UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report November 13, 1997
COMMISSION FILE NO. 0-24812
BRASSIE GOLF CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 56-1781650
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(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
One Tampa City Center, Suite 2550, Tampa, FL 33602
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(Address of principal executive offices)
(813) 222-0611
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(Registrant's telephone number, including area code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes |X| No |_|
<PAGE>
BRASSIE GOLF CORPORATION
FORM 8 - K
TABLE OF CONTENTS
Item 1. Changes in Control of Registrant - None
Item 2. Acquisition or Disposition of Assets...Page 3
Item 3. Bankruptcy or Receivership - None
Item 4. Changes in Registrant's Certifying Accountant - None
Item 5. Other Events - None
Item 6. Resignations of Registrant's Directors - None
Item 7. Financial Statements and Exhibits.........Page 3
Signatures.........................................Page 7
Exhibit 2.1
Asset Purchase Agreement dated November 13, 1997
between The Gauntlet at St.James, Inc. and The
Gauntlet at St. James Plantation, LLC..............Page 8
Page 2 of 7
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
The Company, through its subsidiary The Gauntlet at St. James, Inc., has
disposed of its golf course known as The Gauntlet at St. James ("St. James")
through an asset sale.
On November 13, 1997, the Company sold St. James to The Gauntlet at St. James
Plantation, LLC, based in North Carolina. The P.B. Dye designed golf course
located in Southport, N.C. was sold for $2,950,000 in cash.
Item 7. Financial Statements and Exhibits
Financial Statements
BRASSIE GOLF CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
The following unaudited pro forma condensed consolidated balance sheet is
presented as if St. James were sold on September 30, 1997 and should be read in
conjunction with the pro forma condensed consolidated statements of operations
by the Company for the nine months ended September 30, 1997 and for the year
ended December 31, 1996, the consolidated financial statements and related notes
of the Company included in its Annual Report on Form 10-KSB for the year ended
December 31, 1996 and the unaudited financial statements and related notes of
the Company included in its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997. The pro forma
condensed consolidated balance sheet is unaudited and is not necessarily
indicative of the actual financial position of the Company had the transaction
actually occurred on September 30, 1997 nor does it represent the future
financial condition of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Brassie Golf Brassie Golf
Combining Combining
Historical St. James Pro Forma
------------------ -------------------- --------------
Current assets:
Cash $ 142,869 $ 100,000 $ 242,869
Marketable equity securities 39,912 39,912
Accounts and notes receivable 407,058 (47,033) 360,025
Inventories and other current assets 234,849 (131,177) 103,672
------------ ----------- --------
Total current assets 824,688 (78,210) 746,478
Equity investments in subsidiaries 116,318 116,318
Property and equipment, net 10,342,852 (4,969,348) 5,373,504
Accounts receivable from related 476,471 476,471
parties
Intangible assets, net 758,197 (95,472) 662,725
------------------ ------------------- --------
Total assets $ 12,518,526 $ (5,143,030) $ 7,375,496
================== =================== ===============
</TABLE>
Page 3 of 7
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BRASSIE GOLF CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Brassie Golf Brassie Golf
Combining Combining Pro
Historical (a) St. James(b) Forma
------------------- ------------------ -----------------
Liabilities And Shareholders Equity:
Accounts payable and accrued
expenses $ 620,336 $(147,582) $ 472,754
Accrued interest payable 252,067 (35,938) 216,129
Income tax payable 189,712 189,712
Mortgages and notes payable 8,410,813 (2,872,826) 5,537,987
Accrued discount on convertible
debentures 570,494 570,494
Minority interest payable 111,684 (111,684)
Shareholders' Equity:
Preferred Stock 281 281
Common Stock 29,520 29,520
Additional paid-in capital 25,974,396 25,974,396
Accumulated deficit (23,554,641) (1,975,000) (25,529,641)
Unrealized (loss) on investments (237) (237)
Foreign currency translation
adjustment (85,899) (85,899)
------------------- ------------------ -----------------
Total shareholders' equity 2,363,420 (1,975,000) 388,420
------------------- ------------------ -----------------
Total liabilities and shareholders' $12,518,526 $(5,143,030) $7,375,496
equity =================== ================== =================
</TABLE>
Notes to the unaudited pro forma condensed consolidated balance sheet:
(a) Represents the Company's historical balance sheet contained in the
Company's Quarterly Report on Form 10-QSB for the quarter ended September
30, 1997.
(b) Represents the historical balance sheet of St. James as of September 30,
1997, as adjusted for the Company's loss on the sale of assets.
Page 4 of 7
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BRASSIE GOLF CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
The following unaudited pro forma condensed consolidated statement of operations
is presented as if St. James were sold as of January 1, 1997 and should be read
in conjunction with the pro forma condensed consolidated balance sheet of the
Company for the nine months ended September 30, 1997 and for the year ended
December 31, 1996, the consolidated financial statements and related notes of
the Company included in its Annual Report on Form 10-KSB for the year ended
December 31, 1996 and the unaudited financial statements and related notes of
the Company included in its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997. The pro forma
condensed consolidated statement of operations is unaudited and is not
necessarily indicative of the actual operations of the Company had the
transaction actually occurred on January 1, 1997, nor does it purport to
represent the future operating results of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Brassie Golf Brassie Golf
Combining Pro Forma Combining
Historical(a) St. James (b) Adjustments (c) Pro Forma
------------------ ----------------- ----------------- ---------------
Operating Revenues $ 3,650,052 $ (1,505,893) $ 2,144,159
Operating Expenses (3,714,369) 984,904 (2,729,465)
Depreciation & Amortization (543,398) 185,229 (358,169)
------------------ ----------------- ----------------- ---------------
Operating Loss (607,715) (335,760) (943,475)
Interest Expense (560,494) 214,442 (346,052)
Other Income (Expense) 132,882 (1,312) (1,975,000) (1,843,430)
------------------ ----------------- ----------------- ---------------
Net Loss Before Extraordinary Items $ (1,035,327) $ (122,630) $ (1,975,000) (3,132,957)
================== ================= ================= ===============
Net Loss Per Share Before
Extraordinary Item $ (.04) $ (.11)
=================== ===============
Weighted Average Shares Outstanding 28,587,800 28,587,800
=================== ===============
</TABLE>
Notes to the Unaudited pro forma condensed consolidated statement of operations
(a) Represents the Company's historical statement of operations contained in
its quarterly report on form 10-QSB for the nine months ended September 30,
1997.
(b) Reflects the historical statement of operations of St. James for the nine
months ended September 30, 1997.
(c) Reflects the Company's loss on the sale of St. James.
Page 5 of 7
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BRASSIE GOLF CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
The following unaudited pro forma condensed consolidated statement of operations
is presented as if St. James were sold as of January 1, 1996 and should be read
in conjunction with the pro forma condensed consolidated balance sheet of the
Company for the nine months ended September 30, 1997 and for the year ended
December 31,1996, the consolidated financial statements and related notes of the
Company included in its Annual Report on Form 10-KSB for the year ended December
31, 1996 and the unaudited financial statements and related notes of the Company
included in its Quarterly Reports on Form 10-QSB for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997. The pro forma condensed
consolidated statement of operations is unaudited and is not necessarily
indicative of the actual operations of the Company had the transaction occurred
on January 1, 1996, nor does it purport to represent the future operations of
the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Brassie Golf Brassie Golf
Combining Pro Forma Combining
Historical(a) St. James (b) Adjustments(c) Pro Forma
------------------ ------------------- ------------ ----------------
Operating Revenues $ 5,231,902 $ (2,101,096) $ 3,130,806
Operating Expenses (5,963,114) 1,330,611 (4,632,503)
Depreciation & Amortization (1,042,891) 226,327 (816,564)
Writedown of Goodwill (4,050,000) (4,050,000)
------------------ ------------------- ------------ ----------------
Operating Loss (5,824,103) (544,158) (6,368,261)
Interest Expense (2,316,301) 325,575 (1,990,726)
Other Income (Expense) (485,328) (2,263) (1,975,000) (2,462,591)
----------------- ----------------- ------------ ----------------
Net Loss Before Extraordinary Item $ (8,625,732) $ (220,846) $(1,975,000) $ (10,821,578)
================= ================= ============ ================
Net Loss Per Share Before
Extraordinary Item $ (.43) $ (.54)
================= ================
Weighted Average Shares Outstanding 20,005,900 20,005,900
================= ================
</TABLE>
Notes to the unaudited pro forma condensed consolidated statement of operations.
(a) Represents the Company's historical statement of operations contained in
its Annual Report on From 10-KSB for the year ended December 31, 1996.
(b) Reflects the historical statement of operations of St. James for the year
ended December 31, 1996.
(c) Reflects the Company's loss on the sale of St.James.
Page 6 of 7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned herein duly authorized.
BRASSIE GOLF CORPORATION
By: /s/ Stephen A. Tucker
-------------------------
Stephen A. Tucker
Principal Financial and Accounting Officer
Date: November 26, 1997
Page 7 of 7
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (including its schedules, the "Agreement")
is made as of the ____ day of November, 1997 by and among THE GAUNTLET AT ST.
JAMES PLANTATION, LLC, a North Carolina limited liability company ("Purchaser"),
THE GAUNTLET AT ST. JAMES, INC., a North Carolina corporation (formerly known as
Longview Golf Corporation) ("Seller"), BRASSIE GOLF CORPORATION, a Delaware
corporation ("Brassie"), and CANADIAN PT LIMITED PARTNERSHIP, a North Carolina
limited partnership ("Canadian PT") (Brassie and Canadian PT are hereinafter
referred to collectively as the "Shareholders"). HOMER E. WRIGHT, JR., INC., a
North Carolina corporation, joins in this Agreement solely for the purposes set
forth in Section 11.12 hereof.
