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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
to CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
March 6, 1996
FAMILY GOLF CENTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25098 11-3223246
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
225 Broadhollow Road
Melville, New York 11747
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(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (516) 694-1666
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(Former Address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
By Current Report on Form 8-K dated March 6, 1996 (the "Original
Form 8-K"), Family Golf Centers, Inc. (the "Company") reported the completion of
its acquisition of certain assets from:
(i) Owls' Creek Golf Center, Inc. (the "Owl's Creek
Seller"); and
(ii) Flemington Equities VII ("Equities") and Flemington Golf
and Sports Center, LLC ("FGS", and collectively with Equities, the "Flemington
Sellers").
By Current Report on Form 8-K dated April 19, 1996 (the "Second
Form 8-K"), the Company reported the completion of its acquisition of certain
assets from 202 Golf Associates, Inc. (the "Yorktown Seller").
At the time of filing the Original Form 8-K and the Second Form
8-K with the Securities and Exchange Commission, the Company did not have
adequate information to determine whether the disclosure required in respect of
the businesses acquired from the Owl's Creek Seller, the Flemington Sellers and
the Yorktown Seller was disclosure under Item 2 or Item 5 of Form 8-K. The
Company has determined that the information required by Item 2 of Form 8-K is
required to be disclosed in respect of the acquisitions of the businesses from
the Owl's Creek Seller, the Flemington Sellers and the Yorktown Seller.
Accordingly, the Original Form 8-K is amended and supplemented by the addition
of the following:
Virginia Beach Golf Center
On March 6, 1996, the Company acquired certain assets from Owl's
Creek Seller pursuant to a purchase agreement. The acquired assets included (i)
a long-term lease from the City of Virginia Beach in respect of approximately
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<PAGE>
40 acres of real property in the City of Virginia Beach and the improvements
thereon (the "City Land"); (ii) a long-term lease from R.H. Braithwaite and N.F.
Braithwaite in respect of approximately 41 acres of real property in the City of
Virginia and the improvements thereon (the "Braithwaite Land"); (iii) as a golf
recreational facility (which includes a driving range, an executive golf course,
a pro shop, a club house and other related facilities) on the City Land and the
Braithwaite Land (collectively, the "Premises") and known as "Owl's Creek Golf
Center"; and (iv) certain equipment, fixtures and personal property used in
connection with the operation of the golf center (collectively with the
Premises, the "Owl's Creek Assets").
Pursuant to the purchase agreement, dated March 6, 1996, between
the Owl's Creek Seller and a wholly-owned subsidiary of the Company (the "OC
Purchase Agreement") the Company purchased the Owl's Creek Assets for (i) 50,000
shares of Common Stock of the Company (16,667 of which have been placed in
escrow for one year to satisfy indemnification claims of the Company, if any
under the OC Purchase Agreement) and (ii) $1.8 million in cash, all of which was
derived from working capital.
The Company intends to continue operating the Owl's Creek Assets
as the "Owl's Creek Golf Center," in substantially the same manner as previously
conducted.
Flemington Golf Center
On March 7, 1996, the Company, pursuant to two purchase
agreements, acquired certain assets from Equities and FGS, respectively. The
assets acquired from Equities included approximately 17 acres of real property
in Flemington, New Jersey (the "Land") on which there is a driving range, a
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miniature golf course, batting cages, a pro shop and a club house, used and
operated as "Flemington Golf and Sports Center" (the "Premises"). The assets
acquired from FGS included certain equipment, fixtures and personal property
used in connection with the operation of this golf center (the "Fixtures", and
collectively with the Premises, the "Acquired Assets"). FGS had, prior to
March 7, 1996, leased the Premises from Equities.
Pursuant to the purchase agreement (the "Land Purchase
Agreement"), dated as of March 7, 1996, between Equities and a wholly-owned
subsidiary of the Company ("Company Sub"), the Company purchased the Land for a
mortgage note (the "Note") in the principal amount of $1.7 million, bearing
interest at the rate of 5.25% per annum, and payable on March 7, 2001. The
Note is secured by:
(i) a mortgage on the Premises; and
(ii) the improvements, fixtures, equipment and personal property on
the Land pursuant to a security agreement.
Pursuant to the purchase agreement, dated as of March 7, 1996
(the "Second Purchase Agreement"), between FGS and Company Sub, the Company
purchased the Fixtures from FGS in exchange for 100,000 shares of Common Stock
of the Company.
As part of the acquisition, FGS placed $112,500 in cash in escrow for one year
to satisfy indemnification claims of the Company, if any, under the Second
Purchase Agreement.
The Company intends to continue operating the Acquired Assets
as a golf recreational facility, under the name the "Flemington Family Golf
Center".
The foregoing summary of the acquisitions and related
transactions is incomplete and is qualified in its entirety by reference to the
copies of the agreements filed as Exhibits 1 through 14 annexed hereto.
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Annexed hereto as Exhibit 15 is a press release issued by the
Company on March 8, 1996 announcing, among other things, the Company's
acquisitions of the "Owl's Creek Golf Center and "Flemington Golf and Sports
Center".
Accordingly, the Second Form 8-K is amended and supplemented by
the addition of the following:
Yorktown Golf Center
On April 8, 1996, the Company acquired certain assets from the
Yorktown Seller pursuant to a purchase agreement. The acquired assets included
(i) approximately 16 acres of real property in Yorktown Heights, New York (the
"Land") on which there is a driving range and related facilities, used and
operated as "RT 202 Golf Center" (the "Premises"); and (ii) certain equipment,
fixtures and personal property used in connection with the operation of this
golf center (collectively with the Premises, the "Yorktown Assets").
Pursuant to the purchase agreement, dated April 8, 1996, among
the Yorktown Seller, the Company and a wholly-owned subsidiary of the Company,
the Company purchased the Yorktown Assets for:
(i) $1,601,605.20 in cash, all of which was derived from
workingcapital; and
(ii) 30,900 shares of Common Stock of the Company (10,000 of
whichhave been placed in escrow for a period of up to 2 years fromApril 8, 1996
pending the receipt of various approvals).
The Company intends to continue operating the Yorktown Assets
as a golf recreation facility, under the name "Yorktown Family Golf Centers"
and to make some capital improvements to such assets.
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The foregoing summary of the acquisition is incomplete and is
qualified in its entirety by reference to the copies of the agreements filed as
Exhibit 15 through 20 annexed hereto.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired.
In accordance with Item 7(a)(4) of Form 8-K, attached
hereto as Exhibits 21, 22, 23 and 24 respectively are the financial statements
of Owl's Creek Golf Center, Inc., Flemington Golf and Sports Center, LLC and
202 Golf Associates, Inc. prepared pursuant to Regulation S-X.
(b) Pro Forma Financial Information.
In accordance with Item 7(b)(2) of Form 8-K, attached
hereto as Exhibit 25 are the pro forma financial statements required by Article
11 of Regulation S-X.
(c) Exhibits
1. Purchase Agreement, dated March 6, 1996 between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc., a wholly owned
subsidiary of Family Golf Centers, Inc.
2. Escrow Agreement dated March 6, 1996 among Family Golf Centers,
Inc., Owl's Creek Golf Center, Inc. and Continental Stock Transfer & Trust
Company.
3. Registration Rights Agreement, dated March 6, 1996, between
Family Golf Centers, Inc. and certain stockholders of Owl's Creek Golf Center,
Inc. listed on Schedule 1 thereto.
4. Deed of Assignment dated February 27, 1996 between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc. and the City of
Virginia Beach, Virginia.
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5. Deed of Assignment dated March 1, 1996 between Owl's Creek
Center, Inc. and Virginia Beach Family Golf Centers, Inc.
6. Deed for Improvements, dated as of March 1, 1996, between Owl's
Creek Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc.
7. Bill of Sale, dated as of March 6, 1996, between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc.
8. Purchase Agreement, dated March 7, 1996, between Flemington
Equities VII and Flemington Family Golf Centers, Inc., a wholly-owned
subsidiary of Family Golf Centers, Inc.
9. Purchase Agreement, dated March 7, 1996, between Flemington
Golf and Sports Center, LLC and Flemington Family Golf Centers, Inc., a wholly-
owned subsidiary of Family Golf Centers, Inc.
10. Security Agreement, dated March 7, 1998, by Flemington Family
Golf Centers, Inc. in favor of Flemington Equities VII.
11. Guaranty dated March 7, 1996, by Family Golf Centers, Inc., in
favor of Flemington Equities VII.
12. Mortgage Note, dated March 7, 1996, in the principal amount of
$1,700,000 made by Flemington Family Golf Centers, Inc. in favor of Flemington
Equities VII and related Mortgage Deed.
13. Cash Escrow Agreement, dated March 7, 1996 among Flemington
Family Golf Centers, Inc., Flemington Golf and Sports Center, LLC and
Continental Stock Transfer and Trust Company.
14. Press Release issued by the Company on March 8, 1996.
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15. Purchase Agreement, dated April 8, 1996 among 202 Golf
Associates, Inc., Family Golf Centers, Inc. and Yorktown Family Golf Centers,
Inc., a wholly owned subsidiary of Family Golf Centers, Inc.
16. Escrow Agreement dated April 8, 1996 among Family Golf Centers,
Inc., 202 Golf Associates, Inc., Yorktown Family Golf Centers, Inc. and
Continental Stock Transfer & Trust Company.
17. Registration Rights Agreement, dated April 8, 1996, between
Family Golf Centers, Inc. and 202 Golf Associates, Inc.
18. Assignment and Assumption Agreement, dated April 8, 1996,
between 202 Golf Associates, Inc. and Yorktown Family Golf Centers, Inc.
19. Bill of Sale dated April 8, 1996 by 202 Golf Associates, Inc.
20. Indenture, dated April 8, 1996 between 202 Golf Associates,
Inc. and Yorktown Family Golf Centers, Inc.
21. Audited Financial Statements of Owl's Creek Golf Center, Inc.
for the year ended December 31, 1995.
22. Audited Financial Statements of Flemington Golf and Sports
Center, LLC for the year ended December 31, 1995.
23. Audited Financial Statements of 202 Golf Associates, Inc. for
the year ended December 31, 1995.
24. Unaudited pro forma condensed statements of operations of the
Company and its subsidiaries for the year ended December 31, 1995 and for the
three months ended March 31, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
May 20, 1996
FAMILY GOLF CENTERS, INC.
By: /s/ Dominic Chang
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Dominic Chang,
President and Chief Executive Officer
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INDEX TO EXHIBITS
Page
Exhibit No.
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1. Purchase Agreement, dated March 6, 1996 between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc., a wholly owned
subsidiary of Family Golf Centers, Inc.
2. Escrow Agreement dated March 6, 1996 among Family Golf Centers,
Inc., Owl's Creek Golf Center, Inc. and Continental Stock Transfer & Trust
Company.
3. Registration Rights Agreement, dated March 6, 1996, between
Family Golf Centers, Inc. and certain stockholders of Owl's Creek Golf Center,
Inc. listed on Schedule 1 thereto.
4. Deed of Assignment dated February 27, 1996 between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc. and the City of
Virginia Beach, Virginia.
5. Deed of Assignment dated March 1, 1996 between Owl's Creek
Center, Inc. and Virginia Beach Family Golf Centers, Inc.
6. Deed for Improvements, dated as of March 1, 1996, between Owl's
Creek Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc.
7. Bill of Sale, dated as of March 6, 1996, between Owl's Creek
Golf Center, Inc. and Virginia Beach Family Golf Centers, Inc.
8. Purchase Agreement, dated March 7, 1996, between Flemington
Equities VII and Flemington Family Golf Centers, Inc., a wholly-owned
subsidiary of Family Golf Centers, Inc.
9. Purchase Agreement, dated March 7, 1996, between Flemington
Golf and Sports Center, LLC and Flemington Family Golf Centers, Inc., a wholly-
owned subsidiary of Family Golf Centers, Inc.
10. [OMITTED]
11. Guaranty dated March 7, 1996, by Family Golf Centers, Inc., in
favor of Flemington Equities VII.
12. Mortgage Note, dated March 7, 1996, in the principal amount of
$1,700,000 made by Flemington Family Golf Centers, Inc. in favor of Flemington
Equities VII and related Mortgage Deed.
