer has all requisite
corporate power and authority and is entitled to carry on its business as
now being conducted. Buyer is a wholly-owned subsidiary of CEC.
BROKERAGE AND FINDER'S FEES. The Buyer has not incurred any liability to
any broker, finder or agent for any brokerage fees, finder's fees or
commissions with respect to the transactions contemplated by this Agreement.
MATERIAL MISSTATEMENTS OR OMISSIONS. None of the representations or
warranties set forth in this Section 6 is false or misleading in any
material respect, or omits to state any fact required to be stated therein
or necessary in order to make any of the statements therein not misleading
in any material respect in light of the circumstances under which they are
made.
(vii) COVENANTS OF THE BUYER.
Prior to the Closing Date, the Buyer agrees not to divulge, communicate,
use to the detriment of the Companies or for the benefit of any other
corporation, entity or individual, or misuse in any way, any confidential
information or trade secrets of the Companies; provided, however, such
obligation shall terminate upon the occurrence of any of the following: (i)
where such information now or hereafter becomes part of the public domain,
and the Buyer has not obtained or learned such information as the result of
"misappropriation" or "improper means," as those terms are defined in
California Civil Code, Section 3426.1; (ii) such information is already in
the possession of the Buyer at the time of the disclosures so long as it was
acquired from other than the Companies or otherwise than by misappropriation
or improper means; (iii) such information hereafter comes into the
possession of the Buyer from a third party without breach of this contract;
or (iv) such information is independently developed by the Buyer.
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In the event Buyer determines to abandon the business of ▇▇▇▇▇ acquired
hereunder then and in that even Buyer shall promptly so notify ▇▇▇▇▇ in
writing whereupon ▇▇▇▇▇ shall have the option of acquiring the shares of
Buyer at their then current fair market value. Should ▇▇▇▇▇ elect to
exercise the option granted herein then ▇▇▇▇▇ shall notify Buyer within
thirty (30) days of his receipt of Buyer's notice. ▇▇▇▇▇ shall include with
said notification his estimate of the fair market value. In the event Buyer
and ▇▇▇▇▇ are unable to agree on the fair market value within twenty (20)
days of he receipt of Buyer's estimate then they shall, within twenty (20)
days each select an appraiser, who in turn shall together select a third
appraiser, who shall each appraise the value of the shares of Buyer. The
appraisal which is neither the highest nor the lowest shall be utilized as
the fair market value. Each party shall pay the costs of its own appraiser
and shall divide equally the costs of the third appraiser. ▇▇▇▇▇ shall pay
the amount of the fair market value to CEC within fifteen (15) days of its
determination whereupon CEC shall deliver to ▇▇▇▇▇ the shares of Buyer. In
delivering payment ▇▇▇▇▇ may deliver to CEC shares of CEC Common Stock which
shall be credited against the payment amount at the rate of three dollars
($3.00) per share. Notwithstanding the foregoing (i) in no event shall the
fair market value determination be in excess of six hundred fifty thousand
dollars ($650,000) and (ii) this Section 7.2 shall only be operative in the
event CEC determines to abandon the business of Buyer and shall in no way be
operative in the event CEC shall elect to reorganize, merge or affiliate
with another entity.
(viii) BULK TRANSFER LAW COMPLIANCE. Buyer shall have given notice, if
required, in compliance with the Georgia provisions of the Commercial Code
("Bulk Transfer Law"), of the intended sale of the Assets contemplated by
this Agreement. Compliance with the Bulk Transfer Law shall be a condition
precedent to the Buyer's obligations hereunder. ▇▇▇▇▇ shall furnish the
Buyer with information necessary for the Buyer to prepare the bulk transfer
notice, including all names and business addresses used by the Companies
within the past three years. To the extent any valid claims of creditors
are delivered prior to the Closing Date, such claims shall be paid by ▇▇▇▇▇.
In the event ▇▇▇▇▇ elects not to pay any claim ▇▇▇▇▇ shall deposit the
amount withheld with Buyer to be held in an interest earning account pending
resolution of the claim.