WITNESSETH:
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Seller those assets of Seller
known and operated as The Gauntlet at St. James, for the purchase price and upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the other terms defined in this Agreement, the following
terms will have the definitions indicated:
1.1 Accounts Payable shall mean the trade accounts payable incurred by
Seller in the ordinary course of the Business and unpaid as of the Closing Date,
as specifically identified and listed on Schedule 4.4(c) hereto.
1.2 Accounts Receivable shall mean all of Seller's accounts receivable
related to the Business and less than 90 days old as of the Closing Date,
including receivables in connection with the golf course, golf shop and
clubhouse operations, and membership dues, as specifically identified and listed
on Schedule 4.4(a) hereto.
1.3 Assignment and Assumption Agreement shall mean the assignment and
assumption agreement between Purchaser and Seller in the form of Exhibit 3
hereto.
1.4 Assumed Agreements shall mean the 1990 Contract and the other
contracts, agreements and leases related to the Business that Purchaser shall
assume, as specifically identified and listed on Schedules 4.10(a) and 4.10(b)
hereto.
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<PAGE>
1.5 Balance Sheet Date shall mean September 30, 1997.
1.6 Bill of Sale shall mean the general warranty bill of sale and
assignment in the form of Exhibit 2 hereto, dated as of the Closing Date,
evidencing the transfer from Seller to Purchaser of the Purchased Assets.
1.7 Business shall mean the business sometimes known as "The Gauntlet at
St. James," "The Gauntlet Golf and Country Club," and/or other similar names,
which Business is owned and operated by Seller within or adjacent to the
development known as St. James Plantation in Brunswick County, North Carolina,
including a golf course, practice range, clubhouse, swimming pool, tennis courts
and other buildings and improvements;
1.8 Cash shall mean all of Seller's cash on hand at the Real Property as
of the Closing Date;
1.9 Closing shall mean the closing of the transactions contemplated by
this Agreement.
1.10 Closing Date shall mean November 13, 1997 or such other date as may
be mutually agreed upon by the parties hereto.
1.11 Closing Report shall mean a report, in the form of Schedule 1.11
hereto, to be delivered by Seller to Purchaser as of the Closing Date setting
forth the respective amounts of the Accounts Receivable, Inventory, Cash,
Prepaid Expenses, Accounts Payable, Prepaid Membership Dues and Prepaid Customer
Accounts as of the Closing Date, all such accounts and items to be valued in
accordance with Section 3.3 hereof.
1.12 Club Documents shall mean the Bylaws of The Gauntlet Club in St.
James Plantation dated January 25, 1991, the Golf Rules and Regulations dated
June 1, 1996 and the Tennis Rules and Regulations dated June 1, 1996, copies of
which were previously delivered to Purchaser.
1.13 Deed shall mean a North Carolina general warranty deed dated as of
the Closing Date, conveying fee simple title to the Real Property to Purchaser,
subject only to the Permitted Exceptions.
1.14 Equipment shall mean all of Seller's machinery, equipment, furniture,
fixtures and vehicles, including spare parts and supplies therefor, located at
or used in connection with the Business, including all of the items listed on
Schedule 4.8 hereto.
1.15 Escrow Agent shall mean James R. Prevatte, Jr., Esq., or any
successor agent appointed pursuant to the terms of the Escrow Agreement.
1.16 Escrow Agreement shall mean that certain agreement among Purchaser,
Seller and the Escrow Agent dated as of the Closing Date in the form of Exhibit
4 hereto.
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<PAGE>
1.17 Financial Statements shall mean the balance sheets of the Business
and related statements of income and cash flows at and for the two fiscal years
ended December 31, 1995 and December 31, 1996 and at and for the interim period
ended September 30, 1997, which were previously delivered to Purchaser and are
in the form previously agreed to by the parties hereto and initialed by the
parties hereto to indicate such agreement.
1.18 GAAP shall mean generally accepted accounting principles set forth in
the Statements of Financial Accounting Standards and Interpretations, Accounting
Principles Board Opinions and AICPA Accounting Research bulletins, as in effect
from time to time.
1.19 Intangible Assets shall mean any and all intangible assets owned or
used by Seller in connection with the Business including, without limitation,
copyrights, trademarks, trade names, service marks, customer, member and vendor
lists and records, accounts receivable records, accounts payable records,
prepaid expenses records and other records related to the Business and the
Purchased Assets, including all of those intangible assets listed on Schedule
4.9 hereto.
1.20 Inventory shall mean all of the inventories of goods, materials and
all other inventories of Seller, so classified in accordance with GAAP, less
than 365 days old as of the Closing Date and related to or held in connection
with the Business, including materials on hand to be used to maintain the
condition of the golf course, including all of that inventory listed on Schedule
4.7 hereto.
1.21 Lien shall mean any mortgage, deed of trust, pledge, security
interest, title retention agreement, tax lien, charge, option, adverse claim,
title defect, escrow, right of first refusal, indenture, easement, license,
contract or encumbrance of any kind.
1.22 Other Documents shall mean any and all agreements, statements,
certificates, schedules, opinions, instruments and other documents required or
contemplated hereunder or under any of the Related Agreements.
1.23 Permitted Exceptions shall mean Liens existing of record in the
Brunswick County Registry prior to, or created pursuant to, that General
Warranty Deed dated October 1, 1990 from Homer E. Wright, Jr., Inc. to Longview
Golf Corporation.
1.24 Person shall mean any natural person, firm, partnership, association,
corporation, limited liability company, trust, public body or government.
1.25 Prepaid Expenses shall mean all deposits and prepaid expenses of
Seller with respect to the Business as of the Closing Date, but only to the
extent that such deposits and prepaid expenses are transferrable to Purchaser,
as specifically identified and listed on Schedule 4.4(b) hereto.
1.26 Prepaid Customer Accounts shall mean the unearned portion of all
payments received by Seller for goods and services to be provided to customers
after the Closing, including
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<PAGE>
customer payments in advance and outstanding rain checks and gift certificates,
as specifically identified and listed on Schedule 4.4(e) hereto.
1.27 Prepaid Membership Dues shall mean the unearned portion of all
prepaid membership dues and fees received by Seller prior to the Closing, as
specifically identified and listed on Schedule 4.4(d) hereto.
1.28 Real Property shall mean all of Seller's land, buildings, fixtures
and any other improvements thereon located within or adjacent to the development
known as St. James Plantation in Brunswick County, North Carolina, together with
all appurtenant rights and easements and all buildings and improvements located
thereon, including, without limitation, all of that real property described on
Schedule 1.28 hereto.
1.29 Related Agreements shall mean the Deed, the Escrow Agreement, the
Assignment and Assumption Agreement and the Bill of Sale.
1.30 1990 Contract shall mean that Contract dated September 8, 1990
between Homer E. Wright, Jr., Inc., a North Carolina corporation, and Longview
Golf Corporation, a North Carolina corporation (which subsequently changed its
name to The Gauntlet at St. James, Inc.), as amended by that Amendment to
Contract dated March 18, 1992, related to the construction, development and
management of a golf course, tennis courts, a clubhouse and other facilities on
portions of the Real Property.
ARTICLE II
PURCHASE OF AND SALE OF ASSETS
2.1 Purchased Assets. Subject to and upon the terms and conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and deliver
to Purchaser, free and clear of all liabilities and Liens (other than Permitted
Exceptions), and Purchaser shall purchase and acquire from Seller, the following
assets that are owned by Seller on the Closing Date or in which Seller has any
right, title or interest on the Closing Date (collectively, the "Purchased
Assets"):
(a) Real Property;
(b) Equipment;
(c) Inventory;
(d) Accounts Receivable;
(e) Prepaid Expenses;
(f) Cash;
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<PAGE>
(g) rights and benefits under the Assumed Agreements;
(h) Intangible Assets;
(i) to the extent their transfer is permitted by the terms thereof
and applicable law, all permits, franchises, approvals and authorizations
by governmental authorities or third parties required in connection with
the ownership or possession of the Purchased Assets or the operation of
the Business;
(j) books and records or copies thereof, whether in physical,
electronic or other media, related to the Purchased Assets or the Business
or the employees of Seller to whom Purchaser makes offers of employment;
and
(k) goodwill associated with the Business and the right to carry on
the Business as a going concern.
2.2 Assumed Liabilities. Subject to and upon the terms and conditions set
forth in this Agreement, on the Closing Date and simultaneously with the
transfer, conveyance and assignment to Purchaser of the Purchased Assets,
Purchaser shall assume the Accounts Payable, the obligations of Seller accruing
after the Closing with respect to the Prepaid Membership Dues and Prepaid
Customer Accounts, and the obligations of performance accruing after the Closing
under the Assumed Agreements.
