<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[x] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1997.
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to
________
COMMISSION FILE NO. 0-24812
BRASSIE GOLF CORPORATION
-----------------------------------------------------------
(Name of small business issuer as specified in its charter)
Delaware 56-1781650
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
201 N. Franklin Street, Suite 200, Tampa, Florida
-------------------------------------------------
(Address of principal executive offices)
33602
----------
(Zip Code)
(813) 222-0611
---------------------------
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B in this form and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year: $4,093,599.
The aggregate market value at March 25, 1998 of shares of the Common
Stock held by non-affiliates of the issuer was $16,770,066 based upon the
closing price of the Common Stock in the NASDAQ System (as reported by the
National Quotation Bureau, Inc.). Solely for the purpose of this calculation,
shares held by the principal shareholders named in Item 12 hereof, as well as
shares held by directors and officers of the Registrant, have been excluded.
Such exclusion should not be deemed a determination or an admission by the
issuer that such shareholders or individuals are, in fact, affiliates of the
issuer.
On March 25, 1998, there were 48,343,526 shares of the Registrant's
Common Stock $.001 par value and 2,040 shares of the Registrant's Preferred
Stock, $.001 par value outstanding.
Documents Incorporated by Reference
-----------------------------------
Portions of the Proxy Statement for the annual shareholders meeting to be held
May 7, 1998 are incorporated by reference into Part III.
Transitional small business disclosure format Yes [ ] No [X}
<PAGE> 2
BRASSIE GOLF CORPORATION
FORM 10-KSB
YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
PART I
ITEM 1. Description of Business..................................................... 3
ITEM 2. Description of Property..................................................... 14
ITEM 3. Legal Proceedings........................................................... 15
ITEM 4. Submission of Matters to a Vote of Security-Holders......................... 17
PART II
ITEM 5. Market for the Common Equity and Related Stockholder Matters................ 17
ITEM 6. Management's Discussion and Analysis........................................ 18
ITEM 7. Financial Statements........................................................ 24
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................................... 41
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act......................... 42
ITEM 10. Executive Compensation...................................................... 42
ITEM 11. Security Ownership of Certain Beneficial Owners and Management.............. 42
ITEM 12. Certain Relationships and Related Transactions.............................. 42
ITEM 13. Exhibits, List and Reports on Form 8-K...................................... 42
SIGNATURES..................................................................................... 51
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. CORPORATE HISTORY
Brassie Golf Corporation, a Delaware corporation (the "Company"),
together with its predecessors and subsidiaries, has engaged, since August 1988,
in the acquisition, design, construction, operation and management of private,
semi-private and daily-fee (i.e., "public") golf courses in the United States
and the sale of golf-related consumer products.
The Company was incorporated in Delaware on November 12, 1991
under the name "Longview Golf Corporation" as a holding company to acquire
majority interests in two corporations (one of which is now an operating
subsidiary of the Company), each of which was then developing a golf course. On
November 14, 1991, the Company entered into an Agreement and Plan of
Reorganization (the "Reorganization") with the shareholders of both The Gauntlet
at St. James, Inc. (a North Carolina corporation formerly known as Longview Golf
Corporation) ("GSJ") and The Gauntlet at Laurel Valley, Inc. (formerly known as
Laurel Valley Golf Corporation) ("GLV") pursuant to which the Company acquired
all of the outstanding shares of GSJ and GLV except those shares owned,
respectively, by Canadian PT Limited Partnership (a limited partnership
comprising three pension funds and referred to herein as "PT Partnership") and
Edmonton Pipe Industry Pension Trust Fund (referred to herein as the "EPI
Pension Fund").
On September 18, 1992, the Company changed its name from "Longview
Golf Corporation" to "Brassie Golf Holdings, Ltd." On March 29, 1993, the
Company changed its name from "Brassie Golf Holdings, Ltd." to "Brassie Golf
Corporation" and increased its authorized capital to 25,000,000 shares of Common
Stock, $.001 par value per share ("Common Stock"), and 1,000,000 shares of
Preferred Stock, $.001 par value per share ("Preferred Stock"). On July 18,
1994, the Company increased the number of authorized shares of Common Stock to
50,000,000 shares.
REORGANIZATION WITH HALE IRWIN GOLF SERVICES, INC. On May 16,
1994, the Company acquired 100% of the capital stock of Hale Irwin Golf
Services, Inc. ("HIGSI"), an international golf course design, development and
management company based in St. Louis, Missouri, in exchange for 1,250,000
shares of the Company's Common Stock in a stock-for-stock reorganization (the
"Reorganization"). HIGSI, a Missouri corporation incorporated on October 28,
1986, was founded by Hale S. Irwin, a golf course designer, PGA TOUR
professional and Life Member of the Professional Golf Association of America,
and Richard J. Stahlhuth, a golf course owner and developer. HIGSI had two
operating divisions -- Hale Irwin Golf Design (the "Design Division") and Hale
Irwin Golf Management (the "Management Division"). On September 10, 1994,
HIGSI's operations were combined with the Company's and the Company's principal
executive office was moved from Southport, North Carolina to St. Louis,
Missouri. Messrs. Irwin and Stahlhuth became members of the Board of Directors
of the Company. Mr. Irwin was the President of the Design Division until August
19, 1996, at which time he tendered his resignation as a Director and Officer of
the Company. Mr. Stahlhuth was President of the Company until January 17, 1995,
at which time he tendered his resignation as a Director and Officer of the
Company.
3
<PAGE> 4
On May 16, 1997, Mr. Irwin's employment agreement with the Company
expired. The Company and Mr. Irwin chose not to renew the agreement and all
design contracts were sold by the Company to Mr. Irwin's new design company. See
Item 1.b. "Golf Course Design Services."
MERGER AND REORGANIZATION WITH SUMMIT GOLF CORPORATION. On June
30, 1995, the Company acquired all the issued and outstanding shares of Summit
Golf Corporation, a Florida corporation ("Summit"), through the consummation of
an Agreement of Merger and Reorganization (the "Agreement") whereby the
Company's newly incorporated Florida subsidiary, Brasmit Golf Corporation
("Brasmit"), merged with Summit, thereby simultaneously vesting Summit
shareholders with the right to exchange their Summit shares for 1,875,000 newly
issued common shares, $.001 par value (the "Common Stock") of the Company, which
as a result were then issued. Copies of the Agreement, Amendment No.1 thereto,
and a Pre-Closing Agreement in connection with the transaction were filed as
Exhibits 2.1, 2.2 and 2.3 respectively to the Company's Form 8-K filed July 6,
1995 and are incorporated herein by reference. Additional consideration paid by
the Company comprised 375,000 shares of newly issued subordinated redeemable
preferred stock with a par value of $.001 per share (each share has a stated
value of $10.00 and is convertible into five shares of Common Stock; the
"Preferred Stock"), 500,000 five-year warrants exercisable at $2.50 per share
for the first three (3) years and $3.25 per share for the next two years,
$275,854 cash, and $224,146 in promissory notes. The Company's Certificate of
Designations, Preferences and Rights of Junior Non-Cumulative Redeemable
Convertible Preferred Stock setting the qualities of the Preferred Stock was
filed as an Exhibit to the Company's report on Form 10-Q filed November 14, 1995
and is incorporated herein by reference.
Pursuant to the Articles of Merger filed pursuant to the
Agreement, Brasmit was the surviving corporation and its acquired assets include
(1) all the shares of Club Operations and Property Management, Inc. ("COPM"), a
Florida corporation based in Tallahassee which provided consulting services to
or managed, on the effective date of the merger, a portfolio of 44 facilities,
including 39 private, semi-private and daily-fee golf courses in 14 states
throughout the U.S. and five courses in Mexico; (2) all of Summit's previously
acquired assets of Resort Golf Clubs International, Inc. ("RGCI") including the
RGCI 1995 Marketing Plan which the Company intended eventually to develop and
implement in connection with its interval membership and golf villa programs;
and (3) Summit Golf Properties, Inc., an inactive Delaware corporation.
Following the merger on June 30, 1995, William Horne, Tom
Richardson and Lance McNeill were nominated and elected as Directors at the
Company's Annual Meeting of Shareholders and appointed Officers of the Company
with the following responsibilities:
William E. Horne - President and Chief Executive Officer
Thomas K. Richardson - Senior Vice President - Operations and Chief
Operating Officer
Lance McNeill - Senior Vice President - Acquisitions & Development
Gary A. Nacht resigned as interim President and was appointed
Executive Vice President of the Company and acted as its Chief Financial Officer
until his resignation in all capacities on January 30, 1996.
4
<PAGE> 5
To fund the cash portion of the transaction, the Company utilized
a portion of the proceeds received from a subsidiary's debt repayment which
repayment was funded by surplus proceeds from the subsidiary's May 1995
refinancing of its NationsBank first mortgage on its golf course in Southport,
North Carolina. (See Item 1.c.1. "The Company's Golf Courses - The Gauntlet at
St. James").
Effective September 4, 1995, the Company's St. Louis, Missouri and
Southport, North Carolina corporate offices were, simultaneously with COPM's
move from Tallahassee, relocated to leased premises at the Company's new
corporate headquarters in Tampa, Florida. (See Item 2. "Description of Property"
for information regarding the Company's office facilities.)
In connection with the purchase of the shares and assets described
above, the Company entered into employment agreements (the "Employment
Agreements") with Mr. Horne and Mr. Richardson. Copies of the Employment
Agreements were filed as Exhibits 2.4 and 2.5 respectively to the Company's Form
8-K filed July 6, 1995 and are incorporated herein by reference. The Employment
Agreements contained non-competition provisions and provisions for the
reimbursement of expenses, an automobile allowance, disability and other
customary benefits and are further described hereafter (See Item 12. "Certain
Relationships and Related Transactions.") Each of the Employment Agreements
were terminated during the year ended December 31, 1997.
In connection with Mr. Horne's termination, the Company purchased
all preferred stock held by Mr. Horne for $211,000.
B. GENERAL.
The Company's principal business has historically been the
ownership, development and operation of golf courses. During the year ended
December 31, 1997, the Company sold one of its golf courses, its design
business ("HIGSI"), Summit, and transferred operating control of its two
minority owned golf courses over to its partner, EPI Pension Fund. Until its
disposition of HIGSI and Summit, the Company also provided golf course design
and management services to others in exchange for design and management fees.
During the year ended December 31, 1997, the design and management service
subsidiaries were sold and revenues for each are included through their
respective sale dates.
On June 2, 1997, Joseph R. Cellura was appointed Chairman of the
Board and Chief Executive Officer of the Company.
On September 2, 1997, Clifford F. Bagnall was appointed Chief
Operating Officer and Secretary of the Company.
On December 1, 1997, Jeremiah M. Daly became President of the
Company and was elected to the Board of Directors.
Messrs. Cellura, Bagnall and Daly all entered into long-term
employment agreements with the Company. Copies of the Employment Agreements are
attached as Exhibit 10.61, 10.62, and 10.66, respectively.
5
<PAGE> 6
OWNERSHIP AND OPERATION OF GOLF COURSES.
The Company's business plan was to expand, by acquisition and
development, its portfolio of golf courses primarily by capitalizing on the
present and projected need for quality golf courses in markets where management
believed (i) demand exceeded supply and (ii) buying power, integrated operating
systems and national account management can generate significant economies of
scale. The Company, through its subsidiaries, currently holds ownership
interests in three operating golf courses which are located in South Carolina
and Virginia (see Item 1.c. "The Company's Golf Courses"). All of the courses in
which the Company has an ownership interest are open to the general public for
daily-fee play at normal greens fees ranging from $15.00 to $60.00 per round
(including cart fees) depending upon the time of year, location of the course
and competitive conditions. For a more complete description of the Company's
current facilities, see Item 1.c. "The Company's Golf Courses."
Sale of Resident Memberships. As more fully described below, by
agreement with the developer of the residential development contiguous to the
St. James golf course, initial membership fees were paid to the Company, on
behalf of the purchasing resident, by the developer upon the closing of each lot
sale. These "resident" members are entitled to preferential tee times generally
unavailable to the daily-fee player from other facilities. The bylaws of the
residential development at St. James limit the number of "resident" memberships
(and certain "resident" privileges) that may be sold to and/or activated by lot
owners. The Company sold The Gauntlet at St. James Golf Course on November 13,
1997, and all resident memberships terminated going forward. See Item 1.c.1.
"The Company's Golf Courses -- The Gauntlet at St. James" for a further
discussion on the limitation of the sale of such "resident" memberships.
Competitive Advantage. The Company's management seeks to provide
high quality golf play, superior pro shop equipment and clothing lines and
friendly service. Quality golf play is achieved by striving for the highest
standards of course maintenance while utilizing golf course designs by P.B. Dye
(son of golf course architect Pete Dye).
In connection with its due diligence and market evaluation
activities for prospective acquisition and development opportunities, the
Company typically performs a market analysis of both the location and the
resident and tourist population, an examination of all existing facilities,
equipment and inventory, a review of an up-to-date property survey and Phase I
Environmental Audit, an examination of permits, variances and required approvals
for the development and/or operation of the golf course, an investigation of the
seller's or developer's financial history, an inspection of infrastructure and
improvements, which includes roads, utility services, sewer, water and easements
and an analysis of administrative changes and/or capital improvements required
to bring the facility in line with the Company's level of service and
operational quality.
The Company estimates that in connection with due diligence,
market evaluation and deposit expenditures, it has incurred expenses of
approximately $230,000 and $281,000 for the years ended December 31, 1997 and
1996, respectively. The Company aggressively pursued opportunities to acquire
and/or develop golf courses and other predevelopment opportunities during both
years.
6
<PAGE> 7
Competition with the Company's Golf Course Operations. The
Company's courses face substantial competition for the business of the local and
tourist golfer. Competitors for daily-fee play include other public and private
golf courses within each course's region. For each of the Company's courses,
there are numerous competitive courses within close proximity. For example, the
Myrtle Beach area has approximately one hundred 18-hole courses within a
ninety-minute drive.
Courses competitive with those of the Company generally have
on-site pro shops. Such shops, together with sporting goods stores and clothing
stores within each course's market vicinity, are the Company's principal
competitors with respect to product sales.
Seasonality. In operating its courses, the Company's revenues are
directly affected by the seasonal tourist trade, the weather, and the effects of
the local economy. For example, play often increases during the autumn and
spring months at its courses located in South Carolina, may cease during the
winter months at its course located in Virginia, and decreases at all courses
during unseasonably hot weather.
Under the terms of the Agreement and Plan of Reorganization
between the Company and the former shareholders of HIGSI, the Company was
granted the exclusive right to use the following trade names: "Hale Irwin Golf
Services," "Hale Irwin Golf Management" and "Hale Irwin Golf Design." The
Company's right to use these names expired on May 16, 1997, and therefore the
Company will no longer use Mr. Irwin's name in connection with its business.
Government Regulation Relating to the Environment. Two of the
three golf courses in which the Company has an ownership interest were developed
by the Company. During the construction of golf courses the Company must be
concerned with protecting land designated as "wetlands" and other development
and land use restrictions. Because Phase I environmental audits and permits for
the development sites have been procured in the past by the developers, the
Company has not been required to expend substantial funds on an annual basis in
complying with federal, state and local provisions relating to the environment.
There can be no assurance, however, that future compliance expenditures incurred
by the Company will not be substantial, or that necessary permits and/or
licenses will be granted.
Additionally, operations at the Company's golf courses involve the
use and storage of various hazardous materials such as herbicides, pesticides,
fertilizers, motor oil and gasoline. Various federal, state and local laws,
ordinances and regulations control the storage, use and discharge of such
materials. The Company believes that it is in substantial compliance with all
such laws, ordinances and regulations applicable to its storage and use of such
materials and does not currently incur substantial sums relating to compliance.
However, property owners and users are generally
7
<PAGE> 8
responsible for all environmental conditions present on such property and for
any discharge of any hazardous substances thereon, regardless of knowledge or
responsibility therefor. Consequently, there can be no assurance that the
Company will not in the future incur substantial sums in connection with any
such condition or future discharge.
GOLF COURSE DESIGN SERVICES.
The Company derived revenue from the design of golf courses for
others through its wholly-owned golf course design division, HIGSI. Hale Irwin
previously served as president of the Company's Design Division and was
primarily responsible for the golf course design projects undertaken by the
Company.
On May 16, 1997, Mr. Irwin's three-year employment agreement with
the Company expired. Such employment agreement governed Mr. Irwin's employment
as president of HIGSI, which was purchased by the Company on May 16, 1994. Mr.
Irwin informed the Company that he did not intend to renew the employment
agreement upon its expiration in order to pursue golf course design
independently. In addition, the Company and Mr. Irwin reached an agreement
whereby the Company sold HIGSI to Mr. Irwin for a portion of the earnings to be
received on design contracts the Company was then currently negotiating with
clients, as well as a percentage of revenues on future design contracts procured
by the Company. As HIGSI has been less profitable than anticipated since its
acquisition by the Company in May 1994, the Company believes this agreement will
improve the financial results of the Company compared to previous years. The
Company derived $110,000 in total revenues from its golf course design services
in 1997.
GOLF COURSE MANAGEMENT SERVICES.
The Company also derived revenue through Brassie Golf Management
Services, Inc. ("BGMS") and COPM (subsidiaries of the Company and collectively
referred to as the "Management Division") from operations relating to the
day-to-day management of golf courses for others. As of July 15, 1997, the
Management Division was sold.
EMPLOYEES.
As of December 31, 1997, the Company and its subsidiaries had 43
employees and consultants. As of March 15, 1998, total employees had increased
to 46. No employees of the Company are members of any union or collective
bargaining agreement.
C. THE COMPANY'S GOLF COURSES.
As of December 31, 1997, the Company had ownership interests in
three golf courses: The Gauntlet at Curtis Park, The Gauntlet at Laurel Valley,
and The Gauntlet at Myrtle West. The Company's fourth golf course, The Gauntlet
at St. James, was sold on November 13, 1997.
In the late fall of 1995, the Company engaged in discussions with
its three pension fund partners, EPI Pension Fund, UA Canadian Pipeline Industry
National Pension Plan ("UA Pension Fund") and Canadian Limited PT Partnership
("PT Partnership") (the "Pension Funds") in the four courses in which the
Company had ownership interests ("The Gauntlet Courses") with a view to modeling
a future joint venture and reorganizing existing relationships to enhance the
Company's cash flows and profitability. During February 1996, the parties
established their mutual intentions and on February 21, 1996, the parties
memorialized their intentions in a document captioned an "agreement in
principle" (the "AIP"). In the second quarter of 1996, the Company reached an
agreement with two of its pension fund partners, UA Pension Fund and PT
Partnership, relating to two of the golf courses, The Gauntlet at Curtis Park
and The Gauntlet at St. James, respectively. However, the Company was unable to
reach a satisfactory agreement with EPI Pension Fund with respect to the other
two golf courses, The Gauntlet at Laurel Valley and The Gauntlet at Myrtle
Beach. Certain provisions of the AIP contemplate alternative ownership scenarios
whereby the Pension Funds would assume primary responsibility for The Gauntlet
Courses. These alternative ownership scenarios have been implemented for The
Gauntlet at Laurel Valley and The Gauntlet at Myrtle West (see Item 3, "Legal
Proceedings").
8
<PAGE> 9
The Gauntlet at Curtis Park is owned through a wholly-owned
subsidiary of the Company. The Gauntlet at Laurel Valley and The Gauntlet at
Myrtle West are each owned through separate subsidiaries (the "GLV and GMW
Subsidiaries").
The GLV and GMW Subsidiaries are parties to and the subject of
pending litigation between the Company and EPI Pension Fund. As a result of a
preliminary injunction granted by the Circuit Court in and for Hillsborough
County, Florida on July 12, 1996, the Company transferred 45% of the outstanding
equity in both of the GLV and GMW Subsidiaries to EPI Pension Fund. As a result
of this transfer, the Company's ownership was reduced to, as described above,
30% of the outstanding equity in each of these two subsidiaries. For further
discussion of the Company's pending litigation with EPI Pension Fund see Item 3.
"Legal Proceedings." Through this reorganization, EPI Pension Fund has increased
its ownership interest in and financial commitment to these two golf courses
and, as a result, the Company significantly reduced all short and long term
obligations associated with the ownership of these two golf courses.
1. THE GAUNTLET AT ST. JAMES,
BRUNSWICK COUNTY, SOUTHPORT, NORTH CAROLINA
The Gauntlet at St. James (formerly known as Longview Country
Club) was sold on November 13, 1997 and is a 200 acre, 18-hole, daily-fee golf
course located in the St. James Plantation real estate development in Southport,
North Carolina, which is 30 miles south of Wilmington, North Carolina and 35
miles north of Myrtle Beach, South Carolina. The golf course was designed by
P.B. Dye. Amenities include a 16,000 square foot clubhouse (including the golf
pro shop, restaurant, bar, snack bar and cart storage), a swimming pool and two
tennis courts with a separate tennis pro shop. The Gauntlet at St. James was
owned by a subsidiary of the Company, The Gauntlet at St. James, Inc. ("GSJ"), a
North Carolina corporation. Through November 13, 1997, the Company owned 80%,
and PT Partnership owned 20%, of the outstanding equity shares of GSJ as
follows:
9
<PAGE> 10
<TABLE>
<CAPTION>
Voting Non-Voting Percent of
Common Stock Common Stock Outstanding
------------ ------------ -----------
<S> <C> <C> <C>
PT Partnership 7,200 12,800 20%
The Company 28,800 51,200 80%
------ ------ ---
36,000 64,000 100%
</TABLE>
The GSJ Shareholders' Agreement provides PT Partnership with
certain powers and safeguards with respect to GSJ, including, without
limitation, control over certain expenditures (checks over $5,000 must be
co-signed by a representative of PT Partnership who acts as Secretary of GSJ),
the ability to appoint a majority of directors to the Board of Directors of GSJ
upon written notice to the Company, the ability to purchase the Company's GSJ
shares for fair market value in the event that PT Partnership determines its
investment to be "at risk" (after giving the Company notice of the condition
causing PT Partnership to believe the project is at risk and the Company's
failure to cure the default cited in the notice), a right of first refusal on
all sales of GSJ shares by the Company, certain buy-out provisions in the event
either shareholder receives a third-party offer to purchase its holdings, and
upon exercising its right to appoint a majority of the Board of Directors, the
requirement that at least two directors nominated by PT Partnership must vote in
favor of any resolution passed by the Board of Directors. Reference is made to
the GSJ Shareholders Agreement and Amendments where such provisions are set
forth in full.
Full service play at The Gauntlet at St. James began in October
1991. The residential community, which is adjacent to the golf course, is owned
and being developed by Homer E. Wright, Jr., Inc. ("Wright"), an unaffiliated
entity. For each residential lot or multi-family dwelling unit sold, up to a
maximum of 900, GSJ receives a $5,000 mandatory resident membership fee from the
developer. This membership fee entitles such buyer to membership at The Gauntlet
at St. James, the association in which residents are granted memberships. For
the periods ended November 13, 1997 and December 31, 1996, there were 66 and 96
lots or units sold, respectively, in connection with which the Company received
a resident membership fee. The number of buyers entitled to activate their
memberships at The Gauntlet at St. James is at any given time limited to 485.
At such time as The Gauntlet at St. James has at least 485 active
resident members, its Bylaws provide that its membership may have an option to
purchase the golf course and certain related facilities at the then fair market
value. In addition, Wright, the developer, holds a twenty-five year right of
first refusal to purchase the golf course and certain related facilities on the
same terms as a third-party offeror. In addition, Wright is entitled to a
commission of 5% in the event the golf course is sold (within twenty-five years
from opening). For more information with respect to such provisions, see the
Bylaws of The Gauntlet at St. James and the Purchase Agreement between Wright
and GSJ, dated as of September 8, 1990.
The Gauntlet at St. James serves two client bases: (a) golf
vacationers primarily during the months of September through December and
February through May; and (b) local players throughout the year. The Company
estimates that it receives approximately 60% of its annual revenues at this golf
course from the Myrtle Beach tourist trade with the balance of revenues from
10
<PAGE> 11
the local resident population. During the period ended November 13, 1997 29,796
rounds were played compared to 37,387 rounds played in 1996.
2. THE GAUNTLET AT LAUREL VALLEY,
GREENVILLE COUNTY, TIGERVILLE, SOUTH CAROLINA
The Gauntlet at Laurel Valley is a 165 acre, 18-hole, daily-fee
golf course located near Greenville, South Carolina and 22 miles from
Spartanburg, South Carolina. The course was designed by P.B. Dye. The Gauntlet
at Laurel Valley includes a 4,500 square foot clubhouse with restaurant, pro
shop, members' lounge and underground cart storage facility. The course was
built in conjunction with a planned residential real estate development. The
Company has a 30% ownership interest in The Gauntlet at Laurel Valley, Inc.
("GLV"), a South Carolina corporation. EPI Pension Fund owns the remaining 70%
of the outstanding equity shares of GLV as follows:
<TABLE>
<CAPTION>
Voting Non-Voting Percent of
Common Stock Common Stock Outstanding
------------ ------------ -----------
<S> <C> <C> <C>
EPI Pension Fund 7,000 6,720 70%
The Company 3,000 2,880 30%
------- ----- ---
10,000 9,600 100%
</TABLE>
The Shareholders' Agreement between the Company and EPI Pension
Fund, dated as of October 30, 1991 (the "GLV Shareholders' Agreement"),
provides EPI Pension Fund with certain rights with respect to GLV, including,
without limitation, control over all expenditures over $5,000 (checks over such
amounts must be co-signed by a representative of EPI Pension Fund who acts as
Secretary of GLV), equal representation on the Board of Directors of GLV (with a
director selected jointly by the Company and EPI Pension Fund to break any
ties), the ability to purchase the Company's shares in GLV for fair market value
in the event that EPI Pension Fund determines its investment to be "at risk" and
the Company fails to cure the default cited in the notice, and certain forced
buy-out provisions in the event either shareholder receives a third-party offer
to purchase its holdings. Reference is made to the GLV Shareholders' Agreement
where such provisions are set forth in full.
Full service play commenced in April 1993. There are approximately 425
residential lots adjacent to this facility to be developed by the residential
developer. Based on the transfer of ownership to EPI Pension Fund, the lack of
control by the Company of the golf course and the lack of development to date,
the Company does not expect any proceeds from the sale of lots in the future. In
addition, during the year ended December 31, 1997, the Company charged off
approximately $523,000 of accounts receivable deemed uncollectible by the
Company related to the Laurel Valley development.
11
<PAGE> 12
The Gauntlet at Laurel Valley draws its golfing clientele
primarily from the Greenville/Spartanburg metropolitan area.
3. THE GAUNTLET AT CURTIS PARK,
STAFFORD COUNTY, VIRGINIA
The Gauntlet at Curtis Park, Inc. ("GCP") has a lease agreement
with the Board of Supervisors of Stafford County, Virginia to lease, through the
year 2026 (with two renewal options of 6 years each), land for the development,
construction and operation of an 18-hole golf course with room and permission to
expand to 27 holes (subject to market conditions) within Curtis Memorial Park,
Stafford County, Virginia (the "Lease"). The Lease requires the Company to pay
rental payments equaling the greater of $25,000 or 5% of net revenues (excluding
revenues from certain membership sales) for each of the years remaining in the
initial 33-year lease term. Rental payments are not to exceed 7 1/2% and 11% of
net revenues, respectively, for each year of the two renewal terms. Amenities
include an 8,500 square foot clubhouse which includes an adjacent golf teaching
center, driving range, practice putting green and parking facilities. The golf
course was designed by P.B. Dye and opened for public play in June 1995.
In 1994, the Company entered into a Shareholders' Agreement
concerning GCP with UA Canadian Pipeline Industry National Pension Plan ("UA
Pension Fund") of which the Company owned 80% and UA Pension Fund owned 20% of
the outstanding equity shares of GCP. On September 13, 1996, the Company
purchased the remaining 20% of GCP from UA Pension Fund for $50,000. At the same
time, the Company paid down the $1,600,000 second mortgage loan held by UA
Pension Fund. The remaining loan balance was purchased by, and assigned to, A &
E Capital Funding, Inc. (see Item 12. "Certain Relationships and Related
Transactions") thereby completely terminating UA Pension Fund's interest in GCP.
12
<PAGE> 13
On October 30, 1997, GCP completed a refinancing of the
NationsBank loan on the golf course with a loan and mortgage of $3,280,000 with
Washington Mortgage Financial Group, Ltd. The proceeds of the loan paid off the
first mortgage of approximately $2,200,000 outstanding on that date. In
addition, the proceeds were used to paydown $400,000 on a second mortgage held
by A&E Capital. Certain reserves totaling $104,688 were held out of proceeds by
the lender for capital improvements to the golf course and clubhouse. These
amounts are expected to be expended in the first six months of 1998. The balance
of proceeds were used for working capital purposes for the Company.
Terms of the loan provide for a fixed interest rate of 8.37% for a
period of 10 years, amortized over 20 years. Monthly payments total $26,125,
including principal and interest. In addition, the loan provides that a capital
replacement reserve be established through the year with monthly payments of
$5,331.
GCP seeks to draw golfing clientele from, and sell memberships to,
the residents of the surrounding areas, which include the Washington, D.C.
metropolitan area and the suburbs of Richmond, Virginia. The Curtis Park golf
course has no contiguous or adjacent residential community and therefore there
is no developer with whom GCP has an agreement regarding imposition of mandatory
residential membership fees as a condition of its sale of lots. During the years
ended December 31, 1997 and 1996, 37,982 and 31,167 rounds were played,
respectively.
4. THE GAUNTLET AT MYRTLE WEST,
HORRY COUNTY, NORTH MYRTLE BEACH, SOUTH CAROLINA
The Gauntlet at Myrtle West is a 196 acre, 18-hole, daily-fee golf
course located in North Myrtle Beach, South Carolina. The course was designed by
Tom Jackson. The Gauntlet at Myrtle West includes an 8,000 square foot clubhouse
with restaurant, pro shop, members' lounge and a 6,600 square foot underground
cart storage facility. The course, which was previously known as The Myrtle West
Golf and Country Club, was purchased by The Gauntlet at Myrtle West, Inc.
("GMW"), a South Carolina corporation, on December 30, 1993. The Company owns
30% and EPI Pension Fund owns 70% of the outstanding equity shares of GMW as
follows:
<TABLE>
<CAPTION>
Voting Non-Voting Percent of
Common Stock Common Stock Outstanding
<S> <C> <C> <C>
EPI Pension Fund 7,000 6,720 70%
The Company 3,000 2,880 30%
------ ----- ---
10,000 9,600 100%
</TABLE>
13
<PAGE> 14
The Shareholders' Agreement between the Company and EPI Pension
Fund (the "GMW Shareholders' Agreement"), provides EPI Pension Fund with certain
rights with respect to GMW, including, without limitation, approval over
expenditures that are in excess of $5,000 or outside the annual budget (which
requires the consent of both the President and the Secretary/Treasurer, an EPI
Pension Fund representative) of GMW, equal representation on the Board of
Directors of GMW (with a director selected jointly by EPI Pension Fund and the
Company to break any deadlocks), the ability to purchase the Company's shares in
GMW for fair market value in the event EPI Pension Fund determines its
investment to be "at risk" and the Company fails to cure the default cited in
the notice, and certain forced buy-out provisions in the event either
shareholder receives a third-party offer to purchase its holdings. Reference is
made to the GMW Shareholders' Agreement where such provisions are set forth in
full.
The shares of the Company's Common Stock issued to the North
Myrtle Beach Golf Club, Inc. ("the MW Seller") in connection with the Company's
acquisition of GMW from the MW Seller, were, under certain circumstances,
guaranteed by the Company to have a value in the event of a public sale of
$350,000. On December 11, 1995, MW Seller filed a Complaint against GMW and the
Company, alleging an inability to sell the Company's Common Stock. GMW and the
Company dispute the claim and, as described in Item 3. "Legal Proceedings," have
filed an Answer and will vigorously oppose the action.
The Company took possession of, and commenced operations at, The
Gauntlet at Myrtle West on December 30, 1993. The golf course draws its
clientele predominantly from the Myrtle Beach area golf market. There is no
residential development contiguous to GMW, nor is there a developer from whom
the Company will receive automatic membership fees. The Company wrote down the
remaining investment in the GMW based on EPI Pension Fund control and
anticipated ability to generate proceeds from the GMW.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's principal business office is located at One Tampa
City Center, 201 North Franklin Street, Suite 200, Tampa, Florida 33602.
Effective December 16, 1997, the Company took occupancy of 8,932 square feet of
newly leased office space at the above address (the "Premises"). A five-year
lease ending December 16, 2002 provides for rent on a monthly basis, and for
each of the ensuing years of the term, the Company has agreed to pay annual base
rents of $133,980, $142,910, $151,844, $160,776, and $169,708, respectively. The
landlord's operating expenses for services provided to the Company and other
lessees of the building that accommodates the Premises are estimated, paid
monthly as additional rent, and adjusted annually according to the lease. The
Company may not sublet the Premises or assign the lease (unless to a qualified
and approved affiliate) without the consent of the landlord. The lease contains
other such customary provisions including a force majeure clause and
indemnities.
On July 15, 1997, the Company leased 4,140 square feet at Suite
2550 in the same building for a term of 37 months. The lease provides for
monthly rental of $4,830 during the first twelve (12) months, $5,175 for months
14 through 25, and $5,520 for months 26 through 37. As a result of the
14
<PAGE> 15
Company's need for additional space, the Company sublet Suite 2550 beginning
January 1, 1998 for the remaining 32 months of the lease term for $5,520 per
month. On December 31, 1997, the Company executed an agreement to terminate its
lease dated September 1, 1995 at 5806-A Breckenridge Parkway, Tampa, Florida
33610 and made full settlement with the landlord for a settlement payment of
$76,253. All remaining liabilities are eliminated.
The office space occupied by the Company is sufficient for the
conduct of the Company's business therein.
In December 1996 the Company, through a wholly-owned subsidiary,
Divot Properties WGV, Inc. ("Divot WGV"), purchased for $810,617 approximately
4.25 acres described as Southeast Parcel 2 of the St. Johns Planned Unit
Development located in St. Johns County, Florida, as well as certain license
rights. The land is located within the World Golf Village ("WGV") development
which is currently being developed within the 6,300 acre St. Johns planned
community. The World Golf Village resort, located approximately 15 miles south
of Jacksonville, Florida, upon completion, will be home to the World Golf Hall
of Fame Museum, the World Golf Village Resort Hotel and Conference Center, three
18-hole championship golf courses, PGA Tour Productions, a PGA Tour Golf
Academy, and other amenities. The license rights entitle the Company, for a
period of twenty-five years, to use the World Golf Village name and logos in
connection with the promotion and operation of certain service enterprises, and
the marketing of certain consumer products related to the World Golf Village.
At December 31, 1997, the Company had made a deposit of $500,000
on another parcel of property located within the World Golf Village, described
as Parcel 11. The Company acquired this parcel, again through Divot WGV, for
$1,850,000, on January 16, 1998. Such property is to be used for the
development of the World Golf Village Spa and 32 bungalows at WGV.
For a complete description of all other properties owned or leased
by the Company, see Item 1.c. "Business -- The Company's Golf Courses."
ITEM 3. LEGAL PROCEEDINGS
15
<PAGE> 16
On August 10, 1995, the Company and its subsidiary, The Gauntlet
at Myrtle West, Inc. ("GMW"), received from North Myrtle Beach Golf Club, Inc.
("MW Seller") a "Notice of Default Under Indemnity Agreement and Guaranty" dated
December 28, 1993 in connection with MW Seller's alleged inability to realize
$350,000 or any proceeds through its attempts at a public sale of its 102,010
shares of the Company's Common Stock. The stock was issued to MW Seller and the
Indemnity Agreement and Guaranty (the "Guaranty") was entered into by the
Company and GMW as part consideration for the December 28, 1993 sale to GMW of
certain of MW Seller's assets, inclusive of certain golf course lands and
improvements in Myrtle Beach, S.C. The obligations under the Guaranty are
secured by a third mortgage and security agreement over the golf course. The
Company has disputed the claim that its shares held by MW Seller have no value
and on February 12, 1996 filed an Answer to the December 11, 1995 Complaint and
Third Mortgage Foreclosure proceedings filed by MW Seller under Civil Action No.
5-CR26.3462 in The Court of Common Pleas, County of Horry, State of South
Carolina. The Company denies liability and states that MW Seller's failure to
sell the stock as required by the Guaranty discharges the Company's and GMW's
obligations. The Company believes its maximum liability exposure will be the
shortfall, if any, from $350,000 and the sale proceeds at the time MW Seller's
102,010 Company shares are sold or should have been sold. The Company has
recorded in its Consolidated Financial Statements a reserve for its estimated
maximum liability for this case.
In connection with the Company's February 21, 1996 Agreement in
Principle ("AIP") with its three Pension Fund Partners (see introduction to Item
1.c. "The Company's Golf Courses" for further discussion of the AIP and see
Exhibit 10.47), definitive agreements were reached during the second quarter of
1996 with regards to two of the Company's four golf courses. However, the
Company's efforts to interpret the AIP and negotiate with EPI Pension Fund
regarding the two other courses were unsuccessful. On May 31, 1996, EPI Pension
Fund commenced an action claiming breach of contract, specific performance, a
constructive trust and temporary and permanent injunctive relief. At a hearing
conducted on July 12, 1996 in the Circuit Court in and for Hillsborough County,
Florida, the court issued a preliminary injunction which required the Company to
transfer to EPI Pension Fund 45% of the outstanding equity in the Company's GLV
and GMW subsidiaries whereby
16
<PAGE> 17
the Company now holds 30% of the outstanding equity in each of these two
subsidiaries and EPI Pension Fund holds 70%. The Company filed an appeal brief
to this preliminary injunction on August 14, 1996 in the 2nd District Court of
Appeals for the 13th Judicial District in and for Hillsborough County, Florida.
The District Court denied this appeal on February 11, 1997. The Company entered
into a settlement agreement with the EPI Pension Fund on October 15, 1997, which
purported to resolve all outstanding issues between the Company and the EPI
Pension Fund. The Company has failed to perform all of its obligations under the
settlement. On February 10, 1998, the Circuit Court entered an order directing
the Company to perform fully all of its obligations under the Settlement
Agreement prior to February 24, 1998. At a hearing on March 26, 1998 the
Company offered partial performance under the Settlement Agreement which was
taken under advisement by the Circuit Court and opposing counsel and will be
ruled upon at a hearing to be scheduled in the future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matters were submitted to a vote of the security holders during
the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
From August 6, 1993 through July 17, 1996, the Company's Common
Stock traded on the Toronto Stock Exchange (the "TSE") under the trading symbol
"TEE." The Company voluntarily delisted from the TSE.
The following table sets forth the high and low closing prices on
the TSE for each quarter from January 1, 1996 through the Company's voluntary
request to delist from the TSE on July 17, 1996 (all such prices are in Canadian
dollars):
<TABLE>
<CAPTION>
Closing Prices
--------------
Period Ended High Low
- ------------ ----- -----
<S> <C> <C>
March 30, 1996 $3.60 $2.10
June 30, 1996 2.25 1.05
July 17, 1996 1.25 .68
</TABLE>
Since November 22, 1994, trading of the Company's Common Stock has
been quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") SmallCap Market. The following table sets forth, for the
periods indicated, the quarterly range of the high and
17
<PAGE> 18
low closing prices of the Common Stock as reported by the Nasdaq SmallCap Market
(all such prices are in U.S. dollars):
<TABLE>
<CAPTION>
Closing Prices
--------------
Quarter Ended High Low
- ------------- ---- -----
<S> <C> <C>
March 31, 1996 $2.69 $1.50
June 30, 1996 1.69 .88
September 30, 1996 1.00 .25
December 31, 1996 .50 .25
March 31, 1997 .69 .25
June 30, 1997 .44 .25
September 30, 1997 .37 .19
December 31, 1997 .63 .13
</TABLE>
On March 25, 1998, the closing market price for the Company's
Common Stock on the Nasdaq SmallCap Market was $.37 per share.
As of March 25, 1998, there were approximately 3,000 holders of
record of the Company's Common Stock and 22 holders of record of the Company's
Preferred Stock.
No dividend has been declared or paid by the Company since
inception on the Company's Common Stock. The Company does not anticipate that
any dividends will be declared or paid in the future on the Company's Common
Stock.
As of December 31, 1997, the Company sold 1,920 shares of its 1997
Convertible Preferred Stock ("1997 Preferred"). The 1997 Preferred was sold
solely to accredited investors pursuant to a private placement offering in
reliance upon Section 4(2) of the Securities Act of 1933, as amended. Proceeds
from the private placement of the 1997 Preferred equaled $1,920,000, less fees
of $165,000. The 1997 Preferred was offered in units of 15 preferred shares,
with each such share having a liquidation value of $1,000, plus 10,000 warrants
(exercisable at $1.00 per share for a period of three years) for a price of
$15,000 per unit. The holders of the 1997 Preferred are entitled to 7%
cumulative dividends payable quarterly which percentage increases in certain
events. The Company does not anticipate paying any dividends in the foreseeable
future. The 1997 Preferred is convertible immediately to shares of the Company's
Common Stock at $1,000 per share so converted divided by the "conversion price"
which is a formula based on the lesser of $0.70 or 75% of the average of the
closing price during the ten-day period prior to conversion. Subsequent to
December 31, 1997, the Company sold 120 shares of its 1997 Preferred to similar
investors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements included herein for the years ended
December 31, 1997 and 1996.
Brassie Golf Corporation (the "Company") owns and operates golf
courses, is engaged in the development and marketing of golf-related businesses,
and holds licensing rights in the United States and internationally.
The Company holds certain licensing rights affiliated with the World
Golf Village, which is expected to be a premier tourism, business, and golf
destination in America; the World Golf Village is currently being developed
south of Jacksonville, Florida. The Company also owns land intended for future
development at the World Golf Village. In addition, the Company's portfolio
includes a wholly-owned subsidiary that leases a golf course in Virginia and
minority interests in two golf courses in South Carolina. The Company sold its
interest in a fourth golf course, the Gauntlet at St. James, located in
Southport, North Carolina, in November 1997.
The following table shows the number of full months each golf course
was operating under the Company's ownership during the respective periods:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
% OWNERSHIP DECEMBER 31, DECEMBER 31,
AS OF 12/31/97 1997 1996
-------------- ------------ ------------
<S> <C> <C> <C> <C>
Curtis Park (opened for play June 1995).... 100% 12 12
(opened for play October
St. James 1991).......................... 100% 10 12
Laurel Valley (opened for play April 1993)... 30% 12 12
Myrtle West (acquired December 30, 1993)... 30% 12 12
</TABLE>
In addition, the Company recently entered into a letter of intent to
acquire Lady Fairway Golf, one of the nation's leading manufacturers of women's
golf shoes and accessories. This is the first of several planned acquisitions of
companies in the golf consumer products market.
The Company is seeking to secure additional licensing rights for a
variety of products and services specific to the World Golf Village. The Company
has also been actively engaged in the development of management and hospitality
businesses to be located at the World Golf Village.
As of December 31, 1997, the Company's total assets were approximately
$7,974,000 and the Company's total debt, including capitalized leases, was
approximately $4,292,000.
18
<PAGE> 19
RESULTS OF OPERATIONS
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
REVENUES
The Company derives its revenues primarily from golf revenues (including
greens fees, range fees and cart fees), management and design fees, resident
membership fees, membership sales and annual dues, proshop revenue and food and
beverage revenue. The period-to-period change in each of the revenues categories
is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, INCREASE
1997 1996 (DECREASE)
------------ ------------ -----------
<S> <C> <C> <C>
Golf Revenues................................ $1,833,010 $1,878,273 $ (45,263)
Management and Design Fees................... 809,660 1,785,818 (976,158)
Resident Membership Fees, Membership Sales
and Annual Dues............................ 699,733 774,594 (74,861)
Food & Beverage Revenues..................... 485,737 508,911 (23,174)
Proshop Revenues............................. 259,099 277,188 (18,089)
Other Income................................. 6,360 7,118 (758)
---------- ---------- -----------
Totals....................................... $4,093,599 $5,231,902 $(1,138,303)
========== ========== ===========
</TABLE>
In the aggregate, the Company generated $4,093,599 in revenues during the
year ended December 31, 1997, compared to $5,231,902 in the year ended December
31, 1996, a decrease of $1,138,303. The decrease primarily consists of a
$692,866 decrease in management revenues related to the sale of the management
division in July 1997, a $157,226 decrease in design revenues related to the
sale of the design division in August 1997, and a $141,000 decrease related to
the construction management division which had no operations in 1997. In
addition, as a result of the sale of St. James in November 1997, corresponding
decreases of $228,457, $50,249, $59,916, and $44,134 occurred for golf revenue,
resident membership fees, membership sales and annual dues, food and beverage
revenue, and proshop revenue, respectively. These decreases were offset in part
by an increase of $221,156 in total revenues for Curtis Park.
COSTS AND EXPENSES
The Company's total operating expenses decreased from $11,056,005 during
the year ended December 31, 1996 to $6,660,207 during the year ended December
31, 1997, a decrease of $4,395,798. The decrease is largely attributable to the
writedown of goodwill by $4,050,000 in 1996, reduced expenses of $763,568 as a
result of the sale of the management division in July 1997, reduced expenses of
$424,062 as a result of the sale of the design division in August 1997 and
reduced expenses of $171,412 related to the construction management division
which had no operations in 1997. In addition, a reduction of $153,450 in
operating expenses resulted from the sale of St. James in November 1997 and a
reduction of $171,669 resulted from a related decrease in amortization and
depreciation expense. These items were offset in part by a $307,161 increase in
bad debt expense and a $708,421 increase in other general and administrative
costs. These increased costs were in conjunction with writing off the
uncollectible receivables of the Company, other legal and accounting fees, and
costs and other professional fees associated with preparing the new business
plan of the Company. Marketing costs increased by $135,329 in 1997 in an effort
to enhance investor relations and to more effectively market the business of the
Company. Finally, expenses associated with the operations of the golf course at
Curtis Park were $146,734 higher than in the previous year.
The Company incurred a write down of goodwill of $-0- and $4,050,000
related to the Summit merger as of December 31, 1997 and 1996. The write down in
1996 was a result of management's evaluation of the future value of goodwill on
the Company's financial statements at year end.
Golf course operations include the compensation and benefits costs of
course personnel and related payroll taxes, golf cart leases, equipment rental
and maintenance, clubhouse repairs and
19
<PAGE> 20
upkeep, insurance, utilities, chemicals, seed and fertilizers, water, supplies
and other miscellaneous costs typically incurred in the operation of a golf
course.
General and administrative expenses include management and administrative
compensation, related payroll taxes and benefits, professional fees, including
legal and accounting and other consultants, telephone, utilities, insurance,
other taxes, allowance for doubtful accounts receivable, fixed asset valuation
adjustments, travel, meals and entertainment and office expenses, including
rent.
Interest expense decreased to $683,755 during the year ended December 31,
1997 from $2,316,301 during the year ended December 31, 1996. This $1,632,546
decrease was primarily due to a one-time charge to interest expense in 1996 of
$1,400,000 related to the discount on convertible debentures. In addition, the
contractual interest expense on the debentures and lower principal balances on
certain debt, partially related to the payoff of loans due to the sale of the
St. James property in November 1997, resulted in an additional decrease of
$146,896. The prime rate decreased from 8.65% at December 31, 1996 to 8.50% at
December 31, 1997.
As a result of the 30,082,268 warrants issued in connection with the
issuance of new debentures, the Company recorded $892,709 in amortization
expense related to the debt discount on convertible debentures in 1997.
The loss on equity investment in subsidiaries decreased from $966,579
during the year ended December 31, 1996 to $116,318 during the year ended
December 31, 1997. This $850,261 decrease results primarily from a substantial
writedown of the Company's investment in the Gauntlet at Laurel Valley and the
Gauntlet at Myrtle West subsidiaries in 1996 due to a redetermination of the net
realizable value of the Company's ownership interests in these entities at that
time. Due to the recurring losses and working capital deficiencies of the
entities, the Company in 1997 again redetermined the net realizable value of the
Company's investment in the entities, which the company found to be zero, and
wrote down the investment value by $116,318 to reflect that redetermination as
of December 31, 1997.
For the year ended December 31, 1997, the Company recorded a loss on sale
of subsidiaries of $1,826,164. The Company recorded a $1,931,875 loss on the
sale of the golf course at St. James and a $19,289 loss on the sale of Hale
Irwin Golf Services which were offset by a $125,000 gain on the sale of Brassie
Golf Management Services, Inc. and Summit Golf Corporation. No gains or losses
on the sale of subsidiaries were recorded in 1996 as no subsidiaries were sold
during the year.
Interest and other income decreased to $98,520 during the year ended
December 31, 1997 from $659,266 during the year ended December 31, 1996. This
$560,746 decrease resulted primarily from a one-time gain of $580,000 related to
proceeds received in 1996 from a settlement of claims in connection with a
disposition of securities held by the Company's foreign subsidiary.
The provision for income taxes of $110,000 in 1996 was a result of foreign
income taxes due as a result of the $580,000 gain from the former disposition of
securities mentioned above. No provision for income taxes was necessary in 1997
due to the losses incurred by the Company.
NET LOSS
For the year ended December 31, 1997, the Company had a net loss of
$5,987,034, compared to the net loss of $8,625,732 at December 31, 1996. This
$2,638,698 decrease in loss from prior year is the net result of the items
explained above.
INFLATION
Inflation has not had a material effect on the Company's operations during
the years ended December 31, 1997 and 1996.
20
<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
Historically, golf revenues, resident membership fees, membership sales and
annual dues, proshop revenue, food and beverage revenue and management and
design fees have been the principal source of funds to pay the operating
expenses of the Company. To fund acquisitions, capital improvements, and a
portion of working capital needs, the Company had to rely upon long-term
borrowing and equity financing.
DEFICIENCY IN WORKING CAPITAL
The Company had a deficit in working capital in the amount of $98,529 as of
December 31, 1997, compared to a working capital deficit of $404,785 as of
December 31, 1996. The improvement in the working capital deficiency was
primarily attributable to the effects of proceeds received from the issuance of
preferred stock through a private placement, the sales of the management
division of the Company and the golf course at St. James, and the loan
refinancing related to the golf course at Curtis Park which has been offset in
part by a loss from operations, purchases of long-term assets, deposits toward
business acquisitions and other long-term assets, and a paydown of long-term
debt. The availability of cash and short-term investments as of December 31,
1997 is $188,285, of which $135,019 is restricted for certain expenditures
primarily relating to improvements and repairs at the Curtis Park golf course.
The Company is not generating sufficient revenues from its operations to
fund its activities and therefore is dependent on additional financing from
external sources. This fact raises substantial doubt about the Company's ability
to continue as a going concern. The Company secured $1.92 million of capital in
a private placement transaction in December 1997. The Company expects to raise
additional amounts from private placements in 1998. If the Company is successful
in raising additional capital in 1998, management believes that the Company will
have adequate resources to continue to meet its current debt obligations, fund
capital improvements and expand and develop its businesses. There is no
assurance that such additional funding will be completed and the inability to
obtain such financing would have a material adverse effect on the Company.
The Company has taken measures to maintain controls on operating costs in
1998 as part of a continuing effort to become profitable. Management intends to
take further steps to improve the Company's liquidity and reduce debt, both
short and long term.
As noted above, the Company concluded on a private placement offering in
December 1997 of 7% Cumulative Convertible Preferred Stock ("Preferred Stock")
for $1.92 million, less associated costs of $165,000 to secure such funding. The
Preferred Stock was offered for a price of $15,000 per unit. One hundred
twenty-eight units (128) were sold. Each unit was made up of 15 Preferred Shares
and 10,000 warrants. Each preferred share has a liquidation value of $1,000 and
each warrant is exercisable immediately for a period of 3 years to purchase one
share of common stock for $1.00 each.
During March 1996, the Company issued $5.5 million in six percent
convertible debentures to finance the operations for the Company. During 1996,
the holders of the debentures converted $2,034,262 of the debt into 6,350,564
shares which equated to $2,496,785 in equity, net of financing fees. Through
March 1, 1997, these debentures were convertible into shares of common stock at
discounts ranging from 15%-35% of its current market value. The Company recorded
$1.4 million in interest during 1996 to reflect the discounts upon conversion of
the Company's common stock. As of December 31, 1996, $3,465,738 of convertible
debentures were outstanding.
From January through October 1997, the holders of the debentures converted
$1,195,743 of the debt into 4,972,107 shares which equated to $1,573,308 in
equity, net of financing fees. During November 1997, the remaining $2,269,995
plus accrued interest of outstanding debentures were transferred to new
debenture holders in a third party transaction. Simultaneously, the Company
21
<PAGE> 22
retired the 1996 debenture agreements and replaced them with new debenture
agreements containing new terms.
The new debentures are payable on December 31, 1998. Through December 31,
1998, the holders of the debentures are entitled to convert the debentures into
common stock of the Company at a conversion price equal to the lesser of (1)
$0.17 per share or (2) 70% of the average closing bid of the common stock during
the last five trading days prior to conversion.
From November through December 1997, $1,259,346 of the debentures'
principal had been converted into 8,460,888 shares of common stock, which
equated to $1,863,442 in equity, net of financing fees. As of December 31, 1997,
$1,010,649 of convertible debentures were outstanding.
In connection with the sale of the debenture agreements issued in November
of 1997, the Company issued (1) warrants to purchase 15,041,134 shares of common
stock of the Company at the lesser of $0.17 per share or 70% of the average
closing bid price of the common stock during the last five trading days prior to
exercise, (2) warrants to purchase 15,041,134 shares of common stock of the
Company at the lesser of $0.34 per share or 70% of the average closing bid price
of the common stock during the last five trading days prior to exercise and (3)
1,672,128 shares of common stock. The warrants are exercisable for a period of
three years from the date of issuance.
USES OF FUNDS
From the proceeds obtained through the private placement of preferred
stock, the sale of businesses, and the loan refinancing for Curtis Park, the
Company has positioned itself to execute the new business plan of the Company.
The Company has made a $300,000 deposit toward the acquisition of certain assets
from Divot Golf Corporation that will enable the Company to obtain certain
additional development rights and license agreements at the World Golf Village
and concentrate on golf-related consumer products. The Company also made a
$100,000 deposit toward the acquisition of Lady Fairway Golf, a leading
manufacturer of women's golf shoes and accessories.
In addition, the Company paid $75,000 in cash and 3,000,000 shares of
common stock to purchase certain assets of Divot Spa WGV, Inc., including
licensing and developmental rights on Parcel 11-A of the World Golf Village, the
Spa Tournament Championship development program, and the spa products and
catalogs. In a related transaction, the Company deposited $500,000 toward the
purchase of a parcel of land at the World Golf Village upon which the Company
plans to construct a health spa which will charge a daily fee to visitors of the
World Golf Village and the Golf Hall of Fame located within the Village; the
Company also plans to sell health and spa related consumer products at this
location. The Company expended approximately $215,000 toward the development of
management and hospitality services at the World Golf Village project and
satisfied other short-term and long-term debt and working capital obligations.
DECREASE IN DEBT
Total debt decreased from $10,073,122 at December 31, 1996 to $4,291,574 at
December 31, 1997. Of this $5,781,548 decrease, $3,053,981 is attributed to the
St. James golf course which was sold in November 1997, $2,455,089 is attributed
to the conversion of debt to equity related to debentures issued by the Company,
and $446,291 is attributed to other debt repayments. These decreases were offset
by $440,000 in net proceeds from refinancing the loan on the Curtis Park golf
course after retiring the previous first and second mortgages on the property.
FINANCIAL COMMITMENTS
The Company has current commitments for improvements and repairs at The
Gauntlet at Curtis Park totalling $104,688. Cash has been restricted under the
loan agreement to cover these expenditures. The Company intends to seek
financing for these capital expenditures from outside
22
<PAGE> 23
financing sources, although there is no assurance that such financing will be
available or, if available, will be on terms acceptable to the Company.
As a result of its letter of intent to acquire Lady Fairway Golf signed in
December 1997, the Company has a commitment to fund the purchase and to close
the transaction. The Company also has commitments for future minimum lease
payments under operating and capital leases and has commitments to its executive
officers through employment agreements.
SHAREHOLDERS' EQUITY
During the year ended December 31, 1997, the Company's shareholders' equity
increased from $1,843,291 to $2,590,885. This $747,594 increase was primarily a
result of the issuance of 15,085,123 common shares and 30,082,268 warrants in
connection with the convertible debentures for $4,999,815 and proceeds from the
private placement of preferred stock for $1,920,000 less fees of $165,000,
offset by a net loss of $5,987,034.
WARRANT EXERCISES
As of December 31, 1997, warrants to purchase 33,550,268 shares of the
Company's common stock were outstanding as follows:
<TABLE>
<CAPTION>
# WARRANTS ISSUED EXPIRATION DATE EXERCISE PRICE
- ----------------- ------------------- --------------
<C> <S> <C>
100,000 September 28, 1998 $2.40
238,000 November 17, 1998 $2.40
50,000 December 5, 1998 $1.00
150,000 June 30, 1999 $2.00
1,400,000 June 30, 2000 $2.45-$3.25
250,000 September 28, 2000 $2.40
15,041,134 November 18, 2000 $0.17*
15,041,134 November 18, 2000 $0.34*
1,280,000 December 3, 2000 $1.00**
----------
33,550,268
==========
</TABLE>
- ---------------
* Or 70% of the average closing bid price of the common stock during the last
five trading days prior to conversion, whichever is less.
** Or 75% of the average closing bid price of the common stock during the last
ten trading days prior to conversion, whichever is less.
PROCEEDS FROM DEVELOPER'S RESIDENT LOT SALES
By agreement with the developer of the residential real estate development
contiguous to the Gauntlet at St. James golf course constructed by the Company,
initial membership fees were paid to the Company by the developer on behalf of
the purchasing resident upon the closing of each lot sale pursuant to negotiated
or assumed agreements. During the years ended December 31, 1997 and 1996, 65 and
96 lots were sold, respectively, by the developer at St. James, the proceeds of
which increased cash by $325,000 and $480,000 in 1997 and 1996, respectively. As
a result of the sale of the St. James golf course in November 1997, the Company
expects to receive no further proceeds from the sale of residential lots as
those rights are now held by the buyer of the golf course.
23
<PAGE> 24
ITEM 7. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Brassie Golf Corporation
We have audited the accompanying consolidated balance sheet of Brassie Golf
Corporation and subsidiaries as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 10 to the consolidated financial statements, the
Company changed its method of accounting for two previously majority-owned
subsidiaries.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Brassie Golf Corporation and subsidiaries at December 31, 1997 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 1, the Company has incurred recurring operating losses and has
a working capital deficiency. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.
[ERNST & YOUNG LLP]
ERNST & YOUNG LLP
Raleigh, North Carolina
January 12, 1998
24
<PAGE> 25
BRASSIE GOLF CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 53,266
Cash -- restricted........................................ 135,019
Trade accounts receivable, net of allowance for doubtful
accounts of $150,800................................... 352,018
Accounts receivable from related parties.................. 160,543
Inventories............................................... 31,611
Prepaid expenses and other current assets................. 1,038,588
-----------
Total current assets.............................. 1,771,045
Property and equipment at cost:
Land and land improvements................................ 2,789,069
Depreciable golf course improvements...................... 828,681
Buildings................................................. 1,426,369
Furniture, machinery and equipment........................ 986,642
-----------
6,030,761
Less accumulated depreciation and amortization.............. 742,956
-----------
5,287,805
Intangible assets, net of accumulated amortization of
$270,000.................................................. 583,400
Goodwill.................................................... 331,250
-----------
Total assets...................................... $ 7,973,500
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 772,460
Accrued interest payable.................................. 32,751
Income tax payable........................................ 181,793
Current portion of long-term debt......................... 757,023
Current maturities of capital lease obligations........... 21,510
Accrued discount on convertible debentures................ 104,037
-----------
Total current liabilities......................... 1,869,574
Long-term debt, less current portion........................ 3,477,256
Long-term capital lease obligations, less current portion... 35,785
Commitments and Contingencies
Shareholders' equity:
Convertible Preferred Stock, $.001 par value; 1,000,000
shares authorized; 283,170 shares issued and
outstanding (aggregate liquidation
preference of $1,920,000).............................. 283
Common Stock, $.001 par value; 50,000,000 shares
authorized; 42,632,503 shares issued and outstanding... 42,633
Additional paid-in capital................................ 32,043,966
Accumulated deficit....................................... (29,176,276)
Less cost of Convertible Preferred Stock held in treasury,
281,250 shares......................................... (210,937)
Foreign currency translation adjustment................... (108,784)
-----------
Total shareholders' equity........................ 2,590,885
-----------
Total liabilities and shareholders' equity........ $ 7,973,500
===========
</TABLE>
See accompanying notes.
25
<PAGE> 26
BRASSIE GOLF CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996
----------- ------------
<S> <C> <C>
Operating revenues:
Golf revenues............................................. $ 1,833,010 $ 1,878,273
Food and beverage revenues................................ 485,737 508,911
Proshop revenues.......................................... 259,099 277,188
Membership sales and dues................................. 372,233 294,594
Resident membership fees.................................. 327,500 480,000
Management and design fees................................ 809,660 1,785,818
Other..................................................... 6,360 7,118
----------- ------------
Total operating revenues.......................... 4,093,599 5,231,902
Operating expenses:
Golf course operations.................................... 1,293,975 1,328,564
Cost of food and beverage sales........................... 195,869 203,660
Cost of proshop sales..................................... 193,886 173,812
Advertising expense....................................... 313,351 216,254
Management and design expenses............................ 701,191 1,553,821
General and administrative expenses....................... 3,090,713 2,487,003
Depreciation and amortization expense..................... 871,222 1,042,891
Write down of goodwill.................................... -- 4,050,000
----------- ------------
Total operating expenses.......................... 6,660,207 11,056,005
----------- ------------
Operating loss.............................................. (2,566,608) (5,824,103)
Other income (expense):
Interest expense -- contractual........................... (683,755) (916,301)
Interest expense -- discount on convertible debentures.... -- (1,400,000)
Amortization of debt discount on convertible debentures... (892,709) --
Loss on equity investment in subsidiaries................. (116,318) (966,579)
Loss on sale of subsidiaries.............................. (1,826,164) --
Bad debt recoveries....................................... -- 510,000
Interest income........................................... 98,520 149,266
----------- ------------
Loss before minority interest............................. (5,987,034) (8,447,717)
Minority interest expense................................. -- (68,015)
----------- ------------
Loss before income taxes.................................. (5,987,034) (8,515,732)
Provision for income taxes................................ -- (110,000)
----------- ------------
Net loss.................................................... $(5,987,034) $ (8,625,732)
=========== ============
Basic and diluted loss per common share..................... $ (.22) $ (.43)
=========== ============
Weighted average number of common shares outstanding........ 29,724,100 20,005,900
=========== ============
</TABLE>
See accompanying notes.
26
<PAGE> 27
BRASSIE GOLF CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE
CONVERTIBLE PREFERRED
COMMON STOCK PREFERRED STOCK ADDITIONAL TREASURY STOCK
-------------------- ----------------- PAID-IN ACCUMULATED --------------------
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
---------- ------- -------- ------ ----------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995....... 17,678,066 $17,678 375,000 $375 $21,857,456 $(13,893,582) -- $ --
Net loss........................... -- -- -- -- -- (8,625,732) -- --
Issuance of Common Stock in
connection with conversion of
convertible debentures............ 6,350,564 6,351 -- -- 2,490,434 -- -- --
Issuance of Common Stock in lieu of
compensation...................... 50,000 50 -- -- 58,545 -- -- --
Unrealized gain on investments..... -- -- -- -- -- -- -- --
Translation of foreign currency
financial statements.............. -- -- -- -- -- -- -- --
---------- ------- -------- ---- ----------- ------------ -------- ---------
Balance at December 31, 1996....... 24,078,630 $24,079 375,000 $375 $24,406,435 $(22,519,314) -- $ --
========== ======= ======== ==== =========== ============ ======== =========
Net loss........................... -- -- -- -- -- (5,987,034) -- --
Conversion of Preferred Stock
to Common Stock................... 468,750 469 (93,750) (94) (375) -- -- --
Repurchase of Preferred Stock...... -- -- -- -- -- -- (281,250) (210,937)
Issuance of Preferred Shares in
connection with a private
placement......................... -- -- 1,920 2 1,754,998 -- -- --
Preferred Stock Dividend
-- conversion discount............ -- -- -- -- 669,928 (669,928) -- --
Issuance of Common Stock
in connection with conversion
of convertible debentures......... 13,432,995 13,433 -- -- 3,423,317 -- -- --
Issuance of 30,082,268 warrants
in connection with convertible
debentures........................ -- -- -- -- 1,203,291 -- -- --
Issuance of Common Stock
in connection with the convertible
debenture agreement............... 1,652,128 1,652 -- -- 308,122 -- -- --
Issuance of Common Stock
in connection with the purchase of
Divot Spa WGV, Inc................ 3,000,000 3,000 -- -- 278,250 -- -- --
Unrealized gain on investments..... -- -- -- -- -- -- -- --
Translation of foreign currency
financial statements.............. -- -- -- -- -- -- -- --
---------- ------- -------- ---- ----------- ------------ -------- ---------
Balance at December 31, 1997....... 42,632,503 $42,633 283,170 $283 $32,043,966 $(29,176,276) (281,250) $(210,937)
========== ======= ======== ==== =========== ============ ======== =========
<CAPTION>
FOREIGN UNREALIZED
CURRENCY GAIN (LOSS)
TRANSLATION ON
ADJUSTMENT INVESTMENTS TOTAL
----------- ----------- ----------
<S> <C> <C> <C>
Balance at December 31, 1995....... $(259,664) $(593) $7,721,670
Net loss........................... -- -- (8,625,732)
Issuance of Common Stock in
connection with conversion of
convertible debentures............ -- -- 2,496,785
Issuance of Common Stock in lieu of
compensation...................... -- -- 58,595
Unrealized gain on investments..... -- 356 356
Translation of foreign currency
financial statements.............. 191,617 -- 191,617
--------- ----- ----------
Balance at December 31, 1996....... $ (68,047) $(237) $1,843,291
========= ===== ==========
Net loss........................... -- -- (5,987,034)
Conversion of Preferred Stock
to Common Stock................... -- -- --
Repurchase of Preferred Stock...... -- -- (210,937)
Issuance of Preferred Shares in
connection with a private
placement......................... -- -- 1,755,000
Preferred Stock Dividend
-- conversion discount............ -- -- --
Issuance of Common Stock
in connection with conversion
of convertible debentures......... -- -- 3,436,750
Issuance of 30,082,268 warrants
in connection with convertible
debentures........................ -- -- 1,203,291
Issuance of Common Stock
in connection with the convertible
debenture agreement............... -- -- 309,774
Issuance of Common Stock
in connection with the purchase of
Divot Spa WGV, Inc................ -- -- 281,250
Unrealized gain on investments..... -- 237 237
Translation of foreign currency
financial statements.............. (40,737) -- (40,737)
--------- ----- ----------
Balance at December 31, 1997....... $(108,784) $ -- $2,590,885
========= ===== ==========
</TABLE>
See accompanying notes.
27
<PAGE> 28
BRASSIE GOLF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $ (5,987,034) $ (8,625,732)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on sales of subsidiaries............................. 1,826,164 --
Amortization of debt discount............................. 892,709 --
Loss on equity investments in subsidiaries................ 116,318 966,579
Depreciation.............................................. 520,959 535,293
Amortization.............................................. 350,263 507,598
Writedown of goodwill..................................... -- 4,050,000
Bad debt expense.......................................... 372,161 65,000
Loss on sale of marketable equity securities.............. 21,404 182
Trade accounts receivable................................. (197,388) 66,826
Accounts receivable from related parties.................. (10,543) 107,258
Inventories and other current assets...................... (953,044) (55,202)
Accounts payable and accrued expenses..................... 280,744 (368,480)
Accrued interest payable.................................. 103,774 1,024,133
Income tax payable........................................ (15,919) 197,712
------------ ------------
Net cash used in operating activities....................... (2,679,432) (1,528,833)
INVESTING ACTIVITIES
Payments for intangible assets.............................. (260,006) (571,293)
Purchases of property and equipment, net.................... (366,612) (698,630)
Change in restricted cash................................... (135,019) --
Additional investments in subsidiaries...................... 33,682 (486,770)
Proceeds from sale of marketable equity securities.......... 18,271 --
Proceeds from sale of subsidiaries.......................... 3,550,000 --
------------ ------------
Net cash provided by (used in) investing activities......... 2,840,316 (1,756,693)
FINANCING ACTIVITIES
Additions to long-term borrowings........................... 3,417,480 5,480,388
Payments on long-term borrowings and capital leases......... (4,540,608) (4,836,509)
Issuance of common stock.................................... -- 2,555,380
Payments on loans from officers and shareholders............ (1,293,895) 648,121
Proceeds from sales of convertible preferred stock.......... 1,920,000 --
Payment for stock issuance costs............................ (165,000) --
Payments made to retire preferred stock..................... (210,937) --
------------ ------------
Net cash (used in) provided by financing activities......... (872,960) 3,847,380
Effect of foreign currency exchange rate changes on cash.... (40,737) 191,617
------------ ------------
(Decrease) Increase in cash................................. (752,813) 753,471
Cash at beginning of year................................... 806,079 52,608
------------ ------------
Cash at end of year......................................... $ 53,266 $ 806,079
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 580,581 $ 938,071
============ ============
</TABLE>
See accompanying notes.
28
<PAGE> 29
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. BUSINESS OF THE COMPANY, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES
Brassie Golf Corporation ("the Company") owns and operates golf courses and
is engaged in the development, licensing and marketing of golf-related
businesses. The Company also holds certain exclusive licensing rights in the
United States and internationally.
As of December 31, 1997, the Company has a net working capital deficiency
of $98,529. The Company is not generating sufficient revenues from its
operations to fund its activities and therefore is dependent on additional
financing from external sources. Such factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company secured $1.9
million of funding in a private placement transaction in December 1997. The
Company expects to raise additional amounts from private placements in 1998. If
the Company is successful in raising additional equity capital in 1998,
management believes that the Company will have adequate resources to continue to
meet its current debt obligation, fund capital improvements and expand and
develop its businesses. There is no assurance that such additional funding will
be completed and the inability to obtain such financing would have a material
adverse effect on the Company.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly and majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation. The subsidiaries and
related percentage of ownership by the Company at December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
OWNERSHIP PERCENTAGE
AT
DECEMBER 31,
---------------------
COMPANY NAME ABBREVIATION 1997 1996
- ------------ ------------ --------- ---------
<S> <C> <C> <C>
The Gauntlet at St. James, Inc. .................. St. James 100% 80%
The Gauntlet at Curtis Park, Inc. ................ Curtis Park 100 100
Brassie Golf Management Services, Inc. ........... BGMS -- 100
Summit Golf Corporation........................... Summit -- 100
Hale Irwin Golf Services, Inc. ................... HIGSI -- 100
Brassie Construction Management Services, Inc. ... BCMS 100 100
Amalgamated Equity Golf (a British Columbia
Corporation).................................... Amalgamated 100 100
Divot Properties WGV, Inc. ....................... Properties 100 100
</TABLE>
Minority interest expense in 1996 represents the 20% interest in the St.
James golf course owned by a related entity. The Company received the remaining
20% Minority interest in St. James as part of the sale of the golf course in
1997 (see Note 9, "Disposition of Assets").
The Company's 30% investments in The Gauntlet at Laurel Valley, Inc., a
golf course located in Greenville, S.C., and The Gauntlet at Myrtle West, Inc.,
a golf course located in Myrtle Beach, S.C., are accounted for using the equity
method (See Note 10 "Change in Reporting Entity").
Property and Equipment
Property and equipment is recorded at cost. Costs relating to the
acquisition and development of golf courses, including the cost of real estate,
related legal fees, construction costs, interest, and other direct costs
associated with the development of the golf courses are capitalized as part of
the cost of the course. Depreciable golf course improvements are comprised
primarily of irrigation
29
<PAGE> 30
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
systems, cart paths, bridges, and other land improvements. Depreciation on
property and equipment begins when the assets are placed into service and is
charged to operations over the estimated useful lives of the assets (5 to 20
years), utilizing the straight-line method for financial reporting purposes and
accelerated methods for tax purposes. All other costs are charged to expense as
incurred.
Intangible Assets
Intangible assets consist primarily of financing costs and licensing fees.
Costs incurred in obtaining long-term debt obligations are capitalized at cost
and amortized over the lives of the respective loans. Significant additions to
financing costs during 1997 resulted primarily from costs incurred to obtain
financing on more favorable terms.
Goodwill
The Company initially records goodwill at its cost and amortizes the cost
over the estimated useful life of the asset. At the end of each accounting
period, the Company reviews the carrying value of the goodwill for possible
impairment. The Company's policy for the valuation of goodwill is to calculate
the undiscounted projected future cash flows expected to be generated over the
life of the goodwill. This amount is then compared to the carrying value of the
goodwill to determine if the asset is impaired.
The Company has classified, as goodwill, the cost in excess of the fair
value of the net assets of SPA, which was acquired through a purchase
transaction during 1997 (see Note 8, "Acquisitions", for further discussion).
Goodwill is being amortized on a straight-line basis over 15 years. Amortization
charged to continuing operations amounted to $18,092 and $255,226 in 1997 and
1996, respectively.
During 1996, the Company recorded a goodwill writedown of $4,050,000 on
Summit, leaving a remaining balance of $626,245, net of accumulated
amortization, at December 31, 1996 which reflects estimated future discounted
cash flows. The writedown is included in the accompanying statement of
operations for the year ended December 31, 1996.
In July 1997, the Company sold its golf course management division,
consisting of Brassie Golf Management Services. Inc. and Summit. The Company's
remaining goodwill associated with the Summit was written off in connection with
the sale (See Note 9, "Disposition of Assets").
Restricted Cash
Restricted cash represents escrow accounts of Curtis Park and Saint James
on behalf of certain lending institutions pursuant to loan and sale agreements,
respectively. Such amounts are to be recorded as expense when earned over the
terms of the agreements and are recoverable by the Company upon occurrence of
certain events specified in the respective escrow agreements.
Cash and Cash Equivalents
The Company considers highly liquid, short-term investments with a maturity
of three months or less when purchased to be cash equivalents.
Marketable Equity Securities
The Company's marketable equity securities are classified as
available-for-sale and carried at fair value. The ending balance of
shareholders' equity has been adjusted to reflect the net unrealized holding
gain or loss on securities classified as available-for-sale.
30
<PAGE> 31
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1997, the Company sold all of its marketable equity securities. Net
realized gains, determined by specific identification, were not material.
The Company maintains cash and short-term investments with various
financial institutions. These financial institutions are located in different
areas of the U.S. and Canada, and Company policy is designed to limit exposure
to any one institution. The Company performs periodic evaluations of the
relative credit standing of those financial institutions utilized in the
Company's investment strategy.
Inventories
Inventories are stated at the lower of cost or market as determined using
the specific identification method.
Inventory at December 31, 1997 consists of:
<TABLE>
<S> <C>
Proshop merchandise......................................... $ 27,415
Food and beverage inventory................................. 4,196
--------
$ 31,611
========
</TABLE>
Revenues
Revenues of the Company include daily golf fees, proshop merchandise sales
and food and beverage sales. Golf fees include revenue generated from green
fees, cart fees and range fees. Revenues also include sales of memberships and
annual dues charged to members and golf course management and design fees.
Golf fees, proshop merchandise sales and food and beverage sales are
recognized when received. Annual membership dues are recognized and earned
ratably over a twelve-month period. Membership dues collected in advance are
deferred as "unearned income" and recognized over the period of prepayment.
Membership fees that are non-refundable are recognized by the Company when
received. Golf course management and design fees are recognized as services are
performed.
As part of an agreement with the developer of the residential lots, the
Company receives $5,000 in membership fees for each residential lot sold in the
immediate area of the St. James golf course through November 23, 1997 (See Note
9, "Disposition of Assets").
Stock Based Compensation
On January 1, 1996, the company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires companies to recognize as expense the fair value of all stock-based
awards on the date of grant, or continue to apply the provisions of Accounting
Principles Board Opinion No. 25 ("APB 25") and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option grants as if
the fair-value-based method defined in SFAS 123 had been applied. The Company
has elected to continue to apply the provisions of APB 25 and provide the pro
forma disclosure provisions of SFAS 123 (See Note 7, "Stock Options").