13. Cash Escrow Agreement, dated March 7, 1996 among Flemington
Family Golf Centers, Inc., Flemington Golf and Sports Center, LLC and
Continental Stock Transfer and Trust Company.
14. Press Release issued by the Company on March 8, 1996.
15. Purchase Agreement, dated April 8, 1996 among 202 Golf
Associates, Inc., Family Golf Centers, Inc. and Yorktown Family Golf Centers,
Inc., a wholly owned subsidiary of Family Golf Centers, Inc.
16. Escrow Agreement dated April 8, 1996 among Family Golf Centers,
Inc., 202 Golf Associates, Inc., Yorktown Family Golf Centers, Inc. and
Continental Stock Transfer & Trust Company.
17. Registration Rights Agreement, dated April 8, 1996, between
Family Golf Centers, Inc. and 202 Golf Associates, Inc.
18. Assignment and Assumption Agreement, dated April 8, 1996,
between 202 Golf Associates, Inc. and Yorktown Family Golf Centers, Inc.
19. Bill of Sale dated April 8, 1996 by 202 Golf Associates, Inc.
20. Indenture, dated April 8, 1996 between 202 Golf Associates,
Inc. and Yorktown Family Golf Centers, Inc.
21. Audited Financial Statements of Owl's Creek Golf Center, Inc.
for the year ended December 31, 1995.
22. Audited Financial Statements of Flemington Golf and Sports
Center, LLC for the year ended December 31, 1995.
23. Audited Financial Statements of 202 Golf Associates, Inc. for
the year ended December 31, 1995.
24. Unaudited pro forma condensed statements of operations of the
Company and its subsidiaries for the year ended December 31, 1995 and for the
three months ended March 31, 1996.
PURCHASE AGREEMENT
by and between
OWL'S CREEK GOLF CENTER, INC.
Seller
and
VIRGINIA BEACH FAMILY GOLF CENTER, INC.,
Purchaser
PURCHASE AGREEMENT
PURCHASE AGREEMENT, made as of the 6th day of March, 1996 (this
"Agreement"), by and between OWL'S CREEK GOLF CENTER, INC., a Virginia
corporation, having an address at 700 Pavilion Center, P.O. Box 626, Virginia
Beach, Virginia 23451 ("Seller") and VIRGINIA BEACH FAMILY GOLF CENTERS, INC., a
Delaware corporation having an address at 225 Broadhollow Road, Suite 106E,
Melville, New York ("Purchaser").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Deed of Lease, dated March 17, 1987
(the "City Lease"), between The City of Virginia Beach, Virginia, as lessor, and
Seller, as lessee, as corrected by the Correction to Deed of Lease, dated
December 9, 1992, and as amended pursuant to the Amendment to Deed of Lease,
dated November 30, 1994, Seller is (a) the lessee of that certain parcel of land
located in the City of Virginia Beach, State of Virginia more particularly
described on Exhibit A-1 attached hereto and made a part hereof (the "City
Land") and (b) the owner of the buildings and improvements located thereon (the
"City Improvements" and, together with the City Land, the "City Premises");
WHEREAS, pursuant to that certain Deed of Lease, dated as of July 31,
1986 (the "Braithwaite Lease"), between Robert H. Braithwaite, Jr. and Nancy F.
Braithwaite, as lessor, and Seller, as lessee, Seller is (a) the lessee of that
certain parcel of land located in the City of Virginia Beach, State of Virginia
more particularly described on Exhibit A-2 attached hereto and made a part
hereof (the "Braithwaite Land") and (b) the owner of the buildings and
improvements located thereon (the "Braithwaite Improvements" and, together with
the Braithwaite Land, the "Braithwaite Premises"); the City Lease and the
Braithwaite Lease are referred to collectively herein as the "Leases"; the City
Land and the Braithwaite Land are referred to collectively herein as the "Land";
the City Improvements and the Braithwaite Improvements are referred to
collectively herein as the "Improvements"; and the City Premises and the
Braithwaite Premises are referred to collectively herein as the "Improvements";
WHEREAS, Seller operates a driving range and related facilities at the
Premises under the name "Owl's Creek Golf Center" (the "Business"); and
WHEREAS, Seller wants to sell, assign, transfer and convey all of its
right, title and interest in and to the Leases, the Premises and the Business to
Purchaser, and Purchaser wants to purchase the same from Seller, on the terms,
and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the terms and
conditions set forth herein, and other good and valuable consideration, the
mutual receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree to the foregoing and as follows:
1. Agreement to Sell and Purchase.
1.1 Assets to be Purchased by Purchaser. Seller agrees to
sell, assign, transfer and convey to Purchaser, and Purchaser agrees to purchase
from Seller, upon the terms and conditions hereinafter set forth, all of
Seller's right, title and interest in and to the following property
(collectively, the "Property"):
1.1.1 the Leases;
1.1.2 the Premises;
1.1.3 the easements, rights of way, appurtenances and
other rights and benefits of Seller in and to the Premises, including without
limitation, all of Seller's interest in any air rights, water rights and
irrigation rights;
1.1.4 all furnishings, fixtures, machinery, equipment,
vehicles and personalty attached or appurtenant to or used in connection with
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the Premises that are owned or leased by Seller, and all inventories and
supplies of every kind and description relating to the Business, wherever
located, including without limitation, the items described on Exhibit B attached
hereto and made a part hereof (the "Personal Property");
1.1.5 the files, books, notices and other
correspondence from the lessors under the Leases and any governmental agencies,
and other records used or employed by Seller or its affiliates in connection
with the ownership, lease and/or operation of the Premises and the Business
(collectively, the "Records");
1.1.6 any consents, authorizations, variances,
waivers, licenses, certificates, permits and approvals held by or granted to
Seller in connection with the lease of the Premises (collectively, the
"Permits");
1.1.7 all trade accounts receivable arising out of the
sale of goods or services on or after the Closing Date (as hereinafter defined);
1.1.8 the Braithwaite Lease, the City Lease and the
Master Lease Agreement, dated April 1, 1995, between Eastern Golf Car, Inc. and
the Seller (the "Golf Car Lease"), each as described on Exhibit C-1 attached
hereto and made a part hereof (the "Assumed Contracts");
1.1.9 any monetary and non-monetary claims against
third parties including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties and guarantees, except to the extent the
same relate solely to any Retained Assets or Retained Liabilities (as
hereinafter defined) (the "Claims"); and
1.1.10 any other properties and assets of every kind and
nature, real or personal, tangible or intangible, relating in any way whatsoever
to the Premises or the Business, except to the extent the same relate solely to
the Retained Assets or Retained Liabilities.
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1.2 Assets to be Retained by Seller. Anything herein to the
contrary notwithstanding, Seller shall not sell, and Purchaser shall not
acquire, the following assets of Seller (the "Retained Assets"):
1.2.1 all trade accounts receivable arising out of the
sale of goods or services prior to the Closing Date;
1.2.2 all claims of Seller for refunds or credits with
respect to federal, state or local income taxes or foreign income taxes of
whatever nature or taxable period involved;
1.2.3 any rights of Seller with respect to insurance
policies owned by Seller or for which Seller is the named insured;
1.2.4 all cash, funds in bank accounts and cash
equivalents existing as of the Closing Date;
1.2.5 all properties and assets that are the subject
of any Contracts (as hereinafter defined) other than the Assumed Contract;
1.2.6 any patents, trademarks, trademark
registrations, copyrights, copyright registrations, trade names (other than the
name "Owl's Creek Golf Center") and all registrations thereof and all
applications for any of the foregoing, whether issued or pending, if any, and
all goodwill associated with any of the foregoing (the "Intangible Assets");
1.2.7 the contracts, leases, orders and other
agreements of or relating to the Business described on Exhibit C-2 attached
hereto and made a part hereof (the "Retained Contracts");
1.3 Assumption of Certain Liabilities. Purchaser shall
assume and agree to pay and discharge when due the following liabilities of
Seller to the extent the same arise from and after the Closing Date (the
"Assumed Liabilities"):
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1.3.1 all liabilities and obligations under the
Assumed Contracts.
1.4 Liabilities to be Retained by Purchaser. Seller shall
retain, and Purchaser shall not assume, perform, discharge or pay, and shall not
be responsible for, any and all liabilities or obligations of any nature
whatsoever in connection with or relating to the Property, Seller or the
Business or any predecessor owner of the Property or the Business other than the
Assumed Liabilities (collectively, the "Retained Liabilities").
2. Consideration.
2.1 Consideration. In consideration for the Property, at the
Closing (as hereinafter defined) Purchaser shall: (A) pay to Seller $1,800,000
by certified check or wire transfer of funds, (B) cause Family Golf Centers,
Inc. (the "Parent") to issue 50,000 validly issued, fully paid and non-
assessable shares of common stock, par value $.01 per share, of Parent (the
"Common Stock") and to deliver at the Closing: (i) a certificate representing
33,333 shares of Common Stock to Seller; and (ii) a certificate representing
16,667 shares of Common Stock to the Escrow Agent (the "Escrow Agent") under the
Escrow Agreement referred to in Section 5 hereof (the "Escrow Agreement"), such
certificate to be held and dealt with as provided in the Escrow Agreement, and
(C) assume the Assumed Liabilities. The Seller shall notify the Purchaser as to
the name and number of shares to be issued to each of the Seller's stockholders.
3. Title; Permitted Exceptions.
3.1 Seller will convey the Property to Purchaser, free and
clear of any and all liens, charges, encumbrances, mortgages, pledges, security
interests, easements, agreements and other interests and adverse claims
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(collectively, "Encumbrances"), other than the matters set forth in Exhibit D
attached hereto and made a part hereof (the "Permitted Exceptions").
3.2 Purchaser may order an examination of title from a title
company licensed or authorized to issue title insurance in the State of Virginia
("Title Company"), and shall cause a copy of any title report to be forwarded to
Seller's attorney upon receipt. If a title examination shall disclose any
Encumbrances other than the Permitted Exceptions, Seller shall cause the same to
be discharged of record or otherwise cured.
3.3 If a search of the title discloses judgments,
bankruptcies or other returns against other persons having names the same as or
similar to that of Seller, Seller will on request deliver to the Title Company
or Purchaser an affidavit showing that such judgments, bankruptcies or other
returns are not against Seller, in form sufficient to permit deletion of such
exception from the title policy.
4. Adjustments.
4.1 To the extent that any of the prorations made upon the
Closing Date are based upon estimates of payments to be made and/or expenses to
be incurred by Purchaser subsequent to the Closing Date, or either party
discovers any errors in or omissions in respect of such prorations, Seller and
Purchaser agree to adjust such prorations promptly upon receipt by Seller or
Purchaser, as the case may be, of such payments or of bills or other
documentation setting forth the actual amount of such expenses. The provisions
of this Article shall survive the Closing for a period of six months.
5. The Closing.
5.1 The closing of the transaction provided for in this
Agreement (the "Closing") shall take place simultaneously with the execution and
delivery of this Agreement (the "Closing Date").