2.3 Excluded Liabilities. Except to the extent specifically set forth in
Section 2.2 above, Purchaser shall assume no liabilities or obligations of
Seller, whether absolute, contingent, known or unknown, determinable or not
determinable or otherwise, or whether relating to the Purchased Assets or the
Business or otherwise, and Seller shall retain all such liabilities and
obligations, including, without limitation, the following:
(a) any obligations of Seller under any note or evidence of
indebtedness;
(b) any obligations of Seller under this Agreement or any liability
of Seller arising from any breach of obligations hereunder or of any
representation or warranty hereunder;
(c) any liabilities or obligations of Seller arising by reason of any
violation of federal, state or local law or any rule, regulation or other
requirement of any governmental authority occurring prior to the Closing,
including, without limitation, any environmental, health, safety or
employment laws or regulations;
(d) any liabilities for any income taxes imposed by reason of the
sale or conveyance of the Purchased Assets to Purchaser, it being
understood and agreed that Purchaser will not be deemed to be Seller's
transferee with respect to any such income tax liability;
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<PAGE>
(e) except as specifically provided in Section 3.5 hereof with
respect to ad valorem taxes, any liability of Seller in respect of any
amount of federal, state, local or foreign taxes (including, without
limitation, ad valorem, franchise, payroll or sales and use taxes and any
interest, penalties and additions to such taxes imposed by virtue of the
operations of their businesses prior to the Closing), whether arising
before, at or after the Closing;
(f) any liability or obligation of Seller for breach of contract,
breach of warranty, or similar claim arising from products or services
sold by Seller prior to the Closing and any other claims by customers and
vendors arising from circumstances existing prior to the Closing or any
liability or obligation of Seller for products liability claims arising
from products or services sold by Seller prior to the Closing;
(g) any obligation or liability of any kind under any employee
benefit plan maintained currently or in the past by Seller, or under any
employee benefit plan or agreement which Seller has any present or future
obligation or liability or under which any of its employees has any
present or future rights;
(h) any liability arising in connection with the employment of any
person by Seller, including (i) accrued vacation and bonuses, (ii)
severance, settlement and noncompetition payments, (iii) sick leave,
payroll and other compensation, (iv) insurance, continued insurance and
COBRA benefits, (v) bonus plans and other employee benefit plans, programs
and policies, (vi) taxes related to any of the foregoing, and (vii) any
other liabilities and obligations of Seller with respect to its current,
retired, deceased, disabled or former employees or their survivors or
beneficiaries;
(i) any liability of Seller for environmental claims and any
contingent or undisclosed liabilities of Seller arising from circumstances
existing prior to the Closing;
(j) any liability of Seller in respect of injury to or death of any
person or damage to or destruction of property occurring prior to the
Closing;
(k) any liability arising or accruing under any contract or agreement
not included in the Assumed Agreements; and
(l) any liability of Seller arising after the Closing.
ARTICLE III
PURCHASE PRICE AND CLOSING
3.1 Purchase Price. The purchase price for the Purchased Assets shall be
$2,875,000, subject to adjustment as hereinafter provided (the "Purchase
Price").
3.2 Payment of the Purchase Price. The Purchase Price shall be paid as
follows: (i) upon execution of this Purchase Agreement by Purchaser, payment by
Purchaser of an earnest
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<PAGE>
money deposit in the amount of $50,000 (the "Earnest Money Deposit") to be held
in escrow by James R. Prevatte, Jr., Esq. until Closing and recording of the
Deed, at which time it shall be paid to Seller, or as otherwise provided in
Section 3.8; (ii) upon Closing and recording of the Deed, payment to Seller of
the balance of the Purchase Price in immediately available funds; and (iii)
assumption by Purchaser of the Accounts Payable pursuant to the Assignment and
Assumption Agreement.
Based on the Closing Report, a Purchase Price adjustment shall be
calculated by taking (a) the sum of the values of Cash, Accounts Receivable,
Inventory and Prepaid Expenses, and subtracting (b) the sum of the values of
Accounts Payable, Prepaid Membership Dues and Prepaid Customer Accounts, such
values to be determined in accordance with Section 3.3 hereof (the "Purchase
Price Adjustment"). The Purchase Price shall be increased by the amount of any
positive Purchase Price Adjustment or decreased by the amount of any negative
Purchase Price Adjustment and paid or credited at Closing.
3.3 Valuation of Certain Items. Accounts Receivable shall be valued at
fair market value. Prepaid Expenses shall be valued at face value, but only to
the extent that the same are transferrable to Purchaser and for which Purchaser
shall have the right to receive the benefit thereof. Accounts Payable, Prepaid
Membership Dues and Prepaid Customer Accounts shall be valued at face value.
Inventory shall be valued at cost, but only to the extent that the same is
saleable or usable in the ordinary course of the Business. Such values shall be
set forth in the Closing Report.
3.4 The Closing. The Closing shall take place at the offices of James R.
Prevatte, Jr., Southport, North Carolina on the Closing Date, or on such other
date as Seller and Purchaser may agree. All proceedings to be taken and all
documents to be executed and delivered by the parties at the Closing shall be
deemed to have been taken and executed simultaneously, and no proceeding shall
be deemed taken nor any document executed and delivered until all have been
taken, executed and delivered. The transfer of the Purchased Assets to, and
assumption of the Assumed Agreements by, Purchaser shall be deemed effective as
of the Closing Date; provided, however, that Purchaser assumes no risks and
shall have no liability with respect to the Purchased Assets unless the Closing
shall have occurred. At the Closing, subject to all of the terms and conditions
of this Agreement:
(a) Seller shall deliver to Purchaser the duly executed Deed,
together with a no-lien affidavit and/or lien waivers as may be required
for Purchaser to obtain the title insurance described in Section 8.11
hereof.
(b) Seller shall deliver to Purchaser the duly executed Bill of Sale.
(c) Seller and Purchaser shall execute and deliver to each other the
Assignment and Assumption Agreement.
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<PAGE>
(d) Seller shall deliver to Purchaser, in form and substance
satisfactory to Purchaser, such consents from third parties as Purchaser
may deem necessary or advisable to effect any assignment or transfer
described in Section 2.1 hereof.
(e) Seller shall deliver to Purchaser (i) a certificate of existence
of Seller from the North Carolina Secretary of State as of a recent date,
(ii) a copy of the Articles of Incorporation of Seller, and all amendments
thereto, certified by the North Carolina Secretary of State as of a recent
date, (iii) a copy of the Bylaws of Seller and all amendments thereto,
(iv) resolutions of the shareholders and board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and
the Related Agreements and consummation of the transactions contemplated
hereby and thereby, and (v) original signatures of its incumbent officers,
in each case certified by its Secretary or Assistant Secretary.
(f) Seller shall deliver to Purchaser (i) a certificate of good
standing of Brassie from the Delaware Secretary of State as of a recent
date, (ii) a copy of the Certificate of Incorporation of Brassie, and all
amendments thereto, certified by the Delaware Secretary of State as of a
recent date, (iii) a copy of the Bylaws of Brassie and all amendments
thereto, (iv) resolutions of the board of directors of Brassie authorizing
the execution, delivery and performance of this Agreement, the sale of
assets by Seller as provided for herein, and the consummation of the
transactions contemplated hereby, and (v) original signatures of its
incumbent officers, in each case certified by its Secretary or Assistant
Secretary.
(g) Seller shall deliver to Purchaser evidence satisfactory to
Purchaser of the existence, good standing and authority of Canadian PT and
its General Partner, North Carolinian PT, Inc., as of a recent date.
(h) Seller shall deliver to Purchaser, in a form satisfactory to
Purchaser, releases of any security interests in and Liens on the
Purchased Assets (other than Permitted Exceptions).
(i) Seller shall deliver to Purchaser the Closing Report, certified
as to its accuracy and completeness by the President or chief financial
officer of Seller.
(j) Seller shall deliver to Purchaser a certificate signed by its
President or chief executive officer to the effect that the
representations and warranties of Seller in this Agreement are true and
complete on the Closing Date as if made thereon and that Seller has
performed or complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by Seller
prior to or on the Closing Date.
(k) Seller shall deliver to Purchaser an affidavit duly executed by
Seller in compliance with Section 1445 of the United States Internal
Revenue Code, as amended, and applicable regulations stating that Seller
is not a "foreign person" as that term is defined in said Section 1445.
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(l) Seller shall deliver to Purchaser a duly executed amendment to
the Bylaws of The Gauntlet Club providing that the Manager(s) of Purchaser
shall act as the Board of Directors of The Gauntlet Club.
(m) Seller shall deliver to Purchaser the books and records relating
to the Purchased Assets and such other documents, certificates and
instruments as are reasonably requested by Purchaser to effect the
transactions contemplated herein.
(n) Seller shall cause to be delivered to Purchaser an opinion of
Alston & Bird LLP, counsel to Seller and Brassie, and an opinion of
Kilpatrick Stockton LLP, counsel to Canadian PT, addressed to Purchaser
and Purchaser's lender, Branch Banking and Trust Company, and dated as of
the Closing Date, in form and content satisfactory to Purchaser and
Purchaser's counsel.
(o) Purchaser shall pay the balance of the Purchaser Price as
provided in Section 3.2 hereof.
(p) Seller, Purchaser and the Escrow Agent shall execute and deliver
to each other the Escrow Agreement and Seller shall deliver $25,000 in
immediately available funds to the Escrow Agent.
(q) Purchaser shall deliver to Seller a certificate of existence of
Purchaser from the North Carolina Secretary of State as of a recent date.
(r) Purchaser shall deliver to Seller (i) a copy of the Articles of
Organization of Purchaser, and all amendments thereto, certified by the
North Carolina Secretary of State as of a recent date, (ii) a copy of
resolutions of the Members of Purchaser authorizing the execution,
delivery and performance of this Agreement and the Related Agreements and
consummation of the transactions contemplated hereby and thereby, and
(iii) a certificate signed by its Manager to the effect that the
representations and warranties of Purchaser under this Agreement are true
and complete on the Closing Date as if made thereon and that Purchaser has
performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by Purchaser
prior to or on the Closing Date.
(s) Purchaser delivers to Seller such other documents, certificates
and instruments as are reasonably requested by Seller to effect the
transactions contemplated herein.
(t) Purchaser shall cause to be delivered to Seller an opinion of
Schell Bray Aycock Abel & Livingston P.L.L.C., counsel to Purchaser,
addressed to Seller and dated as of the Closing Date, in form and content
satisfactory to Seller and Seller's counsel.
(u) Purchaser shall direct its attorney to proceed to the Brunswick
County Registry to the determine whether the status of title to the Real
Property is as required by this Agreement and, if the status of title is
determined to be as so required, to record the Deed.
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3.5 Prorations and Closing Costs. The following items shall be prorated
and paid at Closing: (i) ad valorem taxes on the Purchased Assets shall be
prorated on a calendar year basis through the Closing Date; and (ii) assessments
payable by Seller to the St. James Property Owners' Association, Inc. shall be
prorated through the Closing Date. All late listing penalties, if any, shall be
paid by Seller at Closing. Seller shall be responsible for any documentary
transfer taxes imposed by reason of the transfer of the Purchased Assets to
Purchaser as provided herein and any deficiency, interest or penalty asserted
with respect thereto. Purchaser shall pay the fees and costs of recording or
filing the Deed. Seller shall be responsible for all utilities used on the Real
Property or otherwise in connection with the Business prior to Closing and
Purchaser shall be responsible for all such utilities used after Closing.