(ix) CLOSING DATE. The Closing Date of the transactions contemplated by
this Agreement, and the exchange of the consideration and the other
documents described herein, shall take place at 10:00 a.m. on October __,
1997 ("Closing Date") at ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time, on such other date and/or at
such other place and date as the parties hereto may agree.
(x) CONDITIONS PRECEDENT TO CLOSING.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER. The Closing shall not
take place unless all of the following conditions have been fulfilled and
satisfied or have been waived in writing by the Buyer (such conditions are
solely for the benefit of the Buyer):
▇▇▇▇▇ shall have delivered the assignments, conveyances and bills of
sales as required by Section 2 hereof.
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▇▇▇▇▇ shall have obtained all consents, approvals, orders and/or
clearances, if any, required of them in order to consummate the transactions
contemplated by this Agreement, including, without limitation, the
termination of any security interest in or covering any of the Assets,
except for those which may exist with respect to the assumed liabilities.
There shall not have been discovered any material inaccuracy with respect
to any representation or warranty of ▇▇▇▇▇ contained in this Agreement.
▇▇▇▇▇ shall deliver to the Buyer at the Closing a certificate certifying the
foregoing.
There shall be no material covenant or agreement of ▇▇▇▇▇ contained in
this Agreement and required to be performed before the Closing which has
been breached in any material respect. ▇▇▇▇▇ shall deliver to the Buyer at
the Closing a certificate certifying the foregoing.
All required time periods under the applicable Bulk Transfer Law shall
have expired and there shall have been full compliance with all of the
provisions and requirements of the Bulk Transfer Law.
▇▇▇▇▇ shall have executed the investment representation letter in the
form of Schedule 11 attached and shall have agreed to hold the shares for no
less than two years and for investment purposes only.
The Stock Purchase Agreement of even date herewith by and between ▇▇▇▇▇
and CEC shall have closed.
CONDITIONS PRECEDENT TO OBLIGATIONS OF ▇▇▇▇▇. The Closing shall not take
place unless all of the following conditions have been fulfilled, satisfied,
or have been waived in writing by ▇▇▇▇▇ (such conditions are solely for the
benefit of ▇▇▇▇▇):
There shall not have been discovered any material inaccuracy with respect
to any representation or warranty of the Buyer contained in this Agreement.
The Buyer shall deliver to ▇▇▇▇▇ at the Closing a certificate certifying the
foregoing.
There shall be no material covenant or agreement of the Buyer contained
in this Agreement and required to be performed before the Closing which has
been breached in any material respect. The Buyer shall deliver to ▇▇▇▇▇ at
the Closing a certificate certifying the foregoing.
The Buyer shall have delivered to ▇▇▇▇▇ the Purchase Price required to be
delivered at the Closing.
All required time periods under the applicable Bulk Transfer Law shall
have expired and there shall have been full compliance with all of the
provisions and requirements of the Bulk Transfer Law.
The Stock Purchase Agreement of even date herewith by and between ▇▇▇▇▇
and CEC shall have closed.
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▇▇▇▇ ▇▇▇▇▇▇▇ shall have executed the Guaranty as required by Section 3.1.4
hereinabove.
(xi) INDEMNIFICATION.
▇▇▇▇▇ shall indemnify, defend, protect and hold the Buyer, and/or its
officers, directors, shareholders, agents, successors and assigns ("Buyer
Indemnified Parties"), harmless from, against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities,
judgments, damages, recoveries and deficiencies, including interest,
penalties and attorneys' fees, that the Buyer Indemnified Parties shall
incur or suffer, which claims or liabilities are threatened against the
Buyer Indemnified Parties, which arise or result from, or relate to or are
in any way connected with any Buyer Event of Indemnity (as defined below).
For purposes hereof, the term Buyer Event of Indemnity means and includes
any of the followings:
(i) Any material incorrectness in any representation or warranty
of ▇▇▇▇▇ as set forth in this Agreement or in any schedule, certificate or
other document delivered in connection herewith.
