Item 1. Changes in Control of Registrant.
None
Item 2. Acquisition or Disposition of Assets.
On September 28, 1995, the Registrant purchased all of the outstanding shares
of Shagawa Resort, Inc., which was the sole owner of a motel under
construction in Ely, Minnesota. The Registrant is proceeding with completing
the construction of said motel. It is anticipated that construction will be
completed on approximately December 31, 1995 depending on weather
conditions. The motel will consist of 61 units, swimming pool, reception area
and other usual items connected with a motel. The motel will consist of
approximately 54,000 square feet of buildings. The purchase included
approximately 15 acres of land located in Ely, Minnesota.
The purchase price of the motel and land connected therewith was
approximately $2,500,000.00, consisting of $828,141 cash and $1,700,000
by assuming a mortgage to NorWest Bank Minnesota Mesabi N. A. of which
$952,000.00 is guaranteed by a Small Business Administration loan PFA
debenture.
Upon completion it is intended that said motel will be a Holiday Inn Sunspree
Resort. It is estimated that on the date of the purchase, September 28, 1995,
said motel was approximately 75% completed.
The Registrant simultaneously entered into a management agreement with
Northland Adventures Minnesota, Ltd., to manage the motel until December
15, 1997. Registrant also entered into a Stock Purchase and Sale Agreement
and Option to Repurchase Stock with Northland Adventures Minnesota, Ltd.
Said option may be exercised by Northland Adventures Minnesota, Ltd. On or
before December 15, 1997. The option price to be paid to the Registrant would
be an amount equal to the sum of:
a. $628,141.00; plus
b. any additional amounts invested by the Registrant for the motel
project, including any nonrefunded balance of the initial $200,000.00
advanced as a bridge loan; plus
c. An amount equal to $2,000.00 times the number of months elapsed
from the commencement of operation of the motel to the date of repurchase of
the motel; and
d. Payment in full or assumption of the loans to NorWest Bank Minnesota
Mesabi N. A. and Small Business Association.
All of the transactions relative to the purchase by Registrant, the option to
purchase, By Northland Adventures Minnesota, Ltd., and the Management
Agreement was determined as a result of arm's-length negotiations between
unrelated parties.
A copy of the Stock Purchase and Sale Agreement and Option to Repurchase
Stock with respect to said transactions are annexed as Exhibit 1.
Item 3. Bankruptcy or Receivership.
None.
Item 4. Change in Registrant's Certifying Accountant.
None.
Item 5. Other Materially Important Events.
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Registrant: Dynamic Homes, Inc.
VERN MUZIK (president)
Dated: October 12, 1995
STOCK PURCHASE AND SALE AGREEMENT
AND
OPTION TO REPURCHASE STOCK
THIS AGREEMENT is made and entered into this 7th day of September, 1995,
between and among Gary Loge, Phil Swanson, and Gary Otterstad (collectively
"Sellers"), Dynamic Homes, Inc., a Minnesota corporation ("Purchaser"), and
Nortland Adventures Minnesota, Ltd., a Minnesota corporation ("Managing
Agent").
WHEREAS, Sellers are the registered owners of 100% of the stock (the "Stock)
of Shagawa Resort, Inc., a Minnesota corporation ("Shagawa"); and
WHEREAS, Shagawa owns a resort which is under construction in Ely, Minnesota,
and which is commonly known as the Holiday Inn Sun Spree Resort (the
"Project"); and
WHEREAS, Purchaser has supplied materials to Shagawa in connection with the
construction of the Project and is currently owed approximately $628,141.00 by
Shagawa for such materials; and
WHEREAS, due to cost overruns in connection with construction of the Project,
the lenders on the Project have required additional equity to be invested in
the Project as a condition to continuing construction loan disbursements; and
WHEREAS, Purchaser is experienced in the construction of motels and resorts
similar to the Project, and Purchaser is willing to contribute to the Project
the amount owed to Purchaser by Shagawa noted as above as an equity investment,
to assume responsibility for completion of construction of the Project, and to
assume all of the obligations and liabilities of Sellers and Shagawa on
connection with the Project, in exchange for the transfer to Purchaser by
Sellers of all of the Stock; and
WHEREAS, pursuant to a certain Management Agreement (the "Management
Agreement") dated as of even date herewith between Shagawa and Managing Agent,
upon completion of the Project shall be managed by Managing Agent; and
WHEREAS, Purchaser wishes to grant to Managing Agent an option to repurchase
the Stock at any time during the term of the Management Agreement; and
WHEREAS, Sellers desire to sell, transfer, assign and deliver to Purchaser
the Stock for the reasons and purposes recited hereinabove; and
WHEREAS, Purchaser desires to purchase and acquire from Sellers all of the
Stock for the reasons and purposes recited hereinabove; and
WHEREAS, the parties hereto desire to set forth in writing their agreements
and understandings with respect to the sale by Sellers and the purchase by
Purchaser of the Stock, and the option in favor of Managing Agent for the
repurchase of the Stock.