Ad valorem taxes shall be prorated as of the Closing Date based on the
current tax bills for the Purchased Assets, if then available, or if not, on the
basis of the latest available tax figures and information. Should any proration
be based on such latest available tax figures and information prove to be
inaccurate on receipt of the tax bills for any of the Purchased Assets for the
year of the Closing, either Seller or Purchaser, as the case may be, may demand
at any time after the Closing payment from the other correction of such
malapportionment. In addition, if after the Closing there is an adjustment or
reassessment by any governmental authority with respect to, or affecting, any ad
valorem taxes for any Purchased Assets for the year of the Closing or any prior
year, any additional tax payment for any Purchased Assets required to be paid
with respect to the year of the Closing shall be prorated between Purchaser and
Seller, and Seller agrees to pay its prorated portion of any such additional tax
payment for the year of Closing, plus the entire amount of any such additional
tax payment for any prior year, to Purchaser within ten days after receipt of
written notice from Purchaser. If after the Closing there is an adjustment or
reassessment by any governmental authority with respect to, or affecting, any ad
valorem taxes for any Purchased Assets for the year of the Closing or any prior
year, any refund for any Purchased Assets with respect to the year of the
Closing shall be prorated between Purchaser and Seller, and Seller shall receive
the entire amount of any such refund for any prior year.
3.6 Tax Reporting. The parties hereto agree to report the federal, state
and local income and other tax consequences of the purchase and sale
contemplated hereby in a manner consistent with the allocation of the Purchase
Price set forth on Schedule 3.6 hereto and will file IRS Form 8594 on a basis
consistent with such allocation, and no party or any of its affiliates will file
a tax return or take any position inconsistent therewith upon examination of any
tax return, in any refund claim, in any litigation, or otherwise.
3.7 Post Closing Purchase Price Adjustment.
(a) Purchaser and its accountants shall have sixty (60) days after the
Closing in which to review and examine the Closing Report and verify the amount
of the Purchase Price Adjustment. If Purchaser does not dispute the accuracy of
the Closing Report by written notice to Seller within such sixty (60) day
period, the Closing Report shall be deemed accepted and shall be final and
binding on the parties. If following such review, Purchaser disputes the
accuracy of the Closing Report, Purchaser and Seller, or each of their
accountants, shall attempt to reconcile any such dispute. If such dispute has
not been reconciled within thirty (30) days of Purchaser's notification
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to Seller of the existence of such dispute, or such longer period upon which
Purchaser and Seller shall agree, they shall refer such dispute to a North
Carolina certified public accountant or accounting firm on whom Purchaser's and
Seller's accountants shall mutually agree to resolve the dispute (the "Referee
Accountant"). Seller and Purchaser shall furnish to the Referee Accountant
copies of the Closing Report and working papers and supporting detail as the
Referee Accountant shall reasonably request. The decision of the Referee
Accountant shall be final and binding upon all parties, absent manifest error.
Seller and Purchaser each shall pay one-half of the fees and expenses of the
Referee Accountant.
(b) If the amount of the Purchase Price Adjustment, as finally determined,
is greater than the amount determined pursuant to the Closing Report, then any
such difference shall be paid by Purchaser to Seller in immediately available
funds to an account designated in writing by Seller within thirty (30) days of
such determination. If the amount of the Purchase Price Adjustment, as finally
determined, is less than the amount determined pursuant to the Closing Report,
then any such amount shall be refunded by Seller to Purchaser in immediately
available funds to an account designated in writing by Purchaser within thirty
(30) days of such determination.
3.8 Return of Earnest Money Deposit; Remedies. In the event that Seller
does not cause this Agreement to be duly executed as of the date of this
Agreement, and a fully executed copy returned to Purchaser within three (3) days
after the date of this Agreement, or in the event that any of the conditions of
this Agreement are not satisfied, then the Earnest Money Deposit shall be
returned to Purchaser forthwith. In the event that Seller breaches this
Agreement, Purchaser shall be entitled to specific performance or damages in
addition to a return of its Earnest Money Deposit. In the event that Purchaser
breaches this Agreement, Seller shall be entitled to the Earnest Money Deposit
as liquidated damages and its sole remedy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller and each of the
Shareholders, jointly and severally, hereby unconditionally represents and
warrants to Purchaser as follows:
4.1 Due Organization and Authority.
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina. Seller has all requisite
corporate power and authority to own, operate, lease and use its properties and
assets and to carry on its business as it now being conducted. Seller is not a
"foreign person" as that term is defined in Section 1445 of the United States
Internal Revenue Code, as amended, and applicable regulations.
(b) Brassie is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Brassie has all requisite
corporate power and authority to own,
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operate, lease and use its properties and assets and to carry on its business as
it now being conducted.
(c) Canadian PT is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of North Carolina, and its
General Partner, North Carolinian PT, Inc., is a corporation duly organized,
validly existing and in good standing under the laws of the State of North
Carolina.
(d) The Shareholders hold all right, title and interest in all of the
issued and outstanding shares of Seller. The shares held by Brassie represent
eighty percent (80%) of the votes entitled to be cast with respect to matters
requiring approval of the shareholders of Seller. The shares held by Canadian PT
represent twenty percent (20%) of the votes entitled to be cast with respect to
matters requiring approval of the shareholders of Seller.
4.2. Due Authorization; Binding Obligation. Seller and each Shareholder
has all necessary power and authority to execute, deliver and perform this
Agreement and the Related Agreements and Other Documents to which it is a party
and to consummate the transactions contemplated hereunder or thereunder. Such
execution, delivery and performance has been duly authorized by all necessary
action on the part of Seller and the Shareholders and no other proceedings on
the part of Seller or either Shareholder are necessary to authorize this
Agreement and the Related Agreements and Other Documents to which it is a party
and the transactions contemplated hereunder or thereunder. This Agreement and
each of the Related Agreements and Other Documents to which Seller is a party
has been or will be duly executed and delivered and constitutes or will
constitute the valid and binding obligation of Seller enforceable against Seller
in accordance with their respective terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application relating to or affecting the enforcement of
creditors' rights, and (ii) the application of general principles of equity with
respect to the availability of specific performance, injunctive relief or other
equitable remedies or limiting the recovery of attorneys' fees. This Agreement
has been duly executed and delivered and constitutes the valid and binding
obligation of the Shareholders enforceable against each Shareholder in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights, and (ii) the application of general principles of equity with respect to
the availability of specific performance, injunctive relief or other equitable
remedies or limiting the recovery of attorneys' fees.
4.3 No Conflict or Violation; Consents.
(a) Neither the execution, delivery or performance by Seller of this
Agreement, the Related Agreements or the Other Documents to which Seller is a
party nor the consummation of the transactions contemplated hereby or thereby
will (i) contravene or violate Seller's Articles of Incorporation or bylaws,
(ii) violate, conflict with, result in a breach of, or entitle any party to
terminate, or declare a default with respect to, any contract, lease, interest,
judgment, order, decree, law, rule or regulation applicable to Seller or its
business or to the Purchased Assets (with or without the giving of notice or the
passage of time or both) or (iii) require the consent,
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approval or authorization of any Person. Seller is not a party or subject to or
bound by any agreement, instrument, judgment, injunction or decree of any court
or governmental authority that may restrict or interfere with its performance of
this Agreement or any of the Related Agreements or Other Documents to which it
is a party.
(b) Neither the execution, delivery or performance by the Shareholders of
this Agreement, nor the consummation of the transactions contemplated hereby
will (i) contravene or violate Brassie's Articles of Incorporation or bylaws,
(ii) contravene or violate Canadian PT's agreement or certificate of limited
partnership, (iii) violate, conflict with, result in a breach of, or entitle any
party to terminate, or declare a default with respect to, any contract, lease,
interest, judgment, order, decree, law, rule or regulation applicable to either
or the Shareholders or their respective businesses (with or without the giving
of notice or the passage of time or both) or (iv) require the consent, approval
or authorization of any Person. Neither Shareholder is a party or subject to or
bound by any agreement, instrument, judgment, injunction or decree of any court
or governmental authority that may restrict or interfere with its performance of
this Agreement.
4.4 Financial Information. The Financial Statements were prepared in
accordance with GAAP consistently applied throughout the periods indicated, are
in accordance with the books and records of Seller and present fairly in
accordance with GAAP, as of their respective dates or the periods covered
thereby, the financial condition and results of operations of the Business.
Schedule 4.4(a) is a true and complete listing of the Accounts Receivable, all
of which have arisen in the ordinary course of the Business, represent valid
obligations due to Seller and are enforceable in accordance with their terms.
Schedule 4.4(b) is a true and complete listing of the Prepaid Expenses, all of
which have been made in the ordinary course of business and are transferrable to
Purchaser. Schedule 4.4(c) is a true and complete listing of the Accounts
Payable, all of which arose from bona fide transactions in the ordinary course
of the Business and are not yet due and payable. Schedule 4.4(d) is a true and
complete listing of the Prepaid Membership Dues. Schedule 4.4(e) is a true and
complete listing of the Prepaid Customer Accounts.