Advertising Expense
The cost of advertising is expensed as incurred. The Company incurred
$313,000 and $216,000 in advertising costs during the years ended December 31,
1997 and 1996, respectively.
31
<PAGE> 32
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company's primary financial instrument subject to potential
concentration of credit risk is trade accounts receivable which are unsecured.
The Company provides an allowance for doubtful accounts based on its analysis of
potentially uncollectible accounts. The Company's trade receivables arise
principally from its golf course management operations. As of December 31, 1997,
the Company had no significant concentrations of credit risk with any individual
customers.
Foreign and Domestic Operations
Net (loss) income from the Company's foreign subsidiary (Amalgamated) was
approximately $(201,000) and $339,000 for the years ended December 31, 1997 and
1996, respectively. Net loss from domestic operations was approximately
$5,786,000 and $8,965,000, respectively, for the same periods.
Translation of Foreign Currencies
Foreign currency transactions and financial statements of Amalgamated are
translated from the local currency, Canadian dollars, into U.S. dollars at the
current exchange rates except for revenues, costs and expenses which are
translated at average exchange rates. Adjustments resulting from translations of
financial statements are reflected as a separate component of shareholders'
equity.
Net Loss Per Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements. Stock
options, warrants and the five percent convertible debentures are considered
anti-dilutive and therefore have not been included in the computation.
Long Lived Assets
In 1996, the Company adopted FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Under the provisions of the Statement, impairment losses are recognized when
expected future cash flows are less than the assets' carrying value.
Accordingly, when indicators of impairment are present, the Company evaluates
the carrying value of property and equipment and intangibles in relation to the
operating performance and future undiscounted cash flows of the underlying
business. The Company adjusts the net book value of the underlying assets if the
sum of expected future cash flows is less than book value. Based on the
application of the Statement, goodwill was adjusted to its estimated fair value
which resulted in a write-down of $4,050,000 in 1996.
32
<PAGE> 33
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value of Debt
The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1997. Although management is not aware of any factors that would significantly
affect the fair value of amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.
Impact of Recently Issued Accounting Standards
In 1997, the FASB issued Statements No. 130, "Reporting Comprehensive
Income" ("SFAS 130") and No. 131, "Disclosures About Statements of an
Enterprise and Related Information" ("SFAS 131"), which are both effective for
fiscal years beginning after December 15, 1997. SFAS 130 addresses reporting
amounts of other comprehensive income and SFAS 131 addresses reporting segment
information. The Company does not believe that the adoption of these new
standards will have a material impact on its financial statements.
2. LONG-TERM DEBT
Long-term debt with financial institutions and other third parties at
December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Loan to Curtis Park from bank, payable in monthly payments
of $26,124, which includes principal and interest
beginning December 1, 1997 with remaining principal and
interest due October 1, 2007; collateralized by leasehold
interest in land and land improvements. Interest is
payable monthly at 8.37% per annum........................ $3,276,753
Unsecured convertible 5% debentures due December 31, 1998,
unless converted into common stock, interest payable
quarterly and incrementally based upon conversions with
the balance due, if any, at maturity, net of unamortized
discount of $620,356...................................... 390,293
Unsecured operating term loan from bank, with interest at
10.75%, payable in monthly installments of $16,723, which
includes principal and interest, through January 1999..... 220,366
Other notes payable......................................... 346,867
----------
4,234,279
Less current portion........................................ 757,023
----------
$3,477,256
==========
</TABLE>
Principal maturities of all the indebtedness detailed above during each of
the following five years and thereafter are as follows:
<TABLE>
<S> <C>
1998........................................................ $ 757,023
1999........................................................ 77,455
2000........................................................ 242,850
2001........................................................ 47,422
2002........................................................ 51,607
Thereafter.................................................. 3,057,922
----------
$4,234,279
==========
</TABLE>
CONVERTIBLE DEBENTURE EXCHANGE
During March 1996, the Company issued $5.5 million in six percent
convertible debentures to finance the operations of the Company. During 1996,
the holders of the debentures converted $2,034,262 of the debt into 6,350,564
shares which equated to $2,496,785 in equity, net of financing fees. Through
March 1, 1998, the six percent debentures were convertible into shares of common
stock at discounts ranging from 15%-35% of its current market value. The Company
recorded $1.4 million in interest expense during 1996 to reflect the discounts
upon conversion of the
33
<PAGE> 34
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's common stock. As of December 31, 1996, $3,465,738 of convertible
debentures were outstanding.
From January through October 1997, the holders of the debentures converted
$1,195,743 of the debt into 4,972,107 shares which equated to $1,573,308 in
equity, net of financing fees. During November 1997, the remaining $2,269,995 of
outstanding debentures were transferred to new debenture holders in a third
party transaction. Simultaneously, the Company retired the 1996 debenture
agreements and replaced them with new debenture agreements containing new terms.
The new debentures are payable on December 31, 1998. Through December 31,
1998, the holders of the debentures are entitled to convert the debentures into
common stock of the Company at a conversion price equal to the lesser of (1)
$0.17 per share or (2) 70% of the average closing bid of the common stock during
the last five trading days prior to conversion. The debentures accrue interest,
payable quarterly commencing March 1, 1998, at a rate of 5% per annum. If the
Company does not file a Registration Statement with the SEC to register
securities in a public offering within 120 days from November 18, 1997, the
interest rate shall increase to 18% per annum. If the Effective Date of the
Registration Statement has not occurred by the 180th day after November 18,
1997, then the interest rate shall further increase to 24% per annum until the
Effective Date. The accrued interest is convertible into common stock of the
Company at the same conversion price as the debenture principal. In any event,
each holder cannot as a result of such conversions beneficially own more than
4.99% of the then outstanding common stock. In the event that the debenture
holder proposes to convert all or any portion of the principal and interest at a
conversion price of less than $0.05, the Company shall have the option to redeem
all or any part of the amount proposed to be converted at a redemption price of
125% of the amount of the principal and interest proposed to be converted. In
conjunction with these debenture agreements, the Company incurred issuance costs
totaling $27,000. These issuance costs are being amortized as a component of
interest expense over the term of the debentures.
From November through December 1997, $1,259,346 of the debentures'
principal had been converted into 8,460,888 shares of common stock, which
equated to $1,863,442 in equity, net of financing fees. As of December 31, 1997,
$1,010,649 of convertible debentures were outstanding.
In connection with the sale of the debenture agreements, the Company issued
(1) warrants to purchase 15,041,134 shares of common stock of the Company at the
lesser of $0.17 per share of 70% of the average closing bid price of the common
stock during the last five trading days prior to exercise, (2) warrants to
purchase 15,041,134 shares of common stock of the Company at the lesser of $0.34
per share of 70% of the average closing bid price of the common stock during the
last five trading days prior to exercise and (3) 1,672,128 shares of common
stock. The warrants are exercisable for a period of three years from the date of
issuance. The estimated value of these warrants and common stock, $1,513,065,
has been recorded as additional paid-in capital.
3. LEASES
The Company leases certain equipment used in the daily operations of the
Company under capital leases which are included in furniture, machinery and
equipment. Leased equipment under capital leases included in furniture,
machinery and equipment at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Equipment................................................... $69,683
Less accumulated amortization............................... 5,203
-------
$64,480
=======
</TABLE>
34
<PAGE> 35
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The accumulated amortization with respect to these capitalized leases is
included in "accumulated depreciation and amortization" in the accompanying
balance sheet. Amortization expense is included in depreciation and amortization
expense in the accompanying statement of operations.
Future minimum lease payments, by year and in the aggregate, under capital
leases, consist of the following at December 31, 1997:
<TABLE>
<S> <C>
1998........................................................ $ 28,228
1999........................................................ 25,236
2000........................................................ 16,148
--------
Total minimum lease payments................................ 69,612
Amounts representing interest............................... (12,317)
--------
57,295
Less current portion........................................ (21,510)
--------
$ 35,785
========
</TABLE>
The Company also rents certain facilities, land and equipment under
operating leases which expire at various times through 2027. Total rent expense
for the Company was approximately $283,200 and $207,500, for the years ended
December 31, 1997 and 1996, respectively.
Future minimum lease payments, by year and in the aggregate, under
operating leases consist of the following at December 31, 1997:
<TABLE>
<S> <C>
1998........................................................ $ 272,200
1999........................................................ 284,674
2000........................................................ 242,428
2001........................................................ 187,356
2002........................................................ 180,566
Thereafter.................................................. 600,000
----------
$1,767,224
==========
</TABLE>
4. RELATED PARTY TRANSACTIONS
The Company funded expenses on behalf of certain entities affiliated
through common ownership. Accounts receivable from related parties were $160,543
at December 31, 1997. The Company expects payment of the amount outstanding at
December 31, 1997 within the next twelve months; accordingly, the amounts are
classified as short-term assets.
The Company provided management services to related parties resulting in
approximately $77,000 and $190,000 in management fee revenue for the years ended
December 31, 1997 and 1996, respectively.
5. INCOME TAXES
Under Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes," the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income
35
<PAGE> 36
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
tax purposes. Significant components of the Company's deferred tax liabilities
and assets at December 31, 1997 are as follows:
<TABLE>
<S> <C>
Deferred tax liabilities:
Tax over book depreciation and amortization............... $ --
-----------
$ --
===========
Deferred tax assets:
Book over tax depreciation and amortization............... $ 130,000
Net operating loss carryforwards.......................... 4,400,000
Bad debt allowance........................................ 60,000
Other..................................................... 4,700
-----------
Total deferred tax assets................................... 4,594,700
Valuation allowance for deferred tax assets................. (4,594,700)
-----------
Net deferred tax assets..................................... --
===========
Net deferred taxes.......................................... $ --
===========
</TABLE>
At December 31, 1997 the Company has a net operating loss carryforward of
$11,000,000 which will begin to expire in the year 2007. The tax benefits of
these items are reflected in the above table of deferred tax assets and
liabilities. U.S. tax rules impose limitations on the use of net operating
losses following certain changes in ownership. If a change were to occur, the
limitation could reduce the amount of these benefits that would be available to
offset future taxable income each year, starting with the year of ownership
change.
The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Income tax benefit at U.S. statutory rate.............. $(2,040,000) $(2,895,000)
Amortization and write-off of goodwill................. -- 1,722,000
State tax benefit, net................................. (360,000) (492,000)
Equity income.......................................... 47,000 326,000
Interest expense for which no tax benefit was
provided............................................. 357,000 648,000
Impact of foreign losses for which a current tax
benefit is not available............................. 80,000 --
Impact of sale of stock in subsidiaries................ 460,000 --
Other items............................................ 141,000 438,300
Change in valuation allowance.......................... 1,315,000 252,700
Foreign tax............................................ -- 110,000
----------- -----------
Tax expense............................................ $ -- $ 110,000
=========== ===========
</TABLE>
36
<PAGE> 37
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. SHAREHOLDERS' EQUITY
During 1996, the Company issued 50,000 shares of common stock with a value
of $58,595 in lieu of compensation for consulting services performed. The value
of the issued stock was based on the fair market value of the Company's common
stock on the date that the consulting services were performed and reflects the
value of services received. The Company recognized $58,595 in compensation
expense related to the transaction.
During December 1997, the Company closed on a private placement offering of
7% Cumulative Convertible Preferred Stock ("Preferred Stock") for $1.92 million.
The Preferred Stock was offered in units of 15 Preferred Shares, with each such
share having a liquidation value of $1,000, and 10,000 warrants, for a price of
$15,000 per unit.
The holders of the Preferred Stock are entitled to a cash dividend equal to
$70 per share payable quarterly commencing April 1, 1998, although the Company
has the option to utilize shares of its common stock, under certain conditions,
to satisfy the dividend requirement. If the Company has not filed a Registration
Statement with the SEC to register securities in a public offering within 180
days of issuance, the Preferred Stock shall accrue dividends at an annual rate
of $180 per share. The purchaser has the right to convert the Preferred Stock
immediately into a number of shares of the Company's common stock equal to
$1,000 per share converted divided by the Conversion Price. The Conversion Price
means the lesser of (1) $0.70 or (2) 75% of the average of the closing bid price
of a share of the Company's common stock during the ten trading days prior to
such conversion provided that the holder can not as a result of such conversion
beneficially own more than 4.99% of the then outstanding common stock. In the
event the Conversion Price falls below $0.50, the Company may redeem, at $1,250
per share plus any accrued but unpaid dividends, all (but not any part) of
shares proposed to be converted. In conjunction with the discount allowed on the
conversion of the Preferred Stock into common stock, the Company has recorded
dividends of $669,928. The Preferred Stock does not carry any voting rights. As
of December 31, 1997, 128 units of Preferred Stock had been sold while no
conversions of shares of the Company's common stock had taken place.
In connection with the sale and issuance of the Preferred Stock, the
Company issued warrants, exercisable immediately, to purchase 1,280,000 shares
of common stock of the Company at $1.00 per share for a period of three years
from the date of issuance. The Company incurred approximately $165,000 in
additional costs related to the issuance of the Preferred Stock, which are
offset against additional paid-in capital in the consolidated statements of
shareholders' equity.
As of December 31, 1997, warrants to purchase 33,550,268 shares of the
Company's common stock were outstanding. These warrants have exercise prices
ranging from $.17 to $3.25 per share; 100,000 warrants expire September 28, 1998
(exercise price equals $2.40 per share); 238,000 warrants expire November 17,
1998 (exercise price equals $2.40 per share); 50,000 warrants expire December 5,
1998; (exercise price equals $1.00 per share); 150,000 warrants expire June 30,
1999 (exercise price equals $2.00 per share); 1,400,000 warrants expire June 30,
2000 (exercise prices range from $2.40 to $3.25 per share), 250,000 warrants
expire September 28, 2000 (exercise price equals $2.40 per share); 15,041,134
warrants expire November 18, 2000 (exercise price equals the lesser of $0.17 per
share or 70% of the average closing bid of the common stock during the last five
trading days prior to conversion); 15,041,134 warrants expire November 18, 2000
(exercise price equals the lesser of $0.34 per share or 70% of the average
closing bid of the common stock during the last five trading days prior to
conversion); and 1,280,000 warrants expire December 3, 2000 (exercise price
equals $1.00 per share).
37
<PAGE> 38
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loss per Share
The following table sets forth the computation of basic and diluted
earnings per share in accordance with Statement No. 128, Earnings per Share:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Numerator:
Net loss............................................. $(5,987,034) $(8,625,732)
Preferred stock dividends -- conversion discount..... (669,928) --
----------- -----------
Numerator for basic and dilutive earnings per share--
income available to common stockholders........... $(6,656,962) $(8,625,732)
Denominator:
Denominator for basic and diluted earnings per
share -- weighted-average shares.................. 29,724,100 20,005,900
----------- -----------
Basic and diluted loss per share..................... $ (.22) $ (.43)
=========== ===========
</TABLE>
The following number of potentially convertible shares of common stock
related to convertible preferred stock, convertible debentures, warrants, and
stock options are as follows at December 31, 1997:
<TABLE>
<S> <C>
For conversion of convertible preferred stock.......... 4,873,096
For conversion of convertible debentures............... 5,944,994
Outstanding warrants................................... 33,550,268
Outstanding stock options.............................. 594,261
Possible future issuance under stock option plan....... 905,739
----------
Total shares potentially convertible................. 45,868,358
==========
</TABLE>
As of December 31, 1997, the Company had only 7,367,497 common shares
available to be issued.
7. STOCK OPTIONS
On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Brassie Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "Stock Option Plan") as an incentive for key employees. The
purchase price for any Stock Awards and the exercise price for any Options may
not be less than the fair market value for the common stock on the date of
grant. Unless otherwise agreed between the grantee and the Company, the Stock
Awards and Options expire 90 days after termination of the grantee's
relationship with the
38
<PAGE> 39
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company. Because no options were issued during the years ended December 31, 1997
and 1996, no pro forma disclosures are required under SFAS 123.
Options Outstanding, Common Stock
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
SHARES --------------------------
AVAILABLE NUMBER PRICE
FOR GRANT OF SHARES PER SHARE
--------- --------- --------------
<S> <C> <C> <C>
Balances at December 31, 1995......................... 217,475 1,282,525 $2.00 to $3.80
Options granted..................................... -- -- --
Options canceled.................................... 47,000 (47,000) --
Options exercised................................... -- -- --
--------- --------- --------------
Balances at December 31, 1996......................... 264,475 1,235,525 $2.00 to $3.80
--------- --------- --------------
Options granted..................................... -- -- --
Options canceled.................................... 641,264 (641,264) --
Options exercised................................... -- -- --
--------- --------- --------------
Balances at December 31, 1997......................... 905,739 594,261 $2.00 to $3.80
========= ========= ==============
</TABLE>
8. ACQUISITIONS
On December 26, 1997, the Company acquired from a related party certain
licensing and development rights on Parcel 11-A of the World Golf Village, the
Spa Tournament Championship development program, and the Spa Products and
Catalog from Divot Spa WGV, Inc., for approximately $356,000. The purchase price
of which approximately $331,000 and $25,000 has been allocated to goodwill and
licensing fees, respectively, consisted of 3,000,000 shares of the Company's
common stock and cash of $75,000. No expense was recorded during 1997 in
connection with this goodwill. The goodwill will be amortized using the straight
line method over a period of 15 years.
On December 28, 1997, the Company executed a letter of intent with Lady
Fairway Golf to purchase 100% of the outstanding stock of Lady Fairway Golf. In
connection with this agreement, the Company paid a nonrefundable deposit of
$100,000 which is included in the other assets of the Company's consolidated
balance sheet at December 31, 1997. The Company contemplates closing this
transaction in the first quarter 1998.
39
<PAGE> 40
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. DISPOSITION OF ASSETS
During the year ended December 31, 1997, the Company disposed of three
subsidiaries and substantially all of the assets of St. James in three separate
transactions for an aggregate amount of approximately $3,800,000 ($3,550,000 in
cash and $250,000 in accounts receivable). In addition, the Company is entitled
to receive a certain percentage of future contract revenue of Hale Irwin Golf
Services, Inc. The Company recognized a loss of $1,826,164 in connection with
the disposition of these subsidiaries. This loss is reflected in the statement
of operations. The operating results of the subsidiaries were included in the
consolidated statements of operations of the Company from the dates of
acquisition through the dates of disposition. The proceeds from the sale and
related gain (loss) are recorded as follows:
<TABLE>
<CAPTION>
PROCEEDS
FROM SALE GAIN/(LOSS)
---------- -----------
<S> <C> <C>
Brassie Golf Management Services, Inc. and Summit Golf
Corporation............................................... $ 850,000 $ 125,000
The Gauntlet at St. James................................... 2,950,000 (1,931,875)
Hale Irwin Golf Services, Inc............................... -- (19,289)
---------- -----------
$3,800,000 $(1,826,164)
========== ===========
</TABLE>
10. CHANGE IN REPORTING ENTITY
In 1995, the Company consolidated two 75% owned subsidiaries, The Gauntlet
at Laurel Valley and The Gauntlet at Myrtle West in accordance with Financial
Accounting Standards Board Statement 94. In 1996, the Company transferred 45% of
the ownership interest in the subsidiaries to the minority shareholder to comply
with a mandatory injunction issued by the 13th Circuit Court of Hillsborough
County of Florida. Accordingly, the financial statements for 1996 have been
restated to reflect the Company's ownership in the subsidiaries under the equity
method of accounting. In 1996, the Company recognized a loss of $310,888 on the
transference of the interest in the subsidiaries. The Company's interest in the
net losses of these entities is recorded at 75% up until the date of
transference and at 30% thereafter.
Due to the recurring operating losses and working capital deficiencies of
the entities, the Company assessed the net realizable value of these investments
at December 31, 1996 to be -0-. Therefore, on the Company's assessment, a
write-down of $116,318 and $505,691 was recorded in 1997 and 1996, respectively
to reflect the net realizable value of these investments. The write-down is
included in the loss on equity investment in subsidiaries line item on the
Company's 1997 and 1996 statement of operations.
The components of the line item, Loss on equity investment in subsidiaries,
as reported in the consolidated statements of operations are as follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Pro rata share of net loss.................................. $310,888 $ --
Write-down to carrying value ............................... 505,691 116,318
Reserve for ongoing litigation.............................. 150,000 --
-------- --------
Loss on equity investment in subsidiaries................... $966,579 $116,318
======== ========
</TABLE>
40
<PAGE> 41
BRASSIE GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with its executive officers, the
terms of which expire at various times through September 3, 2004. Such
agreements provide for minimum salary levels, as well as for incentive bonuses
which are payable if specified management goals are attained. Minimum
commitments for future salaries, excluding bonuses, by year and in the aggregate
consist of the following at December 31, 1997:
<TABLE>
<S> <C>
1998........................................................ $ 650,000
1999........................................................ 650,000
2000........................................................ 591,667
2001........................................................ 475,000
2002........................................................ 454,167
Thereafter.................................................. 375,000
----------
$3,195,834
==========
</TABLE>
The Company, in the ordinary course of business, is the subject of, or
party to, various pending or threatened claims and litigation. In the opinion of
management, settlement of such claims and litigation will not have a material
effect on the Company's operations or financial position.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
41
<PAGE> 42
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Information incorporated by reference from the Company's Proxy
Statement, under captions "Proposal Two" and "Compliance with Section 16 of the
Securities Exchange Act of 1934"
ITEM 10. EXECUTIVE COMPENSATION
Information incorporated by reference from the Company's Proxy
Statement, under caption "Executive Compensation"
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information incorporated by reference from the Company's Proxy
Statement, under caption "Beneficial Owners and Management"
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information incorporated by reference from the Company's Proxy
Statement, under caption "Certain Relationships and Related Transactions"
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a)(1) and (2) List of Financial Statements
The following consolidated financial statements of Brassie Golf
Corporation and subsidiaries are included in Item 7:
Consolidated Balance Sheet - December 31, 1997
Consolidated Statements of Operations - Years ended December 31, 1997
and 1996
Consolidated Statements of Shareholders' Equity - Years ended
December 31, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1997
and 1996
Notes to Consolidated Financial Statements
No other schedule for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
required under the related instructions or are applicable and therefore
have been omitted.
42
<PAGE> 43
(3) Exhibits
The exhibits listed below which are marked with a page number
reference were filed with a prior registration statement filed under the
Securities Act or in a periodic report filed under the Exchange Act and are
incorporated herein by this reference. The exhibits listed below which are not
marked with a page number reference are filed with this Form 10-KSB.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
2.1 Agreement and Plan of Reorganization effective as of November 14, 1991 by (A)
and among Longview Golf Corporation (the "Company"), Eliga Corporation
("Eliga") and Gutta Percha, Inc. ("GPI")
2.2 Arrangement Agreement dated as of March 26, 1993 between Equity (A)
Preservation Corp. ("Equity"), the Company and 440888 B.C. Ltd. and the
Information Circular distributed to shareholders in connection with the
arrangement contemplated by such Arrangement Agreement (the "Arrangement").
2.3 Final Order of the Supreme Court of British Columbia, dated May 17, 1993, (B)
relating to the fairness of the Arrangement.
2.4 Agreement of Purchase and Sale, dated as of December 23, 1993, by and (B)
between North Myrtle Beach Golf Club, Inc. ("MW Seller"), the Company and
The Gauntlet at Myrtle West, Inc. ("GMW"), and the material Exhibits thereto.
2.5 Purchase and Sale Agreement, dated as of April 12, 1994, between Wedgefield (B)
Limited Partnership ("Wedgefield LP"), the Company and The Gauntlet at
Wedgefield, Inc. ("GWF"), and the material Exhibits thereto.
2.6 Purchase and Sale Agreement, dated as of April 12, 1994,
between Palisades Golf Partners ("Palisades GP"), the (B)
Company and The Gauntlet at Palisades, Inc.
("GPS"), and the material Exhibits thereto.
2.7 Purchase and Sale Agreement, dated as of April 12, 1994, between Northshore (B)
Golf Partners, Ltd. ("Northshore GP"), the Company and The Gauntlet at
Northshore, Inc. ("GNS"), and the material Exhibits thereto.
2.8 Agreement and Plan of Reorganization dated as of May 16, 1994, between the (B)
Company and the shareholders of Hale Irwin Golf Services, Inc., and the
material Exhibits thereto.
3.1 Certificate of Incorporation of the Company, as amended. (A)
3.2 By-laws of the Company. (A)
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
3.3 Amendment to the Certificate of Incorporation of the Company filed July 18, (B)
1994.
4.1 Escrow Agreement dated as of July 23, 1993 between The Toronto Stock (A)
Exchange, the Company, Montreal Trust Company of Canada and the individuals
listed on Schedule A thereto.
4.2 Certificate of Designations, Preferences and Rights of 1997 Convertible
Preferred Stock of the Company dated December 29, 1997.
4.3 Certificate of Designations, Preferences and Rights of 10,500 Shares of 1997
Convertible Preferred Stock of the Company dated January 13, 1998.
10.1 Shareholders Agreement between Eliga, Canadian PT Limited Partnership ("PT (A)
Partnership"), Rizzo Inc., and Longview Golf Corporation ("GSJ") dated as of
October 1, 1990.
10.2 Bylaws of Longview Country Club dated November 14, 1990. (A)
10.3 Purchase Agreement between Homer E. Wright, Jr. and GSJ dated as of (A)
September 8, 1990.
10.4 Loan Agreement between NCNB National Bank of North Carolina (A)
("NationsBank") and GSJ dated as of October 1, 1990; Promissory Note made
by GSJ in favor of NationsBank dated October 1, 1990; Deed of Trust and
Security Agreement between GSJ and NationsBank dated October 1, 1990.
10.5 Loan Agreement between GSJ and PT Partnership dated October 1, 1990; (A)
Promissory Note made by GSJ to PT Partnership dated October 1, 1990; and
Future Advance Deed of Trust, Assignment and Security Agreement made by
GSJ dated October 1, 1990.
10.6 Shareholders Agreement between Eliga, Edmonton Pipe Industry Pension Trust (A)
Fund (the "EPI Pension Fund"), EPI and Laurel Valley Golf Corporation
("GLV") dated as of October 30, 1991.
10.7 Loan Agreement between GLV and NationsBank dated as of October 30, 1991; (A)
Promissory Note made by GLV in favor of NationsBank dated October 30,
1991; and Mortgage of Real Property and Security Agreement between GLV and
NationsBank dated as of October 30, 1991.
10.8 Loan Agreement between GLV and EPI Pension Fund dated as of October 30, (A)
1991; Promissory Note made by GLV to EPI Pension Fund; and second
mortgage and Security Agreement between GLV and EPI Pension Fund dated as
of October 30, 1991.
10.9 Joint Venture Agreement dated as of May 11, 1993 between Laurel Development (A)
Corporation ("LDC"), Foothills Development, Inc. ("Foothills") and Partners in
Progress X.
10.10 Loan Agreement dated as of July 6, 1993 between Amalgamated Equity Golf (A)
Corp. and Foothills.
10.11 Project Management Agreement dated June 1, 1993 between LDC and PMI. (A)
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
10.12 Subscription, Assignment and Assumption Agreement dated as of November 23, (A)
1993 between Amalco and Project 93 Management Ltd. ("Project 93") including
Promissory Note made by Project 93 in favor of Amalco.
10.13 Lease Agreement, as amended, between the Company and the Board of (B)
Supervisors of Stafford County, Virginia dated as of November 23, 1993.
10.14 Shareholders' Agreement between the Company, UA Canadian Pipeline Industry (B)
National Pension Plan ("UA Pension Fund") and The Gauntlet at Curtis Park,
Inc. ("GCP") dated April 19, 1994 and Amendment thereto dated May 13, 1994.
10.15 Loan Agreement between GCP and NationsBank dated as of April 19, 1994; (B)
Promissory Note made by GCP in favor of NationsBank dated April 19, 1994;
and Credit Line Deed of Trust and Security Agreement between GCP and
NationsBank dated as of April 19, 1994.
10.16 Guaranty Agreement between the Company, NationsBank and GCP dated as of (B)
April 19, 1994; Pledge Agreement between the Company and NationsBank dated
as of April 19, 1994; Amending Agreement between the Company, PT
Partnership, GSJ and NationsBank dated as of April 19, 1994 (amending GSJ
Shareholders' Agreement to permit the stock pledge); Amending Agreement
between the Company, EPI Pension Fund, GLV and NationsBank dated as of
April 19, 1994 (amending GLV Shareholders' Agreement to permit the stock
pledge).
10.17 Loan Agreement between GCP and UA Pension Fund dated April 19, 1994; (B)
Promissory Note made by GCP to UA Pension Fund dated April 19, 1994; and
Second Lien Credit Line Deed of Trust and Security Agreement, dated April 19,
1994, between GCP and UA Pension Fund.
10.18 Shareholders' Agreement, dated February 25, 1994, between (B)
the Company, Edmonton Pipe Industry Pension Trust Fund
("EPI Pension Fund") and GMW.
10.19 Indemnity Agreement and Guaranty, dated December 28, 1993, MW Seller, (B)
GMW and the Company; Third Mortgage of Real Property and Security
Agreement, dated December 28, 1993 by GMW to MW Seller.
10.20 Loan Agreement, dated as of December 28, 1993, by and between GMW and (B)
NationsBank; Promissory Note made by GMW to NationsBank dated December
28, 1993; Mortgage of Real Property and Security Agreement, dated December
28, 1993, by GMW to NationsBank.
10.21 Mortgage Purchase and Subscription Agreement, effective as of February 28, (B)
1994, between the Company, EPI Pension Fund and GMW.
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
10.22 Loan Agreement, dated December 28, 1993, between the Company and GMW; (B)
Promissory Note made by GMW to the Company dated December 28, 1993;
Second Mortgage of Real Property and Security Agreement, dated December 28,
1993, by GMW to the Company.
10.23 Intercreditor Agreement, dated December 28, 1993, by and among NationsBank, (B)
the Company, GMW and MW Seller; Assignment and Assumption of
Intercreditor Agreement, dated February 28, 1994, between NationsBank, the
Company, EPI Pension Fund, GMW and MW Seller.
10.24 Subordinated Convertible Note, dated as of April 12, 1994 from the Company to (B)
Warren J. Stanchina, as Trustee; Promissory Mortgage Note dated April 12,
1994 from the Company, GNS, GPS and GWF to Warren J. Stanchina, as
Trustee.
10.25 Indemnity Agreement, dated April 12, 1994, between Wedgefield LP, GWF and (B)
the Company; Indemnity Agreement, dated April 12, 1994, between Palisades
GP, GPS and the Company; Indemnity Agreement, dated April 12, 1994,
between Northshore GP, GNS and the Company; Wedgefield Second Mortgage
Deed and Security Agreement dated as of April 12, 1994 by GWF in favor of
Warren Stanchina, as Trustee; Palisades Second Mortgage Deed and Security
Agreement dated as of April 12, 1994 by GPS in favor of Warren Stanchina, as
Trustee; Second Deed of Trust and Security Agreement dated as of April 12,
1994 by GNS in favor of Warren Stanchina, as Trustee.
10.26 Assumption Agreement, dated April 28, 1994, between BancFlorida, a Federal (B)
Savings Bank ("BancFlorida"), GWF and GPS; Mortgage, Security Agreement,
and Assignment of Rents, dated April 21, 1989, by Wedgefield LP in favor of
BancFlorida; Mortgage Note, dated April 21, 1989, from Wedgefield LP to
BancFlorida.
10.27 Assumption Agreement, dated April 28, 1994, between BancFlorida, GPS and (B)
GWF; Mortgage, Security Agreement, and Assignment of Rents, dated December
8, 1989, by Palisades GP in favor of BancFlorida; Mortgage Note, dated
December 8, 1989, from Palisades GP to BancFlorida.
10.28 Agreement Relating to Construction, Maintenance and Operation of Golf Course (B)
and Country Club, dated October 18, 1989, between Palisades Golf Club Limited
Partnership and Canam Palisades, Ltd.
10.29 Promissory Note, dated April 12, 1994, from GAS to Hermann Flachsmann; (B)
Deed of Trust, Security Agreement, Financing Statement, and Assignment of
Rental dated April 12, 1994 by GAS to Wolfgang Dueren, as Trustee.
10.30 Cooperation Agreement Relating to the Sale of Residential Property and (B)
Operation of a Golf Course and Country Club, dated April 12, 1994, by and
between Northshore LP and GAS.
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
10.31 Brassie Golf Corporation 1994 Stock Option and Restricted Stock Purchase Plan. (B)
10.32 Exclusive Personal Service Contract between the Company and Dye, Inc. dated (C)
March 3, 1993.
10.33 Loan Agreement, dated as of April 24, 1991, between Eliga (D)
and the Company and Promissory Note dated September 15,
1991 in the amount of $780,000.
10.34 Employment Agreement, dated as of May 16, 1994, between the Company and (B)
Richard J. Stahlhuth; Employment Agreement, dated as of May 16, 1994,
between the Company and Hale S. Irwin.
10.35 Employment Agreement, dated as of June 30, 1994, between the Company and (B)
Gary A. Nacht.
10.36 Warrant Agreement, dated March 15, 1994, between the Company and The (B)
Travers Financial Corporation; Warrant Agreement, dated March 15, 1994,
between the Company and Theo Kraumanis.
10.37 Form of Warrant Agreement between the Company and the signatories thereto (E)
dated July 28, 1993.
10.38 Form of Warrant Agreement between the Company and the signatories thereto (F)
dated March 29, 1993.
10.39 Form of Warrant Issued to the Summit Shareholders dated June 30, 1995. (G)
10.40 Form of Warrant and Registration Rights Agreement Issued to Financial Advisor (G)
dated June 30, 1995.
10.41 1995 GSJ Partnership Loan Agreement and Promissory Note dated June 19, (G)
1995.
10.42 GSJ Loan Agreement with Canadian PT Limited Partnership, 1995 GSJ Deed of (G)
Trust and Security Agreement and Promissory Note dated October 1, 1995.
10.43 1995 Deed of Trust and Security Agreement, Promissory Note and 1995 GSJ (G)
NationsBank Loan Agreement dated June 19, 1995.
10.44 Amended and Restated GCP Promissory Note, First Amendment to GCP Loan (G)
Agreement, First Amendment to Credit Line Deed of Trust and Security
Agreement and Restatement of Guaranty Agreement dated May 5, 1995.
10.45 Office Lease between Breckenridge VIII Investment Corporation, Lessor, and (G)
Brassie Golf Corporation, Lessee, dated June 22, 1995.
10.46 Consulting Agreement between the Company and Fantor Consulting Ltd. (Allen (G)
Jefferson) dated January 1, 1996.
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
10.47 Agreement in Principle dated February 21, 1996 between the Company, Gordon (H)
Ewart, the Company's four golf course subsidiaries and the Company's three
pension fund partners.
10.48 Form of $5.5 million 6% Convertible Debenture issued by the Company on (I)
March 19, 1997.
10.49 Form of Letter Agreement dated September 6, 1996 Amending Terms of (J)
Company's $5.5 million 6% Convertible Debenture.
10.50 Sale of Certain Note Secured by Junior Security dated November 14, 1996 (K)
between UA Pension Fund, A & E Capital Funding, Inc., GCP, and the
Company selling and assigning the second mortgage loan on The Gauntlet at
Curtis Park from UA Pension Fund to A & E Capital.
10.51 Agreement for Sale and Purchase dated June 25, 1996 between Divot (K)
Development Corporation and SJH Partnership, Ltd. concerning Southeast Parcel
2 of the St. Johns Development.
10.52 Amendment to Agreement for Sale and Purchase dated December 11, 1996 (K)
between SJH Partnership, Ltd. and Divot Properties WGV, Inc. concerning
Southeast Parcel 2 of the St. Johns Development.
10.53 Assignment and Assumption of Purchase Agreement dated December 11, 1996 (K)
between Divot Development Corporation and Divot Properties WGV, Inc.
concerning Southeast Parcel 2 of the St. Johns Development.
10.54 Letter Agreement dated January 31, 1997 between Flurina Development S.A. and (K)
the Company amending the terms of the Company's Convertible Debenture held
by Flurina.
10.55 Letter Agreement dated February 5, 1997 between Pyramid Investments, LLC (K)
and the Company amending the terms of the Company's Convertible Debenture
held by Pyramid.
10.56 Letter Agreement dated January 29, 1997 between Infinity Investors Ltd. and the (K)
Company concerning converting a portion of the Infinity debenture and the
payoff of the Infinity debenture.
10.57 Assignment of Debenture dated February 5, 1997 between Infinity Investors Ltd. (K)
and Pyramid Investments, LLC assigning to Pyramid the Company's debenture
held by Infinity.
10.58 Form of Warrant issued to Infinity Investors Ltd. dated January 31, 1997. (K)
10.59 Form of Warrant Agreement between the Company and Pyramid Investments, (K)
LLC dated February 5, 1997.
10.60 Sublease Agreement dated as of January 1, 1998 between Churchill Capital
Corporation and the Company, and Consent of Landlord.
10.61 Amended and Restated Employment Agreement dated September 3, 1997 between the
Company and Joseph R. Cellura.
10.62 Employment Agreement dated September 2, 1997 between the Company and
Clifford F. Bagnall.
10.63 Purchase and Sale Agreement dated October of 1997 by and among the Company,
Divot Spa WGV, Inc. and Robert N. Gewant
10.64 Cross Creek/Brassie Stock Agreement dated November 13, 1997 between the Company
and Lance McNeill; General Release by Lance McNeill; Resignation of Lance McNeill;
and Indemnification Agreement between the Company and Lance McNeill.
10.65 Form of Convertible Debenture Agreement dated November 18, 1997 between the Company
and the signatories thereto, Convertible Note and Warrant.
10.66 Employment Agreement dated December 1, 1997 between the Company and Jeremiah M. Daly.
10.67 Form of Private Placement Purchase Agreement dated December 3, 1997 between the Company
and the signatories thereto, with form of Warrant to purchase shares of the Company's
Common Stock.
10.68 Letter Agreement dated December 5, 1997 between the Company and Mr. and
Mrs. William E. Horne, et. al., and Stock Purchase Agreement; Resignation of
William E. Horne; General Release by William E. Horne; and Indemnification Agreement
between the Company and William E. Horne.
10.69 Agreement of Lease dated December 16, 1997 between Tampa City Center Associates and the
Company.
10.70 Form of Mortgage and Security Agreement dated January of 1998 given by Divot Properties
WGV, Inc.; Promissory Note in the principal amount of $1,500,000 given by Divot Properties
WGV, Inc.; Assignment of Net Sales Proceeds; and Continuing Guaranty.
10.71 Form of Private Placement Purchase Agreement dated January of 1998 between the Company and
the signatories thereto.
10.72 Loan Agreement dated as of October 30, 1997 between The Gauntlet at Curtis Park, Inc., the
Company and Washington Mortgage Financial Group, Ltd.
21.1 Subsidiaries of the Company. (B)
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT/ITEM DOCUMENT/DESCRIPTION PAGE
NUMBER
<S> <C> <C>
27 Financial Data Schedule (For SEC Use Only)
</TABLE>
(A) Incorporated by reference from the Company's Form 10, file No. 0-23056,
filed on December 13, 1993.
(B) Incorporated by reference from the Company's Form 10, file No. 0-24812,
filed on September 15, 1994.
(C) Incorporated by reference from the Company's Form 10, file No. 0-23056,
filed on December 13, 1993 (Exhibit 10.14 thereto).
(D) Incorporated by reference from the Company's Form 10, file No. 0-23056,
filed on December 13, 1993 (Exhibit 10.15 thereto).
(E) Incorporated by reference from the Company's Form 10, file No. 0-23056,
filed on December 13, 1993 (Exhibit 10.16 thereto).
(F) Incorporated by reference from the Company's Form 10, file No. 0-23056,
filed on December 13, 1993 (Exhibit 10.17 thereto).
(G) Incorporated by reference from the Company's Form 10-K, file No.
0-24812, filed on April 15, 1996.
(H) Incorporated by reference from the Company's Form 8-K, file No.
0-24812, filed on August 30, 1996.
(I) Incorporated by reference from the Company's Form 10-QSB, file No.
0-24812, filed on May 15, 1996.
(J) Incorporated by reference from the Company's Form 10-QSB, file No.
0-24812, filed on October 30, 1996.
(K) Incorporated by reference from the Company's Form 10-KSB, file No.
0-24812, filed on April 14, 1997.
49
<PAGE> 50
(b) Reports on Form 8-K
Dated February 13, 1998
Dated January 12, 1998
Dated January 12, 1998
Dated November 23, 1997
Dated September 30, 1997
Dated August 1, 1997
Dated July 31, 1997
50
<PAGE> 51
SIGNATURES
In accordance with Sections 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BRASSIE GOLF CORPORATION
By: /s/ Joseph R. Cellura
-----------------------
Chief Executive Officer
Dated: March 30, 1998
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Joseph R. Cellura Director March 30, 1998
- -------------------------------
Joseph R. Cellura
/s/ Gordon D. Ewart Director March 30, 1998
- -----------------------------
Gordon D. Ewart
/s/ Clifford F. Bagnall Director March 30, 1998
- -------------------------------
Clifford F. Bagnall
/s/ Jeremiah M. Daly Director March 30, 1998
- ------------------------------
Jeremiah M. Daly
/s/ James A. McNulty Chief Financial Officer March 30, 1998
- ------------------------------
James A. McNulty
</TABLE>
51
<PAGE> 1
EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
1997 CONVERTIBLE PREFERRED STOCK
OF
BRASSIE GOLF CORPORATION
BRASSIE GOLF CORPORATION, a corporation duly organized and validly existing
under the General Corporation Law of the State of Delaware (the "Corporation")
does hereby certify as follows:
That pursuant to the authority conferred by the Corporation's Amended
Certificate of Incorporation, and pursuant to Section 151 of the Delaware
General Corporation Law, at a meeting duly held on December 29, 1997, the
Corporation's Board of Directors unanimously adopted a resolution providing for
the designations, preferences, and relative, participating, optional, or other
rights, and the qualifications, limitations or restrictions, of its 1997
Convertible Preferred Stock as follows:
1. The distinctive designation of the series shall be "1997 Convertible
Preferred Stock" (the "Preferred Stock" or the "1997 Preferred Stock"). The
number of shares of 1997 Convertible Preferred Stock shall be 1,500.
2. For purposes of this Certificate of Designation and the Company's
Certificate of Incorporation, (i) any series of preferred stock of the Company
entitled to dividends and liquidation preference on a parity with the 1997
Preferred Stock shall be referred to as "Parity Preferred Stock," (ii) any
series of preferred stock ranking senior to the 1997 Preferred Stock and Parity
Preferred Stock with respect to dividends and liquidation preference shall be
referred to as "Senior Stock," and (iii) the Common Stock and any series of
preferred stock ranking junior to the 1997 Preferred Stock and Parity Preferred
Stock with respect to dividends and liquidation preference shall be referred to
as "Junior Stock." As of the date of this Certificate of Designation, there is
not outstanding any Preferred Stock or Senior Stock.
3. In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, after setting apart or paying in full
the preferential amounts due to holders of Senior Stock, the holders of 1997
Preferred Stock and Parity Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the Company to the holders of Junior Stock or Common Stock by reason of their
ownership thereof, an amount equal to their full liquidation preference, which
in the case of shares of 1997 Preferred Stock shall be $1,000 per share, plus
accrued and unpaid dividends (the "Redemption Value"). If, upon such
liquidation, dissolution or winding-up of the Company, the assets of the Company
available for distribution to the holders of its stock be insufficient to permit
the dissolution in full of the amounts receivable as aforesaid by the holders of
Preferred Stock and Parity Preferred Stock, then all
<PAGE> 2
such assets of the Company shall be distributed ratably among the holders of
Preferred Stock and Parity Preferred stock in proportion to the amounts which
each would have been entitled to receive if such assets were sufficient to
permit distribution in full as aforesaid. Neither the consolidation nor merger
of the Company nor the sale, lease or transfer by the Company of all or any part
of its assets shall be deemed to be a liquidation, dissolution or winding-up of
the Company for the purposes of this paragraph.
4. Dividends
(a) The holders of the Preferred Stock shall be entitled to receive a
dividend, payable quarterly on the first day of each calendar quarter commencing
April, 1, 1998, which accrues from the date of issuance at the annual rate of
$70 per share, provided that dividends shall accrue at the annual rate of $180
per share so long as a Registration Statement (as defined in a Private Placement
Purchase Agreement of even date herewith) is not effective at any time after the
180th day following the issuance of the Preferred Stock. The preceding proviso
shall not limit any other rights or remedies of Holder as a result of the breach
by the Company of any provisions herein relating to the Registration Statement
or otherwise.
(b) Dividends shall be payable at the option of the Company either in
cash or in shares of Common Stock which on the date of the dividend payment are
convertible into shares of Common Stock which have a value equal to the
dividend, provided that dividends may be paid in Common Stock only if the public
sale thereof is permitted under a then-effective registration statement. The
value of each share of Common Stock for the purposes of any dividend payment
shall be equal to the average of the last reported sales prices therefor on the
public markets on the last five days prior to the date of the payment.
5. Conversion
(a) The holder shall have the right at any time in its sole discretion,
to convert the Preferred Stock, in whole or in part into a number of shares (the
"Conversion Shares") of the Company's common stock (the "Common Stock") to $
1,000 per share converted divided by the Conversion Price. Conversion Price
means the lesser of (1) $0.70 (the "Cap") or (2) 75% of the average of the
closing bid price of a share of Common Stock of the Company during the ten
trading days prior to such conversion.
(b) In the event that the holder elects to exercise its conversion
rights hereunder, it shall give to the Company written notice (by fax or
overnight courier service or personal delivery) of such election and shall
surrender his Preferred Stock to the Company for cancellation. Conversion shall
be effective upon the giving of such notice. The Company shall, within three
business days
2
<PAGE> 3
after receipt by the Company of notice of conversion, deliver to the Holder (or,
at Holder's request, DWAC) a certificate for the shares of Common Stock into
which such conversion was made.
(c) The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Preferred Stock as herein provided, the number of shares of Common Stock as
shall from time to time be issuable upon the conversion of the Preferred Stock.
(d) The Percentage and the Cap shall each be reduced by two percentage
points for each full 30-day period after the 180th day after the date hereof in
which the Registration Statement has not been declared effective, provided that
neither the Cap nor the Percentage shall ever be less than 50% of its initial
value. The preceding sentence shall not limit any other rights or remedies of
Holder as a result of the breach by the Company of any provisions herein
relating to the Registration Statement or otherwise.
(e) The Cap shall be equitably adjusted in case the Company shall issue
Common Stock as a dividend upon Common Stock or in payment of a dividend
thereon, shall subdivide the member of outstanding shares of its Common Stock
into a greater number of shares or shall contract the number of outstanding
shares of its Common Stock into a lesser number of shares.
(f) If the Company shall effect any consolidation, merger or sale, or if
any capital reorganization or reclassification of the Common Stock shall be
effected, then, as a condition precedent of such transaction, appropriate
provision shall be made to the end that conversion rights hereunder (including,
without limitation, provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to the kind of stock,
securities or assets which are deliverable in respect of Common Stock upon the
consummation of such transaction.
(g) The Preferred Stock shall be convertible at any time only to the
extent that Holder would not as a result of such conversion beneficially own
more than 4.99% of the then outstanding Common Stock. Beneficial ownership shall
be defined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. The opinion of counsel to holder shall prevail in the event of any dispute
on the calculation of holder's beneficial ownership.
(h) Should a holder propose to convert any Preferred Stock at a
Conversion Price which is less than $0.50, the Company shall have the option to
redeem all (but not any part) of the shares proposed to be converted at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends. The
option shall be exercisable by written notice from the Company to the holder
which is given within four business days of the notice of conversion and which
is accompanied by payment of the redemption price in full.
3
<PAGE> 4
6. Certain Payments. In the event the Company fails timely to deliver to
the holder or DWAC a certificate for shares of Common Stock as required
hereunder, or if the Company fails timely to make any required redemption
payment in respect of any shares of Preferred Stock, then, without limiting such
holder's other rights and remedies (including, without limitation, rights and
remedies available to such holder upon an event of default), the Company shall
forthwith pay to such holder an amount accruing at the rate of $50 per day for
each share of Preferred Stock.
7. Events of Default and Early Redemption
(a) An "event of default" with respect to the Preferred Stock shall
exist if any of the following shall occur,
(i) The Company shall breach or fail to comply with any provision
of this Certificate of Designation and such breach or failure shall continue for
15 days after written notice by any Holder to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by court order and such
order shall remain in effect for more then 15 days; or the Company shall be
adjudicated bankrupt or insolvent; or a substantial part of the Company shall be
sequestered by court order and such order shall remain in effect for more than
15 days; or a petition to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the Company and shall
not be dismissed within 45 days after such filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy, reorganization or
insolvency law, or shall consent to the filing of any petition against it under
any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or consent to the appointment of a receiver, trustee or liquidator
of the Company, or of all or any substantial part of its properties.
(b) If an event of default referred to in clause (a)(i) shall occur, the
holder may, in addition to such holder's other remedies, by written notice to
the Company, require that the Company forthwith redeem the Preferred Stock at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends.
Upon any such declaration, such amount shall become immediately due and payable
and the holder shall have all such rights and remedies provided for herein and
in the Subscription Agreement. If an event of default referred to in clauses
(a)(ii), (a)(iii) or (a)(iv) shall occur, the Company forthwith redeem the
Preferred Stock at a redemption price of $1,250 per share, plus any accrued but
unpaid dividends, and the
4
<PAGE> 5
holder shall have all such rights and remedies provided for under the terms of
this Note and the Subscription Agreement.
8. Without the consent of a majority in interest of the holders of the
Preferred Stock, the Company shall not create any class of equity security which
is senior to or parity with the Preferred Stock in liquidation rights.
9. All share, redemption and similar amounts are subject to appropriate
adjustment in the event of stock splits, stock dividends, recapitalization and
similar events.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Clifford F. Bagnall, its secretary, this 29th day of December 1997.
/s/ Clifford F. Bagnall
----------------------------------------
Clifford F. Bagnall
Secretary
Brassie Golf Corporation
5
<PAGE> 1
EXHIBIT 4.3
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF 10,500 SHARES OF
1997 CONVERTIBLE PREFERRED STOCK
OF
BRASSIE GOLF CORPORATION
BRASSIE GOLF CORPORATION, a corporation duly organized and validly existing
under the General Corporation Law of the State of Delaware (the "Corporation")
does hereby certify as follows:
That pursuant to the authority conferred by the Corporation's Amended
Certificate of Incorporation, and pursuant to Section 151 of the Delaware
General Corporation Law, at a meeting duly held on January 13, 1998, the
Corporation's Board of Directors unanimously adopted a resolution providing for
the designations, preferences, and relative, participating, optional, or other
rights, and the qualifications, limitations or restrictions, of an additional
10,500 shares its 1997 Convertible Preferred Stock as follows:
1. The distinctive designation of the series shall be "1997 Convertible
Preferred Stock" (the "Preferred Stock" or the "1997 Preferred Stock"). The
aggregate number of shares of 1997 Convertible Preferred Stock shall be 12,000.
2. For purposes of this Certificate of Designation and the Company's
Certificate of Incorporation, (i) any series of preferred stock of the Company
entitled to dividends and liquidation preference on a parity with the 1997
Preferred Stock shall be referred to as "Parity Preferred Stock," (ii) any
series of preferred stock ranking senior to the 1997 Preferred Stock and Parity
Preferred Stock with respect to dividends and liquidation preference shall be
referred to as "Senior Stock," and (iii) the Common Stock and any series of
preferred stock ranking junior to the 1997 Preferred Stock and Parity Preferred
Stock with respect to dividends and liquidation preference shall be referred to
as "Junior Stock." As of the date of this Certificate of Designation, there is
not outstanding any Preferred Stock or Senior Stock.
3. In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, after setting apart or paying in full
the preferential amounts due to holders of Senior Stock, the holders of 1997
Preferred Stock and Parity Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the Company to the holders of Junior Stock or Common Stock by reason of their
ownership thereof, an amount equal to their full liquidation preference, which
in the case of shares of 1997 Preferred Stock shall be $1,000 per share, plus
accrued and unpaid dividends (the "Redemption Value"). If, upon such
liquidation, dissolution or winding-up of the Company, the assets of the Company
available for distribution to the holders of its stock be insufficient to permit
the dissolution in full of the amounts receivable as aforesaid by
<PAGE> 2
the holders of Preferred Stock and Parity Preferred Stock, then all such assets
of the Company shall be distributed ratably among the holders of Preferred Stock
and Parity Preferred stock in proportion to the amounts which each would have
been entitled to receive if such assets were sufficient to permit distribution
in full as aforesaid. Neither the consolidation nor merger of the Company nor
the sale, lease or transfer by the Company of all or any part of its assets
shall be deemed to be a liquidation, dissolution or winding-up of the Company
for the purposes of this paragraph.
4. Dividends
(a) The holders of the Preferred Stock shall be entitled to receive a
dividend, payable quarterly on the first day of each calendar quarter commencing
April, 1, 1998, which accrues from the date of issuance at the annual rate of
$70 per share, provided that dividends shall accrue at the annual rate of $180
per share so long as a Registration Statement (as defined in a Private Placement
Purchase Agreement of even date herewith) is not effective at any time after the
180th day following the issuance of the Preferred Stock. The preceding proviso
shall not limit any other rights or remedies of Holder as a result of the breach
by the Company of any provisions herein relating to the Registration Statement
or otherwise.
(b) Dividends shall be payable at the option of the Company either in
cash or in shares of Common Stock which on the date of the dividend payment are
convertible into shares of Common Stock which have a value equal to the
dividend, provided that dividends may be paid in Common Stock only if the public
sale thereof is permitted under a then-effective registration statement. The
value of each share of Common Stock for the purposes of any dividend payment
shall be equal to the average of the last reported sales prices therefor on the
public markets on the last five days prior to the date of the payment.
5. Conversion
(a) The holder shall have the right at any time in its sole discretion,
to convert the Preferred Stock, in whole or in part into a number of shares (the
"Conversion Shares") of the Company's common stock (the "Common Stock") to $
1,000 per share converted divided by the Conversion Price. Conversion Price
means the lesser of (1) $0.70 (the "Cap") or (2) 75% of the average of the
closing bid price of a share of Common Stock of the Company during the ten
trading days prior to such conversion.
(b) In the event that the holder elects to exercise its conversion
rights hereunder, it shall give to the Company written notice (by fax or
overnight courier service or personal delivery) of such election and shall
surrender his Preferred Stock to the Company for cancellation. Conversion shall
be effective upon the
2
<PAGE> 3
giving of such notice. The Company shall, within three business days after
receipt by the Company of notice of conversion, deliver to the Holder (or, at
Holder's request, DWAC) a certificate for the shares of Common Stock into which
such conversion was made.
(c) The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Preferred Stock as herein provided, the number of shares of Common Stock as
shall from time to time be issuable upon the conversion of the Preferred Stock.
(d) The Percentage and the Cap shall each be reduced by two percentage
points for each full 30-day period after the 180th day after the date hereof in
which the Registration Statement has not been declared effective, provided that
neither the Cap nor the Percentage shall ever be less than 50% of its initial
value. The preceding sentence shall not limit any other rights or remedies of
Holder as a result of the breach by the Company of any provisions herein
relating to the Registration Statement or otherwise.
(e) The Cap shall be equitably adjusted in case the Company shall issue
Common Stock as a dividend upon Common Stock or in payment of a dividend
thereon, shall subdivide the member of outstanding shares of its Common Stock
into a greater number of shares or shall contract the number of outstanding
shares of its Common Stock into a lesser number of shares.
(f) If the Company shall effect any consolidation, merger or sale, or if
any capital reorganization or reclassification of the Common Stock shall be
effected, then, as a condition precedent of such transaction, appropriate
provision shall be made to the end that conversion rights hereunder (including,
without limitation, provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to the kind of stock,
securities or assets which are deliverable in respect of Common Stock upon the
consummation of such transaction.
(g) The Preferred Stock shall be convertible at any time only to the
extent that Holder would not as a result of such conversion beneficially own
more than 4.99% of the then outstanding Common Stock. Beneficial ownership shall
be defined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. The opinion of counsel to holder shall prevail in the event of any dispute
on the calculation of holder's beneficial ownership.
(h) Should a holder propose to convert any Preferred Stock at a
Conversion Price which is less than $0.50, the Company shall have the option to
redeem all (but not any part) of the shares proposed to be converted at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends. The
option shall be exercisable by written notice from the Company to the holder
which
3
<PAGE> 4
is given within four business days of the notice of conversion and which is
accompanied by payment of the redemption price in full.
6. Certain Payments. In the event the Company fails timely to deliver to
the holder or DWAC a certificate for shares of Common Stock as required
hereunder, or if the Company fails timely to make any required redemption
payment in respect of any shares of Preferred Stock, then, without limiting such
holder's other rights and remedies (including, without limitation, rights and
remedies available to such holder upon an event of default), the Company shall
forthwith pay to such holder an amount accruing at the rate of $50 per day for
each share of Preferred Stock.
7. Events of Default and Early Redemption
(a) An "event of default" with respect to the Preferred Stock shall
exist if any of the following shall occur,
(i) The Company shall breach or fail to comply with any provision of
this Certificate of Designation and such breach or failure shall continue for 15
days after written notice by any Holder to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by court order and such
order shall remain in effect for more then 15 days; or the Company shall be
adjudicated bankrupt or insolvent; or a substantial part of the Company shall be
sequestered by court order and such order shall remain in effect for more than
15 days; or a petition to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the Company and shall
not be dismissed within 45 days after such filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy, reorganization or
insolvency law, or shall consent to the filing of any petition against it under
any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or consent to the appointment of a receiver, trustee or liquidator
of the Company, or of all or any substantial part of its properties.
(b) If an event of default referred to in clause (a)(i) shall occur, the
holder may, in addition to such holder's other remedies, by written notice to
the Company, require that the Company forthwith redeem the Preferred Stock at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends.
Upon any such declaration, such amount shall become immediately due and payable
and the holder shall have all such rights and remedies provided for herein and
in the Subscription Agreement. If an event of default
4
<PAGE> 5
referred to in clauses (a)(ii), (a)(iii) or (a)(iv) shall occur, the Company
forthwith redeem the Preferred Stock at a redemption price of $1,250 per share,
plus any accrued but unpaid dividends, and the holder shall have all such rights
and remedies provided for under the terms of this Note and the Subscription
Agreement.
8. Without the consent of a majority in interest of the holders of the
Preferred Stock, the Company shall not create any class of equity security which
is senior to or parity with the Preferred Stock in liquidation rights.
9. All share, redemption and similar amounts are subject to appropriate
adjustment in the event of stock splits, stock dividends, recapitalization and
similar events.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Clifford F. Bagnall, its secretary, this 13th day of January 1998.
/s/ Clifford F. Bagnall
----------------------------------------
Clifford F. Bagnall
Secretary
Brassie Golf Corporation
5
<PAGE> 1
EXHIBIT 10.60
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Sublease") is entered into as of the 1st day
of January, 1998, by and between CHURCHILL CAPITAL CORPORATION (herein called
"Lessee") and BRASSIE GOLF CORPORATION ("Brassie").
W I T N E S S E T H:
WHEREAS, Brassie has heretofore entered into that certain Lease with Tampa
City Center Associates (the "Landlord") dated July 1, 1997 (the "Lease"),
whereby Brassie agreed to lease from the Landlord certain premises located on
the 25th floor of the Tampa City Center Building, Tampa, Florida (the
"Premises"); and
WHEREAS, the Lessee desires to sublease the said Premises from Brassie.
NOW, THEREFORE, in consideration of the premises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1
DEMISE, DESCRIPTION, USE, TERM, AND RENT
Brassie hereby subleases to Lessee, and Lessee hereby subleases from the
Brassie, office space comprised of approximately 4,140 square feet, as more
further described in Exhibit A attached hereto and made a part hereof (the
"Leased Premises"), to be used only for office purposes and uses normally
incident thereto and for no other purpose, for the term of thirty-two (32)
months commencing on January 1, 1998 and ending on August 31, 2000, for the
monthly rental set forth below and payable as specified in Article 2 hereof:
ARTICLE 2
RENT
Lessee shall pay to Brassie monthly rent in the amount of $5,520.00 (plus
applicable Florida state sales tax) as rent for the Leased Premises during the
term hereof, in monthly installments as set forth in Article 1 hereof. All such
sums are due and payable in advance on the first day of each and every calendar
month during such term, commencing on April 1, 1998, at One Tampa City Center,
Suite 200, Tampa, Florida 33602, or at such other place as Brassie may designate
in writing. All payments shall be without set off or deduction, except as
otherwise expressly provided herein. The foregoing rental rate is inclusive of
all current operating expenses charged by Landlord to Brassie and any additional
increases to the operating expenses and any other additional charges whatsoever.
Except as set forth in the last sentence of this paragraph, any additional
charges beyond the rates as outlined above shall be the
<PAGE> 2
sole responsibility of Brassie. The rental rates shall constitute the sole
charge due and payable for the occupancy by Lessee, except for evening and
weekend utility and HVAC charges, and other incremental usage charges incurred
by Lessee (which shall be billed to Lessee upon Brassie's receipt of an invoice
therefor from Landlord) and late fees or other charges due to Lessee's default.
ARTICLE 3
THE LEASE
All of the terms and provisions of the Lease are incorporated by reference
as if fully rewritten herein, and Lessee shall be entitled to all of the
benefits, and subject to all of the conditions and obligations of, Brassie as
lessee under the Lease, except as otherwise provided herein.
ARTICLE 4
INSURANCE AND RISK OF LOSS
4.1 (a) All personal property belonging to the Lessee or to any other
person, located in or about the Leased Premises or the surrounding building and
premises, shall be at the sole risk of the Lessee or such other person, and
neither the Landlord, Brassie nor their agents shall be liable for the theft or
misappropriation thereof, or for any damage or injury thereto, or for any damage
or injury to the Lessee or other persons or to any of their respective property
caused by fire, water, snow, frost, steam, heat, cold, dampness, falling
plaster, sewers or sewage, gas, odors, noise, the bursting or leaking of pipes,
plumbing, electrical writing or equipment or fixtures of any kin, or of any
other extended coverage perils, or by any act or neglect of any other tenant or
occupant of the building, or of any other person or caused in any manner
whatsoever.
Lessee shall, during the entire term of the Sublease, carry and keep or
cause to be kept in force, at its expense, written by one or more responsible
insurance companies licensed to do business in the State of Florida, insurance
naming Lessee, Brassie and Landlord as the certificate holder, for personal
injury and property damage liability (public liability insurance) upon the
Leased Premises in the amount of at least $1,000,000 for combined single limit
bodily injury and property damage liability, and will provide a Certificate of
Insurance to Brassie within thirty (30) days after the execution of this
Sublease and within thirty (30) days of each renewal date of said insurance. It
is further agreed that no cancellation or material change in the Lessee's
policies shall become effective except upon thirty (30) days prior written
notice to Brassie and Landlord.
2
<PAGE> 3
(b) The Lessee will protect, indemnify and save harmless the Landlord
and Brassie from all losses, costs or damages sustained by reason of any act or
other occurrence causing injury or harm to any person or property whatsoever,
resulting directly or indirectly from the Lessee's use of the Leased Premises or
any part thereof.
4.2 If Lessee shall fail to secure or maintain insurance as required by
Section 4.1, above, at any time during the term hereof, Brassie shall be
permitted, but not required, to obtain such insurance in Lessee's name or as the
agent of Lessee and shall be compensated by Lessee for the cost thereof.
4.3 If the Leased Premises or the building in which it is situated become
untenantable due to fire, flood or other casualty, and if the Landlord
terminates the Lease, then this Sublease shall terminate and rent shall be
abated for the unexpired portion of this Sublease, effective as of the date of
such termination. If the Landlord does not terminate the Lease, but undertakes
to repair, restore or rehabilitate the building or the Leased Premises, the rent
payable hereunder during said period shall not be abated.
ARTICLE 5
WASTE AND NUISANCE
Lessee shall not commit, or suffer to be committed, any waste on the Leased
Premises, nor shall it maintain, commit, or permit the maintenance or commission
of any nuisance on the Leased Premises for any unlawful purpose.
ARTICLE 6
POSSESSION AND QUIET ENJOYMENT
6.1 Brassie shall, on the commencement date of the term of this Sublease as
hereinabove set forth, place Lessee in possession of the Leased Premises and
shall secure Lessee in the quiet enjoyment thereof against all persons lawfully
claiming the same under the Bank during the entire Sublease term.
6.2 This Sublease shall be subordinate, at the option of the Landlord, to
any mortgages placed by the Landlord upon the building or land of which of the
Premises is a part, or the underlying leasehold interest. Lessee agrees to
execute a subordination agreement in the format requested.
6.3 During the entire term hereof, Lessee shall remain in possession of the
Leased Premises and operate its business therefrom during regular working hours.
3
<PAGE> 4
ARTICLE 7
POSSESSION AND QUIET ENJOYMENT
In the event that any future mortgagee of Brassie or Landlord requires that
certain modifications be made to this Sublease, Lessee agrees to execute any and
all documents reasonably necessary to effect such modifications; provided,
however, that nothing contained in this Article 7 shall be construed as Lessee's
agreement to a modification which in any way (i) increases Lessee's financial
obligations hereunder including, but not limited to, rent; (ii) affects the size
or location of the Leased Premises; or (iii) prevents Lessee from deriving any
of the material benefits of this Sublease.
ARTICLE 8
SURRENDER OF LEASED PREMISES
8.1 Lessee shall, without demand therefor and at its own cost and expense,
within ten (10) days after the expiration or sooner termination of the term
hereof, remove all property belonging to the Lessee and all alterations,
additions, or improvements, and fixtures which by the terms of the Lease the
Lessee is permitted to remove, repair all damage to the Premises caused by such
removal, and restore the Premises to the condition it was in prior to the
installation of the property so removed. Any property not so removed shall be
deemed to have been abandoned by Lessee and may be retained or disposed of by
the Bank or the Landlord, as applicable.
8.2 Lessee agrees to and shall, on the expiration or sooner termination of
the term hereof, promptly surrender and deliver the Leased Premises to Brassie
without demand therefor in good condition, ordinary wear and tear and damage by
the elements, fire, or act of God, or by other cause beyond the reasonable
control of Lessee, excepted.
ARTICLE 9
CONDEMNATION
If during the term of this Sublease the Leased Premises should be taken for
any public or quasi-public use under any law, ordinance, or regulation or by
right of eminent domain, or should be sold to the condemning authority under
threat of condemnation, this Sublease shall terminate and the rent shall be
abated during the unexpired portion of this Sublease, effective as of the date
of the taking of the Leased Premises by the condemning authority. Lessee agrees
that Brassie shall have all rights to any leasehold interest in the event of any
condemnation, and Lessee hereby assigns to Brassie all of its right, title and
interest to any such award. Lessee shall, however, be entitled to claim, prove
and receive in such condemnation proceedings such award as may be allowed for
fixtures and other equipment installed by it but only if such award shall be in
addition
4
<PAGE> 5
to the award for the land and building (or portion thereof) containing the
Leased Premises.
ARTICLE 10
OPTION TO RENEW
Lessee shall have no option to renew this Sublease.
ARTICLE 11
DEFAULTS AND REMEDIES
If Lessee shall allow the rent to be in arrears, or shall remain in default
under any other condition of this Sublease for a period of fifteen (15) days
after written notice from Brassie, or shall remain in default under the terms of
the Lease beyond any applicable grace period set forth therein, or if the Leased
Premises shall become vacant or abandoned, or should any person other than
Lessee secure possession of the Leased Premises, or any part thereof, by
bankruptcy proceedings, or other operation of law in any manner at whatsoever,
Brassie may, at its option, without notice to Lessee, terminate this Sublease
or, in the alternative, Brassie may re-enter and take possession of the Leased
Premises and remove all persons and property therefrom, without being deemed
guilty of any manner of trespass, and re-let the Premises or any part thereof
for all or any part of the remainder of said term to a party satisfactory to
Brassie and the Landlord, and at such monthly rental as the Brassie may with
reasonable diligence be able to secure. Should Brassie be unable to relet, or
should such monthly rental be less than the rental Lessee was obligated to pay
under this Sublease, plus the expense of re-letting, then Lessee shall pay the
amount of such deficiency to the Brassie within ten (10) days of demand
therefor. Brassie shall have no duty to mitigate damages hereunder.
It is expressly agreed that in the event of default by Lessee hereunder,
Brassie shall have a lien upon all goods, chattels, or personal property of any
description belonging to Lessee which are placed in, or become a part of, the
Leased Premises, as security for rent due and to become due for the remainder of
the term hereof, which lien shall not be in lieu of or in way affect any
statutory lessor's lien given by law, but shall be cumulative thereto; and a
security interest in all such personal property placed in the Premises for such
purposes. This shall not prevent the sale by Lessee, of any merchandise in the
ordinary course of business free of such lien of Brassie. In the event Brassie
exercises the option to terminate this Sublease, re-enter and occupy or re-let
the Leased Premises as provided in the preceding paragraph, then Brassie may
take possession of all of Lessee's property on the Leased Premises and sell the
same at public or private sale after giving Lessee reasonable notice of the time
and place of any public sale or of the time after which any private sale is to
be made, for cash or on credit, or for such prices and terms as Brassie deems
best, with or without having the property present at such sale.
5
<PAGE> 6
The proceeds of such sale shall be applied first to the necessary and
property expenses of removing, storing, and selling such property, then to the
payment of any rent due or to become due under this Sublease, with the balance,
if any, to be paid be Lessee.
All rights and remedies of Brassie under this Sublease shall be cumulative,
and none shall exclude any other right or remedy at law. Such rights and
remedies may be exercised and enforced concurrently and whenever and as often as
occasion therefor arises.
ARTICLE 12
INSPECTION
Lessee shall permit the Landlord, and their agents to enter into and upon
the Leased Premises at all reasonable times for the purpose of inspecting the
same or for the purpose of maintaining or making repairs or alterations to the
building.
ARTICLE 13
ASSIGNMENT AND SUBLEASE
Lessee shall not assign or convey this Sublease or any interest hereunder;
allow any transfer hereof or any lien upon the Lessee's interest by operation of
law; sublet the Leased Premises or any part thereof; or permit the use or
occupancy of the Leased Premises or any part thereof by anyone other than
Lessee.
ARTICLE 14
MISCELLANEOUS
14.1 All notices to be given under this Sublease shall be given by
certified or registered mail. return receipt requested, addressed to the proper
party as follows:
Brassie: 201 North Franklin Street
Suite 200
Tampa, Florida 33602
Lessee: 201 North Franklin Street
Suite 2550
Tampa, Florida 33602
14.2 This Sublease shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, and assigns when permitted hereby. All Lessees
shall be jointly and severally liable hereunder.
6
<PAGE> 7
14.3 This Sublease shall be construed under and in accordance with the laws
of the State of Florida.
14.4 In case any one or more of the provisions contained in this Sublease
shall for any reason be held to be invalid, illegal, or unenforceable, no other
provision hereof shall be affected thereby and this Sublease shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
herein.
14.5 This Sublease constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings or written or oral agreements
between the parties respecting the subject matter hereof.
14.6 No amendment, modification, or alteration of the terms hereof shall be
binding unless the same shall be in writing, dated subsequent to the date
hereof, and duly executed by the parties hereto.
14.7 The rights and remedies provided by this Sublease are cumulative and
the use of any one right or remedy by either party shall not preclude or waive
its right to use any or all other remedies. Said rights and remedies are given
in addition to any other rights the parties may have by law, statute, ordinance,
or otherwise.
14.8 No waiver by the parties hereto of any default or breach of any term,
condition, or covenant of this Sublease shall be deemed to be a waiver of any
other breach of the same or any other term, condition, or covenant contained
herein.
14.9 In the event or Lessee breaches any of the terms of this Sublease
whereby the party not in default employs attorneys to protect or enforce its
rights hereunder and prevails, then the defaulting party agrees to pay the other
party reasonable attorneys' fees so incurred by such other party.
14.10 Neither Brassie nor the Lessee shall be required to perform any term,
condition, or covenant in this Sublease so long as such performance is delayed
or prevented by any acts of God, strikes, lock-outs, material or labor
restrictions by any governmental authority, civil riot, floods, or any other
cause not reasonably within the control of the Lessee and which by the exercise
of due diligence such party is unable, in whole or in part, to prevent or
overcome.
14.11 Time is of the essence of this Sublease.
Signed and acknowledged
in the presence of:
BRASSIE GOLF CORPORATION
By: /s/ Joseph R. Cellura
-------------------------------------
Joseph R. Cellura,
Its CEO
7
<PAGE> 8
CHURCHILL CAPITAL CORPORATION
By: /s/ Peter M. Peterson
-------------------------------------
Peter M. Peterson,
Its CEO
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 6th day of
January, 1998, by JOSEPH R. CELLURA, as CEO of BRASSIE GOLF CORPORATION, a
__________ corporation, on behalf of the corporation. He is personally known to
me.
/s/ Marjane Gaston
----------------------------------------
NOTARY PUBLIC
Name: Marjane Gaston
-----------------------------------
Serial #: CC 427596
-------------------------------
My Commission Expires: 12/19/98
-----------------
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 6th day of
January, 1998, by PETER M. PETERSON, as CEO of CHURCHILL CAPITAL CORPORATION, a
__________ corporation, on behalf of the corporation. He is personally known to
me.
/s/ Marjane Gaston
----------------------------------------
NOTARY PUBLIC
Name: Marjane Gaston
-----------------------------------
Serial #: CC 427596
-------------------------------
My Commission Expires: 12/19/98
-----------------
8
<PAGE> 9
CONSENT
The undersigned, TAMPA CITY CENTER ASSOCIATES ("Landlord"), being the
landlord under that certain Lease dated as of February 21, 1985, as amended,
hereby consents and approves of the Sublease of the office space leased
thereunder Brassie Golf Corporation ("Brassie") to Churchill Capital
Corporation ("Subtenant") (Brassie and Subtenant collectively, "Lessee").
By its execution hereof, Landlord does not release Brassie from its
primary liability under the Lease. Notwithstanding any provision of the
Sublease, the terms and conditions of the Lease remain unamended and in full
force and effect, and any inconsistent agreement between Brassie and Subtenant
in the sublease shall not be binding on Landlord. By granting its consent to
the sublease, Landlord does not waive the terms and conditions of paragraph 17
of the Lease, and such terms and conditions shall apply to any further proposed
assignment or proposed subletting.
In the event the Lease between the undersigned and Brassie is terminated,
Landlord hereby agrees that this Sublease shall continue for the balance of the
term stated herein with the same force and effect as if Landlord and Lessee
entered into this Sublease, under the same terms and conditions, including
those incorporated by reference from the Lease.
Signed in the presence of: TAMPA CITY CENTER ASSOCIATES
/s/ Douglas L. Clemens By: /s/ Ronald Kulpinski
--------------------------- -------------------------------
Print Name: Douglas L. Clemens Print Name: Ronald Kulpinski
--------------------------- -------------------
Its: President
--------------------------
/s/ Diann L. Waller
- -------------------------------
Print Name: Diann L. Waller
-------------------
<PAGE> 1
EXHIBIT 10.61
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BY AND BETWEEN
BRASSIE GOLF CORPORATION
AND
JOSEPH R. CELLURA
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made
and entered into as of September 3, 1997, by and between BRASSIE GOLF
CORPORATION, a Delaware corporation (the "Company"), AND JOSEPH R. CELLURA
("Employee").
WHEREAS, the Company and Employee entered into an Employment Agreement
dated September 3, 1997; and
WHEREAS, the Company and the Employee wish to amend and restate the
Employment Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, the Company and Employee agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. The Company hereby employs Employee, and Employee
hereby accepts such employment, as Chairman and Chief Executive Officer of the
Company, all upon the terms and conditions set forth herein.
1.2 SERVICES. During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of Chairman and Chief
Executive Officer of the Company under the direction of the Board of Directors
of the Company (the "Board of Directors") or the Executive Committee of the
Board of Directors (the "Executive Committee"). Employee agrees to devote his
best efforts and substantially all of his full business time, energies and
abilities to the services to be performed hereunder and for the exclusive
benefit of the Company. Employee shall be vested with such authority as is
generally commensurate with the position of Chairman and Chief Executive Officer
of the Company, as further outlined below.
1.3 LOCATION. The principal place of employment and the location of
Employee's principal offices shall be in Tampa, Florida and New York, New York;
provided, however, Employee shall temporarily perform outside of Tampa, Florida,
and New York, New York, such services as are reasonably required for the proper
execution of his duties under this Agreement.