NOW, THEREFORE, in consideration of the foregoing recited facts and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase of Stock. Purchaser agrees to and does hereby purchase from Sellers
and Sellers agree to and do hereby sell to Purchaser the Stock in consideration
of the payment of Ten Dollars ($10.00) to be paid by Purchaser to Sellers, and
in consideration of the covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
mutually acknowledged by the parties hereto.
2. Delivery of Certificates. Upon Sellers' receipt of: (i) two (2) fully
executed originals of this agreement from Purchaser; (ii) a fully executed
original of the Agreement dated as of even date herewith among Sellers,
Shagawa, Purchaser and NorWest Bank Minnesota Mesabi, National Association
("NorWest"); (iii) an officially stamped original of the approval from the
U.S. Small Business Administration ("SBA") of the assumption by Purchaser of
Shagawa's loan from Minnesota Business Finance, Inc. (the "SBA Loan"); and
(iv) two (2) fully executed originals of the Management Agreement, Sellers
shall deliver or cause to be delivered to Purchaser: (x) the original
certificates evidencing the Stock, duly endorsed and assigned to the Purchaser
either on the certificates themselves or by duly executed Assignments in the
form attached hereto as Exhibit A; (y) resignations of all current officers
and directors of Shagawa; and (z) the minute book(s) and all of the corporate
records of Shagawa.
3. Representations and Warranties of Sellers. In order to induce Purchaser to
enter into this Agreement and to consummate the transactions contemplated
hereby, Sellers represent and warrant that all of the Stock is owned by them
free and clear of all liens, encumbrances, claims, options, walls, calls and
commitments of every kind, except as has otherwise been disclosed to Purchaser.
Further, Sellers represent and warrant that they have the full legal right,
power and authority to enter into this Agreement and the full legal right,
power and authority to assign, sell, transfer and deliver the Stock to
Purchaser, and with the delivery of the Stock to Purchaser hereunder, they will
transfer valid title therein free and clear of all liens, encumbrances, claims,
options, warrants, calls and commitments of any kind, except as has otherwise
been disclosed to Purchaser. Sellers also represent that Shagawa has legal
title to the real estate on which the Project is being constructed, except for
that portion of the real estate which is leased from the City of Ely which will
become the property of Shagawa upon completion of the Project.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Sellers that Purchaser is authorized to and may lawfully acquire
the stock hereunder, that the Purchaser may lawfully undertake the obligations
set forth herein and that this Agreement constitutes the valid, binding and
legal obligation of Purchaser, enforceable in accordance with its terms.
5. Assumption. By acquisition of the Stock, Purchaser has agreed and hereby
agrees as sole shareholder of Shagawa to assume all contracts, leases and other
agreements and liabilities of Shagawa of any kind or nature and that Sellers
shall forever be released and discharged from any further obligations or
liabilities of any kind or nature in connection with Shagawa or the Project.
The current liabilities of Shagawa are listed in Exhibit B attached hereto and
made a part thereof.
6. Release. Purchaser, for itself and its successors and assigns, do hereby
remise, release and forever discharge each of the Sellers and their respective
heirs, successors and assigns of and from any and all manner of actions, suits,
claims, demands, damages, judgments, levies, and executions, whether known or
unknown, suspected or unsuspected, liquidated or unliquidated, fixed or
contingent, direct or indirect, at law or in equity, and which the Purchaser,
or its officers, directors, successors or assigns, ever had, has or ever can,
shall or may have or claim to have against Sellers for, upon, or by reason of
any matter, fact or thing prior to the date of these presents, including, but
without limitation, any and all claims arising out of Sellers' ownership of the
Stock or in connection with the Project.
7. Indemnification. Purchaser hereby agrees to indemnify and hold Sellers,
their heirs, successors and assigns, harmless from and against any and all
loss, damage, claim, demand, liability, cost or expense (including reasonable
attorney's fees), or any action in respect thereof, arising out of: (i) any
note made by Sellers or guaranty given by Sellers of the obligations of
Shagawa prior to the date hereof to any financial institution or other person
providing credit, loans or financing to Shagawa or its shareholders; (ii) any
claim against Shagawa or Sellers by the creditors of Shagawa based upon
Sellers' prior status as officers, directors and/or shareholders of Shagaw, but
excluding claims based on Sellers' fraud or intentional misrepresentation;
(iii) any activities of Shagawa from and after the date hereof. The current
liabilities of Shagawa are listed on Exhibit B attached hereto and made a part
thereof.