4.5 No Adverse Changes. Since the Balance Sheet Date, Seller has conducted
the Business only in the ordinary course of business in accordance with Seller's
past practices (without extraordinary or unusual transactions) and Seller has
not:
(a) suffered any material damage, destruction or loss (whether or not
covered by insurance) to any of the Purchased Assets;
(b) entered into any agreement relating to the Purchased Assets,
other than agreements for the purchase or sale of Inventory in the
ordinary course of business;
(c) created or assumed any Lien on any of the Purchased Assets;
(d) failed to perform in any material respect any obligations under
any Assumed Agreement;
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(e) sold, transferred, leased or otherwise disposed of any of the
Purchased Assets, except for sales of Inventory in the ordinary course of
business and except for sales of other nonmaterial assets in the ordinary
course of business, or canceled, compromised, waived or released any right
or claim of substantial value;
(f) instituted or made any increase in the compensation or benefits
payable to any employee of the Business;
(g) suffered any change, event or condition (including, without
limitation, the loss of any customer or supplier) which has had or is
likely to have a material adverse effect on the condition (financial or
otherwise) of the Purchased Assets or the Business;
(h) incurred any obligation or liability, absolute, contingent or
otherwise, whether due or to become due, in connection with the Business,
other than in the ordinary course of business consistent with Seller's
past practices;
(i) made any writedown of the value of any of the Purchased Assets;
(j) taken any action that would interfere with or prevent performance
of this Agreement; or
(k) agreed to do any of the foregoing.
4.6 Title. Except as disclosed in the Deed, Seller has and shall convey to
Purchaser at the Closing good and fee simple marketable title to all of the
Purchased Assets, free and clear from all Liens other than Permitted Exceptions.
4.7 Inventory. Schedule 4.7 is a true and complete listing of the
Inventory as of the date hereof by major items (or categories of items, where
appropriate). The Inventory has been recorded in the Financial Statements in
accordance with GAAP.
4.8. Equipment. Schedule 4.8 is a true and complete listing of the
Equipment as of the date hereof by major items (or categories of items, where
appropriate), together with a description of each item and a statement of the
date of acquisition of each item (to the extent practicable).
4.9 Intangible Assets. Schedule 4.9 sets forth all copyrights, trademarks,
service marks, trade names and patents held by Seller in connection with the
Business, all applications for any of the foregoing, and all permits, grants,
franchises and licenses or other rights granted to or from Seller relating to
any of the foregoing, and there are no other copyrights, trademarks, service
marks, trade names or patents used in the Business. Seller has the right to use,
free and clear of any liens, claims or rights of others, the intangible rights
listed on Schedule 4.9 and, to the best of Seller's knowledge, all trade
secrets, know-how, processes, technology, computer software, blueprints and
designs utilized in or incident to its business as presently conducted and such
use does not infringe on or otherwise violate any copyright, trademark, service
mark, trade name or patent. Seller has not received any notice of any adversely
held copyright, trademark,
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service mark, trade name or patent of any other Person or notice of any claim of
any other Person relating to any of the properties set forth on Schedule 4.9. To
the best of Seller's knowledge, the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not result in the loss
or the impairment of any rights to the intangible rights listed on Schedule 4.9.
4.10 Assumed Agreements. With respect to the Assumed Agreements:
(a) Schedule 4.10(a) is a true and accurate listing and description
of all material contracts and purchase orders existing as of the date
hereof for goods and services necessary in the ordinary course of the
Business. Such contracts and purchase orders were entered into or made in
the ordinary course of the Business consistent with Seller's past
practices, are at prices and on terms no less favorable to Seller than
those generally prevailing and are valid and in full force and effect.
(b) Schedule 4.10(b) is a true and accurate listing and description
of all material contracts, leases and other agreements that relate to the
Purchased Assets or the Business and are used or useful in the Business.
Such contracts, leases and other agreements were entered into in the
ordinary course of the Business consistent with Seller's past practices
and are in full force and effect.
4.11 Customers and Suppliers. Schedule 4.11 is a true and complete list of
Seller's ten largest customers and ten largest suppliers for the twelve months
ended September 30, 1997, measured by dollar volume in each case. Seller has
neither received notice or indication that any customer or supplier of Seller
will terminate or substantially reduce its business with Seller, whether as a
result of the transactions contemplated by this Agreement or otherwise, nor, to
the knowledge of Seller, is there a customer or supplier of Seller that intends
to so terminate or substantially reduce its business.
4.12 Members; Club Documents. Schedule 4.12 is a true and complete list of
all members of the club operated by Seller as part of the Business, including
the type of membership, the status of each membership as active or inactive, and
the status of each member with regard to the payment of dues, fees and charges.
The Club Documents are in full force and effect, have not been amended or
modified, and constitute all of the documents that create or describe the
rights, privileges and conditions of membership in the club operated as part of
the Business.
4.13 Licenses and Permits; Compliance With Laws. Schedule 4.13 is a true
and accurate listing and description of all licenses, permits, authorizations
and approvals held by Seller in connection with the Business and/or the
ownership and operation of the Purchased Assets, each of which is currently
valid and in full force and effect, and Seller has delivered to Purchaser
complete and accurate copies of all such licenses, permits, authorizations and
approvals. Seller and the Business are in compliance in all material respects
with all applicable statutes, ordinances, rules, regulations, requirements and
orders of governments and governmental bodies (including but not limited to, all
applicable zoning, building, and other ordinances, regulations and codes), and
Seller has not received any notice asserting any noncompliance therewith.
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4.14 Litigation. There are no actions, suits or proceedings, legal
(governmental or otherwise) pending or, to the knowledge of Seller, threatened
against Seller and Seller has no knowledge of any basis therefor.
4.15 Absence of Undisclosed Liabilities. There does not currently exist,
and as of the Closing there will not exist, any liability or obligation of any
nature or in any amount (whether known or unknown, absolute, accrued, contingent
or otherwise) against any of the Purchased Assets or against Seller with respect
to the Business not fully reflected on or reserved against on the latest balance
sheet included in the Financial Statements, except for trade accounts payable
and accrued expenses incurred after the Balance Sheet Date in the ordinary
course of business consistent with Seller's past practices.
4.16 Books and Records. The records and books of accounts of Seller
relating to the Business and the Purchased Assets are substantially complete and
correct in all material respects.
4.17 Employment Related Payments. Seller has paid or accrued all wages,
commissions, salaries, holiday and vacation pay, bonuses and past service claims
of the employees of Seller due and payable and has made (or will be holding in
trust for the beneficiaries thereof and will thereafter pay on or before the due
date for payment) all proper deductions, remittances and contributions for
employees' wages, commissions and salaries required under all contracts and
statutes (including without limitations, health, hospital and medical insurance,
group life insurance, workers' compensation, unemployment insurance, income tax,
FICA taxes and the like) and wherever required by such contracts and/or
statutes, all proper deductions and contributions from its own funds for such
purposes. Purchaser assumes no liability for any amounts of the foregoing
attributable to periods ending on or prior to the Closing which have been paid
or should have been paid to or for the benefit of, or withheld from, any
employee or salesman of Seller.
4.18 Employment Matters. Seller is not a party to any collective
bargaining agreement with any labor union or any local or subdivision thereof;
there is no current or, to the knowledge of Seller, threatened union organizing
activity among the employees of Seller; and there have been no unfair labor
practice complaints or actions filed or threatened against Seller. No union
representation questions relating to Seller are pending before the National
Labor Relations Board or before any similar agency in any state. Seller is not
and, during the three-year period prior to the date hereof Seller has not been,
in violation in any material respect of any federal, state or foreign laws
respecting employment, employment practices, terms and conditions of employment,
wages and hours, collective bargaining, worker safety, employee insurance,
unfair labor practices or the withholding and payment of FICA, Medicare and
related taxes ("Employment Laws"). Schedule 4.18 is a true and complete list of
Seller's employees, together with their titles or job descriptions, lengths of
service, rates of compensation (regardless of form) and information as to any
bonus or incentive pay, deferred or other compensation to which they are
entitled or for which they are eligible and any special arrangements, oral or
written, with respect to their employment. Except as described in Schedule 4.18,
Seller is not a party to any employment contract, consulting contract or similar
arrangement with any employee or person.
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4.19 Taxes. Seller has filed all federal, state and local tax and other
returns and reports relating to the Business or the Purchased Assets required to
be filed on or before the Closing; all information reported on such returns is
true, accurate and complete; and Seller has paid or accrued (i) any and all
taxes shown to be due on such returns and reports, including, without
limitation, those due in respect of properties, income, franchises, licenses,
sales and payrolls, (ii) all deficiencies and assessments of taxes of which
notice has been received by Seller that are or may become payable by Purchaser
as a Lien upon the Purchased Assets and (iii) all other taxes due and payable on
or before the Closing for which neither filing of tax returns or reports nor
notice of deficiency or assessment is required, of which Seller is or should be
aware that are or may become payable by the Purchaser as a Lien upon the
Purchased Assets. Seller has made all payments of estimated income tax due
through the date hereof and all withholdings of tax relating to the Business or
the Purchased Assets required to be made under all applicable United States,
state and local tax regulations or such taxes have been accrued, reserved
against and entered upon the books of Seller. Seller has not executed or filed
with the Internal Revenue Service or any other taxing authority, domestic or
foreign, any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any taxes.
4.20 Real Property. With respect to the Real Property:
(a) Seller has good and marketable title to it, free and clear of all
Liens other than Permitted Exceptions; Seller has received no notice and
has no actual knowledge of any pending levies, Liens or special
assessments to be made against it by any authority;
(b) there are no pending or, to the knowledge of Seller, threatened,
actions, suits, judgments, summons or proceedings, condemnations or sales
in lieu thereof arising out of any laws of any entity or authority having
jurisdiction over the Real Property;
(c) there are no sale contracts, lease agreements, options to
purchase or rights of first refusal with respect to any aspect thereof now
in effect between the Seller and any party other than the Purchaser; and
(d) all bills for labor, services, materials and utilities and all
trade accounts which are in any way connected with or arise from the
acquisition, development or operation thereof and any improvements located
thereon are current and shall be paid in full prior to the Closing.