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5.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser physical possession of the Property (receipt of which may
be actual or constructive) and the following:
5.2.1 an assignment and assumption agreement (the
"City Lease Assignment and Assumption Agreement"), in proper statutory form for
recording, pursuant to which Seller shall assign to Purchaser all of Seller's
right, title and interest in and to the City Lease and Purchaser shall assume
all of Seller's obligations arising thereunder from and after the Closing Date;
5.2.2 an assignment and assumption agreement (the
"Braithwaite Lease Assignment and Assumption Agreement"), in proper statutory
form for recording, pursuant to which Seller shall assign to Purchaser all of
Seller's right, title and interest in and to the Braithwaite Lease and Purchaser
shall assume all of Seller's obligations arising thereunder from and after the
Closing Date;
5.2.3 a warranty deed with covenant against grantor's
acts, duly executed and acknowledged by Seller, in proper statutory form for
recording, so as to convey to Purchaser fee simple title to the City
Improvements, subject to and in accordance with the provisions of this Agreement
(the "City Deed");
5.2.4 a warranty deed with covenant against grantor's
acts, duly executed and acknowledged by Seller, in proper statutory form for
recording, so as to convey to Purchaser fee simple title to the Braithwaite
Improvements, subject to and in accordance with the provisions of this Agreement
(the "Braithwaite Deed");
5.2.5 a bill of sale conveying, transferring and
selling to Purchaser all right, title and interest of Seller in and to the
Personal
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Property, which bill of sale shall contain a warranty that such property is free
and clear of all Encumbrances other than the Permitted Exceptions;
5.2.6 an assignment and assumption agreement (the
"Contract Assignment and Assumption Agreement") assigning to Purchaser all of
Seller's right, title and interest in and to the Assumed Contracts, the Permits
and the Claims;
5.2.7 a settlement statement (the "Settlement
Statement") setting forth the amounts paid by or on behalf of and/or credited to
each of Purchaser and Seller pursuant to this Agreement;
5.2.8 an owner's affidavit of title with respect to
the City Land and with respect to the Braithwaite Land;
5.2.9 a Certificate or Certificates of Occupancy for
all Improvements;
5.2.10 original counterparts of each of the Assumed
Contracts;
5.2.11 a landlord estoppel and consent to assignment of
lease with respect to the Braithwaite Lease, in the form of Exhibit E attached
hereto and signed by the Lessor under such Lease.
5.2.12 a landlord estoppel and consent to assignment of
lease with respect to the City Lease, in the form of Exhibit F attached hereto
and signed by the Lessor under such Lease.
5.2.13 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;
5.2.14 an affidavit (the "FIRPTA Affidavit") duly
executed and acknowledged by Seller pursuant to Section 1445 (b)(2) of the
Internal
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Revenue Code of 1986, as amended, stating that Seller is not a foreign person
within the meaning of such provision;
5.2.15 keys to all locks relating to the Property,
appropriately labeled;
5.2.16 the Escrow Agreement, executed by Seller, in the
form attached hereto as Exhibit G.
5.2.17 evidence that the note dated December 14, 1992
in the original principal amount of $1,761,761.35 (the "Central Fidelity Note")
(of which $1,551,321.22 was outstanding as of February 8, 1996) executed by the
Seller in favor of Central Fidelity National Bank, has been satisfied in full
and all liens related thereto have been terminated;
5.2.18 evidence that the note dated May 27, 1993 in
the original principal amount of $215,000.00 (the "Resource Bank Note") (of
which $103,266.75 was outstanding as of February 8, 1996) executed by the Seller
in favor of Resource Bank, has been satisfied in full and all liens related
thereto have been terminated;
5.2.19 the written consent of Eastern Golf Car, Inc.
to the assignment of the Golf Car Lease to the Purchaser.
5.2.20 the Registration Rights Agreement, executed by
Seller, in the form attached hereto as Exhibit H.
5.2.21 all other instruments and documents to be
executed, acknowledged where appropriate and/or delivered by Seller to Purchaser
pursuant to any of the other provisions of this Agreement; and
5.2.22 such other documents as may be reasonably
required by Purchaser's counsel in connection with this transaction.
5.3 At the Closing, Purchaser shall deliver to Seller the
following:
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5.3.1 a stock certificate registered in the name of
the Seller's stockholders representing, in the aggregate, 33,333 shares of
Common Stock of Parent;
5.3.2 the Registration Rights Agreement, executed by
the Parent.
5.3.3 the Escrow Agreement, executed by Purchaser;
5.3.4 the City Lease Assignment and Assumption
Agreement;
5.3.5 the Braithwaite Lease Assignment and Assumption
Agreement;
5.3.6 the Contract Assignment and Assumption Agreement;
5.3.7 the Settlement Statement;
5.3.8 all other instruments and documents to be
executed, acknowledged where appropriate and/or delivered by Purchaser to
Seller; and
5.3.9 such other documents as may be reasonably
required by Seller's counsel in connection with this transaction.
6. Representations and Warranties.
6.1 Seller hereby represents and warrants to Purchaser as of
the date hereof and as of the Closing Date as follows:
6.1.1 Organization; Power and Authority. Seller is a
corporation duly formed, validly existing and in good standing under the laws of
the State of Virginia, and has all requisite power and authority to carry on its
business as it is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
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6.1.2 Due Authorization and Execution; Effect of
Agreement. The execution, delivery and performance by Seller of this Agreement
and the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Seller. This Agreement has been duly and validly executed and delivered
by Seller and constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, or other similar
laws relating to creditors' rights generally; and (b) is subject to general
principles of equity.
6.1.3 Consents. No consent, approval or authorization
of, exemption by, or filing with, any governmental or regulatory authority or
any third party is required in connection with the execution, delivery and
performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been, or by the
Closing Date will be, obtained.
6.1.4 Compliance with Applicable Laws. Seller is not
engaging in any activity or omitting to take any action as a result of which
Seller is in violation of any law, rule, regulation, ordinance, statute, order,
injunction or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Property or the Business, and
neither the execution and delivery by Seller of this Agreement or of any of the
other agreements and instruments to be executed and delivered by it pursuant
hereto, the performance by Seller of its obligations hereunder or thereunder or
the consummation of the transactions contemplated hereby or thereby will result
in any such violation. Seller is in compliance with all material requirements
imposed in writing by any insurance carrier of Seller to the extent such carrier
is an insurer or indemnitor of the Property. The Premises are not subject to
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any notice of violation of law, municipal ordinance, orders or requirements
issued by any building department or other governmental agency or subdivision
having jurisdiction.
6.1.5 Permits. All Permits required by any federal,
state, or local law, rule or regulation and necessary for the operation of the
Property as currently being conducted have been obtained and are currently in
effect other than the issuance by the Virginia Alcoholic Beverage Control of a
new liquor license in the name of the Purchaser and the consents of third
parties to be delivered at the Closing. No registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers or other actions of any kind are required by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby (i) to avoid the loss of any Permit or the violation of any law,
regulation, order or other requirement of law, or (ii) to enable Purchaser to
continue the operation of the Property and the Business as presently conducted
after the Closing. The current use and occupation of any portion of the
Property does not violate any of, and, where applicable, is in material
compliance with, the Permits, any applicable deed restrictions or other
covenants, restrictions or agreements including without limitation, any of the
Permitted Exceptions, site plan approvals, zoning or subdivision regulations or
urban redevelopment plans applicable to the Premises.
6.1.6 Title to Assets. Seller has good and marketable
title to the Property free and clear of all Encumbrances other than the
Permitted Exceptions.
6.1.7 Leases. Each of the Leases are in full force
and effect and no party under either Lease, including Seller, is in default, or
has sent or received notice of default, in any respect of such Lease. Seller
has
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paid all rent and additional rent owing in respect of the Leases through, in the
case of the Braithwaite Lease, March 19, 1996 and in the case of the City Lease,
July 31, 1996. The Leases have not been amended or modified in any respect
except as set forth in the Recitals on the first page of this Agreement.
6.1.8 Contracts. Except as set forth on Exhibits C-1
and C-2, Seller is not a party to any leases, contracts, orders or agreements
relating to the Property or the Business (written or otherwise) (collectively,
"Contracts"). Exhibits C-1 and C-2 sets forth a full and complete description
of the Contracts described therein, and none of such Contracts have been amended
or modified except as reflected on said Exhibits. Seller is not holding any
security deposits under any of said Contracts. The Assumed Contracts are in
full force and effect and no party under any such Assumed Contract, including
Seller, is in default, or has sent or received notice of default, in any respect
of any such Assumed Contract. Seller has properly terminated or cancelled all
of the Contracts other than the Assumed Contracts, including without limitation
those described on Exhibit C-2.
6.1.9 Condition of the Improvements. There are no
material structural or mechanical defects in the Improvements, and there are no
leaks in any roof on any Improvement.
6.1.10 Condition of Personal Property. The Personal
Property is in good operating condition and repair, ordinary wear and tear
excepted, and is and as of the Closing Date will be adequate, suitable and
sufficient to meet the needs of and to operate the Property as currently
conducted.
6.1.11 Environmental Matters.
6.1.11.1 As used in this Agreement
"Hazardous Material" shall mean: (i) any "hazardous substance" as now defined
pursuant to
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the Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Section 9601(33); (ii) any "pollutant or contaminant" as
defined in 42 U.S.C. Section 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including
crude oil and any fraction thereof; (v) natural or synthetic gas usable for
fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910;
(vii) any asbestos, asbestos containing material, polychlorinated biphenyl
("PCB"), or isomer of dioxin, or any material or thing containing or composed of
such substance or substances; and (viii) any other pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of any Environmental
Law (as hereinafter defined) and any other toxic, reactive or flammable
chemicals.
6.1.11.2 There is no Hazardous Material
at, under or on the Premises and there is no ambient air, surface water,
groundwater or land contamination within, under, originating from or relating to
the Premises. Seller has not, and has not caused to be, manufactured,
processed, distributed, used, treated, stored, disposed of, transported or
handled any Hazardous Material at, on or under the Premises.
6.1.11.3 Seller has no obligation or
liability imposed or based upon any provision under any foreign, federal, state
or local law, rule, or regulation or common law, or under any code, order,
decree, judgment or injunction applicable to Seller or the Property or any
notice, or request for information issued, promulgated, approved or entered
thereunder, or under the common law, or any tort, nuisance or absolute liability
theory, relating to public health or safety, worker health or safety, or
pollution, damage to or protection to the environment, including without
limitation, laws relating to emissions, discharges, releases or threatened
releases of Hazardous
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Material into the environment (including without limitation, ambient air,
surface water, groundwater, land surface or subsurface), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
generation, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes (hereinafter
collectively referred to as "Environmental Laws").
6.1.11.4 Seller has not been subject to
any civil, criminal or administrative action, suit, claim, hearing, notice of
violation, investigation, inquiry or proceeding for failure to comply with, or
received notice of any violation or potential liability under the Environmental
Laws in respect of the Premises.
6.1.11.5 The Premises are not (a) listed
or proposed for listing on the National Priority List or (b) listed on the
Comprehensive Environmental Response, Compensation, Liability Information System
List ("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. Section 9601(9), or
any comparable list maintained by any foreign, state or local government
authority.
6.1.11.6 There are two underground
storage tanks at the Premises and Seller further warrants and represents that
the use and operation of underground storage tanks has been in compliance with
all Environmental Laws.
6.1.12 Tax Proceedings. There are no proceedings
pending regarding the reduction of real estate taxes or assessments in respect
of the Premises.
6.1.13 Utilities. All water, storm and sanitary sewer,
gas, electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Purchaser and the Premises are
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furnished by facilities of public utilities and the cost of installation of such
utilities has been fully paid.
6.1.14 Access. To the best of Seller's knowledge,
there are no federal, state, county, municipal or other governmental plans to
change the highway or road system in the vicinity of the Premises which could
materially restrict or change access from any such highway or road to the
Premises or any pending or threatened condemnation or eminent domain proceedings
relating to or affecting the Premises. All roads bounding the Premises are
public roads and the Deed is the only instrument necessary to convey to
Purchaser full access to and the right to use such roads freely as well as to
convey all rights appurtenant to the Premises in such roads.
6.1.15 Insurance Requirements. All requirements or
recommendations by any insurer or by any board of fire underwriters or similar
body in respect of the Property have been satisfied.
6.1.16 Litigation. There is no action or proceeding
(zoning or otherwise) or governmental investigation pending, or, to the best of
Seller's knowledge, threatened against, or relating to, Seller (insofar as it
relates to the Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any basis for any such
action, proceeding or investigation.
6.1.17 Assessments. There are no special or other
assessments for public improvements or otherwise now affecting the Premises nor
does Seller know of (a) any pending or threatened special assessments affecting
the Premises or (b) any contemplated improvements affecting the Premises that
may result in special assessments affecting the Premises.
6.1.18 Employee Agreements. There are no union or
employment contracts or agreements (written or oral) involving employees of
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Seller or its affiliates affecting the Property or the Business which will
survive the Closing. All employees of Seller have been terminated as of the
Closing Date.
6.1.19 Work at the Premises. No services, material or
work have been supplied to the Premises for which payment has not been made in
full.