<PAGE> 2
1.4 REPRESENTATIONS. Each party represents and warrants to the other that
he/it has full power and authority to enter into and perform this Agreement and
that his/its execution and performance of this Agreement shall not constitute a
default under or breach of any of the terms of any agreement to which he/it is a
party or under which he/it is bound. Each party represents that no consent or
approval of any third party is required for his/its execution, delivery and
performance of this Agreement or that all consents or approvals of any third
party required for his/its execution, delivery and performance of this Agreement
have been obtained.
1.5 SOLE DISCRETION. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its chairman and chief executive officer.
ARTICLE II
TERM
2.1 TERM. The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
through the seventh anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of this
Agreement.
2.2 RENEWAL. This Agreement shall be renewed for successive one year terms
unless either party hereto provides written notice of non-renewal at least sixty
(60) days prior to the Scheduled Termination Date of each such term.
Notwithstanding the foregoing, each renewal hereof shall constitute a separate
and distinct agreement. If notice of non-renewal is given by either party, all
terms of this Agreement shall remain in full force and effect until the earlier
of the following (i) a new employment agreement is entered into by the parties,
or (ii) employment is terminated under the terms and conditions in Article VII
hereof.
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary equal to Two Hundred Twenty Thousand and 00/100 Dollars
($220,000.00), which base salary shall accrue monthly (prorated for periods less
than a month) and shall be paid in equal bimonthly installments, in arrears. The
base salary will be reviewed annually, or more frequently, as appropriate, by
the Board of Directors or the Compensation Committee of the Board of Directors,
as the case may be, in its sole discretion, provided that the annual base salary
shall not be decreased below Two Hundred Twenty-five Thousand and 00/100 Dollars
($225,000.00).
In addition to the above compensation, the Company shall deliver to
Employee Five Million (5,000,000) shares of common stock of the Company
(referred to as the "Stock") within thirty (30) days after the date of approval
by the Company's shareholders of an increase in the capital
2
<PAGE> 3
stock of the Company. In the event that such approval does not occur by March 1,
1999, the Company shall substitute other property (including cash) having a
value equivalent to what the Stock would have been valued at as of March 1,1999.
The Stock shall be subject to forfeiture by Employee in the event Employee's
employment by the Company is terminated for any reason, excluding death,
disability, or retirement, prior to March 1, 1999 ( referred to as the
Forfeiture Period"). In the event of such termination during the Forfeiture
Period, Employee shall immediately deliver to the Company the certificate(s)
representing the Stock, duly endorsed, and bearing all required documentary
stamps, and such other documents as shall be necessary and reasonably required
to conclude the transfer. The Stock shall bear a legend reflecting the
restrictions set forth herein.
3.2 INCENTIVE COMPENSATION. The Company shall pay Employee, during the Term
of this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
<TABLE>
<CAPTION>
Fiscal Year
EBIT Bonus
----------- -----
<S> <C>
$0 - 1,000,000 Five Percent (5%) of Base Salary
$1,000,001 to $3,000,000 Fifteen Percent (15%) of Base Salary
$3,000,001 to $5,000,000 Thirty Percent (30%) of Base Salary
In excess of $5,000,001 Fifty Percent (50%) of Base Salary
</TABLE>
3.3 BENEFITS. Employee shall be entitled, during the Term hereof, to the
same medical, hospital, dental and life insurance coverage and benefits as are
available to the Company's most senior executive officers on the Commencement
Date.
3.4 WITHHOLDING. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article Ill and
Article VII, are subject to withholding for such federal, state and local taxes
as the Company, in its reasonable judgment, determines to be required pursuant
to any applicable law, rule or regulation.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished with an
office at the principal executive offices of the Company, or at such other
location as agreed to by Employee and the Company, and other working facilities
and secretarial and other assistance suitable to his position and reasonably
required for the performance of his duties hereunder. The Company hereby agrees
to reimburse Employee, subject to the provisions of this Section 4.1, all of the
costs of Employee's maintaining an office in New York, New York, which costs are
currently estimated to be approximately $8,000 per month. The Company shall
promptly reimburse Employee for all of Employee's reasonable expenses incurred
while employed and performing his duties under and in accordance with the terms
and conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner
3
<PAGE> 4
required pursuant to Company's policies and procedures and the Internal Revenue
Code of 1986, as amended (the "Code"), and applicable regulations as are in
effect from tune to time.
4.2 INSURANCE. The Company may secure in its own name or otherwise, and at
its own expense, life, disability and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. If, during the Term of this Agreement, Employee
shall be unable to perform in all material respects his duties hereunder for a
period exceeding six (6) consecutive months by reason of illness or incapacity,
this Agreement may be terminated by the Company in its sole discretion pursuant
to Section 7.2 hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of sixty (60)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article I hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the six (6) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties and privileges attendant thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to his full
remuneration and benefits hereunder during such illness or incapacity unless and
until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article V.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this Article V,
the term "illness or incapacity" shall mean Employee's inability to perform his
duties hereunder substantially on a full-time basis due to physical or mental
illness as determined by the Board of Directors in accordance with the Company's
long-term disability insurance policy or, in the event Company does not have a
long-term disability insurance policy in effect, in accordance with the
following procedure: Employee and the Company each shall designate a physician
who shall jointly select a third physician and the three (3) physicians selected
would then determine whether or not any illness or incapacity is such as to
prevent Employee from performing his duties hereunder.
4
<PAGE> 5
ARTICLE VI
CONFIDENTIALITY
6.1 CONFIDENTIALITY. During the Term of this Agreement and thereafter,
Employee agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Employee shall, upon the
termination of his employment, deliver to the Company any and all records,
books, documents or any other materials whatsoever (including all copies
thereof) containing such trade secrets, which shall be and remain the property
of the Company.
6.2 NON-REMOVAL OF RECORDS. All documents, papers, materials, notes, books,
correspondence, drawings and other written and graphic records relating to the
Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company.
ARTICLE VII
TERMINATION
7.1 TERMINATION FOR CAUSE. This Agreement and the employment of Employee
may be terminated by the Company "For Cause" in any of the following
circumstances:
(a) Employee has been judicially determined to have committed
any fraud, theft, misappropriation or similar act against
the Company or Employee has willfully abused the Company's
expense account policy; or
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties
hereunder, which shall include, without limitation,
Employee's willfully disregarding the lawful written
instructions of the Executive Committee or the Board of
Directors concerning his performance of his duties within
the scope hereof, Employee's conduct which is materially
inconsistent with the published policies of the Company, as
promulgated from time to time and which are generally
applicable to all senior executives, or Employee's breach of
any other material provision of this Agreement, provided,
however, that Employee shall be given written notice of such
default and a reasonable opportunity to cure such default;
or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties hereunder; or
5
<PAGE> 6
(d) Employee has been proven to have engaged in illegal
activities or other wrongful conduct which, individually, or
in the aggregate, have a material adverse effect on the
Company, its reputation, prospects, earnings or financial
condition.
A Termination For Cause under this Section 7.1 shall be effective upon the
date set forth in a written notice of termination delivered to Employee, but
shall not be earlier than the date such written notice is delivered to Employee.
7.2 TERMINATION WITHOUT CAUSE. This Agreement and the employment of the
Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than
ninety (90) days written notice to Employee; or
(c) At the election of the Company by its giving not less than
ninety (90) days written notice to Employee in the event of
an illness or incapacity described in Section 5.1; or
(d) At the election of the Employee by his giving not less than
ninety (90) days written notice to the Company; or
(e) Upon the Scheduled Termination Date or on the last day of
any renewal term in the event of non-renewal of this
Agreement; or
(f) Upon Employee's death.
A Termination Without Cause under Section 7.2(b), (c) or (d) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than sixty (60) days nor more than
one hundred twenty (120) days after the giving of such notice. A Termination
Without Cause under Section 7.2(a), (e) or (f) hereof shall be automatically
effective upon the date of mutual agreement, or the Scheduled Termination Date
or the last day of any renewal term, or the date of death of the Employee, as
the case may be.
7.3 EFFECT OF TERMINATION FOR CAUSE. If Employee's employment is terminated
For Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of Section 4.1
6
<PAGE> 7
hereof which shall be paid by the Company within sixty (60)
days of the date of termination; and
(c) Except as provided in Article XI, this Agreement shall
thereupon be of no further force and effect.
7.4 EFFECT OF TERMINATION WITHOUT CAUSE. If Employee's employment is
terminated Without Cause except pursuant to Section 7.2(d) or (e) hereof:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the Scheduled Termination Date in accordance
with the provisions of Section 4.1 hereof which shall be
paid by the Company within sixty (60) days of the date of
termination;
(c) Employee shall be entitled to severance pay in the amount of
Five Hundred Thousand Dollars ($500,000) which shall be paid
by the Company within sixty (60) days of the date of
termination;
(d) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect.
Any amounts due from Company pursuant to Section 7.3 and 7.4 above and not
paid to Employee as and when due shall accrue interest at the prime rate of
interest as established from time to time by Chase Manhattan Bank.
ARTICLE VIII
NON-COMPETITION AND NON-INTERFERENCE
8.1 NON-COMPETITION. Employee agrees that during the Term hereof and, in
the case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (1) year thereafter, Employee will
not, directly, indirectly, or as an agent on behalf of or in conjunction with
any person, firm, partnership, corporation or other entity, own, manage,
control, join, or participate in the ownership, management, operation, or
control of, or be financially interested in or advise, lend money to, or be
employed by or provide consulting services to, or be connected in any manner
with any competitive business which is located within the United States of
America; provided, however, that Employee shall be permitted to own up to 5% of
the issued and outstanding shares of capital stock of any corporation which has
a class of equity securities registered under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
7
<PAGE> 8
8.2 NON-INTERFERENCE. Employee agrees that during the Term hereof and, in
the case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (1) year thereafter, Employee will
not, directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity, induce or entice any
employee of the Company to leave such employment or cause anyone else to do so.
8.3 SEVERABILITY. If any covenant or provision contained in this Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitral or judicial proceeding, a tribunal shall refuse to enforce
all of the separate covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
ARTICLE IX
REMEDIES
9.1 EQUITABLE REMEDIES. Employee and the Company agree that the services to
be rendered by Employee pursuant to this Agreement, and the rights and interests
granted and the obligations to be performed by Employee to the Company pursuant
to this Agreement, are of a special, unique, extraordinary and intellectual
character, which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in any action at law, and that a
breach by Employee of any of the terms of this Agreement will cause the Company
great and irreparable injury and damage. Employee hereby expressly agrees that
the Company shall be entitled to the remedies of injunction, specific
performance and other equitable relief to prevent a breach of Articles VI and
VIII of this Agreement, both pendente lite and permanently, against Employee, as
such breach would cause irreparable injury to the Company and a remedy at law
would be inadequate and insufficient. Therefore, the Company may in addition to
pursuing its other remedies, obtain an injunction from any court having
jurisdiction in the matter restraining any further violation.
9.2 RIGHTS AND REMEDIES PRESERVED. Nothing in this Agreement shall limit
any right or remedy the Company or Employee may have under this Agreement or
pursuant to lam, for any breach of this Agreement by the other party. The rights
granted to the parties herein are cumulative and the election of one shall not
constitute a waiver of such party's right to assert all other legal remedies
available under the circumstances.
ARTICLE X
MISCELLANEOUS
10.1 NO WAIVERS. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
8
<PAGE> 9
10.2 NOTICES. Any notice to be given to the Company and Employee under the
terms of this Agreement may be delivered personally, by telecopy, telex or other
form of written electronic transmission, or by registered or certified mail,
postage prepaid, and shall be addressed as follows:
IF TO THE COMPANY: Brassie Golf Corporation
One Tampa City Center, Suite 2550
201 North Franklin Street
Tampa, Florida 33602
Attention: President
WITH A COPY TO: Fred S. Ridley, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
201 North Franklin Street, Suite 2100
Tampa, Florida 33602
IF TO EMPLOYEE: Joseph R. Cellura
One Tampa City Center, Suite 2550
201 North Franklin Street
Tampa, Florida 33602
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (i) when personally delivered, (ii) when
telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 SEVERABILITY. The provisions of this Agreement are severable and if
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
9
<PAGE> 10
10.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida without reference to
the conflict of law principles thereof.
10.7 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 ATTORNEYS FEES. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys fees and costs incurred.
10.9 FURTHER ASSURANCES. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
10.10 GENDER. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
10.11 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
ARTICLE XI
SURVIVAL
11.1 SURVIVAL. The provisions of Articles VI, VII, VIII, IX and X, of this
Agreement shall survive the termination of this Agreement whether upon, or prior
to, the Scheduled Termination Date hereof.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BRASSIE GOLF CORPORATION,
a Delaware corporation
By:
-------------------------------------
President
EMPLOYEE
----------------------------------------
Joseph R. Cellura
<PAGE> 1
EXHIBIT 10.62
EMPLOYMENT AGREEMENT
BY AND BETWEEN
BRASSIE GOLF CORPORATION
AND
CLIFFORD F. BAGNALL
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into to be
effective September 2, 1997, by and between BRASSIE GOLF CORPORATION, a Delaware
corporation (the "Company"), and CLIFFORD F. BAGNALL ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement to
assure the Company of the services of Employee and to set forth the respective
rights and duties of the parties hereto; and
WHEREAS, the Company (a) is presently in the business of golf course
ownership and management and providing other golf-related services and (b)
intends to invest its available resources in one or more new business ventures
(such activities, present and future, being hereinafter referred to as the
"Business").
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, the Company and Employee agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. The Company hereby employs Employee, and Employee
hereby accepts such employment, as Chief Operating Officer and Chief Financial
Officer of the Company, all upon the terms and conditions set forth herein.
1.2 SERVICES. During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of Chief Operating
Officer and Chief Financial Officer of the Company under the direction of the
President of the Company (the "President"), the Board of Directors of the
Company (the "Board of Directors") or the Executive Committee of the Board of
Directors (the "Executive Committee"). Employee agrees to devote his best
efforts and substantially all of his full business time, energies and abilities
to the services to be performed hereunder and for the exclusive benefit of the
Company. Employee shall be vested with such authority as is generally
commensurate with the position of Chief Operating Officer and Chief Financial
Officer of the Company, as further outlined below.
1.3 LOCATION. The principal place of employment and the location of
Employee's principal office shall be in Tampa, Florida; provided, however,
Employee shall, when requested by the President, temporarily perform, outside of
Tampa, Florida, such services as are reasonably required for the proper
execution of his duties under this Agreement.
<PAGE> 2
1.4 REPRESENTATIONS. Each party represents and warrants to the other that
he/',it has full power and authority to enter into and perform this Agreement
and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents that
no consent or approval of any third party is required for his/its execution,
delivery and performance of this Agreement or that all consents or approvals of
any third party required for his/its execution, delivery and performance of this
Agreement have been obtained.
1.5 SOLE DISCRETION. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its chief operating officer and chief
financial officer.
ARTICLE II
TERM
2.1 TERM. The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") with respect to
Employee's duties as Chief Operating Officer and as of November _____, 1997 with
respect to Employee's duties as Chief Financial Officer and shall continue
through the third anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of this
Agreement.
2.2 RENEWAL. This Agreement shall be renewed for successive one year terms
unless either party hereto provides written notice of non-renewal at least
thirty (30) days prior to the Scheduled Termination Date of each such term.
Notwithstanding the foregoing, each renewal hereof shall constitute a separate
and distinct agreement. If notice of non-renewal is given by either party, all
terms of this Agreement shall remain in full force and effect until the earlier
of the following (i) a new employment agreement is entered into by the parties,
or (ii) employment is terminated under the terms and conditions in Article VII
hereof.
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary equal to One Hundred Seventy-five Thousand and 00/100 Dollars
($175,000.00), which base salary shall accrue monthly (prorated for periods less
than a month) and shall be paid in equal bimonthly installments, in arrears. The
base salary will be reviewed annually, or more frequently, as appropriate, by
the Board of Directors or the Compensation Committee of the Board of Directors,
as the case may be, in its sole discretion, provided that the annual base salary
shall not be decreased below One Hundred Seventy-five Thousand and 00/100
Dollars ($175,000.00).
2
<PAGE> 3
3.2 INCENTIVE COMPENSATION. The Company shall pay Employee, during the Term
of this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
<TABLE>
<CAPTION>
Fiscal Year
EBIT Bonus
----------- -----
<S> <C>
$0 - 1,000,000 Five Percent (5%) of Base Salary
$1,000,001 to $3,000,000 Fifteen Percent (15%) of Base Salary
$3,000,001 to $5,000,000 Thirty Percent (30%) of Base Salary
In excess of $5,000,001 Fifty Percent (50%) of Base Salary
</TABLE>
3.3 BENEFITS. Employee shall be entitled, during the Term hereof, to the
same medical, hospital, dental and life insurance coverage and benefits as are
available to the Company's most senior executive officers on the Commencement
Date.
3.4 WITHHOLDING. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III and
Article VII, are subject to withholding for such federal, state and local taxes
as the Company, in its reasonable judgment, determines to be required pursuant
to any applicable law, rule or regulation.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished with an
office at the principal executive offices of the Company, or at such other
location as agreed to by Employee and the Company, and other working facilities
and secretarial and other assistance suitable to his position and reasonably
required for the performance of his duties hereunder. The Company shall
reimburse Employee for all of Employee's reasonable expenses incurred while
employed and performing his duties under and in accordance with the terms and
conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner required pursuant to Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code"), and applicable
regulations as are in effect from time to time.
4.2 INSURANCE. The Company may secure in its own name or otherwise, and at
its own expense, life, disability and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
3
<PAGE> 4
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. If, during the Term of this Agreement, Employee
shall be unable to perform in all material respects his duties hereunder for a
period exceeding three (3) consecutive months by reason of illness or
incapacity, this Agreement may be terminated by the Company in its sole
discretion pursuant to Section 7.2 hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of thirty (30)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article I hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the three (3) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties and privileges attendant thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to his full
remuneration and benefits hereunder during such illness or incapacity unless and
until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article V.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this Article V,
the term "illness or incapacity" shall mean Employee's inability to perform his
duties hereunder substantially on a full-time basis due to physical or mental
illness as determined by the Board of Directors in accordance with the Company's
long-term disability insurance policy or, in the event Company does not have a
long-term disability insurance policy in effect, in accordance with the
following procedure: Employee and the Company each shall designate a physician
who shall jointly select a third physician and the three (3) physicians selected
would then determine whether or not any illness or incapacity is such as to
prevent Employee from performing his duties hereunder.
ARTICLE VI
CONFIDENTIALITY
6.1 CONFIDENTIALITY. During the Term of this Agreement and thereafter,
Employee agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Employee shall, upon the
termination of his employment, deliver to the Company any and all records,
books, documents or any other materials whatsoever (including all copies
thereof) containing such trade secrets, which shall be and remain the property
of the Company.
4
<PAGE> 5
6.2 NON-REMOVAL OF RECORDS. All documents, papers, materials, notes, books,
correspondence, drawings and other written and graphic records relating to the
Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company and,
effective immediately upon the termination of the Employee's employment with the
Company for any reason, shall not be removed from the Company's premises without
the Company's prior written consent.
ARTICLE VII
TERMINATION
7.1 TERMINATION FOR CAUSE. This Agreement and the employment of Employee
may be terminated by the Company "For Cause" in any of the following
circumstances:
(a) Employee has been judicially determined to have committed
any fraud, theft, misappropriation or similar act against
the Company or Employee has willfully abused the Company's
expense account policy; or
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties
hereunder, which shall include, without limitation,
Employee's willfully disregarding the lawful written
instructions of the President, the Chairman of the Executive
Committee or the Board of Directors concerning his
performance of his duties within the scope hereof,
Employee's conduct which is materially inconsistent with the
published policies of the Company, as promulgated from time
to time and which are generally applicable to all senior
executives, or Employee's breach of any other material
provision of this Agreement, provided, however, that
Employee shall be given written notice of such default and a
reasonable opportunity to cure such default; or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties hereunder; or
(d) Employee has been proven to have engaged in illegal
activities or other wrongful conduct which, individually, or
in the aggregate, have a material adverse effect on the
Company, its reputation, prospects, earnings or financial
condition.
A Termination For Cause under this Section 7.1 shall be effective upon the
date set forth in a written notice of termination delivered to Employee, but
shall not be earlier than the date such written notice is delivered to Employee.
7.2 TERMINATION WITHOUT CAUSE. This Agreement and the employment of the
Employee may be terminated "Without Cause" as follows:
5
<PAGE> 6
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company at any tune after December
31, 1997, by its giving not less than thirty (30) days
written notice to Employee; or
(c) At the election of the Company by its giving not less than
thirty (30) days written notice to Employee in the event of
an illness or incapacity described in Section 5.1; or
(d) At the election of the Employee by his giving not less than
thirty (30) days written notice to the Company; or
(e) Upon the Scheduled Termination Date or on the last day of
any renewal term in the event of non-renewal of this
Agreement; or
(f) Upon Employee's death.
A Termination Without Cause under Section 7.2(b), (c) or (d) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than thirty (30) days nor more than
forty-five (45) days after the giving of such notice. A Termination Without
Cause under Section 7.2(a), (e) or (f) hereof shall be automatically effective
upon the date of mutual agreement, or the Scheduled Termination Date or the last
day of any renewal term, or the date of death of the Employee, as the case may
be.
7.3 EFFECT OF TERMINATION FOR CAUSE. If Employee's employment is terminated
For Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of Section 4.1 hereof which shall be paid by
the Company within sixty (60) days of the date of
termination; and
(c) Except as provided in Article XI, this Agreement shall
thereupon be of no further force and effect.
7.4 EFFECT OF TERMINATION WITHOUT CAUSE. If Employee's employment is
terminated Without Cause except pursuant to Section 7.2(d) or (e) hereof:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
6
<PAGE> 7
(b) Employee shall be entitled to reimbursement for expenses
accrued through the Scheduled Termination Date in accordance
with the provisions of Section 4.1 hereof which shall be
paid by the Company within sixty (60) days of the date of
termination;
(c) Employee shall be entitled to severance pay in the amount of
Two Hundred Forty Thousand Dollars ($240,000) which shall be
paid by the Company within sixty (60) days of the date of
termination;
(d) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect.
Any amounts due from Company pursuant to Section 7.3 and 7.4 above and not
paid to Employee as and when due shall accrue interest at the prime rate of
interest as established from time to time by Chase Manhattan Bank.
ARTICLE VIII
NON-COMPETITION AND NON-INTERFERENCE
8.1 NON-COMPETITION. Employee agrees that during the Term hereof and, in
the case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (1) year thereafter, Employee will
not, directly, indirectly, or as an agent on behalf of or in conjunction with
any person, firm, partnership, corporation or other entity, own, manage,
control, join, or participate in the ownership, management, operation, or
control of, or be financially interested in or advise, lend money to, or be
employed by or provide consulting services to, or be connected in any manner
with any competitive business which is located within the United States of
America; provided, however, that Employee shall be permitted to own up to 5% of
the issued and outstanding shares of capital stock of any corporation which has
a class of equity securities registered under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
8.2 NON-INTERFERENCE. Employee agrees that during the Term hereof and, in
the case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (1) year thereafter, Employee will
not, directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity, induce or entice any
employee of the Company to leave such employment or cause anyone else to do so.
8.3 SEVERABILITY. If any covenant or provision contained in this Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitral or judicial proceeding, a tribunal shall refuse to enforce
all of the separate covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
7
<PAGE> 8
ARTICLE IX
REMEDIES
9.1 EQUITABLE REMEDIES. Employee and the Company agree that the services to
be rendered by Employee pursuant to this Agreement, and the rights and interests
granted and the obligations to be performed by Employee to the Company pursuant
to this Agreement, are of a special, unique, extraordinary and intellectual
character, which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in any action at law, and that a
breach by Employee of any of the terms of this Agreement will cause the Company
great and irreparable injury and damage. Employee hereby expressly agrees that
the Company shall be entitled to the remedies of injunction, specific
performance and other equitable relief to prevent a breach of Articles VI and
VIII of this Agreement, both pendente lite and permanently, against Employee, as
such breach would cause irreparable injury to the Company and a remedy at law
would be inadequate and insufficient. Therefore, the Company may, in addition to
pursuing its other remedies, obtain an injunction from any court having
jurisdiction in the matter restraining any further violation.
9.2 RIGHTS AND REMEDIES PRESERVED. Nothing in this Agreement shall limit
any right or remedy the Company or Employee may have under this Agreement or
pursuant to law for any breach of this Agreement by the other party. The rights
granted to the parties herein are cumulative and the election of one shall not
constitute a waiver of such party's right to assert all other legal remedies
available under the circumstances.
ARTICLE X
MISCELLANEOUS
10.1 NO WAIVERS. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 NOTICES. Any notice to be given to the Company and Employee under the
terms of this Agreement may be delivered personally, by telecopy, telex or other
form of written electronic transmission, or by registered or certified mail,
postage prepaid, and shall be addressed as follows:
IF TO THE COMPANY: Brassie Golf Corporation
One Tampa City Center, Suite 2550
201 North Franklin Street
Tampa, Florida 33602
Attention: President
WITH A COPY TO: Fred S. Ridley, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
201 North Franklin Street, Suite 2100
Tampa, Florida 33602
8
<PAGE> 9
IF TO EMPLOYEE: Clifford F. Bagnall
14032 Ellesmere Drive
Tampa, Florida 33624
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (i) when personally delivered, (ii) when
telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 SEVERABILITY. The provisions of this Agreement are severable and if
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida without reference to
the conflict of law principles thereof.
10.7 SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 ATTORNEYS FEES. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys fees and costs incurred.
10.9 FURTHER ASSURANCES. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
9
<PAGE> 10
10.10 GENDER. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
10.11 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
ARTICLE 1
SURVIVAL
10.12 SURVIVAL. The provisions of Articles VI, VII, VIII, IX and X, of this
Agreement shall survive the termination of this Agreement whether upon, or prior
to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
BRASSIE GOLF CORPORATION,
a Delaware corporation
By:
-------------------------------------
President
EMPLOYEE
----------------------------------------
Clifford F. Bagnall
10
<PAGE> 1
EXHIBIT 10.63
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into
effective as of October , 1997 by and among (i) BRASSIE GOLF CORPORATION, a
Delaware corporation ("Brassie"); (ii) DIVOT SPA WGV, Inc., a Florida
corporation (the "Seller"); and (iii) ROBERT N. GEWANT ("Gewant") an individual
residing in the State of Florida and who is the sole shareholder of the Seller
(the "Shareholder").
RECITALS
A. Brassie desires to purchase and Seller desires to sell substantially all
of the assets, businesses, properties and rights of Seller's business
("Business").
B. Brassie has determined that it is in the best interests of its
respective shareholders for Brassie to acquire substantially all of the assets
and property of the Seller as provided herein in order to effectuate the
acquisition of the businesses of the Seller. Simultaneously with such
acquisition, the Seller will then be issued shares of common stock of Brassie as
provided herein, in consideration for the assets and property to be acquired.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
ACQUISITION; RELATED TRANSACTIONS; CLOSING
1.1 THE CLOSING. Subject to the terms and conditions of this Agreement, the
consummation of the Acquisition (as defined below) and the other transactions
contemplated hereby shall take place as promptly as practicable (and in any
event prior to December 31, 1997 as set forth in Article XI hereof), at the
offices of Brassie in Tampa, Florida, or such other place and time as the
parties may otherwise agree (the "Closing"), and the date of Closing is referred
to herein as the "Closing Date."
1.2 ACQUISITION. At Closing on the Closing Date, and upon all of the terms
and subject to all of the conditions of this Agreement, Seller shall sell,
assign, convey, transfer and deliver to Brassie, and Brassie shall purchase for
the consideration set forth in Section 1.3 below, all of the respective Seller's
right, title and interest, legal and equitable, in and to the assets and
properties listed on Schedule 1.2 hereof ("Assets"), free and clear of any and
all claims, liens or encumbrances, except as otherwise provided in this
Agreement (the "Acquisition").
<PAGE> 2
Notwithstanding any provision of this Agreement to the contrary, Seller shall
not transfer, convey, or assign to Brassie, but shall retain, all of its right,
title and interest in and to the retained assets listed on Schedule 1.2(b)
hereof.
1.3 PURCHASE PRICE. For purposes of this Agreement, "Consideration" means
3,000,000 shares of common stock, par value $.001 per share, of Brassie (the
"Brassie Common Stock") and cash in the amount of Seventy-five Thousand Dollars
($75,000).
1.4 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that the
following shall occur:
(a) The Seller and the Shareholder shall have satisfied each of the
conditions set forth in Article VI and shall deliver to Brassie the documents,
certificates, opinions, consents and letters required by Article VI.
(b) The Brassie Companies shall have satisfied each of the conditions
set forth in Article VII and shall deliver the documents, certificates, consents
and letters required by Article VII.
(c) Brassie shall issue and deliver stock certificates representing the
shares of Brassie Common Stock issuable pursuant to Section 1.3 registered in
the name of the Seller. The shares of Brassie Common Stock issuable pursuant to
Section 1.3 are referred to herein as the Brassie Shares.
(d) Brassie shall deliver to Seller cash in the amount of Seventy-Five
Thousand Dollars ($75,000).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BRASSIE
As a material inducement to the Seller and the Shareholder to enter into
this Agreement and to consummate the transactions contemplated hereby, Brassie
makes the following representations and warranties to the Seller and the
Shareholder:
2.1 CORPORATE STATUS. Brassie is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
authorized to do business in the State of Delaware, is qualified to do business
as a foreign corporation in all jurisdictions where it presently carries on
business, and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted. There is no
pending or, to the knowledge of Brassie, threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of Brassie.
2
<PAGE> 3
2.2 CORPORATE POWER AND AUTHORITY. Brassie has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Brassie has
taken all corporate action necessary to authorize its execution and delivery of
this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
Brassie and constitutes its legal, valid and binding obligation enforceable
against Brassie in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 BRASSIE COMMON STOCK. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the Brassie Shares as provided in this Agreement, the Brassie Shares will be
validly issued, fully paid, non-assessable shares, but unregistered and
restricted under the Securities Act, and listed on the National Association of
Securities Dealers Automated Quotations ("Nasdaq") and tradeable only in
accordance with Rule 144 as promulgated under the Securities Act.
2.5 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Brassie consists of 50,000,000 shares of Brassie Common Stock and 1,000,000
shares of Brassie Preferred Stock, and 39,632,503 shares of Brassie Common Stock
are validly issued and outstanding and no shares of Brassie Preferred Stock are
issued or outstanding.
2.6 NO VIOLATION. The execution and delivery of this Agreement by Brassie,
the performance by Brassie of its respective obligations hereunder and the
consummation by Brassie of the transactions contemplated by this Agreement will
not (a) contravene any provision of the Certificates or Articles of
Incorporation or Bylaws of Brassie, (b) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment, ruling
or order of any Governmental Authority or of any arbitration award which is
either applicable to, binding upon, or enforceable against Brassie, (c) conflict
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Brassie, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of Brassie, (e) give to
any individual or entity a right or claim against Brassie, which would have a
Material Adverse Effect on Brassie, or (f), except as specifically set forth on
Schedule 2.6, require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, including, without limitation, (i) pursuant to the
Exchange Act and the Securities Act and applicable inclusion requirements of
Nasdaq, (ii) filings required under the securities or blue sky laws of the
various states, (iii) any filings or consents required to be made or obtained by
Brassie or (iv) any governmental permits or licenses required to operate the
businesses of the Seller.
3
<PAGE> 4
2.7 REPORTS AND FINANCIAL STATEMENTS. From January 1, 1997 to the date
hereof and at all other material times, except where failure to have done so did
not and would not have a Material Adverse Effect on Brassie, Brassie has filed
all reports, registrations and statements, together with any required amendments
thereto, that it was required to file with the SEC, including, but not limited
to Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements (collectively, the
"Brassie Reports"). As of their respective dates (but taking into account any
amendments filed prior to the date of this Agreement), the Brassie Reports
complied in all material respects with all the rules and regulations promulgated
by the SEC and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Brassie included in the Brassie
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP consistently applied during
the periods presented (except, as noted therein, or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal audit adjustments)
the financial position of Brassie and its consolidated subsidiaries as of the
date thereof and the results of their operations and their cash flows for the
periods then ended.
2.8 NO COMMISSIONS. Brassie has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
2.9 ACCURACY OF INFORMATION FURNISHED. No representation, statement or
information contained in this Agreement (including, without limitation, the
various Schedules attached hereto) or any agreement executed in connection
herewith or in any certificate delivered pursuant hereto or thereto or made or
furnished to the Seller or the Shareholder or their representatives by Brassie,
contains or shall contain any untrue statement of a material fact or omits or
shall omit any material fact necessary to make the information contained therein
not misleading. Brassie has provided the Seller or the Shareholder with true,
accurate and complete copies of all documents listed or described in the various
Schedules attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER AND THE SHAREHOLDER
As a material inducement to the Brassie Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, the Seller,
and the Shareholder, jointly and severally make the following representations
and warranties to the Brassie Companies:
3.1 CORPORATE STATUS. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has the
requisite power and
4
<PAGE> 5
authority to own or lease its properties and to carry on its business as now
being conducted. The Seller is not required to qualify to do business as a
foreign corporation in any jurisdiction. The Seller has fully complied with all
of the requirements of any statute governing the use and registration of
fictitious names, and has the legal right to use the names under which it
operates its businesses. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of the Seller.
3.2 POWER AND AUTHORITY. The Seller has the corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. The Seller has taken all
corporate action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder, and the consummation of
the transactions contemplated hereby. The Shareholder is an individual residing
in the State of Florida with the requisite competence and authority to execute
and deliver this Agreement, to perform his respective obligations hereunder and
to consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Seller and by the Shareholder, and constitutes the legal, valid and binding
obligation of each of them, enforceable against each of them in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 NO VIOLATION. Except for any approvals or consents required with
respect to those Material Contracts (as defined in Section 3.21) expressly
identified on Schedule 3.21 as requiring the consents of third parties, the
execution and delivery of this Agreement by the Seller and the Shareholder, the
performance by the Seller and the Shareholder of their obligations hereunder and
the consummation by them of the transactions contemplated by this Agreement will
not (a) contravene any provision of the Articles of Incorporation or Bylaws or
other organizational or governing document of the Seller, (b) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against the Seller or the Shareholder, (c) conflict with, result in any breach
of, or constitute a default (or an event which would, with the passage of time
or the giving of notice or both, constitute a default) under, or give rise to a
right of payment under or the right to terminate, amend, modify, abandon or
accelerate, any Material Contract which is applicable to, binding upon or
enforceable against the Seller or the Shareholder, (d) result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
or assets of the Seller or the Shareholder, (e) give to any individual or entity
a right or claim against the Seller or the Shareholder or (f) require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other Person,
except any applicable SEC and other filings required to be made by Brassie.
5
<PAGE> 6
3.5 RECORDS OF THE SELLER. The copies of the Articles of Incorporation,
Bylaws and other documents and agreements of the Seller which were provided to
Brassie are true, accurate, and complete and reflect all amendments made through
the date of this Agreement. The minute books and other records of corporate
actions for the Seller made available to Brassie for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, such minute books and records contain the
true signatures of the persons purporting to have signed them, and such minute
books and records contain an accurate record of all corporate actions of the
Shareholder and directors (and any committees thereof) of the Seller taken by
written consent or at a meeting or otherwise since incorporation or formation.
All corporate actions by the Seller have been duly authorized or ratified. All
accounts, books, ledgers and official and other records of the Seller are
accurate and complete, and there are no inaccuracies or discrepancies of any
kind contained therein. The stock ledger of the Seller, as previously made
available to Brassie, contains accurate and complete records of all issuances,
transfers and cancellations of shares of the capital stock of the Seller.
3.6 FINANCIAL STATEMENTS. The Seller has delivered to Brassie Seller's pro
forma balance sheet dated as of November 30, 1997, referred to herein as the
"Current Balance Sheet". The Current Balance Sheet fairly presents the financial
position of the Seller at such balance sheet date. The books and records of the
Seller fully and fairly reflect all of its transactions, properties, assets and
liabilities and the Current Balance Sheet does not reflect any write-up or
revaluation increasing the book value of any assets.
3.7 NO CHANGES. Except as set forth on Schedule 3.7, since November 30,
1997, there has not been any:
(a) transaction by any Seller except in the ordinary course of business
conducted as of that date;
(b) material adverse change in the financial condition, liabilities,
assets or results of operation of the business of Seller;
(c) indebtedness or liability, whether accrued, absolute, contingent or
otherwise incurred by Seller;
(d) default under any indebtedness of Seller, or any event which with
the lapse of time or the giving of notice, or both, would constitute such a
default;
(e) amendment or termination of any Contract, lease or license to which
Seller is a party;
(f) material increase in compensation paid, payable or to become
payable by Seller to any of its employees;
6
<PAGE> 7
(g) extraordinary losses (whether or not covered by insurance) or
waiver by Seller of any extraordinary rights of value;
(h) commitment to or liability to any labor organization;
(i) lowering of the prices charged by Seller for goods or services in a
manner not consistent with past practices;
(j) notice from any customer as to the customer's intention not to
conduct business with Seller, the result of which loss or losses of business,
individually or in the aggregate, has had, or could reasonably be expected to
have, a material adverse effect on the business; or
(k) other event or condition of any character, that has or might
reasonably have an adverse effect on Seller's or the business' Assets, financial
condition, or business.
3.8 LIABILITIES. The Seller has no liabilities or obligations, whether
accrued, absolute, contingent or otherwise, except (a) to the extent reflected
on the Seller's Current Balance Sheet and not paid or discharged, (b)
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Seller's Current Balance Sheet (none of which
relates to any breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), and (c) liabilities incurred in the
ordinary course of business prior to the date of the Seller's Current Balance
Sheet which, in accordance with GAAP consistently applied, were not required to
be recorded thereon and which, in the aggregate, are not material (the
liabilities and obligations referenced in (a), (b) and (c) above are referred to
as the "Designated Liabilities"). Schedule 3.8 lists, for the Seller, (i) all
indebtedness of the Seller for borrowed money and for capitalized equipment
leases, and (ii) the account numbers and names of each bank, broker or other
depository institution and the names of all persons authorized to withdraw funds
from each such account.
3.9 LITIGATION. Except as provided on Schedule 3.9, there is no action,
suit or other legal or administrative proceeding or governmental investigation
pending, or, to the knowledge of the Seller and the Shareholder, threatened,
anticipated or contemplated (i) against, by or affecting the Seller or the
Shareholder (relating to the transactions herein or to the Seller), or the
Seller's properties or assets, except for routine customer claims and complaints
arising in the ordinary course consistent with past practice which involve
amounts less than $10,000 individually or $75,000 in the aggregate, or (ii)
which question the validity or enforceability of this Agreement or the
transactions contemplated hereby, and there is no basis for any of the
foregoing. There are no outstanding orders, decrees or stipulations issued by
any Governmental Authority in any proceeding to which the Seller is or was a
party which have not been complied with in full or which continue to impose any
material obligations on the Seller.
7
<PAGE> 8
3.10 ENVIRONMENTAL MATTERS.
(a) To the best of its knowledge, the Seller is and has at all times
been in full compliance with all Environmental Laws governing its business,
operations, properties and assets, including, without limitation: (i) all
requirements relating to the Discharge and Handling of Hazardous Substances;
(ii) all requirements relating to notice, record keeping and reporting; (iii)
all requirements relating to obtaining and maintaining Licenses (as defined
herein) for the ownership by the Seller of its properties and assets and the
operation of its business as presently conducted (as defined in Section 3.11);
and (iv) all applicable writs, orders, judgments, injunctions, governmental
communications, decrees, informational requests or demands issued pursuant to,
or arising under, any Environmental Laws.
(b) There are no (and there is no basis for any) non-compliance orders,
warning letters, notices of violation (collectively "Notices"), claims, suits,
actions, judgments, penalties, fines, or administrative or judicial
investigations of any nature or proceedings (collectively "Proceedings") pending
or threatened against or involving the Seller, its businesses, operations,
properties or assets issued by any Governmental Authority or third party with
respect to any Environmental Laws or Licenses issued to the Seller thereunder in
connection with, related to or arising out of the ownership by the Seller of its
properties or assets or the operation of its businesses, which have not been
resolved to the satisfaction of the issuing Governmental Authority or third
party in a manner that would not impose any obligation, burden or continuing
liability on Brassie in the event that the transactions contemplated by this
Agreement are consummated.
(c) To the best of its knowledge, the Seller has not at any time
Discharged, nor has it at any time allowed or arranged for any third party to
Discharge, Hazardous Substances to, at or upon: (i) any location other than a
site lawfully permitted to receive such Hazardous Substances; (ii) any parcel of
real property owned or leased at any time by the Seller (including, without
limitation, the Company Owned Properties (as defined in Section 3.11), except in
compliance with applicable Environmental Laws; or (iii) any site which, pursuant
to CERCLA or any similar state law has been placed on the National Priorities
List or its state equivalent, or the Environmental Protection Agency or any
relevant state agency has notified the Seller that it has proposed or is
proposing to place on the National Priorities List or its state equivalent. To
the best of the Seller's knowledge, there has not occurred, nor is there
presently occurring, a Discharge, or threatened Discharge of any Hazardous
Substance on, into or directly beneath the surface of any real property owned or
leased at any time by the Seller.
(d) Schedule 3.10(b) identifies, for the prior five (5) years, (i) all
environmental audits, assessments or occupational health studies undertaken by
any Governmental Authority, the Seller or the Shareholder or their agents or
representatives, or any third party, relating to or affecting the Seller or the
Company Owned Properties; (ii) all ground, water, soil, air or asbestos
monitoring undertaken by the Seller, the Shareholder or their agents or
representatives thereof or undertaken by any Governmental Authority or any third
party, relating to or affecting the Company Owned Properties or any real
property owned or leased at any time by the Seller; (iii)
8
<PAGE> 9
all material written communications between the Seller and any governmental
authority arising under or relative to Environmental Laws including, but not
limited to, all Notices issued to the Seller or the Shareholder and pertaining
to the Company Owned Properties; and (iv) all outstanding citations issued under
OSHA, or similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings or decrees, relating to or affecting the Seller or
any real property owned or leased at any time by the Seller.
(e) For purposes of this Section, the following terms shall have the
meanings ascribed to them below:
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms may
further be defined in any Environmental Law, into or through any medium
including, without limitation, ground water, surface water, land, soil or
air in violation of law.
"Environmental Laws" means all federal state, regional or local
statutes, laws rules, regulations, codes, ordinances, orders, plans,
injunctions, decrees, rulings, licenses, and changes thereto, or judicial
or administrative interpretations thereof, or similar laws, but only to the
extent currently in existence, any of which govern, purport to govern, or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, waste disposal, hazardous or toxic
substances, solid or hazardous waste, occupational, health and safety, as
any of these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, ordinances, plans, injunctions, decrees,
rulings, licenses, and changes thereto, or judicial or administrative
interpretations thereof, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.
9601, et. seq., (herein, collectively, "CERCLA"); the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss. 6901
et. seq., (herein, collectively, "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. ss. 1801, et. seq., (the
"Hazardous Materials Transportation Act"); the Clean Water Act, as amended,
33 U.S.C. ss. 1311, et. seq., (the "Clean Water Act"); the Clean Air Act,
as amended, 42 U.S.C. ss. 7401-7642, (the "Clean Air Act"); the Toxic
Substances Control Act, as amended, 15 U.S.C. ss. 2601 et. seq., (the
"Toxic Substances Control Act"); the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. ss. 136-136y ("FIFRA"); the Emergency
Planning and Community Right-to-Know Act of 1986 as amended 42 U.S.C. ss.
11001, et. seq., (Title III of SARA) ("EPCRA"); and the Occupational Safety
and Health Act of 1970, as amended, 29 U.S.C. ss. 651, et. seq., ("OSHA").
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in any
Environmental Law.
9
<PAGE> 10
"Hazardous Substances" shall be construed broadly to include any toxic
or hazardous substance, material or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals, compounds,
by-products, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of which
requires investigation or remediation under any Environmental Laws or which
are or become regulated, listed or controlled by, under or pursuant to any
Environmental Laws, or which has been or shall be determined or interpreted
at any time by any Governmental Authority to be a hazardous or toxic
substance regulated under any other statute, law, regulation, order, code,
rule, order, or decree.
"Licenses" means, for purposes of this Section 3.10 only, all licenses,
certificates, permits, approvals, decrees and registrations required under
the Environmental Laws.
3.11 REAL ESTATE. Schedule 3.11(a) (i) contains the legal description of,
any real property or any leasehold or other interest therein (including without
limitation any option or other right or obligation to purchase any real property
or any interest therein) owned by the Seller as of the date hereof (the "Company
Owned Properties"); and (ii) lists all real property (or any interest therein)
owned by the Seller within the past five years that is not owned by the Seller
as of the date of this Agreement. With respect to each such parcel of Company
Owned Properties: (i) the Seller or Brassie or their assignee has or will have
at Closing good and marketable title, free and clear of any covenants,
conditions, easements and exceptions other than the permitted exceptions and of
any Lien other than liens for real estate taxes not yet due and payable, (ii)
there are no pending or, to the knowledge of the Shareholder or the Seller,
threatened condemnation proceeding, suits or administrative actions relating to
the Company Owned Properties or other matters affecting adversely the current
use, occupancy or value thereof; (iii) the legal descriptions for the Company
Owned Properties contained in the deeds thereof describe such parcels fully and
adequately; (iv) the buildings and improvements, if any, are located within the
boundary lines of the described parcels of land and are not in violation of
applicable setback requirements, local comprehensive plan provisions, zoning
laws and ordinances (and none of the properties or buildings or improvements
thereon are subject to "permitted nonconforming use" or "permitted
non-conforming structure" classifications), applicable building code
requirements, permits, licenses or other forms of approval, regulation or
restrictions by any Governmental Authority, and do not encroach on any easement
which may burden the land; the land does not serve any adjoining property for
any purpose inconsistent with the use of the land; and the Company Owned
Properties are not located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use thereof have
not been obtained; (v) all facilities, if any, have received all approvals of
Governmental Authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, ordinances, rules and regulations; (vi) there
are no Contracts granting to any party or parties the right of use or occupancy
of any portion of the Company Owned Properties, and there are no parties (other
than the Seller) in possession of any of the Company Owned Properties; (vii)
there are no outstanding options or rights of first refusal or similar rights to
purchase any of the Company Owned
10
<PAGE> 11
Properties or any portion thereof or interest therein; (viii) all facilities, if
any, located on the Company Owned Properties are supplied with utilities and
other services necessary for their operation, all of which services are adequate
in accordance with all applicable laws, ordinances, rules and regulations, and
are provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting the Company Owned Properties; (ix) the Owned Properties
abut on and have adequate direct vehicular access to a public road and there is
no pending or, to the knowledge of the Shareholder or the Seller, threatened
termination of such access; and (x) all improvements, buildings and systems on
the Owned Properties are suitable for their current use.
3.12 BUSINESS; GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY.
(a) Upon the consummation of the transactions contemplated hereby,
Brassie will have acquired and own all of the Seller's Assets and operations of
its Business, and any related rights and interests thereto. The Seller has good
and marketable title to all of its Assets free and clear of any Liens, except as
provided on Schedule 3.12(a).
(b) The Fixed Assets currently in use or necessary for the business
and operations of the Seller are in good operating condition, normal wear and
tear excepted, and have been maintained in accordance with all applicable
manufacturer's specifications and warranties. For purposes of this Agreement,
the term "Fixed Assets" means all vehicles, machinery, equipment, tools,
supplies, leasehold improvements, furniture and fixtures, owned, used by or
located on the premises of the Seller as set forth on Schedule 1.2(a) hereof.
3.13 COMPLIANCE WITH LAWS. The Seller and the Shareholder and their
Affiliates have been in compliance with all laws, regulations and orders
applicable to them, their business and operations (as conducted by them now and
in the past), the Assets, the Company Owned Properties, and any other properties
and assets (in each case owned or used by them now or in the past). The Seller
has not been cited, fined or otherwise notified of any asserted past or present
failure to comply with any laws, regulations or orders and no proceeding with
respect to any such violation is pending or threatened. The Seller is not
subject to any Contract, decree or injunction to which it is a party which
restricts the continued operation of any business or the expansion thereof to
other geographical areas, customers and suppliers or lines of business. Neither
the Seller, nor any of its employees or agents, has made any payment of funds in
connection with its business which is prohibited by law, and no funds have been
set aside to be used in connection with its business for any payment prohibited
by law. The Seller is and at all times has been in full compliance with the
terms and provisions of the Immigration Reform and Control Act of 1986, as
amended (the "Immigration Act"). With respect to each Employee (as defined in 8
C.F.R. 274a.1(f)) of the Seller for whom compliance with the Immigration Act is
required, the Seller has on file a true, accurate and complete copy of (i) each
Employee's Form I-9 (Employment Eligibility Verification Form) and (ii) all
other records, documents or other papers prepared, procured and/or retained
pursuant to the Immigration Act. The Seller has not been cited, fined, served
with a Notice of Intent to Fine or with a Cease and Desist Order, nor has any
action or administrative proceeding been initiated or threatened against the
Seller, by the
11
<PAGE> 12
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
3.14 LABOR AND EMPLOYMENT MATTERS. The Seller is not a party to or bound by
any collective bargaining agreement or any other agreement with a labor union,
and, to the knowledge of the Seller and the Shareholder, there has been no labor
union prior to the date hereof organizing any employees of the Seller into one
or more collective bargaining units. There has been no strike, walkout or work
stoppage involving any of the employees of the Seller prior to the date hereof.
3.15 EMPLOYEE BENEFIT PLANS
(a) EMPLOYEE BENEFIT PLANS. The Seller has not adopted, approved, or
administered, ay anytime, any employee benefit plan or any arrangement,
including but not limited to any employee pension benefit plans, as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), multi-employer plans, as defined in ss. 3(37) of ERISA, employee
welfare benefit plans, as defined in ss. 3(1) of ERISA, deferred compensation
plans, stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in ss. 3(3) of ERISA, in which employees,
their spouses or dependents, of the Seller participate ("Employee Benefit
Plans").
(b) MULTI-EMPLOYER PLANS. The Seller is not, nor has it been,
obligated with respect to any multi-employer plan as described in ss. 4001(a)(3)
of ERISA ("MPPA Plan").
(c) WELFARE PLANS. (i) The Seller is not obligated under any employee
welfare benefit plan as described in ss. 3(1) of ERISA ("Welfare Plan") to
provide medical or death benefits with respect to any employee or former
employee of the Seller or its predecessors after termination of employment; (ii)
the Seller has complied with the notice and continuation coverage requirements
of ss. 4980B of the Code and the regulations thereunder with respect to each
Welfare Plan that is, or was during any taxable year for which the statute of
limitations on the assessment of federal income taxes remains open, by consent
or otherwise, a group health plan within the meaning of ss. 5000(b)(l) of the
Code; and (iii) there are no reserves, assets, surplus or prepaid premiums under
any Welfare Plan which is an Employee Benefit Plan. The consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation due to any individual.
(d) CONTROLLED GROUP LIABILITY. Neither the Seller, nor any entity
that would be aggregated with the Seller under Code ss. 414(b), (c), (m) or (o);
(i) has ever terminated or withdrawn from an employee benefit plan under
circumstances resulting (or expected to result) in liability to the Pension
Benefit Guaranty Corporation ("PBGC"), the fund by which the employee benefit
plan is funded, or any employee or beneficiary for whose benefit the plan is or
was maintained (other than routine claims for benefits); (ii) has any assets
subject to (or
12
<PAGE> 13
expected to be subject to) a lien for unpaid contributions to any employee
benefit plan; (iii) has failed to pay premiums to the PBGC when due; (iv) is
subject to (or expected to be subject) an excise tax under Code ss. 4971; (v)
has engaged in any transaction which would give rise to liability under ss. 4069
or ss. 4212(c) of ERISA; or (vi) has violated Code ss. 4980B or ss. 601 through
608 of ERISA.
3.16 TAX MATTERS. All Tax Returns required to be filed prior to the date
hereof with respect to the Seller or any of its income, properties or operations
have been timely filed, each such Tax Return has been prepared in compliance
with all applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects. All Taxes due and payable by or with respect to the
Seller have been paid or are accrued on the applicable Current Balance Sheet or
will be accrued on the Seller's books and records as of the Closing.
3.17 INSURANCE. Schedule 3.17 lists all valid, outstanding enforceable
policies of insurance issued to the Seller by reputable insurers covering its
properties, assets and business insuring against such risks and in such coverage
amounts (the "Insurance Policies"). The Insurance Policies are in full force and
effect, and all premiums due thereon have been paid through the date of this
Agreement and will be paid through the Closing. The Seller has complied with the
provisions of such Insurance Policies applicable to it, and has provided Brassie
copies of all Insurance Policies and all amendments and riders thereto. There
are no pending claims under any of the Insurance Policies for an amount in
excess of $25,000 individually or $100,000 in the aggregate, including any claim
for loss or damage to the properties, assets or business of the Seller. The
Seller has not failed to give, in a timely manner, any notice required under any
of the Insurance Policies to preserve its rights thereunder.
3.18 LICENSES AND PERMITS. The Seller possesses all licenses, approvals,
permits or authorizations from Governmental Authorities (collectively, the
"Permits") for its business and operations, including with respect to the
operations of each of the Company Owned Properties. Schedule 3.18 sets forth a
true, complete and accurate list of all such Permits or applications for such
Permits, itemized for the Seller. All such Permits are valid and in full force
and effect, the Seller is in compliance with the respective requirements
thereof, and no proceeding is pending or threatened to revoke or amend any of
them. None of such Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.19 ADEQUACY OF THE ASSETS; AFFILIATED TRANSACTIONS. The Assets, Owned
Properties, Leased Premises and other equipment leased by the Seller constitute,
in the aggregate, all of the assets and properties necessary for the conduct of
the business of the Seller in the manner in which and to the extent to which
such business is currently being conducted. Except as provided in Schedule 3.19,
no officer, director or shareholder of the Seller, nor any person related by
blood or marriage to any such person, nor any entity in which any such person
owns any beneficial interest, is a party to any Contract or transaction with the
Seller or has any interest in any property used by the Seller.
13
<PAGE> 14
3.20 INTELLECTUAL PROPERTY. The Seller has full legal right, title and
interest in and to all trademarks, service marks, trade names, copyrights,
know-how, patents, trade secrets, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the conduct
of its business as specifically listed on Schedule 3.20 hereof (the
"Intellectual Property"). The conduct of the business of the Seller as presently
conducted, and the unrestricted conduct and the unrestricted use and
exploitation of the Intellectual Property, does not infringe or misappropriate
any rights held or asserted by any Person and, to the knowledge of the Seller
and the Shareholder, no Person is infringing on any Intellectual Property. No
payments are required for the continued use of the Intellectual Property. None
of the Intellectual Property has ever been declared invalid or unenforceable, or
is the subject of any pending or threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
3.21 CONTRACTS. Schedule 3.21 sets forth a list of each Material Contract
(as defined below), true, correct and complete copies of which have been
provided to Brassie, Schedule 3.21 identifies certain Material Contracts that
require the Consents of third parties to the transactions contemplated hereby.
The Seller has not violated any of the material terms or conditions of any
Material Contract or any term or condition which would permit termination or
material modification of any Material Contract, all of the covenants to be
performed by any other party thereto have been fully performed, and there are no
claims for breach or indemnification or notice of default or termination under
any Material Contract. To the knowledge of the Seller and the Shareholder, no
event has occurred which constitutes, or after notice or the passage of time, or
both, would constitute, a default by the Seller under any Material Contract, and
no such event has occurred which constitutes or would constitute a default by
any other party. As used in this Section 3.21 "Material Contracts" shall mean
formal or informal, written or oral, (a) loan agreements, indentures, mortgages,
pledges, hypothecations, deeds of trust, conditional sale or title retention
agreements, security agreements, equipment financing obligations or guaranties,
or other sources of contingent liability in respect of any indebtedness or
obligations to any other Person, or letters of intent or commitment letters with
respect to same (other than those which individually provide for annual payments
of less than $25,000); (b) contracts obligating the Seller to provide or obtain
products or services for a period of one year or more, (c) leases of real
property; (d) leases of personal property (other than those which individually
provide for annual payments of less than $25,000); (e) distribution, sales
agency or franchise or similar agreements, or agreements providing for an
independent contractor's services, or letters of intent with respect to same
(other than those which individually provide for annual payments of less than
$25,000); (f) employment agreements, management service agreements, consulting
agreements, confidentiality agreements, non-competition agreements, employee
handbooks, policy statements and any other agreements relating to any employee,
officer or director of the Seller; (g) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (h) contracts relating to pending capital expenditures by the Seller;
(i) contracts obligating the Seller to purchase vehicles, parts, accessories,
supplies, equipment, oil, advertising, media and media related services of any
kind (other than those which individually provide for annual payments of less
than $25,000); (j) non-competition agreements restricting the Seller in any
14
<PAGE> 15
manner, (k) any contracts obligating the Seller to make payments in excess of
$50,000, in the aggregate, over the remaining term of such contract; and (1) all
other Contracts or understandings which are material to the Seller or its
business, assets or properties, irrespective of subject matter and whether or
not in writing, and not otherwise disclosed on the Schedules.
3.22 ACCURACY OF INFORMATION FURNISHED. No representation, statement or
information contained in this Agreement (including, without limitation, the
various Schedules attached hereto) or any agreement executed in connection
herewith or in any certificate delivered pursuant hereto or thereto or made or
furnished to Brassie or its representatives by the Seller or the Shareholder,
contains or shall contain any untrue statement of a material fact or omits or
shall omit any material fact necessary to make the information contained therein
not misleading. The Seller has provided Brassie with true, accurate and complete
copies of all documents listed or described in the various Schedules attached
hereto.
3.23 SECURITIES LAW MATTERS. Seller represents and warrants that the
Securities to be acquired by it upon consummation of the transactions described
in Article 1 will be acquired by it for its own account, not as a nominee or
agent, and without a view to resale or other distribution within the meaning of
the Securities Act and the rules and regulations thereunder, except as
contemplated in Section 9.1 hereof; (ii) Shareholder represents and warrants
that the Securities to be acquired by him from Seller upon dissolution of Seller
or upon any other distribution by Seller will be acquired by him for his own
account, not as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules and
regulations thereunder; and (iii) neither Seller or Shareholder will distribute
any of the Securities in violation of the Securities Act. The Shareholder has
had the opportunity to discuss the transactions contemplated hereby with Brassie
and has had the opportunity to obtain such information pertaining to Brassie as
has been requested, including but not limited to filings made by Brassie with
the SEC under the Exchange Act. The Shareholder represents that he has such
knowledge and experience in business or financial matters that he is capable of
evaluating the merits and risks of an investment in the Brassie Shares.
3.24 NO COMMISSIONS. Neither the Seller nor the Shareholder has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 CONDUCT OF BUSINESS BY THE SELLER PENDING THE CLOSING. The Seller and
the Shareholder, jointly and severally, covenant and agree that, except as
otherwise expressly required or permitted by the terms of this Agreement,
between the date of this Agreement and the Closing, the business of the Seller
shall be conducted only in, and the Seller shall not take any action except in,
the ordinary course of business consistent with past practice. The Seller and
the
15
<PAGE> 16
Shareholder shall use its or his reasonable best efforts to preserve intact the
Seller's business organizations, to keep available the services of their current
officers, employees and consultants, and to preserve their present relationships
with Persons with which they have business relations. By way of amplification
and not limitation, the Seller shall not, except as expressly required or
permitted by the terms of this Agreement, between the date of this Agreement and
the Closing, directly or indirectly, do or propose or agree to do any of the
following (except to the extent such is contemplated to be done herein) without
the prior written consent of Brassie:
(a) amend or otherwise change its Articles of Incorporation, Bylaws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its assets,
tangible or intangible, except in the ordinary course of business consistent
with past practice; or any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of such capital stock, or any other ownership interest, of it;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or other securities, except for distributions to the
Shareholder;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities; or acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or division
thereof or any assets;
(e) except in the ordinary course of business consistent with past
practice, (i) sell, lease or transfer any of its properties or assets, (ii) make
any investment either by purchase of stock or securities, contributions of
capital or property transfer, or purchase any property or assets of any other
Person; (iii) make or obligate itself to make capital expenditures; (iv) incur
any obligations or liabilities including, without limitation, any indebtedness
for borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances; (v) modify, terminate, amend or enter
into any Contract other than as expressly required or permitted herein; or (vi)
impose any security interest or other Lien on any of its Assets;
(f) other than in the ordinary course of business consistent with past
practice, pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation,
16
<PAGE> 17
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any directors, officers or employees;
(g) take any action with respect to accounting policies or procedures
other than in the ordinary course of business consistent with past practice;
(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business consistent with past practice, or delay paying any amount
payable beyond forty-five (45) days following the date on which it is due,
except to the extent being contested in good faith;
(i) enter into any transaction with the Shareholder or an Affiliate
thereof;
(j) make or pledge any charitable contributions in excess of $5,000 in
the aggregate; or
(k) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or warranty
in Article III untrue or incorrect in any respect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
5.2 COOPERATION. Each of the parties agrees to cooperate with the others in
the preparation and filing of all forms, notifications, reports and information,
if any, required or reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement,
and to use his or its best efforts to agree jointly on a method to overcome any
objections by any Governmental Authority to any such transactions.
5.3 ACCESS TO INFORMATION. From the date hereof to Closing, each party
shall afford to each other party and its officers, employees, auditors, counsel
and agents reasonable access at all reasonable times to its properties, offices
and other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and other
data and information as may be requested.
17
<PAGE> 18
5.4 NOTIFICATION OF CERTAIN MATTERS. Each of the parties to this Agreement
shall give prompt notice to the other parties of the occurrence or
non-occurrence of any event which would likely cause any representation or
warranty made by such party herein to be untrue or inaccurate or any covenant,
condition or agreement contained herein not to be complied with or satisfied
(provided, however, that, any such disclosure shall not in any way be deemed to
amend, modify or in any way affect the representations, warranties and covenants
made by any party in or pursuant to this Agreement).
5.5 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement, the subject matter or terms hereof or any
confidential information or other proprietary knowledge concerning the business
or affairs of any other party which it may have acquired from such party in the
course of pursuing the transactions contemplated by this Agreement without the
prior consent of the other parties hereto; provided, that any information that
is otherwise publicly available, without breach of this provision, or has been
obtained from a third party without a breach of such third party's duties, shall
not be deemed confidential information. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto, except that Brassie may make such public
disclosure as it deems appropriate (in which case, Brassie will consult with the
Seller prior to making such disclosure).
5.6 EMPLOYMENT AGREEMENT. At the Closing, Brassie shall enter into an
employment agreement in the form attached hereto as Schedule 5.6 with
Shareholder.
5.7 SHAREHOLDER AND DIRECTOR VOTE. The Shareholder, in executing this
Agreement, consents as director and shareholder (as applicable) of the Seller,
to the Purchase and Sale and other transactions contemplated hereby, waives
notice of any meeting in connection therewith, and hereby releases and waives
all rights with respect to the transactions contemplated hereby under any
agreements relating to the sale or purchase of the Assets of the Seller.
5.8 CERTAIN TAX MATTERS. The Shareholder shall duly prepare or cause to be
prepared, and file or cause to be filed, on a timely basis, all Tax Returns for
the Seller for any period ending on or before Closing. The Shareholder shall
provide such Tax Returns to Brassie for review at least thirty (30) business
days prior to their due date (including extensions where applicable). The
Shareholder shall not file any amended Tax Returns with respect to the Seller
without the prior written consent of Brassie, which consent shall not be
unreasonably withheld. After Closing, each party shall provide the other parties
with such information and records and access to such of its officers, directors,
employees and agents as may be reasonably requested by the other parties in
connection with the preparation of any tax return or any audit or other
proceeding relating to the Seller.
5.9 AGREEMENTS OF AFFILIATES. The Shareholder hereby agrees to comply with
the restrictions imposed upon affiliates of the Seller pursuant to Rule 144
under the Securities Act.
18
<PAGE> 19
5.10 SECURITIES LAWS MATTERS. Brassie covenants to remain current in its
reporting obligations under the Exchange Act for two (2) years following the
Closing Date.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF BRASSIE
The obligations of Brassie to effect the Purchase and Sale and the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by Brassie:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Seller and the
Shareholder in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time except that those representations and warranties which
address matters only as of particular date shall remain true and correct as of
such date. The Seller and the Shareholder shall have performed or complied with
all of their obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date. The Seller and the Shareholder shall have
delivered to Brassie a certificate, dated as of the Closing Date, (which in case
of the Seller shall be duly signed by its President and Secretary) certifying
that such representations and warranties are true and correct and that all such
obligations have been performed and complied with.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the date
hereof and the Closing Date; (a) there shall have been no Material Adverse
Change to the Seller, (b) there shall have been no adverse federal, state or
local legislative or regulatory change having a Material Adverse Effect on the
services, products or business of the Seller, and (c) none of the Assets of the
Seller shall have been damaged by fire, flood, casualty, act of God or the
public enemy or other cause (regardless of insurance coverage for such damage)
which damages may have a Material Adverse Effect on the Seller, and the Seller
and the Shareholder shall have delivered to Brassie a certificate, dated as of
the Closing Date, to that effect.
6.3 CORPORATE CERTIFICATE. The Seller and the Shareholder shall have
delivered to Brassie (i) copies of the Articles of Incorporation of the Seller
certified by the Florida Secretary of State no longer than fifteen (15) days
prior to the Effective Time and copies of the Bylaws of the Seller as in effect
immediately prior to the Effective Time, (ii) copies of resolutions adopted by
the Board of Directors and the Shareholder of the Seller authorizing the
transactions contemplated by this Agreement, and (iii) a certificate of good
standing of the Seller issued by the State of Florida and each other state in
which it is qualified to do business as of a date not more than five (5) days
prior to the Closing Date, and all of such documents as to the Seller shall be
certified as of the Closing Date by the Secretary of the Seller as being true,
correct and complete.
19
<PAGE> 20
6.4 CONSENTS. The Seller, the Shareholder, and Brassie shall have received
consents to the Acquisition and other transactions contemplated hereby and
waivers of rights to terminate or modify any material rights or obligations of
the Seller or the Shareholder, from any Person from whom such consent or waiver
is required, including without limitation, under any Material Contract listed or
required to be listed in Schedule 3.21 or any other law or regulation as of a
date not more than five (5) days prior to the Closing, or who as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such Contracts or instruments, either by the terms thereof or as a matter of
law. Brassie shall have obtained other approvals required under state laws and
all other Governmental Authorities with respect to the transactions contemplated
hereby.
6.5 SECURITIES LAWS. Brassie shall have received all necessary consents and
otherwise complied with any state Blue Sky or securities laws applicable to the
issuance of the Brassie Shares in connection with the transactions contemplated
hereby.
6.6 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Acquisition or other transactions hereunder, or which, in the reasonable
judgment of Brassie, makes it inadvisable to proceed with the transactions
contemplated hereby.
6.7 BOARD AND SHAREHOLDER APPROVAL. The Board of Directors and the
shareholders of Brassie shall have authorized and approved this Agreement and
the transactions contemplated hereby.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE SELLER AND THE SHAREHOLDER
The obligations of the Seller and the Shareholder to effect the Acquisition
and the other transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by the Seller and the
Shareholder.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Brassie contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by this Agreement, and (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Brassie shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Brassie shall have delivered to the Seller a certificate, dated as of the
Closing Date, and signed by an executive officer, certifying that such
representations and
20
<PAGE> 21
warranties are true and correct and that all such obligations have been
performed and complied with.
7.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the date
hereof and the Closing Date; (a) there shall have been no Material Adverse
Change to Brassie, and (b) there shall have been no adverse federal, state or
local legislative or regulatory change having a Material Adverse Effect on the
services, products or business of Brassie, and Brassie shall have delivered to
Seller a certificate, dated as of the Closing Date, to that effect.
7.3 CORPORATE CERTIFICATE. Brassie shall have delivered to the Seller and
the Shareholder, (i) copies of resolutions adopted by the Board of Directors and
the Shareholder of Brassie, authorizing the transactions contemplated by this
Agreement, and (ii) a certificate of good standing of Brassie issued by the
State of Florida and each other state in which they is qualified to do business
as of a date not more than five (5) days prior to the Closing Date, and all of
such documents as to Brassie shall be certified as of the Closing Date by the
Secretary of the Seller as being true, correct, and complete.
7.4 BRASSIE SHARES. On the Effective Date, Brassie shall have issued all of
the Brassie Shares and shall have delivered to the Shareholder certificates for
the Brassie Shares as described in Section 2.4, issued to him hereunder.
7.5 NO ORDER OR INJUNCTION. There shall not be issued and in effect by or
before any court or other governmental body an order or injunction restraining
or prohibiting the transactions contemplated hereby.
7.6 CONSENTS. The Seller, the Shareholder, and Brassie shall have received
consents to the Acquisition and other transactions contemplated hereby and
waivers of rights to terminate or modify any material rights or obligations of
Brassie from any Person from whom such consent or waiver is required, or any
other law or regulation as of a date not more than five (5) days prior to the
Closing, or who as a result of the transactions contemplated hereby, would have
such rights to terminate or modify such Contracts or instruments, either by the
terms thereof or as a matter of law. Brassie shall have obtained other approvals
required under state laws and all other Governmental Authorities with respect to
the transactions contemplated hereby.
7.7 SECURITIES LAWS. Brassie shall have received all necessary consents and
otherwise complied with any state Blue Sky or securities laws applicable to the
issuance of the Brassie Shares in connection with the transactions contemplated
hereby.
7.8 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Acquisition or other transactions hereunder, or which, in the reasonable
judgment of Brassie, makes it inadvisable to proceed with the transactions
contemplated hereby.
21
<PAGE> 22
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT BY THE SHAREHOLDER FOR INDEMNIFICATION. The Shareholder
agrees to indemnify and hold Brassie and its stockholders, directors, officers,
employees, attorneys, agents and Affiliates harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Brassie arising out of, relating to, or resulting, from
(i) any breach of a representation or warranty made by the Seller or the
Shareholder in or pursuant to this Agreement, (ii) any breach of the covenants
or agreements made by the Seller or the Shareholder in or pursuant to this
Agreement, or (iii) any inaccuracy in any certificate, instrument or other
document delivered by the Seller or the Shareholder as required by this
Agreement (collectively, "Indemnifiable Damages"). Notwithstanding the foregoing
provisions, no claim for Indemnifiable Damages shall be asserted by Brassie or
any other Person, until the aggregate of all Indemnifiable Damages exceeds the
sum of $25,000.00 (the "Indemnification Threshold"), in which case Brassie shall
be entitled only to Indemnifiable Damages in excess of such amount, but in no
event shall such Indemnifiable Damages exceed $250,000.00 in the aggregate.
8.2 AGREEMENT BY BRASSIE FOR INDEMNIFICATION. Brassie agrees to indemnify
and hold the Shareholder and his employees, attorneys, agents and Affiliates
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by the Shareholder
arising out of, relating to, or resulting, from (i) any breach of a
representation or warranty made by Brassie in or pursuant to this Agreement,
(ii) any breach of the covenants or agreements made by Brassie in or pursuant to
this Agreement, or (iii) any inaccuracy in any certificate, instrument or other
document delivered by Brassie as required by this Agreement (collectively,
"Indemnifiable Damages"). Notwithstanding the foregoing provisions, no claim for
Indemnifiable Damages shall be asserted by the Shareholder or any other Person,
until the aggregate of all Indemnifiable Damages exceeds the sum of $25,000.00
(the "Indemnification Threshold"), in which case Shareholder shall be entitled
only to Indemnifiable Damages in excess of such amount, but in no event shall
such Indemnifiable Damages exceed $250,000.00 in the aggregate.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any party hereto in this Agreement or pursuant hereto
shall survive for two (2) years following the Closing Date. No claim for the
recovery of Indemnifiable Damages may be asserted by any other party after such
representations and warranties shall thus have expired; provided, however, that
claims for Indemnifiable Damages first asserted within the applicable period
shall not thereafter be barred. Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party shall have
the right to fully rely on the representations, warranties, covenants and
agreements of the other parties contained in this Agreement or in any other
documents or papers delivered in connection herewith. Each
22
<PAGE> 23
representation, warranty, covenant and agreement of the parties contained in
this Agreement is independent of each other representation, warranty, covenant
and agreement.
8.4 REMEDIES CUMULATIVE; WAIVER. The remedies provided herein shall be the
sole remedies for breach of contract.
8.5 DEFENSE OF THIRD PARTY CLAIMS. With respect to each third party claim
for which either party to this Agreement seeks indemnification under this
Article (a "Third Party Claim"), the indemnified party shall give prompt notice
to the indemnifying party of the Third Party Claim, provided that failure to
give such notice promptly shall not relieve or limit the obligations of the
indemnifying party unless the indemnifying party has been materially prejudiced
thereby (and such failure to notify the indemnifying party will not relieve them
from any other liability they may have to indemnified party). If the remedy
sought in the Third Party Claim is solely money damages, or if indemnified party
otherwise permits, then the indemnifying party at its sole cost and expense,
may, upon notice to the indemnified party within fifteen (15) days after the
indemnifying party receives notice of the Third Party Claim, assume the defense
of the Third Party Claim. If the indemnifying party assumes the defense of a
Third Party Claim, then the indemnifying party shall select counsel reasonably
satisfactory to indemnified party to conduct the defense. The indemnifying party
shall not consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claim, unless (i) the settlement or judgment is solely for money
damages and the indemnifying party admits in writing their liability to hold the
indemnified party harmless from and against any losses, damages, expenses and
liabilities arising out of such settlement or judgment or (ii) indemnified party
consents thereto, which consent shall not be unreasonably withheld. The
indemnifying party shall provide the indemnified party with fifteen (15) days
prior notice before they consent to a settlement of, or the entry of a judgment
arising from, any Third Party Claim. The indemnified party shall be entitled to
participate, at its own expense, in the defense of any Third Party Claim, the
defense of which is assumed by the indemnifying party with its own counsel and
at its own expense. With respect to Third Party Claims in which the remedy
sought is not solely money damages and the indemnified party does not permit the
indemnifying party to assume the defense, the indemnifying party shall, upon
notice to indemnified party within fifteen (15) days after the indemnifying
party receives notice of the Third Party Claim, be entitled to participate in
the defense with his own counsel at his own expense. If the indemnifying party
does not assume or participate in the defense of any Third Party Claim in
accordance with the terms of this Section, then the indemnifying party shall be
bound by the results obtained by the indemnified party with respect to the Third
Party Claim. The parties shall cooperate in the defense of any Third Party
Claim.
ARTICLE IX
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other disposition
after the Closing Date of the Brassie Shares:
23
<PAGE> 24
9.1 DISPOSITION OF SHARES. Except as specifically provided in Section 3.23
of the Agreement, Seller and the Shareholder represent and warrant that the
shares of Brassie Common Stock being acquired hereunder will not be sold or
otherwise disposed of, except (a) pursuant to an exemption from the registration
requirements under the Securities Act, (b) in accordance with Rule 144 under the
Securities Act, or (c) pursuant to an effective registration statement filed by
Brassie with the SEC under the Securities Act. To the extent the Shareholder
complies with the provisions of Rule 144 under the Securities Act in effecting
sales of the Brassie Shares, Brassie agrees to provide its transfer agent with
appropriate instructions and/or opinions of counsel in order for the Shareholder
to sell, transfer and/or dispose of the Brassie Shares in accordance with Rule
144.
9.2 LEGEND. The certificates representing the Brassie Shares shall bear the
following or similar legend as used by Brassie at the time:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO, (B) IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR (C) IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Brassie may, unless a registration statement is in effect covering such shares,
place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
ARTICLE X
DEFINITIONS
10.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
24
<PAGE> 25
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or
charge).
"Material Adverse Change (or Effect)"means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, use, franchise, intangible,
payroll, withholding, social
25
<PAGE> 26
security and unemployment taxes imposed by any federal, state, local or
foreign government agency, and any interest or penalties related thereto.