(ii) Any material failure by ▇▇▇▇▇ to perform his respective
covenants or agreements pursuant to this Agreement.
(iii) Any indebtedness, obligation or liability of the Companies
not expressly assumed by the Buyer pursuant to Section 3.4 of the Agreement.
The Buyer shall indemnify, defend, protect and hold ▇▇▇▇▇, and/or his
agents, successors and assigns ("▇▇▇▇▇ Indemnified Parties"), harmless from,
against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, judgments, damages, recoveries and
deficiencies, including interest, penalties and attorneys' fees, that ▇▇▇▇▇
Indemnified Parties shall incur or suffer, which claims or liabilities are
threatened against ▇▇▇▇▇ Indemnified Parties, which arise or result from, or
relate to or are in any way connected with any ▇▇▇▇▇ Event of Indemnity (as
defined below). For purposes hereof, the term ▇▇▇▇▇ Event of Indemnity
means and includes any of the following:
(i) Any material incorrectness in any representation or warranty
of the Buyer as set forth in this Agreement or in any schedule, certificate
or other document delivered in connection herewith.
(ii) Any material failure by the Buyer to perform its covenants
or agreements pursuant to this Agreement.
(xii) ARBITRATION AND ALTERNATIVE DISPUTE RESOLUTION.
OBLIGATION TO ARBITRATE. Any dispute between the parties relating to the
interpretation and enforcement of their rights and obligations under this
agreement shall be resolved solely by arbitration in accordance with the
provisions of this section.
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BINDING ARBITRATION. Any dispute between the parties that is to be
resolved by arbitration shall be settled and decided by arbitration
conducted by the American Arbitration Association in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as
then in effect, except as provided below. Any such arbitration shall be
held and conducted in Orange County, California before one arbitrator who
shall be selected by mutual agreement of the parties; if agreement is not
reached on the selection of an arbitrator within thirty (30) days, then such
arbitrator shall be appointed by the presiding judge of the superior court
of the county in which the arbitration is to be conducted.
ARBITRATION RULES AND PROCEDURES. The provisions of the Commercial
Arbitration Rules of the American Arbitration Association shall apply and
govern such arbitration, subject, however, to the following:
Any demand for arbitration shall be in writing and must be made within a
reasonable time after the claim, dispute or other matter in question has
arisen. In no event shall the demand for arbitration be made after the date
that institution of legal or equitable proceedings based on such claim,
dispute, or other matter would be barred by the applicable statute of
limitations or by agreement of the parties, whichever is applicable.
The arbitrator or arbitrators appointed must be former or retired judges
or "attorneys" with at least ten (10) years experience in business and
business acquisition matters, or nonattorneys with like experience in the
area of dispute.
All proceedings involving the parties shall be reported by a certified
shorthand court reporter and written transcripts of the proceedings shall be
prepared and made available to the parties.
The arbitrator or arbitrators shall prepare in writing and provide to the
parties factual findings and the reasons on which the decision of the
arbitrator or arbitrators is based.
Final decision by the arbitrator or arbitrators must be made within
ninety (90) days from the date the arbitration proceedings are initiated.
The prevailing party shall be awarded reasonable attorneys' fees, expert
and nonexpert witness costs and expenses, and other costs and expenses
incurred in connection with the arbitration, unless the arbitrator or
arbitrators for good cause determine otherwise.
Costs and fees of the arbitrator or arbitrators shall be borne by the
non-prevailing party, unless the arbitrator or arbitrators for good cause
determine otherwise.
The award or decision of the arbitrator or arbitrators, which may include
equitable relief, shall be final and judgment may be entered on it in
accordance with applicable law in any court having jurisdiction over the
matter.
The provisions of Title 9 of Part 3 of the California Code of Civil
Procedure, including Section 1283.05, and successor statutes, permitting
expanded discovery proceedings shall be applicable to all disputes which are
arbitrated pursuant to this Section.
45
(xiii) EXPENSES. Each party shall pay its own expenses (including the
fees and expenses of its legal counsel, accountants and any other advisors,
consultants or experts) in connection with the transactions contemplated
hereunder.