6.1.20 Financial Condition. Seller has delivered to
Purchaser true and correct copies of the following: financial statements
consisting of balance sheets and income statements of Seller as of December 31,
1994 and the quarters ended March 31, 1995, June 30, 1995 and September 30,
1995. Each such balance sheet presents fairly the financial condition, assets
and liabilities of Seller as of its date; each such statement of income presents
fairly the results of operations of Seller for the period indicated. The
financial statements referred to in this Section 6.1.20 are in accordance with
the books and records of Seller. Since December 31, 1994 and since September
30, 1995:
(i) There has at no time been a material adverse
change in the financial condition, results of operations, businesses,
properties, assets, liabilities or future prospects of Seller, the Property or
Business;
(ii) The Business has been conducted in all
respects only in the ordinary course;
(iii) Seller has not suffered an extraordinary
loss (whether or not covered by insurance) or waived any right of substantial
value.
6.1.21 Full Disclosure. To the best knowledge of
Seller, none of the information supplied by Seller herein or in the exhibits
hereto contains any untrue statement of a material fact or omits to state a
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material fact required to be stated herein or necessary in order to make the
statements herein, in light of the circumstances under which they are made, not
misleading.
6.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
6.2.1 Organization; Power and Authority. Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
6.2.2 Due Authorization and Execution; Effect of
Agreement. The execution, delivery and performance by Purchaser of this
Agreement and the consummation by Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action required to
be taken on the part of Purchaser. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms. The
execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby will not, with
or without the giving of notice or the lapse of time, or both, (i) violate any
provision of any law, rule or regulation to which Purchaser is subject; (ii)
violate any order, judgment or decree applicable to Purchaser; or (iii) conflict
with or result in a breach of or a default under any term or condition of
Purchaser's Certificate of Incorporation or By-Laws or any agreement or other
instrument to which Purchaser is a party or by which it or its assets may be
bound, except in each case, for
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violations, conflicts, breaches or defaults which in the aggregate would not
materially hinder or impair the consummation of the transactions contemplated
hereby.
6.3 Survival. It shall be a condition to each party's
obligation to close hereunder that the representations and warranties of the
parties made in this Article 6 and the factual matters represented to Seller's
knowledge shall be true and correct as of the Closing Date. The representations
and warranties of the parties made in this Article 6 shall survive the Closing.
7. Post Closing Covenants. Seller hereby covenants and agrees with
Purchaser as follows:
7.1 Cooperation by Seller. Seller will use its best efforts
to secure all necessary consents, approvals, authorizations, exemptions and
waivers from third parties as shall be required in order to enable Seller to
effect the transactions contemplated hereby, and will otherwise use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with the terms and conditions hereof.
7.2 Further Assurances. At any time and from time to time
after the Closing Date, Seller shall, at the request of Purchaser, execute and
deliver any further instruments or documents and take all such further action as
Purchaser may reasonably request in order to transfer into the name of Purchaser
any and all Property contemplated to be sold pursuant to this Agreement and to
further consummate the transactions contemplated by this Agreement.
8. Brokers.
8.1 Seller and Purchaser warrant and represent to each other
that they dealt with no broker, finder or similar agent or party who or which
might be entitled to a commission or compensation on account of introducing the
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parties, the negotiation or execution of this Agreement and/or the closing of
the transaction provided for herein. Purchaser and Seller hereby respectively
agree to indemnify and hold harmless the other party from and against all loss,
liability, damage and expense (including, without limitation, attorneys' fees)
imposed upon or incurred by the other party by reason of any claim for
commissions or other compensation for bringing about this transaction by any
broker, finder or similar agent or party who claims to have dealt with the
indemnifying party in connection with this transaction. The provisions of this
Article 8 shall survive the Closing or any termination of this Agreement.
9. "As Is". Purchaser represents that it has inspected the
Property and is familiar with the physical condition thereof, and that it agrees
to accept the Property "as is", in its condition at the date of this Agreement.
10. Default. If Seller shall default in the performance of its
obligations under this Agreement, Purchaser shall be entitled to all rights and
remedies available at law or in equity, including specific performance. If
Purchaser shall default in the performance of its obligations under this
Agreement, the sole right and remedy of Seller shall be to terminate this
Agreement, and Seller shall not seek or obtain any money or other judgment
against Purchaser or any disclosed or undisclosed parent, principal, officer or
employee of Purchaser or against the assets or estate of Purchaser.
11. Costs and Fees. Documentary stamps for the Deed, deed transfer
or conveyancing taxes, if any, shall be payable by Seller, and in no event be
payable by Purchaser. Recording fees for the Deed shall be payable by
Purchaser. Purchaser shall also pay the expenses incurred in connection with
(a) the examination of title, (b) the issuance of a policy of title insurance
for Purchaser, and (c) a survey of the Property, if obtained by Purchaser. Any
other similar costs not expressly provided for elsewhere in this Agreement shall
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be divided and borne in accordance with the usual practices in the jurisdiction
where the Premises are located. It is agreed that no portion of the
consideration paid by Purchaser hereunder shall be allocated toward items of
personal property conveyed hereunder. The provisions of this Article shall
survive the Closing.
12. Indemnification.
12.1 Subject to the further provisions of this Article,
Seller shall protect, defend, hold harmless and indemnify Purchaser, its
officers, directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and expenses
whatsoever (including without limitation, reasonable professional fees and costs
of investigation, litigation, settlement, and judgment and interest) ("Losses")
that may be suffered or incurred by any of them arising from or by reason of (i)
any Retained Liability or other liability or obligation of Seller which is not
an Assumed Liability; (ii) the breach of any representation, warranty, covenant
or agreement of Seller contained in this Agreement or in any document or other
writing delivered pursuant to this Agreement; and (iii) any and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs and expenses
(including without limitation, interest, penalties, reasonable legal fees and
accounting fees) incident to the foregoing and the enforcement of the provisions
of this Section 12.1.
12.2 Subject to the further provisions of this Article,
Purchaser shall protect, defend, hold harmless and indemnify Seller, its
directors, officers, shareholders, employees and agents, and its successors and
assigns from, against and in respect of any and all Losses that may be suffered
or incurred by any of them arising from or by reason of (i) any of the Assumed
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Liabilities on and after the Closing Date, (ii) the breach of any
representation, warranty, covenant or agreement of Purchaser contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to the
foregoing and the enforcement of the provisions of this Section 12.2.
12.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a claim
that, if allowed (whether voluntarily or by judicial or quasi-judicial tribunal
or agency), would give rise to an obligation of another party (the "Indemnifying
Party") to indemnify the Indemnified Party under any provision of this
Agreement, before paying the same or agreeing thereto, the Indemnified Party
shall promptly notify the Indemnifying Party in writing of all such facts within
the Indemnified Party's knowledge with respect to such claim and the amount
thereof (a "Notice of Claim"). If, prior to the expiration of fifteen (15) days
from the mailing of a Notice of Claim, the Indemnifying Party shall request, in
writing, that such claim not be paid, the Indemnified Party shall not pay the
same, provided the Indemnifying Party proceeds promptly, at its or their own
expense (including employment of counsel reasonably satisfactory to the
Indemnified Party), to settle, compromise or litigate, in good faith, such
claim. After notice from the Indemnifying Party requesting the Indemnified
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall not
be liable to the Indemnified Party for any legal or other expense subsequently
incurred by the Indemnified Party in connection with the defense thereof.
- 22-
However, the Indemnified Party shall have the right to participate at its
expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide a
timely Notice of Claim as provided in this Section 12.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder; however,
the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 12.3.
12.4 For purposes of this Article, any assertion of fact
and/or law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make operational
an indemnification obligation hereunder, shall, on the date that such assertion
is made, immediately invoke the Indemnifying Party's obligation to protect,
defend, hold harmless and indemnify the Indemnified Party pursuant to this
Article.
12.5 The obligation of Seller under Section 12.1 shall be
satisfied first from the Escrow Fund (as defined in the Escrow Agreement), and,
if the Escrow Fund is inadequate to provide indemnification to Purchaser, then
from Seller directly.
13. Notices.
13.1 All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to give
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to the other hereunder shall be in writing and shall be delivered by hand,
overnight express carrier, or sent by registered or certified mail, return
receipt requested, postage prepaid, in either event, addressed to the parties at
their respective addresses first above set forth. A copy of any Notice given by
Seller to Purchaser shall simultaneously be given in either manner provided
above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New
York, New York 10176, Attention: Kenneth R. Koch, Esq. A copy of any Notice
given by Purchaser to Seller shall simultaneously be given in either manner
provided above to Thomas C. Broyles, 700 Pavilion Center, P.O. Box 626, Virginia
Beach, Virginia 23451. Notices given in the manner aforesaid shall be deemed to
have been given three (3) business days after the day so mailed, the day after
delivery to any overnight express carrier and on the day so delivered by hand.
Either party shall have the right to change its address(es) for the receipt of
Notices by giving Notice to the other party in either manner aforesaid. Any
Notice required or permitted to be given by either party may be given by that
party's attorney.
14. Miscellaneous.
14.1 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns. Purchaser shall
not assign this Agreement without the prior written consent of Seller, which
consent shall not be unreasonably withheld or delayed.
14.2 This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with, the laws of the State of New
York.
14.3 The captions or article headings in this Agreement are
for convenience only and do not constitute part of this Agreement.
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14.4 This Agreement has been fully negotiated by the parties
and rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.
14.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.
14.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
14.7 This Agreement may not be modified, changed,
supplemented or terminated, nor may any obligations hereunder be waived, except
by written instrument signed by the party to be charged or by its agent duly
authorized in writing or as otherwise expressly permitted herein.
14.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof or of any other agreement or provision herein contained. No extension
of the time for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or acts.
14.9 This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the same
original.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
OWL'S CREEK GOLF CENTER, INC.
By: /s/ Thomas C. Broyles
----------------------------
Name: Thomas C. Broyles
Title:
VIRGINIA BEACH FAMILY GOLF
CENTERS, INC.
By: /s/ Krishnan P. Thampi
----------------------------
Name: Krishnan P. Thampi
Title:
- 26 -
INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A-1 CITY LAND
EXHIBIT A-2 BRAITHWAITE LAND
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C-1 ASSUMED CONTRACTS
EXHIBIT C-2 RETAINED CONTRACTS
EXHIBIT D PERMITTED EXCEPTIONS
EXHIBIT E LANDLORD ESTOPPEL AND CONSENT TO ASSIGNMENT OF BRAITHWAITE LEASE
EXHIBIT F LANDLORD ESTOPPEL AND CONSENT TO ASSIGNMENT OF CITY OF VIRGINIA
BEACH LEASE
EXHIBIT G ESCROW AGREEMENT
EXHIBIT H REGISTRATION RIGHTS AGREEMENT
EXHIBIT A-1
CITY LAND
EXHIBIT A-1
All that certain tract pice or parcel of land, situate, lying and being in the
City of Virginia Beach, Virginia described as follows: BEGINNING at a point in
the western right-of-way line of South Birdneck Road, which point is 2,810.76
feet in a northerly direction from the intersection of South Birdneck Road and
Bells Road; thence S 60 degrees 11'14"W 413.14 feet to a point; thence S 59
degrees 48'00"W 489.60 feet to a point; thence S 59 degrees 14'43"W 276.28 feet
to a point; thence N 28 degrees 16'27"W 100.32 feet to a point; thence N 11
degrees 10'25"W 132.60 feet to a point; thence N 20 degrees 17'20"W 132.50 feet
to a point; thence N 44 degrees 17'08"W 131.98 feet to a point; thence N 68
degrees 00'00"W 248.73 feet to a point; thence N 66 degrees 31'35"W 120.05 feet
to a point; thence N 49 degrees 46'11"W 139.21 feet to a oint; thence N 37
degrees 00'00" 166.39 feet to a point; thence N 61 degrees 43'37"W 115.71 feet
to a point; thence N 67 degrees 57'49"W 154.80 feet to a point; thence S 81
degrees 43'37"W 115.71 feet to a point; thence N 67 degrees 57'49"W 184.80 feet
to a point; thence S 81 degrees 54'10"W 140.87 feet to a point; thence S 60
degrees 46'06"W 81.77 feet to a point; thence N 17 degrees 59'19"W 84.50 feet to
a point; thence N 83 degrees 11'32"E 50.98 feet to a point; thence N 17 degrees
59'19"W 200.21 feet to a point; thence N 83 degrees 39'27"E 2,279.62 feet to a
point in the western right-of-way line of South Birdneck Road; thence S 11
degrees 27'19"E 157.11 feet to a point; thence along a curve to the right having
a radius of 1,402.50 feet an arc distance of 636.73 feet to the point of
Beginning.