10.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing:
(a) by mutual written consent of all of the parties hereto at any time
prior to the Closing; or
(b) by Brassie upon delivery of written notice to the Seller and the
Shareholder in accordance with Section 12.1 of this Agreement in the event of a
material breach by the Seller or the Shareholder of any provisions of this
Agreement, including covenants, warranties or representations; or
(c) by the Seller and the Shareholder upon delivery of written notice
to Brassie in accordance with Section 12.1 of this Agreement in the event of a
material breach by Brassie of any provision of this Agreement, including
covenants, warranties or representations; or
(d) by (i) Brassie or (ii) the Seller and the Shareholder upon
delivery of written notice in accordance with Section 12.1 of this Agreement, if
the Closing shall not have occurred by December 31, 1997.
26
<PAGE> 27
11.2 EFFECT OF TERMINATION. Except for the provisions of Article VIII, in
the event of termination of this Agreement pursuant to Section 11.1, this
Agreement shall forthwith become void and of no further force and effect, and
the parties shall be released from any and all obligations hereunder; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
11.3 SPECIAL PROVISIONS. Notwithstanding anything in this Agreement to the
contrary, in the event that there is any change in control in Brassie (as
defined in the federal securities laws) on or before the fifth anniversary of
the Closing, then, at Seller's sole discretion, (i) the Seller shall transfer to
Brassie all consideration previously paid to Seller by Brassie in connection
with the transactions contemplated hereby, and (ii) Brassie shall return to
Seller, all proprietary rights, licenses, and concepts previously received by
Brassie from Seller associated the World Golf Village or otherwise. This
provision shall survive the Closing.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage prepaid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
prepaid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which any party
shall designate in writing to the other parties):
27
<PAGE> 28
(a) if to Brassie to:
One Tampa City Center
Suite 200
Tampa, Florida 33602
Attn: Jeremiah Daley, President
Telecopy: (813) 222-3434
with a copy to:
Foley and Lardner
100 North Tampa Street
Suite 2700
Tampa, Florida 33602
Attn.: Russell Alba, Esq.
Telecopy: (813) 221-4210
(b) If to the Seller and/or the Shareholder to:
c/o Dr. Robert N. Gewant
One Tampa City Center
Suite 200
Tampa, Florida 33602
Telecopy: (813) 222-3434
with a copy to:
Annis, Mitchell, Cockey, Edwards & Roehn
One Tampa City Center, Suite 2100
P.O. Box 3433
Tampa, FL 33601
Attn: Fred S. Ridley, Esquire
Telecopy: (813) 223-9067
12.2 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
attached hereto) and other documents delivered at Closing pursuant hereto,
contains the entire understanding of the parties in respect of its subject
matters and supersedes all prior agreements and understandings (oral or written)
between or among the parties with respect to such subject matter. The Schedules
and Exhibits constitute a part hereof as though set forth in full above.
12.3 EXPENSES. Except as otherwise provided herein, the Shareholder shall
pay his own and the Seller's fees and expenses, including counsel fees incurred
in connection with this Agreement or any transaction contemplated hereby.
Brassie shall pay its own fees and expenses, including its own counsel fees.
28
<PAGE> 29
12.4 AMENDMENT: WAIVER. This Agreement may not be modified, amended,
supplemented, canceled, or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.
12.5 BINDING EFFECT: ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the Seller or the Shareholder
without the prior written consent of Brassie. Brassie may assign all or any
portion of its rights hereunder to one or more of its wholly owned subsidiaries.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever, the words "include," "includes," or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
12.8 GOVERNING LAW: INTERPRETATION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State.
12.9 JURISDICTION.
(a) The parties to this Agreement agree that any suit, action or
proceeding arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof shall be brought in the courts of
Hillsborough County, Florida or in the U.S. District Courts for the Middle
District of Florida and the Seller and the Shareholder hereby irrevocably accept
the exclusive personal jurisdiction of those courts for the purpose of any suit,
action or proceeding.
29
<PAGE> 30
(b) In addition, Brassie, the Seller and the Shareholder each hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it or he may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any judgment entered
by any court in respect thereof brought in Hillsborough County, Florida or the
U.S. District Courts for the Middle District of Florida, and hereby further
irrevocably waives any claim that any suit, action or proceedings brought in any
such court has been brought in an inconvenient forum.
12.10 ARM's Length Negotiations. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions, and
effects of this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advise of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in
executing this Agreement; (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
The parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.
BRASSIE GOLF CORPORATION, a Delaware
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
DIVOT SPA WGV, INC., a Florida corporation
By:
-------------------------------------
Name: Robert N. Gewant
Title: President
----------------------------------------
Robert N. Gewant, Individually
30
<PAGE> 1
EXHIBIT 10.64
CROSS CREEK/BRASSIE STOCK AGREEMENT
THIS AGREEMENT made this 13th day of November, 1997, by and between
BRASSIE GOLF CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, having its principal place of business at One Tampa City
Center, Suite 2550, Tampa, Florida 33602, hereinafter referred to as the
"CORPORATION" and LANCE McNEILL, presently residing at 2310 Collins Lane,
Lakeland, Florida 33803, hereinafter referred to as "McNEILL".
W I T N E S S E T H:
WHEREAS while previously serving as an officer and member of the Board
of Directors of the CORPORATION, McNEILL was involved, on behalf of the
CORPORATION, in the Cross Creek Golf Course Development project, hereinafter
referred to as "Cross Creek' and in doing so, was involved in authorizing the
expenditure of Thirty-Five Thousand and No/100 Dollars ($35,000.00) of the
CORPORATION'S funds in order to provide for engineering studies in furtherance
of "Cross Creek" and,
WHEREAS the CORPORATION is no longer involved in the development of
Cross Creek and McNEILL has represented that the CORPORATION will recover the
Thirty-Five Thousand Dollars ($35,000.00) previously expended for the
engineering costs described hereinabove on or before May 15, 1998;
WHEREAS, McNEILL presently owns at least 100,000 shares of common stock
in the CORPORATION which may be pledged in part to secure the repayment to the
CORPORATION of the Thirty-Five Thousand Dollars ($35,000.00) described above.
<PAGE> 2
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The above recitals are true and correct and are herein incorporated
by reference.
2. McNEILL hereby guarantees to the CORPORATION that on or before May
15, 1998, the CORPORATION will receive a return or repayment of the Thirty-Five
Thousand Dollars ($35,000.00) described above from some or any source whether or
not directly attributable to McNEILL; provided however that the enforcement of
this guaranty shall be limited to the rights contained in Paragraph 5 hereof.
3. That to secure the performance of the guaranty contained in
Paragraph 2 above, McNEILL agrees to pledge One Hundred Thousand (100,000)
shares of common stock which McNEILL owns in his individual capacity in the
CORPORATION and further agrees that so long as this Agreement shall remain in
effect, McNEILL will not otherwise sell, assign, transfer, pledge, mortgage,
alienate, hypothecate, or in any way encumber or dispose of said One Hundred
Thousand (100,000) shares of common stock of the CORPORATION, except as herein
provided. McNEILL represents and warrants that none of the 100,000 common shares
described herein have heretofore been sold, assigned, transferred, pledged,
mortgaged, alienated, hypothecate, or that he has otherwise encumbered or
disposed of said shares in any manner prior to the date hereof.
2
<PAGE> 3
4. The CORPORATION agrees that it will consent to a removal of the
presently existing SEC regulation 144 restrictions from the remaining 728,260
shares of common stock presently owned by McNEILL and the CORPORATION shall at
the request of McNEILL cause its counsel to issue an opinion that such stock is
free and clear of those restrictions to the extent required to allow the shares
to be freely traded.
5. If on May 15, 1998, the CORPORATION shall not have been paid or
repaid the Thirty-Five Thousand Dollars ($35,000.00) engineering fee described
above, McNEILL shall at his option either pay to the CORPORATION the sum of
Thirty-Five Thousand Dollars ($35,000.00) in cash or its equivalent or transfer
and deliver the One Hundred Thousand (100,000) shares, including the
certificates representing the shares either duly endorsed in blank or with duly
endorsed Stock Powers attached, all in a form suitable for the transfer of the
shares to the CORPORATION on or before May 15, 1999.
6. That not less than ten (10) days prior to May 15, 1998, McNEILL will
notify the CORPORATION by Certified Mail, at its principal place of business,
whether he shall satisfy his obligation pursuant to this Agreement by payment of
the Thirty-Five Thousand Dollars ($35,000.00) as previously described in
Paragraph 1 or by transfer to the CORPORATION of the 100,000 shares of common
stock as described in Paragraph 3 above.
7. At the execution and delivery of this Agreement, McNEILL shall
execute and deliver to the CORPORATION the resignation attached as Exhibit "A"
and the General Release attached as
3
<PAGE> 4
Exhibit "B" and the CORPORATION shall execute and deliver to McNEILL the
Indemnification Agreement attached as Exhibit "C".
8. This Agreement shall be binding on and inure to the benefit of the
CORPORATION and McNEILL and their respective heirs, executors, administrators,
legal representatives, successors, and assigns, subject to the restriction on
transfer as set out in Paragraph 3 of this Agreement.
9. RULES OF CONSTRUCTION.
A. This Agreement constitutes the entire agreement between the parties
and supersedes any and all prior negotiations, preliminary agreements, and all
prior and contemporaneous discussions and understandings of the parties related
to the subject matter of this Agreement.
B. This Agreement may be amended or modified only by a written
instrument executed by both the CORPORATION and McNEILL.
C. This Agreement shall be construed, interpreted, and enforced in
accordance with the laws of the State of Florida. The venue for any legal action
to enforce the rights or obligations of any party to this Agreement, shall be
located in Hillsborough County, Florida.
D. The parties mutually acknowledge that the terms of this Agreement
have been negotiated and that each party has had the benefit of legal counsel.
Accordingly, this Agreement shall not be construed against either party hereto
based upon any inconsistencies or ambiguities which appear herein.
4
<PAGE> 5
E. If all or any all of this Agreement be enforced in a Court of law,
the prevailing party to any such cause of action shall be entitled to recover
all costs, including reasonable attorney's fees.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals this 13th day of November, 1997, at Tampa, Hillsborough County, Florida.
Witnesses: BRASSIE GOLF CORPORATION
A Delaware corporation
/s/
- ----------------------------------
By: /s/ Joseph R. Cellura
-------------------------------------
/s/ Joseph R. Cellura
- ---------------------------------- Its: President
/s/ /s/ Lance McNeill
- ---------------------------------- ----------------------------------------
LANCE McNEILL
/s/
- ----------------------------------
5
<PAGE> 6
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS THAT: LANCE McNEILL, (hereinafter
"McNeill"), for and in consideration of the sum of Ten Dollars ($10.00) Dollars
and other good and valuable consideration, received from or on behalf of BRASSIE
GOLF CORPORATION, a Delaware corporation, its officers, agents, or
representatives (hereinafter "Brassie"), the receipt and sufficiency of which is
hereby acknowledged;
DOES HEREBY remise, release, acquit, satisfy, and forever discharge
Brassie, individually and collectively, jointly and severally, and including any
of its agents, officers, directors, partners, employees or representatives,
including sureties, and any of their parent or subsidiary companies or
affiliated business entities (together with their officers, directors, employees
and agents) and each of their successors and assigns (collectively, the
"Released Parties"), of and from all, and all manner of, action and actions,
cause and causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, liens (mechanics', equitable,
or otherwise), contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, executions, claims and demands whatsoever, in
law or in equity, which McNeill ever had, now has, or which any personal
representative, successor, heir or assignee of McNeill hereafter can, shall, or
may have, against the Released Parties, for, upon, or by reason of McNeill's
employment with Brassie or an other of the Released Parties, including, but not
limited to, relief in any administrative proceedings or plenary action injuries
suffered to
<PAGE> 7
any federal, state or local law. I specifically release and forever waive any
and all claims which I ever had, now have, and which I or my heirs or executors,
administrators or assigns, or any of them, hereafter can, shall, or may have for
any matter or thing, known or unknown. Without limitation to the foregoing, I
hereby acknowledge the immediate termination of my employment with Brassie and
any Released Party and consent hereby to the immediate termination of any and
all employment and/or consulting agreements between me and Brassie or any
Released Party. I further acknowledge that, except as specifically provided in
that certain "Cross Creek" Agreement dated November __, 1997, and except as
specifically provided in that certain Indemnification Agreement dated November
__, 1997, I am not entitled to, and hereby waive any right to, any payment or
compensation of any kind from Brassie and all Released Parties, including, but
not limited to, back pay, vacation pay, severance, reimbursements, bonuses, and
the cash value of any insurance policies.
IN WITNESS WHEREOF, we have hereunto set our hands and seals effective
this 13th day of November, 1997.
Signed, sealed and delivered
in the presence of:
/s/ John L. Mann By: /s/ Lance McNeill
- ---------------------------------- -------------------------------------
Signature of Witness #1 Lance McNeill
John L. Mann
- ----------------------------------
Typed or printed name of
Witness #1
2
<PAGE> 8
/s/ Kelly A. Olivier
- ----------------------------------
Signature of Witness #2
Kelly A. Olivier
- ----------------------------------
Typed or printed name of
Witness #2
STATE OF FLORIDA
COUNTY OF POLK
The foregoing instrument was acknowledged before me this 13th day of
November, 1997, by Lance McNeill, who is personally known to me or who has
produced __________________________________ (type of identification) as
identification.
/s/ John L. Mann
----------------------------------------
Signature of Personal Taking
Acknowledgment
John L. Mann
----------------------------------------
Name of Acknowledger Typed,
Printed or Stamped
(NOTARY SEAL)
Notary Public State of Florida
CC445608
----------------------------------------
Notarial Serial Number
3
<PAGE> 9
November 13, 1997
Board of Directors
Brassie Golf Corporation
One Tampa City Center
Suite 2550
Tampa, FL 33602
Re: Letter of Resignation
To the Board of Directors of Brassie Golf Corporation:
Effective as of the date written above, I hereby resign as a director
and officer of the Brassie Golf Corporation and each of its subsidiaries and
affiliated companies.
Sincerely,
/s/ Lance McNeill
Lance McNeill
<PAGE> 10
EXHIBIT "B"
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made and entered
into this _____ day of _______________, 1997, by and between BRASSIE GOLF
CORPORATION, a Delaware corporation ("Brassie") and LANCE McNEILL ("McNeill").
Background
McNeill has served as a director, officer and agent of Brassie since
June 5, 1995. Effective as of the date hereof, and by way of separate letter
McNeill has resigned in all capacities in exchange for which Brassie hereby
agrees to indemnify him and hold him harmless from liability associated with his
service in such capacities for Brassie to the maximum extent permitted by law.
A majority of the disinterested directors of Brassie have approved the
execution of this Agreement at a meeting of the directors called for that
purpose on November 10, 1997.
1. In consideration of the service of McNeill to Brassie, and subject
to the terms of this Agreement, Brassie hereby agrees to indemnify and hold
McNeill harmless from:
a. Any and all liability, cost and damage sustained by him in any
civil or criminal action or threat of action by reason of his being an officer,
director, employee or agent of Brassie or by reason of his office, status or
service as an officer, director, employee or agent of another corporation or
legal entity or enterprise at the request of Brassie or his actions while
performing in any such capacity, all so long as McNeill acted in good faith and
in a manner he reasonably believed to be in the best interests of Brassie.
<PAGE> 11
b. Any amount paid in settlement of any claim or demand based upon
the service or action described in Section 1(a) above.
c. Any reasonable advancement, cost and expense associated with
defending or opposing any claim of demand described in Section 1(a) above,
including, without limitation, all reasonable attorney's fees and court costs,
whether or not assessable in the court action, and including any such attorney's
fees and costs incurred in appellate proceeding or alternative dispute
resolution proceeding.
2. To the extent permitted by law, Brassie hereby remises, releases,
and forever discharges, McNeill of and from all, and all manner of action and
actions, cause and causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever, in law, or in equity, which it may
have against McNeill arising out of his being an officer, director, employee or
agent of Brassie or by reason of his office, status or service as an officer,
director, employee or agent of another corporation or legal entity or enterprise
at the request of Brassie or his actions while performing in any such capacity,
including, without limitation, the development or exploitation of any business
concept or idea, whether fully or partially developed while McNeill
2
<PAGE> 12
was performing in any such capacity, from the beginning of the world to the date
of the date of these presents.
3. The foregoing indemnification and release shall not apply to any
claim or demand for any act which McNeill:
a. did not act in good faith;
b. was opposed to the best interests of Brassie;
c. which constituted a criminal act, unless McNeill had no
reasonable cause to believe that such act was unlawful;
d. engaged in willful misconduct or conscious disregard for the best
interest of Brassie; or,
e. derived an improper personal benefit.
4. Any indemnification under Section 1, unless pursuant to a
determination by a court, shall be made by Brassie only as authorized in the
specific case upon a determination that indemnification of McNeill as officer,
director, employee or agent of Brassie is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 and 3. Such
determination shall be made:
a. By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to any such proceeding; or
b. By independent legal counsel selected by the Board of Directors
prescribed in Paragraph 4(a); or
c. By the Shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to any such
3
<PAGE> 13
proceeding or, if no such quorum is obtainable, by a majority vote of
shareholders who were not a party to any such proceeding.
5. Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible as set out in Section 4 hereinabove.
6. In the event that McNeill determines that he is entitled to
indemnification under Section 1 of this Agreement, he shall give Brassie written
notice of his demand for indemnification, with sufficient documentation, to the
extent available to McNeill, to enable Brassie to determine whether or not the
claim is barred by the application of Section 3 of this Agreement. If Brassie
determines that the right to indemnification for the claim is barred by the
operation of Section 3 of this Agreement, it shall give McNeill written notice
of such objection ("Objection to Claim") within twenty (20) days of the date of
the demand by McNeill specifying the reason for such objection. If the objection
is not timely given, Brassie shall be conclusively presumed to have waived its
right to object. If Brassie makes the Objection to Claim timely, McNeill, unless
the parties can promptly agree to an alternative form of dispute resolution,
shall be entitled to have a court of competent jurisdiction determine by
declaratory decree whether or not his right to indemnification for the claim is
barred by Section 3 of this Agreement. If the right to indemnification for the
claim is not barred by Section 3, McNeill shall be entitled to the
indemnification provided in Section 1.
4
<PAGE> 14
7. As a condition precedent to the indemnification provisions contained
in paragraph 1 above, McNeill shall be obligated to follow the following
procedure: Upon receiving any communication placing McNeill on notice that a
claim has or may be asserted against him for which he might be entitled to
indemnification hereunder, whether by letter, service of process, other writing,
or orally, McNeill shall communicate same to Brassie (and, in the case of any
written communication, immediately provide a copy of same to Brassie). McNeill
shall not thereafter offer to compromise or settle any such claim without
Brassie's prior written consent. Any violation of this provision shall result in
the nullification of the indemnification provisions of this Agreement. In the
event a lawsuit is flied against McNeill, Brassie shall have the right, but not
the obligation, to: (1) provide counsel of Brassie's choice to McNeill, for
which Brassie will bear all costs and expenses (subject to McNeill's obligation
to reimburse same if a decision is made that McNeill's actions were not subject
to indemnification by Brassie hereunder); or (2) assume the cost of McNeill's
defense by counsel of McNeill's choosing (once again, subject to a reservation
of rights and McNeill's obligation to reimburse as provided above). In the event
Brassie does not notify McNeill of its desire to select either of the options
described above, McNeill shall retain its own counsel, and pay for same, subject
to the indemnification rights contained herein. Consistent with the above,
McNeill shall not offer to compromise or settle any lawsuit without Brassie's
prior written
5
<PAGE> 15
consent (the violation of which shall result in a nullification of the
indemnification provisions of this Agreement).
8. The indemnification provided in this Agreement is in addition to,
and not in limitation of any other indemnification provided by Brassie under any
agreement or right indemnification provided by law.
9. In any legal action or proceeding, including alternative dispute
resolution proceedings, relating to the enforcement or interpretation of this
Agreement, the prevailing party shall be entitled to recover, in addition to any
other relief, such parties reasonable attorney's fees and costs, including those
incurred in any appellate proceeding.
10. The parties agree that this Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Florida.
The venue for any legal action to enforce or interpret the rights or obligations
of any party to this Agreement shall be located in Hillsborough County, Florida
and each of the parties consents to such action being maintained in the Circuit
Court Thirteenth Judicial Circuit sitting in such county.
6
<PAGE> 16
11. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their heirs, successors in interest and assigns as
applicable.
Signed in the presence of:
BRASSIE GOLF CORPORATION,
a Florida corporation
By: /s/ Joseph R. Cellura
-------------------------------------
Joseph R. Cellura
/s/ John L. Mann Its: President
- --------------------------------- ----------------------------------------
John L. Mann
- --------------------------------- ----------------------------------------
(Type or Print Name) (Type or Print Address)
/s/ Kimberly Aaron
- ----------------------------------
Kimberly Aaron
- ----------------------------------
(Type or Print Name)
Signed in the presence of:
----------------------------------------
LANCE MCNEILL
----------------------------------------
- ---------------------------------- ----------------------------------------
(Type or Print Address)
- ----------------------------------
(Type or Print Name)
- ----------------------------------
- ----------------------------------
(Type or Print Name)
7
<PAGE> 1
EXHIBIT 10.65
BRASSIE GOLF CORPORATION
David Bodner/Murray Huberfeld Partnership ("BH")
Congregation Ahavas Tzdokoh v'Chsed ("CA")
Rita Folger ("RF)
Gentlemen:
4. You (collectively, the "Holders") have reviewed the filings which
Brassie Golf Corporation (the "Company")has made with the Securities Exchange
Commission during the past 12 months. The Company represents and warranties to
the Holders that all such filings are correct and accurate in all material
respects and in all material respects state all facts necessary to make such
filings not misleading. Holders have had the opportunity to discuss the
Company's affairs with the Company's officers.
5. Holders have purchased from third parties Debentures of the Company in
the form of Exhibit 1 and in the aggregate principal amount and accrued interest
of not less than $2,449,000. BH, CA and RF respectively purchased 75.6097%,
19.5121% and 4.8780% of the Debentures.
6. In order to induce Holders not to seek immediate collection of the
Debentures and for other good and valuable consideration, the Company hereby
agrees to issue to each Holder, in exchange for such Holder's interest in the
Old Debentures, (i) a debenture in the form of Exhibit 2 and in the principal
amount set forth opposite such Holder's name below (collectively, the "Notes'),
(ii) the number of restricted shares of company stock set forth opposite such
Holder's name below (the "Shares"), (iii) warrants in the form of Exhibit 3 to
purchase that number of shares of common stock of the Company which is set forth
opposite such Holder's name below at an exercise price of $0.17 per share (the
"A Warrants"), and (iv) warrants in the form of Exhibit 4 to purchase that
number of shares of common stock of the Company which is set forth opposite such
Holder's name below at an exercise price of $0.34 per share (the "B Warrants").
The A Warrants and the B Warrants are hereinafter sometimes collectively
referred to as the "Warrants").
<TABLE>
<CAPTION>
Holder Number of Principal Number of Number of
shares Amount of A Warrants B Warrants
(Restricted) Notes
<S> <C> <C> <C> <C>
Bodner/Huberfeld Partnership 1,249,170 $ 1,851,681 11,385,929 11,385,929
Congregation Ahavas Tzodokoh v'Chesed 322,367 $ 2,810,888 2,938,288 2,938,288
Rita Folger 80,591 $ 119,462 716,917 716,917
--------- ------------ ----------- ----------
1,652,128 $14,405,882 15,041,134 15,041,134
========= =========== ========== ==========
</TABLE>
4. Rule 144.
(a) The Company confirms that the Old Debentures were issued no
later than March 31, 1996 to non-affiliates of the Company,
and that Holders will be entitled to tack the holding period
of the prior holder to each Holder's holding period under
Holder's Shares, Notes, Warrants and shares issuable on
conversion of the Notes or on cashless exercise of the
Warrants.
(b) It is the opinion of Company's counsel, a copy of which is
attached as Exhibit 4, that the Shares, and whenever any Note
or Warrant is converted, the shares issuable on such
<PAGE> 2
conversion, will be deemed to have been held for at least one
year for the purposes of the holding period requirements of
Rule 144.
(c) The Company will at all times satisfy the current public
information requirements of Rule 144.
5. Registration.
(a) The Company will file, on or before the 90th day after the
date hereof (the date hereof being referred to herein as the
"Completion Date") a registration statement (the "Registration
Statement") for the public sale by Holders of the shares which
are issuable on conversion of the Notes and on exercise of the
Warrants (including any such securities which may then or
thereafter be issued on exercise of the Option. The shares to
be covered by the Registration Statement are collectively
referred to as the "registered shares."
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective not later than 60
days after the date of filing, and to remain effective for
three years. The registration shall be accompanied by blue sky
clearances in such states as Holders may reasonably request.
(c) The Company shall pay all expenses of the registration
hereunder, other than Holder's underwriting discounts.
(d) The Company shall supply to Holders a reasonable number of
copies of all registration materials and prospectuses. The
Company and Holders shall execute and deliver to each other
indemnity agreements which are conventional in registered
offerings of this type. The Holders shall reasonably cooperate
with the Company in the preparation and filing of the
Registration Statement and appropriate amendments thereto.
(e) Holders may transfer a proportionate part of their
registration rights to a limited number of permitted
transferees of the Notes or portions thereof.
6. Securities Representations.
(a) Each Holder represents and warrants that it is purchasing the
Old Debentures from current holders thereof, and it will
exchange the Old Debentures for Notes and other securities
issuable hereunder (collectively, including the shares
issuable on conversion of the Notes and on exercise of the
Warrants, the "Securities"), solely for investment solely for
its own account and not with a view to or for the resale or
distribution thereof except as permitted under the
Registration Statement.
(b) Each Holder understands that it may sell or otherwise transfer
the Securities only if such transaction is duly registered
under the Securities Act of 1933, as amended, under the
Registration Statement or otherwise, or if Holders shall have
received the favorable opinion of counsel to the Company, to
the effect that such sale or other transfer may be made in the
absence of registration under the Securities Act of 1933, as
amended, and registration or qualification in every applicable
state. The certificates representing the aforesaid securities
will be legended to reflect these restrictions, and stop
transfer instructions will apply. Holder realizes that the
Securities are not a liquid investment.
(c) No Holder has relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities
Act) in evaluating the risks and merits of this investment.
Each Holder has the knowledge and experience to evaluate the
Company and the risks
<PAGE> 3
and merits relating thereto.
(d) Each Holder represents and warrants that such Holder is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act of
1933, as amended, and shall be such on the date any shares are
issued to the holder; each Holder acknowledges that such
Holder is able to bear the economic risk of losing such
Holder's entire investment in the shares and understands that
an investment in the Company involves substantial risks; such
Holder has the power and authority to enter into this
agreement and the execution and delivery of, and performance
under this agreement shall not conflict with any rule,
regulation, judgment or agreement applicable to such Holder;
and such Holder has invested in previous transactions
involving restricted securities.
7. Legal Fees. Concurrently herewith, the Company will pay a $27,000
fee to Oscar D. Folger as counsel to certain of the Holders.
8. Nature of Obligations. The obligations of each Holder hereunder are
several and not joint, and no Holder makes any representation or warranty as to
any other Holder.
9. Miscellaneous.
This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their
personal representatives and permitted assigns. It sets forth
all agreements of the parties. It shall be enforceable by
decrees of specific performance (without posting bond or other
security) as well as by other available remedies. This
Agreement shall be governed by, and construed in accordance
with, the laws of Florida. The federal and state courts
sitting in the City of Tampa shall have exclusive jurisdiction
over all matters relating to this Agreement. Trial by jury is
expressly waived.
All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and
shall be deemed to have been delivered (i) on the date
personally delivered or (ii) one day after properly sent by
Federal Express, addressed to the respective parties at their
address set forth in this Agreement or (iii) on the day
transmitted by facsimile so long as a confirmation copy is
simultaneously forwarded by Federal Express, in each case
addressed to the respective parties at their address set forth
in this Agreement. Either party hereto may designate a
different address by providing written notice of such new
address to the other party hereto as provided above.
Dated: 11/18/97
-----------------------
HOLDERS:
Bodner/Huberfeld Partnership
By:
/s/ ?
-----------------------------------
Congregation Ahavas Tzdokoh v'Chesed
By: /s/ ?
-----------------------------------
/s/ Rita Folger
- ---------------------------------------
Rita Folger
AGREED:
BRASSIE GOLF CORPORATION
By: /s/ ?
-----------------------------------
Chairman & CEO
<PAGE> 4
EXHIBIT 2
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR
SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO BRASSIE
GOLF CORPORATION, THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
$119,462
--------
CONVERTIBLE NOTE
(the "Note")
BRASSIE GOLF CORPORATION
BRASSIE GOLF CORPORATION, a Delaware corporation (hereinafter called
the "Corporation"), hereby promises to pay to the order of Rita Folger
(hereinafter the "Holder") the principal sum of $119,462 on December 31, 1998.
This Note shall accrue interest at the rate of 5% per annum, payable on the
first day of each calendar quarter commencing March 1, 1998 and on maturity.
This Note is being issued under an Agreement between the Company and
the Holder (the "Subscription Agreement"). The term "Registration Statement"
shall have the meaning attributed thereto in the Subscription Agreement and the
term "Effective Date" means the date on which the Registration Statement shall
be declared to be effective. "Completion Date" shall have the meaning ascribed
thereto in the Subscription Agreement.
4. Conversion Rights.
(a) The principal and accrued interest on this Note is convertible
by Holder from time to time commencing immediately, in whole
or in part, into shares of common stork of the Company "Common
Stock") at the lesser (the "Conversion Price") of $.17 per
share (the "Cap") or 70% of the average closing bid price (the
"Average Price") of the Common Stock during the last five
trading days prior to conversion.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when
Holder shall give to the Company written notice of such
election (which may be effected by facsimile). Holder shall
thereafter promptly surrender this Note to the Company for
cancellation against payment of interest accrued through the
date of conversion. The Company shall within five business
days after conversion deliver to Holder a certificate for the
Common Stock acquired by Holder upon such conversion.
(c) If the Effective Date has not occurred by the 121st day after
the Completion Date, then, in addition to the Holder's other
remedies:
(i) the interest rate under the Note shall be increased
to 18% per annum (or, if less, the highest rate
permitted by law) until the Effective Date, and
<PAGE> 5
(ii) at Holder's option, the Note shall not be repaid by
the Company and shall remain convertible and accrue
interest, until such date as is designated by Holder
but not later than 180 days after the Effective Date.
(d) If the Effective Date has not occurred by the 180th day after
the Completion Date, then, in addition to the Holder's other
remedies, the interest rate under the Note shall be further
increased to 24% per annum (or, if less, the highest rate
permitted by law) until the Effective Date.
(e) The Company shall reserve for issuance on conversion and
exercise of this Note and the Warrant (as defined in the
Subscription Agreement) sufficient shares of Common Stock. The
Company shall use its best efforts promptly to list on NASDAQ
all shares of Common Stock which are issued upon conversion of
this Note.
(f) The Note shall be convertible at any time only to the extent
that Holder would not as a result of such exercise
beneficially own more that 4.99% of the then outstanding
Common Stock. Beneficial ownership shall be defined in
accordance with Rule 13d-3 under the Securities Exchange Act
of 1934. The opinion of counsel to Holder shall prevail in the
event of any dispute on the calculation of Holder's beneficial
ownership.
(g) If any capital reorganization or reclassification of the
common stock, or consolidation, or merger of the Company with
or into another corporation, or the sale or conveyance of all
or substantially all of its assets to another corporation
shall be effected, then, as a condition precedent of such
reorganization or sale, the following provision shall be made:
The Holder of the Note shall from and after the date of such
reorganization or sale have the right to receive (in lieu of
the shares of common stock of the Company immediately
theretofore receivable with respect to the Note, upon the
exercise of conversion rights), such shares of stock,
securities or assets as would have been issued or payable with
respect to or in exchange for the number of outstanding shares
of such common stock immediately theretofore receivable with
respect to the Note (assuming the Note were then convertible).
In any such case, appropriate provision shall be made with
respect to the rights and interests of the Holders to the end
that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable
upon the exercise thereof.
5. Redemption Rights. In the event that the Holder proposes to convert all
or any portion of the principal or interest of this Note at a conversion price
of less than $.05, the Company shall at its option be entitled to redeem all or
any portion of the Note proposed to be converted. Such option shall be
exercisable by paying to the Holder, within three business days after the date
of such proposed conversion, cash equal to the sum of 125% of the amount of
principal and interest proposed to be converted, plus any accrued interest which
is not proposed to be converted.
6. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly and
validly issued, fully paid and non-assessable and no personal liability will
attach to the holder thereof.
7. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible) has not
been registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding this Note (and the Common Stock into which the Note
is convertible) for investment purposes and not with a view to, or for sale in
connection with, a distribution thereof and that this Note (and the Common Stock
into which the Note is convertible) may not be assigned, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act or an opinion of counsel for the Holder, which counsel shall be
reasonably
<PAGE> 6
satisfactory to the Company, to the effect that such disposition is in
compliance with the Act, and represents and warrants that such Holder is an
"accredited investor" that such Holder has, or with its representative has, such
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks in respect of this Note (and the Common Stock
into which the Note is convertible) and is able to bear the economic risk of
such investment.
8. Certain Payments. In the event the Company breaches its obligation to
deliver certificates for Common Stock under this Note upon conversion, or if the
Company breaches its obligation to pay redemption amounts when due, then without
limiting Holder's other rights and remedies (including, without limitation,
rights and remedies available to Holder upon an event of default), the Company
shall forthwith pay to the Holder an amount accruing at the rate of $1,000 per
day for each day of such breach for each $100,000 principal amount of this Note,
with pro rata payments for principal amounts of less than $100,000.
9. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if
any of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure
shall continue for 15 days after written notice by
any Holder of any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or
of a substantial part of its properties shall be
appointed by court order and such order shall remain
in effect for more than 15 days; or the company shall
be adjudicated bankrupt or insolvent; or a
substantial part of the property of the Company shall
be sequestered by court order and such order shall
remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed
against the Company and shall not be dismissed within
45 days after such filing.
(iii) The Company shall file a petition in voluntary
bankruptcy or request reorganization under any
provision of any bankruptcy, reorganization or
insolvency law, or shall consent to the filing of any
petition against it under any such law.
(iv) The Company shall make an assignment for the benefit
of its creditors, or admit in writing its inability
to pay its debts generally as they become due, or
consent to the appointment of a receiver, trustee or
liquidator of the Company, or of all or any
substantial part of its properties.
(b) If an event of default referred to in clause (i) shall occur,
the Holder may, in addition to such Holder's other remedies,
by written notice to the Company, declare the principal amount
of this Note, together with all interest accrued thereon, to
be due and payable immediately. Upon any such declaration,
such amount shall become immediately due and payable and the
Holder shall have all such rights and remedies provided for
under the terms of this Note and the Subscription Agreement.
If an event of default referred to in clauses (ii), (iii) or
(iv) shall occur, the principal amount of this Note, together
with all interest accrued thereon, shall become immediately
due and payable and the Holder shall have all such rights and
remedies provided for under the terms of this Note and the
Subscription Agreement.
10. Miscellaneous.
<PAGE> 7
(a) All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by
delivery in person, by telegram, by facsimile, recognized
overnight mail carrier, telex or other standard form of
telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as
follows: (a) if to the Holder, to such address as such Holder
shall furnish to the Company in accordance with this Section,
or (b) if to the Company, to it at its headquarters office, or
to such other address as the Company shall furnish to the
Holder in accordance with this Section.
(b) This Note shall be governed and construed in accordance with
the laws of the State of Florida applicable to agreements made
and to be performed entirely within such state.
(c) The Company waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand.
(d) If any provision of this Note shall for any reason be held to
be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof,
but this Note shall be construed as if such invalid or
unenforceable provision had never been contained herein.
(e) The waiver of any event of default or the failure of the
Holder to exercise any right or remedy to which it may be
entitled shall not be deemed a waiver of any subsequent event
of default or of the Holder's right to exercise that or any
other right or remedy to which the Holder is entitled.
(f) The Holder of this Note shall be entitled to recover its legal
and other costs of collecting on this Note, and such costs
shall be deemed added to the principal amount of this Note.
In addition to all other remedies to which the Holder may be
entitled hereunder, Holder shall also be entitled to decrees
of specific performance without posting bond or other
security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed on the date set forth below.
Dated: 11/18/97
--------------------------------
BRASSIE GOLF CORPORATION
By: /s/ ?
-----------------------------------
<PAGE> 8
Exhibits 3 and 4
Neither this Warrant nor the shares of Common Stock issuable on
exercise of this Warrant have been registered under the Securities Act of 1913.
None of such securities may be transferred in the absence of registration under
such Act or an opinion of counsel to the effect that such registration is not
required.
BRASSIE GOLF CORPORATION
WARRANT
DATED: 11/18/97
Number of Shares: 716,917 .17 cents
Holder: Rita Folger
Address:
------------------------------
THIS CERTIFIES THAT the Holder is entitled to purchase from BRASSIE GOLF
CORPORATION, a Delaware corporation (hereinafter called the "Company"), the
number of shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to the lesser (the "Conversion Price") of [Exhibit 3:
$0.17][Exhibit 4: $0.34] per share (the "Cap") or 70% of the average closing bid
price (the "Average Price") of the Common Stock during the last five trading
days prior to exercise.
4. All rights granted under this Warrant shall expire on the third
anniversary of the date of issuance of this Warrant.
5. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased form the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
6. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
<PAGE> 9
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased from the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
7. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) an the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased from the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
8. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shams of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased form the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
9.
10. Notwithstanding anything to the contrary contained herein, Holder shall
not have the right to exercise this Warrant so long as and to the extent that at
the time of such exercise, such exercise would cause the Holder then to be the
"beneficial owner' of five percent (5%) or more of the Company's then
outstanding Common Stock. For purposes hereof, the term "beneficial owner" shall
have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act
of 1934. The opinion of legal counsel to Holder, in form and substance
satisfactory to the Company and the Company's counsel, shall prevail in all
matters relating to the amount of Holder's beneficial ownership.
11. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or hypothecated,
only if registered by the Company under the Securities Act of 1933 (the "Act")
or if the Company his received from counsel to the Company a written
<PAGE> 10
opinion to the effect that registration of the Warrant or the Underlying Shares
is not necessary in connection with such transfer, sale, assignment or
hypothecation. The Warrant and the Underlying Shares shall be appropriately
legended to reflect this restriction and stop transfer instructions shall apply.
The Holder shall through its counsel provide such information as is reasonably
necessary in connection with such opinion.
12. The holder of this warrant is entitled to certain registration rights
under an Agreement dated 11/18/97 (the "Subscription Agreement").
13. Any permitted assignment of this Warrant shall be effected by the
Holder by (i) executing the form of assignment at the end hereof, (ii)
surrendering the Warrant for cancellation at the office of the Company,
accompanied by the opinion of counsel to the Company referred to above, and
(iii) unless in connection with an effective registration statement which covers
the sale of this Warrant and or the shares underlying the Warrant, delivery to
the Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the Holder for
investment and not with a view to its distribution or resale; whereupon the
Company shall issue, in the name or names specified by the Holder (including the
Holder) new Warrants representing in the aggregate rights to purchase the same
number of Shares as are purchasable under the Warrant surrendered. Such Warrants
shall be exercisable immediately upon any such assignment of the number of
Warrants assigned. The transferor will pay all relevant transfer taxes.
Replacement Warrants shall bear the same legend as is borne by this Warrant.
14. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
15. The Company covenants and agrees that all shares of Common Stock which
may be issued upon exercise hereof will, upon issuance, be duly and validly
issued, fully paid and non-assessable and no personal liability will attach to
the holder thereof. The Company further covenants and agrees that, during the
periods within which this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
for issuance upon exercise of this Warrant and all other Warrants.
16. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
17. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or stock
dividends payable with respect to such Common Stock, the shares of Common Stock
of the Company are at any time increased or decreased or changed into or
exchanged for a different number or kind of share or other security of the
Company or of another corporation, then appropriate adjustments in the number
and kind of such securities then subject to this Warrant shall be made effective
as of the date of such occurrence so that the position of the Holder upon
exercise will be the same as it would have been had it owned immediately prior
to the occurrence of such events the Common Stock subject to this Warrant. Such
adjustment shall be made successively whenever any event listed above shall
occur and the Company will notify the Holder of the Warrant of each such
adjustment. Any fraction of a share resulting from any adjustment shall be
eliminated and the price per share of the remaining shares subject to this
Warranty adjusted accordingly.
18. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with the
purchase form at the end hereof properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company); (ii) payment to the Company of the
exercise price for the number of Shares specified in the above-mentioned
purchase form together with applicable stock transfer taxes, if any; and (iii)
unless in connection with an effective registration statement which covers the
sale of the shares underlying the Warrant, the delivery to the company of a
statement by the Holder (in a form acceptable to the Company
<PAGE> 11
and its counsel) that such Shares are being acquired by the Holder for
investment and not with a view to their distribution or resale.
19. The certificates for the Common Stock so purchased shall be delivered
to the Holder within a reasonable time, not exceeding five business days after
all requisite documentation has been provided, after the rights represented by
this Warrant shall have been so exercised, and shall bear a restrictive legend
with respect to any applicable securities laws.
20. This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware. The federal and state courts in the city
of __________ shall have exclusive jurisdiction over this instrument and the
enforcement thereof. Service of process shall be effective if by certified mail,
return receipt requested. All notices shall be in writing and shall be deemed
given upon receipt by the party to whom addressed. This instrument shall be
enforceable by decrees of specific performances as well as other remedies.
IN WITNESS WHEREOF, Brassie Golf Corporation has caused this Warrant to
be signed by its duly authorized officers under its corporate seal, and to be
dated as of the date set forth above.
BRASSIE GOLF CORPORATION
By: /s/ ?
--------------------------
<PAGE> 12
Exhibit 4
Opinion of Counsel
Omitted
<PAGE> 13
Exhibits 3 and 4
Neither this Warrant nor the shares of Common Stock issuable on
exercise of this Warrant have been registered under the Securities Act of 1913.
None of such securities may be transferred in the absence of registration under
such Act or an opinion of counsel to the effect that such registration is not
required.
BRASSIE GOLF CORPORATION
WARRANT
DATED: 11/18/97
Number of Shares: 716,917 .34 cents
Holder: Rita Folger
Address:
------------------------------
THIS CERTIFIES THAT the Holder is entitled to purchase from BRASSIE GOLF
CORPORATION, a Delaware corporation (hereinafter called the "Company"), the
number of shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to the lesser (the "Conversion Price") of [Exhibit 3:
$0.17][Exhibit 4: $0.34] per share (the "Cap") or 70% of the average closing bid
price (the "Average Price") of the Common Stock during the last five trading
days prior to exercise.
4. All rights granted under this Warrant shall expire on the third
anniversary of the date of issuance of this Warrant.
5. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased form the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
6. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
<PAGE> 14
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased from the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
7. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shares of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) an the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased from the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
8. In lieu of the exercise of any portion of this Warrant as provided in
the foregoing sentence, this Warrant may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to:
(a) the product of (a) the number of shams of Common Stock then
issuable upon the exercise of this Warrant and (b) the excess,
of any, of (i) the Market Price Per Share (as determined
below) on the date of conversion over (ii) the exercise price,
divided by
(b) the Market Price Per Share on the date of conversion.
The term "Market Price Per Share" on any date shall mean the closing
price per share of Company's Common Stock for the trading day immediately
preceding such date, or, if there is no trading price, the highest price
theretofore paid by any person for shares theretofore purchased form the
Company. This Warrant may also be converted in part into a pro rata number of
shares of Common Stock.
9.
10. Notwithstanding anything to the contrary contained herein, Holder shall
not have the right to exercise this Warrant so long as and to the extent that at
the time of such exercise, such exercise would cause the Holder then to be the
"beneficial owner' of five percent (5%) or more of the Company's then
outstanding Common Stock. For purposes hereof, the term "beneficial owner" shall
have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act
of 1934. The opinion of legal counsel to Holder, in form and substance
satisfactory to the Company and the Company's counsel, shall prevail in all
matters relating to the amount of Holder's beneficial ownership.
11. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or hypothecated,
only if registered by the Company under the Securities Act of 1933 (the "Act")
or if the Company his received from counsel to the Company a written
<PAGE> 15
opinion to the effect that registration of the Warrant or the Underlying Shares
is not necessary in connection with such transfer, sale, assignment or
hypothecation. The Warrant and the Underlying Shares shall be appropriately
legended to reflect this restriction and stop transfer instructions shall apply.
The Holder shall through its counsel provide such information as is reasonably
necessary in connection with such opinion.
12. The holder of this warrant is entitled to certain registration rights
under an Agreement dated 11/18/97 (the "Subscription Agreement").
13. Any permitted assignment of this Warrant shall be effected by the
Holder by (i) executing the form of assignment at the end hereof, (ii)
surrendering the Warrant for cancellation at the office of the Company,
accompanied by the opinion of counsel to the Company referred to above, and
(iii) unless in connection with an effective registration statement which covers
the sale of this Warrant and or the shares underlying the Warrant, delivery to
the Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the Holder for
investment and not with a view to its distribution or resale; whereupon the
Company shall issue, in the name or names specified by the Holder (including the
Holder) new Warrants representing in the aggregate rights to purchase the same
number of Shares as are purchasable under the Warrant surrendered. Such Warrants
shall be exercisable immediately upon any such assignment of the number of
Warrants assigned. The transferor will pay all relevant transfer taxes.
Replacement Warrants shall bear the same legend as is borne by this Warrant.
14. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
15. The Company covenants and agrees that all shares of Common Stock which
may be issued upon exercise hereof will, upon issuance, be duly and validly
issued, fully paid and non-assessable and no personal liability will attach to
the holder thereof. The Company further covenants and agrees that, during the
periods within which this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
for issuance upon exercise of this Warrant and all other Warrants.
16. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
17. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or stock
dividends payable with respect to such Common Stock, the shares of Common Stock
of the Company are at any time increased or decreased or changed into or
exchanged for a different number or kind of share or other security of the
Company or of another corporation, then appropriate adjustments in the number
and kind of such securities then subject to this Warrant shall be made effective
as of the date of such occurrence so that the position of the Holder upon
exercise will be the same as it would have been had it owned immediately prior
to the occurrence of such events the Common Stock subject to this Warrant. Such
adjustment shall be made successively whenever any event listed above shall
occur and the Company will notify the Holder of the Warrant of each such
adjustment. Any fraction of a share resulting from any adjustment shall be
eliminated and the price per share of the remaining shares subject to this
Warranty adjusted accordingly.
18. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with the
purchase form at the end hereof properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company); (ii) payment to the Company of the
exercise price for the number of Shares specified in the above-mentioned
purchase form together with applicable stock transfer taxes, if any; and (iii)
unless in connection with an effective registration statement which covers the
sale of the shares underlying the Warrant, the delivery to the company of a
statement by the Holder (in a form acceptable to the Company
<PAGE> 16
and its counsel) that such Shares are being acquired by the Holder for
investment and not with a view to their distribution or resale.
19. The certificates for the Common Stock so purchased shall be delivered
to the Holder within a reasonable time, not exceeding five business days after
all requisite documentation has been provided, after the rights represented by
this Warrant shall have been so exercised, and shall bear a restrictive legend
with respect to any applicable securities laws.
20. This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware. The federal and state courts in the city of
__________ shall have exclusive jurisdiction over this instrument and the
enforcement thereof. Service of process shall be effective if by certified mail,
return receipt requested. All notices shall be in writing and shall be deemed
given upon receipt by the party to whom addressed. This instrument shall be
enforceable by decrees of specific performances as well as other remedies.
IN WITNESS WHEREOF, Brassie Golf Corporation has caused this Warrant to
be signed by its duly authorized officers under its corporate seal, and to be
dated as of the date set forth above.
BRASSIE GOLF CORPORATION
By: /s/ ?
--------------------------
<PAGE> 17
Exhibit 4
Opinion of Counsel
Omitted
<PAGE> 1
EXHIBIT 10.66
EMPLOYMENT AGREEMENT
BY AND BETWEEN
BRASSIE GOLF CORPORATION
AND
JEREMIAH M. DALY
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of December 1, 1997, by and between BRASSIE GOLF CORPORATION, a Delaware
corporation (the "Company"), and JEREMIAH M. DALY ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to assure the Company of the services of Employee and to set forth the
respective rights and duties of the parties hereto; and
WHEREAS, the Company (a) is presently in the business of golf course
ownership and management and providing other golf-related services and (b)
intends to invest its available resources in one or more new business ventures
(such activities, present and future, being hereinafter referred to as the
"Business").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee agree
as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. The Company hereby employs Employee, and
Employee hereby accepts such employment, as President of the Company, all upon
the terms and conditions set forth herein.
1.2 SERVICES. During the Term (as hereinafter defined) hereof,
Employee agrees to perform diligently and in good faith the duties of President
of the Company under the direction of the Chairman and Chief Executive Officer
of the Company (the "Chairman and CEO".), the Board of Directors of the Company
(the "Board of Directors") or the Executive Committee of the Board of Directors
(the "Executive Committee"). Employee agrees to devote his best efforts and
substantially all of his full business time, energies and abilities to the
services to be performed hereunder and for the exclusive benefit of the Company.
Employee shall be vested with such authority as is generally commensurate with
the position of President of the Company, as further outlined below.
1.3 LOCATION. The principal place of employment and the location
of Employee's principal office shall be in Tampa, Florida; provided, however,
Employee shall, when requested by the Chairman and CEO, temporarily perform,
outside of Tampa, Florida, such services as are reasonably required for the
proper execution of his duties under this Agreement.
<PAGE> 2
1.4 REPRESENTATIONS. Each party represents and warrants to the
other that he/it has full power and authority to enter into and perform this
Agreement and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents that
no consent or approval of my third party is required for his/its execution,
delivery and performance of this Agreement or that all consents or approvals of
any third party required for his/its execution, delivery and performance of this
Agreement have been obtained.
1.5 SOLE DISCRETION. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its president.
ARTICLE II
TERM
2.1 TERM. The term of Employee's employment hereunder (the "Term")
shall commence as of the date hereof (the "Commencement Date") and shall
continue through the fifth anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of this
Agreement.
2.2 RENEWAL. This Agreement shall be renewed for an additional
five-year term unless either party hereto provides written notice of non-renewal
at least thirty (30) days prior to the Scheduled Termination Date of each such
term. Notwithstanding the foregoing, each renewal hereof shall constitute a
separate and distinct agreement. If notice of non-renewal is given by either
party, all terms of this Agreement shall remain in full force and effect until
the earlier of the following (i) a new employment agreement is entered into by
the parties, or (ii) employment is terminated under the terms and conditions in
Article VII hereof.
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered
by Employee, the Company shall pay Employee, during the Term of this Agreement,
an annual base salary equal to Two Hundred Fifty Thousand Dollars ($250,000),
which base salary shall accrue monthly (prorated for periods less than a month)
and shall be paid in equal bi-monthly installments, in arrears. The base salary
will be reviewed annually, or more frequently, as appropriate, by the Board of
Directors or the Compensation Committee of the Board of Directors, as the case
may be, in its sole discretion, provided that the annual base salary shall not
be decreased below Two Hundred Fifty Thousand Dollars ($250,000.00).
3.2 INCENTIVE COMPENSATION. The Company shall pay Employee, during
the Term of this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
2
<PAGE> 3
<TABLE>
<CAPTION>
Fiscal Year
EBIT Bonus
----------- -----
<S> <C>
$0 - 1,000,000 Five Percent (5%) of Base Salary
$1,000,001 to $3,000,000 Fifteen Percent (15%) of Base Salary
$3,000,001 to $5,000,000 Thirty Percent (30%) of Base Salary
In excess of $5,000,001 Fifty Percent (50%) of Base Salary
</TABLE>
3.3 BENEFITS. Employee shall be entitled, during the Term hereof,
to the same medical, hospital, dental and life insurance coverage and benefits
as are available to the Company's most senior executive officers on the
Commencement Date, including, without limitation, an indemnification agreement
in the form attached hereto as Exhibit A. Additionally, Employee shall be
entitled to reimbursement for all reasonable moving expenses incurred in
connection with Employee's relocation to Tampa, Florida.
3.4 WITHHOLDING. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III and
Article VII, are subject to withholding for such federal, state and local taxes
as the Company, in its reasonable judgment, determines to be required pursuant
to any applicable law, rule or regulation.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished
with an office at the principal executive offices of the Company, or at such
other location as agreed to by Employee and the Company, and other working
facilities and secretarial and other assistance suitable to his position and
reasonably required for the performance of his duties hereunder. The Company
shall reimburse Employee for all of Employee's reasonable expenses incurred
while employed and performing his duties under and in accordance with the terms
and conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner required pursuant to Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code"), and applicable
regulations as are in effect from time to time.
4.2 INSURANCE. The Company may secure in its own name or
otherwise, and at its own expense, life, disability and other insurance covering
Employee or Employee and others, and Employee shall not have any right, title or
interest in or to such insurance other than as expressly provided herein.
Employee agrees to assist the Company in procuring such insurance by submitting
to the usual and customary medical and other examinations to be conducted by
such physicians(s) as the Company or such insurance company may designate and by
signing such applications and other written instruments as may be required by
any insurance company to which application is made for such insurance.
3
<PAGE> 4
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. If, during the Term of this Agreement,
Employee shall be unable to perform in all material respects his duties
hereunder for a period exceeding three (3) consecutive months by reason of
illness or incapacity, this Agreement may be terminated by the Company in its
sole discretion pursuant to Section 7.2 hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or incapacity, whether
by physical or mental cause, renders him unable for a minimum period of thirty
(30) consecutive calendar days to carry out his duties and responsibilities as
set forth herein, the Company shall have the right to designate a person to
replace Employee temporarily in the capacity described in Article I hereof;
provided, however, that if Employee returns to work from such illness or
incapacity within the three (3) month period following his inability due to such
illness or incapacity, he shall be entitled to be reinstated in the capacity
described in Article I hereof with all rights, duties and privileges attendant
thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to his
full remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this Agreement
in accordance with the provisions of this Article V.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this
Article V, the term "illness or incapacity" shall mean Employee's inability to
perform his duties hereunder substantially on a full-time basis due to physical
or mental illness as determined by the Board of Directors in accordance with the
Company's long-term disability insurance policy or, in the event Company does
not have a long-term disability insurance policy in effect, in accordance with
the following procedure: Employee and the Company each shall designate a
physician who shall jointly select a third physician and the three (3)
physicians selected would then determine whether or not any illness or
incapacity is such as to prevent Employee from performing his duties hereunder.
ARTICLE VI
CONFIDENTIALITY
6.1 CONFIDENTIALITY. During the Term of this Agreement and
thereafter, Employee agrees to maintain the confidential nature of the Company's
trade secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Employee shall, upon the
termination of his employment, deliver to the Company any and all records,
books, documents or any other materials whatsoever (including all copies
thereof) containing such trade secrets, which shall be and remain the property
of the Company.
4
<PAGE> 5
6.2 NON-REMOVAL OF RECORDS. All documents, papers, materials,
notes, books, correspondence, drawings and other written and graphic records
relating to the Business of the Company which Employee shall prepare or use, or
come into contact with, shall be and remain the sole property of the Company
and, effective immediately upon the termination of the Employee's employment
with the Company for any reason, shall not be removed from the Company's
premises without the Company's prior written consent.
ARTICLE VII
TERMINATION
7.1 TERMINATION FOR CAUSE. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" in any of the following
circumstances:
(a) Employee has been judicially determined to have committed any
fraud, theft, misappropriation or similar act against the
Company or Employee has willfully abused the Company's expense
account policy; or
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties
hereunder, which shall include, without limitation, Employee's
willfully disregarding the lawful written instructions of the
Chairman of the Executive Committee or the Board of Directors
concerning his performance of his duties within the scope
hereof, Employee's conduct which is materially inconsistent
with the published policies of the Company, as promulgated
from time to time and which are generally applicable to all
senior executives, or Employee's breach of any other material'
provision of this Agreement, provided, however, that Employee
shall be given written notice of such default and a reasonable
opportunity to cure such default; or
(c) Employee is grossly negligent or engages in willful misconduct
in the performance of his duties hereunder; or
(d) Employee has been proven to have engaged in illegal activities
or other wrongful conduct which, individually, or in the
aggregate, have a material adverse effect on the Company, its
reputation, prospects, earnings or financial condition.
A Termination For Cause under this Section 7.1 shall be effective upon
the date set forth in a written notice of termination delivered to Employee, but
shall not be earlier than the date such written notice is delivered to Employee.
7.2 TERMINATION WITHOUT CAUSE. This Agreement and the employment
of the Employee may be terminated "Without Cause" as follows:
5
<PAGE> 6
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company at any time after
December 31, 1997, by its giving not less than thirty
(30) days written notice to Employee; or
(c) At the election of the Company by its giving not less
than thirty (30) days written notice to Employee in
the event of an illness or incapacity described in
Section 5.1; or
(d) At the election of the Employee by his giving not
less than thirty (30) days written notice to the
Company; or
(e) Upon the Scheduled Termination Date or on the last
day of any renewal term in the event of non-renewal
of this Agreement; or
(f) Upon Employee's death.
A Termination Without Cause under Section 7.2(b), (c) or (d) hereof
shall be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than thirty (30) days nor more than
forty-five (45) days after the giving of such notice. A Termination Without
Cause under Section 7.2(a), (e) or (f) hereof shall be automatically effective
upon the date of mutual agreement, or the Scheduled Termination Date or the last
day of any renewal term, or the date of death of the Employee, as the case may
be.
7.3 EFFECT OF TERMINATION FOR CAUSE. If Employee's employment is
terminated For Cause:
(a) Employee shall be entitled to accrued base salary
under Section 3.1 through the date of termination
which shall be paid by the Company within sixty (60)
days of the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of Section 4.1 hereof
which shall be paid by the Company within sixty (60)
days of the date of termination; and
(c) Except as provided in Article XI, this Agreement
shall thereupon be of no further force and effect.
7.4 EFFECT OF TERMINATION WITHOUT CAUSE. If Employee's employment
is terminated Without Cause except pursuant to Section 7.2(d) or (e) hereof:
6
<PAGE> 7
(a) Employee shall be entitled to accrued base salary
under Section 3.1 through the date of termination
which shall be paid by the Company within sixty (60)
days of the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the Scheduled Termination
Date in accordance with the provisions of Section 4.1
hereof which shall be paid by the Company within
sixty (60) days of the date of termination;
(c) Employee shall be entitled to severance pay in the
amount of Five Hundred Thousand Dollars ($500,000)
which shall be paid by the Company within sixty (60)
days of the date of termination;
(d) Except as provided in Article XI, this Agreement
shall thereupon be of no further force or effect.
Any amounts due from Company pursuant to Section 7.3 and 7.4 above and
not paid to Employee as and when due shall accrue interest at the prime rate of
interest as established from time to time by Chase Manhattan Bank.
ARTICLE VIII
NON-COMPETITION AND NON-INTERFERENCE
8.1 NON-COMPETITION. Employee agrees that during the Term hereof
and, in the case of a Termination For Cause or a Termination Without Cause
pursuant to Section 7.2(d) hereof, for a period of one (1) year thereafter,
Employee will not, directly, indirectly, or as an agent on behalf of or in con
unction with any person, firm, partnership, corporation or other entity, own,
manage, control, join, or participate in the ownership, management, operation,
or control of, or be financially interested in or advise, lend money to, or be
employed by or provide consulting services to, or be connected in any manner
with any competitive business which is located within the United States of
America; provided, however, that Employee shall be permitted to own up to 5% of
the issued and outstanding shares of capital stock of any corporation which has
a class of equity securities registered under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
8.2 NON-INTERFERENCE. Employee agrees that during the Term hereof
and, in the case of a Termination For Cause or a Termination Without Cause
pursuant to Section 7.2(d) hereof, for a period of one (1) year thereafter,
Employee will not, directly, indirectly or as an agent on behalf of or in
conjunction with any person, firm, partnership, corporation or other entity,
induce or entice any employee of the Company to leave such employment or cause
anyone else to do so.
8.3 SEVERABILITY. If any covenant or provision contained in this
Article VIII is determined to be void or unenforceable in whole or in part, it
shall not be deemed to affect or
7
<PAGE> 8
impair the validity of any other covenant or provision. If, in any arbitral or
judicial proceeding, a tribunal shall refuse to enforce all of the separate
covenants deemed included in this Article VIII, then such unenforceable
covenants shall be deemed eliminated from the provisions hereof for the purpose
of such proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings.
ARTICLE IX
REMEDIES
9.1 EQUITABLE REMEDIES. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Employee to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Employee hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of Articles
VI and VIII of this Agreement, both pendente lite and permanently, against
Employee, as such breach would cause irreparable injury to the Company and a
remedy at law would be inadequate and insufficient. Therefore, the Company may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction in the matter restraining any further violation.
9.2 RIGHTS AND REMEDIES PRESERVED. Nothing in this Agreement shall
limit any right or remedy the Company or Employee may have under this Agreement
or pursuant to law for any breach of this Agreement by the other party. The
rights granted to the parties herein are cumulative and the election of one
shall not constitute a waiver of such party's right to assert all other legal
remedies available under the circumstances.
ARTICLE X
MISCELLANEOUS
10.1 NO WAIVERS. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of any such
provision, nor prevent such party thereafter from enforcing such provision or
any other provision of this Agreement.
10.2 NOTICES. Any notice to be given to the Company and Employee
under the terms of this Agreement may be delivered personally, by telecopy,
telex or other form of written electronic transmission, or by registered or
certified mail, postage prepaid, and shall be addressed as follows:
8
<PAGE> 9
IF TO THE COMPANY:
Brassie Golf Corporation
One Tampa City Center, Suite 2550
201 North Franklin Street
Tampa, Florida 33602
Attention: Chairman
WITH A COPY TO:
Fred S. Ridley, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
201 North Franklin Street, Suite 2100
Tampa, Florida 33602
IF TO EMPLOYEE:
Jeremiah M. Daly
17 Old Meadow Road
Marion, Massachusetts 02738
WITH A COPY TO:
Charles T. Brumback, Jr., Esquire
Akerman, Senterfitt & Eidson, P.A.
Citrus Center
255 South Orange
P.O. Box 231
Orlando, Florida 32802-0231
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (i) when personally delivered, (ii) when
telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 SEVERABILITY. The provisions of this Agreement are severable
and if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, including the survivor upon any
merger, consolidation, share exchange or combination
9
<PAGE> 10
of the Company with any other entity. Employee shall not have the right to
assign, delegate or otherwise transfer any duty or obligation to be performed by
him hereunder to any person or entity.
10.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
10.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 SECTION HEADINGS. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 ATTORNEYS FEES. In the event of any litigation arising out of
this Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys fees and costs incurred.
10.9 FURTHER ASSURANCES. Each party hereto shall cooperate and
shall take such further action and shall execute and deliver such further
documents as may be reasonably requested by the other party in order to carry
out the provisions and purposes of this Agreement.
10.10 GENDER. Whenever the pronouns "he" or "his" are used herein
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
10.11 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which taken together shall be deemed one original.
ARTICLE XI
SURVIVAL
11.1 SURVIVAL. The provisions of Articles VI, VII, VIII, IX and X,
of this Agreement shall survive the termination of this Agreement whether upon,
or prior to, the Scheduled Termination Date hereof.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
BRASSIE GOLF CORPORATION, a
Delaware corporation
By:
-----------------------------------------
Joseph R. Cellura, Chairman and
Chief Executive Officer
EMPLOYEE
--------------------------------------------
Jeremiah M. Daly
11
<PAGE> 1
EXHIBIT 10.67
Private Placement Purchase Agreement
December 3, 1997
One Tampa City Center, Suite 2550
Tampa, Florida 33602
Gentlemen:
1. The undersigned ("Subscriber") has reviewed the filings which you (the
"Company") have made with the Securities Exchange Commission during the past 12
months. The Company represents and warrants to the Subscriber that all such
filings were made timely, are correct and accurate in all material respects and
in all material respects state all facts necessary to make such filings not
misleading. Subscriber has had the opportunity to discuss the Company's affairs
with the Company's officers.
2. At a closing (the "Closing") to occur at the offices of the Company
simultaneously herewith, the Subscriber will for $15,000 per Unit (as defined
below) purchase from the Company, and the Company will sell, the number of Units
set forth below opposite Subscriber's name below. Each Unit consists of 15
shares of 1997 Convertible Preferred Stock (the "Preferred") having a
liquidation value of $1,000 per share (the "Preferred") and warrants (the
"Warrants") to purchase 10,000 shares of common stock of the Company ("Common
Stock"). Such purchase by Subscriber is part of an offering in which an
aggregate of 100 Units will be sold simultaneously with such sale to Subscriber.
The purchasers of the 100 Units are referred to herein collectively as the
"Purchasers." The purchase price will be paid in full and in cash at the
Closing. The date of the Closing is referred to herein as the "Completion Date."
3. The Certificate of Designation for the Preferred is in the form of
Exhibit A. The Warrants are in the form of Exhibit B.
4. Counsel to the Company is concurrently herewith rendering an opinion to
Subscriber in respect of the validity of the securities issued hereby and on
certain other matters.
5. Registration.
(a) The Company will on or before the 90th day after the date hereof
file a registration statement (the "Registration Statement") for the
non-underwritten public sale by the holders of the shares of Common Stock which
have theretofore been issued or which may thereafter be issued on conversion of
the Preferred or upon exercise of the Warrants.
(b) The Company shall use its best efforts to cause the Registration
Statement to become effective not later than 90 days after the date of filing,
and, subject to Section 4(h), to remain effective for two years with respect to
Common Stock issued upon conversion of Preferred Stock and three years with
respect to Common
<PAGE> 2
Stock issued upon exercise of Warrants. The registration shall be accompanied by
blue sky clearances in such states as the holders may reasonably request.
(c) The Company shall pay all expenses of the registration hereunder,
other than the holders' brokerage fees, discounts or commissions, and transfer
taxes, if any.
(d) Registration rights may be assigned to assignees of the Preferred,
the Warrants or the underlying stock, but only with the Company's prior written
consent, which consent shall not be unreasonably withheld or delayed. The
provisions of this Section are for the benefit of the Subscriber and
Subscriber's personal representatives and permitted assigns.
(e) In connection with such registration, the Company and the
Subscriber will sign indemnification agreements which are conventional in
transactions of this kind.
(f) Should Subscriber from time to time or times give to the Company
notice that it has assigned all or any part of the Preferred or the Warrants or
any shares of Common Stock issuable on conversion or exercise in transactions
permitted hereunder, the Company shall, at no cost to Subscriber, within five
business days file a supplement to the registration statement to reflect the
name(s) of the transferee(s) as (a) selling shareholder(s).
(g) Subscriber agrees that for a period of 12 months from the Closing
it shall not offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of any Common Stock (each, a "Sale") that Subscriber does not
own as of such date, provided, however, that no such restriction shall apply to
any Common Stock to be issued to Subscriber upon the conversion of any Preferred
which is converted within 10 business days after such Sale or upon the exercise
of any Warrants which are exercised within 10 business days after such Sale.
(h) Once the registration statement is effective, the Company will
issue UNLEGENDED shares of common stock (in form which can be transmitted
electronically if desired by Subscriber):
(i) on conversion of the Preferred and exercise of the
Warrants, whether or not such shares are sold simultaneously with such
conversion or exercise; or
(ii) in exchange for any legended shares of common stock
which were issued on prior conversion of the Preferred or exercise of
the Warrants.
6. The Company covenants to call a meeting of stockholders on or before
March 31, 1998 and to hold such meeting not later than April 30, 1998 (the
"Meeting") and to propose to the stockholders at such meeting that the
stockholders approve the issuance of shares
2
<PAGE> 3
on conversion of the Preferred and on exercise of the Warrants. Until such
approval is obtained, the Warrants shall not be exercisable, and the maximum
number of shares which will be issued on conversion of the Preferred by all
Purchasers is _______, issuable on a first converted-first exercised basis.
Should such approval not be obtained on or before April 30, 1998, then until
such approval is obtained, the Company shall on demand by Subscriber made at any
time or times redeem any portion of the Preferred Stock which is not convertible
under the preceding sentence and which is designated by Subscriber for
redemption (the "Redeemed Portion") at a redemption price equal to $2,000 per
share proposed to be converted plus accrued but unpaid dividends. The redemption
price for each redemption demand shall be payable within 30 business days after
such demand is made, and shall accrue interest from the date of the demand by
Subscriber at 11% per annum or, if less, the maximum statutory interest rate in
Florida. Interest shall be payable on demand by Subscriber after such 30th day.
7. Certain General Representations.
(a) Subscriber represents and warrants that it is purchasing the Units
solely for investment solely for its own account and not with a view to or for
the resale or distribution or of Units, or of the Preferred or any shares (the
"Shares") of Common Stock issuable upon conversion or exercise thereof.
(b) Subscriber understands that it may sell or otherwise transfer the
Units, the Preferred, the Warrants or the Shares only if such transaction is
duly registered under the Securities Act of 1933, as amended, under the
Registration Statement or otherwise, or if Subscriber shall have received the
favorable opinion of counsel to the holder, which opinion shall be reasonably
satisfactory to counsel to the Company, to the effect that such sale or other
transfer may be made in the absence of registration under the Securities Act of
1933, as amended (the "Securities Act") , and registration or qualification in
every applicable state. The certificates representing the aforesaid securities
will be legended to reflect these restrictions, and stop transfer instructions
will apply. Subscriber realizes that the Units are not a liquid investment.
(c) Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities Act) in evaluating
the risks and merits of this investment. Subscriber has the knowledge and
experience to evaluate the Company and the risks and merits relating thereto.
(d) Subscriber represents and warrants that Subscriber is an
"accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated pursuant to the Securities Act of 1933, as amended, and shall be
such on the date any shares are issued to the holder; Subscriber acknowledges
that Subscriber is able to bear the
3
<PAGE> 4
economic risk of losing Subscriber's entire investment in the shares and
understands that an investment in the Company involves substantial risks;
Subscriber has the power and authority to enter into this agreement, and the
execution and delivery of, and performance under this agreement shall not
conflict with any rule, regulation, judgment or agreement applicable to the
Subscriber; and Subscriber has invested in previous transactions involving
restricted securities.
(e) Subscriber represents that Subscriber's investment decision to
purchase the Units was based exclusively on the Company's SEC filings.
8. Fees and Expenses.
(a) The Company will upon Closing pay to Mueller Trading Company a fee
for all Purchasers which aggregates $150,000.
(b) The Company will at Closing pay a total of $15,000 to Oscar D.
Folger for his services as counsel to certain Purchasers in connection herewith.
(c) Except as aforesaid, each party shall bear its own expenses in
connection with this transaction.
9. Funding Limitations; Certain Company Representations and Covenants.
(a) The Company represents that neither the issuance of the Preferred
or Warrants, nor the conversion or exercise thereof, will trigger any rights
under any outstanding securities of the Company.
(b) For so long as Subscriber owns any shares of Preferred, the Company
will promptly forward to Subscriber copies of all press releases by the Company
and all filings made by the Company with the Securities and Exchange Commission.
10. The Company's obligations under this Agreement and under the Preferred
and Warrants shall not be subject to defense, offset or counterclaim for any
matter or thing. All claims by the Company against Subscriber shall be brought
by the Company in separate actions for monetary damages only, and injunctive
relief shall not be available.
11. This Agreement may not be changed or terminated except by written
agreement of the Company and a majority-in-interest of the Purchasers. It shall
be binding on the parties and on their personal representatives and permitted
assigns. It sets forth all agreements of the parties. It shall be enforceable by
decrees of specific performance (without posting bond or other security) as well
as by other available remedies. This Agreement may be signed in counterparts.
This Agreement shall be governed by the internal laws
4
<PAGE> 5
of the State of Delaware. The Florida courts shall have exclusive jurisdiction
over this instrument and the enforcement thereof. Service of process shall be
effective if by certified mail, return receipt requested.
Subscriber:
-----------------------------------
By:
-------------------------------------
Number of Units: _____________
5
<PAGE> 6
Exhibit A
There is hereby created a series of the Preferred Stock of this corporation to
consist of 1,000 of the shares of 1997 Preferred Stock, $0.001 par value per
share, which this corporation now has authority to issue.
1. The distinctive designation of the series shall be "1997 Convertible
Preferred Stock" (the "Preferred Stock" or the "1997 Preferred Stock"). The
number of shares of 1997 Convertible Preferred Stock shall be 1,500.
2. For purposes of this Certificate of Designation and the Company's
Certificate of Incorporation, (i) any series of Preferred Stock of the Company
entitled to dividends and liquidation preference on a parity with the 1997
Preferred Stock shall be referred to as "Parity Preferred Stock," (ii) any
series of Preferred Stock ranking senior to the 1997 and Parity Preferred Stock
with respect to dividends and liquidation preference shall be referred to as
"Senior Stock," and (iii) the Common Stock and any series of Preferred Stock
ranking junior to the 1997 and Parity Preferred Stock with respect to dividends
and liquidation preference shall be referred to as "Junior Stock." As of the
date of this Certificate of Determination there is not outstanding any Parity
Preferred Stock or Senior Stock.
3. In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, after setting apart or paying in full
the preferential amounts due to holders of Senior Stock, the holders of 1997
Preferred Stock and Parity Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
the Company to the holders of Junior Stock or Common Stock by reason of their
ownership thereof, an amount equal to their full liquidation preference, which
in the case of shares of 1997 Preferred Stock shall be $1,000 per share, plus
accrued and unpaid dividends (the "Redemption Value"). If, upon such
liquidation, dissolution or winding-up of the Company, the assets of the Company
available for distribution to the holders of its stock be insufficient to permit
the distribution in full of the amounts receivable as aforesaid by the holders
of Preferred Stock and Parity Preferred Stock, then all such assets of the
Company shall be distributed ratably among the holders of Preferred Stock and
Parity Preferred Stock in proportion to the amounts which each would have been
entitled to receive if such assets were sufficient to permit distribution in
full as aforesaid. Neither the consolidation nor merger of the Company nor the
sale, lease or transfer by the Company of all or any part of its assets shall be
deemed to be a liquidation, dissolution or winding-up of the Company for the
purposes of this paragraph.
A-1
<PAGE> 7
4. Dividends.
(a) The holders of the Preferred Stock shall be entitled to receive a
dividend, payable quarterly on the first day of each calendar quarter commencing
April 1, 1998, which accrues from the date of issuance at the annual rate of $70
per share, provided that dividends shall accrue at the annual rate of $180 per
share so long as Registration Statement (as defined in a Private Placement
Purchase Agreement of even date herewith) is not effective at any time after the
180th day following the issuance of the Preferred Stock. The preceding proviso
shall not limit any other rights or remedies of Holder as a result of the breach
by the Company of any provisions herein relating to the Registration Statement
or otherwise.
(b) Dividends shall be payable at the option of the Company either in
cash or in shares of Common Stock which on the date of the dividend payment are
convertible into shares of Common Stock which have a value equal to the
dividend, provided that dividends may be paid in Common Stock only if the public
sale thereof is permitted under a then effective registration statement. The
value of each share of Common Stock for the purposes of any dividend payment
shall be equal to the average of the last reported sales prices therefor on the
public markets on the last five trading days prior to the date of the payment.
5. Conversion
(a) The holder shall have the right at any time in its sole discretion,
to convert the Preferred Stock, in whole or in part, into a number of shares
(the "Conversion Shares") of the Company's common stock (the "Common Stock")
equal to $1,000 per share converted divided by the Conversion Price. The
Conversion Price means the lesser of (1) $0.70 (the "Cap") or (2) 75% of the
average of the closing bid price of a share of Common Stock of the Company
during the ten trading days prior to such conversion.
(b) In the event that the holder elects to exercise its conversion
rights hereunder, it shall give to the Company written notice (by fax or
overnight courier service or personal delivery) of such election and shall
surrender his Preferred Stock to the Company for cancellation. Conversion shall
be effective upon the giving of such notice. The Company shall, within three
business days after receipt by the Company of notice of conversion, deliver to
the Holder (or, at Holder's request, DWAC) a certificate for the shares of
Common Stock into which such conversion was made.
(c) The Company shall at all times reserve and keep available out of
its authorized and unissued common stock, solely for issuance upon the
conversion of the Preferred Stock as herein provided, the number of shares of
common stock as shall from time to time be issuable upon the conversion of the
Preferred Stock.
A-2
<PAGE> 8
(d) The Percentage and the Cap shall each be reduced by two percentage
points for each full 30-day period after the 180th day after the date hereof in
which the Registration Statement has not been declared effective, provided that
neither the Cap nor the Percentage shall ever be less than 50% of its initial
value. The preceding sentence shall not limit any other rights or remedies of
Holder as a result of the breach by the Company of any provisions herein
relating to the Registration Statement or otherwise.