(xiv) NOTICES. All notices, requests, demands and other communications
required or contemplated hereunder shall be in writing, shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, and shall be deemed to have been given upon the earlier
of (a) the date of personal delivery to the person to receive such notice at
the address indicated below or (b) if mailed to the person to receive such
notice at the address indicated below, four (4) business days after the date
of posting by the United States Post Office as evidenced by the execution of
the return receipt. The parties' addresses, for all purposes hereof, are as
follows:
▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Buyer: Classic Golf Management, Inc.
c/o CEC Properties, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, President
Notice of change of address shall be given by written notice but shall not
be deemed effective until it has been given in the manner detailed in this
Section.
(xv) APPLICABLE LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and
not the laws pertaining to conflicts or choice of laws, of the State of
California applicable to agreements made and to be performed wholly within
the State of California.
(xvi) ATTORNEYS' FEES AND LITIGATION COSTS. If any suit, legal
proceeding, arbitration or other action is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
its reasonable attorneys' fees and other costs incurred in such proceedings
or action, in addition to any other relief to which it may be entitled.
(xvii) NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements, representations, warranties, indemnities, covenants and
agreement made by each of the parties hereto shall survive the Closing Date.
(xviii) WAIVERS. No waiver of any breach or default hereunder, or of
any condition precedent to the performance of any obligation hereunder,
shall be considered valid unless in writing and signed by the parties giving
such waiver or against whom such waiver is to be enforced, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the
same or similar nature.
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(xix) INTERPRETATION. The parties hereto acknowledge and agree that
each has been given the opportunity to independently review this Agreement
with legal counsel, and has the requisite experience and sophistication to
understand, interpret and agree to the particular language of the provisions
hereof. In the event of any ambiguity in or dispute regarding the
interpretation of this Agreement, or any provision hereof, the
interpretation of this Agreement shall not be resolved by any rule
providing for interpretation against the party who causes the uncertainty to
exist or against the party who is the draftsman of this Agreement.
(xx) PARTIAL INVALIDITY AND SEVERABILITY. If any provision of this
Agreement shall be held or deemed to be, or shall, in any fact, be
inoperative or unenforceable as applied in any particular case because it
conflicts with any other provision or provisions hereof or any constitution
or statute or rule of public policy or for any other reason, such
circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to any extent whatsoever. The invalidity of
any one or more phrases, sentences, clauses, sections or subsections of this
Agreement shall not affect the remaining portion thereof.
(xxi) SECTION HEADINGS. The section headings in this Agreement are
included for convenience only, are not a part of this Agreement and shall
not be used in construing it.
(xxii) REFERENCE TO SECTIONS. All references to sections are deemed to
include references to the sections' subsidiary to the section referred to
when the context so requires. The term "this Section" refers to the Section
of the Agreement in which the reference is made and all other Sections
subsidiary to the Section referred.
(xxiii) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of each corporate party hereto, their respective
successors and permitted assigns, and each individual party hereto and his
or her heirs, personal representatives, estates, successors and permitted
assigns.
(xxiv) FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver such other instruments, in form and substance mutually agreeable to
the parties, as any other party may reasonably require in order to carry out
the terms of this Agreement or to implement, complete or further the
transactions contemplated by this Agreement.
(xxv) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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(xxvi) ENTIRE AGREEMENT; AMENDMENT. This Agreement, any all
certificates, schedules and exhibits incorporated herein, and all other
agreements, documents or writings required to be delivered in connection
herewith contain the entire understanding among the parties hereto with
respect to the subject matter among the parties hereof and supersedes any
and all prior or contemporaneous written or oral negotiations and agreements
between them regarding the subject matter hereof. No addition, modification
or amendment of or to any term or provision of this Agreement, or to this
Agreement as a whole, shall be effective unless set forth in writing and
signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above mentioned.
CLASSIC GOLF MANAGEMENT, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, President
CEC PROPERTIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, President
48