EXHIBIT A-2
BRAITHWAITE LAND
- 3 -
EXHIBIT A-2
All that certain lot, piece or parcel of land being known and designated as
40.899 acres, as shown on that certain plat entitled "Exhibit Plat for Owl's
Creek Golf Center, Inc.," which said plat is dated December, 1986 and made by
John E. Sirine and Associates, and being further identified as the Eastern
portion of parcel 478, being that portion of Parcel 478 located East of the
"100' VEPCO Easement, (M.B. 53, P.44)", as shown on that plat recorded in the
Clerk's Office of the Circuit Court of the City of Virginia Beach in Map Book
162, page 15, et seq.
LESS AND EXCEPT that portion of the above described property conveyed to the
City of Virginia Beach from Robert H. Braithwaite, Jr., et ux, et al, by Deed of
Dedication dated October 1, 1987, duly recorded in the aforesaid Clerk's Office
in Deed Book 2687, at page 2199.
EXHIBIT B
PERSONAL PROPERTY
- 4 -
PRO SHOP - EQUIPMENT AND FIXTURES:
Miscellaneous Golf Clubs for rent Signs
Fixture display Telephone equipment
Club pro Time clock
Window blinds Cash register
Carpet Display fixtures
Vacuum Security System
SNACK BAR - EQUIPMENT AND FIXTURES:
Refrigerators Sneeze guard
Walk in box freight Steamer
Walk in refrigerators Slicer
Ice machine Cash register
Marketer merchandiser cooler 16 Tables
Two freezers (upright) 4 Tables
Utility sink and drainboard 40 Chairs
2 Door over Television
Roll warmer Griddle
Hot Plate Hot dog grill
Updrafted equipment stand Updraft unit 66" with stand
Sandwich display case Utensils
Snack Bar Equipment Carpet
OFFICE:
Safe
2 Desks
2 Cabinets
Credenza
Copying machine
GOLF COURSE MAINTENANCE EQUIPMENT:
Backhoe - Cat 416 #5PC0167 Dump truck '79 Ford
Tools (misc.) chain saw (McCullock) Toro fringe mower
(0432761005)
Chain saw (Eager Beaver) National Mower riding mower
(vertical)
John Deere 1250 w/loader tractor
(CH 30780002010)
1 used Toro Sand Pro (08890-40103)
1 used Jacobsen Green Mower walk behind
22" #62208-741
Ryan Greensairs
Ryan Jr. sod cutter Greensmaster Toro 1000
Walker
Toro GM 3000 Greens Mower (04350-9181) Truck - Isuzu 1990 (pickup)
Jacobsen Greensking Mower IV Fringe Mower engine
John Deere #935 (JD72) #MDF935X475232 Toro 3250 Groundsmaster
(Model 30988)
John Deere 756 Turf Mower 2 Desk
John Deere 1500 spray tank vehicle 2 Chairs
John Deere AMT 600 Leaf blower
2" T-10 Meter gallons - flow meter Compressor
Lely Spreader #9410639 Spreader Epoxy - Lesco
Gang mower (Pull) 2 Weed eaters (Stihl 44)
DRIVING RANGE EQUIPMENT:
Washer-dryer Automatic T-up machine
Wittex electric ball striper Wittex racks and displays
Wittex ball hawk Wittex small equipment
Range baskets Wittex ball washer brush
model
Conversion kit picker Display case
Range station divider Range case screen
Repair equipment for clubs Golf ball picker
Twister ball washer Trash receptacles
Bag Caddie Yamaha range car
Range mats Range ball washer
EXHIBIT C-1
ASSUMED CONTRACTS
1. Deed of Lease, dated March 17, 1987, between The City of Virginia Beach,
Virginia, as lessor, and Owl's Creek Golf Center, Inc., as lessee, as
corrected by the Correction to Deed of Lease, dated December 9, 1992, and
as amended by the Amendment to Deed of Lease, dated November 30, 1994.
2. Deed of Lease, dated as of July 31, 1986, between Robert H. Braithwaite,
Jr. and Nancy F. Braithwaite, as lessor, and Owl's Creek Golf Center, Inc.,
as lessee.
3. Master Lease Agreement, dated as of April 1, 1995 by and between Eastern
Golf Car, Inc., as lessor and Owl's Creek Golf Course, as lessee, pursuant
to which lessee leased golf cars from the lessee for a period of 60 months
commencing on April 1, 1995. Monthly rent is in the amount of $2,997.78,
payable on the first day of each month.
- 5 -
EXHIBIT C-2
RETAINED CONTRACTS
1. Agreement between Associates Commercial Corp. and Owl's Creek Golf Center,
Inc., dated May 25, 1995, as assigned to Associates Leasing, Inc.
- 6 -
EXHIBIT D
PERMITTED EXCEPTIONS
1. Easement granted Virginia Electric and Power Company by instrumentrecorded
in the Clerk's Office of the Circuit Court of the City of Virginia Beach
in Deed Book 222, page 404 and in Map Book 16, page 13 along Birdneck Road
(As to Parcel Two) as shown on survey made by John E. Sirine & Associates,
Ltd. dated February 29, 1996.
2. Real estate taxes accruing from the beginning of the second half of the
fiscal year 1995-1996, not yet due and payable, and all other taxes for
subsequent years, not yet due and payable and possible roll back taxes if
this property is not under Virginia Land Use Program.
3. Storm water taxes accruing from the beginning of the thirdquarter of the
fiscal year 1995-1996 as to Parcel One and the first quarter of the fiscal
year 1996-1997 as to Parcel Two; delinquent storm-water fees for the
second quarter of the fiscal year 1995-1996 plus penalties and interest
for Parcel One, not yet due and payable, and all other taxes for
subsequent years, not yet due and payable.
4. Easement granted Virginia Electric and Power Company by instrument
recorded in the aforesaid Clerk's Office in Deed Book 2734, page 418 and
dated April 13, 1988 which is located along Northeasterly lot lines as
shown on survey made by John E. Sirine Associates, Ltd. dated
February 29, 1996.
5. Terms and conditions of the Lease dated March 17, 1987 by and between the
City of Virginia Beach, Virginia, and Owl's Creek Golf Course, Inc.,
recorded December 15, 1992 in the Clerk's Office of the Circuit Court of
the City of Virginia Beach in Deed Book 2620, at page 586. Correction to
Deed of Lease dated December 9, 1992 as recorded in Deed Book 3161, page
1033. Amendment to Lease dated November 30, 1994 as recorded in Deed Book
3476, page 1451.
6. Terms and conditions of the Lease dated July 31, 1986, by and between
Robert H. Braithwaite, Jr. and Nancy Braithwaite, husband and wife, and
Owl's Creek Golf Center, Inc., recorded October 5, 1987 in the Clerk's
Office of the Circuit Court of the City of Virginia Beach in Deed Book
2699, at page 971.
7. Reservation of Air Rights as recorded in instrument in the aforesaid
Clerk's Office in Deed Book 2303 at page 1009, and shown in Map Book 162,
at page 15, which document prohibits
- 7 -
without limitation any par three golf courses or miniature golf courses.
8. Deed of Dedication for widening of Birdneck Road as recorded in the
aforesaid Clerk's Office in Deed Book 2687 at page 2199.
9. One hundred (100) foot Vepco easement as shown in Map Book 53, at page 49.
(As to Parcel One)
10. Twenty foot (20') utility easement, as shown in Map Book 114, page 36, and
are recorded in Deed Book 1593, at page 692.
11. A portion of this property may be deemed wetlands by the Army Corps of
Engineers, and may be subject to regulation.
12. Six foot (6') drainage easement as reserved in Deed Book 2679 at page 0971
and located along southwesterly corner of lot lines. (As to Parcel Two)
13. Parcel One is under the Virginia Land Use Program and may be subject to
Roll Back Taxes, if assessed.
14. Parcel Two is under the Virginia Land Use Program and may be subject to
Roll Back Taxes, if assessed.
15. 125' Drainage Easement granted by instrument recorded in the aforesaid
Clerk's Office in Deed Book 909, page 420 and located on northwesterly
corner of lot lines as shown on survey made by John E. Sirine and
Associates, Ltd. dated February 29, 1996.
16. 75' Drainage Easement granted by instrument recorded in the aforesaid
Clerk's Office in Deed Book 1242, page 183 and located along northwesterly
corner of lot lines as shown on survey made by John E. Sirine and
Associates, Ltd. dated February 29, 1996.
17. 100' Drainage Easement granted by instrument recorded in the aforesaid
Clerk's Office in Deed Book 1242, page 183 and located along northwesterly
corner of lot lines as shown on survey made by John E. Sirine and
Associates, Ltd.
18. 20' Utility Easement granted by instrument recorded in the aforesaid
Clerk's Office in Deed book 1593, page 692 and recorded in Map Book 114,
page 36 and located along northeasterly corner of lot lines as shown on
survey made by John E. Sirine and Associates, Ltd. dated February 29,
1996.
19. Survey entitled, "Owl's Creek Golf Center, Inc.," prepared for Virginia
Beach Family Golf Centers, Inc. dated February 29, 1996 shows the
following matters which affect the property:
a. Borrow Pit
b. Lake(s)
c. Sign(s)
d. Pole(s)
- 8 -
e. Wooden Fence(s)
f. Concrete cart Path
g. Wooden steps and bridges
h. Irrigation boxes
i. Well
j. Virginia Power Transformer Pad
k. Overhead wire(s)
l. Concrete curb(s)
m. Wooden retaining wall
n. Wooden bridges
- 9 -
EXHIBIT E
LANDLORD ESTOPPEL AND CONSENT TO ASSIGNMENT
OF BRAITHWAITE LEASE
- 9 -
EXHIBIT E
LANDLORD ESTOPPEL AND
CONSENT TO ASSIGNMENT OF LEASE
THIS LANDLORD ESTOPPEL AND CONSENT TO ASSIGNMENT OF LEASE ("Estoppel") is
made as of this ___ day of _____________________, 1996, by NANCY F. BRAITHWAITE
("Landloard") [index as grantor] in favor of OWL'S CREEK GOLF CENTER, INC., a
Virginia corporation ("Tenant") [index as grantor and grantee] and VIRGINIA
BEACH FAMILY GOLF CENTERS, INC., a Delaware corporation ("Assignee") [index as
grantee], whose address is 225 Broadhollow Road, Suite 106E Melville, New York
11747.
RECITALS:
1. Landlord and Tenant entered into that certain Deed of Lease (the "Deed
of Lease") dated July 31, 1986, a copy of which is recorded in the Office of the
Clerk of the Circuit Court of the City of Virginia Beach, Virginia (the "Clerk's
Office"), in Deed Book 2679, at page 971.
2. Tenant and Assignee have entered into that certain Purchase Agreement
dated ____ day of ____________________, 1996, pursuant to which Tenant desires
to sell to Assignee Tenant's business, including, among other things, Tenant's
interest in the lease.
3. Landlord desires to consent to the assignment of the Tenant's interest
in the Lease to Assignee and to make certain certifications relating to the
Lease, all as is more fully set forth below.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), cash in hand paid, and other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged by the parties, the
parties hereto do hereby certify and agree as follows:
1. Landlord's Certification. Landlord hereby certifies that:
1.1 A true, correct, and complete copy of the Lease, as amended or
modified, is attached to this Estoppel as Exhibit A. The Lease is the only
document evidencing the agreement, oral or written, of Landlord and Tenant with
respect to the premises covered thereby (the "Premises").
1.2 All rent and any and all other sums, charges or liabilities
(collectively, "Rent") due and owing under the Lease as of this date have been
paid in full. Rent paid to date covers the period expiring on March 20, 1996.