4.21 Environmental Matters. Except as set forth on Schedule 4.21, with
respect to environmental matters:
(a) the ownership, use, maintenance and operation of the Real
Property and the conduct of the Business by Seller is in compliance in all
material respects with all applicable federal, state, county or local
statutes, laws, regulations, rules, ordinances, codes, licenses and
permits of any governmental authorities relating to environmental matters,
including by way of illustration and not by way of limitation (i) the
Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery
Act of 1976, the
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Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Toxic Substances Control Act (and any amendments or extensions
of any of them), and (ii) all other applicable environmental requirements;
(b) without limiting the generality of Section 4.21(a), Seller (i)
has operated the Real Property, and has at all times received, handled,
used, stored, treated, shipped and disposed of all hazardous substances,
petroleum products and wastes, in compliance with all applicable
environmental, health or safety statutes, ordinances, orders, rules,
regulations, permits and requirements, and (ii) has removed from the Real
Property, including the subsurface, all hazardous substances, petroleum
products and wastes and any contamination of the Real Property resulting
therefrom;
(c) Seller has neither been informed that any hazardous or toxic
materials, substances, pollutants, contaminants or wastes managed by
Seller have been released, nor has Seller released any of same, into the
environment, or deposited, discharged, placed, recycled or disposed of at
or on the Real Property or any other property (or that any condition
constituting a threatened release exists), nor has Seller at any time used
the Real Property as a landfill or waste disposal site;
(d) no notice of any violation of any matter which would cause any of
the representations and warranties contained in Sections 4.21(a) through
4.21(d) relating to the Real Property or its use to be false or materially
misleading has been received by Seller, and there are no writs,
injunctions, decrees, orders or judgments outstanding, and no lawsuits,
claims, proceedings or investigations pending or, to the knowledge of
Seller, threatened, requiring any work, repairs, construction or capital
expenditures with respect to the Real Property or otherwise relating to
the ownership, use, maintenance or operation of the Real Property, nor, to
the knowledge of Seller, is there any basis for such lawsuits, claims,
proceedings or investigations being instituted or filed; and
(e) there are no underground storage tanks located on the Real
Property.
4.22 Solvency; Bankruptcy Filings. Seller is solvent and has not incurred
and does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be received by it
and of amounts to be payable on or in respect of debts of it). Seller is neither
contemplating any voluntary bankruptcy filing under federal or state bankruptcy
or insolvency laws nor has Seller received any information to indicate that an
involuntary bankruptcy filing may be commenced against it.
4.23 No Brokerage. Neither Seller nor either Shareholder has incurred any
obligation or liability, contingent or otherwise, for brokerage or finder's fees
or agent's commissions or like payments in connection with this Agreement or the
transactions contemplated hereby.
4.24 No Misstatements or Omissions. No representation or warranty
contained in this Agreement (including its schedules) or in any Related
Agreement or Other Document to which Seller is a party contains or will contain
any untrue statement of a material fact, or omits or will
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omit to state a material fact necessary to make the statements or facts
contained therein or herein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
To induce Seller to enter into this Agreement and to consummate the
transactions contemplated herein, Purchaser hereby unconditionally represents
and warrants to Seller as follows:
5.1 Due Organization and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and has all requisite corporate power and authority to own,
operate, lease and use its properties and assets and to carry on its business as
it is now being conducted.
5.2 Due Authorization; Binding Obligation. Purchaser has all necessary
corporate power and authority to make, execute, deliver and perform this
Agreement and the Related Agreements and Other Documents to which it is a party
and to consummate the transactions contemplated hereunder or thereunder. Such
execution, delivery and performance has been duly authorized by all necessary
action on the part of Purchaser and no other proceedings on the part of
Purchaser are necessary to authorize this Agreement and the Related Agreements
and Other Documents to which it is a party and the transactions contemplated
hereunder or thereunder. This Agreement and each of the Related Agreements and
Other Documents to which it is a party has been or will be duly executed and
delivered and constitutes or will constitute the valid and binding obligation of
Purchaser enforceable against it in accordance with their respective terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to or affecting the enforcement of creditors' rights, and (ii) the application
of general principles of equity with respect to the availability of specific
performance, injunctive relief or other equitable remedies or limiting the
recovery of attorneys' fees.
5.3 No Conflict or Violation; Consents. Neither the execution, delivery or
performance of this Agreement or the Related Agreements or Other Documents to
which Purchaser is a party nor the consummation of the transactions contemplated
hereby or thereby will (a) contravene or violate Purchaser's Articles of
Incorporation or bylaws, (b) violate, conflict with, result in a breach of, or
entitle any party to terminate, or declare a default with respect to, any
contract, lease, interest, judgment, order, decree, law, rule or regulation
applicable to Purchaser or its business (with or without the giving of notice or
the passage of time or both), or (c) require the consent, approval or
authorization of any person, firm, corporation or government entity, which
consent or approval has not been obtained. Purchaser is not a party to or
subject to or bound by any agreement, instrument, judgment, injunction or decree
of any court or governmental authority that may restrict or interfere with its
performance of this Agreement.
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5.4 No Brokerage. Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokerage or finder's fees or agent's commissions
or like payments in connection with this Agreement or the transactions
contemplated hereby.
5.5 No Misstatements or Omissions. No representation or warranty contained
in this Agreement (including its schedules) or in any Related Agreement or Other
Document to which Purchaser is a party contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained therein or herein not
misleading.
ARTICLE VI
COVENANTS OF SELLER AND THE SHAREHOLDERS
6.1 Delivery of Documents and Records. To the best of Seller's knowledge,
Seller has delivered to Purchaser copies of all appraisals, environmental
assessments, surveys, title insurance policies and attorney's title opinions in
the possession or control to Seller with respect to the Purchased Assets.
6.2 Conduct of Business. Seller and the Shareholders covenant and agree
with Purchaser that, from the date hereof to the Closing, Seller will, and the
Shareholders will cause Seller to:
(a) conduct and operate the Business only in the ordinary course and
in a manner consistent with prior and current business practices and
operations;
(b) use its best efforts to keep available the service of the present
employees of the Business and preserve its relationships with its members,
customers and suppliers;
(c) maintain the Purchased Assets in their present state of repair
and continue to carry and keep in effect its existing insurance policies
or substitute policies providing substantially equivalent coverage;
(d) maintain the books, accounts and records of the Business in a
manner consistent with Seller's past practices and maintain revenues and
Accounts Receivable on a normal basis, with no changes in accounting
methods or procedures for billing, collections or recording of member or
customer accounts receivable or reserves on doubtful accounts;
(e) cause the Business to maintain supplies on a normal basis, and
purchase inventory in accordance with past practices, without changing its
purchase procedures;
(f) cause the Business to make all normal and recurring payments with
respect to bank debts, leases, contractual arrangements and other
obligations, and pay other amounts due to in connection with the Business;
and
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(g) duly comply in all material respects with all laws applicable to
it and to the conduct of the Business.
6.3 Negative Covenants. Seller covenants and agrees that, from the date
hereof to the Closing, except with the prior written consent of Purchaser,
Seller will not:
(a) take any action or omit to take any action that would result in a
breach of any of the representations and warranties set forth in Article
IV hereof as if they had been made as of the Closing Date;
(b) amend or modify any of the Club Documents;
(c) increase in any manner the compensation of any of the employees
or agents of the Business, pay any bonuses not required by an existing
program, pay or agree to pay to any of its employees any pension or
retirement allowance not required by any existing plan, or enter into,
extend or modify, or undertake any commitment to enter into, extend or
modify any employment agreement with or for the benefit of any Person;
(d) permit the Business to incur any material indebtedness or make
any capital expenditures, or enter into any material contract, agreement
or arrangement with respect to the Business, other than in the ordinary
course of business;
(e) fail to perform in any material respect any obligations under any
Assumed Agreement; or
(f) take any action that would interfere with or prevent performance
of this Agreement.
6.4 Access to Facilities, Records, Employees Etc. Between the date hereof
and the Closing Date, Seller shall give or cause to be given to the authorized
representatives of Purchaser full access at all reasonable times, for purposes
of its due diligence investigations, to all of the Purchased Assets and to all
of Seller's books, records, documents and files of every character related to
the Business and the Purchased Assets and Assumed Agreements; provided, however,
that Purchaser and its representatives shall use all reasonable efforts to
minimize any interference with respect to such investigation on the business
operations of Seller. Purchaser and its authorized representatives shall be
entitled to make copies of such books, records, documents and files or other
information requested by Purchaser and related to the Business. Seller shall
cooperate with Purchaser in conducting such investigation and promptly upon
Purchaser's request shall also provide Purchaser and its authorized
representatives reasonable access to Seller's employees, customers and suppliers
during normal business hours to the extent reasonably deemed by Purchaser to be
necessary in connection with its due diligence investigations. Such employees
shall be instructed to and such customers and suppliers shall be requested to
cooperate with Purchaser and to provide such information as Purchaser and its
authorized representatives may reasonably request. Purchaser shall indemnify
Seller for any damage to the Purchased Assets resulting from Purchaser's due
diligence investigations, which indemnity obligation shall survive
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the termination of this Agreement. Purchaser agrees that it will use its best
efforts to cause its officers, employees, agents and representatives to keep all
information obtained pursuant to such investigations confidential and to return
such information promptly in the event the transactions contemplated hereby are
not consummated.
6.5 Permits and Licenses. At and/or following the Closing, Seller will
execute and file any and all assignments, permit transfer applications and
notices to governmental agencies, necessary to transfer to Purchaser all
licenses, permits, authorizations and approvals held by Seller in connection
with the Business, to the extent that the same are transferable, or to keep such
licenses, permits, authorizations and approvals in full force and effect.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
fulfillment of the following conditions prior to or on the Closing Date:
7.1 Representations and Warranties. Each of the representations and
warranties of Purchaser contained in this Agreement and in any Related Agreement
or Other Document shall have been true and accurate as of the date when made and
shall be deemed to be made again on and shall be true and accurate as of the
Closing Date.