(e) The Cap shall be equitably adjusted in case the Company shall issue
common stock as a dividend upon common stock or in payment of a dividend
thereon, shall subdivide the number of outstanding shares of its common stock
into a greater number of shares or shall contract the number of outstanding
shares of its common stock into a lesser number of shares.
(f) If the Company shall effect any consolidation, merger or sale, or
if any capital reorganization or reclassification of the Common Stock shall be
effected, then, as a condition precedent of such transaction, appropriate
provision shall be made to the end that conversion rights hereunder (including,
without limitation, provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to the kind of stock,
securities or assets which are deliverable in respect of Common Stock upon the
consummation of such transaction.
(g) The Preferred Stock shall be convertible at any time only to the
extent that Holder would not as a result of such conversion beneficially own
more that 4.99% of the then outstanding Common Stock. Beneficial ownership shall
be defined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. The opinion of counsel to Holder shall prevail in the event of any dispute
on the calculation of Holder's beneficial ownership.
(h) Should holder propose to convert any Preferred Stock at a
Conversion Price which is less than $0.50, the Company shall have the option to
redeem all (but not any part) of the shares proposed to be converted at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends. The
option shall be exercisable by written notice from the Company to the Holder
which is given within four business days of the notice of conversion and which
is accompanied by payment of the redemption price in full.
6. Certain Payments. In the event the Company fails timely to deliver or
DWAC a certificate for shares of Common Stock as required hereunder, or if the
Company fails timely to make any required redemption payment in respect of any
shares of Preferred Stock, then, without limiting such holder's other rights and
remedies (including, without limitation, rights and remedies available to such
holder upon an event of default), the Company shall forthwith pay to such holder
an amount accruing at the rate of $50 per day for each share of Preferred Stock.
A-3
<PAGE> 9
7. Events of Default and Early Redemption.
(a) An "event of default" with respect to the Preferred Stock shall
exist if any of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Certificate of Designation and such breach or failure
shall continue for 15 days after written notice by any Holder to the
Company.
(ii) A receiver, liquidator or trustee of the Company or
of a substantial part of its properties shall be appointed by court
order and such order shall remain in effect for more than 15 days; or
the Company shall be adjudicated bankrupt or insolvent; or a
substantial part of the property of the Company shall be sequestered by
court order and such order shall remain in effect for more than 15
days; or a petition to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the Company and
shall not be dismissed within 45 days after such filing.
(iii) The Company shall file a petition in voluntary
bankruptcy or request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall consent to the
filing of any petition against it under any such law.
(iv) The Company shall make an assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or consent to the appointment of a
receiver, trustee or liquidator of the Company, or of all or any
substantial part of its properties.
(b) If an event of default referred to in clause (i) shall occur, the
Holder may, in addition to such Holder's other remedies, by written notice to
the Company, require that the Company forthwith redeem the Preferred Stock at a
redemption price of $1,250 per share, plus any accrued but unpaid dividends.
Upon any such declaration, such amount shall become immediately due and payable
and the Holder shall have all such rights and remedies provided for herein and
in the Subscription Agreement. If an event of default referred to in clauses
(ii), (iii) or (iv) shall occur, the Company forthwith redeem the Preferred
Stock at a redemption price of $1,250 per share, plus any accrued but unpaid
dividends, and the Holder shall have all such rights and remedies provided for
under the terms of this Note and the Subscription Agreement.
8. Without the consent of a majority in interest of the holders of the
Preferred Stock, the Company shall not create any class of equity security which
is senior to or parity with the Preferred Stock in liquidation rights.
A-4
<PAGE> 10
9. All share, redemption and similar amounts are subject to appropriate
adjustment in the event of stock splits, stock dividends, recapitalization and
similar events.
A-5
<PAGE> 11
Exhibit B
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
WARRANT
To Purchase Shares of Common Stock of
------------------------------------
DATED: December __, 1997
Number of Shares:
Holder:
Address:
THIS CERTIFIES that, for value received the holder of this Warrant ("Holder"),
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to purchase from , a Delaware corporation (the "Company" or "Brassie"), the
number of fully paid and nonassessable shares of the Company's Common Stock (the
"Common Stock") set forth above at the purchase price per share as set forth in
Section 1 below ("Exercise Price"). The number of shares and Exercise Price are
subject to adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price.
(a) Subject to adjustments as provided herein, this Warrant shall be
exercisable for the number of shares of common stock set forth above, at an
Exercise Price per share of $1.00.
(b) This Warrant shall be exercisable during the period commencing on
the date hereof and ending on the third anniversary of the date of this warrant.
2. Title to Warrant. This Warrant shall be transferable only with the
prior written consent of the Company, which consent shall not be unreasonably
withheld or delayed. Transfers shall occur at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole
B-1
<PAGE> 12
or in part, at any time, or from time to time, during the term hereof as
described in Section l above, by faxed or other written notice thereof, so long
as such notice is followed within three business days by the surrender of this
Warrant and a standard form of Notice of Exercise duly completed and executed on
behalf of the holder hereof, at the office of the Company in Florida (or such
other office or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder appearing on the
books of the Company), and subject to Section 5 hereof, payment of the purchase
price of the shares thereby purchased in cash or check reasonably acceptable to
the Company. The holder of this Warrant shall be entitled within five business
days after exercise to receive a certificate for the number of shares so
purchased and, if this Warrant is exercised in part, a receipt acknowledging
tender of the Warrant, with a new Warrant for the unexercised portion of this
Warrant to be issued as soon as reasonably practicable. The Company agrees that,
upon exercise of this Warrant in accordance with the terms hereof, the shares so
purchased shall be deemed to be issued to such holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been exercised. In the event the Company fails to issue to certificates for
any shares of Common Stock upon exercise of this Warrant within such time, then
without limiting Holder's other rights and remedies, the Company shall forthwith
pay to the Holder an amount accruing at the rate of $250 per day for each 10,000
such shares of common stock subject to this Warrant, with pro rata payments for
shares in an amount less than 10,000.
The Company covenants that all shares which may be issued upon the exercise of
rights represented by this Warrant will, upon exercise of the rights represented
by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
Notwithstanding anything to the contrary contained herein, the holder hereof
shall not have the right to exercise this Warrant so long as and to the extent
that at the time of such exercise, such exercise would cause such holder then to
be the "beneficial owner" of five percent (5%) or more of the Company's then
outstanding Common Stock. For purposes hereof, the term "beneficial owner" shall
have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act
of 1934, as amended. The opinion of legal counsel to the holder of this Warrant
shall prevail in all matters relating to the amount of such holder's beneficial
ownership.
4. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu of any fractional share to which such holder
would otherwise be entitled, such holder shall be entitled, at its option, to
receive either (i) a cash payment equal to the excess of fair market value for
such fractional share above
B-2
<PAGE> 13
the Exercise Price for such fractional share (as mutually determined by the
Company and the holder) or (ii) a whole share if the holder tenders the Exercise
Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares upon
the exercise of this Warrant shall be made without charge to the holder hereof
for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the holder of
this Warrant or in such name or names as may be directed by the holder of this
Warrant (with the prior written consent of the Company); provided, however, that
in the event certificates for shares are to be issued in a name other than the
name of the holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed by the
holder hereof and the Notice of Exercise duly completed and executed and stating
in whose name and certificates are to be issued; and provided further, that such
assignment shall be subject to applicable laws and regulations. Upon any
transfer involved in the issuance or delivery of any certificates for shares of
the Company's securities, the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto.
6. No Rights as Stockholder. This Warrant does not entitle the holder
hereof to any voting rights, dividend rights or other rights as a stockholder of
the Company prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a registry
showing the name and address of the registered holder of this Warrant. This
Warrant may be surrendered for exchange, transfer or exercise, in accordance
with its terms, at the office of the Company, and the Company shall be entitled
to rely in all respects, prior to written notice to the contrary, upon such
registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day not a
Saturday or a Sunday or a legal holiday.
B-3
<PAGE> 14
10. Adjustments of Rights. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
(a) Merger. If at any time there shall be a merger or consolidation of
the Company with or into another corporation, then, as a part of such merger or
consolidation, lawful provision shall be made so that the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities or property
resulting from such merger or consolidation, to which a holder of the stock
deliverable upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised immediately before
such merger or consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the holder after the merger or consolidation.
(b) Reclassification, etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
(c) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall split, subdivide
or combine the securities as to which purchase rights under this Warrant exist,
the Exercise Price shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.
(d) Common Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in, or make any other distribution with respect to Common Stock
of, shares of Common Stock, then the Exercise Price in effect immediately prior
to such event shall be adjusted, from and after the date of determination of the
stockholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price by a fraction (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of shares of the Common Stock outstanding
immediately after such dividend or distribution.
B-4
<PAGE> 15
(e) Other Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend (other than dividends out of
retained earnings), or make any other distribution with respect to Common Stock
payable in stock (other than Common Stock) or other securities or property, then
the Company may, at its option, either (i) decrease the per share Exercise
Prices by an appropriate amount based upon the value distributed on each share
of Common Stock as determined in good faith by the Company's Board of Directors
or (ii) provide by resolution of the Company's Board of Directors that on
exercise of this Warrant, the holder hereof shall receive, in addition to the
shares of Common Stock otherwise receivable on exercise hereof, the same number
and kind of stock, other securities and property which such holder would have
received had the holder held the shares of Common Stock receivable on exercise
hereof on and before the record date for such dividend or distribution.
(f) Adjustment of Number of Shares. Upon each adjustment in the
Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable under Section 1(a) hereof shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of shares purchasable
immediately prior to such adjustment the Exercise Price by a fraction (i) the
numerator of which shall be the Exercise Price immediately prior to such
adjustment, and (ii) the denominator of which shall be the Exercise Price
immediately after such adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or number
of shares purchasable hereunder shall be adjusted pursuant to Section 10 hereof,
the Company shall issue a certificate signed by its Chief Executive Officer or
Chief Financial Officer setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment, and shall cause a
copy of such certificate to be mailed (by first class mail, postage prepaid) to
the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of Delaware and for all purposes shall be construed in accordance with and
governed by the laws of said state, without giving effect to the conflict of
laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. Under an
agreement
B-5
<PAGE> 16
of even date herewith, the Company is required to file a registration statement
(the "Registration Statement") with respect to the shares issuable hereunder.
Amendments. This Warrant may be amended and the observance of any term of this
Warrant may be waived only with the written consent of the Company and the
registered holder hereof.
Notice. Any notice required or permitted hereunder shall be deemed effectively
given upon personal delivery to the party to be notified or upon faxed
transmission, or upon deposit with the United States Post Office, by certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated below for such party, or at such other address as such other party may
designate by ten-day advance written notice.
IN WITNESS WHEREOF, _________________________________ has caused this Warrant to
be executed by its officer thereunto duly authorized.
Dated: December ___, 1997
By:
---------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
B-6
<PAGE> 1
EXHIBIT 10.68
December 5, 1997
PERSONAL AND CONFIDENTIAL
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Mr. and Mrs. William E. Horne
Mr. William E. Horne, as custodian
for Jordan R. Horne and William J. Horne,
minor children
1002 Bajada de Avila
Tampa, FL 33610
Re: Stock Purchase Agreement
Dear Mr. Horne:
Pursuant to the terms and conditions of the Stock Purchase Agreement
entered into on the ____ day of November, 1997 with Brassie Golf Corporation,
Brassie Golf Corporation and/or its assigns hereby notifies and directs you to
deliver common and preferred shares of stock in the Brassie Golf Corporation
owned either by you jointly with your wife, Charlotte, or held by you as
custodian for your two (2) minor children, Jordan R. Horne and William J. Horne,
in the following amounts and at the previously agreed upon terms:
503,617 shares of common stock at $.15 per share
281,250 shares of preferred stock at $.75 per share
The aggregate sale price for the above designated shares shall be
$286,480.05.
You are hereby directed to deliver to Brassie Golf Corporation and/or
its assigns at ___________ a.m./p.m. on the ______ day of _______________, at
BRASSIE GOLF CORPORATION's principal place of business at One Tampa City Center,
Suite 2550, Tampa, Florida 33602, the Certificates representing the shares of
stock indicated hereinabove, duly endorsed in blank or with duly endorsed stock
powers attached, all in form suitable for the transfer of the shares to the
Brassie Golf Corporation and/or its assigns.
You are further directed to deliver to the BRASSIE GOLF CORPORATION an
executed Letter of Resignation and an executed General Release, both in the
forms set forth in Exhibits "B" and "C," respectively, of the Stock Purchase
Agreement entered into between the parties.
Upon delivery of said stock certificates, the Brassie Golf Corporation
and/or its assigns will tender to you a check in the amount of the aggregate
sale price as indicated hereinabove, together with an executed Indemnification
Agreement in the form
<PAGE> 2
attached to the Stock Purchase Agreement as Exhibit "D".
BRASSIE GOLF CORPORATION
By:
-------------------------------
Joseph R. Cellura
Its: President
<PAGE> 3
December 12, 1997
Board of Directors
Brassie Golf Corporation
One Tampa City Center
Suite 2550
Tampa, FL 33602
Re: Letter of Resignation
To the Board of Directors of Brassie Golf Corporation:
Effective as of the date written above, I hereby resign as a director
and officer of the Brassie Golf Corporation and each of its subsidiaries and
affiliated companies.
Sincerely,
William E. Horne
Exhibit "B"
<PAGE> 4
Exhibit "C"
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS THAT: WILLIAM E. HORNE, (hereinafter
"Horne"), for and in consideration of the sum of Ten Dollars ($10.00) Dollars
and other good and valuable consideration, received from or on behalf of BRASSIE
GOLF CORPORATION, a Delaware corporation, its officers, agents, or
representatives (hereinafter "Brassie"), the receipt and sufficiency of which is
hereby acknowledged;
DOES HEREBY remise, release, acquit, satisfy, and forever discharge
Brassie, individually and collectively, jointly and severally, and including any
of its agents, officers, directors, partners, employees or representatives,
including sureties, and any of their parent or subsidiary companies or
affiliated business entities (together with their officers, directors, employees
and agents) and each of their successors and assigns (collectively, the
"Released Parties"), of and from all, and all manner of, action and actions,
cause and causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, liens (mechanics', equitable,
or otherwise), contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, executions, claims and demands whatsoever, in
law or in equity, which Horne ever had, now has, or which any personal
representative, successor, heir or assignee of Horne hereafter can, shall, or
may have, against the Released Parties, for, upon, or by reason of Horne's
employment with Brassie or an other of the Released Parties, including, but
<PAGE> 5
Exhibit "C"
not limited to, relief in any administrative proceedings or plenary action
injuries suffered to any federal, state or local law. I specifically release and
forever waive any and all claims which I ever had, now have, and which I or my
heirs or executors, administrators or assigns, or any of them, hereafter can,
shall, or may have for any matter or thing, known or unknown. Without limitation
to the foregoing, I hereby acknowledge the immediate termination of my
employment with Brassie and any Released Party and consent hereby to the
immediate termination of any and all employment and/or consulting agreements
between me and Brassie or any Released Party, including that certain Employment
Agreement between me and Brassie dated June 5, 1995. 1 further acknowledge that,
except as specifically provided in that certain Stock Purchase Agreement dated
November _, 1997, and except as specifically provided in that certain
Indemnification Agreement dated November _, 1997, I am not entitled to, and
hereby waive any right to, any payment or compensation of any kind from Brassie
and all Released Parties, including, but not limited to, back pay, vacation pay,
severance, reimbursements, bonuses, and the cash value of any insurance
policies.
IN WHEREOF, we have hereunto set our hands and seals effective this
____ day of ______________, 1997.
Signed, sealed and delivered
in the presence of:
By:
- ----------------------------------- ---------------------------
Signature of Witness #1 William E. Horne
- -----------------------------------
Typed or printed name of Witness #1
<PAGE> 6
Exhibit "C"
- ------------------------------
Signature of Witness #2
- -------------------------------
Typed or printed name of Witness #2
STATE OF FLORIDA
COUNTY OF _____________________
The foregoing instrument was acknowledged before me this ___ day of
___________ 1997, by William E. Horne, who is personally known to me or who has
produced _______________________________ (type of identification) as
identification.
-----------------------------------
Signature of Person Taking
Acknowledgment
-----------------------------------
Name of Acknowledger Typed,
Printed or Stamped
(NOTARY SEAL)
Notary Public, State of ______
-----------------------------------
Notarial Serial Number
<PAGE> 7
Exhibit "C"
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made and entered
into this ____ day of __________, 1997, by and between BRASSIE GOLF CORPORATION,
a Delaware corporation ("Brassie") and WILLIAM E. HORNE ("Horne").
Background
Horne has served as a director, officer and agent of Brassie since June
5, 1995. Effective as of the date hereof, and by way of separate letter Horne
has resigned in all capacities in exchange for which Brassie hereby agrees to
indemnify him and hold him harmless from liability associated with his service
in such capacities for Brassie to the maximum extent permitted by law.
A majority of the disinterested directors of Brassie have approved the
execution of this Agreement at a special meeting of the directors called for
that purpose on November 10, 1997.
1. In consideration of the service of Horne to Brassie, and
subject to the terms of this Agreement, Brassie hereby agrees to indemnify and
hold Horne harmless from:
(a) Any and all liability, cost and damage sustained by him in
any civil or criminal action or threat of action by reason of his being an
officer, director, employee or agent of Brassie or by reason of his office,
status or service as an officer, director, employee or agent of another
corporation or legal entity or enterprise at the request of Brassie or his
<PAGE> 8
Exhibit "C"
actions while performing in any such capacity, all so long as Horne acted in
good faith and in a manner he reasonably believed to be in the best interests of
Brassie.
(b) Any amount paid in settlement of any claim or demand based
upon the service or action described in Section l(a) above.
(c) Any reasonable advancement, cost and expense associated
with defending or opposing any claim of demand described in Section l(a) above,
including, without limitation, all reasonable attorney's fees and court costs,
whether or not assessable in the court action, and including any such attorney's
fees and costs incurred in appellate proceeding or alternative dispute
resolution proceeding.
2. To the extent permitted by law, Brassie hereby remises,
releases, and forever discharges, Horne of and from all, and all manner of
action and actions, cause and causes of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever, in law, or in equity, which it may
have against Horne arising out of his being an officer, director, employee or
agent of Brassie or by reason of his office, status or service as an officer,
director, employee or agent of another corporation or legal entity or enterprise
at the request of Brassie or his actions while performing in any such capacity,
including, without limitation, the development or exploitation of
<PAGE> 9
Exhibit "C"
any business concept or idea, whether fully or partially developed while Horne
was performing in any such capacity, pursuant to the Employment Agreement
entered into between Horne and BRASSIE on June 5, 1995, from the beginning of
the world to the day of the date of these presents.
3. The foregoing indemnification and release shall not apply to
any claim or demand for any act which Horne:
(a) did not act in good faith;
(b) was opposed to the best interests of Brassie;
(c) which constituted a criminal act, unless Horne had no
reasonable cause to believe that such act was unlawful;
(d) engaged in willful misconduct or conscious disregard for
the best interest of Brassie; or,
(e) derived an improper personal benefit.
4. Any indemnification under Section 1, unless pursuant to a
determination by a court, shall be made by Brassie only as authorized in the
specific case upon a determination that indemnification of Horne as officer,
director, employee or agent of Brassie is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 and 3.
Such determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to any such proceeding; or
(b) By independent legal counsel selected by the Board of
Directors prescribed in Paragraph 4(a); or
<PAGE> 10
Exhibit "C"
(c) By the Shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to any such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not a
party to any such proceeding.
5. Evaluation of the reasonableness of expenses and authorization
of indemnification shall be made in the same manner as the determination that
indemnification is permissible as set out in Section 4 hereinabove.
6. In the event that Horne determines that he is entitled to
indemnification under Section 1 of this Agreement, he shall give Brassie written
notice of his demand for indemnification, with sufficient documentation, to the
extent available to Horne, to enable Brassie to determine whether or not the
claim is barred by the application of Section 3 of this Agreement. If Brassie
determines that the right to indemnification for the claim is barred by the
operation of Section 3 of this Agreement, it shall give Horne written notice of
such objection ("Objection to Claim") within twenty (20) days of the date of the
demand by Horne specifying the reason for such objection. If the objection is
not timely given, Brassie shall be conclusively presumed to have waived its
right to object. If Brassie makes the Objection to Claim timely, Horne, unless
the parties can promptly agree to an alternative form of dispute resolution,
shall be entitled to have a court of competent jurisdiction determine by
declaratory decree whether or not his right to indemnification for the claim is
barred by Section 3 of this Agreement. If the right to
<PAGE> 11
Exhibit "C"
indemnification for the claim is not barred by Section 3, Horne shall be
entitled to the indemnification provided in Section 1.
7. As a condition precedent to the indemnification provisions
contained in paragraph I above, Horne shall be obligated to follow the following
procedure: Upon receiving any communication placing Horne on notice that a claim
has or may be asserted against him for which he might be entitled to
indemnification hereunder, whether by letter, service of process, other writing,
or orally, Horne shall communicate same to Brassie (and, in the case of any
written communication, immediately provide a copy of same to Brassie). Horne
shall not thereafter offer to compromise or settle any such claim without
Brassie's prior written consent. Any violation of this provision shall result in
the nullification of the indemnification provisions of this Agreement, In the
event a lawsuit is filed against Horne, Brassie shall have the right, but not
the obligation, to: (1) provide counsel of Brassie's choice to Horne, for which
Brassie will bear all costs and expenses (subject to Horne's obligation to
reimburse same if a determination is made that Horne's actions were not subject
to indemnification by Brassie hereunder); or (2) assume the cost of Horne's
defense by counsel of Horne's choosing (once again, subject to a reservation of
rights and Horne's obligation to reimburse as provided above. In the event
Brassie does not notify Horne of its desire to select either of the options
described above, Horne shall retain its own counsel, and pay for same, subject
to the indemnification rights contained
<PAGE> 12
Exhibit "C"
herein. Consistent with the above, Horne shall not offer to compromise or settle
any lawsuit without Brassie's prior written consent (the violation of which
shall result in a nullification of the indemnification provisions of this
Agreement).
8. The indemnification provided in this Agreement is in addition
to, and not in limitation of any other indemnification provided by Brassie under
any agreement or right indemnification provided by law.
9. In any legal action or proceeding, including alternative
dispute resolution proceedings, relating to the enforcement or interpretation of
this Agreement, the prevailing party shall be entitled to recover, in addition
to any other relief, such parties reasonable attorney's fees and costs,
including those incurred in any appellate proceeding.
10. The parties agree that this Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Florida.
The venue for any legal action to enforce or interpret the rights or obligations
of any party to this Agreement shall be located in Hillsborough County, Florida
and each of the parties consents to such action being maintained in the Circuit
Court Thirteenth Judicial Circuit sitting in such county.
11. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their heirs, successors in interest and assigns
as applicable.
Signed in the presence of: BRASSIE GOLF CORPORATION,
a Florida corporation
<PAGE> 13
Exhibit "C"
By:
--------------------------------
Joseph R. Cellura
Its: President
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
(Type or Print Name) (Type or Print Address)
- -----------------------------------
- -----------------------------------
(Type or Print Name)
Signed in the presence of:
-----------------------------------
WILLIAM E. HORNE
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
(Type or Print Name) (Type or Print Address)
- -----------------------------------
- -----------------------------------
(Type or Print Name)
<PAGE> 14
Exhibit "C"
STOCK PURCHASE AGREEMENT
THIS AGREEMENT made this 13th day of November, 1997 by and between
BRASSIE GOLF CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, having its principal place of business at One Tampa City
Center, Suite 2550, Tampa, Florida 33602, hereinafter referred to as the
"CORPORATION", and/or its assigns, and WILLIAM E. HORNE and CHARLOTTE HORNE,
husband and wife, and WILLIAM E. HORNE, as custodian for both JORDAN R. and
WILLIAM J. HORNE, minor children, all residing at 1002 Bajada de Avila, Tampa,
Florida 33613, hereafter collectively referred to as the "SELLERS".
WITNESSETH:
WHEREAS, the CORPORATION, and/or its assigns, are desirous of obtaining
outstanding shares of its stock in order to assist the CORPORATION in securing
additional prospective financing for the CORPORATION in its future development
and profitability; and
WHEREAS, WILLIAM E. HORNE, former President and CEO of the CORPORATION,
has indicated a desire and willingness to sell to the CORPORATION, and/or its
assigns, all shares of the outstanding common and preferred stock in the
CORPORATION, owned either by himself jointly with his wife, CHARLOTTE HORNE, or
held by WILLIAM E. HORNE as custodian for his two minor children, Jordan R.
Horne and William J. Horne, and;
WHEREAS, the total shares of common and preferred stock presently owned
by WILLIAM E. HORNE jointly with his wife, CHARLOTTE HORNE, or held by WILLIAM
E. HORNE as custodian for his two minor children, Jordan R. Horne and William J.
Horne, are as follows:
William E. & Charlotte Horne 361,417 common shares
William E. & Charlotte Horne 281,250 preferred shares
William E. Horne as custodian
for Jordan R. Horne, a minor
child 71,100 common shares
William E. Horne as custodian
for William J. Horne, a minor
child 71,100 common shares
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The above recitals are true and correct and are herein
<PAGE> 15
Exhibit "C"
incorporated herein by reference.
2. The CORPORATION, and/or its assigns, shall purchase from the
SELLERS, subject to the terms and conditions set forth in this Agreement, and
the SELLERS agree to sell to the CORPORATION, and/or its assigns, all shares of
common and preferred stock in the corporation as set out hereinabove
(collectively, the "Shares") which are currently owned by WILLIAM E. HORNE and
CHARLOTTE HORNE, or maintained by WILLIAM E. HORNE as custodian for the benefit
of his minor children, Jordan R. Horne and William E. Horne.
3. The purchase price for the common stock shall be Fifteen Cents
($.15) per share, and the purchase price for the preferred stock shall be
Seventy-Five Cents ($.75) per share, for a combined purchase price of $75,542.55
for 503,617 common shares and $210,937.50 for the 281,250 preferred shares.
4. The parties agree that the CORPORATION, and/or its assigns,
shall purchase, and the SELLERS shall sell all shares of the common and
preferred stock described in Paragraph 2 hereinabove on or before December 15,
1997 and that the transaction shall take place at the CORPORATION's principal
place of business at One Tampa City Center, Suite 2550, Tampa, Florida 33602.
5. Not less than ten (10) days prior to December 15, 1997, the
CORPORATION, and/or its assigns, shall mail to the Sellers by Certified Mail at
their address contained hereinabove, written notice of the closing date
(including the time). A copy of said written notice to be sent is attached
hereto and incorporated herein as Exhibit "A". The date designated shall be
referred to hereafter as the "Closing Date," and the event anticipated to occur
shall be referred to as the "Closing."
6. At the closing, the SELLERS shall deliver: (i) the
certificates representing the Shares either duly endorsed in blank or with duly
endorsed Stock Powers attached, all in a form suitable for the transfer of the
Shares to the CORPORATION; (ii) the letter of resignation of William E. Horne in
the form attached hereto as Exhibit "B; " and (iii) the General Release of
William E. Horne in the form attached hereto as Exhibit "C." The CORPORATION
shall deliver to the SELLERS at the Closing ready funds in the amount of the
aggregate purchase price described in Paragraph 3 above, and the Indemnification
Agreement in the form attached hereto as Exhibit "D".
7. So long as this Agreement shall remain in effect, the SELLERS
agree that they shall not sell, assign, transfer, pledge, mortgage, alienate,
hypothecate, or in any way encumber or dispose of any of the Shares of the
CORPORATION described in Paragraph 2 except as herein provided. SELLERS
represent and
<PAGE> 16
Exhibit "C"
warrant that none of the Shares have heretofore been sold, assigned,
transferred, pledged, mortgaged, alienated, hypothecated, or otherwise
encumbered or disposed of in any manner prior to the date hereof.
8. This Agreement shall be binding on and inure to the benefit of
the CORPORATION, and/or its assigns, and the SELLERS and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer as set out in Paragraph 7 of this
Agreement.
9. The SELLERS agree that so long as this Stock Purchase
Agreement remains in full force and effect, including any modifications or
amendments to the terms and duration of said Agreement which may be properly
executed between the parties hereto, that they shall not disclose, communicate,
or permit to be disclosed or communicated in any manner whatsoever to any other
person or entity, the terms, conditions or other information contained within
this Stock Purchase Agreement. Said provision shall not apply to any
communications the SELLERS may have with either their legal counsel or Mr. Lance
McNeill, so long as no other third parties are present at the time of said
communications. A violation of this provision shall give rise to a cause of
action for damages on behalf of the CORPORATION and/or its assigns.
10. Time is of the essence in the performance of this Agreement.
The parties agree that the damages to be incurred by each party in the event of
default by the other will be difficult to establish and calculate and therefore
the parties agree that if either party fails to perform their obligations within
the time limits provided above, the other party ma@ at its option pursue the
remedy of specific performance or abandon such claim and take such action as
they deem appropriate without the restrictions imposed by this Agreement.
11. RULES OF CONSTRUCTION.
(a) This Agreement constitutes the entire agreement between
the parties and supersedes any and all prior negotiations, preliminary
agreements, and all prior and contemporaneous discussions and understandings of
the parties related to the subject matter of this Agreement.
(b) This Agreement may be amended or modified only by a
written instrument executed by both the CORPORATION, and/or its assigns, and the
SELLERS.
(c) This Agreement shall be construed, interpreted, and
enforced in accordance with the laws of the State of Florida. The venue for any
legal action to enforce the rights or
<PAGE> 17
Exhibit "C"
obligations of any party to this Agreement shall be located in Hillsborough
County, Florida.
(d) The parties mutually acknowledge that the terms of this
Agreement have been negotiated and that each party has had the benefit of legal
counsel. Accordingly, this Agreement shall not be construed against either party
hereto based upon any inconsistencies or ambiguities which appear herein.
(e) If all or any part of this Agreement be enforced in a
court of law, the prevailing party to any such cause of action shall be entitled
to recover all costs, including reasonable attorney's fees.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals this 13th day of November, 1997 at Tampa, Hillsborough County, Florida.
Witnesses: BRASSIE GOLF CORPORATION, a
Delaware corporation
/s/ John L. Mann By: /s/ Joseph R. Cellura
- ----------------------------------- --------------------------------
Joseph R. Cellura
/s/ Kimberly Aaron Its: President
- -----------------------------------
/s/ John L. Mann /s/ William E. Horne
- ----------------------------------- -----------------------------------
WILLIAM E. HORNE
/s/ Jackie Hutchison
- -----------------------------------
/s/ John L. Mann /s/ Charlotte Horne
- ----------------------------------- -----------------------------------
CHARLOTTE HORNE
/s/ Jackie Hutchison
- -----------------------------------
/s/ John L. Mann /s/ William E. Horne
- ----------------------------------- -----------------------------------
WILLIAM E. HORNE as custodian
/s/ Jackie Hutchison for the benefit of his minor
- ----------------------------------- children, Jordan R. Horne and
William E. Horne
<PAGE> 1
EXHIBIT 10.69
AGREEMENT OF LEASE
BETWEEN
TAMPA CITY CENTER ASSOCIATES
LANDLORD,
AND
BRASSIE GOLF CORPORATION
TENANT
PREMISES:
SUITE 201
ONE TAMPA CITY CENTER BUILDING
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PREMISES ............................................................... 1
TERM ................................................................... 1
BASE RENT AND ADDITIONAL RENT .......................................... 1
IMPROVEMENTS BY LANDLORD ............................................... 4
USE .................................................................... 5
RELOCATION ............................................................. 6
REPAIRS BY LANDLORD .................................................... 6
SERVICES: ELEVATOR, AIR CONDITIONING, WATER, CLEANING AND ELECTRICITY .. 8
TENANT RISK ............................................................ 10
DESTRUCTION OR DAMAGE TO PREMISES ...................................... 11
SUBORDINATION AND ATTORNMENT ........................................... 11
RULES AND REGULATIONS .................................................. 12
FLOOR LOAD ............................................................. 12
DEFAULT ................................................................ 13
ASSIGNMENT AND SUBLETTING .............................................. 15
RIGHT OF ENTRY ......................................................... 17
EMINENT DOMAIN ......................................................... 18
QUIET ENJOYMENT ........................................................ 19
INDEMNITY AND HOLD HARMLESS ............................................ 19
TENANT'S FIRE AND EXTENDED COVERAGE AND WAIVER OF SUBROGATION
THEREUNDER..................................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
REMEDIES CUMULATIVE .................................................... 20
HOLDING OVER ........................................................... 20
NO WAIVER OR CHANGES ................................................... 21
TENANT'S ESTOPPEL ...................................................... 21
MARGINAL NOTATIONS ..................................................... 22
NOTICE ................................................................. 22
USE OF NAME ............................................................ 23
APPLICABLE LAWS ........................................................ 23
HEIRS AND ASSIGNS ...................................................... 23
LANDLORD'S EXCULPATION ................................................. 23
ENTIRE AGREEMENT AND OTHER AGREEMENTS .................................. 24
REASONABLE MODIFICATION ................................................ 24
LEGAL CONSTRUCTION ..................................................... 24
BROKER ................................................................. 24
SECURITY DEPOSIT ....................................................... 25
ATTORNEY'S FEES ........................................................ 26
LANDLORD'S LIEN ........................................................ 26
ADDITIONAL LEASES ...................................................... 26
APPLICABLE LAWS ........................................................ 27
RADON .................................................................. 27
HAZARDOUS SUBSTANCE .................................................... 27
NO OFFER ............................................................... 29
JOINT AND SEVERAL LIABILITY ............................................ 29
NO CONSTRUCTION AGAINST DRAFTING PARTY ................................. 29
TIME OF THE ESSENCE .................................................... 29
NO RECORDATION ......................................................... 30
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
NO MERGER .............................................................. 30
NOTICE OF LANDLORD'S DEFAULT ........................................... 30
AUTHORITY .............................................................. 30
TAX CREDITS ............................................................ 30
FINANCIAL REPORTS ...................................................... 31
LANDLORD'S FEES ........................................................ 31
PRESUMPTION ............................................................ 31
WAIVER OF TECHNICAL DEFECTS IN NOTICES ................................. 32
TELECOMMUNICATIONS ..................................................... 32
NO RIGHT TO TERMINATE .................................................. 34
GUARANTY ............................................................... 34
CONFIDENTIALITY ........................................................ 35
FORCE MAJEURE .......................................................... 35
</TABLE>
iii
<PAGE> 5
THIS LEASE AGREEMENT, made on this 16th day of December, 1997 ("Lease")
is by and between TAMPA CITY CENTER ASSOCIATES ("Landlord"), whose mailing
address is One Tampa City Center, Suite 2838, Tampa, Florida 33602, and BRASSIE
GOLF CORPORATION ("Tenant"), whose mailing address is One Tampa City Center,
Suite 201, Tampa, Florida 33602.
PREMISES
1. Landlord leases to Tenant and Tenant leases and rents from Landlord
the premises ("Premises") shown and identified on the floor plan(s) attached
hereto as Exhibit "All and made a part hereof, located on the second floor of
the One Tampa City Center Building ("Building") located at 201 North Franklin
Street, Tampa, Florida 33602, on property more specifically described on Exhibit
"B" attached hereto (the "Land") No easement for light and air is granted.
TERM
2. The term ("Term") of this Lease shall be five (5) years, unless
sooner terminated or extended as provided herein. The Term shall begin
("Commencement Date") on December 17, 1997 and shall end on December 16, 2002
("Expiration Date") at 6:00 P.M. "Lease Year" means the period commencing on the
Commencement Date or any anniversary thereof, and ending on the day before the
following anniversary of the Commencement Date.
BASE RENT AND ADDITIONAL RENT
3.A. Tenant agrees to pay Landlord, at Landlord's address above, or at
such other place as Landlord may designate in writing, without demand,
deduction, credit or setoff, as a covenant independent of all other covenants
contained in this Lease, and in lawful money of the United States of America:
(i) Rental ("Base Rent") of:
(a) One Hundred Thirty Three Thousand Nine Hundred Eighty and
No/100 ($133,980.00) Dollars for the first Lease Year ("Base Rent"), payable in
equal monthly installments of Eleven Thousand, One Hundred Sixty Five and No/100
($11,165.00) Dollars;
(b) One Hundred Forty Two Thousand, Nine Hundred Twelve and
00/100 Dollars ($142,912.00) for the second Lease Year, payable in equal monthly
installments of Eleven Thousand, Nine Hundred, Nine and 33/100 ($11,909.33)
Dollars;
<PAGE> 6
(c) One Hundred Fifty One Thousand, Eight Hundred Forty Four
and 00/100 Dollars ($151,844.00) for the third Lease Year, payable in equal
monthly installments of Twelve Thousand, Six Hundred, Fifty Three and 66/100
($12,653.66) Dollars;
(d) One Hundred Sixty Thousand, Seven Hundred Seventy Six and
00/100 Dollars ($160,776.00) for the fourth Lease Year, payable in equal monthly
installments of Thirteen Thousand, Three Hundred, Ninety Eight and 00/100
($13,1398.00) Dollars; and
(e) One Hundred Sixty Nine Thousand, Seven Hundred Eight and
00/100 Dollars ($169,708.00) for the fifth Lease Year, payable in equal monthly
installments of Fourteen Thousand, One Hundred Forty Two and 33/100 ($14,142.33)
Dollars;
all of which payments shall be paid in advance on the first day of each
calendar month during the Term (except that if the Commencement Date is
on other than the first day of a calendar month, monthly Base Rent for
such partial month shall be paid on or before the Commencement Date).
(ii) Adjustments to Base Rent, including without
limitation those provided in Paragraphs 3.D and 4.A, which adjustments
together with all other sums due from Tenant hereunder shall constitute
"Additional Rent"; and
(iii) All sales, privilege or rental tax (including
Florida Rental Tax) required by any governmental body on all Base Rent
and Additional Rent due from Tenant to Landlord.
3.B. Tenant shall pay a late charge in the amount of Two Hundred Fifty
and No/100 Dollars ($250.00) to defray administrative costs if any monthly
installment of Base Rent is not received by Landlord by the tenth (10th) day of
the pertinent calendar month. Any installment of Base Rent or Additional Rent or
any other charge or assessment due or to become due herein required to be paid
by Tenant which is not paid when due, shall bear interest at eighteen percent
(18%) per annum, from the due date until paid, for the purpose of reimbursing
Landlord for its opportunity costs incurred by reason of such failure by Tenant
and not as penalty therefor. The interest so charged shall be deemed Additional
Rent.
3.C. Base Rent and Additional Rent are together referred to herein as
"Rent".
3.D. For purposes of this Lease, the base line Operating Expenses
(defined below) of the entire Building ("Base Footage Expense") shall be equal
to the quotient of the actual Operating Expenses for the 1997 calendar year
divided by 732,630 square feet, the total rentable area in the Building for the
purpose of the calculations of this Paragraph 3 only. The rentable area of the
Premises will be conclusively deemed 8932 square feet for the purpose this
Lease. In determining the amount of Operating
<PAGE> 7
Expenses for each year of the Term, if less than one hundred percent (100%) of
the Building rentable area shall have been occupied by tenants at any time
during such year, Operating Expenses shall be determined for such year to be an
amount equal to the operating expenses which would normally be expected to be
incurred had such occupancy been one hundred percent (100%) throughout the year.
On or about the first day of March, 1999, and each subsequent March
1st, or as soon thereafter as the necessary information can reasonably be
secured, Landlord shall calculate the amount of actual Operating Expenses for
the calendar year immediately preceding. The actual Operating Expenses so
determined shall be divided by the said rentable area in the Building and the
quotient so obtained ("Actual Footage Expense") shall be compared to the Base
Footage Expense. If the Actual Footage Expense so determined exceeds the Base
Footage Expense, then Landlord shall promptly notify Tenant specifying the
adjustment to the Base Rent. There shall be no reduction in the Base Rent if the
Actual Footage Expense is less than the Base Footage Expense. On the first Base
Rent payment date next following each such notice from Landlord ("Adjustment
Date"), Tenant, in the case of an increase, shall pay to Landlord a lump sum
equal to 1/12th of the product of the difference between the Actual Footage
Expense and the Base Footage Expense times the said rentable area of the
Premises, multiplied by the number of months (and any fraction thereof) of the
Term then elapsed from the Commencement Date, or January 1st preceding the last
Adjustment Date (if any has occurred), whichever date is most recent, to such
payment date, taking into account any applicable adjustments to the Base Rent
previously paid under this Paragraph 3. Thereafter, and continuing until the
issuance of a new notice by Landlord, Tenant shall pay to Landlord each month,
1/12th of the product of the difference between the Base Footage Expense and
110% of the Actual Footage Expense times the said rentable area of the Premises.
On or about March 1st of each year during the Term and at any time Landlord
issues a notice to Tenant comparing the Base Footage Expense and the Actual
Footage Expense, the amounts, if any, collected by Landlord from Tenant under
this Paragraph 3 shall be adjusted, and if the amount so collected differs from
the amount actually due to Landlord hereunder, a reconciliation shall be made
between Landlord and Tenant. The foregoing adjustment provision shall survive
the Expiration Date and be applicable to such portion of the preceding calendar
year as this Lease was in effect.
"Operating Expenses" shall mean those items of cost and expense paid or
incurred by, or on behalf of, Landlord for management, repair, maintenance or
operation of the Building, adjacent plazas and sidewalks, the Land, and the
personal property of Landlord used in the operation of the Building and Land as
determined in accordance with generally accepted principles of sound management
consistently applied, which are properly
2
<PAGE> 8
chargeable to the operation of the Building, including but not limited to:
(i) Wages, salaries, bonuses and fees along with related
taxes, insurance benefits and other fringe benefits and reimbursable expenses.
(ii) All operation, management, maintenance, inspection,
repairs, painting of common areas, replacements, upkeep and servicing of the
Building and the equipment therein, including all supplies, equipment, tools and
materials used therein and service contracts (including but not limited to alarm
service, window cleaning, pest control, elevator and janitorial services);
(iii) Water, electricity, power, fuel and other utilities;
(iv) Premiums and other charges, with respect to insurance;
(v) All taxes and assessments and governmental charges and
fees imposed upon the Building, the Land, and Landlord's property used therein,
together with the allied facilities or improvements thereon (including without
limitation any occupancy, gross receipts or rental taxes paid by Landlord, but
not income or franchise tax or any other taxes imposed or measured by Landlord's
income or profits unless the same is in lieu of real estate taxes);
(vi) The management fee paid for managing the Building for the
Landlord;
(vii) Amortization, of the cost of capital investment items
(or the rentals attributable to leasing such items) that are for the purpose of
reducing operating costs or that may be required by governmental authority
and/or Landlord's insurance carriers, plus interest on the unamortized balance
thereof at the then current market rate. All such costs shall be amortized over
the reasonable life of the capital investment items, with the reasonable life
and amortization schedule being determined in accordance with sound management
accounting principles.
3.E. Failure of Landlord to furnish a statement of actual Operating
Expenses or to give notice of an adjustment to Base Rent under this Paragraph 3
in a timely manner shall not prejudice or act as a waiver of Landlord's right to
furnish such statement or give such notice at a subsequent time or collect any
adjustments to the Base Rent for any preceding period. Tenant hereby agrees that
the Landlord's statement of actual Operating Expenses shall be final and binding
for all purposes of this Lease unless, within thirty (30) days after Landlord
provides Tenant with written notice of the statement, Tenant provides Landlord
with written notice (i) disputing the mathematical accuracy of such amount (the
"Disputed
3
<PAGE> 9
Amount"), (ii) designating a certified public accountant, reasonably acceptable
to Landlord, and appointed by Tenant, at its sole cost and expense, to review
the mathematical accuracy of the Disputed Amount with Landlord and/or its
designated representatives and (iii) agreeing to pay all of Landlord's costs and
expenses in connection with such review, including attorneys' fees and
accountants' fees, unless as a result thereof the Disputed Amount is
demonstrated to reflect a mathematical error in excess of three percent (3%) of
the amount actually due from Tenant. Landlord hereby agrees, in the event it
receives such notice from Tenant, to cooperate in promptly completing such
review and promptly refunding any portion of the Disputed Amount which exceeds
the amount actually due from Tenant. Tenant shall cause its accountant, and any
employees or agents involved in such review to keep all information disclosed by
Landlord in connection with such review strictly confidential. Notwithstanding
Tenant Is written notice to Landlord of its election to conduct a review of
Landlord' s records, Tenant shall timely pay to Landlord the amount due Landlord
in accordance with Landlord's statement and estimated Operating Expenses for the
current calendar year determined in accordance with Paragraph 3.D., above, which
payments shall be subsequently equitably adjusted if Tenant's review discloses
an overpayment acknowledged by Landlord.
3.F. Failure of Landlord to furnish a statement of actual Operating
Expenses or to give notice of an adjustment to Base Rent under this Paragraph 3
in a timely manner shall not prejudice or act as a waiver of Landlord's right to
furnish such statement or give such notice at a subsequent time or collect any
adjustments to the Base Rent for any preceding period.
IMPROVEMENTS BY LANDLORD
4.A. Tenant accepts the Premises in its "as-is" condition, with no
warranty from Landlord as to the condition of the Premises, including without
limitation, the improvements, equipment, and appliances contained therein.
4.C. Within 30 days after the Commencement Date, Tenant will execute
and deliver to Landlord a written declaration stating the Commencement Date and
Expiration Date. In such declaration, Tenant shall certify that Tenant is in
possession and has accepted the Premises, and that all conditions of this Lease
required of Landlord as of that date have been fulfilled, and there are no
defenses or off-sets against the enforcement of this Lease by Landlord.
4.D. Landlord's interest in the Premises and Building shall not be
subject to liens for improvements made by the Tenant, and Tenant shall have no
power or authority to create any lien or permit any lien to attach to the
Premises or to the present estate,
4
<PAGE> 10
reversion or other estate of Landlord in the Premises herein demised or on the
Building or other improvements thereon as a result of improvements made by
Tenant or for any other cause or reason. All materialmen, contractors, artisans,
mechanics and laborers and other persons contracting with Tenant with respect to
the Premises or any part thereof, are hereby charged with notice that such liens
are expressly prohibited and that they must look solely to Tenant to secure
payment for any work done or material furnished for improvements by Tenant or
for any other purpose during the term of this Lease, and Tenant covenants to
promptly notify such parties of this provision exculpating Landlord from
liability for such liens. Tenant shall indemnify Landlord against any loss or
expense incurred as a result of the assertion of any such lien, and Tenant
covenants and agrees to transfer any claimed or asserted lien to a bond or such
other security as may be permitted by law within three (3) business days of the
assertion of any such lien or claim of lien. Tenant shall advise all persons
furnishing designs, labor, materials or services to the premises in connection
with Tenant's improvements thereof of the provisions of this Paragraph. If any
such lien is claimed against the Premises, then, in addition to any other right
or remedy of Landlord, Landlord may, but shall not be obligated to, discharge
the same. Any amount paid by Landlord for such purposes shall be paid by Tenant
to Landlord as additional rent within ten (10) days of Landlord's demand
therefor.
FAILURE TO GIVE POSSESSION
5. If Landlord should fail to tender possession of the Premises to
Tenant by the date Landlord has specified as the Commencement Date for any
reason other, this Lease shall not be void or voidable by Tenant, nor shall
Landlord be liable to Tenant for any loss or damage resulting therefrom. The
Term shall commence at the time thereafter when Landlord tenders possession of
the Premises to Tenant, and such date shall be the actual Commencement Date, and
the Term of this Lease shall be measured from said Commencement Date.
USE
6. The Premises shall be used for general office and related purposes
and no other purpose. The Premises shall not be used for retail sales (unless
specified to the contrary) or for any illegal purposes or in violation of any
regulation of any governmental body, or in any manner to create any trespass, or
to vitiate any insurance or increase the rate of insurance on the Premises or
the Building. Tenant agrees to comply with all governmental rules, regulations,
decrees or requirements applicable to the use and occupancy of the Premises.
Tenant will not use or permit the Premises to be used or occupied for any
purpose or in a any manner
5
<PAGE> 11
that may cause or tend to cause demonstrations, picketing, impair the reputation
of the Building or its desirability as an office building; use the Building or
allow the Premises to be used for any improper, immoral, unlawful, pornographic,
sexually explicit, or objectionable purpose. Tenant will conduct its business
and control its employees and agents in such a manner as not to create any
nuisance or interfere with, annoy, or disturb any other tenant or occupant of
the Building or Landlord in its operation of the Building. If Tenant receives
notice of any claim of violation of any law, rule or regulation applicable to
the Premises, Tenant shall give prompt notice thereof to Landlord. In the event
of any such circumstance, Tenant will give Landlord an opportunity to defend the
alleged violation with counsel reasonably acceptable to both Landlord and
Tenant, at Tenant's expense, and both will cooperate in the defense of any
alleged violation. In case of breach of any of the covenants contained in this
Paragraph 6, Landlord may, in addition to all other remedies available to the
Landlord under the Lease, elect to terminate this Lease by giving Tenant 60
days' written notice to vacate.
RELOCATION
7.A. Landlord may, by notice to Tenant, change the location of the
Premises from that set forth herein to another location on any floor.
7.B. Landlord reserves the right, upon giving 60 days, advance notice
to Tenant, to transfer and remove the Tenant from the Premises to any other
available rentable area of substantially equal size and area and equivalent
rental in the Building. Landlord shall bear the expense of such removal as well
as the expense of any renovations or alterations necessary to make the new space
substantially conform in layout and appointment with the original premises.
Landlord shall additionally bear the reasonable costs incurred by Tenant in
collection with replacement of existing stationary and business cards, and the
relocation of communications and computer lines. Landlord may exercise the right
to so relocate Tenant under this Paragraph 7 at any time including but not
limited to the period before Tenant takes possession of the Premises.
REPAIRS BY TENANT AND REMOVAL OF TENANT'S IMPROVEMENTS AND ALTERATIONS
8.A. Tenant accepts the Premises in their present condition (subject to
Tenant's obligation to bring the Premises into compliance with Applicable Laws
pursuant to Paragraph 41) as suited for the use intended by Tenant. Tenant will,
at Tenant's sole expense, take good care of the Premises and the fixtures,
equipment and appurtenances therein, and will suffer no active or permissive
waste or injury thereof. Tenant agrees, at Tenant's expense, but
6
<PAGE> 12
under the direction of Landlord, to promptly repair (making replacements where
necessary) any injury or damage to the Premises. Tenant also agrees, at Tenant's
expense but under the direction of Landlord, to promptly repair (making
replacements where necessary) any injury or damage to the Building caused by the
misuse or neglect thereof by Tenant, Tenant's employees, or by persons entering
the Building under express or implied invitation of Tenant. All such repairs and
replacements shall be of a quality equal to original installations. If Tenant
fails to make such repairs or replacements promptly, Landlord may, at its
option, make repairs or replacements, and Tenant shall repay the cost thereof to
Landlord on demand.
8.B. Tenant will not, without Landlord's written consent, make any
alterations, additions or improvements in or about the Premises. Tenant shall
obtain all appropriate governmental permits and approvals at Tenant's expense
prior to beginning any such work in the Premises. All alterations, additions or
improvements to the Premises (including, but not limited to, floor covering,
wall covering, wall and ceiling lighting fixtures, carpets, drapes and drapery
hardware) made or installed by Tenant (or by the Landlord for Tenant's benefit)
shall, at Tenant's sole cost and expense, comply with Applicable Laws, and shall
become the property of Landlord at the Expiration Date. Landlord reserves the
right to require Tenant, at Tenant's expense: (i) to remove any improvements
or additions made to the Premises by Tenant, or by Landlord for Tenant's
benefit, at the Expiration Date; and (ii) to repair all injury done by or in
connection with installation or removal of said improvements or additions.
Tenant further agrees to do so prior to the Expiration Date, or within 30 days
after notice from Landlord, whichever shall be later, provided that Landlord
gives such notice no later than 30 days after the Expiration Date. Any increase
in property taxes on or fire or casualty insurance premiums for the Building
attributable to such alteration, addition, or improvement shall be borne by
Tenant.
8.C. No later than the Expiration Date, Tenant will remove all Tenant's
personal property and Tenant shall repair all injury done by or in connection
with the installation or removal of said property and surrender the Premises
(together with all keys to the Premises) in as good a condition as they were at
the beginning of the Term, reasonable wear and tear excepted. All property of
Tenant remaining on the Premises after the Expiration Date shall be deemed
conclusively abandoned and may, at the election of Landlord, either be retained
as Landlord's property or be removed by Landlord, and Tenant shall reimburse
Landlord for the cost of removing the same, subject, however, to Landlord's
right to require Tenant to remove any improvements or additions made to the
Premises by Tenant pursuant to Paragraph 8.B.
7
<PAGE> 13
8.D. In doing work of any nature in, to or about the Premises, Tenant
will use only contractors or workmen approved in writing by Landlord.
REPAIRS BY LANDLORD
9.A. Tenant agrees that unless otherwise stipulated herein, Landlord
shall not be required to make any improvements to or repairs of any kind or
character on the Premises during the Term, except such repairs as may be deemed
necessary by Landlord for normal maintenance operations of the Building's
plumbing, heating and air conditioning and electrical systems. Landlord shall
use reasonable diligence in carrying out its obligations under this Paragraph 9,
but shall not be liable under any circumstances for any incidental or
consequential damage to any person or property for any failure to do so.
9.B. Landlord reserves the right to make changes in and about the
Building and Land, including any improvements located thereon. Such changes may
include, but not be limited to, rehabilitation, redecoration, refurbishment and
refixturing of the Building and expansion of or structural changes to the
Building, and changes to the address or name of the Building. The right of
Tenant to quiet enjoyment and peaceful possession given under the Lease will not
be deemed breached or interfered with by reason of Landlord's actions pursuant
to this paragraph so long as such actions do not materially deprive Tenant of
its use of the Premises.
SERVICES: ELEVATOR, AIR CONDITIONING, WATER, CLEANING AND ELECTRICITY
10.A. Landlord shall furnish the following services without charge, at
the proper season, during work day hours of 8:00 A.M. to 6:00 P.M. on Mondays
through Fridays, inclusive, (except where otherwise specified) on normal
business days, except holidays observed by national banks in Tampa, Florida and
Gasparilla Day:
(i) Elevator service and freight elevator service in common
with other tenants shall be provided during hours set by Landlord, provided that
at all times there shall be at least one elevator available to service the
Premises;
(ii) Air conditioning in Landlord's judgment sufficient to
reasonably cool or heat the Premises;
(iii) Water for ordinary lavatory purposes;
(iv) Common use restrooms;
8
<PAGE> 14
(v) Cleaning services during non-business hours, except
Saturdays and Sundays in accordance with the specifications attached
hereto as Exhibit "C";
(vi) Electric current as provided in Paragraph 10.B.
Services under items (i) and (ii) for periods other than periods
prescribed above will be made available by Landlord for the benefit of Tenant
provided Tenant has given Landlord written notice at least 24 hours in advance.
Tenant shall pay on demand as Additional Rent Landlord's standard charge for
such additional service(s).
10.B. Landlord shall furnish electric current sufficient for 3 watts
per square foot of rentable area connected load at 85% demand during the time
periods of Paragraph 10.A. Tenant will not, without Landlord's prior written
consent in each instance, use or connect any electrical equipment or additional
services, which in Landlord's opinion will increase the said load, demand load
or use, or which will interfere with the electrical use or reasonable electrical
requirements of others in the Building. If Landlord grants such consent and
provides additional electrical service, circuits or equipment, or if Tenant uses
any of the services enumerated in this Paragraph 10.B. in an amount or for a
period in excess of that provided for herein, then Landlord shall charge Tenant,
and Tenant shall pay to Landlord, as Additional Rent, a sum as reimbursement for
the direct cost of such added services, at the rate published by the appropriate
public utility company supplying said service for that level of consumption,
together with applicable Florida Rental Tax.
10.C. Landlord shall in no way be liable for cessation of any of the
services of this Paragraph 10 caused by strike, accident or breakdown, nor shall
Landlord be liable for damages from the stopping of elevators or elevator
service, or any of the fixtures or equipment in the Building being out of
repair, or for injury to person or property, caused by any defects in the
electrical equipment, heating, ventilating and air conditioning system,
elevators or water apparatus, or for any damages arising out of failure to
furnish the services enumerated in this Paragraph 10. Cessation of any of the
services of this Paragraph 10 shall not be considered to be an eviction or
disturbance of Tenant's use of the Premises nor shall this Lease or any of the
provisions be deemed invalidated by such cessation.
10.D. There shall be no abatement, set-off or apportionment of rent
payable by Tenant relative to the failure of Landlord to furnish, or
interruption in the delivery of, any of the services of this Paragraph 10 or the
making of any of the repairs or maintenance of Paragraph 9. Landlord may
temporarily discontinue any such services as may be necessary due to causes
(except lack of funds) beyond the reasonable control of Landlord.
9
<PAGE> 15
Landlord shall use reasonable diligence in carrying out its obligations under
this Paragraph 10, but shall not be liable under any circumstances for any
incidental or consequential damage to any person or property for any failure to
do so. No reduction or discontinuance of such services under this Paragraph 10
shall be construed as an eviction of Tenant or (except as specifically provided
in this Lease) release Tenant from any obligation of Tenant under this Lease,
and nothing contained herein shall derogate from the provisions of Paragraph 21.
10.E. Landlord's obligation to furnish heat, cooling and electricity
shall be conditioned upon the availability of adequate energy sources. Landlord
shall have the right to reduce heat, cooling and electricity within the Building
as required by any mandatory or voluntary fuel or energy savings, allocation or
similar statute, regulation, order or program.
TENANT RISK
11. Landlord, its officers, directors, agents, and employees shall not
be liable for any loss, injury or damages to persons or property resulting from
any cause whatsoever, including, but, not limited to acts or omissions of
Landlord or other tenant in the Building, construction defects, water, rain,
sleet, fire, explosion, falling plaster, glass, tile or sheetrock, steam, gas,
electricity, water or rain which may leak from any part of the Premises or the
Building, or from the pipes, appliances or plumbing works therein or from the
roof, street, or subsurface or whatsoever, storms, negligence and accidents,
breakage, stoppage, or leaks of gas, heating, sewer pipes, boilers, wiring or
plumbing or any other defect in, on or about the Premises, except where such
damage is caused by or due to the sole gross negligence or willful acts of
Landlord. Tenant expressly assumes all liability for or on account of any such
injury, loss or damage, and will at all times indemnify and save Landlord
harmless from and against all liability, damage or expense caused by, or arising
out of, any such injury, loss or damage to persons or property upon the
Premises, the Building or the contiguous land. Landlord makes no representations
or warranties with respect to crime in the area, undertakes no duty to protect
against criminal acts and shall not be liable for any injury, wrongful death,
business damages, or property damage arising from any criminal acts. The
Landlord may, from time to time, employ security personnel and equipment,
however, such personnel and equipment are only for the protection of the
Landlord's property. The Landlord reserves the right, in its sole and absolute
discretion, to start, alter or terminate any such security services without
notice. The Tenant is urged to provide security for its own personnel, property,
and business, as it deems necessary. The Tenant is urged to obtain insurance to
protect against criminal acts.
10
<PAGE> 16
DESTRUCTION OR DAMAGE TO PREMISES
12.A. If the Premises or the Building are so substantially damaged as
to be untenantable by storm, fire, earthquake or other casualty, or if the
Building is damaged to the extent that the cost of repair exceeds 25?6 of the
then replacement cost of the Building, or if the Premises or Building are
materially damaged by such event during the last six (6) months of the Term or
any extension thereof, then Rent shall equitably abate from the date of such
damage or destruction, and Landlord, at Landlord's sole option, may elect: (i)
to terminate this Lease as of the date of the fire or casualty by written notice
to Tenant given within 60 days after that date; or (ii) to commence within 60
days of receipt of insurance settlement the restoration of the Premises to a
tenantable condition (including Tenant Improvements existing at the commencement
of the Lease Term) but not including any other alterations, additions, or
improvements by Tenant), which restoration Landlord shall pursue with due
diligence. In the event Landlord elects to restore the Premises, this Lease
shall remain in force and effect and Rent shall commence upon delivery of the
Premises to Tenant in a tenantable condition.
12.B. If the Premises are damaged but not rendered wholly untenantable
by any of the events set forth in Paragraph 12.A and this Lease shall not be
terminated pursuant to Paragraph 12.A, Rent shall abate in such proportion as
the Premises have been damaged and Landlord shall restore the Premises as
speedily as practicable whereupon full rent shall commence.
12.C. In no event shall Rent abate if the damage or destruction of the
Premises, whether total or partial, is the result of the negligence of Tenant,
its agents or employees.
12.D. Landlord shall have no liability under any circumstances for any
business losses of Tenant, or for any losses to Tenant's personal property or
fixtures caused by any casualty occurrence as contemplated in this Paragraph 12.
No damages shall accrue to Tenant, nor shall any termination privilege become
operable against Landlord, for delays which may occur because of adjustment of
any insurance claim by Landlord, or for any delay not reasonably within
Landlord's control.
SUBORDINATION AND ATTORNMENT
13.A. This Lease is and shall continue to be subject and subordinate to
any mortgages, deeds of trust, ground leases and underlying leases which may now
or hereafter cover or affect the Land or the Building, and to all renewals,
modifications, consolidations, replacements and extensions of any such
instruments. This clause shall be self-operative and no instrument
11
<PAGE> 17
of subordination shall be required, however, at any time and from time to time,
Tenant shall execute promptly any certificate in confirmation of such
subordination that Landlord may request.
13.B. If any such ground or underlying lease(s) or mortgage or deed of
trust is terminated or foreclosed, this Lease (at the option of the lessor under
such ground or underlying lease (s) or the purchaser at such foreclosure sale,
as the case may be) shall not terminate, nor be terminable by Tenant by reason
of such termination or foreclosure, and Tenant shall attorn to the lessor under
such ground or underlying lease (s) or the purchaser at such foreclosure sale.
In no event shall any such lessor or purchaser be:
(a) liable for any act or omission of Landlord or any prior
landlord;
(b) liable for the return of any security deposit not assigned
or received by such purchaser;
(c) subject to any offsets or defenses that the Tenant might
have against Landlord or any prior landlord;
(d) bound by any payment or rent or additional rent that
Tenant might have paid to Landlord or any prior landlord for more than
the current month;
RULES AND REGULATIONS
14. Tenant shall at all times and shall cause its employees, agents,
licensees, and any other persons entering the Building under express or implied
invitation of Tenant, to observe and comply with the Rules and Regulations
attached hereto as Exhibit I'D", and such further reasonable rules and
regulations as Landlord may prescribe on written notice to Tenant. Landlord
shall use reasonable efforts to secure compliance by all tenants and other
persons with the Rules and Regulations from time to time in effect, but shall
not be responsible to Tenant for failure of any person to comply with such Rules
and Regulations.
FLOOR LOAD
15. Tenant shall not overload the floors, nor shall Tenant install any
heavy business machines or any safes or heavy equipment of any kind without
prior written consent of Landlord, which, if granted, may be conditioned upon
moving by skilled licensed handlers and installation and maintenance at Tenant's
expense of special reinforcing and settings adequate to absorb and prevent noise
and vibration.
12
<PAGE> 18
DEFAULT
16.A. If Tenant defaults in paying any installment or other payment of
Rent on or before the date when due; or if Tenant is in default for 15 days
after written notice thereof in performing any other of Tenant's obligations
hereunder; or if the Premises shall become vacant, deserted or abandoned; or if
Tenant is named in a petition in bankruptcy; or if a receiver is appointed for
Tenant's property, including Tenant's interest in the Premises, and such
receiver or petition is not removed or discharged within 60 days after written
notice from Landlord to Tenant to obtain such removal; or if, whether
voluntarily or involuntarily, Tenant takes advantage of any debtor relief
proceedings under any present or future law, whereby the rent or any part
thereof is or is proposed to be reduced or payment thereof deferred; or if
Tenant makes an assignment for the benefit of creditors; or if the Premises or
Tenant's effects or interest therein shall be levied upon or attached under
process against Tenant, not satisfied or dissolved within 30 days after such
levy or attachment; then, and in any of said events Landlord, at its option, may
after the occurrence of such default, in addition to any other rights or
remedies under law or equity, pursue any or all of the following:
(i) Terminate this Lease by written notice to Tenant. Upon
such termination by Landlord, Tenant will at once surrender possession of the
Premises to Landlord and remove all of Tenant's effects therefrom; and Landlord
may forthwith re-enter the Premises and repossess itself thereof, and remove all
persons and effects therefrom, using such force as may be necessary without
being guilty of trespass, forcible entry or detainer or other tort; or
(ii) Remedy such default for the account and at the expense of
Tenant without thereby waiving such default; or
(iii) Landlord may declare immediately due and payable all
Base Rent and all Additional Rent and any other charges and assessments against
the Tenant due or to become due hereunder for the balance of the Term.
16.B. In addition to, and not in lieu of Landlord's foregoing rights,
Landlord may, at its option, as Tenant's agent without termination of this
Lease, enter upon and rent the Premises, with or without advertisement, and by
private negotiations and for any terms and conditions Landlord deems reasonable.
Tenant shall be liable to Landlord for deficiency, if any, between all rent
reserved hereunder and the total rental applicable to the Term obtained by
Landlord on re-letting after deducting Landlord's expenses in restoring the
Premises and all cost incident to such re-letting, including without limitation,
advertising costs, legal fees and brokerage commissions. The total rental
applicable to the term obtained by Landlord on such reletting shall be the
property of the Landlord and Landlord shall
13
<PAGE> 19
not be liable to Tenant for any excess thereof over rent reserved hereunder.
16.C. In the event Landlord elects to terminate this Lease as herein
above provided, Landlord may, in addition to any other remedies it may have,
recover from Tenant all damages Landlord may incur by reason of such default,
including the cost of recovering the Premises, reasonable attorneys' fees, a
prorata portion of any rental abatement, tenant improvement allowance, and any
other cash concession set forth herein (which shall be amortized over the Term)
and including the worth at the time of such termination of the excess, if any,
of the amount of Base Rent and Additional Rent reserved in this Lease for the
remainder of the Term over the then reasonable rental value of Premises for the
remainder of the Term, all of which amounts shall be immediately due and payable
from Tenant to Landlord.
16.E. The receipt by Landlord of Base Rent or Additional Rent or any
other charge or assessment with knowledge of the breach of any covenant of this
Lease shall not be deemed a waiver of such breach other than the failure of
Tenant to pay the particular Base Rent or Additional Rent or other charges or
assessments so accepted.
ASSIGNMENT AND SUBLETTING
17.A. Without the prior written consent of Landlord, Tenant shall not
assign, mortgage or encumber this Lease or sublease the Premises or any part
thereof.
17.B. If Tenant desires to sublease the Premises or any part thereof,
Tenant shall submit to Landlord a written request for the consent of Landlord to
such subletting, which request shall be accompanied by the name and address of
the proposed subtenant,,a description identifying the space to be sublet, a copy
of the fully executed sublease conditioned only upon approval of Landlord, the
nature and character of the business of the proposed subtenant, and its proposed
use of the Premises, current financial information on the proposed subtenant and
such other information as Landlord may request. Landlord shall have the option
within 30 days of receipt of such notice and information to give notice to
Tenant requiring Tenant to sublease to Landlord or its nominee such portion of
the Premises proposed to be sublet, for a term to commence on the date as set
forth in Landlord's notice to Tenant (which date shall not be less than 60 nor
more than 120 days following the service of such notice) and to expire on the
expiration date provided in the proposed sublease, but otherwise on the same
terms and conditions as contained in this Lease, except for such terms and
conditions thereof that are irrelevant or inapplicable, in which event, Tenant
shall deliver possession of the sublet area in the same condition as Tenant is
obligated to surrender possession at the end of the
14
<PAGE> 20
Term, as provided in this Lease, except that Landlord shall make the necessary
separating partitions and Tenant shall reimburse Landlord for the cost thereof.
17.C. In the event Landlord requires Tenant to sublease to
Landlord or its nominee, pursuant to Paragraph 17.B, then the rents (including
all additional rents) payable under the sublease shall be equal to the
proportion of such rents payable under this Lease as the proportion which the
usable sublet area bears to the usable area in the Premises. Without limiting
the generality of the foregoing, it is expressly agreed that: (i) this Paragraph
17 is inapplicable to such sublease to Landlord or its nominee; (ii) such
sublease to Landlord or its nominee shall grant to the subtenant the unqualified
and unrestricted right, without Tenant's permission: (1) to assign such sublease
or any interest therein and/or to sublet the space covered by such sublease or
any portion thereof and (2) to make any and all changes, alterations and
improvements in the space covered by the sublease; (iii) such sublease to
Landlord or its nominee shall provide that any assignee or undertenant of the
subtenant may, at the election of the subtenant, be permitted to make
alterations, decorations and installations in such space or any part thereof,
and shall also provide in substance that any such alterations, decorations and
installations thereon made by an assignee or undertenant of the subtenant may be
removed, in whole or in part, by such assignee or undertenant, at its option,
prior to or upon the expiration or other termination of such sublease, provided
that such assignee or undertenant, at its expense, shall repair the damage and
injury, if any, to such space caused by such removal; and (iv) such sublease to
Landlord or its nominee shall also provide the parties to such sublease
expressly negate any intention that any estate created under such sublease be
merged with any other estate held by either of said parties.
17.D. In the event that Landlord shall not exercise its option under
Paragraph 17.B, then Landlord shall not unreasonably withhold or delay its
consent to the proposed subletting, provided:
(i) The proposed subletting is for purposes not inconsistent
with the manner of use permitted herein and is in keeping with the then
standards of the Building and does not violate any negative covenants or rights
granted other tenants in any other lease between Landlord and other tenants in
the Building; and
(ii) The proposed subtenant is a reputable party of
reasonable financial worth considering the responsibility involved and Tenant
shall provide Landlord with proof thereof satisfactory to Landlord; and
(iii) The proposed subtenant is not then an occupant of any
part of the Building; and
15
<PAGE> 21
(iv) The proposed sublease shall contain a provision making
such sublease subject to the terms and conditions of this Lease; and
(v) The proposed subletting shall not release Tenant from
the due, prompt and punctual performance of all the terms, covenants and
conditions contained in this Lease on its part to be performed or observed and
from the payment of the Base Rent and Additional Rents due and to become due
under this Lease; and
(vi) The consent of Landlord to the proposed subletting
shall not constitute a waiver of any provision of this Lease and no further
subletting shall be made without Landlord's prior consent in writing, and the
subtenant shall not further assign or sublet the Premises without Landlord's
prior written consent, and then only upon compliance with all the provisions
contained in this Paragraph 17; and
(vii) That in the event portions of the Premises are sublet,
in no event shall there be more than one tenant (including Tenant) in the
Premises; and
(viii) Tenant shall not have (1) advertised or publicized in
any way the availability of all or part of the Premises without prior notice to
Landlord or (2) publicly advertised the Premises for subletting whether through
broker, agent, representative or otherwise at a rental rate less than that for
which space in the Building is being offered for rent by Landlord, but this
provision shall not prohibit the renting by Tenant at such lower rate; and
(ix) Landlord shall have the right to require Tenant to pay
to Landlord a sum equal to (1) any rent or other consideration paid to Tenant by
any subtenant which is in excess of the rent then being paid by Tenant to
Landlord pursuant to the terms of this Lease and (2) any other profit or gain
realized by Tenant from any such subletting. All sums payable under this
Paragraph 17.D (ix) by Tenant shall be paid to Landlord as Additional Rent
immediately upon receipt thereof by Tenant. If only a part of the Premises is
sublet, the rent paid therefor by Tenant to Landlord shall be deemed to be that
fraction thereof that the usable area of such sublet space bears to the usable
area of the Premises.
17.E. If Tenant is a limited liability company, a
corporation other than a corporation the outstanding voting stock of which is
listed on a "national securities exchange,, (as defined in the Securities
Exchange Act of 1934), or a general or limited partnership (the "Entity"), any
transfer of part or all of the shares, units or interests in the Entity by sale,
assignment, merger, reorganization, bequest, inheritance, operation of law or
other disposition (including, but not limited to, such a transfer to or by a
receiver or trustee in federal or state bankruptcy,
16
<PAGE> 22
insolvency, or other proceedings, including but not limited to any adjustment in
partnership interests) so as to result in a change in the present control of
said Entity by the person(s) now owning a majority of said corporate shares,
units or interests in the Entity shall constitute an assignment for purposes of
this Paragraph 17.
17.F. If Tenant assigns this Lease or subleases all or a portion of the
Premises without conforming to all of the terms and conditions of this Paragraph
17, Landlord shall not be precluded from collecting rent from the assignee or
subtenant and collection of same shall not be construed to be a ratification by
Landlord of the assignment or sublease; and the proposed assignment or sublease
shall be voidable at the option of the Landlord.
17.G. Tenant covenants and agrees that in any case where Tenant claims
Landlord is unreasonably withholding its consent to a subletting, Tenant shall
not make any claim against Landlord for damages but shall be restricted to the
remedy of declaratory judgment.
17.H. In the event Tenant desires to assign this Lease or any part
hereof, Tenant shall submit to Landlord a written request for Landlord's consent
to such assignment, which request, shall be accompanied by the name and address
of the proposed assignee and a copy of the fully executed assignment conditioned
only upon the approval of Landlord, together with the proposed assignee's
proposed use of the Premises, current financial information on the proposed
assignee and such other information as Landlord may request. Based upon such
information, Landlord may in its sole discretion (i) grant Tenant right to
assign the Lease, (ii) deny Tenant's request to assign this Lease, (iii)
terminate this Lease effective no less than thirty (30) days after notice to
Tenant of such termination, or (iv) seek additional information with respect to
the proposed assignee. If Landlord grants its consent, it shall have the right
to require Tenant to pay Landlord a sum of money equal to any rent and any other
consideration paid to Tenant by such assignee in excess of any rent which is
then being paid or which under the terms of this Lease is to be paid by Tenant
to Landlord plus any other profit or gain realized by Tenant upon such
assignment. All sums payable by Tenant under this paragraph shall be paid to
Landlord as Additional Rent immediately upon receipt thereof by Tenant.
RIGHT OF ENTRY
18. Landlord shall have the right to enter into and grant licenses to
enter the Premises at any time upon reasonable notice to Tenant under the
circumstances (except no notice shall be required in the case of leasing,
maintenance or an emergency) for any purpose which Landlord may deem necessary
for any emergency or
17
<PAGE> 23
routine maintenance of, repair to, installation in or operation of the Building,
including without limitation, the exhibiting of the Premises to prospective
purchasers, mortgagees or tenants. In addition, Landlord shall have the right to
take all necessary materials and equipment into the Premises and to store the
same within during the necessary repairs and maintenance. Any entry and activity
by the Landlord, as permitted under this Paragraph 18, shall not entitle Tenant
to any rent abatement, shall not constitute an eviction of Tenant and shall not
in any way violate the Lease or any provision hereof.
EMINENT DOMAIN
19.A. If the whole of the Premises shall be condemned, or purchased in
lieu of condemnation, by any competent authority, for any public purpose, then,
the Term of this Lease shall cease and terminate from the time when the
possession shall be required for such use or purpose and the rent shall be
apportioned accordingly.
19.B. If any part of the Premises shall be taken or condemned or
purchased in lieu thereof by any competent authority for any public purpose,
provided the balance of the Premises remaining cannot be effectively utilized by
Tenant for office space, Tenant shall have the option to cancel this Lease,
giving Landlord written notice within 20 days after receipt of notice of the
condemnation from Landlord, or in the absence of such notice, within a
reasonable time after the taking occurs. If Tenant is entitled to exercise said
option to terminate and does so, all rents shall be prorated to the date Tenant
is required to give up possession. In the event Tenant is not entitled to cancel
the Lease, or if it is entitled to do so but does not exercise its option, then
Tenant will be responsible for the rent as heretofore set forth to the date of
such taking or purchase; after which date the rent herein reserved shall be
reduced proportionately as the usable floor area of the remaining leased space
compares to the usable floor area of the leased space before such taking or
purchase.
19.C. Landlord and Tenant hereby agree that any award or proceeds
resulting from a condemnation or sale in lieu thereof of the whole or part of
the Premises shall belong solely to Landlord, and Tenant hereby waives any right
to make any claim therefor as the result of this Lease; provided, however, that
Tenant shall not be prevented from pursuing any claim for business damages
against the condemning authority, so long as such claim is separate from
Landlord's claim and will not diminish Landlord's award.