1.3 The Lease is in full force and effect and, as of the date of this
Estoppel there are (a) no defaults, or events which with the giving of notice or
passage of time, or both, would become defaults, by Landlord in connection with
the Lease; and (b) no defaults or events
1
which, with the giving of notice or passage of time, or both, would become
defaults, by Tenant in connection with the Lease.
1.4 The date of the expiration of the term of the Lease is March 20,
2027.
1.5 Annual Rent currently payable by Tenant under the Lease for the
period expiring February 27, 1997, is equal to $25,000.00. The payments
specified in this Section 1.5 and Section 3 of the Lease are the only payments
which the Tenant is required to make to Landlord under the Lease.
1.6 Landlord is the fee owner of the Premises and is the landlord
under the Lease.
1.7 Nancy F. Braithwaite is the sole owner of the property resulting
from the death of her husband Robert H. Braithwaite, Jr.
2. Consent to Assignment. Landlord does hereby ratify and adopt the Lease
and agrees to and does hereby unconditionally consent to the assignment and/or
sale of Tenant's interest under the lease from Tenant to Assignee; provided,
however that Landlord does not waive its rights to consent to any future
assignment of the Lease by Assignee. Landlord shall not seek to hold Assignee
liable for any Rent for the period prior to the assignment of the Lease.
Landlord's consent shall not release Tenant from its obligations under the
lease.
3. Additional Documentation. Landlord agrees that it shall cooperate with
Assignee in obtaining all consents and waivers from any lender having a lien on
the Premises necessary or appropriate to carry out the purposes and intents
hereof.
WITNESS the following duly authorized signature and seal:
__________________________________
Nancy F. Braithwaite
2
STATE OF VIRGINIA
CITY OF _______________________, to-wit:
The foregoing instrument was acknowledged before me in ___________________,
Virginia, this ____ day of __________________________, 1996, by Nancy F.
Braithwaite.
___________________________________
Notary Public
My commission expires:
3
EXHIBIT "A"
LEASE
[Attach a true, complete, and accurate copy of entire Lease, as amended and
modified, and for Assignee's reference, if applicable, copies of all relevant
ground lease or sublease documentation (and any assignments thereof)]
4
EXHIBIT F
LANDLORD ESTOPPEL AND CONSENT TO THE ASSIGNMENT
OF CITY OF VIRGINIA BEACH LEASE
- 10 -
EXHIBIT F
LANDLORD ESTOPPEL AND
CONSENT TO ASSIGNMENT OF LEASE
THIS LANDLORD ESTOPPEL AND CONSENT TO ASSIGNMENT OF LEASE ("Estoppel") is
made as of this 1st day of March, 1996, by THE CITY OF VIRGINIA BEACH, VIRGINIA,
a municipal corporation ("Landlord") [index as grantor] in favor of OWL'S CREEK
GOLF CENTER, INC., a Virginia corporation ("Tenant") [index as grantor and
grantee] and VIRGINIA BEACH FAMILY GOLF CENTERS, INC., a Delaware corporation
("Assignee") [index as grantee], whose address is 225 Broadhollow Road, Suite
106E, Melville, New York 11747.
RECITALS:
1. Landlord and Tenant entered into that certain Deed of Lease (the "Deed
of Lease") dated March 17, 1987, a copy of which is recorded in the Office of
the Clerk of the Circuit Court of the City of Virginia Beach, Virginia (the
"Clerk's Office"), in Deed Book 2620, at page 586. The Deed of Lease was
corrected pursuant to Correction to Deed of Lease (the "Correction") dated
December 9, 1992, by and between Landlord and Tenant, a copy of which is
recorded in the Clerk's Office in Deed Book 3161, at page 1033. The Deed of
Lease, as corrected by the Correction, was amended pursuant to Amendment to Deed
of Lease (the "Amendment") dated November 30, 1994, by and between Landlord and
Tenant, a copy of which is recorded in the Clerk's Office in Deed Book 3476 at
page 1451. (The Deed of Lease, the Correction and the Amendment are hereinafter
collectively referred to as the "Lease").
2. Tenant and Assignee have entered into that certain Purchase Agreement
dated 6th day of March, 1996, pursuant to which Tenant desires to sell to
Assignee Tenant's business, including, among other things, Tenant's interest in
the lease.
3. The Lease provides that Tenant may not assign its interest in the Lease
without the prior written consent of Landlord. Landlord desires to consent to
the assignment of the Tenant's interest in the Lease to Assignee and to make
certain certifications relating to the Lease, all as is more fully set forth
below.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), cash in hand paid, and other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged by the parties, the
parties hereto do hereby certify and agree as follows:
1. Landlord's Certification. Landlord hereby certifies that:
1.1 a true, correct, and complete copy of the Lease, as amended or
modified, is attached to this Estoppel as Exhibit A. The Lease is the only
document evidencing the agreement, oral or written, of Landlord and Tenant with
respect to the premises covered thereby (the "Premises").
1
1.2 All rent and any and all other sums, charges or liabilities
(collectively, "Rent") due and owing under the Lease as of this date have been
paid in full. Rent paid to date covers the period expiring on July 31, 1996.
1.3 The Lease is in full force and effect and, as of the date of this
Estoppel, there are (a) no defaults, or events which with the giving of notice
or passage of time, or both, would become defaults, by Landlord in connection
with the Lease; and (b) no defaults or events which, with the giving of notice
or passage of time, or both, would become defaults, by Tenant in connection with
the Lease.
1.4 The date of the expiration of the term of the Lease is March 31,
2027.
1.5 Annual Rent currently payable by Tenant under the Lease for the
period expiring on July 31, 1996, is equal to $18,000.00 and such taxes as may
be assessed. The payments specified in this Section 1.5 and in Section 3 of the
Lease are the only payments which the Tenant is required to make to Landlord
under the Lease.
1.6 Landlord is the fee owner of the Premises and is the landlord
under the Lease.
2. Consent to Assignment. Landlord does hereby ratify and adopt the Lease
and agrees to and does hereby unconditionally consent to the assignment and/or
sale of Tenant's interest under the Lease from Tenant to Assignee; provided,
however that Landlord does not waive its rights to consent to any future
assignment of the Lease by Assignee. Landlord shall not seek to hold Assignee
liable for any Rent for the period prior to the assignment of the Lease.
Landlord's consent shall not release Tenant from its obligations under the
Lease.
3. Additional Documentation. Landlord agrees that it shall cooperate with
Assignee in obtaining all consents and waivers from any lender having a lien on
the Premises necessary or appropriate to carry out the purposes and intents
hereof.
WITNESS the following duly authorized signature and seal:
THE CITY OF VIRGINIA BEACH, VIRGINIA
a municipal corporation
By: /s/ C. ORAL LAMBERT, JR.
-----------------------------------
SEAL Its: CHIEF OF STAFF
-----------------------------------
2
COMMONWEALTH OF VIRGNIA
AT LARGE, to-wit:
The foregoing instrument was acknowledged before me in Va. Beach, Virginia,
this 1st day of March, 1996, by C. Oral Lambert, Jr., Chief of Staff of the City
of Virginia Beach, Virginia, a municipal corporation, on its behalf.
/s/ Karen M. Akers
---------------------------------------
Notary Public
My commission expires: 1/31/99
3
EXHIBIT G
ESCROW AGREEMENT
- 11 -
EXHIBIT G
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of March __, 1996, among FAMILY GOLF CENTERS,
INC., a Delaware corporation with executive offices at 225 Broadhollow Road,
Melville, New York 11747 ("FGC"), OWL'S CREEK GOLF CENTER, INC., a Virginia
corporation with executive offices at 700 Pavilion Center, P.O. Box 626,
Virginia Beach, Virginia 23451 (the "Seller") and CONTINENTAL STOCK TRANSFER &
TRUST COMPANY incorporated under the laws of the United States of America with
executive offices at 2 Broadway, New York, New York 10004 (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution hereof, the Seller, FGC and
Virgnia Beach Family Golf Centers, Inc., a wholly-owned Delaware subsidiary of
FGC ("Subsidiary"), are consummating the transactions contemplated by the
Purchase Agreement, dated as of March __, 1996 (the "Purchase Agreement"), among
the Seller and Subsidiary, pursuant to which, among other things, Subsidiary
shall purchase certain assets of Seller in exchange for (i) $1,800,000.00 in
cash, and (ii) 50,000 shares of common stock, par value $.01 per share (the "FGC
Common Stock").
WHEREAS, pursuant to Section 2.1 of the Purchase Agreement, 16,667 shares
(the "Escrowed Property") of the FGC Common Stock are required to be placed into
an escrow account (the "Escrow Account") to be maintained by the Escrow Agent
against any claims for indemnity under the Purchase Agreement; and
WHEREAS, this is the Escrow Agreement referred to in Section 5 of the
Purchase Agreement. Capitalized terms used in this Escrow Agreement and not
otherwise defined herein shall have the respective meanings given to them in the
Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
I. Escrow.
Section 1.01 Appointment of Escrow Agent. The Seller and FGC hereby
appoint the Escrow Agent, and the Escrow Agent hereby agrees to serve, as Escrow
Agent in accordance with, and pursuant to, this Agreement.
Section 1.02 Operation of Escrow Account. The parties hereto agree that,
subject to Section 1.03 hereof, the Escrow Account shall operate as follows:
(a) As soon as reasonably practicable following the Effective Time,
FGC shall deposit, in accordance with Section 1.03 hereof, into the Escrow
Account an aggregate of 16,667 shares of FGC Common Stock pursuant to the
Purchase Agreement.
(b) At any time prior to March __, 1997, FGC shall be entitled to give
a notice to the Escrow Agent, signed by its President or any Vice President
(with a copy to the Seller), (i) to the effect that there has been an event
entitling the Subsidiary to indemnification from the Seller pursuant to the
Purchase Agreement, which notice shall specify the amounts owed by the Seller
pursuant to the Purchase Agreement, the calculation of such amounts and the
basis therefore.
(c) Twenty days after the Escrow Agent has received a notice
pursuant to Section 1.02(a) (or, if not a business day, on the next business day
following such twentieth day) it shall deliver to FGC the Escrowed Property (the
"Escrowed Property") to be valued as set forth in Section 1.02(e) in the amounts
specified in such notice unless the Seller shall have notified the Escrow Agent
(with a copy to FGC) in writing before such date that it disagrees with the
Subsidiary's determination that it is entitled to indemnification with respect
to the Purchase Agreement, which notice shall be set forth in reasonable detail
the basis for such disagreement.
(d) Should any dispute arise with respect to the delivery, ownership,
or right of possession of the Escrowed Property, the Escrow Agent, as more fully
set forth in Section (IV(xi), is authorized and directed to retain in its
possession without liability to anyone all or any part of the Escrowed Property
until such dispute shall have been settled either by mutual agreement by the
parties concerned or by a final order, decree, or judgment of a court of
competent jurisdiction in the United States of America and time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings, and may, in its
discretion, deposit such Escrowed Property with a court of competent
jurisdiction in the United States of America which is hearing such dispute.
(e) For purposes of this Agreement, the value of each share of FGC
Common Stock which is part of the Escrowed Property shall be deemed equal to the
Current Market Price (as hereinafter defined).
(f) The "Current Market Price" per share of FGC Common Stock shall
mean the average of the daily closing sales price as reported on the NASDAQ
Stock
- 3-
Market for the five consecutive trading days immediately preceding the date of
determination.
Section 1.03 Distribution of Escrowed Property. Unless a notice under
Section 1.02(a) has been given and Escrowed Property in satisfaction of such
notice has not been delivered to FGC, either because the 20-day period has not
yet run out or because a dispute relating to the claim made by such notice is
then pending, the Escrowed Property or such portion of it as at the time remains
in escrow, together with all dividends and distributions received by the Escrow
Agent with respect thereto, shall be returned to the Seller on March __, 1997.
Section 1.04 Termination of Escrow Account. This Agreement and the Escrow
Account will terminate at 5:00 P.M., New York City local time, on the date on
which all of the shares of FGC Common Stock contained therein shall be
distributed as set forth above.
Section 1.05 Voting. The shares of FGC Common Stock held in the Escrow
Account shall be voted by the Seller or its designee.