7.2 Covenants and Conditions. Purchaser shall have duly performed and
complied fully with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or on the
Closing Date.
7.3 No Litigation or Governmental Proceedings. No action or proceeding
shall have been instituted before any court or governmental body by any third
party to restrain or prohibit, or to obtain damages in respect of, the
consummation of this Agreement. No party to this Agreement shall have received
written notice from any governmental body of (i) its intention to institute any
action or proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation into the
consummation of this Agreement or (ii) the actual commencement of such an
investigation. Purchaser shall give notice to Seller of any such intent,
investigation or inquiry promptly upon receipt of notice of its occurrence.
7.4 Execution and Delivery Requirements. Purchaser shall have satisfied
its execution and delivery requirements for the Closing as set forth in Section
3.4 hereof.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are subject to the
fulfillment of the following conditions prior to or on the Closing Date:
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8.1 Purchaser's Financing. All conditions imposed by Purchaser's lender
with respect to Purchaser's financing of the acquisition of the Purchased Assets
shall have been satisfied.
8.2 InspectionPurchaser shall have completed to its satisfaction, in its
sole discretion, its due diligence investigation of the Purchased Assets and the
Business, including without limitation, any environmental investigations deemed
necessary by Purchaser, and confirmation that Seller has in force and Purchaser
will be able to reasonably assume or obtain all licenses, permits, approvals and
authorizations to operate the Purchased Assets and the Business.
8.3 Representations and Warranties. Each of the representations and
warranties of Seller contained in this Agreement and in any Related Agreement or
Other Document shall have been true and accurate in all material respects as of
the date when made and shall be deemed to be made again on and shall be true and
accurate in all material respects as of the Closing Date.
8.4 Covenants and Conditions. Seller shall have duly performed and
complied fully with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Seller prior to or on the Closing
Date.
8.5 No Litigation or Governmental Proceedings. No action or proceeding
shall have been instituted before any court or governmental body by any third
party to restrain or prohibit, or to obtain damages in respect of, the
consummation of this Agreement. No party to this Agreement shall have received
written notice from any governmental body of (i) its intention to institute any
action or proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation into the
consummation of this Agreement or (ii) the actual commencement of such an
investigation. Seller shall give notice to Purchaser of any such intent,
investigation or inquiry promptly upon receipt of notice of its occurrence.
8.6 Consents and Approvals. All consents, approvals, authorizations and
filings required to be obtained or made for the valid and effective transfer to
Purchaser of the Purchased Assets and the Assumed Agreements and consummation of
the transactions contemplated by this Agreement and the Related Agreements shall
have been obtained or made.
8.7 No Adverse Change. There shall have been no material adverse change in
the Business or Purchased Assets (financial or otherwise) since the Balance
Sheet Date.
8.8 Licenses and Permits. All assignable licenses and permits necessary
for the conduct of the Business shall have been assigned to Purchaser effective
as of the Closing Date, with all necessary consents to permit Purchaser to
operate the business of Seller under such permits and licenses.
8.9 Termination of Liens. All Liens on the Purchased Assets other than
Permitted Exceptions shall have been terminated pursuant to written instruments
in form and substance reasonably satisfactory to Purchaser.
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8.10 Survey. Purchaser shall have obtained a satisfactory survey of the
Real Property showing no Liens other than the Permitted Exceptions.
8.11 Title Insurance. Purchaser shall have obtained a commitment for the
issuance of an owner's title insurance policy insuring Purchaser's title in the
Real Property as good, valid and marketable fee simple title, free and clear of
all Liens except for Permitted Exceptions. The commitment shall be marked prior
to or at the Closing by a representative of the issuer so as to satisfy all
requirements as to the issuance of a policy pursuant thereto, advance the
effective date to the date of filing of the Deed in the Brunswick County
Registry and result in a binding obligation on the part of the title insurance
company to issue a final policy pursuant thereto.
8.12 Employment Related Payments. Seller shall have paid or accrued all
wages, commissions, salaries, holiday and vacation pay, bonuses and past service
claims of the employees of Seller then or previously due and payable and shall
have made all proper deductions, remittances and contributions for employees'
wages, commissions and salaries required under all contracts and statutes
(including without limitations, health, hospital and medical insurance, group
life insurance, workers' compensation, unemployment insurance, income tax, FICA
taxes and the like) and wherever required by such contracts and/or statutes, all
proper deductions and contributions from its own funds for such purposes.
Purchaser assumes no liability for any amounts of the foregoing attributable to
periods ending on or prior to the Closing which have been paid or should have
been paid to or for the benefit of, or withheld from, any employee or salesman
of Seller.
8.13 Execution and Delivery Requirements. Seller shall have satisfied its
execution and delivery requirements for the Closing as set forth in Section 3.4
hereof.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification of Purchaser. Seller and each of the Shareholders,
jointly and severally, hereby indemnifies and holds Purchaser harmless from and
against any and all Losses (as defined in Section 9.3) by reason of, or arising
out of, any of the following:
(a) any breach of any representation or warranty made by Seller in
this Agreement or in any Related Agreement or Other Document;
(b) any failure by Seller to perform or fulfill any of its covenants
or agreements set forth in this Agreement or in any Related Agreement or
Other Document;
(c) the failure of Seller to pay when due or otherwise to perform any
of its obligations or liabilities incurred on or prior to the Closing
Date, other than those obligations and liabilities expressly assumed by
Purchaser pursuant to this Agreement;
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(d) any liability or obligation for breach of contract, breach of
warranty, or products liability or similar claim arising from products or
services sold by Seller prior to the Closing;
(e) any employment dispute, claims and/or charges related to Seller's
acts, omissions or misconduct prior to the Closing, including, without
limitation, claims, charges or actions filed by current or former
employees of Seller or applicants for employment with Seller;
(f) any actual or threatened claim, suit, action or proceeding
arising out of or resulting from Seller's operation of the Business prior
to the Closing; and
(g) any environmental contamination or pollution (including any
release or threatened release of hazardous substances, petroleum products
or wastes) on the Real Property, or any improvements thereon, which
occurred after October 1, 1990 and prior to the Closing; or any
contamination or pollution of any other property resulting from the
operation of the Business prior to the Closing; or any remediation,
containment or cleanup of the Real Property or such other property
required by applicable governmental authorities or otherwise necessary to
protect Purchaser from liability related to such contamination or
pollution; or any violations of the Clean Air Act, the Clean Water Act,
the Resource Conservation and Recovery Act of 1976, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Toxic
Substances Control Act and any other environmental laws or regulations (i)
with respect to the Real Property occurring after October 1, 1990 and
prior to the Closing, (ii) committed by Seller or any of its predecessors
in interest after October 1, 1990, or (iii) otherwise arising out of the
operation of the Business of Seller prior to the Closing.
The aggregate liability of Seller and the Shareholders to Purchaser
pursuant to this Section 9.1 shall be limited to $75,000, including the amount
delivered to the Escrow Agent pursuant to Section 3.4.
9.2 Indemnification of Seller. Purchaser hereby indemnifies and holds
Seller harmless from and against any and all Losses incurred by Seller by reason
of, or arising out of, any of the following:
(a) any breach of any representation or warranty made by Purchaser
pursuant to this Agreement;
(b) any failure of Purchaser to perform any of its covenants or
agreements set forth in the Agreement or in any Related Agreement or Other
Document; or
(c) any litigation, proceeding or claim by any third party, insofar
as any of the foregoing arises out of the business conducted by Purchaser
after the Closing or Purchaser's ownership, operation or use of the
Purchased Assets following the Closing;
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provided, however, that Purchaser does not indemnify Seller for any Losses
arising from Seller's own misconduct or negligence or the conduct of the
Business prior to the Closing.
9.3 Losses. References herein to "Loss" or "Losses" shall mean (i) any and
all damages, claims, losses, expenses, costs, obligations and liabilities,
including, without limitation, liabilities for reasonable attorneys' fees and
related expenses incurred by the party incurring the Loss or Losses and (ii) the
cost of remediation, cleanup, containment and disposal with respect to matters
addressed in Section 9.1(g).
9.4 Survival of Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements of Seller, the
Shareholders and Purchaser set forth in this Agreement shall survive the Closing
and shall remain in full force and effect at all times following the Closing,
except that (i) the representations and warranties set forth in Sections 4.4,
4.5, 4.7 through 4.18, 4.20(b), 4.20(d), 4.21 through 4.24, 5.4 and 5.5 shall
only survive for a period of one (1) year following the Closing, and (ii) the
representations and warranties set forth in Section 4.19 shall only survive
until the expiration of the applicable statutes of limitations.
ARTICLE X
ADDITIONAL COVENANTS AND AGREEMENTS
10.1 Bulk Sales Compliance. The parties hereto agree to waive compliance
with the provisions of any applicable bulk transfer laws as they may be
applicable to the transactions provided for in this Agreement. Seller expressly
agrees to pay and discharge, promptly and diligently, when due, or to contest or
litigate, all claims of creditors which could be asserted against Purchaser or
the Purchased Assets by reason of such noncompliance, and to indemnify Purchaser
for any failure to do so.
10.2 Warranties. At the Closing, Seller shall be deemed to have assigned
to Purchaser all of its right, title and interest in and to such warranties
(express and implied) that continue in effect with respect to the Purchased
Assets and to have nominated Purchaser as its true and lawful attorney to
enforce such warranties, and Seller shall execute and deliver such specific
assignments of such warranty rights as Purchaser may reasonably request from
time to time.
10.3 Further Assurances. Following the Closing, Seller shall for no
further consideration perform all such other action and execution, acknowledge
and deliver and cause to be executed, acknowledged and delivered such
assignments, transfers, consents and other documents as Purchaser may reasonably
request to vest in Purchaser and protect Purchaser's rights, title and interest
in and enjoyment of the Purchased Assets and the Business.