19.D. If there shall be taken during the Term of this Lease any
substantial or material part of the Building, and Landlord decides not to
restore the Building, Landlord may, upon reasonable notice to Tenant, terminate
this Lease. If this Lease
18
<PAGE> 24
is not terminated by either party following a condemnation, Landlord shall apply
the proceeds of condemnation received by Landlord to restoration, to the extent
necessary.
QUIET ENJOYMENT
20. Tenant, on paying the Base Rent and Additional Rent and keeping and
performing the conditions and covenants herein contained, shall and may
peaceably and quietly enjoy the Premises for the Term aforesaid as against all
persons claiming by, through or under Landlord, subject, however, to the terms
of this Lease and any underlying leases and mortgages or deeds of trust, if any.
INDEMNITY AND HOLD HARMLESS
21. Notwithstanding that joint or concurrent liability may be imposed
upon Landlord by law, Tenant shall indemnify, defend and hold harmless Landlord,
at Tenant's expense against: (i) any default by Tenant hereunder or any
violation of laws or ordinances, or governmental orders of any kind; (ii) any
act or omission of Tenant or its agents, contractors, employees, licensees, or
any other person entering upon the Premises under express or implied invitation
of Tenant; and (iii) all claims for injury or damage to persons or property by
reason of the use or occupancy of the Premises regardless of the cause.
Moreover, Landlord shall not be liable for any damage or injury to the Premises,
to Tenant's property, to Tenant, its agents, contractors, employees, invitees or
licensees, arising from any use or condition of the Premises, the Building, or
any sidewalk or entrance way . serving the Building, or the act of neglect of
other Building tenants or the malfunction of any equipment or apparatus serving
the Building. Any and all claims for any damage referred to in this Paragraph 21
are hereby waived by Tenant.
TENANT'S FIRE AND EXTENDED COVERAGE AND WAIVER OF SUBROGATION THEREUNDER
22.A. At all times during the Term of this Lease, Tenant agrees to keep
the trade fixtures, operating equipment, furnishings, alterations, additions,
improvements (but not including the Tenant Improvements existing at the
commencement of the Lease Term) and any other equipment furnished and installed
by Tenant insured against loss or damage by fire or other casualty, with fire
and extended coverage insurance in an amount equal to not less than ninety
percent (90%) of the full insurable value thereof, written by one or more
responsible insurance companies licensed to do business in the State of Florida,
naming Tenant as the insured and the Landlord as the certificate holder. Each
such policy shall
19
<PAGE> 25
be non-cancelable for any cause without first giving Landlord 30 days' prior
written notice.
22.B. Tenant further agrees to maintain in force during the Term of
this Lease a policy or policies of commercial general liability insurance,
including property damage, written by one or more responsible insurance
companies licensed to do business in the State of Florida, insuring Tenant and
naming Landlord as an additional insured against loss of life, bodily injury
and/or property damage with respect to the Premises and the business operated by
Tenant in the Premises, in which the limit of public liability shall not be less
than One Million and No/100th Dollars ($1,000,000.00) for combined single limit
bodily injury and property damage liability. Each such policy shall be
noncancelable for any cause without first giving Landlord 30 days, prior written
notice.
22.C. A copy of the insurance policies required in Paragraphs 22.A and
22.B, or a certificate of said insurance required under said paragraphs, shall
be delivered to Landlord on or before the Commencement Date.
22.D. Landlord hereby waives any and all rights of recovery against
Tenant for or arising out of damage to or destruction of the Premises, or the
Building, from causes then included under standard fire and extended coverage
insurance policies or endorsements, and Landlord covenants and agrees with
Tenant that Landlord will obtain a waiver from the carrier of Landlord's
insurance on the Building releasing such carrier's subrogation rights as against
Tenant.
22.E. Tenant hereby waives any and all rights of recovery against
Landlord for or arising out of damage to or destruction of any property of
Tenant from causes then included under standard fire and extended coverage
insurance policies or endorsements, and Tenant covenants and agrees with
Landlord that Tenant will obtain a waiver from the carrier of Tenant's insurance
on the Premises releasing such carrier's subrogation rights as against Landlord.
REMEDIES CUMULATIVE
23. The rights given to Landlord herein are in addition to any rights
that may be given to Landlord by any statute or otherwise.
HOLDING OVER
24. If Tenant remains in possession after the Expiration Date, with
Landlord's acquiescence and without any distinct agreement between the parties,
Tenant shall be a tenant at will,
20
<PAGE> 26
and such tenancy shall be subject to all the provisions hereof, except that the
monthly portion of the Base Rent shall be doubled for the entire hold-over
period and there shall be no renewal of this Lease by operation of law. Nothing
in this Paragraph 24 shall be construed as a consent by Landlord to the
possession of the Premises by Tenant after the Expiration Date. Tenant shall be
responsible to Landlord for all consequential damages resulting from Tenant's
failure to timely surrender the Premises is strict accordance with this
Paragraph.
NO WAIVER OR CHANGES
25. The failure of Landlord to seek redress for violation of, or to
insist upon the strict performance of, any covenant or condition of this Lease,
or any of the Rules and Regulations herein or hereafter adopted by Landlord,
shall not prevent a subsequent act or omission, which would have originally
constituted a violation, from having all the force and effect of an original
violation. The receipt by Landlord of rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach other than
the failure of Tenant to pay the particular rent so accepted. No provision of
this Lease shall be deemed to have been waived by Landlord, unless such waiver
be in writing signed by Landlord. No act or thing done by Landlord or Landlord's
agent during the Term shall be deemed an acceptance of a surrender of the
Premises and no agreement to accept such surrender shall be valid unless in
writing signed by Landlord.
TENANT'S ESTOPPEL
26. Tenant shall, from time to time, upon not less than 10 days, prior
written request by Landlord, execute, acknowledge and deliver to Landlord a
written statement certifying that this Lease is unmodified and in full force and
effect (for if there have been modifications that the same is in full force and
effect as modified and stating the modifications), the dates to which the rent
and other charges have been paid, whether or not to the best of Tenant's
knowledge Landlord is in default hereunder (and if so, specifying the nature of
the default), and addressing any other matter pertaining to this Lease, it being
intended that any such statement delivered pursuant to this Paragraph 26 may be
relied upon by a prospective purchaser of Landlord's interest or mortgagee of
Landlord's interest or assignee of any mortgage or deed of trust upon Landlord's
interest in the Premises.
21
<PAGE> 27
MARGINAL NOTATIONS
27. The marginal notations in this Lease are included for convenience
only and shall not be taken into consideration in any construction or
interpretation of this Lease or any of its provisions.
NOTICE
28.A. Tenant shall pay the rent and other charges payable hereunder to
Landlord and forward all notices to Landlord at the following address (or at
such other place as Landlord may hereafter designate in writing):
Tampa City Center Associates
c/o Cushman & Wakefield of Florida, Inc.
One Tampa City Center, Suite 2565
Tampa, Florida 33602
With a copy to:
GTE Realty Incorporated
One Tampa City Center, Suite 2838
Tampa, Florida 33602
Landlord shall forward all notices to Tenant to:
Brassie Golf Corporation
One Tampa City Center, Suite 201
Tampa, Florida 33602
Attention: __________
Any notice provided for in this Lease must, unless otherwise expressly provided
herein, be in writing, and be forwarded by registered or certified mail, return
receipt requested, postage prepaid, or by personal delivery or national
overnight service. Any notice of demand required to be given or that may be
given hereunder shall be deemed complete upon the date of receipt thereof, or if
delivery is refused, on the date of attempted delivery thereof. If notice
deposited in the mail, in the manner above, is unclaimed, such notice shall be
effective three (3) days after the date of mailing. Either party hereto may
change its address to any other address in the United States of America by
notice in writing given to the other party in the manner herein provided.
22
<PAGE> 28
28.B. Tenant hereby appoints as its agent to receive all dispossessory
or distraint proceedings, the person occupying the Premises, and if there is no
person occupying same, then such service may be made by attachment thereof on
the main entrance to the Premises.
USE OF NAME
29. Tenant shall not, except to designate Tenant's business address
(and then only in a conventional manner and without emphasis or display), use
the name or mark (as shown on the top of this page) "One Tampa City Center" for
any purpose whatsoever. Landlord shall have the right from time to time to
rename the Building, and shall not be liable to Tenant for the resulting costs.
APPLICABLE LAWS
30. This lease shall be construed under the laws of the State of
Florida.
HEIRS AND ASSIGNS
31. The provisions of this Lease shall inure to the benefit of and be
binding upon Landlord and Tenant, and their respective successors, heirs, legal
representatives and assigns; it being understood that the term "Landlord", as
used in this Lease, means only the owners, or the lessee for the time being of
the Land and the Building, so that in the event of any sale or sales of the Land
or of any lease thereof, the Landlord named herein shall be and hereby is
entirely freed and relieved of all covenants and obligations of Landlord
hereunder accruing thereafter, and it shall be deemed without further agreement
that the purchaser, or the lessee, as the case may be, has assumed and agreed to
carry out any and all covenants and obligations of Landlord hereunder during the
period such party has possession of the Land and the Building. Should the Land
and the entire Building be severed as to ownership by sale and/or lease, then
the owner of the entire Building or lessee of the entire Building that has the
right to lease space in the Building to tenants shall be deemed the "Landlord".
Tenant shall be bound to any succeeding landlord for all the terms, covenants
and conditions hereof and shall execute any attornment agreement not in conflict
herewith at the request of any succeeding landlord.
LANDLORD'S EXCULPATION
32. Neither shareholders, officers or directors of Landlord
(collectively, the "parties") shall be liable for the performance
23
<PAGE> 29
of Landlord's obligations under this Lease. Tenant shall look solely to Landlord
to enforce Landlord' s obligations hereunder and shall not seek any damages
against any of the parties. Tenant agrees that the liability of Landlord for
Landlord's obligations under this Lease is specifically limited to Landlord's
interest in the Building, and Landlord shall never be personally liable with
respect to any of the terms, covenants and conditions of this Lease.
ENTIRE AGREEMENT AND OTHER AGREEMENTS
33.A. This Lease and the instrument setting forth the Commencement Date
and the Expiration Date pursuant to Paragraph 2, contain the entire agreement of
the parties hereto and no representations, inducements, promises or agreements,
oral or otherwise, between the Landlord and Tenant not embodied herein, shall be
of any force or effect.
33.B. Any agreement hereafter between Landlord and Tenant shall be
ineffective to modify, release or otherwise effect this Lease, in whole or in
part, unless such agreement is in writing and signed by both parties.
REASONABLE MODIFICATION
34. If in connection with obtaining financing for the Building, or for
any ground or underlying lease(s), a recognized institutional, lender shall
request reasonable modifications in this Lease as a condition of such financing,
Tenant will not unreasonably withhold, delay or defer its consent, provided that
such modifications do not increase the obligations of Tenant hereunder or
adversely affect, to a material extent, Tenant's leasehold interest or Tenant's
use and enjoyment of the Premises.
LEGAL CONSTRUCTION
35. If any of the provisions of this Lease shall be held to be invalid,
illegal or unenforceable for any reason, such circumstance shall not affect any
other provision. This Lease shall be construed as if such invalid, illegal or
unenforceable provision had never been herein.
BROKER
36. Tenant represents that, except for Cushman & Wakefield, Inc.
("Broker"), Tenant has not dealt with any real estate broker, sales person or
finder in connection with this Lease, and no other real estate broker initiated
or participated in the negotiation of
24
<PAGE> 30
this Lease, or showed the Premises to Tenant. Tenant agrees to indemnify and
hold harmless Landlord from and against any liabilities and claims for
commissions and fees arising out of a breach of the foregoing representation.
Landlord shall be responsible for the payment of all commissions to Broker,
based upon the leasing commission policy of Landlord affecting the Building on
the date of this Lease.
SECURITY DEPOSIT
37. Tenant has deposited with Landlord a sum equal to Fifty Thousand,
Six Hundred Fourteen 67/100 (50,614.67), which comprises: (i) prepaid Base Rent
for the first month of the Lease Term ($11,165.00); (ii) prepaid Base Rent for
the last two months of the Lease Term (an aggregate amount of $28,284.67)
(together with prepaid Base Rent for the second month referred to as the
"Prepaid Rent"); and (iii) a security deposit of Eleven Thousand One Hundred
Sixty Five and No/100 Dollars ($11,165.00) (the "Security Deposit"). The Prepaid
Rent and the Security Deposit shall serve as security for the performance of
Tenant's obligations in this Lease, except that the prepaid Base Rent shall be
applied to Rent due for the specified months if not sooner applied to cure a
Tenant default in accordance with this Section. The Security Deposit shall be
returned to Tenant, without interest, within 30 days after the Expiration Date,
provided Tenant has fully performed hereunder, and has vacated the Premises
surrendering all keys. If Tenant defaults in any of the provisions of this
Lease, Landlord may, but shall not be required to, apply all or part of the
Prepaid Rent not previously applied to Base Rent and the Security Deposit to the
payment of any amount due from Tenant hereunder or for any sum which Landlord
may spend or be required to spend because of Tenant's default, including any
damages or deficiency in reletting of the Premises whether such damages or
deficiency accrue before or after summary proceedings or re-entry by Landlord.
Landlord shall have the right to apply any part of the Prepaid Rent and Security
Deposit to cure any default of Tenant and if Landlord does so, Tenant shall,
within ten (10) days after demand, deposit with Landlord the amount so applied
so that Landlord shall have the full Prepaid Rent and Security Deposit (less any
amount of Prepaid Rent applied to the specified month's Base Rent) on hand at
all times during the Term. In the event of a sale of the Building or a lease of
the Building, subject to this Lease, Landlord shall be released from all
liability for the application of the Prepaid Rent to the specified month's Base
Rent and the return of the Security Deposit, and Tenant shall look to the new
landlord for such application and return. This provision shall apply to every
transfer or assignment of the Prepaid Rent and Deposit to a new landlord. The
Prepaid Rent and Security Deposit shall not be assigned or encumbered by Tenant
without the written consent of Landlord and such assignment or encumbrance
without Landlord's consent shall be void.
25
<PAGE> 31
ATTORNEY'S FEES
38. In the event Tenant defaults in the performance of any of the
provisions of this Lease and Landlord places the enforcement of this Lease, or
any part thereof, or the collection of any rent due or to become due hereunder
or recovery of the possession of the Premises in the hands of an attorney,
Tenant agrees to pay Landlord's attorney's fees and costs, whether or not suit
is instituted. If suit is instituted between Landlord and Tenant with respect to
this Lease or the Premises, the prevailing party shall be entitled to
reimbursement from the non-prevailing party for all reasonable attorneys' fees
and costs incurred at the trial level and at all levels of appeal. Landlord and
Tenant hereby waive the right to trial by jury in any action or proceeding
brought in connection with this Lease or the Premises, to the extent such waiver
is permitted by applicable law.
LANDLORD'S LIEN
39.A. Tenant hereby grants to Landlord a lien and security interest on
all property of Tenant now or hereafter placed in or upon the Premises, and such
property shall be, and remain subject to, such lien and security interest of
Landlord for payment of all rent and other sums agreed to be paid by Tenant
herein.
39.B. The provisions of this Paragraph relating to such lien and
security interest shall constitute a security agreement under and subject to the
Uniform Commercial Code of the State of Florida so that Landlord shall have, and
may enforce, a security interest on all property of Tenant now or hereafter
placed in or on the Premises, in addition to and cumulative of the Landlord's
liens and rights provided by law or by the other terms and provisions of this
Lease.
39.C. Tenant agrees to execute as debtor such financing statement or
statements and such other documents as Landlord may now or hereafter request in
order to protect or further perfect Landlord's security interest. Tenant hereby
irrevocably appoints Landlord as its attorney in fact to execute and file such
financing statements on its behalf.
ADDITIONAL LEASES
40. If Tenant leases other space within the Building, any default under
such other lease shall constitute a default under this Lease, and any default
under this Lease will constitute a default under such other lease.
26
<PAGE> 32
APPLICABLE LAWS
41. Tenant shall cause all portions of the leasehold improvements to
the Premises, including the Tenant Improvements and any subsequent alteration,
modification or addition thereto throughout the Term to comply with all laws,
ordinances, rules, regulations, standards and guidelines of any governmental
entity, agency or authority, including without limitation, all building codes,
fire codes, life-safety codes, and the Americans With Disabilities Act of 1990
("Applicable Laws"). Tenant shall indemnify Landlord and hold Landlord harmless
from and against any expenses, damages, liabilities or claims, including
attorneys' fees, arising from any alleged non-compliance of such improvements
with Applicable Laws. If as a result of the Tenant Improvements or any
subsequent renovation or improvements to any part of the Premises or the
Building, Landlord then or at any later time becomes obligated to incur expenses
to comply with any Applicable Law, which expenses Landlord would not be
obligated to incur if not for Tenant making such renovation or improvement, then
Tenant shall, within thirty (30) days after demand therefor, reimburse Landlord
for all such expenses.
RADON
42. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit.
HAZARDOUS SUBSTANCE
43. As used herein, "Hazardous Materials Laws" means all federal, state
and local laws, statutes, ordinances and regulations, rules, rulings, policies,
orders and administrative actions and orders relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
disposal or transportation of any oil, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste, infectious waste, or other
hazardous, toxic, contaminated or polluting materials, substances or wastes,
including, without limitation, any "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under any such laws, ordinances or
regulations (collectively, "Hazardous Materials"). Tenant shall, at its own
expense, at all times and in all respects: (i) comply with all Hazardous
Materials Laws regarding Hazardous Materials introduced in or about the Building
or Land by or at the direction of Tenant or in connection with Tenant's use of
the
27
<PAGE> 33
Premises ("Tenant's Hazardous Materials"); and (ii) procure, maintain in effect
and comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals relating to Tenant's Hazardous Materials
within, on, under or about the Building or Land in conformity with all
applicable Hazardous Materials Laws and prudent industry practices regarding
management of such Hazardous Materials. Landlord recognizes and agrees that
Tenant may use Tenant's Hazardous Materials in normal quantities that are
applicable to general office use and that such use by Tenant shall not be deemed
a violation of this Paragraph, so long as the levels are not in violation of any
Hazardous Materials Laws. Upon termination or expiration of the Lease, Tenant
shall, at its own expense, cause all of Tenant's Hazardous Materials to be
removed from the Premises, Building, and Land, and transported for use, storage
or disposal in accordance and compliance with all applicable Hazardous Materials
Laws. Landlord acknowledges that it is not the intent of this Paragraph to
prohibit Tenant from operating its business as described in this Lease. Tenant
may operate its business according to the custom of the industry so long as the
use or presence of Tenant's Hazardous Materials is strictly and properly
monitored according to all applicable governmental requirements. Tenant shall
indemnify, protect, defend (by counsel reasonably acceptable to Landlord), and
hold Landlord and Landlord's Indemnitees free and harmless from and against any
and all claims, liabilities, penalties, forfeitures, losses and expenses
(including attorneys, fees) or death of or injury to any person or damage to any
property whatsoever, including, without limitation, the Building and Land,
arising from or caused in whole or in part, directly or indirectly, by the
presence in or about the Building or Land of any of Tenant's Hazardous Materials
or by Tenant's failure to comply with any Hazardous Materials Law regarding
Tenant's Hazardous Materials or in connection with any removal, remediation,
clean up, restoration and materials required hereunder to return the Premises
and any other property of whatever nature to their condition existing prior to
the appearance of Tenant's Hazardous Materials.
a. Tenant shall comply with all Hazardous Materials Laws
regarding the disclosure of the presence or danger of Tenant's Hazardous
Materials. Tenant acknowledges and agrees that all reporting and warning
obligations required under the Hazardous Materials Laws with respect to Tenant's
Hazardous Materials are the sole responsibility of Tenant, whether or not such
Hazardous Materials Laws permit or require Landlord to provide such reporting or
warnings, and Tenant shall be solely responsible for complying with such
Hazardous Materials Laws regarding the disclosure of, the presence or danger of
Tenant's Hazardous Materials. Tenant shall immediately notify Landlord, in
writing, of any complaints, notices, warnings, reports or asserted violations of
which Tenant becomes aware relating to Hazardous Materials on or about the
Premises, the Building or the Land. Tenant shall also immediately notify
Landlord if Tenant knows or has reason to believe Tenant's
28
<PAGE> 34
Hazardous Materials have or will be released in or about the Building or Land.
b. Tenant shall not perform or cause to be performed, any
Hazardous Materials surveys, studies, reports or inspection, relating to the
Premises, the Building or the Land without obtaining Landlord's advance written
consent, which consent may be withheld in Landlord's sole discretion. At any
time prior to the expiration of the Lease Term, Landlord shall have the right to
enter upon the Premises in order to conduct appropriate tests and to deliver to
Tenant the results of such tests to demonstrate that levels of any Hazardous
Materials in excess of permissible levels has occurred as a result of Tenant's
use of the Premises.
c. The respective rights and obligations of Landlord and
Tenant under this Paragraph shall survive the expiration or termination of this
Lease.
NO OFFER
44. This Lease is submitted to Tenant on the understanding that it will
not be considered an offer and will not bind Landlord in any way until Tenant
has duly executed and delivered duplicate originals to Landlord and Landlord has
executed and delivered one of such originals to Tenant.
JOINT AND SEVERAL LIABILITY
45. If Tenant is composed of more than one signatory to this Lease,
each signatory will be jointly and severally liable with each other signatory
for payment and performance according to this Lease. The act of, written notice
to, written notice from, refund to, or signature of any signatory to this Lease
(including without limitation modifications of this Lease made by fewer than all
such signatories) will bind every other signatory as though every other
signatory had so acted, or received or given the written notice or refund, or
signed.
NO CONSTRUCTION AGAINST DRAFTING PARTY
46. Landlord and Tenant acknowledge that each of them and their counsel
have had an opportunity to review this Lease and that this Lease will not be
construed against Landlord merely because Landlord has prepared it.
29
<PAGE> 35
TIME OF THE ESSENCE
47. Time is of the essence of each and every provision of this Lease.
NO RECORDATION
48. Tenant's recordation of this Lease or any memorandum or short form
of it will be void and a default under this Lease.
NO MERGER
49. The voluntary or other surrender of this Lease by Tenant or the
cancellation of this Lease by mutual agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, (a) terminate all or any subleases and
subtenancies or (b) operate as an assignment to Landlord of all or any subleases
or subtenancies. Landlord's option under this Paragraph will be exercised by
written notice to Tenant and all known sublessees or subtenants in the Premises
or any part of the Premises.
NOTICE OF LANDLORD'S DEFAULT
50. In the event of any alleged default in the obligation of Landlord
under this Lease, Tenant will deliver to Landlord written notice listing the
reasons for Landlord's default and Landlord will have 30 days following receipt
of such notice to cure such alleged default or, in the event the alleged default
cannot reasonably be cured within a 30-day period, to commence action and
proceed diligently to cure such alleged default. A copy of such notice to
Landlord will be sent to any holder of a mortgage or other encumbrance on the
building or project of which Tenant has been notified in writing, and any such
holder will have a reasonable period in which to cure such alleged default,
including such time as such holder may require to commence and pursue a
foreclosure action, if required to effect such cure.
AUTHORITY
51. Tenant and the party executing this Lease on behalf of Tenant
represent to Landlord that such party is authorized to do so by requisite action
of the board of directors or partners, as the case may be, and agree upon
request to deliver to Landlord a resolution or similar document to that effect.
TAX CREDITS
30
<PAGE> 36
52. Landlord is entitled to claim all tax credits and depreciation
attributable to leasehold improvements in the Premises. Promptly after
Landlord's demand, Landlord and Tenant will prepare a detailed list of the
leasehold improvements and fixtures and their respective costs for which
Landlord or Tenant has paid. Landlord will be entitled to all credits and
depreciation for those items for which Landlord has paid by means of any tenant
finish allowance or otherwise. Tenant will be entitled to any tax credits and
depreciation for all items for which Tenant has paid with funds not provided by
Landlord.
FINANCIAL REPORTS
53. Within 15 days after Landlord's request, Tenant will furnish
Tenant's most recent audited financial statements (including any notes to them)
to Landlord, or, if no such audited statements have been prepared, such other
financial statements (and notes to them) as may have been prepared by an
independent certified public accountant or, failing those, Tenant's internally
prepared financial statements certified by Tenant Is chief financial officer to
be complete and accurate. Tenant will discuss its financial statements with
Landlord and will give landlord access to tenant's books and records in order to
enable landlord to verify the financial statements. Landlord will not disclose
any aspect of Tenant' s financial statements that Tenant designates to Landlord
as confidential except (a) to Landlord's lenders or prospective purchasers of
the project, (b) in litigation between Landlord and Tenant, and (c) if required
by court order.
LANDLORD'S FEES
54. Whenever Tenant requests Landlord to take any action or give any
consent required or permitted under this Lease, Tenant will reimburse Landlord
for all of Landlord's reasonable costs incurred in reviewing the proposed action
or consent, including without limitation reasonable attorneys, engineers' or
architects' fees, within 10 days after Landlord's delivery to tenant of a
statement of such costs. Tenant will be obligated to make such reimbursement
without regard to whether Landlord consents to any such proposed action.
PRESUMPTION
55. In all cases hereunder, and in any suit, action or proceeding of
any kind between the parties, it shall be presumptive evidence of the fact of
the existence of a charge being due, if Landlord shall produce a bill, notice or
certificate to the effect that such charge appears of record on the books in his
office or
31
<PAGE> 37
appears as an open charge on the books, records or official bills of municipal
authorities, and has not been paid.
WAIVER OF TECHNICAL DEFECTS IN NOTICES
56. In lieu of Tenant waiving the right to receive any notices, Tenant
hereby waives any technical defects, as to form, substance and delivery, in the
giving of any notices required by this Lease and Florida Statutes, including the
statutory three-day notice required by Section 83.20, Florida Statutes, so long
as the notice reasonably apprises the Tenant of the general nature of the reason
for the giving of the notice and affords the tenant a reasonable opportunity to
cure, if applicable.
TELECOMMUNICATIONS
57. Tenant acknowledges and agrees that all telephone and
telecommunications services desired by Tenant shall be ordered and utilized at
the sole expense of Tenant. Unless Landlord otherwise requests or consents in
writing, all of Tenant's telecommunications equipment shall be and remain solely
in the Tenant's premises and the, telephone closet(s) on the floor(s) on which
the Tenant's premises is located, in accordance with rules and regulations
adopted by Landlord from time to time. Unless otherwise specifically agreed to
in writing, Landlord shall have no responsibility for the maintenance of
Tenant's telecommunications equipment, including wiring; nor for any wiring or
other infrastructure to which Tenant's telecommunications equipment may be
connected. Tenant agrees that, to the extent any such service is interrupted,
curtailed or discontinued, Landlord shall have no obligation or liability with
respect thereto even if the cause thereof is due to the negligence of Landlord,
its employees, agents, and contractors, and it shall be the sole obligation of
Tenant at its expense to obtain substitute service.
Landlord shall have the right, upon reasonable prior notice to Tenant, to
interrupt or turn off telecommunications facilities in the event of emergency or
as necessary in connection with repairs to the Building or installation of
telecommunications equipment for other Tenants of the Building.
Any and all telecommunications equipment installed in the Tenant's premises or
elsewhere in the Building by or on behalf of Tenant, including wiring, or other
facilities for telecommunications transmittal, shall be removed prior to the
expiration or earlier termination of the Lease term, by Tenant at its sole cost
or, at Landlord's election, by Landlord at Tenant's sole cost, with the cost
thereof to be paid as Additional Rent. Landlord shall have the right, however,
upon written notice to Tenant to require Tenant to abandon and leave in place,
without additional payment to
32
<PAGE> 38
Tenant or credit against rent, any and all telecommunications wiring and related
infrastructure, or selected components thereof, whether located in the Tenant's
premises or elsewhere in the Building.
In the event that Tenant wishes at any time to utilize the services of a
telephone or telecommunications provider whose equipment is not then servicing
the Building, no such provider shall be permitted to install its lines or other
equipment within the Building without first securing the prior written approval
of the Landlord. Landlord's approval shall not be deemed any kind of warranty or
representation by Landlord, including, without limitation, any warranty or
representation as to the suitability, competence, or financial strength of the
provider. Without limitation of the foregoing standard, unless all of the
following conditions are satisfied to Landlord's satisfaction, it shall be
reasonable for Landlord to refuse to give its approval: (i) Landlord shall incur
no expense whatsoever with respect to any aspect of the provider's provision of
its services, including without limitation, the costs of installation, materials
and services; (ii) prior to commencement of any work in or about the Building by
the provider, the provider shall supply Landlord with such written indemnities,
insurance, financial statements, and such other items as Landlord reasonably
determines to be necessary to protect its financial interests and the interests
of the Building relating to the proposed activities of the provider; (iii) the
provider agrees to abide by such rules and regulations, Building and other
codes, job site rules and such other requirements as are reasonably determined
by Landlord to be necessary to protect the interests of the Building, the
Tenants in the Building and Landlord, in the same or similar manner as Landlord
has the right to protect itself and the Building with respect to proposed
alterations as described in Article 8 of this Lease; (iv) Landlord reasonably
determines that there is sufficient space in the Building for the placement of
all of the provider's equipment and materials; (v) the provider agrees to abide
by Landlord requirements, if any, that provider use existing Building conduits
and pipes or use Building contractors (or other contractors approved by
Landlord); (vi) Landlord receives from the provider such compensation as is
reasonably determined by Landlord to compensate it for space used in the
Building for the storage and maintenance of the provider's equipment, for the
fair market value of a provider's access to the Building, and the costs which
may reasonably be expected to be incurred by Landlord; (vii) the provider agrees
to deliver to Landlord detailed "as built" plans immediately after the
installation of the provider's equipment is complete; and (viii) all of the
foregoing matters are documented in a written license agreement between Landlord
and the provider, the form and content of which is reasonably satisfactory to
Landlord.
Notwithstanding any provision of the proceeding paragraphs to the contrary, the
refusal of Landlord to grant its approval to any
33
<PAGE> 39
prospective telecommunications provider shall not be deemed a default or breach
by Landlord of its obligation under this Lease unless and until Landlord is
adjudicated to have acted recklessly or maliciously with respect to Tenant's
request for approval, and in that event, Tenant shall still have no right to
terminate the Lease or claim an entitlement to rent abatement, but may as
Tenant's sole and exclusive recourse seek a judicial order of specific
performance compelling Landlord to grant its approval as to the prospective
provider in question. The provisions of this paragraph may be enforced solely by
Tenant and Landlord, are not for the benefit of any other party, and
specifically but without limitation, no telephone or telecommunications provider
shall be deemed a third party beneficiary of this Lease.
Tenant shall not utilize any wireless communications equipment (other than usual
and customary cellular telephones), including antennae and satellite receiver
dishes, within the Tenant's premises or the Building, without Landlord, s prior
written consent. Such consent may be conditioned in such a manner so as to
protect Landlord's financial interests and the interests of the Building, and
the other tenants therein, in a manner similar to the arrangements described in
the immediately preceding paragraphs.
In the event that telecommunications equipment, wiring and facilities of any
type installed by or at the request of Tenant within the Tenant's premises, or
elsewhere within or on the Building causes interference to equipment used by
another party, Tenant shall assume all liability related to such interference.
Tenant shall use reasonable efforts, and shall cooperate with Landlord and other
parties, to promptly eliminate such interference. In the event that Tenant is
unable to do so, Tenant will substitute alternative equipment which remedies the
situation. If such interference persists, Tenant shall discontinue the use of
such equipment, and, at Landlord's discretion, remove such equipment according
to foregoing specifications.
NO RIGHT TO TERMINATE
58. Tenant hereby waives the remedies of termination and rescission and
hereby agrees that Tenant's sole remedies for Landlord's default hereunder and
for breach of any promise or inducement shall be limited to a suit for damages
and/or injunction.
GUARANTY
59. INTENTIONALLY OMITTED.
34
<PAGE> 40
CONFIDENTIALITY
60. Tenant acknowledges that the terms and conditions of this Lease are
to remain confidential for the Landlord's benefit, and may not be disclosed by
Tenant to anyone, by any manner or means, directly or indirectly, without
Landlord's prior written consent. The consent by the Landlord to any disclosures
shall not be deemed to be a waiver on the part of the Landlord of any
prohibition against any future disclosure.
FORCE MAJEURE
61. Whenever a period of time is herein prescribed for the taking of
any action by Landlord, Landlord shall not be liable or responsible for, and
there shall be excluded from the computation of such period of time, any delays
due to strikes, labor difficulties, unavailability of materials, riots, acts of
God, shortages of labor or materials, delays resulting from governmental
actions, permitting or effects of laws, regulations or restrictions, financing,
or any other cause whatsoever beyond the control of Landlord. Landlord will have
no liability to Tenant, nor will Tenant have any right to terminate this Lease
or abate rent or assert a claim of partial or total actual or constructive
eviction, because of Landlord's failure to perform any of its obligations in the
Lease if the failure is due to such causes.
IN WITNESS WHEREOF, the parties have executed this Lease on the date first above
written.
AS TO TENANT: TENANT:
Signed, sealed and delivered
in the presence of:
BRASSIE GOLF CORPORATION
/s/ ? By: /s/ Jeremiah M. Daly
- ------------------------------ -----------------------------------
Witness As its: President
---------------------------
/s/ ? Jeremiah M. Daly
- ------------------------------ ------------------------------
Witness (Print name signed above)
AS TO LANDLORD: LANDLORD:
35
<PAGE> 41
Signed, sealed and delivered
in the presence of:
TAMPA CITY CENTER ASSOCIATES
/s/ ?
- ------------------------------ By: GTE REALTY CORPORATION,
Witness As General Partner
/s/ ?
- ------------------------------
Witness By: /s/ Ronald W. Kulpinski
-------------------------
Ronald W. Kulpinski,
President
36
<PAGE> 42
- -------------------------------------------------------------------------------
EXHIBIT "B"
DESCRIPTION OF LAND
- -------------------------------------------------------------------------------
Office Tower occupies Parcel 1, all of block 81 general map of Tampa according
to map or plat thereof as recorded in Plat Book 1, page 7 of the Public Records
of Hillsborough County, Florida.
<PAGE> 43
===============================================================================
EXHIBIT "C"
JANITORIAL SPECIFICATIONS
===============================================================================
DAILY JANITORIAL SERVICE SPECIFICATIONS
- --------------------------------------------------------------------------------
Day porters shall be on duty from 6:30 a.m. to 3:30 p.m., Mondays through
Fridays; Sundays and holidays are excepted. The duties of the day porters and
their supervisor, who are under the exclusive direction of the Building
Management, shall be, but are not limited to, the following:
1. ENTRANCE LOBBY: The entrance areas are to be kept neat and clean at all
times and the following minimum cleaning operations shall be maintained
to attain the effect:
a. Mop and vacuum floors daily and as necessary.
b. Dust walls as necessary.
c. Wipe down or polish metal surfaces as necessary.
d. Clean cigarette urns and screen sand daily and as needed.
e. Wash door glass daily and as needed.
f. Remove trash from all containers and dispose of in proper
manner.
2. ELEVATORS:
a. Vacuum carpet daily as needed.
b. Check and clean elevator interiors periodically throughout the
day.
c. Clean sides of all elevator cars daily.
d. Clean hand rails daily.
e. Clean lobby elevator saddles, doors and frames daily.
3. RESTROOMS:
a. Fill soap dispensers, paper towel dispensers and toilet seat
cover dispensers as needed. (Towels, soap and toilet seat
covers are to be furnished by Owner.)
b. Report all mechanical deficiencies (i.e., dripping faucets,
clogged toilets, lights out, etc.) to the Building Management
Office.
c. Spot clean all mirrors and powder shelves.
d. Empty paper towel receptacles as needed.
4. PUBLIC AREAS:
a. Police all public stairwells and keep in clean condition. Spot
mop spillage.
b. Dust all railings as necessary.
c. Police all public areas for trash.
5. BUILDING SERVICE AREAS:
a. Sweep all ramps and the loading dock area.
b. Remove all gum and foreign matter from sidewalks on sight.
c. Lay down and remove lobby runners as necessary.
d. Damp mop as needed.
<PAGE> 44
e. Change lights as requested by Management.
6. EXTERIOR STRUCTURE AND GROUNDS SERVICES:
a. Police entire perimeter of building, including landscaped
planters and storm drain grills to the street on all sides.
b. Spot sweep accumulations of dirt, papers and leaves in all
comer areas where winds tend to cause collection of debris.
c. Spot clean all exterior glass at building and retail
entrances.
d. Empty all waste receptacles and remove trash from designated
trash area.
e. Sweep sidewalk, steps, walks and benches.
NIGHTLY TENANT SUITE AND COMMON AREA SPECIFICATIONS
- -------------------------------------------------------------------------------
1. NIGHTLY SERVICES:
a. Vacuum all areas.
b. Dust mop all resilient, composition and marble floors with
dust mops. Spot damp mop to remove spills and water stains as
required.
c. Dust all desks, window sills and office furniture with treated
dust cloths.
d. Empty all waste paper baskets and other trash containers. Any
bulk trash or moving boxes that are clearly marked "Trash"
shall be removed.
e. Remove all trash from floors to the designated trash areas.
f. Remove fingerprints, dirt, smudges, graffiti, etc., from all
doors, frames, glass partitions, jambs and elevator interiors.
g. Return chairs and waste baskets to proper positions.
h. Clean, sanitize and polish drinking fountains.
i. Dust and remove debris from all metal door thresholds as
necessary.
j. Wipe clean smudged brightwork as necessary.
k. Check for burned-out lights and report them to Supervisor.
Janitorial Supervisor to leave list of burned-out lights at
Building Management Office nightly.
l. Police all interior public corridor planters.
m. Sweep all stairwells.
2. WEEKLY SERVICES:
a. Dust all low-reach areas including, but not limited to, chair
rungs, structural and furniture ledges, baseboards, door
louvers, wood paneling, molding, etc.
b. Dust inside of all door jambs.
c. Spot clean and polish all brightwork.
d. Sanitize all telephone receivers.
e. Wash out and disinfect all cans and other receptacles.
f. Spot clean spills from carpet as necessary.
3. MONTHLY SERVICES:
<PAGE> 45
a. Dust all high-reach areas including, but not limited to, tops
of door frames, structural and furniture ledges, air
conditioning diffusers and return grills, tops of partitions,
picture frames, etc.
b. Vacuum upholstered furniture.
c. Move all plastic carpet protectors and thoroughly vacuum under
and around all desks and office furniture.
d. Edge all carpeted areas,
e. Dust venetian blinds.
4. TWO TIMES PER MONTH: Scrub or otherwise recondition all resilient or
composition flooring to provide a level of appearance equivalent to a
completely refinished floor.
5. QUARTERLY: Shampoo and extract all common elevator lobby areas.
NIGHTLY RESTROOM SERVICE SPECIFICATIONS
- -------------------------------------------------------------------------------
1. NIGHTLY SERVICES:
a. Restock all restrooms with supplies from the Owner's stock,
including paper towels, toilet seat covers, toilet tissue and
hand soap as required.
b. Wash and polish all mirrors, dispensers, faucets, flushometers
and brightwork with non-scratch, disinfectant cleaner. Wipe
dry all sinks.
c. Wash and sanitize all toilets, urinals and sinks.
d. Remove stains, descale toilets, urinals and sinks as required.
e. Mop all restroom floors with disinfectant germicidal solution.
f. Empty and sanitize all waste, sanitary napkin and tampon
receptacles.
g. Remove all restroom trash.
h. Spot clean all fingerprints, marks and graffiti from walls,
partitions, glass, aluminum and light switches as required.
i. Check for light fixtures burned out or not working properly
and report them to the Supervisor. Janitorial Supervisor is to
leave a list at Building Office on a daily basis.
j. Wash vents located in doors.
2. WEEKLY SERVICES: Dust all low-reach and high-reach areas, including but
not limited to, structural ledges, mirror tops, partition tops and
edges, air conditioning diffusers and return air grills.
3. MONTHLY SERVICES:
a. Wipe down all tile walls and metal partitions. Partitions
shall be left clean and streakfree after this work.
b. Clean all ventilation grills.
c. Dust all doors and door jambs.
d. Machine scrub ceramic tile floors and grout.
<PAGE> 46
4. QUARTERLY: The tile flooring in the ladies' and men's restrooms on
floors 19, 29, 34 and 35, including any other restroom flooring that
will be added in the future with like tile, require a cosmetic cover-up
application such as Tile Guard.
NIGHTLY MAIN FLOOR ELEVATOR LOBBY AND PUBLIC CORRIDOR
SPECIFICATIONS
- -------------------------------------------------------------------------------
1. NIGHTLY SERVICES:
a. Spot clean all glass, including low partitions and the
corridor side of all windows and glass doors to tenant
premises.
b. Spot clean all brightwork, including kick plates, base,
partition tops, hand rails, waste paper receptacles, planters,
elevator call button plates and visible hardware on the
corridor side of tenant entry doors.
c. Thoroughly clean all door saddles free of dirt and debris.
d. Vacuum, spot clean, sweep or damp mop all flooring.
e. Spot clean and dust directory board glass and ledges.
f. Screen sand for cigarette butts in all ash receptacles located
just outside all entrance doors. Also empty all trash
receptacles, replace plastic liners and sanitize as needed.
g. Buff terrace level corridor floor.
2. WEEKLY: Sweep all three service stairwells from the basement to the
39th floor.
NIGHTLY PASSENGER ELEVATOR SPECIFICATIONS
- -------------------------------------------------------------------------------
1. NIGHTLY SERVICES:
a. Clean all metal surfaces.
b. Spot clean cab walls and interior doors.
c. Spot clean outside surfaces of all elevator doors and frames.
d. Vacuum cab floor and edges thoroughly.
e. Wipe clean all door tracks and thresholds.
2. WEEKLY SERVICES:
a. Thoroughly clean entire interior surfaces of all doors and
frames and outside surfaces of all doors and frames.
b. Thoroughly clean all door tracks and thresholds.
3. MONTHLY SERVICES: Steam extract carpet in all passenger elevators.
4. QUARTERLY SERVICES: Wipe clean entire cab ceiling.
<PAGE> 47
NIGHTLY EXTERIOR STRUCTURE AND GROUNDS SERVICES
SPECIFICATIONS
1. NIGHTLY SERVICES:
a. Police entire perimeter of building, including the landscaped
areas and storm drain grills, up to the property lines on all
sides.
b. Spot sweep accumulations of dirt, papers and leaves in all
comer areas where winds tend to cause a collection of debris.
c. Spot clean all exterior glass at building entrances.
d. Lift nap on all entry walk-off mats as necessary with a heavy
bristle brush and vacuum.
e. Empty all waste receptacles and remove trash from designated
trash areas.
f. Sweep sidewalks, steps, landscaped areas, walks and benches.
g. Pick up and sweep loading dock area.
2. MONTHLY SERVICES:
a. Pressure clean the loading dock and trash compactor area.
b. Pick up and sweep the loading dock area.
WINDOW CLEANING SERVICES
1. MONTHLY SERVICES:
a. Wash exterior glass on terrace level.
b. Wash interior glass of Main Lobby, Branch Bank and Building
Management Office.
<PAGE> 48
- -------------------------------------------------------------------------------
EXHIBIT "D"
RULES AND REGULATIONS
- -------------------------------------------------------------------------------
1. The sidewalks, walks, plaza entries, corridors, concourses, ramps,
staircases, escalators and elevators shall not be obstructed or used
for any purpose other than ingress and egress to and from the Premises.
No bicycle or motorcycle shall be brought into the Building or kept on
the Premises without the consent of Landlord.
2. No freight, furniture or bulky matter of any description will be
received into the Building or carried into the elevators except in such
a manner, during such hours and using such elevators and passageways as
may be approved by Landlord, and then only having been scheduled in
advance. Any hand trucks, carryalls or similar appliances used for the
delivery or receipt of merchandise or equipment shall be equipped with
rubber tires, side guards and such other safeguards as Landlord shall
require.
3. Landlord shall have the right to prescribe the weigh@ position and
manner of installation of safes and/or other heavy equipment which
shall, if considered necessary by Landlord, be installed in a manner
which shall insure satisfactory weight distribution. All damage done to
the Building by reason of a safe or any other article of Tenant's
office equipment being on the Premises shall be repaired at the expense
of Tenant. The time and manner of moving safes and/or other heavy
equipment shall be subject to prior approval by Landlord.
4. Only persons authorized by Landlord will be permitted to furnish ice,
drinking water, towels, barbering, shoe shining, floor polishing and
other similar services to Tenant and only at hours and under
regulations fixed by Landlord. Tenant shall use no other method of
heating or cooling than that supplied by Landlord.
5. Tenant or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time, place, leave or discard any rubbish,
paper, articles or objects of any kind whatsoever outside the doors of
the Premises or in the corridors or passageways of the Building. No
animals or birds except for assist animals shall be brought or kept in
or about the Building.
6. Landlord shall have the right to prohibit any advertising by Tenant
which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability for offices, and upon written notice from
Landlord, Tenant will refrain from or discontinue such advertising.
7. Tenant shall not place, cause or allow to be placed any sign or
lettering whatsoever, at, in, about or upon the Premises, except in and
at such places as may be designated by Landlord and consented to by
Landlord in writing. All lettering and graphics on corridor doors shall
conform to the standard prescribed by Landlord. No trademark shall be
displayed in any event.
8. Canvassing, soliciting or peddling in the Building is prohibited and
Tenant shall cooperate to prevent same.
9. Landlord shall have the right to exclude any person from the Building
other than during customary business hours, and any person in the
Building will be subject to identification by the employees and agents
of Landlord. All persons in or entering the Building shall be required
to comply with the security policies of the Building. Landlord will
provide all security services for the Building, provided that if Tenant
desires any additional security service for the Premises, Tenant shall
have the right (with the advance written consent of Landlord) to obtain
such additional service at Tenant's sole cost and expense.
10. Only workmen employed, designated or approved by Landlord may be
employed for repairs, installation, alterations, painting, material
moving and other similar work that may be done on the Premises.
11. Tenant shall not do any cooking or conduct any restaurant luncheonette
or cafeteria for the sale or service of food or beverages to its
employees or to others, or permit the delivery of any food or beverage
to the Premises, except by such persons delivering the same as shall be
approved by Landlord and only under regulations fixed by Landlord.
Tenant may, however, operate a coffee bar by and for its employees.
12. Tenant shall not bring or permit to be brought or kept in or on the
Premises any inflammable, combustible, corrosive, caustic, poisonous or
explosive fluid, material. chemical or substance, or cause or permit
any odors to permeate in or emanate from the Premises.
<PAGE> 49
- -------------------------------------------------------------------------------
EXHIBIT "D"
RULES AND REGULATIONS
(CONTINUED)
- -------------------------------------------------------------------------------
13. Tenant shall not mark, paint, drill into, or in any way deface any part
of the Building or the Premises. No boring, cutting or stringing of
wires shall be permitted, except with the prior written consent of
Landlord, as Landlord may direct. Tenant shall not install any
resilient tile or similar floor covering in the Premises except with
the prior approval of Landlord.
14. No additional locks or bolts of any kind shall be placed on any door in
the Building or the Premises and no lock on any door therein shall be
changed or altered in any respect Landlord shall furnish two keys for
each lock on doors in the Premises and shall, on Tenant's request and
at Tenant's expense, provide additional duplicate keys. All keys shall
be returned to Landlord upon the termination of this Lease. Landlord
may be at all times keep a pass key to the Premises. All entrance doors
to the Premises shall be left closed at all times, and left locked when
the Premises are not in use.
15. Tenant shall give immediate notice to Landlord in case of accidents in
the Premises or in the Building or of defects therein or in any
fixtures or equipment or of any known emergency in the Building.
16. Tenant shall not use the Premises or permit the Premises to be used for
photographic, multilith or multigraph reproduction except in connection
with its own business and then only with Landlord's prior permission.
17. Tenant shall not use or permit any portion of the Premises to be used
as an office for a public stenographer or typist, offset printing, the
sale of liquor or tobacco, a barber or manicure shop, an employment
bureau, a labor union office, a doctor's or dentist's office, a dance
or music studio, any type of school, or for any use other than those
specifically granted in this Lease.
18. Tenant shall not advertise for laborers giving the Premises as an
address, nor pay such laborers at a location in the Premises.
19. The requirements of Tenant will be attended to only upon application at
the offices of the Building. Employees of Landlord shall not perform
any work or do anything outside of their regular duties, unless under
special instructions from the office of Landlord.
20. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. Business machines and mechanical equipment
belonging to Tenant which cause noise, vibration or any other nuisance
that may be transmitted to the structure or other portions of the
Building or to the Premises, to such a degree as to be objectionable to
Landlord or which interfere with the use or enjoyment by other tenants
of their premises or the public portions of the Building, shall be
placed and maintained by Tenant at Tenant's expense, in settings of
cork, rubber or spring type vibration eliminators sufficient to
eliminate noise and vibration.
21. No draperies, shutters or other covering may be installed by Tenant
between the Building Standard window covering and the exterior windows
or walls. Installation and use of lighting which is visible from the
exterior of the Building, except for Building Standard lights, are
subject to the prior written approval of Landlord.
22. Tenant shall not place, install or operate within the Premises or any
other part of the Building any engine, stove or machinery, or conduct
mechanical operations therein, without the written consent of Landlord.
23. No portion of the Premises or any other part of the Building shall at
any time be used or occupied as sleeping or lodging quarters.
<PAGE> 1
EXHIBIT 10.70
THIS INSTRUMENT PREPARED BY
AND RETURN TO:
Fred S. Ridley, Esquire
Annis, Mitchell, Cockey,
Edward & Roehn, P.A.
Post Office Box 3433
Tampa, Florida 33601
MORTGAGE AND SECURITY AGREEMENT
THIS AGREEMENT, made this ____ day of January, 1998, between DIVOT
PROPERTIES WGV, INC. of Hillsborough County, State of Florida, hereinafter
called Mortgagor; and ___________________________. hereinafter called Mortgagee;
W I T N E S S E T H :
Mortgagor, in consideration of the sum of Ten Dollars and other
valuable consideration to Mortgagor paid by Mortgagee, receipt whereof is hereby
acknowledged, does hereby grant, bargain, sell, assign, transfer, convey and
confirm unto Mortgagee, the property situate in St. Johns County, Florida,
described on EXHIBIT "A" attached hereto.
Together with, all buildings, structures and other improvements and all
fixtures, furniture and furnishings, equipment, carpeting, appliances and all
other personalty now on such land or that may hereafter be erected or placed
thereon or acquired therefor, including, but not limited to, all heating,
lighting, plumbing, ventilating, refrigerating, air conditioning, sprinkling,
water and power systems, appliances and fixtures; all elevators, motors and
machinery; all storm and screen windows and doors, screens, awnings, window
shades, bath tubs, sinks, toilets, basins, mirrors, refrigerators, hot water
heaters and ranges, and all substitutions and replacements thereof and all
proceeds thereof, including insurance proceeds, and all shrubbery now growing or
that may hereafter be planted or grown thereon. The real and personal property
described herein is sometimes hereafter collectively called "the property".
Mortgagor also hereby grants, assigns, transfers and conveys to
Mortgagee all rents, issues, income and profits from the property, which are
hereby specifically assigned and pledged to Mortgagee as security for the
payment of the debt herein referred to and Mortgagor's performance of all of
Mortgagor's covenants and agreements herein contained; and also all the crops
and/or produce of every kind now growing or that may be hereafter growing, grown
or produced upon said land or any part thereof.
Mortgagor also hereby grants, assigns, transfers and conveys to
Mortgagee all and singular the ways, easements riparian and other
<PAGE> 2
rights, and all tenements, hereditaments and appurtenances thereunto belonging
to the Property or in anywise appertaining thereto.
Mortgagor hereby grants to Mortgagee a mortgage and a security interest
in all of the property described in this Agreement and in addition to the rights
of a mortgage, Mortgagee shall have all of the rights of a secured party under
the Florida Uniform Commercial Code.
TO HAVE AND TO HOLD the above described property unto Mortgagee, their
and his heirs, successors and assigns forever.
Mortgagor hereby covenants with Mortgagee that Mortgagor is
indefeasibly seized with the absolute and fee simple title to the property; that
Mortgagor has full power and lawful authority to sell, convey, assign, transfer
and mortgage the same; that it shall be lawful for Mortgagee at any time
hereafter peaceably and quietly to enter upon, have, hold and enjoy the property
and every part thereof; that the property is free and discharged from all liens,
encumbrances and claims of every kind, including all taxes and assessments;
except for taxes and assessments not yet due and payable and governmental
regulations; except taxes accruing subsequent to December 31, 1997 and subject
to those matters set forth in EXHIBIT "B" attached hereto.
That Mortgagor covenants that Mortgagor, at Mortgagor's own expense,
will execute such other and further instruments and assurances to vest absolute
and fee simple title to the property in Mortgagee that may be requested by
Mortgagee; and that Mortgagor will, and his heirs, legal representatives and
successors shall warrant and defend the title to the property unto Mortgagee
against the lawful claims and demands of all persons whomsoever.
This mortgage is given to secure to Mortgagee payment of that certain
promissory note, of even date herewith, made by Mortgagor in the aggregate
original principal amount of One Million Five Hundred Thousand and 00/100
Dollars ($1,500,000.00), accruing interest at the rate of fifteen percent (15%)
per annum on the principal amounts remaining from time to time unpaid, which
note is payable to the order of the Mortgagee at _________________________.
Until full payment of such promissory note, or any extensions or
renewals thereof, in whole or in part, and until payment of all other
indebtedness or liability that may become due or owing hereunder and secured
hereby, if mortgagor shall faithfully and promptly comply with and perform each
and every other covenant and provision herein on the part of Mortgagor to be
complied with and performed, then this Agreement shall be void.
Mortgagor agrees that any additional sum or sums advanced by the then
holder of the Note secured hereby to or for the benefit of Mortgagor, whether
such advances are obligatory or made at the option
2
<PAGE> 3
of Mortgagee, or otherwise, at any time within twenty (20) years from the date
of this mortgage, with interest thereon at the rate agreed upon at the time of
each additional loan or advance, shall be equally secured with and have the same
priority as the original indebtedness secured hereby and all such sums shall be
subject to all of the terms and provisions of this mortgage, whether or not such
additional loan or advance is evidenced by a promissory note and whether or not
identified by a recital that it is secured by this mortgage; provided that the
aggregate amount of principal indebtedness outstanding at any one time shall not
exceed the sum of $1,500,000.00 and provided further that it is understood and
agreed that this future advance provision shall not be construed to obligate
Mortgagee to make any such additional loans or advances. It is further agreed
that any additional note or notes executed and delivered under this future
advance provision shall be included in the word "Note" wherever it appears in
the context of this mortgage.
And Mortgagor hereby further covenants as follows:
To pay, with interest, the Note and any extensions or renewals thereof,
in whole or in part, and all other indebtedness or liability hereby secured,
however created or evidenced, promptly when the same respectively becomes due;
to pay and/or discharge any other amounts, indebtedness and/or liability that
may in the future become due, owing or outstanding from Mortgagor to Mortgagee,
however the same may be or may have been contracted, evidenced or accrued; to
pay all taxes and assessments levied or assessed upon the property before the
same become delinquent, and in no event to permit the property, or any part
thereof, to be sold for nonpayment of taxes or assessments, to keep the property
in good repair and to permit, commit or suffer no waste, impairment or
deterioration thereof; to comply strictly with all laws and governmental
regulations and rules affecting said property or its operation; to pay all taxes
that may be levied or assessed on this mortgage or the monies secured hereby; to
permit no mechanic's or other liens arising either by contract or by law, to be
created or rest upon all or any part of the property for ten days without the
same being paid or released, and discharge of the property therefrom procured;
and to pay all costs and expenses incurred or paid by Mortgagee in collecting
the monies hereby secured or in enforcing or protecting the rights and security
of the Mortgagee hereunder, including reasonable attorneys' fees incurred out of
court, at trial, on appeal, or in bankruptcy proceedings, in the event the
mortgage and the Note or other evidence of liability be placed in the hands of
an attorney for collection.
Mortgagor further covenants to keep the buildings, structures and other
improvements now or hereafter erected or placed on the premises and constituting
a part of the mortgage security constantly insured against all loss or damage
for the full insurable value of the property for fire, windstorm and extended
coverage in insurance companies satisfactory to Mortgagee (but Mortgagee shall
not be liable for the insolvency or irresponsibility of any such companies),
3
<PAGE> 4
which policies shall provide for not less than 10 days written notice of
cancellation to Mortgagee, and to pay promptly all premiums for such insurance,
the policies representing which shall be delivered to and held by Mortgagee as
additional security for the payment of the indebtedness and liability security
hereby. All sums recoverable on any such insurance policies shall be made
payable to Mortgagee by a loss payable clause satisfactory to Mortgagee, to be
attached to such policies. In the event any such insurance policy shall expire
during the life hereof, Mortgagor agrees to procure and pay for renewal thereof,
with the above requirements, replacing such expired policy and deposit the same
with Mortgagee, together with receipts showing payment in full of premiums
therefor, ten days prior to the expiration date of such policy. In case of loss,
Mortgagee is hereby authorized to adjust and settle any claim under any such
policy and Mortgagee is authorized to collect and receipt for any such insurance
money and to apply the same, at Mortgagee's option, in reduction of the
indebtedness hereby secured, whether due or not, or to allow Mortgagor to use
such insurance money, or any part thereof in repairing the damage or restoring
the improvements or other property without affecting the lien hereof for the
full amount secured hereby.
It is further covenanted that Mortgagee may (but shall not be obligated
so to do) advance monies that should have been paid by Mortgagor hereunder in
order to protect the lien or security hereof, and Mortgagor agrees without
demand to forthwith repay such monies, which amount shall bear interest from the
date so advanced until paid at the rate of fifteen (15%) percent per annum and
shall be considered as so much additional indebtedness secured hereby; but no
payment by Mortgagee of any such monies shall be deemed a waiver of Mortgagee's
right to declare the principal sum due hereunder by reason of the default or
violation of Mortgagor in any of his covenants hereunder.
Mortgagor further covenants that granting any extension or extensions
of the time payment of any part or all of the total indebtedness or liability
secured hereby, or taking other or additional security for payment thereof,
shall not affect this mortgage or the rights of Mortgagee hereunder, or operate
as a release from any liability upon any part of the indebtedness hereby secured
under any covenant herein contained.
It is further covenanted and made of the essence hereof that in case of
default for ten (10) days in the performance of any of the covenants herein on
the part of Mortgagor, then it shall be optional with Mortgagee to consider all
unmatured indebtedness or liability secured hereby, and accrued interest
thereon, as immediately due and payable, without demand and without notice or
declaration of said option, and Mortgagee shall have the right forthwith to
institute proceedings to enforce the collection of all monies secured hereby
and/or to foreclose the lien hereof.
4
<PAGE> 5
It is further stipulated and agreed by and between the parties that the
Mortgagee shall have the right to exercise any option or privilege herein given
or reserved and to enforce any duty of the Mortgagor at any time without further
or other notice regardless of any prior waiver by Mortgagee of default of
Mortgagor or delay by Mortgagee in exercising any right, option or privilege or
enforcing such duty of Mortgagor, and no waiver by Mortgagee of default of
Mortgagor nor delay of Mortgagee in exercising any right, privilege or option or
in enforcing any duty of Mortgagor shall be deemed, held or construed to be a
waiver of any of the terms or provisions of this mortgage or of any subsequent
or continuing default.
Mortgagor covenants and agrees to cultivate and properly care for all
growing crops on the property in accordance with prevailing horticulture
practices in the State of Florida.
It is further covenanted and agreed that if at any time in the option
of Mortgagee a receivership may be necessary to protect the mortgaged property,
or its rents, issues, profits, crops or produce, whether before or after
maturity of the indebtedness hereby secured, or at the time of or after the
institution of suit to collect such indebtedness or to enforce this mortgage,
Mortgagee shall, as a matter of strict right and regardless of the value of the
mortgage security for the amounts due hereunder or secured hereby, or of the
solvency of any party bound for the payment of such indebtedness, have the right
to the appointment on ex parte application, and without notice to anyone, by any
court having jurisdiction, of a receiver to take charge of, manage, preserve,
protect and operate the property and to operate and conduct any business located
on the property, to collect the rents, issues, profits and income thereof, to
sell and deliver all crops and produce growing or grown and produced on the
property, to fertilize and care for any groves on the property, to make all
necessary and needed repairs, and to pay all taxes and assessments against the
property and insurance premiums for insurances thereon and after the payment of
the expenses of the receivership and management of the property to apply the net
proceeds in reduction of the indebtedness hereby secured or in such manner as
the Court shall direct. Such receivership shall, at the option of Mortgagee,
continue until full payment of all sums hereby secured or until title to the
property shall have passed by sale under this mortgage.
It is covenanted and agreed that the terms "Mortgagor" and "Mortgagee"
are used for convenience herein, and such terms and any pronouns used in
connection therewith, shall be construed to include the plural as well as the
singular number, and the masculine, feminine and neuter genders, whenever and
wherever the context so admits or requires; and that all covenants and
obligations of the
5
<PAGE> 6
respective parties hereto shall extend to and be binding upon their respective
heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, Mortgagor has hereunto set his hand and seal the
day and year first above written.
Signed, sealed and delivered DIVOT PROPERTIES WGV, INC.,
in the presence of: a Florida corporation
- -------------------------
By:
--------------------------------
- -------------------------
STATE OF ___________________
COUNTY OF __________________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by _____________________, as ________________ of DIVOT
PROPERTIES, WGV, INC., a Florida corporation, on behalf of the corporation.
He/She is personally known to me or has produced _____________________ as
identification.
-----------------------------------
NOTARY PUBLIC
Name:
------------------------------
Serial #:
--------------------------
My Commission Expires:
6
<PAGE> 7
EXHIBIT "B"
1. Saint Johns DRI Development Order approved under St. Johns County,
Florida Resolution No. 91-130, as modified by Modification of Saint
Johns DRI Development Order under Resolution No. 91-183, as noticed
under Notification of DRI/Development Order recorded in Official
Records Book 922, page 219, as further modified by Modification of
Saint Johns DRI Development Order under Resolution 94-211 and
Resolution 95-06, Resolution 96-102 and Resolution 96-233, as noticed
under Notification of DRI/Development Order recorded in Official
Records Book 1091, page 1119 and Official Records Book 1217, page 437,
all of the public records of St. Johns County, Florida.
2. Water and Wastewater Utility Service Agreement, between Northwest
Utilities I, Inc., SJH Partnership, Ltd. and St. Johns County, Florida
dated January 24, 1995, as recorded in Official Records Book 1094, page
332, of the public records of St. Johns County, Florida.
3. Declaration of Covenants and Restrictions for Saint Johns Northwest
Master recorded in Official Records Book 1185, page 595, public records
of St. Johns County, Florida.
4. Memorandum of Declaration of Voluntary Payment Obligations recorded in
Official Records Book 1185, page 1831, public records of St. Johns
County, Florida.
5. Terms and provisions of Section 9.7 of the Agreement for Sale and
Purchase by and between SJH Partnership, Ltd. and Broudy Brothers, Inc.
dated May 24, 1996, restricting the property from being used for the
sale of package liquor for off-premises consumption.
6. Exclusive rights as to development of timeshare estates, timeshare
licenses or vacation clubs as such programs are defined under Chapter
721, F.S. contained in Special Warranty Deed in favor of Vistana WGV,
Ltd., dated July 24, 1996, recorded in Official Records Book 1185, page
1409, public records of St. Johns County, Florida.
7. Exclusive rights as to golf products store contained in Special
Warranty Deed in favor of WGV Retail, General Partnership dated July
24, 1996, recorded in Official Records Book 1185, page 1519, public
records of St. Johns County, Florida.
8. Declaration of Covenants and Restrictions for Saint Johns Northwest
Residential recorded in Official Records Book 1185, page 740, as
amended in Official Records Book 1198, page 872, Official Records Book
1198, page 890, Official Records Book
7
<PAGE> 8
1230, page 1358, and Official Records Book 1252, page 1479, and
Supplementary Declaration of Covenants and Restriction for Saint
Johns-Northwest Residential recorded in Official Records Book 1279,
page 286, all of the public records of St. Johns County, Florida.
9. A 25.0 foot Upland Buffer as shown on survey by Northeast Florida
Surveyors, dated June 5, 1997.
10. Impact Fee Credit Agreement dated November 18, 1997 and recorded
November 24, 1997 in Official Records Book 1278, page 1584 of the
public records of St. Johns County, Florida.
11. Impact Fee Credit Agreement dated November 18, 1997 and recorded
November 24, 1997 in Official Records Book 1278, page 1596 of the
public records of St. Johns County, Florida.
12. Declaration of Covenants and Restrictions for Saint Johns 0 Northwest
Commercial recorded in Official Records Book 1185, page 645, as amended
by Notice of Relocation of Roadways - Saint Johns - Northwest
Commercial recorded in Official Records Book 1198, page 866, and
Supplementary Declaration of Covenants and Restrictions for Saint Johns
- Northwest Commercial recorded in Official Records Book 1998, page
948, all of the public records of St. Johns County, Florida.
8
<PAGE> 9
PROMISSORY NOTE
$1,500,000.00 January ___, 1998
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the order of:
__________________________ ("Holder") at its office in _______________________,
or at such other place as Holder hereof may designate, the sum of: One Million
Five Hundred Thousand 00/100 Dollars ($1,500,000.00) of principal, or such
lesser amount as shall equal the aggregate amounts advanced from time to time to
Maker, together with interest on the unpaid balance of principal outstanding
from time to time computed from the date of each advance to Maker to the date of
receipt of payment, at the rate of fifteen percent (15%) per annum. Principal
and interest shall be due and payable on June 30, 1998.
Payment of any installment shall be first applied to accrued interest to the
date of receipt thereof, and the balance, if any, to principal.
Maker may prepay this Note in full or in part, without penalty, but any such
prepayment shall be first applied to accrued interest, and the balance, if any,
to principal.
All past due interest shall bear interest at the rate eighteen percent (18%) per
annum.
Nothing herein, nor any transaction related hereto, shall be construed or so
operate as to require the Maker to pay interest at a greater rate than shall be
lawful. Should any interest or other charges paid by the Maker in connection
with this Note result in the computation or earning of interest in excess of the
maximum legal contract rate of interest which is legally permitted under the
laws of Florida, from time to time, then any and all such excess shall be, and
the same is, hereby waived by the Holder, and any and all such excess shall be
automatically credited against and in reduction of the principal balance due
under this indebtedness and any portion which exceeds the principal balance due
under this Note shall be paid by the Holder to the Maker. At the maturity of
this Note (or prior thereto, in the event of any permitted prepayment, or if the
Holder accelerates payment thereof), if the total amount of interest paid, and
any other charge upon the principal, exceeds the maximum legal contract rate
permitted by law, such interest shall be recomputed and any such excess shall be
credited to principal or returned to the Maker.
The indebtedness evidenced by this Note is secured by a certain Mortgage and
Security Agreement, dated as of the date of this Note, encumbering property
located in St. Johns County, Florida.
Upon the occurrence of any "event of default", the events constituting an "event
of default" being hereinafter defined and
<PAGE> 10
enumerated, Holder hereof, at Holder's sole election, may declare all or any
portion of the principal of and accrued interest on this Note to be immediately
due and payable, and may proceed at once and without further notice to enforce
this Note or any instrument securing or security for this Note, or both, in
accordance with their terms. Failure of Holder to exercise this option at any
time or times shall not be construed as a waiver thereof by Holder, nor shall
Holder be prohibited from thereafter exercising such option at any subsequent
time.
Each of the following events shall constitute an "event of default": (1) failure
to pay any installment of principal or interest on the Note, or any renewal or
extension thereof, when due; (2) failure to perform or to comply with any of the
obligations imposed by any instrument given to secure the indebtedness evidenced
by the Note or by any other agreement or undertaking of Maker securing or
related to this Note; (3) failure by Maker to pay any obligation, whether direct
or contingent, for borrowed money, or to perform or observe the terms of any
instrument pursuant to which such obligation was created or secured, except when
such obligation is being contested in good faith by Maker; (4) if any warranty,
representation or statement made or furnished to Holder by or on behalf of Maker
or any guarantor in connection with the loan to Maker proves to have been false
in any material respect when made or furnished; (5) the death of any individual
Maker, guarantor or any other person primarily or secondarily responsible for
the repayment of this Note; (6) loss, theft, substantial damage, destruction,
abandonment, sale or encumbrance to or of any of the collateral securing payment
of this Note, or the making of any levy, seizure or attachment thereof or
thereon; (7) if Maker or any guarantor becomes insolvent or bankrupt, or ceases,
is unable, or admits in writing his inability to pay his debts as they mature,
or makes a general assignment for the benefit of, or enters into any composition
or arrangement with, creditors; or (8) if proceedings are commenced for the
appointment of a receiver, trustee or liquidator of Maker or any guarantor, or
of a substantial part of his assets or if any bankruptcy, reorganization,
readjustment of debt, insolvency, dissolution, liquidation or similar
proceedings are commenced, voluntarily or involuntarily, and, if involuntarily,
are not discharged within thirty (30) days.
Maker, and any endorser, surety, or guarantor of this Note hereby severally
waives demand, protest, presentment, notice of nonpayment, notice of protest and
diligence in bringing suit against any party and does hereby consent that time
of payment of all or any part of the amount due hereunder may be extended from
time to time by Holder hereof without notice.
Maker, and any endorser, surety, or guarantor further agree, jointly and
severally to pay all costs of collection, including, in case the principal of
this Note or any payment of the principal or any interest thereon is not paid at
the respective maturity thereof, or in case it becomes necessary to protect the
security thereof, whether
2
<PAGE> 11
suit be brought or not, attorneys' fees, court costs, collection expenses and
other expenses which Holder may incur or pay in the prosecution or defense of
its rights hereunder, whether in judicial proceedings, including bankruptcy
court and appellate proceedings, or whether out of court.
No delay or failure of Holder in the exercise of any right or remedy hereunder
or under any other agreement or undertaking securing or related hereto shall
affect any such right or remedy, and no single or partial exercise of any such
right or remedy shall preclude any further exercise thereof, and no action taken
or omitted by Holder shall be deemed a waiver of any such right or remedy.
This Note shall be binding upon Maker and the personal representatives, heirs
and assigns of each of them and upon Holder and its successors and assigns.
This Note shall be construed and enforced in accordance with applicable Florida
and Federal law.
It is agreed that time is of the essence and that, in the event of any default
in payment of any installment for a period of fifteen (15) days, the Holder of
this Note may, at Holder's option, declare all of the remainder of the debt due
and payable. Any failure to exercise such option shall not constitute a waiver
of the right to exercise the option at any other time.
DIVOT PROPERTIES, WGV, INC.,
a Florida corporation
By:
-----------------------------------------
Name:
------------------------------
Its:
-------------------------------
3
<PAGE> 12
ASSIGNMENT OF NET SALES PROCEEDS
This ASSIGNMENT OF NET SALES PROCEEDS is made and entered as of the
____ day of January, 1998, by and between THE GAUNTLET AT CURTIS PARK, INC., a
Virginia corporation ("Assignor"), and ____________________________ (the
"Assignee").
RECITALS
WHEREAS, Divot Properties WGV, Inc., a sister corporation of Assignor
("Divot"), is indebted to Assignee as evidenced by that Promissory Note (the
"Note") dated as of January __, 1998 in the aggregate original principal amount
of One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00);
WHEREAS, the Note is secured by that certain Mortgage and Security
Agreement dated as of January __, 1998 (the "Mortgage"), which will be recorded
in the Public Records of St. Johns County, Florida.
WHEREAS, as further security for the Note, Assignor has agreed to
assign to Assignee the net sales proceeds (as hereinafter defined) from any sale
of certain property owned by Assignor in Stafford County, Virginia, known as the
Gauntlet at Curtis Park Golf Course ("Curtis Park") and which is more
particularly described in EXHIBIT "A" attached hereto.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and undertakings hereinafter set forth, the parties hereby agree as
follows:
1. Assignment of Net Sales Proceeds. Assignor hereby assigns unto
Assignee all of its right, title and interest to the Net Sales Proceeds from the
sale of Curtis Park. As used herein, "Net Sales Proceeds" shall mean the gross
sales price of Curtis Park, less sales commissions, closing costs and the amount
payable to the holder of the first mortgage on Curtis Park in full and complete
satisfaction of said mortgage. This Assignment of Net Sales Proceeds shall
terminate at such time as Divot has paid the Note in full, and upon payment of
the Note in full, Assignee shall deliver to Assignor a termination of this
Assignment in recordable form. Until such termination, Assignor shall direct the
closing agent for any sale of Curtis Park to pay the Net Sales Proceeds
therefrom directly to Assignee.
2. Default. A default shall have occurred hereunder if the Assignor
shall fail to pay in full the Net Sales Proceeds to Assignee at the closing of
any sale of Curtis Park.
3. Governing Law. This instrument is to be construed in all respects
and enforce according to laws of the State of Florida.
<PAGE> 13
4. Binding Effect. This instrument shall be binding upon and incur to
the benefit of the Assignor and Assignee and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties have executed this agreement on the day
and year first above written.
THE GAUNTLET AT CURTIS PARK, INC.,
a Virginia corporation
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
STATE OF _____________
COUNTY OF ____________
The foregoing instrument was acknowledged before me this ______ day of
January, 1998, by ___________________________________, as __________________ of
THE GAUNTLET AT CURTIS PARK, INC., a Virginia corporation, on behalf of the
corporation. He/She is personally known to me or has produced __________________
as identification.
-----------------------------------
NOTARY PUBLIC
Name:
------------------------------
Serial #:
--------------------------
My Commission Expires:
2
<PAGE> 14
CONTINUING GUARANTY
To: _____________________________ January ___, 1998
("Lender")
Gentlemen:
In consideration of and to induce the Lender to make or maintain loans,
advances of money and extensions of credit granted to DIVOT PROPERTIES WGV,
INC., a Florida corporation (hereinafter the "Borrower"), and to grant to
Borrower such renewals, extensions, modifications, and forebearances as Lender
may deem advisable, the undersigned (hereinafter the "Guarantor") and with full
knowledge that Lender intends to rely hereon, hereby jointly and severally,
unconditionally guarantees to the Lender and its assigns, Borrower's full and
prompt payment when due, whether at stated maturity, by acceleration or
otherwise, of all Borrower's indebtedness to Lender arising out of that certain
Promissory Note of even date herewith in the original principal amount
$________________ (the "Obligation").
In furtherance of the above Obligation, Guarantor further agrees to all
of the following:
1. This Guaranty is and shall be construed as a continuing, unlimited,
absolute and unconditional guaranty of payment of the Obligation (and not merely
of collection), without regard to the legality, validity, regularity or
enforceability of any of the Obligation, any of the agreements pursuant to which
any of the Obligation arose or were created or any other agreement related
thereto, and without regard to any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge of a surety or guarantor
including, without limitation, a defense of statute or limitation or laches or
to assert any right of setoff or counterclaim. The effectiveness of this
Guaranty is in no way conditional upon any requirement that the Lender first
attempt to collect any of the Obligation from the Borrower.
2. The liability of any individual Guarantor hereunder is primary and
independent of the liability of any other Guarantor and of any other guaranties
at any time in effect with respect to all or any part of the Obligation. Each
Guarantor's liability hereunder may be enforced regardless of the existence of
any other Guarantors. Separate action or actions may be brought and prosecuted
against any Guarantor whether or not action is brought and prosecuted against
Borrower or any other Guarantor.