II. Deposit of Escrowed Property.
Section 2.01 Deposit of Escrowed Property. As soon as reasonably
practicable following the Closing Date (as defined in the Purchase Agreement),
FGC shall, as set forth in Section 1.02, deposit with the Escrow Agent 16,667
shares of FGC Common Stock.
- 4 -
III. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b) sent by
certified mail return receipt requested, or (c) sent by over-night delivery with
proper postage prepaid, and addressed as follows:
If to FGC to:
225 Broadhollow Road
Melville, New York 11747
(516) 694-1666
If to Seller to:
c/o Thomas C. Broyles
700 Pavilion Center
P.O. Box 626
Virginia Beach, Virginia 23451
(804) 491-4000
If to the Escrow Agent, to:
2 Broadway
New York, New York 10004
(212) 509-4000
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. Except as
otherwise provided herein, no notice or communication shall be effective until
received or refused.
IV. Concerning the Escrow Agent.
To induce the Escrow Agent to act hereunder, it is further agreed by each
of the Seller and FGC that:
(i) The Escrow Agent shall not be under any duty to give the Escrowed
Property held by it hereunder any greater degree of care than it gives
- 5-
its own similar property and shall not be required to invest any funds held
hereunder except as directed in this Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(ii) This Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Agreement.
(iii) the Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions, damages, and
expenses, including reasonable attorney's fees and disbursements, arising out
of, and in connection with, this Agreement. Without limiting the foregoing, the
Escrow Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including, without limitation, any liability for any delays
(not resulting from gross negligence or willful misconduct) in the investment or
reinvestment of the Escrowed Funds, or any loss of interest incident to any such
delays.
(iv) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument, or other writing delivered
- 6 -
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(v) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in good faith and in accordance with such
advice.
(vi) The Escrow Agent does not have any interest in the Escrowed Funds
deposited hereunder, but is serving as escrow holder only. Any payments of
income from the Escrow Account shall be subject to withholding regulations then
in force with respect to United States taxes.
This paragraph (vi) and paragraph (iii) of this Article V shall survive
notwithstanding any termination of this Agreement or the resignation of the
Escrow Agent.
(vii) The Escrow Agent makes no representation as to the validity,
value, genuineness, or the collectibility of any security or other documents or
instrument held by, or delivered to, it.
(viii) The Escrow Agent shall not be called upon to advise any party
as to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(ix) The Escrow Agent (and any successor escrow agent) at any time
- 7 -
may be discharged from its duties and obligations hereunder by the delivery to
it of notice of termination signed by FGC and the Seller or at any time may
resign by giving written notice to such effect to FGC and the Seller. Upon any
such termination or resignation, the Escrow Agent shall deliver the Escrowed
Property to any successor escrow agent jointly designated by the other parties
hereto in writing, or to any court of competent jurisdiction if no such
successor escrow agent is agreed upon, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The termination or resignation of the Escrow Agent
shall take effect on the earlier of (A) the appointment of a successor
(including a court of competent jurisdiction) or (B) the day that is 30 days
after the date of delivery: (1) to the Escrow Agent of the other parties' notice
of termination or (2) to the other parties hereto of the Escrow Agent's written
notice of resignation. If at that time the Escrow Agent has not received a
designation of a successor escrow agent, the Escrow Agent's sole responsibility
after that time shall be to keep the Escrowed Property safe until receipt of a
designation of successor escrow agent or a joint written disposition instruction
by the other parties hereto or an enforceable order of a court of competent
jurisdiction.
(x) The Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
(xi) In the event of any disagreement among or between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Property, or in the event that the Escrow Agent in good faith
- 8 -
is in doubt as to what action it should take hereunder, the Escrow Agent shall
be entitled to retain the Escrowed Property until the Escrow Agent shall have
received (A) a final and non-appealable order of a court of competent
jurisdiction directing delivery of the Escrowed Property or (b) a written
agreement executed by the other parties hereto directing delivery of the
Escrowed Property, in which event the Escrow Agent shall disburse the Escrowed
Property in accordance with such order or agreement. Any court order referred to
in (A) above all be accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Escrow Agent to the effect that said court order is
final and non-appealable. The Escrow Agent shall act on such court order and
legal opinions without further question.
(xii) As consideration for its agreement to act as Escrow Agent as
herein described, FGC, on the one hand, and the Seller, on the other hand,
agrees to share equally the Escrow Agent fees determined in accordance with the
terms set forth on Exhibit A hereto (and made a part of this Escrow Agreement as
if herein set forth). In addition, FGC and the Seller agrees to reimburse the
Escrow Agent for all reasonable expenses, disbursements, and advances incurred
or made by the Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses, and disbursements of its counsel).
(xiii) No publicly distributed material or other matter in any
language (including, without limitation, notices and reports) which mentions the
Escrow Agent's name or the rights, powers, or duties of the Escrow Agent shall
be issued by the other parties hereto or on such parties' behalf undless the
Escrow Agent shall first have given its specific written consent thereto.
- 9 -
V. Miscellaneous.
Section 5.01 Binding Effect. This Escrow Agreement shall be binding upon,
and inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators, and representatives, and shall
not be enforceable by, or inure to the benefit of, any other third party, except
as provided in paragraph (ix) of Article V with respect to the termination of,
or resignation by, the Escrow Agent. No party may assign any of its rights or
obligations under his Agreement without the written consent of the other
parties.
Section 5.02 Choice of Law. This Agreement shall be construed in
accordance with, and governed by, the internal law of the State of Delaware
(without reference to its rules as to conflicts of law).
Section 5.03 Modification. This Agreement may only be modified by a
writing signed by all of the parties hereto.
Section 5.04 Headings. The section headings herein are for convenience
only and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles are to Sections and Articles, respectively,
contained herein.
Section 5.05 Counterparts. This Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and the
same instrument; provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a single copy of this
Agreement which shall constitute an original.
- 10 -
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
By: ____________________________
Name:
Title:
OWL'S CREEK GOLF CENTER, INC.
By: _____________________________
Name:
Title:
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: _____________________________
Name:
Title:
- 11 -
EXHIBIT A
Escrow Agent Fees: $100.00 per month
- 12 -
EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
- 12 -
<PAGE>
EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
Agreement dated as of March , 1996, between certain stockholders of OWL'S
CREEK GOLF CENTER, INC. listed on Schedule I hereto (the "Holders") and
FAMILY GOLF CENTERS, INC., with an address at 225 Broadhollow Road, Melville,
New York 11747 (the "Company").
WHEREAS, the holders are the holders of an aggregate of 50,000 shares (the
"Shares") of the common stock, par value $.01 per share, of the Company
("Common Stock");
WHEREAS, the Holders desire to have certain registration rights under the
securities laws, and the Company desires that the Holders have such
registration rights;
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the parties hereby agree as
follows:
1. If, at any time during the period commencing six months from the date
hereof and terminating on the date on which the Shares become saleable under
Rule 144 promulgated under the Act (as defined below), the Company shall
determine to file any registration statement, or any post-effective amendment
to a registration statement, under the Securities Act of 1933 (the "Act"),
covering equity securities of the Company (other than registration statements
on Form S-8 or S-4 or any other form not generally available for the
registration of securities for sale to the public) for its own account or for
the account of others, the Company shall advise Thomas C. Broyles, as
<PAGE>
representative of the Holders (the "Representative"), by written notice at
least 10 business days prior to any filing, and shall, upon the request of
the Holders, and at the expense of the Company, include in any such
registration statement, or any such post-effective amendment to a
registration statement, all of the Registrable Securities (as hereinafter
defined) that the Representative has requested in writing to be registered,
provided that such written request is delivered by the Representative to the
Company within ten business days of the Representative's receipt of notice
from the Company. As used in this Agreement, Registrable Securities shall
mean (i) the Shares, and (ii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any convertible security, option,
warrant right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the
Shares. All costs and expenses of such registration statement shall be borne
by the Company, except underwriting discounts or commissions applicable to
any of the Registrable Securities sold by the Holders and any counsel to the
Holders. The Company shall not be required to register securities of the
Holders on more than one occasion; provided that if the Holders have been
prevented from selling all of the Shares Holders wished to sell because of
limitations imposed under paragraph (c) of this Section 1, then the Holders
shall be entitled to include the Shares in one or more additional
registration statements under the terms of this Section 1 until the Holders
have been able to sell all of the Shares of Common Stock Holders wishes to
sell.
(a) The Company shall supply prospectuses and such other documents as the
Holders may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities, use its reasonable best
efforts to register and qualify any of the Registrable
2
<PAGE>
Securities for sale in a reasonable number of states and do any and all other
acts and things which may be necessary or desirable to enable the Holders to
consummate the public sale or other disposition of the Registrable Securities
subject to the rights of others with similar rights.
(b) The Company shall also furnish indemnification in the manner provided
in Section 2 hereof, except that the maximum amount of such indemnification
shall be limited to the amount of proceeds received by each of the Holders
from the sale of the Registrable Securities. The Holders shall furnish
information and indemnification as set forth in Section 2 hereof, except that
the maximum amount which may be recovered from the Holders shall be limited
to the amount of proceeds received by each of the Holders from the sale of
the Registrable Securities.
(c) In connection with any offering involving an underwriting of shares of
the Company's Common Stock, the Company shall not be required under Section 1
hereof to include any of the Holders' securities in such underwriting unless
the Holders accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons entitled to
select the underwriters), and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize or limit the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable
Securities,
3
<PAGE>
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata, subject to prior existing rights, among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by such selling stockholders).
(d) Notwithstanding anything contained herein to the contrary, the
Registrable Securities shall not include the shares held in escrow pursuant
to the Escrow Agreement, dated as of even date herewith, among the Company,
Owl's Creek Golf Center, Inc. and the Escrow Agent (as therein defined) (the
"Escrow Agreement") until such time, if any, and only to the extent that,
such shares are released from escrow and delivered to the Representative in
accordance with the terms of such Escrow Agreement.
2. (a) Whenever pursuant to Section 1, a registration statement relating
to any of the Registrable Securities is filed under the Act, amended or
supplemented, the Company shall, to the extent permitted by law, indemnify
and hold harmless Holders, and each person, if any, who controls (within the
meaning of the Act) Holders, and each underwriter (within the meaning of the
Act) of such securities and each person, if any, who controls (withing the
meaning of the Act) any such underwriter, against such losses, claims,
damages, liabilities or actions, joint or several, to which Holders, any such
controlling person or any such underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
in respect thereof, arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any such
registration statement or
4
<PAGE>
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
Holders and each such controlling person and underwriter for any legal or
other expenses reasonably incurred by Holders or such controlling person or
underwriter in connection with investigating or defending any such losses,
claims, damages, liabilities or actions; provided, however, that the Company
will not be liable in any such case to the extent that any such losses,
claims, damages, liabilities or actions arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished by Holders or any other underwriter, for
use in the preparation thereof.
(b) Each of the Holders shall indemnify and hold harmless the Company,
each of its directors, each of its officers and each person, if any, who
controls the Company within the meaning of the Act against any losses,
claims, damages, liabilities or actions, to which the Company or any such
director, officer or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue or alleged untrue statement of any
preliminary prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading in each case to the
extent, but only to the
5
<PAGE>
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Holder for
use in the preparation thereof; and shall reimburse the Company or any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such losses, claims, damages, liabilities or actions.
(c) Promptly after receipt by an indemnified party under this Section 2 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party, give
the indemnifying party notice of the commencement thereof; but the omission
to so notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section
2.
(d) In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party, the indemnifying party shall not be liable to such
indemnified party under this Section 2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation.
6
<PAGE>
(e) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise
be liable under this Section 2 to the extent permitted by law, provided that
(i) no contribution shall be made under circumstances where the indemnifying
party would not have been liable for indemnification under the fault
standards set forth in this Section 2, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of
Secton 11(f) of the Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent
misrepresentation and (iii) contribution by each Holder shall be limited in
amount to the net amount of proceeds received by him from the sale of the
Registrable Securities pursuant to such Registration Statement or prospectus.
3. The provisions of Sections 13 and 14 of the Purchase Agreement, by and
between Virginia Beach Family Golf Centers, Inc. and Owl's Creek Golf Center,
Inc., dated the date hereof, shall be applicable to this agreement as if
fully set forth herein.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
FAMILY GOLF CENTERS, INC.