8. Option to Repurchase Stock. Purchaser hereby grants Managing Agent the
option at any time during the term of the Management Agreement, as such term
may be extended pursuant to the terms and conditions of the Management
Agreement, to repurchase the Stock from Purchaser. In order to exercise the
repurchase option, Managing Agent shall give written notice to Purchaser of its
intent to repurchase the Stock at least thirty (30) days in advance of the
anticipated date of repurchase. Managing Agent shall pay to Purchaser as full
consideration and payment for the repurchase of the Stock an amount (the
"Repurchase Price") equal to the sum of: (i) $628,141.00, plus (ii) any
additional amounts invested by Purchaser in Shagawa or the Project after the
date hereof with the prior written approval of Sellers, plus (iii) an amount
equal to $2,000.00 times the number of months elapsed from the commencement of
operation of the Project to the date of repurchase of the Stock by Managing
Agent as herein provided. In addition to payment of the Repurchase Price,
Managing Agent shall either assume all of Purchaser's and Shagawa's obligations
with respect to the NorWest and SBA Loans, or cause such loans to be repaid in
full. As a further condition of the repurchase, Managing Agent shall also
assume all of the then existing liabilities of Shagawa, and Managing Agent
shall also assume all of the existing liabilities of Shagawa as disclosed to
Managing Agent on a then current balance sheet of Shagawa, and Managing
Agent shall release and indemnify Purchaser from any further liabilities in
connection with its ownership of the Stock. Notwithstanding the foregoing,
Managing Agent shall not be required to assume any liabilities of Shagawa or
Purchaser unless Sellers have consented to such liabilities pursuant to
paragraph 9 thereof.
9. Prohibition on Transfer or Encumbrance of Stock. Purchaser for itself and
its successors and assigns hereby covenants and agrees that until the
expiration of Managing Agent's option to repurchase the Stock, as set forth
herein, Purchaser shall not sell, assign, encumber, hypothecate or otherwise
transfer or convey in any manner the Stock or incur liabilities on behalf of
Shagawa without the prior written consent of Sellers, which consent may be
withheld in Sellers' sole discretion.
10. General.
A. Further Assurances. Purchaser and Sellers agree to take such further action
and execute and deliver all such further documents as may be necessary to fully
carry out the transaction contemplated and described herein.
B. Counterparts. This Agreement may be executed contemporaneously in two or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument. Telecopy versions
of signed documents shall be deemed original documents for all purposes hereof.
C. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Minnesota.
D. Entire Agreement. This Agreement and the documents delivered pursuant
hereto constitute the entire agreement and understanding between the parties
hereto and supersede any prior agreement and understanding, whether oral or
written, relating to the subject matter hereof. This Agreement may be modified
or amended only be a written Agreement executed by Purchaser and Sellers.
E. Survival. All representations, warranties and covenants contained herein
shall survive the execution of this Agreement and the consummation of the
transactions contemplated hereby.
F. Notices. Any notice or other communication provided for herein or given
hereunder to a party hereto shall be in writing and shall be delivered in
person to such party or mailed by first class mail, postage prepaid, addressed
as set forth hereinbelow, or to such other address with respect to a party as
such party shall notify the others in writing according to this notice
provision. If mailed, such notice or other communication shall be deemed to
be received on the third day after deposit:
Sellers: 1300 Highway 371 & 210 W., #109
Brainerd, MN 56401
Purchasers: Dynamic Homes, Inc.
c/o Mr. Glenn R. Anderson
2215 South Sixth Street
Brainerd, MN 56401
Managing
Agent: Northland Adventures Minnesota, Ltd.
c/o Mr. Gary Loge
1300 Highway 371 & 210 W., #109
Brainerd, MN 56401
IN WITNESS WHEREOF, the parties have executed and delivered thisAgreement as
of the day and year first above written.
SELLERS:
GARY LOGE
PHIL SWANSON
GARY OTTERSTAD
PURCHASER:
Dynamic Homes, Inc.,
a Minnesota corporation
By: VERN MUZIK
Title: President
MANAGING AGENT:
Northland Adventures Minnesota, Ltd.,
a Minnesota corporation
By: GARY LOGE
Title: President
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, GARY LOGE, PHILLIP SWANSON, GARY OTTERSTAD hereby sells,
assigns, and transfers unto DYNAMIC HOMES, INC. 1000 Shares of the Common
Stock standing in his name on the books of SHAGAWA RESORT, INC., a Minnesota
corporation, represented by Certificate Nos. 1 - 4 herewith and does hereby
irrevocably constitute and appoint Dynamic Homes, Inc. as his true and lawful
attorney - in - fact to transfer the said stock on the books of Shagawa
Resorts, Inc. with full power of substitution on the premises.
Dated: August 7, 1995
GARY LOGE
PHILLIP SWANSON
GARY C. OTTERSTAD
EXHIBIT B
CURRENT LIABILITIES OF SHAGAWA
None