3. The Lender shall have the absolute right, without giving notice to
or obtaining the assent of a Guarantor and without relieving Guarantor of
liability hereunder, to deal with the Borrower and each other party who now is
or after the date hereof
<PAGE> 15
becomes liable in any manner (including an assumption of an Obligation) for the
Obligation, in such manner as the Lender in its sole discretion deems fit. For
this purpose, Guarantor gives to the Lender full authority in its sole
discretion to do any or all of the following things: (a) extend credit, make
loans and afford other financial accommodations to the Borrower at such times,
in such amounts and on such terms as the Lender may approve; (b) vary the terms
(including any increase in the interest rate) and grant renewals, extensions or
modifications of any present or future Obligation of Borrower to the Lender; (c)
grant time, waivers and other indulgences in respect thereto; (d) vary,
exchange, release or discharge wholly or partially the Obligation of Borrower,
or delay in or abstain from perfecting and enforcing any security interest, or
guaranty or other means of obtaining payment of any Obligation which the Lender
now has or acquires after the date hereof; (e) substitute or release all or part
of any security now or hereafter held by Lender; (f) make a settlement with one
or more Borrower for less than the aggregate amount of Borrower's Obligation and
thereafter release Borrower from liability for its Obligation; (g) accept
partial payments from Borrower or any other party; (h) release or discharge,
wholly or partially, any endorser or any Guarantor; (i) make a settlement with
one or more Guarantor for less than the aggregate amount of Borrower's
Obligation and thereafter release a Guarantor from liability hereunder; and (j)
compromise or make any settlement or other arrangement with Borrower. Lender
shall not be obligated to inquire into the motives or purposes of any actions by
Borrower in relation to the Obligation as a precondition to Guarantor's
liability under the Guaranty, nor shall any act or omission by Lender affect or
impair this Guaranty.
4. The amount of liability of Guarantor and all rights, powers, and
remedies of Lender hereunder and under any other agreement now or at any time
hereafter in force between Lender and Guarantor, including any other guaranty
executed by Guarantor relating to any Obligation, shall be cumulative and not
alternative and such rights, powers and remedies shall be in addition to all
rights, powers and remedies given to Lender by law.
5. Guarantor warrants to Lender (a) it has disclosed to Lender in
writing all known defaults of any of its personal or business Obligation and
those business entities in which it is a principal and of any and all actions
and proceedings pending or threatened against it or its business entities and
will advise Lender of any such defaults that may occur in the future; and (b)
nothing exists to impair the immediate taking effect of this Guaranty and the
effectiveness of this Guaranty.
6. Guarantor agrees to pay any deficiency remaining after the Lender
realizes on any collateral security for Obligation by sale or resale (whether
furnished by Borrower, Guarantor or a third party) but the Lender shall not be
required to first proceed
2
<PAGE> 16
against such security. Upon the occurrence of any default by Borrower in any of
its Obligation with Lender, Lender shall have immediate right, without notice or
demand, to setoff against Guarantor's Obligation hereunder all money owed by
Lender to Guarantor. Lender shall be deemed to have exercised such right to
setoff and to have made a charge against any such money immediately upon the
occurrence of such default even though such charge is made or entered in the
books of the Lender subsequent thereto. Lender will notify Guarantor after any
such setoff, but failure to do so shall not invalidate the setoff. Guarantor
authorizes Lender to mark its books and records to reflect all of the described
security interests and liens and act otherwise in recognition thereof.
7. Guarantor hereby subordinates any debt currently or which hereafter
may be owed to it by Borrower to the Obligation guaranteed hereunder and, upon
request of the Lender, Guarantor will execute a separate subordination
agreement. Guarantor further agrees that, to the extent it becomes subrogated to
the Lender's rights by virtue of having made payments to the Lender on behalf of
Borrower, such rights in subrogation shall be subordinate to the rights of the
Lender with respect to any unpaid Obligation and agrees that it shall not be
entitled to enforce or receive payment until all Obligation have been fully
paid. Should Borrower make any payment to Guarantor, Guarantor shall hold such
sum in trust and deliver same forthwith to Lender to be applied against the
Obligation, in accordance with the discretion of Lender.
8. This instrument contains the entire agreement of the parties as a
final expression of this Guaranty. There are no pre-existing representations or
conditions precedent (oral or written) respecting the effectiveness of this
Guaranty. No provisions of this Guaranty can be changed, waived, discharged or
terminated except by an instrument in writing signed by the Lender and
Guarantor, which expressly refers to the provision of this Guaranty to which
such instrument relates. No such waiver shall extend to, affect or impair any
right with respect to any Obligation which is not expressly dealt with therein.
No course of dealing, course of performance or trade usage and no parol evidence
of any nature, shall be used to supplement or modify any terms. No delay or
omission on the part of the Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto and any waiver of a right in
any instance shall not be deemed a waiver in any other instance. A waiver or
modification with reference to any one event shall not be construed as
continuing, nor shall it be construed as a bar to, or a waiver or modification
of, any subsequent right, remedy or recourse to a subsequent event.
9. If for any reason Borrower has no legal existence or is under no
legal obligation to discharge any of the Obligation undertaken or purported to
be undertaken by it or on its behalf, or if any of the monies included in the
Obligation have become unrecoverable from Borrower by operation of law, pursuant
to any
3
<PAGE> 17
bankruptcy proceeding, or for any other reason, this Guaranty shall nevertheless
be binding on Guarantor to the same extent as if Guarantor at all times had been
the principal borrower on all such Obligation. This Guaranty shall be in
addition to any other guaranty or other security given for the Obligation, and
it shall not be prejudiced or rendered unenforceable by the invalidity of any
such other guaranty or security.
10. Upon any default by Borrower in the full and prompt payment and
performance of any of the Obligation, the liabilities and Obligation of
Guarantor hereunder shall at the option of the Lender, become forthwith due and
payable to the Lender without demand or notice of any nature, such demand or
notice being expressly waived by Guarantor.
11. In the event a voluntary petition or an involuntary petition (not
discharged or dismissed within sixty days of its filing), is filed by or against
Borrower under the United States Lenderruptcy Code of 1978, or any similar or
successor law, or a receiver, custodian, or liquidator is appointed for
Borrower, Guarantor shall, jointly and severally, without demand or notice,
immediately become liable for the payment of the then unpaid principal balance,
together with accrued and unpaid interest thereon, of Borrower's Obligation to
Lender, whether or not the Lender is prohibited from seeking payment of the
Obligation from Borrower by acceleration thereof, or whether or not said filing
operates as a stay of any action on the part of Lender to seek enforcement or
collection of such Obligation from Borrower or against any collateral of the
Borrower which the Lender has or may have.
12. Guarantor waives notice of acceptance hereof, notice of incurring
future Obligation by Borrower, notice of any action taken or committed by the
Lender in reliance hereon, of any requirement that the Lender be diligent or
prompt in making demands hereunder, or that it give notice of any default by the
Borrower or of the assertion of any other right of the Lender hereunder.
Guarantor also irrevocably waives to the fullest extent permitted by law, all
defenses which at any time may be available in respect of its Obligation
hereunder by virtue of any homestead exemption, statute of limitations, stay,
moratorium law or other similar law now or hereafter in effect. Guarantor also
irrevocably waives any duty on the part of Lender to disclose to Guarantor any
facts it may now or hereafter know about Borrower. Guarantor acknowledges it is
fully responsible for being informed and continuing to remain informed of the
financial condition of Borrower and of all circumstances bearing on the risk of
non-payment of any Obligation.
13. Guarantor further waives any defense to enforcement of this
Guaranty because of Lender's failure to preserve, perfect or continue perfecting
any security interest now or hereafter held by Lender securing the Obligation,
or any requirement for valuation
4
<PAGE> 18
and appraisal of collateral security or diligence in collection, or Lender's
failure to claim or make any claim in any insolvency proceeding involving
Borrower or any other Guarantor of the Obligation, or because of Lender
releasing any one or more but not all the Guarantors from liability hereunder,
or because of any right of setoff or counterclaim against the Borrower in
respect of any liability of any Guarantor to Borrower including any proceeding
under the Lenderruptcy Code or insolvency proceeding of any nature.
GENERAL
14. "Guarantor" and "Borrower" as used in this Guaranty, as well as
related pronouns, nouns and verbs, shall denote the singular and the plural, as
well as natural or artificial persons, as appropriate.
15. This Guaranty shall be construed and enforced in accordance with
and governed by the laws of the State of Florida. Wherever possible each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. The caption or heading at the beginning of each section is for the
convenience of the parties and are not part of the Guaranty.
16. Any demand or notice to Guarantor shall be in writing and shall be
effective when delivered to Guarantor's last known address or mailed or sent by
telegraph to Guarantor's address as shown on the records of the Lender.
17. If at any time all or any part of any payment theretofore applied
by the Lender to any Obligation hereby guaranteed is or must be rescinded or
returned by the Lender for any reason whatsoever (including without limitation
the insolvency, bankruptcy or reorganization of Borrower), such indebtedness
shall for the purpose of this Guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence
notwithstanding such application by the Lender, and this Guaranty shall continue
to be effective or be reinstated, as the case may be, as to such indebtedness as
though such application by the Lender had not been made.
18. Any notices or documents given by Guarantor to Lender shall be in
writing and shall be sent to the address set forth at the beginning of this
Guaranty. Notices of termination of this Guaranty must comply with the terms
stated in the section entitled "Duration of Guaranty."
5
<PAGE> 19
19. Guarantor further agrees, as the principal obligor and not as
Guarantor only, to pay to the Lender forthwith upon demand, in funds immediately
available to the Lender, all costs and expenses (including court costs,
paralegal expenses, out-of-pocket expenses, and reasonable legal fees of
counsel, including trial, appellate, post-judgment collection and bankruptcy
proceedings) incurred or expended by the Lender (a) in connection with this
Guaranty and the enforcement hereof, and (b) in connection with Lender's
attempts to collect the Obligation from Borrower, together with interest on
amounts recoverable under this Guaranty from the time such amounts become due
until payment at the maximum rate of interest permitted under applicable law.
20. Lender may from time to time, without notice to Guarantor, assign
or transfer all or a portion of any Obligation or any interest therein, and each
and every assignee or transferee of the Obligation or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Obligation, be entitled to the benefits of this Guaranty to the same extent as
if such assignee or transferee were the Lender; provided, however, that the
foregoing shall in no way restrict or preclude the assignee from qualifying as a
holder in due course under the Uniform Commercial Code.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
on the day and year aforesaid.
WITNESSES: BRASSIE GOLF CORPORATION
By:
- ----------------------------------- --------------------------------
Print Name: Title:
------------------------
- -----------------------------------
Print Name: ("Guarantor")
------------------------
STATE OF
--------------------------
COUNTY OF
-------------------------
The foregoing was acknowledged before me this ____ day of January,
1998, by ________________________________, as _____________ of Brassie Golf
Corporation and on its behalf, who is personally known to me or who has produced
____________________ as identification.
-----------------------------------
NOTARY PUBLIC
Name:
------------------------------
My Commission Expires:
6
<PAGE> 1
EXHIBIT 10.71
PRIVATE PLACEMENT PURCHASE AGREEMENT
Brassie Golf Corporation (the "Company") and Divot Properties, WGV, Inc. ("Sub")
One Tampa City Center
201 North Franklin Street, Suite 200
Tampa, Florida 33602
re: Purchase of Units
Gentlemen:
1. Certain Representations.
(a) The undersigned ("Subscriber") has reviewed the filings which
the Company has made with the Securities Exchange Commission
during the past 12 months. The Company represents and warrants
to the Subscriber that all such filings are correct and
accurate in all material respects and in all material respects
state all facts necessary to make such filings not misleading.
Subscriber has had the opportunity to discuss the Company's
affairs with the Company's officers.
(b) The Company and Sub represent and warrant that Sub is wholly
owned by the Company.
2. Sale of Units.
(a) Each Unit consists of one secured note issued by Sub in the
principal amount of $1,000 and in the form of Exhibit A (a
"Note"), and 500 shares (the "shares") of common stock of the
Company ("common stock").
(b) Effective upon the Closing (as hereinafter defined), the
Company (as to the shares included in the Units) and Sub (as
to the Notes included in the Units) hereby sell to Subscriber,
and Subscriber hereby purchases from the Company, the number
of Units set forth opposite Subscriber's name below.
(c) The purchase price of each Unit is $1,000.50, allocable $1,000
to the Note and $0.50 to the shares. The purchase price is
payable on the date of the Closing by wire transfer directly
to the person or entity who at the Closing sells Parcel 11 (as
hereinafter defined) to the Company.
(d) The Notes to be issued to the Purchasers will upon the Closing
be secured by a first mortgage in the form of Exhibit B (the
"Mortgage") and by a first and prior pledge and assignment of
certain proceeds under an instrument in the form of Exhibit C
(the "Assignment"), and will be guaranteed by the Company
pursuant to a guaranty in the form of Exhibit D. The interest
of each Purchaser in the Mortgage and the Assignment will be
pro rata with the respective number of Units purchased by it.
(e) This Agreement shall terminate and shall be of no further
force or effect if the Closing has not occurred by the close
of business on February 28, 1998.
(f) The term "Purchasers" as used herein means subscribers who in
the aggregate are purchasing 1,500 Units under agreements of
the same tenor as this Agreement.
(g) "Parcel 11" means the real estate which is described in the
Mortgage. The "Closing" means the consummation of the
currently contemplated purchase by the Company of Parcel 11.
1
<PAGE> 2
(h) Concurrently with the Closing and as a condition to the
obligations of Subscriber hereunder, the Company shall cause
Annis, Mitchell, Cockey, Edwards & Roehn to deliver to the
Subscriber an opinion of such counsel (which opinion shall be
satisfactory to counsel to Subscriber) to the effect that the
Note, this Agreement, the Mortgage, the Assignment and the
Guaranty are valid. binding and enforceable in accordance with
their respective terms, that the Mortgage and the Assignment
are superior to and are not subordinate to or on a parity with
any other liens or claims then in effect or which may arise
thereafter, that the Mortgage and the Assignment have been
duly recorded and that the security interests thereunder have
been perfected by all requisite UCC and other filings, and
that the shares are duly and validly issued, fully paid and
non-assessable.
3. Registration.
(a) The Company will include the shares in the first registration
statement which is hereafter filed by the Company on Form S-1
or S-3 (the "Registration Statement"). The registration shall
be accompanied by blue sky clearances in such states as
Subscriber may reasonably request.
(b) The Company shall pay all expenses of the registration
hereunder, other than Subscriber's underwriting discounts.
(c) The Company shall supply to Subscriber a reasonable number of
copies of all registration materials and prospectuses. The
Company and Subscriber shall execute and deliver to each other
indemnity agreements which are conventional in registered
offerings of this type. The Subscriber shall reasonably
cooperate with the Company in the preparation and filing of
the Registration Statement and appropriate amendments thereto.
(d) Subscriber may transfer a proportionate part of its
registration rights to a limited number of permitted
transferees of the Units or portions thereof.
4. Securities Representations.
(a) Subscriber represents and warrants that it is purchasing the
shares solely for investment solely for its own account and
not with a view to or for the resale or distribution thereof
except as permitted under the Registration Statement or as
otherwise permitted by law.
(b) Subscriber understands that it may sell or otherwise transfer
the Note or the shares only if such transaction is duly
registered under the Securities Act of 1933, as amended, under
the Registration Statement or otherwise, or if Subscriber
shall have received the favorable opinion of counsel to the
holder, which opinion shall be reasonably satisfactory to
counsel to the Company, to the effect that such sale or other
transfer may be made in the absence of registration under the
Securities Act of 1933, as amended, and registration or
qualification in every applicable state. The certificates
representing the shares will be legended to reflect these
restrictions, and stop transfer instructions will apply.
Subscriber realizes that the Units are not a liquid
investment.
(c) Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities
Act) in evaluating the risks and merits of this investment.
Subscriber has the knowledge and experience to evaluate the
Company and the risks and merits relating thereto.
(d) Subscriber represents and warrants that Subscriber is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act of
1933, as amended, and shall be such on the date any shares are
issued to the holder; Subscriber acknowledges that Subscriber
is able
2
<PAGE> 3
to bear the economic risk of losing Subscriber's entire
investment in the Note and the shares and understands that an
investment in the Company involves substantial risks;
Subscriber has the power and authority to enter into this
agreement, and the execution and delivery of, and performance
under this agreement shall not conflict with any rule,
regulation, judgment or agreement applicable to the
Subscriber; and Subscriber has invested in previous
transactions involving restricted securities.
5. Commission. The Company will at the Closing pay to Mueller Trading
Company a 10% commission on all amounts paid by Purchasers to the
Company.
6. Legal Fee. At the Closing, the Company will pay a $10,000 fee to Oscar
D. Folger.
7. Miscellaneous.
(a) This Agreement may not be changed or terminated except by
written agreement. It shall be binding on the parties and on
their personal representatives and permitted assigns. It sets
forth all agreements of the parties. It shall be enforceable
by decrees of specific performance (without posting bond or
other security) as well as by other available remedies. This
Agreement shall be governed by, and construed in accordance
with, the laws of Florida. The federal and state courts
sitting in the City of Tampa shall have exclusive jurisdiction
over all matters relating to this Agreement. Trial by jury is
expressly waived.
(b)
(c) A
(d) ll notices, requests, service of process, consents, and
(e) other communications under this Agreement shall be in writing
and shall be deemed to have been delivered (i) on the date
personally delivered or (ii) one day after properly sent by
Federal Express, addressed to the respective parties at their
address set forth in this Agreement or (iii) on the day
transmitted by facsimile so long as a confirmation copy is
simultaneously forwarded by Federal Express, in each case
addressed to the respective parties at their address set forth
in this Agreement. Either party hereto may designate a
different address by providing written notice of such new
address to the other party hereto as provided above.
8. Except as otherwise expressly set forth herein, each party hereto shall
be responsible for its own expenses with regard to the negotiation and
execution of this Agreement.
Dated:
----------------------------
SUBSCRIBER:
signature:
------------------------
type or print name:
---------------
Address:
--------------------------
Fax No.
Social Security No:
---------------
Number of Units:
------------------
AGREED:
BRASSIE GOLF CORPORATION
BY
---------------------------------
DIVOT PROPERTIES, WGV, INC.
BY
---------------------------------
3
<PAGE> 1
EXHIBIT 10.72
Loan No.: 300071-8
Servicing No.: ________
================================================================================
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
as Lender
---------------------------------------------
LOAN AGREEMENT
dated as of October 30th, 1997
-----
---------------------------------------------
THE GAUNTLET AT CURTIS PARK, INC.
as Borrower
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
RECITALS...................................................................................................... 1
ARTICLE I - DEFINITIONS...................................................................................... 1
Section 1.1 Definitions................................................................................... 1
Section 1.2 Other Definitional Provisions................................................................. 13
Section 1.3 Incorporation by Reference of Commitment...................................................... 14
ARTICLE II - THE LOAN........................................................................................ 14
Section 2.1 Loan Terms.................................................................................... 14
Section 2.2 Interest...................................................................................... 14
Section 2.3 Term.......................................................................................... 14
Section 2.4 Payments...................................................................................... 14
ARTICLE III - CONDITIONS PRECEDENT TO LOAN.................................................................... 14
Section 3.1 Loan Documents................................................................................ 14
Section 3.2 Brokerage Commissions......................................................................... 15
Section 3.3 Title Evidence................................................................................ 15
Section 3.4 Survey........................................................................................ 15
Section 3.5 Insurance..................................................................................... 15
Section 3.6 Authority Documents........................................................................... 15
Section 3.7 Financial Statements and Operating Statements................................................. 16
Section 3.8 Opinion....................................................................................... 16
Section 3.9 Compliance with Laws.......................................................................... 16
Section 3.10 Agreements.................................................................................... 16
Section 3.11 Taxes......................................................................................... 16
Section 3.12 Utilities..................................................................................... 16
Section 3.13 Reserve Accounts.............................................................................. 16
Section 3.14 Engineer's Report............................................................................. 17
Section 3.15 Certificate of Occupancy and-Other Permits.................................................... 17
Section 3.16 Environmental Assessment and O&M Program...................................................... 17
Section 3.17 Appraisal..................................................................................... 17
Section 3.18 Equity........................................................................................ 17
Section 3.19 Management Agreement.......................................................................... 17
Section 3.20 Special Purpose Entity........................................................................ 17
Section 3.21 Miscellaneous................................................................................. 17
ARTICLE IV - REPRESENTATIONS AND WARRANTIES................................................................... 18
Section 4.1 Existence; Compliance with Law................................................................ 18
Section 4.2 Equity Interests.............................................................................. 18
Section 4.3 Power; Authorization; Enforceable Obligations................................................. 18
Section 4.4 No Legal Bar.................................................................................. 19
Section 4.5 No Material Litigation........................................................................ 19
Section 4.6 No Default.................................................................................... 19
Section 4.7 Solvency; Fraudulent Conveyance............................................................... 19
Section 4.8 Special Purpose Entity........................................................................ 19
Section 4.9 Taxes......................................................................................... 20
Section 4.10 No Burdensome Restrictions.................................................................... 20
Section 4.11 Investment Company Act; Other Regulations..................................................... 20
Section 4.12 Subsidiaries.................................................................................. 20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.13 Title to Premises............................................................................. 20
Section 4.14 Ownership of Personalty....................................................................... 21
Section 4.15 Financial Statements.......................................................................... 21
Section 4.16 No Change..................................................................................... 21
Section 4.17 Accuracy of Information....................................................................... 21
Section 4.18 Principal Place of Business................................................................... 21
Section 4.19 Taxpayer Identification Number................................................................ 22
Section 4.20 Insurance..................................................................................... 22
Section 4.21 Mechanic's Liens, etc......................................................................... 22
Section 4.22 Litigation.................................................................................... 22
Section 4.23 No Violation.................................................................................. 22
Section 4.24 ERISA......................................................................................... 22
Section 4.25 O&M Program................................................................................... 23
ARTICLE V - COVENANTS AND AGREEMENTS...................................................................... 23
Section 5.1 Affirmative Covenants of the Borrower......................................................... 23
Section 5.2 Negative Covenants of the Borrower............................................................ 29
Section 5.3 Environmental Covenants....................................................................... 30
Section 5.4 Recourse Covenants............................................................................ 32
Section 5.5 Insurance..................................................................................... 32
ARTICLE VI - RESERVE ACCOUNTS.............................................................................. 34
Section 6.1 Establishment of Reserve Accounts............................................................. 34
Section 6.2 Initial Reserve Deposits...................................................................... 34
Section 6.3 Monthly Reserve Deposits...................................................................... 34
Section 6.4 Adjustments to Monthly Reserve Deposit to the Replacement Reserve Account..................... 34
Section 6.5 Permitted Investments, Earnings, Charges and Annual Accounting................................ 35
Section 6.6 Assignment to the Lender of Reserve Accounts and Rights and Claims............................ 36
Section 6.7 Application of Reserve Accounts Upon an Event of Default...................................... 36
Section 6.8 Disbursements from Tax and Insurance Reserve Account.......................................... 37
Section 6.9 Disbursements from Repair Escrow Account and Replacement Reserve Account...................... 37
Section 6.10 Indemnification............................................................................... 40
ARTICLE VII - EVENTS OF DEFAULT; REMEDIES................................................................... 40
Section 7.1 Events of Default............................................................................. 40
Section 7.2 Remedies...................................................................................... 41
ARTICLE VIII - CASUALTY LOSSES; EMINENT DOMAIN............................................................... 42
Section 8.1 Repairs and Casualty Losses................................................................... 42
Section 8.2 Eminent Domain................................................................................ 42
Section 8.3 Application of Insurance Proceeds and Condemnation Awards..................................... 43
ARTICLE IX - GENERAL PROVISIONS............................................................................ 45
Section 9.1 Remedies Cumulative; Waivers.................................................................. 45
Section 9.2 Benefit....................................................................................... 45
Section 9.3 Assignment and Assumption..................................................................... 45
Section 9.4 Information................................................................................... 46
Section 9.5 Nonrecourse Loan; Exceptions.................................................................. 47
Section 9.6 Amendments.................................................................................... 47
Section 9.7 Governing Law and Jurisdiction................................................................ 47
Section 9.8 Savings Clause................................................................................ 47
Section 9.9 Execution in Counterparts..................................................................... 47
Section 9.10 Notices....................................................................................... 47
Section 9.11 Right of Set-Off.............................................................................. 48
Section 9.12 Written Agreement............................................................................. 48
Section 9.13 Waiver of Jury Trial.......................................................................... 49
</TABLE>
ii
<PAGE> 4
LOAN AGREEMENT
LOAN AGREEMENT, dated as of October, ____ 1997 (together with all
exhibits, schedules., riders and addenda hereto, which are hereby incorporated
herein, the "Loan Agreement" or "Agreement"), by and between THE GAUNTLET AT
CURTIS PARK, INC., a Virginia corporation (the "Borrower"), with its principal
place of business at 18 Fairway Drive, Fredericksburg, Virginia 22406; BRASSIE
GOLF CORPORATION, a Delaware corporation (the "Borrower Principals", whether
one or more); and WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware
corporation, with its principal offices in Vienna, Virginia (together with its
successors and assigns, the "Lender").
RECITALS:
The Borrower has applied to the Lender for a loan in the original
principal amount of $3,280.000.00 (the "Loan") to be made by the Lender pursuant
to the terms hereof.
The Loan will be secured by, among other things, a first priority lien
on Borrower's leasehold interest in the Land and in the Improvements, Personalty
and Rents and Profits.
The Lender is willing to make the Loan based on the terms and
conditions set forth in this Loan Agreement and subject to the execution and
delivery of each of the Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Borrower
Principals and the Lender hereby agree as follows:
ARTICLE I - DEFINITIONS
SECTION 1.1 DEFINITIONS.
As used in this Agreement, the other Loan Documents, or any certificate
or other document made or delivered pursuant hereto, the capitalized terms used
herein shall, unless otherwise defined herein or therein, have the following
meanings:
Additional Repair(s) or Replacement(s). Any repairs, replacements or
improvements (other than Immediate Repairs or Replacements) (i) which are
advisable to keep the Premises in good order and repair and in good marketable
condition, or to prevent deterioration of the Premises, or (ii) for an Immediate
Repair or Replacement to the extent such Immediate Repair or Replacement exceeds
125% of the estimated cost of such Immediate Repair or Replacement as set forth
in Exhibit B hereto.
Affiliate(s). As to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control"
<PAGE> 5
when used with respect to any specified Person means the power to direct the
management and policies of such Person. directly or indirectly. whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" or "controlled" have meanings correlative to the foregoing.
Appraisal. An appraisal of the Premises prepared at the Borrower's
expense by a qualified appraiser designated by and satisfactory to the Lender,
in accordance with written instructions from the Lender, dated as of a date
acceptable to the Lender and otherwise satisfactory in form and substance to the
Lender.
Approved Insurer. An insurer previously approved by the
Lender with an A.M. Best Company, Inc. rating of A- or better, and
which is authorized to issue insurance in the State.
Assignment of Management Agreement. The Assignment and Subordination of
Management Agreement, dated as of even date herewith, executed by the Borrower,
the Lender and the property manager for the Premises.
Bankruptcy Event. As to any Person, the occurrence of any of the
following with respect to such Person: (i) a court or governmental agency having
jurisdiction over the Premises shall enter a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency, reorganization, moratorium, sequestration, liquidation,
consolidation or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, conservator, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its property
or order the winding up or liquidation of its affairs; (ii) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect is commenced against a Person and such petition remains
unstayed and in effect for a period of sixty (60) consecutive days; (iii) such
Person shall commence a voluntary case under any applicable bankruptcy,
insolvency or similar law or make any general assignment for the benefit of
creditors; (iv) such Person shall admit in writing its inability to pay its
debts generally as they become due (otherwise than on a purely temporary basis),
or (v) such Person shall take any action in furtherance of any of the aforesaid
purposes.
Business Day. Any day other than a Saturday, a Sunday, a legal holiday
in Charlotte, North Carolina. or a day on which banking institutions located in
Charlotte, North Carolina are authorized by law or other governmental action to
close.
Certification. As to any specified report, Financial Statement,
Operating Statement, Rent Roll or other document, a written certification by a
Responsible Officer of the Person providing such report, Financial Statement,
Operating Statement, Rent Roll or other document that such report, Financial
Statement, Operating Statement, Rent Roll or other document, as at the date
thereof, (i) contains all of the information and statements required to be set
forth therein, (ii) that such information and statements are true and correct in
all material respects, (iii) that there is no untrue statement of a material
fact required to be stated therein, (iv) that there is no failure to state
therein any information or fact that is necessary to make the information or
statements contained therein, in light of the circumstances under which they are
made, not misleading, and
Page 2
<PAGE> 6
(v) that there is no fact known to such Responsible Officer that materially
adversely affects any of the information or statements set forth therein.
Closing Date. The date set forth in the first paragraph of
this Loan Agreement.
Commitment. The Lender's commitment letter with respect to the Loan as
accepted by the Borrower and the Borrower Principals in accordance with the
terms thereof.
Default Condition. The occurrence or existence of an event or condition
which, upon the giving of notice or the passage of time, or both, would
constitute an Event of Default.
Eligible Account. An account that is either (i) maintained with a
depository institution whose commercial or finance paper or other similar
obligations are rated A-1 or better by Standard & Poor's or P-1 or better by
Moody's, (ii) an account or accounts maintained with a depository institution
with a minimum long-term unsecured debt rating of BBB- or better by Standard &
Poor's or Baa3 or better by Moody's, provided that the deposits in such account
or accounts are fully insured by the Federal Deposit Insurance Corporation,
(iii) a segregated trust account maintained with the corporate trust department
of an institution with capital and surplus of not less than $50,000,000 and with
a minimum long-term unsecured debt rating of BBB- or better by Standard & Poor's
or Baa3 or better by Moody's, or (iv) an account otherwise acceptable to the
Lender.
Environmental Assessment. A report (including all drafts thereof) of an
environmental assessment of the Premises of such scope (including but not
limited to the taking of soil borings and air and groundwater samples and other
above and below ground testing) as the Lender may request, by a consulting firm
acceptable to the Lender, which shall, among other things, be dated as of a date
acceptable to the Lender and conform to (i) the current minimum standards for
the American Society of Testing and Materials, and (ii) the Lender's then
current requirements.
Environmental Covenant(s). Each of the covenants, agreements
and/or indemnities set forth in Section 5.3 of this Loan Agreement.
Equity Interests. Any and all shares, interests, participations and
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person not a corporation (including,
without limitation, general and limited partnership interests in a limited
partnership), and any and all warrants and options to purchase any of the
foregoing.
ERISA. The Employee Retirement Income Security Act of 1974.
Event of Default. The occurrence of any event or condition specified in
Section 7.1 of this Loan Agreement.
Financial Statement. As to any indicated Person, for any specified
period, financial statements of such Person, including, at a minimum, a current
balance sheet, a current income and expense statement, a statement showing
contingent liabilities and any other supporting
Page 3
<PAGE> 7
schedules or documentation that the Lender may from time to time require, and,
in the case of the Borrower, a detailed cash flow statement for each property
and/or entity in which the Borrower has an interest, prepared in accordance with
GAAP (as defined herein). The cash flow statements provided shall include, as
applicable, the property and entity name, location, size (including the number
of rooms with respect to hotels and the number of licensed beds with respect to
healthcare facilities), and the percentage of ownership therein, its leasing and
occupancy status, its Operating Income (including the sources of Operating
Income), its Operating Expenses, its Net Operating Income, any loan balance
currently outstanding, the amount and beneficiary of any cash distributions, the
amount invested in and/or received from such property or entity; and detailed
cash flow projections for the next twelve (12) month period therefor. Each
Financial Statement shall include a Certification thereto.
Financing Statements. The UCC financing statements filed in order to
perfect the Lender's lien on certain personal property and fixtures as more
particularly described therein. The Financing Statements shall be on forms
approved for filing in the State and local filing offices of the State in which
any filings are necessary or, in the Lender's opinion desirable, to be made to
perfect the interests of the Lender granted under the Loan Documents, together
with the search results for such filing offices, including copies of all
reported financing statements.
GAAP. Generally accepted accounting principles, as from time-to-time in
effect in the United States of America, or such alternative accounting standard
as may be acceptable to the Lender, consistently applied.
Governmental Action. The issuance or probable or threatened issuance of
any claim, citation, notice of any pending or threatened suit, proceeding, order
or governmental inquiry or opinion involving the Premises that alleges the
violation of any Requirement of Law or Hazardous Materials Law.
Governmental Authorities. Any governmental (including health and
environmental) agency, office, officer or official whose consent or approval is
required as a prerequisite to the commencement of the construction, renovation
or expansion of the Improvements or to the operation and occupancy of the
Improvements or the Premises or to the performance of any act or obligation or
the observance of any agreement, provision or condition of whatsoever nature
herein contained.
Ground Lease. Each ground lease, if any, pursuant to which the Borrower
acquires an interest as ground lessee of any portion of the Premises.
Hazardous Materials. Includes petroleum and petroleum products,
flammable explosives, radioactive materials (excluding radioactive materials in
smoke detectors), polychlorinated biphenyls, lead, asbestos or asbestos
containing materials in any form that is or could become friable, hazardous
waste, toxic or hazardous substances or other related materials whether in the
form of a chemical, element, compound, solution, mixture or otherwise including,
but not limited to, those materials defined as "hazardous substances,"
"extremely hazardous substances," "hazardous chemicals," "hazardous materials,"
"toxic substances," "solid waste," "toxic chemicals." "air pollutants," "toxic
pollutants," "hazardous wastes," "extremely hazardous
Page 4
<PAGE> 8
waste," or "restricted hazardous waste" by Hazardous Materials Law or regulated
by Hazardous Materials Law in any manner whatsoever, and all other "Hazardous
Materials", if any, identified in the Program Rider.
Hazardous Materials Law. All federal, state, and local laws, ordinances
and regulations and standards, rules, policies and other governmental
requirements and any court judgments applicable to the Borrower or to the
Premises relating to industrial hygiene or to environmental or unsafe conditions
or to human health including, but not limited to, those relating to the
generation, manufacture, storage. handling, transportation, disposal, release,
emission or discharge of Hazardous Materials, those in connection with the
construction, fuel supply, power generation and transmission, waste disposal or
any other operations or processes relating to the Premises, and those relating
to the atmosphere, soil, surface and ground water, wetlands, stream sediments
and vegetation on, under, in or about the Premises. "Hazardous Materials Law"
also shall include, but not be limited to, the following laws, as amended as set
forth herein and as subsequently amended: (1) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USCA 9601 et seq.; (2) the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA
6901 et seq.; (3) the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USCA 1251 et seq.; (4) the Toxic Substances Control
Act, 15 USCA 2601 et seq.; (5) the Emergency Planning and Community
Right-to-Know Act of 1986, 42 USCA 11001 et seq.; (6) the Clean Air Act, as
amended by the Clean Air Act Amendments, 42 USCA 7401 et seq.; (7) the National
Environmental Policy Act of 1969, 42 USCA 4321 et seq.; (8) the River and Harbor
Act of 1899, 33 USCA 401 et seq.; (9) the Endangered Species Act of 1973, 16
USCA 1531 et seq.; (10) the Occupational Safety and Health Act of 1970, 29 USCA
651 et seq.; (11) the Safe Drinking Water Act, 42 USCA 300 (f) et seq.; and (12)
the Hazardous Materials Transportation Act, 49 USCA 1801 et seq., and all
regulations from time to time adopted in respect to the foregoing laws.
Immediate Repair(s). Those repairs, replacements and improvements
listed as "Immediate Repairs" on Exhibit B hereto.
Improvements. As defined in the Security Instrument.
Initial Reserve Deposit(s). Any amount required to be deposited into
any Reserve Account on or before the Closing Date in accordance with the terms
of this Loan Agreement, including without limitation, any initial deposit to any
Reserve Account identified on Exhibit B hereto or in the Program Rider.
Insurance. All of the following insurance coverages:
(i) Property Insurance. Insurance with respect to the
Improvements against any peril included within the classification "All
Risks of Physical Loss" with extended coverage in amounts at all times
sufficient to prevent it from becoming a co-insurer within the terms of
the applicable policies, but in any event such insurance shall be
maintained in an amount equal to the full insurable value of the
Premises and with
Page 5
<PAGE> 9
deductibles acceptable to the Lender. The term "full insurable value"
as used herein shall mean the actual replacement cost of the Premises
(without taking into account any depreciation, and exclusive of
excavations, footings and foundations, landscaping and paving). The
policy must include an agreed value clause, which must be updated
annually.
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, dram shop coverage and umbrella liability insurance against
any and all claims, including all legal liability to the extent
insurable imposed upon the Lender and all court costs and attorneys'
fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Premises in
such amounts as the Lender may require but in no event for a combined
single limit of less than a $1,000,000.00 minimum (or a $3,000,000.00
000 minimum if the Premises contains one or more elevators) with a
$2,000, .00 minimum (or a $6,000,000-00 minimum if the Premises
contains one or more elevators) general aggregate limit. In the event
that any payment of proceeds is made under any umbrella liability
insurance policy, the Borrower shall immediately purchase additional
liability insurance coverage so that at all times there shall be no
less than a $1,000,000.00 minimum (or a $3,000,000.00 minimum if the
Premises contains one or more elevators) of liability insurance
coverage per occurrence with a $2,000,000.00 minimum (or a
$6,000,000.00 minimum if the Premises contains one or more elevators)
general aggregate limit.
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
it), with respect to any work on, about or regarding the Premises.
(iv) Business Interruption. Business interruption insurance
and/or insurance for loss of rental value (as determined by the Lender)
in an amount sufficient to avoid any co-insurance penalty and to
provide proceeds which will cover a period acceptable to the Lender in
its reasonable discretion.
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance covering all boilers and other pressure vessels,
machinery and equipment located in, on or about the Premises and
insurance against loss of occupancy or use arising from any such
breakdown in an amount equal to 100% of the actual replacement cost of
such machinery (without taking into account any depreciation) and
containing such deductibles as are acceptable to the Lender.
(vi) Flood Insurance. If all or any portion of the Premises
is located within a federally designated flood hazard zone, flood
insurance as is generally available and in such amounts and with such
deductibles as the Lender may reasonably require.
(vii) Other Insurance. Such other insurance (including,
without limitation, earthquake insurance, sinkhole insurance and
malpractice insurance) with respect to
Page 6
<PAGE> 10
the Premises against loss or damage of the kinds from time to time
reasonably required by the Lender in connection with loans secured by
properties comparable to the Premises.
Intangible Personalty. As defined in the Security Instrument.
Land. As defined in the Security Instrument.
Lien. Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance. lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
Loan Amount. The original principal amount of the Note.
Loan Document(s). This Loan Agreement, the Commitment, the Note, the
Security Instrument, the Financing Statements, the Assignment of Management
Agreement, and all other documents evidencing, securing or relating to the Loan.
Local Tenant Lease(s). Any lease representing (i) an interest in 20% or
less of the aggregate net rental square footage of the Premises or (ii) any
lease representing 5,000 sq. ft. or less; provided however, as to one or more
tenants that are Affiliates, all leases of such affiliated tenant shall be
aggregated and treated as one lease for purposes of determining whether such
leases are individually Local Tenant Leases, and if such leases, as aggregated,
exceed either limitation set forth above, then each lease shall be deemed not to
be a Local Tenant Lease.
Management Agreement. The written management agreement for the
Premises, in form and substance satisfactory to the Lender, by and between the
Borrower, as owner, and a management company acceptable to the Lender, as
manager.
Material Adverse Change. As to the specified Person, a material adverse
change in the business, operations, property, condition (financial or otherwise)
or prospects of such Person and. in addition. as to the Borrower, any material
adverse change in (i) the ability of the Borrower to perform its obligations
under this Loan Agreement or any of the other Loan Documents or (ii) the
validity or enforceability of this Loan Agreement or any of the other Loan
Documents or the rights or remedies of the Lender hereunder or thereunder.
Monthly Reserve Deposits. Any other monthly payment or deposit required
in connection with any Reserve Account, including without limitation, any
monthly payments or deposits to any Reserve Account identified in Exhibit B
hereto or in the Program Rider.
Net Operating Income. With respect to any specified period, (i)
Operating Income, minus (ii) Operating Expenses, each as calculated for such
period.
Note. The promissory note or notes of the Borrower in connection with
the Loan in favor of the Lender, as acknowledged and agreed to by the Borrower
Principals, together with all prior
Page 7
<PAGE> 11
notes amended, modified, renewed, extended. restated, supplemented, replaced or
substituted thereby.
Note Payment Amount. For any Payment Date, the total amount
due and owing under the Note on such Payment Date.
O&M Program. An operations and maintenance program (in form and
substance satisfactory to the Lender) relating to the use, handling and/or
abatement of one or more Hazardous Materials and which is accepted in writing by
the Borrower.
Obligations. As to any stated Person, the unpaid principal of and
interest on any promissory note or other indebtedness of such Person (including,
without limitation, interest accruing after the maturity of any such promissory
note or indebtedness and interest accruing thereon after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to such Person, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) and all other
obligations and liabilities of such Person, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred, whether
on account of principal, interest, reimbursement obligations, fees. indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel) or otherwise.
Operating Expenses. Any expense paid or to be paid by the Borrower (or
any of its agents or by the Lender on account or on behalf of the Borrower) at
any time in connection with the operation of the Premises, determined on an
accrual basis, in accordance with GAAP, including, without limitation, (i) fees,
costs and expenses related to tenant improvements required to be paid or
reimbursed under any lease or other agreement, (ii) all payments required to be
made pursuant to any management, franchise or other agreement, (iii)
undistributed expenses, including without limitation, general and
administrative, marketing, utilities, operations and maintenance and other
expenses, as appropriate, (iv) legal, accounting, appraisal and other
professional fees, costs and disbursements, including annual fees and other
amounts (including indemnity payments) payable annually or otherwise, (v) taxes,
insurance premiums and impositions of any type, (vi) replacement reserves, (vii)
fees, costs and expenses of the Lender (if any) paid by the Borrower, (viii) any
amount paid in connection with any interest rate contract or similar hedge, cap,
collar, floor or currency swap, and (ix) all items, if any, defined as an
Operating Expense in the Program Rider. Notwithstanding the foregoing, Operating
Expenses will not include (A) depreciation or amortization, (B) any expenses
that in accordance with GAAP should be capitalized (other than current charges
for any such expenses included in the preceding sentence), (C) the principal of
and interest on the Note and (D) any item of expense that would otherwise be
considered within Operating Expenses pursuant to the provisions above but which
is actually paid directly by any tenant or other Person as required by such
tenant's or Person's lease and/or other agreement.
Operating Income. All rents (net of concessions), charges, expense
recovery, revenues and other income (including interest income) paid or to be
paid (other than security deposits from tenants or other Persons under valid
leases or other agreements and insurance, eminent domain or similar proceeds and
rewards paid directly to the Lender pursuant to the provisions of
Page 8
<PAGE> 12
the Loan Agreement) at any time to the Borrower (or to any of its agents for the
account of the Borrower) by any Person in connection with the operation of the
Premises, determined on a cash basis. in accordance with GAAP, and all items, if
any, defined as Operating Income in the Program Rider.
Operating Statement. As to the Premises, for any period indicated, a
statement of the Borrower. as reflecting, truly and accurately, the items set
forth therein as at the date thereof, showing the Operation, Income and
Operating Expenses for the indicated period and including a statement as to the
amounts and sources of rent or other income collected and any other information
required by the Lender. Each Operating Statement shall include a Certification.
Payment Date. Each date any payment of principal or interest
on the Note is due and payable thereunder.
Permitted Encumbrances. As defined in the Security Instrument, together
with any Liens which have been bonded over (i) within thirty (30) days after the
date of filing thereof, (ii) with a bonding company satisfactory to the Lender,
(iii) in an amount satisfactory to the Lender, and (iv) otherwise in form and
substance satisfactory to the Lender, in each case, in the Lender's reasonable
discretion.
Permitted Investments. Any (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
full faith and credit of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the Treasury
of the United States of America); (ii) commercial or finance paper or other
similar obligations rated at the time of purchase A- I or better by Standard &
Poor's or P- I or better by Moody's-, (iii) interest-bearing demand or time
deposits (including certificates of deposit) in any issuing bank or trust
company secured at all times, in the manner and to the extent provided by law,
by collateral security (described in clause (i) of this definition) of a market
value (valued at least quarterly) of no less than the amount of money so
invested; (iv) negotiable or non-negotiable certificates of deposit, time
deposits or other similar banking arrangements issued by any bank or trust
company with combined equity and surplus of no less than $1OO,000,000, having a
rating in either of the two highest rating categories by either Moody's or
Standard & Poor's or fully insured by the Federal Deposit Insurance Corporation;
(v) Eligible Account; and (vi) account or fund that is invested only in any of
the above; provided that such Permitted Investments shall mature on the Business
Day after the date of acquisition.
Person. An individual, a general or limited partnership, a limited
liability company, a limited liability partnership, a corporation, a business
trust, a joint stock company, a trust, an unincorporated association, a joint
venture, a Governmental Authority or other entity of whatever nature.
Personalty. The Tangible Personalty and the Intangible Personalty.
Premises. The collective reference to the Land, the Improvements and
the Tangible Personalty.
Page 9
<PAGE> 13
Program Rider. The Program Rider attached as Exhibit D to
this Loan Agreement.
Prohibited Activities or Conditions. Causing or permitting, whether
directly or indirectly, (1) the presence, use, generation, manufacture,
production, processing, installation, release, discharge. storage (including
storage in above ground and underground storage tanks for petroleum or petroleum
products), treatment, handling, or disposal of any Hazardous Materials
(excluding the safe and lawful use and storage of quantities of Hazardous
Materials or petroleum products, customarily used in the ordinary operations of
the Borrower or customarily used in the ordinary operations of any tenant
previously approved by the Lender) on or under the Premises, or in any way
affecting the Premises or its value or which may form the basis for any present
or future claim. demand or action seeking cleanup of the Premises, (ii) the
transportation of any Hazardous Materials to or from the Premises (excluding the
safe and lawful use and storage of quantities of Hazardous Materials or
petroleum products, customarily used in the ordinary operations of the Borrower
or customarily used in the ordinary operations of any tenant previously approved
by the Lender), or (iii) any occurrence or condition on the Premises (or
exacerbation of the same) that is or may be in violation of Hazardous Materials
Law.
Recourse Covenant(s). Each of those covenants and/or agreements set
forth in Section 5.4 of this Loan Agreement.
Rent Roll. As to the Premises, a rent schedule in a form acceptable to
the Lender, certified by a Responsible Officer of the Borrower, showing the
legal and trade name of each tenant, and for each tenant, the gross and net
square feet occupied, the lease expiration date, the rent payable (both base
rent and additional rent), right of first refusal, options, rights to move
tenants, security deposits and any other information requested by the Lender
and, as to any annual Rent Roll, copies of paid tax receipts for the related
fiscal year. Each Rent Roll shall include a Certification.
Rents and Profits. As defined in the Security Instrument.
Repair Escrow Account. An Eligible Account established and maintained
pursuant to the terms of this Loan Agreement.
Replacement Reserve Account. An Eligible Account established and
maintained pursuant to the terms of this Loan Agreement.
Replacements. Those repairs, replacements or improvements listed as
"Replacements" on Exhibit B hereto.
Requirement(s) of Law. As to any Person, the organizational or
governing documents of such Person. and any statute, law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority (including, without limitation, all requirements relating to zoning,
parking, ingress and egress, building setbacks, or use of the Premises, all
Hazardous Materials Laws, the Architectural Barriers Act of 1968, the
Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, erosion
control ordinances, storm drainage control laws
Page 10
<PAGE> 14
and doing business and/or licensing laws). in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
Reserve Account(s). The Repair Escrow Account, the Tax and Insurance
Reserve Account, the Replacement Reserve Account, and all other reserve and/or
escrow accounts established or required pursuant to the provisions of the Loan
Documents. including, without limitation, pursuant to the Program Rider.
Responsible Officer. As to any Person, the general partner (if the
general partner is not an individual, then the chief executive officer, the
chief financial officer or the president or similar individual of the general
partner), the chief executive officer, the chief financial officer or the
president or similar individual of such Person.
Security Instrument. The deed of trust, mortgage, deed to secure debt
or other instrument, dated as of even date herewith, executed by the Borrower
granting to the Lender a first priority lien or title priority on the Borrower's
leasehold estate in the land, the Improvements, the Tangible Personalty, the
Intangible Personalty and the Rents and Profits to secure the obligations of the
Borrower under the Loan Documents, together with all prior instruments amended.
modified, renewed, extended, restated, supplemented, replaced or substituted
thereby.
Significant Ownership Interest. Any of the following:
(i) if the entity is a general partnership or a joint
venture, (A) any partnership interest in the general partnership, or
(B) any interest of a joint venturer in the joint venture;
(ii) if the entity is a limited partnership, (A) any limited
partnership interest in the entity which, together with all other
limited partnership interests in the entity sold, assigned,
transferred, pledged, encumbered or otherwise disposed of since the
Closing Date exceeds 49% of all of the limited partnership interests in
the entity, or (B) any general partnership interest in the entity;
(iii) if the entity is a limited liability company or limited
liability partnership, any membership interest which, together with all
other membership interests in the limited liability company or limited
liability partnership sold, assigned, transferred, pledged, encumbered
or otherwise disposed of since the Closing Date exceeds 49% of all of
the membership interests in the limited liability company or limited
liability partnership;
(iv) if the entity is a corporation, any voting stock in the
corporation which, together with all other voting stock of the
corporation sold, assigned, transferred, pledged, encumbered or
otherwise disposed of since the Closing Date exceeds 49% of all of the
voting stock of the corporation; and/or
Page 11
<PAGE> 15
(v) if the entity is a trust, any beneficial interest in
such trust which, together with all other beneficial interests
in the trust sold, assigned, transferred, pledged, encumbered or
otherwise disposed of since the Closing Date exceeds 49% of all of the
beneficial interests in the trust.
Special Purpose Entity. An entity whose structure and organizational
and governing documents are in form and substance acceptable to the Lender and
which satisfies all of the following requirements:
(i) it conducts its business solely in its own name through
its duly authorized officers or agents so as not to mislead others as
to the identity of the entity with which those others are concerned,
and particularly uses its best efforts to avoid the appearance of
conducting business on behalf of any Affiliate or that its assets are
available to pay the creditors of any Affiliate. Without limiting the
generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts. statements and loan applications, are made solely in its
name;
(ii) it maintains its records and books of account separate
from those of its Affiliates;
(iii) it obtains proper authorization required by any
Requirement of Law of all action requiring such authorization;
(iv) it obtains proper authorization from its shareholders,
partners or members, as the case may be of all action requiring such
approval;
(v) it pays its Operating Expenses and liabilities from its
own funds;
(vi) its Financial Statements disclose the effects of its
transactions in accordance with GAAP, and disclose that its assets are
not available to pay creditors of any Affiliate,
(vii) its resolutions, agreements and other instruments
authorizing and underlying the transactions described in this Agreement
and in the other Loan Documents are maintained by it as its official
records, separately identified and held apart from the records of any
Affiliate;
(viii) it maintains an arm's-length relationship with its
Affiliates and does not hold itself out as being liable for the debts
of any Affiliate;
(ix) it keeps its assets and its liabilities wholly separate
from those of all other entities, including, but not limited to its
Affiliates except, in each case, as contemplated by the Loan Documents;
and
(x) its sole assets are the Premises, the Intangible
Personalty and the Rents and Profits.
Page 12
<PAGE> 16
State. The state in which the Premises is located.
Subordination Agreement. A subordination, non-disturbance and
attornment agreement in form and substance acceptable to the Lender.
Survey . A survey of the Land and Improvements (as-built) made by a
civil engineer or surveyor, duly licensed or registered in the State, dated as
of a date acceptable to the Lender, containing a surveyor's certification
acceptable to the Lender for the benefit of the Borrower and the Lender (which
certification shall, among other things, indicate whether or not any of the Land
or Improvements are located within an area identified as having "special flood
hazards" as such term is used in the Flood Disaster Protection Act of 1973),
together with its successors and assigns. as their interests may appear, and
otherwise in form and substance acceptable to the Lender.
Tangible Personalty. As defined in the Security Instrument.
Tax and Insurance Reserve Account. An Eligible Account established and
maintained pursuant to the terms of this Loan Agreement.
Tenant Estoppel Certificate. A tenant estoppel certificate in form and
substance acceptable to the Lender.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. The word "including" when used in this Agreement is intended
to be illustrative and not exclusive. Section, subsection, paragraph,
clause, exhibit, schedule, addendum and rider references contained in
this Agreement are references to sections, subsections, paragraphs,
clauses, exhibits, schedules, addenda and riders in or to this
Agreement unless otherwise specified. The captions herein are inserted
only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Loan Agreement nor the intent of
any provision hereof. The terms set forth herein are applicable to the
singular as well as the plural forms of such terms and to the masculine
as well as the feminine and neuter genders of such terms.
(b) All references in this Loan Agreement or any other Loan
Document to any Loan Document, agreement, contract, license, document
or instrument shall mean such Loan Document, agreement, contract,
license, document or instrument as amended, modified, renewed,
extended, restated, supplemented, reissued, and/or substituted from
time to time.
(c) All references or citations in this Loan Agreement or any
other Loan Document to any statute, law, treaty, rule, regulation or
other Requirement of Law shall mean such
Page 13
<PAGE> 17
statute, law, treaty, rule. regulation or other Requirement of
Law as amended, modified, supplemented, replaced or substituted from
time to time.
SECTION 1.3 INCORPORATION B-Y REFERENCE OF COMMITMENT.
All of the terms and conditions of the Commitment are hereby
incorporated herein by reference. as if such terms and conditions were set forth
herein in their entirety, but in the event of any conflict or discrepancy
between the terms and/or conditions of this Loan Agreement and those of the
Commitment, the terms and conditions of this Loan Agreement shall control.
ARTICLE II - THE LOAN
SECTION 2.1 LOAN TERMS.
Subject to the terms and conditions of this Loan Agreement and the
other Loan Documents. the Lender agrees to make the Loan to the Borrower in the
principal sum of the Loan Amount, such borrowing to be evidenced by the Note and
the other Loan Documents.
SECTION 2.2 INTEREST.
The outstanding principal balance of the Loan shall bear interest, and
principal and interest shall be repayable, in accordance with the terms of the
Note.
SECTION 2.3 TERM.
The Loan shall be due and payable in full, unless accelerated sooner
pursuant to the terms of this Loan Agreement, on the maturity date set forth in
the Note.
SECTION 2.4 PAYMENTS.
All payments by the Borrower under the Loan shall be made in accordance
with the terms of the Note.
ARTICLE III - CONDITIONS PRECEDENT TO LOAN
The obligation of the Lender to make the Loan is subject to the
Lender's satisfaction, by proper evidence, execution and/or delivery to the
Lender of each of the following items, each in form and substance satisfactory
to the Lender and the Lender's counsel:
SECTION 3.1 LOAN DOCUMENTS.
Each of the Loan Documents.
Page 14
<PAGE> 18
SECTION 3.2 BROKERAGE COMMISSIONS.
All brokerage commissions, finder's fees or similar compensation in
connection with the purchase of the Premises (if all or any portion of the
Premises is being purchased with Loan proceeds), the making of the Loan, or the
transactions contemplated by the Loan Documents have been paid in full.
SECTION 3.3 TITLE EVIDENCE.
An original signed title commitment in form and substance satisfactory
to the Lender, for a standard ALTA mortgagee policy as to the Borrower's
leasehold estate in the Land from a company or from companies approved by the
Lender (including any reinsurance agreements and endorsements required by the
Lender), providing coverage for the full principal amount of the Loan.
containing such coverages and endorsements as may be required by the Lender,
together with copies of all recorded documents creating exceptions to such
policy.
SECTION 3.4 SURVEY.
Two (2) originals of the Survey.
SECTION 3.5 INSURANCE.
Each policy of insurance required by this Loan Agreement is in full
force and effect on the Closing Date.
SECTION 3.6 AUTHORITY DOCUMENTS.
(a) Organizational Documents. As applicable, a certified copy
of each limited partnership agreement, limited partnership certificate,
partnership agreement, articles of incorporation, bylaws, shareholder
agreements, articles of organization and operating agreement of the
Borrower and each Borrower Principal (when not an individual), and each
general partner, member or shareholder of the Borrower and each
Borrower Principal (when not an individual), with all amendments,
modifications, supplements and restatements thereto.
(b) Assumed Name Certificate. A certified copy of each assumed
name certificate, if any, of the Borrower and each Borrower Principal
(when not an individual).
(c) Good Standing Certificates. Good standing certificates, or
their equivalent, issued by the Secretary of State and all other
appropriate offices of the state organization of the Borrower and each
Borrower Principal (when not an individual) and evidence satisfactory
to the Lender of the Borrower's and each such Borrower Principal's
authorization to do business in the State if the state of the
Borrower's and each such Borrower Principal's organization is other
than the State.
Page 15
<PAGE> 19
(d) Resolutions and Consents. Certified resolutions and/or
consents authorizing the Borrower and each Borrower Principal (when not
an individual) to enter into the Loan Documents.
SECTION 3.7 FINANCIAL STATEMENTS AND OPERATING STATEMENTS.
Financial Statements of the Borrower and each Borrower Principal as of
the end of the most recent fiscal year, together with Operating Statements for
the period from the beginning of the current fiscal year and ending on a date
not more than thirty (30) days prior to the Closing Date.
SECTION 3.8 OPINION.
An opinion of independent counsel to the Borrower in form and substance
acceptable to the Lender, dated as of the Closing Date.
SECTION 3.9 COMPLIANCE WITH LAWS.
The Premises and the Intangible Personalty, and the intended uses
thereof, are in compliance with all Requirements of Law.
SECTION 3.10 AGREEMENTS.
Certified copies of all operating agreements, ground leases, franchise
agreements, service contracts. purchase contracts, management agreements, labor
contracts, license agreements and equipment leases, if any, relating to the
Borrower's ownership and/or use and operation of the Premises.
SECTION 3.11 TAXES.
The Land and the Improvements are separately assessed for tax purposes,
together with tax parcel identification numbers, tax rates, estimated tax values
and the identities of the taxing authorities.
SECTION 3.12 UTILITIES.
The availability and suitability of the water, storm water, electric,
oil, natural gas, sewer and telephone utilities needed to properly service the
Premises in its intended use.
SECTION 3.13 RESERVE ACCOUNTS.
The establishment of each Reserve Account with balances equal to any
Initial Reserve Deposit thereto required by this Loan Agreement (including the
Program Rider) or any of the other Loan Documents.
Page 16
<PAGE> 20
SECTION 3.14 ENGINEER'S REPORT.
An engineer's report from an engineer approved by the Lender and dated
as of a date acceptable to the Lender, which report shall, among other things,
(a) conform to all requirements of the Lender and (b) certify that the Premises
is in compliance with all applicable requirements of the Americans with
Disabilities Act of 1990.
SECTION 3.15 CERTIFICATE OF OCCUPANCY AND-OTHER PERMITS.
Such certificates of occupancy, permits and licenses as the Lender may
require to evidence that the Premises is suitable for occupancy and use.
SECTION 3.16 ENVIRONMENTAL ASSESSMENT AND O&M PROGRAM.
An Environmental Assessment of the Premises. The Borrower shall furnish
and adopt an O&M Program with respect to all Hazardous Materials, if any,
identified in such Environmental Assessment or as otherwise required by the
Lender.
SECTION 3.17 APPRAISAL.
An Appraisal.
SECTION 3.18 EQUITY.
The Borrower's equity as of the Closing Date is acceptable to the
Lender.
SECTION 3.19 MANAGEMENT AGREEMENT.
A certified copy of the Management Agreement for the Premises in form
and substance satisfactory to the Lender. The Management Agreement and all
management fees thereunder shall be subordinate to the Loan.
SECTION 3.20 SPECIAL PURPOSE ENTITY.
The Borrower is a Special Purpose Entity.
SECTION 3.21 MISCELLANEOUS.
All other documents or items set forth in the Commitment (including all
supplemental and special conditions included in the Commitment) or otherwise
required by the Lender.
Page 17
<PAGE> 21
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan,
the Borrower and. where specifically indicated, each Borrower Principal hereby
represents and warrants to the Lender (for itself, but not otherwise) on the
Closing Date as follows:
SECTION 4.1 EXISTENCE; COMPLIANCE WITH LAW.
The Borrower and each Borrower Principal (when not an individual) (a)
is duly organized. validly existing and in good standing under the laws of the
Jurisdiction of its organization. (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessor and to conduct the business IN which it is currently engaged. (c) is duly
qualified to do business in and is in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law.
SECTION 4.2 EQUITY INTERESTS.
The owners (beneficial and otherwise) of all of the Equity Interests in
the Borrower and each Borrower Principal (when not an individual) are as set
forth in Exhibit A and have been duly authorized, are validly issued and
outstanding, fully paid and non-assessable. There are no outstanding options or
other rights pertaining to the Equity Interests in the Borrower and each
Borrower Principal (when not an individual), and no voting trust or similar
agreement affecting either ownership of or the right to vote such Equity
Interests (except for those items detailed in the Borrower's or such Borrower
Principal's partnership or operating agreement or certificate of incorporation).
SECTION 4.3 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
The Borrower and each Borrower Principal (when not an individual) has
all requisite legal power and authority, and the legal fight, to make, deliver
and perform each Loan Document to which it is. or is to be, a party and to
borrow hereunder, and has taken all necessary corporate, partnership or company
action (as the case may be) to authorize the execution, delivery and performance
of each Loan Document to which it is, or is to be, a party and TO authorize the
borrowings on the terms and conditions of this Agreement and THE Note. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of any Loan Document, except to the
extent specified in any such Loan Document. Each Loan Document has been (or will
be) duly executed by, and delivered on behalf of the Borrower and the Borrower
Principals, as the case may be. Each Loan Document constitutes (or when executed
and delivered will constitute) the legal, valid and binding obligation,
enforceable against the Borrower and the Borrower Principals. as the case may
be, in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, sequestration,
liquidation. consolidation or similar laws affecting the enforcement of
creditors' rights generally
Page 18
<PAGE> 22
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
SECTION 4.4 NO LEGAL BAR.
The execution. delivery and performance of the Loan Documents will not
violate any Requirement of Law applicable to the Borrower and the Borrower
Principals or any contractual obligation, security, agreement, instrument,
license or other undertaking by which the Borrower or any Borrower Principal is
bound and will not result in, or require, the creation or imposition of any Lien
on any of their properties or revenues pursuant to any such Requirement of Law
or contractual obligation, security, agreement, instrument, license or other
undertaking.
SECTION 4.5 NO MATERIAL LITIGATION.
No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending, to the knowledge of the Borrower and the
Borrower Principals, threatened against any of them or any of their properties
or revenues or with respect to any Loan Document or any of the transactions
contemplated thereby, or which could reasonably be expected to have a Material
Adverse Change.
SECTION 4.6 NO DEFAULT.
Neither the Borrower nor any Borrower Principal is in default, under or
with respect to any contractual obligation, security, agreement, instrument,
license or other undertaking by which the Borrower or such Borrower Principal is
bound which is in excess of $10,000. No Default Condition or Event of Default
has occurred and is continuing.
SECTION 4.7 SOLVENCY; FRAUDULENT CONVEYANCE.
The Borrower and each Borrower Principal is solvent and will not be
rendered insolvent by the transactions contemplated hereby and, after giving
effect to such transactions, will not be left with an unreasonably small amount
of capital with which to engage in its business. Neither the Borrower nor any
Borrower Principal intends to incur, or believes that it has incurred, debts
beyond its ability to pay such debts as they mature. Neither the Borrower nor
any Borrower Principal has commenced or filed nor contemplates the commencement
or filing of any bankruptcy, insolvency, reorganization, moratorium,
sequestration, liquidation, consolidation or similar proceedings or the
appointment of a receiver, liquidator, assignee, conservator, trustee,
sequestrator or similar official in respect of it or any of its assets. The
amount of the Loan constitutes reasonably equivalent value and fair
consideration for the transfer to the Lender of the interest in the Premises
represented by the Security Instrument. Neither the Borrower nor any Borrower
Principal is transferring any interest in the Premises with any intent to
hinder, delay or defraud any of its creditors.
SECTION 4.8 SPECIAL PURPOSE ENTITY.
The Borrower is a Special Purpose Entity.
Page 19
<PAGE> 23
SECTION 4.9 TAXES.
The Borrower and each Borrower Principal, respectively, has filed or
caused to be filed all tax returns which are required to be filed and has paid
all taxes shown to be due and payable on said returns and on any assessments
made against it and any of its property and, to its knowledge all other taxes,
fees and other charges imposed on it and any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on its books). No tax Lien
has been filed, and, to its knowledge, no claim is being asserted, with respect
to any such tax, fee or other charge which, in either case, could reasonably be
expected to have a Material Adverse Change.
SECTION 4.10 NO BURDENSOME RESTRICTIONS.
Neither the Borrower nor any Borrower Principal is a party to or
subject to any contractual obligation. security, agreement, instrument, license
or other undertaking by which the Borrower or such Borrower Principal is bound
(other than the Loan Documents) which could have a Material Adverse Change on
the business, properties, assets, operations or condition, financial or
otherwise, of it. or on the ability of it to carry out its obligations hereunder
or under the other Loan Documents.
SECTION 4.11 INVESTMENT COMPANY ACT; OTHER REGULATIONS.
Neither the Borrower nor any Borrower Principal is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. Neither the Borrower
nor any Borrower Principal is subject to regulation under any Requirement of Law
which limits its ability to incur Obligations, other than as set forth herein or
in the other Loan Documents.
SECTION 4.12 SUBSIDIARIES.
The Borrower has no Subsidiaries.
SECTION 4.13 TITLE TO PREMISES.
The Borrower is seized of the Land and Improvements (and any fixtures)
in fee, or is the owner of a leasehold interest in the Land and Improvements
(and any fixtures) pursuant to a Ground Lease, and has marketable title to any
appurtenant easements and has the right to convey the same, that title to such
property is free and clear of all encumbrances except for the Permitted
Encumbrances, and that it will warrant and defend the title to such property
(except for the Permitted Encumbrances) against the claims of all Persons. As to
the balance of the Premises, the Rents and Profits and the Intangible
Personalty, the Borrower represents and warrants that it has marketable title to
such property, that it has the right to convey such property and that it will
warrant and defend such property against the claims of all persons or parties.
Page 20
<PAGE> 24
SECTION 4.14 OWNERSHIP OF PERSONALTY.
The Borrower owns, subject to no Lien other than the Lien of the
Security Instrument and the other Loan Documents, as appropriate, all of the
Personalty.
SECTION 4.15 FINANCIAL STATEMENTS.
As of the date of the most recent Financial Statement furnished to the
Lender, neither the Borrower nor any Borrower Principal had any material (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services, as evidenced by bonds, notes or other similar instruments or
agreements, (b) obligations as a lessee under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases, (c) obligations
under direct or indirect guaranties in respect of, or any obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or any obligations of
another of the kind referred to in clause (a) or (b) above, (d) contingent
liability or liability for taxes, or (e) long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not, to the extent
required by GAAP, reflected in the foregoing statements or in the notes thereto.
No sale, transfer or other disposition by the Borrower or any Borrower Principal
of any material part of its business or property has occurred since the date of
such party's most recent Financial Statement furnished to the Lender.
SECTION 4.16 NO CHANGE.
There has been no development or event which has had or could
reasonably be expected to have a Material Adverse Change (a) with respect to the
Borrower or any Borrower Principal since the date of such party's most recent
Financial Statement furnished to the Lender, or (b) with respect to Borrower's
leasehold interest in the Land, the Premises or any portion of the Intangible
Personalty since the date of the most recent Operating Statements furnished to
the Lender.
SECTION 4.17 ACCURACY OF INFORMATION.
(a) Each exhibit, Financial Statement, Operating Statement, Rent Roll,
document, book, record, report and other item of written information furnished
by the Borrower or the Borrower Principals, as the case may be, to the Lender in
connection with the Loan Documents is accurate as of its date and as of the date
so furnished and (b) all financial projections contained therein are based on
reasonable and stated assumptions, and no such document contains any material
misstatement of fact or omits to state a material fact.
SECTION 4.18 PRINCIPAL PLACE OF BUSINESS.
The Borrower's principal place of business and chief executive office
is at the location get forth in the first paragraph of this Loan Agreement and
it has not operated under any name other than its own name at any time from the
date of its formation.
Page 21
<PAGE> 25
SECTION 4.19 TAXPAYER IDENTIFICATION NUMBER.
The Borrower's taxpayer identification number is as set forth in the
Note.
SECTION 4.20 INSURANCE.
The Borrower does not know of and has not received any written notice
of any violation of any insurance policy term that remains uncured and, to its
best knowledge, it and the Premises and the use thereof materially comply with
all insurance policy terms.
SECTION 4.21 MECHANIC'S LIENS, ETC.
Except as have been paid for in full by the Borrower on or before the
Closing Date or as shall be paid prior to delinquency in the ordinary course of
the Borrower's business, no improvements or repairs have been made to the
Premises during the one hundred twenty (120) days preceding the date hereof;
there are no contracts not fully performed, and no outstanding bills incurred,
for labor or materials used in making improvements or repairs on the Premises,
or for services of architects, surveyors or engineers incurred in connection
therewith. The Borrower has made no contract or arrangement of any kind
whatsoever, the performance of which by the other party thereto could give rise
to a Lien on the Premises superior to that of the Security Instrument.
SECTION 4.22 LITIGATION.
There are no pending or threatened actions, proceedings, suits,
judgments, bankruptcies or executions that in any way involve the Borrower, the
Loan Documents or any Borrower Principal, and the Borrower is not a surety on
any bond through which a Lien might be created superior to any conveyance
executed by the Borrower.
SECTION 4.23 NO VIOLATION.
The Borrower is not in violation of any Requirement of Law or any
Hazardous Materials Law and has not received notice of and has no knowledge of
any Governmental Action.
SECTION 4.24 ERISA.
(a) The Borrower is not an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, (b) the assets of
the Borrower do not constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. ss.2510.3-101, (c) neither the Borrower nor any of its
general partners, members or shareholders, as the case may be, have any trust or
custodial relationship with the Lender or any affiliate of the Lender with
respect to any ERISA plan. and (d) neither the Borrower nor any general partner,
member or shareholder of the Borrower is a participant in any governmental plan
that has a trust or custodial relationship with the Lender or any affiliate of
the Lender. The Borrower (i) is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (ii) transactions by or with the Borrower are not
Page 22
<PAGE> 26
subject to Requirements of Law regulating investments of and fiduciary
obligations with respect to government plans.
SECTION 4.25 O&M PROGRAM.
The Borrower has adopted an O&M Program with respect to all Hazardous
Materials, if any. identified in the Environmental Assessment furnished to the
Lender prior to the Closing Date or as otherwise required by the Lender.
ARTICLE V - COVENANTS AND AGREEMENTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER.
During any period in which the Loan is outstanding, the Borrower agrees
that it will:
(a) Use of Loan Funds. Cause all Loan proceeds to be used for
the purposes set forth in a loan closing statement approved by the
Lender and use all excess Loan proceeds disbursed to the Borrower only
for lawful business purposes permitted under the Borrower's
organizational documents. No part of the proceeds of the Loan will be
used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors. If requested
by the Lender, the Borrower will furnish to the Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U. No part of the proceeds of the Loan
has been used in any manner that could result in a violation of
Regulations G, T, V or X of the Board of Governors of the Federal
Reserve System.
(b) Payment. Pay when due all sums owing to the Lender and
others in accordance with the terms of the Loan Documents.
(c) Fees, Costs and Expenses. Pay when due all fees, costs and
expenses required to be paid by the Borrower pursuant to the terms of
the Commitment or any of the other Loan Documents, including without
limitation, reasonable attorneys fees and other fees, costs and
expenses of the Lender in connection with the enforcement of the
Lender's rights under the Loan Documents. Any such amounts paid by the
Lender shall be due and payable upon demand.
(d) Condition of Premises. Keep and maintain the Premises in
good order, condition and repair and shall make, as and when the same
shall become necessary, all repairs and maintenance necessary or
appropriate in order to keep the Premises from deteriorating.
Page 23
<PAGE> 27
(e) Compliance. Comply with all (i) building, zoning, fire,
health, environmental, disability and use laws (including, but not
limited, to all state and local handicapped access laws, the
Architectural Barriers Act of 1968, the Fair Housing, Amendments Act of
1988, the Rehabilitation Act of 1973, the Americans with Disabilities
Act of 1990 and similar laws and ordinances), codes, ordinances, rules
and regulations, (ii) covenants and restrictions of record and (iii)
easements which are in any way applicable to the Premises or any part
thereof and the use or enjoyment thereof.
(f) Inspection. Subject to the rights of any tenants of the
Premises under their leases, permit the Lender and/or its authorized
agents to enter upon the Premises during normal working hours and as
often as the Lender desires, for the purpose of inspecting the
Improvements specifically and the condition and operation of the
Premises generally. In connection therewith, the Borrower shall permit
the Lender and the Lender's representatives (including an independent
Person such as an engineer, architect, or inspector) or third parties
making Immediate Repairs, Replacements or Additional Repairs or
Replacements to enter onto the Premises during normal business hours
(subject to the rights of any tenants of the Premises under their
leases) to inspect the progress of any Immediate Repairs, Replacements
or Additional Repairs or Replacements and all materials being used in
connection therewith, to examine all plans, specifications and shop
drawings relating to such Immediate Repairs, Replacements or Additional
Repairs or Replacements which are or may be kept at the Premises, and
to complete any Immediate Repairs, Replacements or Additional Repairs
or Replacements. The Borrower agrees to cause all contractors,
subcontractors, agents, architects and inspectors reasonably to
cooperate with the Lender and the Lender's representatives or such
other Persons described above in connection with inspections or the
completion of Immediate Repairs, Replacements or Additional Repairs or
Replacements.
(g) Reimbursement. The Borrower agrees that if it shall fail
to pay when due any tax, assessment or charge levied or assessed
against the Premises, the Borrower's leasehold interest in the Land or
otherwise with respect to the Ground Lease or any utility charge,
whether public or private, or any insurance premium or if it shall fail
to procure the Insurance required hereunder and cause the delivery of
the insurance certificates as required herein, or if it shall fail to
pay any other charge or fee described herein, then the Lender, at its
option, may pay, procure or cause the delivery of the same. The
Borrower will reimburse the Lender upon demand for any sums of money
paid by the Lender pursuant to this Section, together with interest on
each such payment at the default rate set forth in the Note and all
such sums and interest thereon shall be secured hereby.
(h) Environmental Assessment. Provide to the Lender from
time-to-time, at the Borrower's sole fee, cost and expense, if the
Lender shall ever have reason to believe that any Hazardous Material
affects the Premises, or if any Governmental Action is made or
threatened, or if an Event of Default shall have occurred, an
Environmental Assessment, which Environmental Assessment shall have
been ordered by the Borrower within ten (10) days after the Lender's
request and which shall be delivered to the Lender promptly after the
date of the Lender's request. At all other times, the Lender may
request an Environmental Assessment to be provided by the Borrower at
the Lender's
Page 24
<PAGE> 28
expense. The Borrower will cooperate with each consulting firm making
any Environmental Assessment and will promptly supply to the consulting
firm, from time to time upon request. all information available to the
Borrower to facilitate the completion of the Environmental Assessment.
If the Borrower falls to furnish the Lender within ten (10) days after
the Lender's request with a copy of an agreement with an acceptable
environmental consulting firm to provide such Environmental Assessment,
or if the Borrower fails to order such Environmental Assessment within
ten (10) days after the Lender's request, the Lender may cause any such
Environmental Assessment to be made at the Borrower's fee, cost,
expense and risk. The Lender may disclose to interested parties any
information the Lender ever has about the environmental condition or
compliance of the PremiSes, but shall be under no duty to disclose any
such information except as may be required by law. The Lender shall be
under no duty to make any Environmental Assessment of the Premises, and
in no event shall any such Environmental Assessment by the Lender be or
give rise to a representation that any Hazardous Material is or is not
present on the Premises, or that there has been or shall be compliance
with any Hazardous Materials Law, nor shall the Borrower or any other
Person be entitled to rely on any Environmental Assessment made by the
Lender or at the Lender's request. The Lender owes no duty of care to
protect the Borrower or any other Person against or to inform them of.
any Hazardous Material or other adverse condition affecting the
Premises.
(i) Appraisal. At all times during the term of the Loan,
cooperate with the Lender and use its best efforts to assist the Lender
in obtaining an Appraisal of the Premises, and will promptly supply to
the Lender, from time to time upon request, all information available
to the Borrower to facilitate the completion of the Appraisal. If any
Event of Default occurs, or if a casualty loss or governmental taking
occurs and results in insurance or eminent domain proceeds in excess of
$50,000.00, the Lender may, in its reasonable discretion, choose the
appraiser, but the Borrower shall be responsible for any fees payable
to said appraiser in connection with an Appraisal of the Premises.
Under all other circumstances, the appraiser performing any such
Appraisal shall be engaged by the Lender, and the Lender shall be
responsible for any fees payable to said appraiser in connection with
an Appraisal of the Premises.