10.4 Access; Mail. From time to time following the Closing, upon the
reasonable request of Purchaser, Seller shall afford Purchaser and its
authorized representatives access to Seller's records, general ledgers and tax
returns to the extent reasonably necessary for Purchaser's business, tax,
accounting or legal purposes, and shall permit Purchaser to make copies thereof
at
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Purchaser's sole expense. Following the Closing, Purchaser will have the right
to receive all mail addressed to Seller and related to the Business; provided,
however, that Purchaser will promptly forward to Seller any mail sent to
Purchaser which appears to relate to assets other than the Purchased Assets or
to agreements other than the Assumed Agreements.
10.5 Employees. Seller acknowledges that Purchaser is under no obligation
to offer employment to any of Seller's employees. Seller shall terminate,
however, the employment of all its employees who have been offered employment
with Purchaser and shall encourage such employees to accept such offer. Seller
agrees to make available to Purchaser on and after the Closing Date any and all
records with respect to such employees as Purchaser shall reasonably request.
10.6 Employee Benefit Plans. Seller shall remain fully responsible for all
payments and other funding of, and all liability under all employee benefit
plans and programs maintained by Seller, including but not limited to pension,
retirement, profit sharing, deferred compensation, stock option, stock
ownership, severance, vacation, bonus or other incentive plans, all other
written or oral employee programs, arrangements or agreements, all medical,
dental or other health plans, all life insurance plans and all other employee
benefit plans or fringe benefit plans, including, without limitation, all
"employee benefit plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently adopted,
maintained by, sponsored in whole or in part by or contributed to by Seller or
any affiliate thereof for the benefit of Seller's employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
(the "Employee Benefit Plans"), and Seller shall administer the Employee Benefit
Plans in accordance with the terms thereof and ERISA.
10.7 Name. At all times from and after the Closing, neither Seller nor any
of the Shareholders shall use or license the use of the names "St. James" or
"St. James Plantation" or derivations thereof in the operation of a golf course,
country club, real estate development or any related or similar business located
in North Carolina, South Carolina or Virginia. Within thirty (30) days after the
Closing, Seller shall change its name to a name that does not include "St.
James" or "St. James Plantation."
10.8 Receipt of Accounts Receivable and Other Amounts. As a courtesy to
Seller, Purchaser agrees to receive on behalf of Seller and remit monthly to
Seller payments on all accounts receivable of Seller existing and 90 or more
days old as of the Closing Date; provided, however, that Purchaser shall be
under no obligation to use affirmative efforts to collect any account receivable
of Seller and shall have no liability to Seller for failure to do so. In the
event that Seller or either Shareholder shall receive any payment with respect
to the Accounts Receivable or any other Purchased Assets after the Closing,
Seller shall immediately pay all such amounts to Purchaser.
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ARTICLE XI
MISCELLANEOUS
11.1 Expenses. Except as specifically provided in this Agreement, each
party hereto shall bear all of its expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation,
accounting and legal fees incurred in connection therewith.
11.2 Assignment; Successor and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
11.3 Notices. All notices, demands and other communications that are
required or permitted to be given hereunder or with respect hereto shall be in
writing, shall be given either by (i) personal delivery, (ii) nationally
recognized overnight courier, or (iii) telecopy, and shall be deemed to have
been given or made when personally delivered, when deposited with charges
prepaid with the nationally recognized overnight courier, or when transmitted by
telecopy machine, addressed to the respective parties as follows:
If to Seller or either Shareholder:
The Gauntlet at St. James, Inc.
c/o Brassie Golf Corporation
One Tampa City Center, Suite 2550
Tampa, Florida 33602
Attention: Stephen Tucker, CFO
Telecopy: 813-221-4210
with a copy (which shall not constitute notice) to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: William R. Klapp, Jr., Esq.
Telecopy: 404-881-4777
If to Purchaser:
The Gauntlet at St. James Plantation, LLC
4006 St. James Drive SE
Southport, North Carolina 28461
Attention: John A. Atkinson, President
Telecopy: (910) 253-7602
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with a copy (which shall not constitute notice) to:
Schell Bray Aycock Abel & Livingston P.L.L.C.
230 North Elm Street, Suite 1500
Greensboro, North Carolina 27401
Attention: John A. McLendon, Jr., Esq.
Telecopy: (910) 370-8830
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
11.4 Captions. The captions of Articles and sections of this Agreement are
for convenience of reference only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
11.5 Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of North Carolina.
11.6 Amendments, Waivers, Etc. No amendment, modification or discharge of
this Agreement, and no waiver of any condition or the breach of any provision,
term, covenant, representation or warranty hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement, and
shall not impair the rights of the party granting such waiver in any other
respect or at any other time. The failure of any party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
the right at a later date to enforce the same or to enforce any future
compliance with or performance of any of the provisions hereof.
11.7 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes and cancels any and all prior agreements and understandings, both
written and oral, among them relating to the subject matter hereof.
11.8 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
11.9 Purchaser's Inspection; Adequacy of Disclosure. No inspection or
investigation by Purchaser of any matter relating to the Purchased Assets or the
Business shall be deemed a
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waiver by Purchaser of any representation, warranty or covenant of Seller
hereunder. Any item disclosed in any Schedule hereto in connection with a
representation, warranty or covenant of Seller shall be deemed disclosed only in
connection with the specific representation, warranty or covenant to which the
item is explicitly referenced.
11.10Meaning of Knowledge. Any reference in this Agreement or in any
Related Agreement or Other Document to Seller's "knowledge" shall mean and
include all matters which Seller, either Shareholder, any general partner of
Canadian PT, or any of their respective officers, directors or employees
actually know. In making each representation or warranty set forth in this
Agreement and in any Related Agreement or Other Documents which is qualified by
any such expression as to the knowledge of Seller, Seller, Brassie and Canadian
PT hereby represent and warrant that they have duly and diligently inquired of
all relevant officers, directors, employees and general partners as to the
accuracy and completeness of such representation or warranty.
11.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11.12 Waiver and Agreement by HEW. With respect to the transactions
provided for in this Agreement, HEW hereby waives its option to purchase and its
right to receive a 5% commission as provided for in the 1990 Contract. HEW
agrees that any fees due to Seller pursuant to the 1990 Contract relating to
residential lot sales prior to the Closing Date will be paid in accordance with
the 1990 Contract and HEW warrants that such lot closings prior to the Closing
Date will be scheduled in the normal course of business and that HEW will not
intentionally defer such residential lot closings until after the Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
[SIGNATURES ON NEXT PAGE]
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PURCHASER: THE GAUNTLET AT ST. JAMES PLANTATION, LLC
By:
John A. Atkinson, Manager
SELLER: THE GAUNTLET AT ST. JAMES, INC.
(Corporate Seal) By:
Name:
Title:
SHAREHOLDERS: BRASSIE GOLF CORPORATION
(Corporate Seal) By:
Name:
Title:
CANADIAN PT LIMITED PARTNERSHIP
By: North Carolinian PT, Inc., its General Partner
By:
Name:
Title:
FOR PURPOSES OF SECTION 11.12 ONLY: HOMER E. WRIGHT, JR., INC.
(Corporate Seal) By:
John A. Atkinson, President
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List of Schedules
1.11 Form of Closing Report
1.28 Real Property
3.6 Allocation of Purchase Price
4.4(a) Accounts Receivable
4.4(b) Prepaid Expenses
4.4(c) Accounts Payable
4.4(d) Prepaid Membership Dues
4.4(e) Prepaid Customer Accounts
4.7 Inventory
4.8 Equipment
4.9 Intangible Assets
4.10(Purchaser Orders
4.10(Contracts, Leases and Other Agreements
4.11 Customers and Suppliers
4.12 Members
4.13 Licenses and Permits
4.18 Employees
4.21 Environmental Disclosures
List of Exhibits
1 Form of Deed
2 Form of Bill of Sale
3 Form of Assignment and Assumption Agreement
4 Form of Escrow Agreement
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Schedule 1.11
to
ASSET PURCHASE AGREEMENT
Form of Closing Report
Add:
Cash $ 800
Accounts Receivable $ 87,967
Inventory $ 120,195
Prepaid Expenses $ 18,957
Subtotal $ 227,919
Subtract:
Accounts Payable $ 108,267
Prepaid Membership D$ 37,001
Prepaid Customer Acc$ 5,755
Subtotal $ 151,023
Purchase Price Adjustment $ 76,896
This Closing Report is delivered to The Gauntlet at St. James Plantation,
LLC ("Purchaser") pursuant to Section 3.2 of the Asset Purchase Agreement dated
November _____, 1997 among Purchaser, The Gauntlet at St. James, Inc. ("Seller")
and the other parties thereto. The undersigned officer of Seller hereby
certifies that the amounts set forth above are true and accurate as of the date
hereof, and that the schedules attached hereto are accurate and complete
listings of each account, item (or categories of items, where appropriate)
included in the respective adjustment amounts set forth above.
This the _____ day of November, 1997.
The Gauntlet at St. James, Inc.
Name: ________________________
Title: ________________________
Purchaser acknowledges and hereby agrees to the foregoing purchase price
adjustments.
The Gauntlet at St. James Plantation, LLC
Name: ________________________
Title: __________________________
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Schedule 4.21
to
ASSET PURCHASE AGREEMENT
Environmental Disclosure
NONE
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Schedule 4.10b
to
ASSET PURCHASE AGREEMENT
Contracts, Leases, and Other Agreements to Be Assigned to Purchaser
Vendor Description of Property Begin DateTerm
NationsBank Leasing 75 Electric Club Car golf 11/13/95 48 months
Textron Financial Jacobsen LF-128 Fairway Mo11/04/96 48 months
Jacobsen PGM Mower
Jacobsen Greens King IV
Pitney Bowes Postage meter 12/10/96 51 months
Executive Leasing Copy machine 6/20/96 60 months
Ecolab Jackson EE 2000 Dishwasher 12 months
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