(j) Surveys. Following any change in the exterior
configuration of the Premises or any rezoning affecting the Premises,
provide the Lender with such additional Surveys as requested by the
Lender.
(k) Other Tests. Promptly submit to the Lender copies of
reports of all physical tests at any time made on the Land, the
Improvements or the materials to be incorporated into the Improvements
and shall, at the Borrower's expense, cause to be made such additional
tests from time to time as the Lender may reasonably require after any
change in the Premises or receipt by the Lender of any such report.
(l) Taxes and Fees. Except as otherwise provided herein, pay
as they become due all taxes, general and special assessments, permit
fees, inspection fees, license fees, water and sewer charges, franchise
fees and equipment rents against it or the Premises,
Page 25
<PAGE> 29
and the Borrower, upon request of the Lender, will submit to the Lender
receipts evidencing said payments.
(m) Financial Statements and Operating Statements. Furnish, or
cause to be furnished to the Lender. annual Financial Statements for
itself. Monthly Operating Statements shall be submitted to the Lender
when requested by the Lender and for any period during which any Event
of Default is continuing. Operating Statements shall be delivered to
the Lender within forty-five (45) days of the end of each of the
Borrower's fiscal quarters, and an annual Financial Statements shall be
submitted to the Lender within ninety (90) days of the Borrower's
fiscal year end in lieu of an Operating Statement for the Borrower's
fourth fiscal quarter. Without limiting any other rights available to
the Lender under this Loan Agreement or any of the other Loan
Documents, in the event the Borrower shall fail to timely furnish the
Lender any Financial Statement in accordance with this subsection, the
Borrower shall promptly pay to the Lender a penalty in the amount of $
1,000.00 for each such failure.
(n) Books and Records. Keep and maintain at all times at the
Premises, at the Borrower's address set forth herein, or at such other
place as the Lender may approve in writing, complete and accurate books
of accounts and records adequate to reflect correctly the results of
the operation of the Premises and copies of all written contracts,
leases and other instruments which affect the Premises (including, but
not limited to, all bills, invoices and contracts for utilities, waste
management service, telephone service and management services, rent
registrations and all materials filed with any Governmental Authority
where applicable). Such books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any time
by the Lender upon reasonable prior notice.
(o) Further Assurances. The Borrower shall furnish or cause to
be furnished such further documentation or information (including
without limitation, amendments, replacements, corrections, deletions or
additions to the Loan Documents or any other materials furnished to the
Lender in connection with the Loan) which is (i) reasonably required to
enable the Lender to sell the Loan, or (ii) deemed necessary or
appropriate by the Lender in the exercise of its rights under any of
the Loan Documents or to perfect, protect. maintain, preserve, continue
and/or extend any Lien granted to the Lender under the Security
Instrument or any other Loan Document, provided, however, that the
Borrower shall not be required to do anything that (A) has the effect
of (I) changing the essential economic terms of the Loan set forth in
the Loan Documents or (II) imposing greater liability under the Loan
Documents, or (B) results in any substantial fee, cost or expense to
the Borrower. In addition, the Borrower shall furnish or cause to be
furnished such further documentation and information (including without
limitation, amendments, replacements, corrections, deletions and
additions to the Loan Documents and other materials furnished to the
Lender in connection with the Loan) deemed necessary or appropriate by
the Lender to correct patent mistakes in the Loan Documents, materials
relating- to title insurance policies and other insurance required
hereunder, and the funding- of the Loan, provided that any such further
documentation or information shall be at the sole fee, cost and expense
of the Lender.
Page 26
<PAGE> 30
(p) Payment of Operating Expenses. Pay all Operating Expenses,
except to the extent that the Lender is obligated to pay any Operating
Expense on behalf of the Borrower from the Tax and Insurance Reserve
Account.
(q) Payment of Recurring, Capital Expenditures. Pay all
expenditures with respect to the Premises related to capital repairs,
replacements and improvements (other than Replacements) performed from
time to time.
(r) ERISA. Deliver to the Lender such certifications or other
evidence from time to time throughout the term of the Loan, as
requested by the Lender in its reasonable discretion, that (i) the
Borrower is not an "employee benefit plan," a "governmental plan"
and/or subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (ii) one or more of
the following circumstances is true:
(A) Less than twenty-five percent (25%) of all Equity
Interests in the Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. ss.2510.3- 101(f)(2); and/or
(B) The Borrower qualifies as an "operating company"
or a .,real estate operating company" within the meaning of 29
C.F.R. ss.2510.3-101(c) or (e).
(s) Actions and Proceedings. Promptly notify the Lender in
writing of any action or proceeding relating to any condemnation or
other taking, whether direct or indirect, of the Premises or any
portion thereof, or purporting to affect the Premises or the Borrower's
leasehold interests under any ground lease, any Loan Document or any
right of the Lender hereunder or thereunder. In each such action or
proceeding, the Borrower shall, unless otherwise directed by the Lender
in writing, appear in and prosecute or defend any such action or
proceeding. The Borrower hereby further authorizes the Lender, in the
Lender's reasonable discretion following notice to the Borrower, as
attorney-in-fact for the Borrower, to commence, appear in and
prosecute, in the Lender's or the Borrower's name, any action or
proceeding relating to any condemnation or other taking of the
Premises, whether direct or indirect, and to settle or compromise any
claim in connection with such condemnation or other taking.
(t) Completion of Immediate Repairs, Replacements and
Additional Repairs or Replacements.
(i) The Borrower shall commence the Immediate Repairs
immediately following the execution of this Agreement (or as
soon thereafter as weather reasonably shall permit) and shall
at all times thereafter diligently pursue the completion of
all Immediate Repairs. The Borrower shall complete all
Immediate Repairs no later than twelve (12) months after the
date of this Agreement. The Borrower covenants and agrees that
each of the Immediate Repairs, Replacements and Additional
Repairs or Replacements and all materials,
Page 27
<PAGE> 31
equipment, fixtures, and any other item comprising a part of
any Immediate Repair, Replacement or Additional Repair or
Replacement shall be constructed, installed or completed, as
applicable, free and clear of all mechanic's, materialman's or
other liens (except for those liens existing on the date of
this Agreement which have been approved in writing by the
Lender).
(ii) If the Lender determines, in its reasonable
discretion, that Additional Repairs or Replacements are
advisable in order to keep the Premises in good order and
repair, the Lender may send the Borrower written notice of the
need for making such Additional Repairs or Replacements. The
Borrower shall promptly commence making such Additional
Repairs or Replacements. If the Borrower fails to commence
such Additional Repairs or Replacements within thirty (30)
days after such notice and diligently pursue completion of
such Additional Repairs or Replacements, such failure shall be
an Event of Default under this Loan Agreement, and, in
addition to all other rights the Lender may have under the
Loan Documents upon an Event of Default, the Lender may
contract with third parties to make such Additional Repairs or
Replacements and may in its sole discretion (A) apply the
funds in the Repair Escrow Account and/or Replacement Reserve
Account toward the labor and materials necessary to complete
such Additional Repairs or Replacements, and/or (B) demand
payment for such Additional Repairs or Replacements from the
Borrower.
(iii) In the event the Lender determines in its
reasonable discretion that any Immediate Repair, Replacement
or Additional Repair or Replacement has not been completed in
a workmanlike and timely manner, the Lender shall have the
option to withhold disbursement for such unsatisfactory
Immediate Repair, Replacement or Additional Repair or
Replacement and to proceed under existing contracts or to
contract with third parties to complete such Immediate Repair,
Replacement or Additional Repair or Replacement and to apply
the Repair Escrow Account or the Replacement Reserve Account
toward the labor and materials necessary to complete such
Immediate Repair, Replacement or Additional Repair or
Replacement to the reasonable satisfaction of the Lender,
without providing any prior notice to the Borrower.
(iv) In order to facilitate the Lender's completion
or making of the Immediate Repairs, Replacements or Additional
Repairs or Replacements, the Lender is granted the irrevocable
right to enter onto the Premises and perform any and all work
and labor necessary to complete or make the Immediate Repairs,
Replacements or Additional Repairs or Replacements and employ
watchmen to protect the Premises from damage, loss and/or
theft. All sums so expended by the Lender shall be deemed to
have been advanced to the Borrower and secured by the Security
Instrument and the other Loan Documents.
(v) All Immediate Repairs, Replacements and
Additional Repairs or Replacements shall comply with all
Requirements of Law and applicable insurance requirements
including, without limitation, applicable
Page 28
<PAGE> 32
building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.
(u) Program Rider. Comply with all covenants and agreements set forth
in the Program Rider.
SECTION 5.2 NEGATIVE COVENANTS OF THE BORROWER.
During any period in which the Loan is outstanding, the Borrower agrees
that it will not:
(a) Sale or Encumbrance of Personalty. Sell, encumber or otherwise
dispose of any of the Personalty except (i) to incorporate Tangible Personalty
into the Improvements or replace Tangible Personalty with goods of quality and
value at least equal to that replaced, or (ii) for the sale, disposal or use of
inventory, if any, in the ordinary course of the Borrower's business at the
Premises; provided, however, in the event the Borrower sells or otherwise
disposes of any of the Personalty, the Lender's security interest in the
proceeds of the Personalty shall continue pursuant to the Security Instrument
and the other Loan Documents, as appropriate.
(b) Construction. Construct or permit the construction of any
improvements on the Premises other than Immediate Repairs or Replacements or as
otherwise required hereunder or previously consented to in writing by the
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed.
(c) Change in Ownership; Identity of the Borrower. Permit any sale,
transfer, assignment or other disposition of, or grant or create any Lien on, a
Significant Ownership Interest in the Borrower, except by inheritance, devise,
bequest or by operation of law upon the death of a natural person. The Borrower
hereby acknowledges to the Lender that (i) the identity of the Borrower and the
expertise available to the Borrower were and continue to be material
circumstances upon which the Lender has relied in connection with, and which
constitute valuable consideration to the Lender for, the extending to the
Borrower of the indebtedness evidenced by the Note and (ii) any chanc,e in such
identity or expertise could materially impair or jeopardize the security for the
payment of the Note granted to the Lender by the Security Instrument and the
other Loan Documents, as appropriate.
(d) Prepayment of Rent. Accept any prepayment of rent or installments
of rent for more than two (2) months in advance without the prior written
consent of the Lender.
(e) No Other Name. Change its name or operate under any name other than
its name as set forth herein.
(f) No Restricted Payments. Make any payment or take any other action
constituting (i) any direct or indirect purchase or other acquisition by the
Borrower of Equity Interests of any other Person, or any direct or indirect
loan, advance (other than
Page 29
<PAGE> 33
advances to employees for moving and travel expenses, drawing accounts
and expenditures in the ordinary course of business) or capital
contribution by the Borrower to any other Person, including all debt
and any Obligation of any sort, and/or (ii) a payment or prepayment on
account of, or the setting apart of assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of subordinated debt, either directly or indirectly,
whether in cash or in property or in obligations of any Person.
(g) No Waste or Abandonment. Suffer, permit or commit waste,
permit impairment or deterioration of, or abandon, the Premises or any
portion thereof. The Borrower will not itself, or pen-nit any tenant or
other Person to, remove, demolish or alter any improvement now existing
or hereafter erected on the Premises or any fixture, equipment or
machinery in or on the Premises except in connection with any Repair or
Replacement.
(h) Use of Premises. Except as required by applicable law, or
as otherwise permitted in writing by the Lender, allow any change in
the business use of all or any portion of Premises from the use thereof
as of the Closing Date.
SECTION 5.3 ENVIRONMENTAL COVENANTS.
(a) Not cause, permit or exacerbate any Prohibited Activities
or Conditions. The Borrower represents and warrants that it has not at
any time caused or permitted any Prohibited Activities or Conditions
except as set forth in the Environmental Assessment and that no
Prohibited Activities or Conditions exist or have existed on or under
the Premises. The Borrower shall take all appropriate steps to prevent
its employees, agents, and contractors, and any tenants from causing,
permitting, or exacerbating any Prohibited Activities or Conditions.
The Borrower shall not lease or allow the sublease or use of all or any
portion of the Premises to any tenant, subtenant or user that, in the
ordinary course of its business, would cause, permit, or exacerbate any
Prohibited Activities or Conditions, and all leases, subleases and use
agreements relating to the Premises shall contain provisions sufficient
to ensure that tenants, subtenants and users shall not cause, permit or
exacerbate any Prohibited Activities or Conditions.
(b) Comply in a timely manner with, and cause all employees,
agents, and contractors of the Borrower and any other persons present
on the Premises to so comply with, (i) any O&M Program now or hereafter
in effect during the term of the Loan, and (11) Hazardous Materials
Law, so as to minimize any economic loss to the Premises and the Loan.
The Borrower shall adopt an O&M Program with respect to any Hazardous
Materials identified in any Environmental Assessment or any
Governmental Action relating to the Premises, or as otherwise required
by the Lender with respect to the Premises. Any O&M Program shall be
performed by qualified contractors under the supervision of a
consulting engineer hired by the Borrower with the prior written
approval of the Lender which approval shall not be unreasonably
withheld, conditioned or delayed. All costs and expenses of any O&M
Program shall be paid by the Borrower, including without limitation the
charges of such contractors and consulting engineer and
Page 30
<PAGE> 34
the Lender's fees, costs and expenses incurred in connection with the
monitoring and review of the O&M Program and the Borrower's performance
thereunder.
(c) Promptly notify the Lender in writing of: (i) any
Governmental Action it becomes aware of (ii) any claim made or
threatened by any third party against the Borrower. The Lender, or the
Premises relating to loss or injury resulting from any occurrence or
condition on the Premises or any other real property that could require
the removal from the Premises of any Hazardous Materials or cause any
restrictions on the ownership, occupancy, transferability or use of the
Premises under Hazardous Materials Law or (111) the occurrence of any
Prohibited Activities or Conditions. The Borrower shall cooperate with
any governmental inquiry, and shall comply with any governmental or
judicial order, request or directive which arises from any alleged
Prohibited Activities or Conditions; provided that with respect to
governmental requests or directives only, the Borrower may contest or
object to a good faith dispute regarding said request or directive if
the Borrower notifies the Lender in advance of said contest or
objection and as long as said contest or objection does not result in a
violation of law or fines assessed against the Premises.
(d) Pay promptly all costs and expenses incurred by the Lender
in connection with any Governmental Action, including but not limited
to costs of any environmental audits, studies, investigations or
remedial activities including but not limited to the removal of any
Hazardous Materials from the Premises. The Borrower also shall pay
promptly the costs of any environmental audits, studies, investigations
or the removal of any Hazardous Materials from the Premises required by
the Lender as a condition of its consent to any sale or transfer of all
or any part of the Premises or any interest therein or required by the
Lender following a reasonable determination by the Lender that there
may be Prohibited Activities or Conditions on or under the Premises.
Any such costs or expenses incurred by the Lender (including but not
limited to reasonable fees and expenses of attorneys and consultants,
whether incurred in connection with any judicial or administrative
process or otherwise) which the Borrower fails to pay promptly shall
become additional indebtedness secured by the Security Instrument.
(e) HOLD HARMLESS, DEFEND AND INDEMNIFY THE LENDER AND ITS
OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, AFFILIATES (INCLUDING
ANY PARENT CORPORATION), SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL
PROCEEDINGS, CLAMS, DAMAGES, PENALTIES, FEES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE FEES AND EXPENSES OF ATTORNEYS
AND EXPERT WITNESSES, INVESTIGATORY FEES, AND CLEANUP AND REMEDIATION
EXPENSES, WHETHER INCURRED IN CONNECTION WITH ANY JUDICIAL OR
ADMINISTRATIVE PROCESS OR OTHERWISE), ARISING DIRECTLY OR INDIRECTLY
FROM (i) ANY BREACH OF ANY REPRESENTATION, WARRANTY, OR OBLIGATION OF
THE BORROWER CONTAINED IN THIS SECTION 5.3 OR (ii) THE PRESENCE OF
HAZARDOUS MATERIALS ON OR UNDER THE PREMISES OR ANY PROPERTY PROXIMATE
TO THE PREMISES OR ANY GOVERNMENTAL ACTION ALLEGING ANY SUCH PRESENCE,
Page 31
<PAGE> 35
EXCEPT TO THE EXTENT THAT THE BORROWER CAN CONCLUSIVELY PROVE
BOTH THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE
WAS CAUSED SOLELY BY ACTIONS, CONDITIONS, OR EVENTS THAT OCCURRED AFTER
THE DATE THAT THE LENDER (OR ANY PURCHASER AT A FORECLOSURE SALE)
ACTUALLY ACQUIRED TITLE TO THE PREMISES AND THAT SUCH PRESENCE OR
GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE WAS NOT CAUSED BY THE DIRECT
OR INDIRECT ACTIONS OF THE BORROWER OR ANY BORROWER PRINCIPAL, OR ANY
PARTNER, MEMBER, PRINCIPAL, OFFICER, DIRECTOR, TRUSTEE OR MANAGER OF
THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR OR AFFILIATE OF THE
BORROWER OR ANY BORROWER PRINCIPAL. THE OBLIGATIONS AND LIABILITIES OF
THE BORROWER UNDER THIS SECTION 5.3(e) SHALL SURVIVE ANY TERMINATION,
SATISFACTION, ASSIGNMENT, ENTRY OF A JUDGMENT OF FORECLOSURE OR
DELIVERY OF A DEED IN LIEU OF FORECLOSURE OF THE SECURITY INSTRUMENT.
SECTION 5.4 RECOURSE COVENANTS.
Except as otherwise expressly permitted by the Loan Documents, during
any period in which the Loan is outstanding, the Borrower agrees that it will
not, without the prior written consent of the Lender:
(a) Sale, Transfer, Conveyance or Disposal. Permit any sale,
transfer, conveyance or other disposal of the Borrower's leasehold
interests under any ground lease, the Premises, the Rents and Profits
or the Intangible Personalty.
(b) Subordinate Financing and Liens. Engage in any subordinate
financing with respect to the Premises, the Rents and Profits or THE
Intangible Personalty or grant any consensual Liens against the
Borrower's leasehold interest under any ground lease the Premises, the
Rents and Profits or the Intangible Personalty.
(c) Special Purpose Entity. Fail to be a Special Purpose
Entity.
SECTION 5.5 INSURANCE.
(a) Maintenance of Insurance. The Borrower shall, at its sole
cost and expense, keeping full force and effect all Insurance. If the
Borrower fails to maintain any Insurance required by this Agreement,
the Lender may, at its option, procure such Insurance, and the Borrower
shall reimburse the Lender for the amount of all premiums paid by the
Lender thereon promptly upon demand by the Lender, with interest
thereon at the rate then provided by the Note from the date paid by the
Lender to the date of repayment, and such sum shall be a part of the
indebtedness secured by the Security Instrument. The Lender shall not
by the fact of approving, disapproving, accepting, preventing,
obtaining or failing, to obtain any Insurance, incur any liability for
or with respect to the amount of Insurance carried, the form or legal
sufficiency of insurance
Page 32
<PAGE> 36
contracts, solvency of insurance companies, or payment or defense of
lawsuits, and the Borrower, for itself, hereby expressly assumes full
responsibility therefor and all liability, if any, with respect
thereto.
(b) Insurance with Respect to Immediate Repairs, Replacements
and Additional Repairs or Replacements. In addition to and to the
extent not covered by any Insurance required under the Loan Documents,
the Borrower shall provide or cause to be provided worker's
compensation insurance, builder's risk, and public liability insurance
and other insurance to the extent required under applicable law in
connection with a particular Immediate Repair, Replacement or
Additional Repair or Replacement reasonably required by the Lender.
(c) Approved Insurers. Each of the Borrower's insurers shall
be an Approved Insurer. If any of the Borrower's insurers shall at any
time cease to be an Approved Insurer, then within thirty (30) days
after notice from the Lender to the Borrower, the Borrower will obtain
replacement Insurance or additional Insurance issued by one or more
other Approved Insurers.
(d) Form of Insurance Policies; Endorsements. All policies for
Insurance shall be in such form and with such endorsements as are
comparable to the forms of and endorsements to the Borrower's insurance
policies in effect on the date hereof or otherwise in accordance with
commercially reasonable standards applied by prudent owners of similar
businesses in the general vicinity of the Premises and generally
acceptable to institutional lenders for comparable properties and
risks. All such policies shall name the Lender, and its successors and
assigns, as additional insureds, mortgagees and/or loss payees, as
deemed appropriate by the Lender, and shall provide that all proceeds
are payable to the Lender and shall contain: (i) a standard
"non-contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by the Lender notwithstanding the negligent or
willful acts or omissions of the named Borrower; (ii) to the extent
available at commercially reasonable rates, a waiver of subrogation
endorsement as to the Lender; (iii) an endorsement providing that no
policy shall be impaired or invalidated by virtue of any act, failure
to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by the Borrower, the Lender or any
other named insured, additional insured, mortgagee or loss payee,
except for the willful misconduct of the Lender knowingly in violation
of the conditions of such policy; (iv) an endorsement providing for a
deductible per loss of an amount not more than that which is
customarily maintained by prudent owners of similar businesses in the
general vicinity of the Premises; (v) a provision that such policies
shall not be canceled or amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least
thirty (30) days prior written notice to the Lender in each instance,
and (vi) effective waivers by the insurer of all claims for insurance
premiums against any loss payees, additional insureds, mortgagees and
named insureds (other than the Borrower). Any insurance coverage
relating to the, Premises that is carried by the Borrower in excess of
the Insurance required hereunder shall name the Lender, and its
successors and assigns. as additional insureds, mortgagees and/or loss
payees, as appropriate, as provided herein. A certificate executed by
the Borrower's insurance
Page 33
<PAGE> 37
consultant and other evidence of Insurance required by the Lender shall
be delivered to the Lender not less than ten (10) days prior to the
expiration date of any of the policies for Insurance required to be
maintained hereunder which certificate and other evidence shall certify
payment of applicable premiums for renewal and replacement policies.
The Borrower may effect any Insurance required hereunder through
blanket insurance policies. The Borrower shall deliver to the Lender
certified copies of all policies for Insurance which shall be taken out
upon the Premises while any part of the Loan shall remain unpaid.
(e) Compliance with Insurance Policy Terms. The Borrower shall
comply with all terms of policies for Insurance and shall not bring or
keep or permit to be brought or kept any article upon the Premises or
cause or permit any condition to exist thereon which would be
prohibited by or could invalidate any Insurance required hereunder.
ARTICLE VI - RESERVE ACCOUNTS
SECTION 6.1 ESTABLISHMENT OF RESERVE ACCOUNTS.
On or before the Closing Date, the Lender shall establish each Reserve
Account. Each Reserve Account shall be under the sole dominion and control of
the Lender.
SECTION 6.2 INITIAL RESERVE DEPOSITS.
On the Closing Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Initial Reserve Deposit applicable to such Reserve
Account.
SECTION 6.3 MONTHLY RESERVE DEPOSITS.
On each Payment Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Monthly Reserve Deposit applicable to such Reserve
Account. The Lender may, upon written request from the Borrower, waive any
requirement for the payment of a Monthly Reserve Deposit, provided however, that
any such waiver by the Lender of a requirement that the Borrower pay such
Monthly Reserve Deposit may be revoked by the Lender, in the Lender's sole
discretion, at any time upon notice in writing to the Borrower.
SECTION 6.4 ADJUSTMENTS TO MONTHLY RESERVE DEPOSIT TO THE REPLACEMENT
RESERVE ACCOUNT.
The Lender may, in the Lender's reasonable discretion, adjust the
Monthly Reserve Deposit to the Replacement Reserve Account from time to time to
an amount sufficient, in the Lender's reasonable judgment, to maintain adequate
balances necessary for Replacements, including, without limitation, Additional
Repairs or Replacements made pursuant to the terms of the Loan Agreement.
Notwithstanding the foregoing, in the event the Lender shall at any time
increase the Monthly Reserve Deposit to the Replacement Reserve Account over the
Monthly Reserve Deposit to the Replacement Reserve Account then required
pursuant to Exhibit B
Page 34
<PAGE> 38
hereto, the Borrower, may at its election, request that the Lender obtain, at
the sole cost, fee and expense of the Borrower, an engineering report from an
engineer to be selected by the Lender in its reasonable discretion, in which
case the Monthly Reserve Deposit to the Replacement Reserve Account shall be
adjusted by the Lender based on such engineering report, provided that in no
event shall the Monthly Reserve Deposit to the Replacement Reserve Account be
decreased below the applicable amount set forth on Exhibit B hereto.
SECTION 6.5 PERMITTED INVESTMENTS, EARNINGS, CHARGES AND ANNUAL
ACCOUNTING.
(a) Permitted Investments. The Lender may invest and reinvest,
or cause to be invested or reinvested, all or any portion of any funds
on deposit in any Reserve Account in Permitted Investments. The
maturities of the Permitted Investments on deposit in any Reserve
Account shall be selected and coordinated to become due not later than
the day before any disbursements from any Reserve Account must be made.
All such Permitted Investments shall be held in the name and be under
the sole dominion and control of the Lender, to the extent permitted by
applicable laws, and no Permitted Investment shall be made unless the
Lender shall perfect its first priority Lien in such Permitted
Investment and, to the extent permitted by applicable laws, the Lender
shall have sole possession and control over each such Permitted
Investment and the income thereon, and any certificate or other
instrument or document evidencing any such investment shall be
delivered directly to the Lender, together with any document of
transfer necessary to transfer title to such investment to the Lender.
The Lender shall not have any liability (other than for the Lender's
gross negligence or willful misconduct) for any loss in investments of
funds in any Reserve Account that are invested in Permitted Investments
and no such loss shall affect the Borrower's obligation to (i) make any
payment hereunder, under the Security Instrument, the Note or any other
Loan Document, or (ii) fund, or have liability for funding, any Reserve
Account. The Borrower agrees that it shall include all interest,
earnings or profits on Permitted Investments of funds on deposit in any
Reserve Account as its income (and, if the Borrower is a partnership or
other pass-through entity, the partners, members or beneficiaries of
the Borrower, as the case may be), and shall be the owner of such
accounts for federal and applicable state and local tax purposes,
except to the extent the Lender retains such interest, earnings or
profits for its own account in accordance with the provisions of
Section 6.5(b) of this Loan Agreement. The Borrower shall have no right
whatsoever to direct the investment of the proceeds in any Reserve
Account.
(b) Earnings. All interest, earnings or profits on the
Permitted Investments of funds in any of the Reserve Accounts shall be
deposited into the applicable Reserve Account, provided that the Lender
may, at its election, retain for its own account any such interest,
earnings or profits (i) on the Tax and Insurance Reserve Account, and
(ii) on any or all of the Reserve Accounts during the occurrence and
continuance of an Event of Default.
(c) Charges. Except as prohibited by applicable laws, the
Lender may charge the Borrower for holding, maintaining and applying
funds in any of the Reserve Accounts to the extent funds on deposit in
such Reserve Account are invested or reinvested in
Page 35
<PAGE> 39
Permitted Investments and the Lender does not retain for its own
account any interest. earnings or profits on such Reserve Account in
accordance with the provisions of Section 6.5(b) of this Loan
Agreement.
(d) Annual Accounting. The Lender shall furnish or cause to be
furnished to the Borrower, without charge, an annual accounting of each
Reserve Account in the normal format of the Lender or its agent,
showing credits and debits to such Reserve Account and the purpose for
which each debit to such Reserve Account was made.
SECTION 6.6 ASSIGNMENT TO THE LENDER OF RESERVE ACCOUNTS AND RIGHTS AND
CLAIMS.
(a) The Borrower hereby assigns to the Lender the Reserve
Accounts as additional security for all of the Borrower's Obligations
to the Lender, under the Note and under the other Loan Documents;
provided, however, the Lender shall make disbursements from the Reserve
Accounts in accordance with the terms of this Agreement. including
without limitation, the Program Rider.
(b) The Borrower assigns to the Lender all rights and claims
the Borrower may have against(i) all persons or entities claiming
amounts due for taxes, utilities, rent or insurance, or(ii) all persons
or entities supplying labor or materials in connection with the
Immediate Repairs, Replacements or Additional Repairs or Replacements;
provided, however, that the Lender may not pursue any such right or
claim unless an Event of Default exists under this Agreement or the
Loan Documents.
SECTION 6.7 APPLICATION OF RESERVE ACCOUNTS UPON AN EVENT OF DEFAULT.
If any Event of Default occurs, then the Borrower shall
immediately lose all of its rights to receive disbursements from the
Reserve Accounts unless and until the earlier to occur of or
concurrently with (a) the date on which such Event of Default is fully
cured, and (b) the date on which all amounts secured by the Security
Instrument and the other Loan Documents have been paid in full and the
lien of the Security Instrument and the other Loan Documents, as
appropriate, have been released by the Lender. Upon any Event of
Default, the Lender may in its sole discretion, use the Reserve
Accounts (or any portion thereof) for any purpose, including but not
limited to (i) repayment of any indebtedness secured by the Security
Instrument and the other Loan Documents, including but not limited to
principal prepayments and the prepayment premium applicable to such
full or partial prepayment (as applicable); provided, however, that
such application of funds shall not cure or be deemed to cure any Event
of Default, (ii) reimbursement of the Lender for all losses, fees,
costs and expenses (including, without limitation, reasonable legal
fees) suffered or incurred by the Lender as a result of such Event of
Default, (iii) payment of any amount expended in exercising all rights
and remedies available to the Lender at law or in equity or under this
Agreement or under any of the other Loan Documents, or (iv) to the
payment of any item for which payment is required or permitted from any
of the Reserve Accounts pursuant to the terms of this Loan Agreement.
Nothing in this Loan Agreement shall obligate the Lender to apply all
Page 36
<PAGE> 40
or any portion of the Reserve Accounts on account of any Event of
Default by the Borrower or to pay the indebtedness secured by the
Security Instrument or any of the other Loan Documents or in any
specific order of priority.
SECTION 6.8 DISBURSEMENTS FROM TAX AND INSURANCE RESERVE ACCOUNT.
(a) The Lender shall disburse, to the extent of amounts on
deposit in the Tax and Insurance Reserve Account, directly to each
Person owed any portion of the water and sewer assessments and frontage
charges, taxes, assessments and insurance premiums, the total sum owed
to such Person. Such disbursements shall be made by the Lender (i) so
as to coincide in frequency with the regular billing cycle of such
Person, and (ii) on or before the date that each such payment is due.
(b) The Lender may require the Borrower to pay to the Lender
in advance, additional amounts for taxes, charges, premiums,
assessments, and impositions in connection with the Borrower or the
Premises which the Lender shall reasonably deem necessary. Unless
otherwise provided by applicable law, the Lender may require payments
for such other amounts to be paid by the Borrower in a lump sum or
periodic installments, at the Lender's option.
(c) If the amount held in the Tax and Insurance Reserve
Account at the time of the annual accounting thereof shall exceed the
amount deemed necessary by the Lender to provide for the payment of
water and sewer assessments and frontage charges, taxes, assessments,
impositions and insurance premiums, as they fall due, such excess shall
be credited against future Monthly Reserve Deposits to the Tax and
Insurance Reserve Account. If at any time the amount held in the Tax
and Insurance Reserve Account shall be less than the amount deemed
necessary by the Lender to pay water and sewer assessments and frontage
charges, taxes, assessments, impositions and insurance premiums. the
Borrower shall pay to the Lender any amount necessary to make up the
deficiency within thirty (30) days after notice from the Lender to the
Borrower requesting payment thereof.
(d) Upon payment in full of all amounts owed by the Borrower
under or otherwise secured by any of the Loan Documents, all remaining
amounts on deposit, if any. in the Tax and Insurance Reserve Account
shall be distributed to the Borrower.
SECTION 6.9 DISBURSEMENTS FROM REPAIR ESCROW ACCOUNT AND
REPLACEMENT RESERVE ACCOUNT.
(a) Upon written request from the Borrower and satisfaction of
the requirements set forth in this Loan Agreement, the Lender shall
disburse to the Borrower amounts from the Repair Escrow Account
necessary to reimburse the Borrower for the actual costs of Immediate
Repairs and shall disburse amounts from the Replacement Reserve Account
necessary to reimburse the Borrower for the actual costs of
Replacements (but, as to any Immediate Repair or Replacement, such
amount shall not exceed 125% of the original estimated cost of such
Immediate Repair and/or
Page 37
<PAGE> 41
Replacement set forth on Exhibit B to this Loan Agreement, unless the
Lender agrees to such reimbursement).
(b) Upon written request from the Borrower, the Lender may, in
its discretion, disburse amounts from the Repair Escrow Account and/or
Replacement Reserve Account to reimburse the Borrower for the actual
cost of labor and materials associated with an Additional Repair or
Replacement. Each such request from the Borrower shall include a
statement regarding why such disbursement should be made. If the Under
determines that (i) such Additional Repair or Replacement is of the
type intended to be covered by this Agreement, (11) the costs for such
Additional Repair or Replacement are reasonable, (iii) the amount of
funds in the Repair Escrow Account and/or the Replacement Reserve
Account. as applicable, is sufficient to pay the Additional Repair or
Replacement and 125% of the then current estimated cost of completing
all remaining Immediate Repairs and Replacements, as applicable, and
(iv) all other conditions for disbursement under this Loan Agreement
have been met, then the Lender shall disburse funds from the Repair
Escrow Account and/or the Replacement Reserve Account, as applicable,
for such Additional Repair or Replacement in accordance with the
requirements of this Loan Agreement for Immediate Repairs and/or
Replacements.
(c) Each request for disbursement from the Repair Escrow
Account or Replacement Reserve Account shall be in a form specified or
approved by the Lender and shall set forth (i) the specific Immediate
Repairs, Replacements or Additional Repair or Replacement, as the case
may be, for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Immediate Repair, Replacement or
Additional Repair or Replacement, as the case may be, includes the
purchase or replacement of specific items, (iii) the price of all
materials (grouped by type or category) used IN any Immediate Repair,
Replacement or Additional Repair or Replacement, as the case may be,
other than the purchase or replacement of specific items, and (iv) the
cost of all contracted labor or other services applicable to each
Immediate Repair, Replacement or Additional Repair or Replacement, as
the case may be, for which such request for disbursement is made. With
each request the Borrower shall certify that all Immediate Repairs,
Replacements or Additional Repairs or Replacements, as the case may be,
have been made in accordance with the requirements of this Loan
Agreement and all Requirements of Laws. Each request for disbursement
shall include (A) copies of invoices for all items or materials
purchased and all contracted labor or services provided, and (B) such
acknowledgements of payment, lien waivers and/or releases with respect
to the Immediate Repairs, Replacements and Additional Repairs or
Replacements for which disbursement is requested as the Lender may
require. In connection with each disbursement from the Repair Escrow
Account or the Replacement Reserve Account, as the case may be, the
Lender may require the Borrower to provide the Lender with an
endorsement to the Lender's title insurance policy showing that no
Liens have been placed against the Premises since the date of
recordation of the Security Instrument (other than Permitted
Encumbrances and any other Liens previously approved in writing by the
Lender, if any).
Page 38
<PAGE> 42
(d) Except as provided in the following sentence, each request
for disbursement from the Repair Escrow Account or the Replacement
Reserve Account shall be made only after completion (as reasonably
determined by the Lender) of the Immediate Repair, Replacement or
Additional Repair or Replacement for which disbursement is requested.
If (1) the cost of the Immediate Repair, Replacement or Additional
Repair or Replacement exceeds the lesser of (A) 1% of the original Loan
Amount. or (B) $50,000.00, (ii) the written contract with respect to
such Immediate Repair, Replacement or Additional Repair or Replacement
requires periodic payment for such work pursuant to the terms thereof,
and (111) the Lender has approved in writing in advance such periodic
payments, then a request for reimbursement from the Repair Escrow
Account and/or Replacement Reserve Account may be made after completion
of a portion of the work under such contract, provided (1) the
materials for which the request is made are on site at the Premises and
are properly secured or have been installed in the Premises, (2) all
other conditions in this Loan Agreement for disbursement have been
satisfied, and (3) funds remaining in the Repair Escrow Account or the
Replacement Reserve Account, as the case may be, are, in the Lender's
reasonable judgment, sufficient to complete such Immediate Repair,
Replacement or Additional Repair or Replacement and all the other
Immediate Repairs and/or Replacements when required. The Lender, at its
option, may issue joint checks, payable to the Borrower and the
supplier, materialman, mechanic, contractor, subcontractor or other
party to whom payment is due in connection with any such periodic
payment for an Immediate Repair, Replacement or Additional Repair or
Replacement to be paid from the Repair Escrow Account or Replacement
Reserve Account, as the case may be.
(e) The Lender shall have no obligation to make any
disbursement from the Repair Escrow Account or the Replacement Reserve
Account more frequently than once in any month and (except in
connection with the final disbursement) in any amount less than the
lesser of (i) I% of the original Loan Amount or (ii) $5,000.00.
(f) Prior to any disbursement from the Repair Escrow Account
or the Replacement Reserve Account, the Lender may, at the Borrower's
expense, require an inspection by an appropriate independent qualified
professional reasonably selected by the Lender and a copy of a
certificate of completion by an independent qualified professional
reasonably acceptable to the Lender prior to the disbursement of any
amounts from the Repair Escrow Account or the Replacement Reserve
Account exceeding $25,000.00. The Borrower shall pay the Lender a
reasonable inspection fee not exceeding $ 1,000.00 for each such
inspection.
(g) The Lender shall not be obligated to make disbursements
from the Repair Escrow Account or the Replacement Reserve Account to
reimburse the Borrower for the costs of routine maintenance to the
Premises, tenant improvements or leasing commissions.
(h) Upon the earlier to occur of (i) the timely completion of
all Immediate Repairs in accordance with the requirements of this Loan
Agreement, as verified by the Lender in its reasonable discretion, or
(ii) the payment in full of all amounts owed by the
Page 39
<PAGE> 43
Borrower under or otherwise secured by any of the Loan Documents, all
amounts remaining on deposit, if any, in the Escrow Repair Account
shall be distributed to the Borrower.
(i) Upon payment in full of all amounts owed by the Borrower
under or otherwise secured by any of the Loan Documents, all amounts
remaining on deposit, if any, in the Replacement Reserve Account shall
be distributed to the Borrower.
SECTION 6.10 INDEMNIFICATION.
The Borrower agrees to indemnify the Lender and to hold the Lender
harmless from and against any and all actions, suits, claims, demands,
counterclaims, cross-claims, liabilities, losses, damages, obligations, fees and
costs and expenses (including litigation costs, reasonable attorneys' fees and
expenses) arising from or in any way connected with (a) the performance of the
Immediate Repairs, Replacements or Additional Repairs or Replacements, (b)
unpaid taxes, utility bills, rent or insurance premiums owed by the Borrower,
and/or (c) the holding or investment of the Reserve Accounts, except to the
extent any of the foregoing is the direct result of the gross negligence or
willful misconduct of the Lender.
ARTICLE VII - EVENTS OF DEFAULT; REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
An Event of Default shall occur if any of the following has occurred
and is continuing:
(a) Payments. The Borrower fails to make any payment
hereunder, under the Note or under any other Loan Document, when due
and payable, and such payment is not to be received prior to the 10th
day after the same is due (or such greater period, if any, required by
applicable law) following the date such payment becomes due and
payable.
(b) Bankruptcy, etc. The occurrence of any Bankruptcy Event
with respect to the Borrower or any general partner or member thereof.
(c) Judgments. One or more judgments or decrees shall be
entered against the Borrower (not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage), and any such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded (through appeal or otherwise) within thirty (30) calendar days
from the entry thereof.
(d) Recourse Covenants. The Borrower violates any of the
Recourse Covenants.
(e) Compliance with Sections 5.1(o) an@. The Borrower fails to
comply with any or all of the provisions of either Section 5.1(o) or
5.1(p) and such failure continues for a period of thirty (30) calendar
days following (i) in the case of Section
Page 40
<PAGE> 44
5.1(o), the date demand by the Lender is made upon the Borrower for the
execution of any agreement or document in accordance with the
provisions of Section 5.1(o) or (ii) in the case of Section 5.1(p), the
date on which any Operating Expense becomes due and payable in
accordance with the terms thereof, without regard to any extension,
modification or waiver relating thereto; provided that if any Operating
Expense is the subject of a bona fide dispute and is less than I% of
the outstanding balance of the Loan as of the date on which the
particular Operating Expense in dispute became due and payable. then
the Borrower shall have ninety (90) days from the date the same becomes
due and payable to pay such Operating Expense or to furnish the Lender
a bond or other collateral acceptable to the Lender in the Lender's
reasonable discretion.
(f) Representations and Warranties. Any representation,
warranty, acknowledgment or statement made by the Borrower or any
Borrower Principal herein, in any other Loan Document or in any written
statement or certificate delivered or required to be delivered pursuant
hereto shall prove untrue in any material respect on the date as of
which it was deemed to have been made or any representation, warranty
acknowledgment or statement submitted to the Lender concerning the
financial condition or credit standing of the Borrower, any general
partner or member thereof or any Borrower Principal proves to be false
or misleading.
(g) Compliance with Covenants and Agreements. The Borrower
shall fall to comply with, observe or perform any covenant or agreement
made by it herein or in any other Loan Document, which failure
continues for thirty (30) days following written notice thereof to the
Borrower; provided that if such failure is of a type which can not
feasibly be cured within such thirty (30) day period and the Borrower
is diligently and in good faith pursuing such cure, then the Borrower
shall have a reasonable period of time (but in no event more than
ninety (90) days following such written notice) to cure such failure
without the same becoming an Event of Default hereunder. Nothing in
this Section 7. 1 (g) shall be deemed or construed to entitle the
Borrower to any notice and opportunity to cure with respect to any
failure to comply with, observe or perform any covenant or agreement
which constitutes an Event of Default under any other subsection of
this Section 7.1 or to extend any notice and/or opportunity to cure
otherwise provided for in any other subsection of this Section 7. 1.
(h) Material Adverse Change. In the Lender's reasonable
opinion, any event occurs that could have a Material Adverse Change
upon the Borrower.
(i) Events of Default under the Program Rider or other Loan
Documents. The occurrence of any Event of Default or similar event
under any of the Program Rider or the other Loan Documents, after
giving effect to any period of time provided for the cure of any such
event or occurrence in the Program Rider or any such Loan Document.
SECTION 7.2 REMEDIES.
Upon the occurrence of an Event of Default, the Lender may, at its
option:
Page 41
<PAGE> 45
(a) Acceleration. Accelerate the entire unpaid principal
balance of the Loan and all accrued interest thereon without advance
notice to the Borrower, the same becoming immediately due and payable.
In addition, upon acceleration, any and all other Obligations of the
Borrower to the Lender shall be immediately due and payable.
(b) Replacement of Property Manager. Upon written notice to
the Borrower, require the replacement of any property manager or
managing agent for the Premises with a property manager or managing
agent reasonably acceptable to the Lender.
(c) Other Remedies. Invoke any other remedies set forth herein
or in any of the other Loan Documents, including without limitation,
foreclosure of the Lien granted in the.Security Instrument and
enforcement of the assignment to the Lender of the Rents and Profits in
accordance with the terms of the Security Instrument.
ARTICLE VIII - CASUALTY LOSSES; EMINENT DOMAIN
SECTION 8.1 REPAIRS AND CASUALTY LOSSES.
(a) Restoration of Premises. Except as otherwise provided in
this Section 8.1, the Borrower shall, at its expense, promptly repair,
restore, replace or rebuild any part of the Premises which is damaged
or destroyed by any casualty or as the result of any taking under the
power of eminent domain, provided the Lender has made available
insurance proceeds or eminent domain proceeds or awards available to
the Borrower for such repair, restoration, replacement or rebuilding.
The Borrower shall cause all repairs, rebuilding, replacements or
restorations to be (in the reasonable opinion of the Lender) of
substantially equivalent quality to the Premises as of the date hereof,
ordinary wear and tear excepted.
(b) Proof of Loss; Claims Settlement. In the event of loss, the
Borrower shall give prompt written notice thereof to the insurance
carrier and the Lender, and the Lender may make proof of loss if not
made promptly by the Borrower. During the existence of any Event of
Default, the Lender is hereby authorized, in its reasonable discretion,
to adjust, compromise and collect the proceeds of any insurance claims.
(c) Application of Insurance Proceeds. The Borrower hereby
assigns the proceeds of any such insurance policies to the Lender and
hereby directs and authorizes each insurance company to make payment
for such loss directly to the Lender. The proceeds of any insurance or
any part thereof shall be applied by the Lender in accordance with the
provisions of Section 8.3 of this Loan Agreement.
SECTION 8.2 EMINENT DOMAIN.
(a) Participation in Proceedings. The Borrower shall promptly
notify the Lender of any actual or threatened initiation of any eminent
domain proceeding or other taking for public use as to the whole or any
pan of the Premises and/or any rights
Page 42
<PAGE> 46
incident or appurtenant thereto and shall deliver to the Lender copies
of any and all papers served or received in connection with such
proceedings, and the Lender shall have the right, at its option, to
participate in such proceedings at the expense of the Borrower
(including, without limitation, the Lender's reasonable attorneys'
fees) and the Borrower will execute such documents and take such other
steps as required to permit such participation.
(b) Right to Settle Claims. During the existence of any Event
of Default, the Lender is hereby authorized to adjust, compromise and
collect the proceeds of any eminent domain or similar award or settle a
claim for damages and to apply the same (or any part thereof) to the
then outstanding balance of the Loan.
(c) Use of Proceeds. The Borrower assigns to the Lender any
proceeds or awards which may become due by reason of any condemnation
or other taking for public use of the whole or any part of the Premises
and any rights incident or appurtenant thereto including, without
limitation, the rights of the Borrower under any ground lease. The
proceeds of any such condemnation award or proceeds of any part thereof
shall be applied by the Lender in accordance with the provisions of
Section 8.3 of this Loan Agreement.
(d) Further Assignments; Acceleration. The Borrower agrees to
execute such further assignments and agreements as may be reasonably
required by the Lender to assure the effectiveness of this Section 8.2.
In the event any governmental agency or authority shall require or
commence any proceedings for the seizing or demolishing of any part of
the Premises, or shall commence any proceedings to condemn or otherwise
take pursuant to the power of eminent domain (or other power) a
material portion of the Premises, the Lender may, at its option,
declare the Loan to be immediately due and payable in full and apply
all or any portion of the eminent domain (or similar) awards or
proceeds to the then outstanding balance of the Loan.
SECTION 8.3 APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION AWARDS.
(a) All proceeds of insurance assigned to the Lender pursuant
to Section 8.1 of this Loan Agreement, and all proceeds or awards which
may become due by reason of any condemnation or other taking for public
use of the whole or any part of the Premises or any rights incident or
appurtenant thereto, including, without limitation, the rights of the
Borrower under any ground lease, and that have been assigned to the
Lender pursuant to Section 8.2 of this Loan Agreement shall be eligible
to be applied by the Lender in its sole discretion to the repayment of
the Loan; provided, however, that subject to the provisions of this
Section 8.3, such proceeds shall be held in an Eligible Account and
applied to the repair or restoration of the Premises if all of the
following conditions are met:
(i) there exists no Default Condition or Event of Default;
Page 43
<PAGE> 47
(ii) the Borrower presents sufficient evidence to the Lender
that (A) with respect to any casualty loss, there are sufficient funds
from the insurance proceeds and from equity funds, if needed, to
completely restore or repair the damaged Premises, or (B) with respect
to any condemnation award, there are sufficient funds from the
condemnation award or proceeds and from equity funds, if needed. to
completely restore the Premises to an architectural whole and to pay
Operating, Expenses. and (C) the insurance proceeds or condemnation
award is less than 20% of the original Loan Amount,
(iii) as applicable, all affected non-Local Tenants and 75% of
all affected Local Tenants (as determined by square footage) agree in a
manner reasonably satisfactory to the Lender that they will continue or
extend their interests and arrangements for the contract terms then in
effect following the repair, restoration, replacement or rebuilding;
(iv) all parties having material operating, management and/or
franchise interests in, and arrangements concerning, the Premises agree
that they wi 'II continue their interests and arrangements for the
contract terms then in effect following the repair, restoration,
replacement or rebuilding;
(v) the Borrower presents sufficient evidence to the Lender
that the Premises will be repaired or restored to an architectural
whole two (2) years prior to the maturity date of the Loan;
(vi) the Lender will not incur any liability to any other
Person as a result of such use or release of proceeds; and
(vii) (A) as to any casualty loss, the insurance proceeds
shall be held by the Lender and disbursed as repair, restoration,
replacement or rebuilding progresses substantially in accordance with
the procedures set forth in this Loan Agreement for disbursement from
the Replacement Reserve Account; provided, however that insurance
proceeds of $50,000.00 or less will be disbursed directly to the
Borrower for repair, restoration, replacement or rebuilding and (B) as
to any condemnation award, the condemnation award or proceeds shall be
held by the Lender and disbursed as repair, restoration, replacement or
rebuilding progresses substantially in accordance with the procedures
set forth in this Loan Agreement for disbursement from the Replacement
Reserve Account.
(b) If the above-stated conditions are not satisfied within ninety (90)
days of loss, then the Lender may, at its option. apply any proceeds in
repayment of the amount then outstanding under the Note.
(c) Upon the completion of any repair, restoration, replacement or
rebuilding any remaining proceeds shall be paid to the Lender in repayment of
the amount then outstanding under the Note in accordance with the provisions of
the Note.
Page 44
<PAGE> 48
ARTICLE IX - GENERAL PROVISIONS
SECTION 9.1 REMEDIES CUMULATIVE; WAIVERS.
All remedies of the Lender provided for herein and/or in the other Loan
Documents are cumulative and shall be in addition to any and all other rights
and remedies provided for or available under the other Loan Documents, at law
and/or in equity. The exercise of any right or remedy by the Lender hereunder
shall not in any way constitute a cure or waiver of any Default Condition or
Event of Default hereunder or under any other Loan Document, or invalidate any
act done pursuant to any notice of the occurrence of any Default Condition or
Event of Default, or prejudice the Lender in the exercise of any of its rights
hereunder or under or any other Loan Document, unless, in the exercise of said
rights, the Lender realizes all amounts owed to it under the Loan Documents. No
waiver of any Default Condition or Event of Default. hereunder shall be implied
from any delay or omission by the Lender to take action on account of such
Default Condition or Event of Default, and no express waiver shall affect any
Default Condition or Event of Default other than the Default Condition or Event
of Default specified in the waiver and it shall be operative only for the time
and to the extent therein stated. Waivers of any covenants, terms or conditions
contained herein must be in writing and shall not be construed as a waiver of
any subsequent failure to observe or comply with the same covenant, term or
condition. The consent or approval by the Lender to or of any act by the
Borrower requiring further consent or approval shall not be deemed to waive or
render unnecessary the consent or approval to or of any subsequent or similar
act.
SECTION 9.2 BENEFIT.
This Loan Agreement is made and entered into for the sole protection
and benefit of the Lender and the Borrower, their successors and permitted
assigns, and no other Person or Persons shall have any right to action hereon or
rights to the Loan proceeds at any time, nor shall the Lender owe any duty
whatsoever to any claimant for labor performed or material furnished in
connection with the construction of the Improvements, or to apply any
undisbursed portion of the Loan to the payment of any such claim, or to exercise
any right or power of the Lender hereunder or arising from any Default Condition
or Event of Default by the Borrower.
SECTION 9.3 ASSIGNMENT AND ASSUMPTION.
(a) The terms hereof shall be binding upon and inure to the
benefit of the heirs, successors, assigns, and personal representatives
of the parties hereto.
(b) The Borrower shall not assign or permit any assumption of
this Loan Agreement, any of the other Loan Documents or any of its
rights, interests, duties or obligations hereunder or thereunder or any
Loan proceeds or other sums to be advanced hereunder in whole or in
part without the prior written consent of the Lender (which consent
shall not be unreasonably withheld or delayed) and the payment to the
Lender of all reasonable and customary expenses incurred by the Lender
in connection with any such assignment and/or assumption and of a
processing fee (i) with respect to any assignment and/or assumption
during the first twelve (12) months of the term of the
Page 45
<PAGE> 49
Loan, in an amount equal to 1% of the then outstanding principal amount
of the Loan as of the date the Borrower requests the Lender to consent
to such assignment or assumption, and (11) with respect to any such
assignment and/or assumption thereafter, in an amount equal to
$10,000.00; any assignment or assumption (whether voluntary or by
operation of law) without said consent shall be void. Without in any
way limiting the foregoing, in no event shall
the Lender consent to any assignment or assumption during the first
twelve (12) months following the date of this Loan Agreement if the
consideration paid or to be paid by the assignee or purchaser of the
Premises in connection therewith, as determined by the Lender in its
reasonable judgment, is less than the appraised value of the Premises
used by the Lender in underwriting the Loan. The Borrower shall furnish
the Lender at the Borrower's sole cost and expense such information as
the Lender shall request in connection with any assignment or
assumption, including without limitation, an Appraisal or other
evidence satisfactory to the Lender in its reasonable discretion of the
value of the Premises as of the date of the assignment and/or
assumption. In addition, the assignee or purchaser of the Premises
shall be required to assume the Borrower's duties and obligations under
this Loan Agreement and shall be required to execute and deliver to the
Lender such documents, opinions, certificates and information as the
Lender reasonably requires to effectuate such assumption of duties and
obligations. No sale, assignment or assumption shall relieve the
Borrower of its Obligations under this Loan Agreement or any of the
other Loan Documents, unless the Borrower has obtained the prior
written consent of the Lender, which consent shall not be unreasonably
withheld or delayed.
(c) It is expressly recognized and agreed that the Lender may,
in its sole discretion, sell, assign, transfer, participate or
otherwise convey this Loan Agreement, the Note, the Security Instrument
and any other Loan Documents, in whole or in part, to any other Person
provided that all of the provisions hereof shall continue in full force
and effect and, in the event of such assignment, the Lender shall
thereafter be relieved of all liability hereunder and any Loan
disbursements made by any assignee shall be deemed made IN pursuance
and not in modification hereof and shall be evidenced by the Note and
secured by the Security Instrument and any other Loan Documents. It is
further expressly recognized that the Lender intends to sell, transfer,
deliver and assign the Loan in the secondary mortgage market. By its
execution of this Loan Agreement and the other Loan Documents, the
Borrower and each Borrower Principal understands and agrees that any
Financial Statement, Operating Statement, Rent Roll and other
information delivered to the Lender may be delivered to any secondary
mortgage market participant in connection with the sale or assignment
of the Loan or any security backed by the Loan. In the event of such
assignment, the Lender shall thereafter be relieved of all liability
hereunder and any Loan disbursements made by any assignee shall be
deemed made in pursuance and not in modification hereof and shall be
evidenced by the Note and secured by the Security Instrument and the
other Loan Documents.
SECTION 9.4 INFORMATION.
It is expressly recognized and agreed that the Lender may share any
information pertaining to the Loan Documents, the transactions contemplated
thereby and the records
Page 46
<PAGE> 50
maintained by the Lender in connection therewith with Washington Mortgage
Financial Group, Ltd., including its subsidiaries and any of the other
Affiliates of the foregoing and any other Persons which require such information
in connection with the sale in the secondary mortgage market of the Loan.
SECTION 9.5 NONRECOURSE LOAN; EXCEPTIONS.
The Note provides that the Loan is nonrecourse to the Borrower and each
Borrower Principal. except for (a) the lien of the Security Instrument and the
other Loan Documents and (b) the exceptions provided for in the Note.
SECTION 9.6 AMENDMENTS.
This Loan Agreement shall not be amended except by a written instrument
signed by all parties hereto.
SECTION 9.7 GOVERNING LAW AND JURISDICTION.
This Loan Agreement and the other Loan Documents and all matters
relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State. The Borrower and all of its general
partners/members and each Borrower Principal hereby submit to the jurisdiction
of the state and federal courts located in the State and agree that the Lender
may, at its option. enforce its rights under the Loan Documents in such courts.
SECTION 9.8 SAVINGS CLAUSE.
Invalidation of any one or more of the provisions of this Loan
Agreement shall in no way affect any of the other provisions hereof, which shall
remain in full force and effect.
SECTION 9.9 EXECUTION IN COUNTERPARTS.
This Loan Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument, and in making proof of this Loan
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
SECTION 9.10 NOTICES.
All notices and other communications shall have been duly given and
shall be effective (a) when delivered, (b) when transmitted via telecopy (or
other facsimile device) to the number set forth in Exhibit C hereto, (c) the day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective party at the address set forth in
Exhibit C hereto, or at such other address as such party may specify by written
notice to the other party hereto. No notice of change of address shall be
effective except upon actual receipt. This Section 9.10 shall not be
Page 47
<PAGE> 51
construed in any way to affect or impair any waiver of notice or demand provided
in any Loan Document or to require giving of notice or demand to or upon any
Person in any situation or for any reason. In addition to the foregoing, the
Lender may, from time to time, specify to the Borrower additional notice parties
by providing to the Borrower written notice of the name, address, telephone
number and telecopy number of any such additional notice party. Each such
additional notice party shall be entitled to receive and/or give any notice
required or permitted to be given under this Loan Agreement or any other Loan
Document.
SECTION 9.11 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held by or owing to the Lender (including, without
limitation branches, agencies or Affiliates of the Lender wherever located) to
or for the credit or the account of the Borrower against the obligations and
liabilities of the Borrower to the Lender hereunder, under the Note or
otherwise. irrespective of whether the Lender shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of the Lender subsequent thereto.
The Lender agrees to notify the Borrower subsequent to any such set-off or
application.
SECTION 9.12 WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER, EACH BORROWER PRINCIPAL
AND THE LENDER, AS APPROPRIATE, SHALL BE DETERMINED SOLELY FROM THIS WRITTEN
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR OR CONTEMPORANEOUS
ORAL OR WRITTEN AGREEMENTS BETWEEN THE LENDER, THE BORROWER AND EACH BORROWER
PRINCIPAL CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN DOCUMENTS
ARE SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE VARIED
BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH,
OR SUBSEQUENT TO THE EXECUTION OF THIS LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR,
Page 48
<PAGE> 52
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 9.13 WAIVER OF JURY TRIAL.
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL HEREBY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
LOAN AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY
THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL, AND THE LENDER, THE
BORROWER AND EACH BORROWER PRINCIPAL ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF
OF ANOTHER PARTY TO THIS LOAN AGREEMENT HAS MADE ANY REPRESENTATIONS OF FACT TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
EFFECT. THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL FURTHER ACKNOWLEDGE
THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS LOAN AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
Page 49
<PAGE> 53
IN WITNESS WHEREOF, the Borrower, each Borrower Principal and the
Lender have executed this Loan Agreement as of the above- written date.
THE GAUNTLET AT CURTIS PARK, INC., a
Virginia corporation
By: /S/ Clifford F. Bagnall (SEAL)
--------------------------------
Name: Clifford F. Bagnall
Title: Vice President
BORROWER PRINCIPALS:
Brassie Golf Corporation,
A Delaware Corporation
/S/ Clifford F. Bagnall (SEAL)
-----------------------------------
Name: Clifford F. Bagnall
its Chief Operating Officer
(SEAL)
------------------------------------
Name:
(SEAL)
------------------------------------
Name:
LENDER:
WASHINGTON MORTGAGE FINANCIAL
GROUP, LTD., a Virginia corporation
By: /S/ Molly Jo Battenfield (SEAL)
---------------------------------
Molly Jo Battenfield
Assistant Vice President
<PAGE> 54
EXHIBIT A
EQUITY INTERESTS
Borrower: The Gauntlet at Curtis Park, Inc., a Virginia corporation
Sole Shareholder: Brassie Golf Corporation, a Delaware
corporation
Each Borrower Principal which is not an Individual:
Brassie Golf Corporation, a Delaware corporation
EXHIBIT A
<PAGE> 55
EXHIBIT B
IMMEDIATE REPAIRS, REPLACEMENTS, INITIAL RESERVE DEPOSITS
AND MONTHLY RESERVE DEPOSITS
<TABLE>
<CAPTION>
Immediate Repairs Estimated Cost
- ---------------- --------------
<S> <C>
$19,750.00
Replacements Estimated Cost
- ------------ --------------
See attached Schedule 1
Initial Reserve Deposits
- ------------------------
Initial Reserve Deposit to the Repair Escrow
Account 125% of the aggregate estimated cost
of Immediate Repairs shown above): $24,688.00.
Initial Reserve Deposit to the Replacement
Reserve Account: $
---------.
Initial Reserve Deposit to the Tax and
Insurance Reserve Account: $
---------.
Monthly Reserve Deposits
- ------------------------
Monthly Reserve Deposits to the Replacement Reserve Account shall be in
an amount equal to $5,331.03 per month, as such amount may be adjusted
from time to time in accordance with the terms of this Loan Agreement,
including without limitation, the Program Rider.
Monthly Reserve Deposits to the Tax and Insurance Reserve Account shall
be in an amount equal to (a) the sum of (i) the aggregate anticipated
annual premiums for all
</TABLE>
EXHIBIT B
<PAGE> 56
insurance policies required to be maintained pursuant to this Loan
Agreement due in the coming year. (11) the sum of the anticipated
annual real property taxes, personal property taxes, intangibles taxes
and assessment for the Premises due in the coming year, (111) the sum
of anticipated annual water and sewer assessments and frontage charges
for the Premises due in the coming year, and (iv) the sum of all other
anticipated assessments and charges against the Premises due in the
coming year, divided by (b) twelve (12).
EXHIBIT B
<PAGE> 57
EXHIBIT C
ADDRESSES FOR NOTICE
if to the Borrower: The Gauntlet at Curtis Park, Inc.
18 Fairway Drive
Fredericksburg, Virginia 22406
if to the Lender: Washington Mortgage Financial Group, Ltd.
1593 Spring Hill Road, Suite 400
Vienna, Virginia 22182
Attn: Molly Jo Battenfield
Telephone: 703/610-1446
Telecopy: 703/610-1401
with copies to: Powell, Goldstein, Frazer & Murphy LLP
1001 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20004
Attention: Ronald S. Gart, Esq.
Telephone: 202/624-3944
Telecopy: 202/624-7222
EXHIBIT C
<PAGE> 58
EXHIBIT D
PROGRAM RIDER
1. Definitions. The following capitalized terms shall
supplement any definition of such capitalized terms set forth in
the Loan Agreement:
(a) Operating Expenses. In addition to all operating expenses
included in the definition to the Loan Agreement, the term "Operating
Expenses" shall also include, without limitation, all fees, costs and
expenses related to golf course ownership, ground rent. management and
operations, including, without limitation, expenses incurred IN
connection with the production of income at the Premises, including
without limitation, improvements, food, beverages, telephones and other
income.
(b) Operating Income. In addition to all Operating Income
described in the definitions to the Loan Agreement, Operating Income
shall also include, without limitation, all revenues from concessions,
sale of merchandise, golf carts, golf club and other personal property
rental, all rents and revenues, and all departmental and ancillary
services revenues, including without limitation, food and beverage
revenues, telephone revenues, television revenues, vending machine
sales, rents and other income from all sources.
2. Representations and Warranties of the Borrower. To induce the
Lender to enter into this Loan Agreement and to make the Loan, the Borrower
hereby represents and warrants to the Lender on the Closing Date as follows:
(a) The Premises. All facilities and amenities relating to the
operation of the golf course as presently constructed and operated are
located on the Premises.
(b) Licenses. The Borrower has all licenses, permits,
certificates and/or privileges necessary for the ownership or operation
of the Premises as presently constructed and operated and has delivered
certified copies of all of the foregoing to Lender.
3. Affirmative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will:
(a) Lessee Information. Submit to the Lender when requested by
the Lender, all information on monthly operation of the Premises, which
information shall include a Certification thereof.
(C) Management Company Estoppel Certificates. Furnish to the
Lender when requested by the Lender, Estoppel Certificates executed by
the manager for such tenants of any portion of the Premises as the
Lender may require.
EXHIBIT D
<PAGE> 59
4. Negative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will
not:
(a) Agreements, Licenses and Permits. Allow any default under
or a breach, withdrawal, cancellation, rescission, termination,
alteration or modification of any rental agreement, sales contract,
management contract, construction contract, technical service agreement
or other contract or agreement, or any license, permit, certificate or
privilege affecting the Premises.
(b) Management Fees. Pay or allow to be paid incentive
management fees.
(c) Leases. The Borrower shall not enter into, default under,
breach, withdraw, cancel, rescind, terminate, alter or modify any lease
of, or other agreement regarding, any portion of the Premises without
the Lender's prior written approval, unless such lease (i) is on a form
previously approved by the Lender, (ii) provides for terms in
conformity with local conditions, (iii) together with the tenant's
proposed use of the space leased, conforms with applicable laws and the
covenants and agreements set forth in the Loan Documents, including but
not limited to those relating to Hazardous Materials and specifically
references such covenants relating to Hazardous Materials, and (iv)
does not for any purchase option, right of first offer or refusal or
similar right relating to all or any portion of the Premises.
5. Event of Default. In addition to any Events of Default set
forth in the Loan Agreement or any of the other Loan Documents, any default
under, breach of or failure by the Borrower to perform its obligations under the
ground lease (as defined in the Security Instrument, the "Ground Lease") or any
termination, cancellation, rescission or revocation of the Ground Lease shall be
an Event of Default under the Loan Agreement and the other Loan Documents.
6. Operating Agreements and Management Contracts. The Borrower
has furnished to the Lender photocopies of all material Operating Agreements and
Management Contracts entered into with the Borrower, and all amendments,
supplements and modifications thereto. With respect to each such Operating
Agreement and Management Contract, (i) such Operating Agreement and Management
Contract is or will be at the time of execution and delivery thereof valid and
binding on the parties thereto and in full force and effect, (ii) no default has
occurred or is continuing under the terms thereof, and no event has occurred
which, with the giving of notice or the lapse of time. or both, would constitute
a default thereunder, and no party thereto has attempted or threatened to
terminate any such Operating Agreement and Management Contracts, (iii) the
Borrower has not made any previous assignment of the Operating Agreements and
Management Contracts to any Person, except as security for loans and other
financial accommodations, if any, which are to be paid with the proceeds of the
Loan and are to be terminated promptly following the Closing Date, and (iv) no
financing statement covering any of the Operating Agreements and Management
Contracts is on file in any public office, except for those financing statements
relating to loans and other financial accommodations which are to be pal 'd with
the proceeds of the Loan and are to be terminated promptly following the Closing
Date.
EXHIBIT D
<PAGE> 60
7. Conduct of Business and Compliance with Laws. The Borrower
shall do or cause to be done all things necessary to obtain. enter into,
preserve and keep in full force and effect its existence and material rights
and, if appropriate, construction permits and all material Licenses,
Participation Agreements, and Operating Agreements and Management Contracts
which are necessary for its business and the operation of the Premises as a golf
course, and (ii) engage in and continue to engage only in the business of owning
and operating a golf course and related services
8. Compliance with the Ground Lease. The Borrower shall promptly
and faithfully keep and perform, or cause to be kept and performed in all
respects, all the terms, covenants and conditions required to be performed and
observed by the Borrower lessee under the Ground Lease within the period
(exclusive of any grace or cure periods) provided in the Ground Lease, and will
not do or permit anything to be done which will impair or tend to impair the
security of the Security Instrument or the Borrower's rights under the Ground
Lease which would be grounds for declaring a default, forfeiture, cancellation
or termination of the Ground Lease.
9. Default or Notice of Default Under the Lease. The Borrower
shall give prompt written notice to the Lender of any default by the Borrower in
its performance of its obligations under the Ground Lease and shall promptly
forward to the Lender copies of any notices which the Borrower receives from the
lessor claiming any default by the Borrower in complying with the obligations
under the Ground Lease.
10. Estoppel Certificates of the Lessor. If requested by the
Lender, the Borrower will use all reasonable efforts to obtain estoppel
certificates from the lessor stating (a) that the Ground Lease is unmodified and
in full force and effect, or, in the event the Ground Lease has been modified,
the nature of such modification, (b) that the Borrower is not in default in its
performance of its obligations under the Ground Lease, or, in the event the
Borrower is in default, the nature of such default, and (c) the last date on
which the rent was paid and the amount of such payment.
11. Proof of Payments Required to be Made Under the Lease. When
requested by the Lender, the Borrower will promptly furnish proof of payment of
all items which the Borrower is obligated to pay pursuant to the terms of the
Ground Lease.
12. Cure of Defaults. In the event the Borrower shall fail to pay
any installment of rent or additional rent reserved under the Ground Lease, or
TO make any other payment required to be paid by the Borrower, as lessee under
the Ground Lease, at the time and in the manner provided in the Ground Lease. or
if the Borrower shall fail to perform or observe any other term, covenant.
condition, or obligation required to be performed or observed by the Borrower
under the Ground Lease, without waiving or releasing the Borrower from any of
its obligations, the Lender shall have the right, but shall be under no
obligation, to pay any such installment of rent or additional rent, or other
payment, and may perform any other act or take such action as may be appropriate
to cause such other term, covenant, condition, or obligation to be promptly
performed or observed on behalf of the Borrower, to the end that the Borrower's
rights, in, to and under the Ground Lease shall be kept unimpaired and free from
default. The Borrower shall permit the Lender to enter upon the Premises with or
without notice and to do anything thereon
EXHIBIT D
<PAGE> 61
or thereto which the Lender shall deem necessary or prudent for such purpose.
13. Execution of Documents; Power of Attorney. The Borrower shall
execute and deliver on request of the Beneficiary such instruments as the
Beneficiary may deem useful or required to permit the Beneficiary to cure any
defaults under the Ground Lease, or permit the Beneficiary to take such other
action as the Lender considers desirable to cure or remedy the default and
preserve the interest of the Borrower in the Premises. If the Borrower falls to
execute and deliver to the Lender, any such instruments within five (5) calendar
days after written request from the Lender the Borrower shall, and hereby does,
irrevocably constitute and appoint the Lender, or any officer of the Lender, as
the Borrower's true and lawful attorney IN fact. with full power of
substitution, to effect the execution and deliverance of any and all such
instruments on behalf of the Borrower and in the Borrower's name.
14. Amendments and Modifications. The Borrower shall not, and
hereby releases, relinquishes and surrenders unto the Lender all of its rights,
power and authority to, cancel, surrender, amend, modify or alter the Ground
Lease, without prior written authority and consent of the Lender. The Borrower
further shall not cancel the automatic renewals of the Ground Lease, if any,
without the prior written approval of the Lender (b) if the Ground Lease so
allows, shall promptly renew the Ground Lease in accordance with the provisions
set forth therein, (c) shall exercise all renewal options and options to
purchase, if any, contained in the Ground Lease, and (d) shall, if a voluntary
or involuntary petition under the United States Bankruptcy Code, as amended, is
filed by or against the lessor, under Section 365(h) of the United States
Bankruptcy Code, as amended, elect to remain in possession of the Premises and
not treat the Ground lease as terminated. The Borrower hereby irrevocably
constitutes and appoints the Lender, or any officer of the Lender, as the
Borrower's true and lawful attorney in fact, with full power of substitution, to
exercise of the aforementioned options and rights on behalf of the Borrower and
in the Borrower's name.
15. Sublease; Assignment. The Borrower will not sublease,
assign or grant licenses with respect to any of the property subject to the
Ground Lease without the prior written consent of the Lender.
16. Notice of Remedial Proceeding. The Borrower shall give
immediate written notice to the Lender of the commencement of any remedial
proceedings under the Ground Lease by any party thereto and, if required by the
Lender, shall permit the Lender, as the Borrower's attorney-in-fact, to control
and act for the Borrower in any such remedial proceedings and shall within
thirty (30) calendar days after request by the Lender obtain from the lessor and
deliver to the Lender the lessor's estoppel certificate required thereunder, if
any.
17. Non-Merger of Estates. The Borrower covenants and agrees that
there shall not be a merger of the Ground Lease, or of the leasehold estate
created thereby, with the fee estate or another leasehold estate covered by the
Ground Lease by reason of said leasehold estate or said fee estate, or any part
of either, coming into common ownership, unless the Lender shall consent in
writing to such merger, if the Borrower shall acquire such fee or other
leasehold estate, then the Security Instrument shall simultaneously and without
further action be spread so as to become a lien on such, fee or other leasehold
estate.
EXHIBIT D
<PAGE> 62
18. Warranties and Representations. The Borrower represents and
warrants that: (1) the Ground Lease is in full force and effect and a true and
complete copy of the Ground Lease (including any amendments or side letters
relating thereto) has been deposited with the Lender; (11) there are no existing
defaults under the provisions of the Ground Lease or in the performance of any
of the terms, covenants or conditions and warranties thereof; and (iii) all
rents (including additional rents) and other charges reserved in the Ground
Lease have been paid to the extent they were payable prior to the date hereof.
19. Warranty of Title. The Borrower is lawfully seized of a
leasehold estate in the Premises, free and clear of all liens and encumbrances,
and subject only to those liens and encumbrances, easements, rights-of-way,
covenants, agreements, restrictions and conditions of record described on the
title insurance policy issued on the date hereof. The Borrower has the right and
power to convey the Premises, hereby warrants generally the same, and covenants
to execute such further assurances thereof as may be requisite. The Borrower
covenants that the lien created hereby is and will be maintained as a first
leasehold lien upon the Premises and every part thereof.
20. Covenants Binding on the Leasehold Estate. All covenants
hereof shall run with the leasehold estate until payment in full of all amounts
owed by the Borrower under or otherwise secured by any of the Loan Documents.
21. Notice of Lessor's Default. The Borrower shall promptly notify
the Lender in writing of any default by the lessor in the performance or
observance of any of the terms, covenants or conditions of the Ground Lease to
be performed by the lessor.
22. Option of Beneficiary. If there shall be filed by or against
the Borrower a petition under the United States Bankruptcy Code, as amended, and
the Borrower, as lessee under the Ground Lease, shall determine to reject the
Ground Lease pursuant to Section 365(a) of the United States Bankruptcy Code, as
amended the Borrower shall give the Lender not less than ten (10) banking days'
prior written notice of the date on which the Borrower shall apply to the
Bankruptcy Court for authority to reject the Ground Lease. The Lender shall have
the right, but not the obligation, to serve upon the Borrower within such ten
(10) banking day period a notice stating that (a) the Lender demands that the
Borrower, as debtor- in-possession, or the Borrower's trustee assume and then
assign the Ground Lease to the Lender pursuant to Section 365 of the United
States Bankruptcy Code, as amended, and (b) the Lender covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide adequate
assurance of future performance under the Ground Lease. If the Lender serves
upon the Borrower the notice described in the preceding sentence, the Borrower
shall not seek to reject the Ground Lease but shall instead comply with the
demand provided for in clause (a) of the preceding sentence within thirty (30)
calendar days after the notice shall have been given, subject to the performance
by the Lender of the covenant provided for in clause (b) of the preceding
sentence.
23. Default under the Ground Lease. A default in the payment of
any rent, additional rent or any payment due under the Ground Lease, when and as
the same are due and payable or a failure or default in the performance or
observance of any of the terms, conditions, covenants or
EXHIBIT D
<PAGE> 63
agreements set forth in the Ground Lease, or the occurrence of any event which
with the giving, of notice, the passage of time or both would constitute a
default under the Ground Lease, or the receipt of notice by the Borrower that
the Ground Lease will be or has been terminated, or any assignment, subletting
or termination of the Ground Lease, without the prior written consent of the
Lender.
EXHIBIT D
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
December 31, 1997
The Gauntlet at St. James, Inc.
The Gauntlet at Curtis Park, Inc.
Brassie Construction Management Services, Inc.
Amalgamated Equity Golf (a British Columbia
Corporation)
Divot Properties WGV, Inc.
The Gauntlet at Laurel Valley, Inc.
The Gauntlet at Myrtle West, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BRASSIE GOLF CORPORATION FOR THE YEAR ENDED DECEMBER
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 188,285
<SECURITIES> 0
<RECEIVABLES> 512,561
<ALLOWANCES> 0
<INVENTORY> 31,611
<CURRENT-ASSETS> 1,771,045
<PP&E> 6,030,761
<DEPRECIATION> 742,956
<TOTAL-ASSETS> 7,973,500
<CURRENT-LIABILITIES> 1,869,574
<BONDS> 3,513,041
0
283
<COMMON> 42,633
<OTHER-SE> 2,547,969
<TOTAL-LIABILITY-AND-EQUITY> 7,973,500
<SALES> 744,836
<TOTAL-REVENUES> 4,093,599
<CGS> 389,755
<TOTAL-COSTS> 6,660,207
<OTHER-EXPENSES> 1,826,164
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,594,262
<INCOME-PRETAX> (5,987,034)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,987,034)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,987,034)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