By:
------------------------------
Title:
------------------------------
------------------------------ ----------------------------
Thomas C. Broyles W. Mackenzie Jenkins
------------------------------ ----------------------------
Frank N. Bilisoly Catherine H. Doser
Residuary Trust Under
Declaration of Trust
------------------------------
Alfred E. Abiouness
------------------------------ ----------------------------
Marion R. Adams Clarence John Doser
Declaration of Trust,
FBO Clarence John Doser
------------------------------
Craig L. Slingluff
------------------------------
Grover Brook Parker
------------------------------
Richard A. Mladick
------------------------------
C. Randolph Hudgins, Jr.
</TABLE>
8
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NAME & ADDRESS TOTAL SHARES
-------------------------- --------------
<S> <C>
THOMAS C. BROYLES
704 CRYSTAL LANE
VIRGINIA BEACH, VA 23451
###-##-#### 20,681
Frank N. Bilisoly
327 Freemason Street
Norfolk, VA 23510
###-##-#### 5,171
Alfred E. Abiouness
7309 Colony Point Road
Norfolk, VA 23505
###-##-#### 5,171
Marion R. Adams
2139 Wentworth Avenue
Myrtle Beach, SC 29575
###-##-#### 1,358
Craig L. Slingluff
1217 North Bay Shore Drive
Virginia Beach, VA 23451
###-##-#### 2,585
Grover Brook Parker
2336 Windy Pines Road
Virginia Beach, VA 23458
###-##-#### 815
Richard A. Mladick
Elly D. Mladick, JTWRS
1224 East Bay Shore Drive
Virginia Beach, VA 23451
###-##-#### 2,519
C. Randolph Hudgins, Jr.
7634 North Shore Drive
Norfolk, VA 23505
###-##-#### 5,171
W. Mackenzie Jenkins
7300 Ocean Front
Virginia Beach, VA 23451
###-##-#### 5,171
Catherine H. Doser
Residuary Trust Under
Declaration of Trust
728 Kitty Hawk Way
N. Palm Beach, FL 33408
###-##-#### 679
Clarence John Doser
Declaration of Trust, FBO
Clarence John Doser
728 Kitty Hawk Way
N. Palm Beach, FL 33408
###-##-#### 679
Total Shares 50,000
</TABLE>
9
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of March 6, 1996, among FAMILY GOLF CENTERS,
INC., a Delaware corporation with executive offices at 225 Broadhollow Road,
Melville, New York 11747 ("FGC"), OWL'S CREEK GOLF CENTER, INC., a Virginia
corporation with executive offices at 700 Pavilion Center, P.O. Box 626,
Virginia Beach, Virginia 23451 (the "Seller") and CONTINENTAL STOCK TRANSFER &
TRUST COMPANY incorporated under the laws of the United States of America with
executive offices at 2 Broadway, New York, New York 10004 (the "Escrow Agent").
W I T N E S E T H:
WHEREAS, simultaneously with the execution hereof, the Seller, FGC and
Virginia Beach Family Golf Centers, Inc., a wholly-owned Delaware subsidiary of
FGC ("Subsidiary"), are consummating the transactions contemplated by the
Purchase Agreement, dated as of March 6, 1996 (the "Purchase Agreement"), among
the Seller and Subsidiary, pursuant to which, among other things, Subsidiary
shall purchase certain assets of Seller in exchange for (i) $1,800,000.00 in
cash, and (ii) 50,000 shares of common stock, par value $.01 per share (the "FGC
Common Stock").
WHEREAS, pursuant to Section 2.1 of the Purchase Agreement, 16,667
shares (the "Escrowed Property") of the FGC Common Stock are required to be
placed into
<PAGE>
an escrow account (the "Escrow Account") to be maintained by the Escrow Agent
against any claims for indemnity under the Purchase Agreement; and
WHEREAS, this is the Escrow Agreement referred to in Section 5 of the
Purchase Agreement. Capitalized terms used in this Escrow Agreement and not
otherwise defined herein shall have the respective meanings given to them in the
Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
I. Escrow.
Section 1.01 Appointment of Escrow Agent. The Seller and FGC hereby
appoint the Escrow Agent, and the Escrow Agent hereby agrees to serve, as Escrow
Agent in accordance with, and pursuant to, this Agreement.
Section 1.02 Operation of Escrow Account. The parties hereto agree
that, subject to Section 1.03 hereof, the Escrow Account shall operate as
follows:
(a) As soon as reasonably practicable following the
Effective Time, FGC shall deposit, in accordance with Section 1.03 hereof, into
the Escrow Account an aggregate of 16,667 shares of FGC Common Stock pursuant to
the Purchase Agreement.
(b) At any time prior to March 6, 1997, FGC shall be
entitled to give a notice to the Escrow Agent, signed by its President or any
Vice President (with a copy to the Seller), (i) to the effect that there has
been an event entitling the Subsidiary to indemnification from the Seller
pursuant to the Purchase Agreement, which notice shall specify the amounts owed
by the Seller pursuant to the Purchase Agreement, the calculation of such
amounts and the basis therefore.
(c) Twenty days after the Escrow Agent has received a notice
<PAGE>
pursuant to Section 1.02(a) (or, if not a business day, on the next business day
following such twentieth day) it shall deliver to FGC the Escrowed Property (the
"Escrowed Property") to be valued as set forth in Section 1.02(e) in the amounts
specified in such notice unless the Seller shall have notified the Escrow Agent
(with a copy to FGC) in writing before such date that it disagrees with the
Subsidiary's determination that it is entitled to indemnification with respect
to the Purchase Agreement, which notice shall be set forth in reasonable detail
the basis for such disagreement.
(d) Should any dispute arise with respect to the delivery,
ownership, or right of possession of the Escrowed Property, the Escrow Agent, as
more fully set forth in Section IV(xi), is authorized and directed to retain in
its possession without liability to anyone all or any part of the Escrowed
Property until such dispute shall have been settled either by mutual agreement
by the parties concerned or by a final order, decree, or judgment of a court of
competent jurisdiction in the United States of America and time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings, and may, in its
discretion, deposit such Escrowed Property with a court of competent
jurisdiction in the United States of America which is hearing such dispute.
(e) For purposes of this Agreement, the value of each share
of FGC Common Stock which is part of the Escrowed Property shall be deemed equal
to the Current Market Price (as hereinafter defined).
(f) The "Current Market Price" per share of FGC Common Stock
shall mean the average of the daily closing sales price as reported on the
NASDAQ Stock
<PAGE>
Market for the five consecutive trading days immediately preceding the date of
determination.
Section 1.03 Distribution of Escrowed Property. Unless a notice under
Section 1.02(a) has been given and Escrowed Property in satisfaction of such
notice has not been delivered to FGC, either because the 20-day period has not
yet run out or because a dispute relating to the claim made by such notice is
then pending, the Escrowed Property or such portion of it as at the time remains
in escrow, together with all dividends and distributions received by the Escrow
Agent with respect thereto, shall be returned to the Seller on March 6, 1997.
Section 1.04 Termination of Escrow Account. This Agreement and the
Escrow Account will terminate at 5:00 P.M., New York City local time, on the
date on which all of the shares of FGC Common Stock contained therein shall be
distributed as set forth above.
Section 1.05 Voting. The shares of FGC Common Stock held in the Escrow
Account shall be voted by the Seller or its designee.
II. Deposit of Escrowed Property.
Section 2.01 Deposit of Escrowed Property. As soon as reasonably
practicable following the Closing Date (as defined in the Purchase Agreement),
FGC shall, as set forth in Section 1.02, deposit with the Escrow Agent 16,667
shares of FGC Common Stock.
4
<PAGE>
III. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b) sent by
certified mail return receipt requested, or (c) sent by over-night delivery with
proper postage prepaid, and addressed as follows:
If to FGC to:
225 Broadhollow Road
Melville, New York 11747
(516) 694-1666
If to Seller to:
c/o Thomas C. Broyles
700 Pavilion Center
P.O. Box 626
Virginia Beach, Virginia 23451
(804) 491-4000
If to the Escrow Agent, to:
2 Broadway
New York, New York 10004
(212) 509-4000
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. Except as
otherwise provided herein, no notice or communication shall be effective until
received or refused.
IV. Concerning the Escrow Agent.
To induce the Escrow Agent to act hereunder, it is further agreed by
each of the Seller and FGC that:
(i) The Escrow Agent shall not be under any duty to give the
Escrowed Property held by it hereunder any greater degree of care than it gives
5
<PAGE>
its own similar property and shall not be required to invest any funds held
hereunder except as directed in this Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(ii) This Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Agreement.
(iii) The Escrow Agent shall not be liable, except for its own
gross negligence or willful misconduct, and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions, damages, and
expenses, including reasonable attorneys' fees and disbursements, arising out
of, and in connection with, this Agreement. Without limiting the foregoing, the
Escrow Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including, without limitation, any liability for any delays
(not resulting from gross negligence or willful misconduct) in the investment or
reinvestment of the Escrowed Funds, or any loss of interest incident to any such
delays.
(iv) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument, or other writing
delivered
6
<PAGE>
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(v) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in good faith and in accordance
with such advice.
(vi) The Escrow Agent does not have any interest in the
Escrowed Funds deposited hereunder, but is serving as escrow holder only. Any
payments of income from the Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes.
This paragraph (vi) and paragraph (iii) of this Article V shall survive
notwithstanding any termination of this Agreement or the resignation of the
Escrow Agent.
(vii) The Escrow Agent makes no representation as to the
validity, value, genuineness, or the collectibility of any security or other
documents or instrument held by, or delivered to, it.
(viii) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(ix) The Escrow Agent (and any successor escrow agent) at any
time
7
<PAGE>
may be discharged from its duties and obligations hereunder by the delivery to
it of notice of termination signed by FGC and the Seller or at any time may
resign by giving written notice to such effect to FGC and the Seller. Upon any
such termination or resignation, the Escrow Agent shall deliver the Escrowed
Property to any successor escrow agent jointly designated by the other parties
hereto in writing, or to any court of competent jurisdiction if no such
successor escrow agent is agreed upon, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The termination or resignation of the Escrow Agent
shall take effect on the earlier of (A) the appointment of a successor
(including a court of competent jurisdiction) or (B) the day that is 30 days
after the date of delivery: (1) to the Escrow Agent of the other parties'
notice of termination or (2) to the other parties hereto of the Escrow Agent's
written notice of resignation. If at that time the Escrow Agent has not
received a designation of a successor escrow agent, the Escrow Agent's sole
responsibility after that time shall be to keep the Escrowed Property safe until
receipt of a designation of successor escrow agent or a joint written
disposition instruction by the other parties hereto or an enforceable order of a
court of competent jurisdiction.
(x) The Escrow Agent shall have no responsibility for the
contents of any writing of any third party contemplated herein as a means to
resolve disputes and may rely without any liability upon the contents thereof.
(xi) In the event of any disagreement among or between the
other parties hereto resulting in adverse claims or demands being made in
connection with the Escrowed Property, or in the event that the Escrow Agent in
good faith
8
<PAGE>
is in doubt as to what action it should take hereunder, the Escrow Agent shall
be entitled to retain the Escrowed Property until the Escrow Agent shall have
received (A) a final and non-appealable order of a court of competent
jurisdiction directing delivery of the Escrowed Property or (B) a written
agreement executed by the other parties hereto directing delivery of the
Escrowed Property, in which event the Escrow Agent shall disburse the Escrowed
Property in accordance with such order or agreement. Any court order referred
to in (A) above shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to the Escrow Agent to the effect that said court
order is final and non-appealable. The Escrow Agent shall act on such court
order and legal opinions without further question.
(xii) As consideration for its agreement to act as Escrow
Agent as herein described, FGC, on the one hand, and the Seller, on the other
hand, agrees to share equally the Escrow Agent fees determined in accordance
with the terms set forth on Exhibit A hereto (and made a part of this Escrow
Agreement as if herein set forth). In addition, FGC and the Seller agrees to
reimburse the Escrow Agent for all reasonable expenses, disbursements, and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses, and disbursements of its
counsel).
(xiii) No publicly distributed material or other matter in any
language (including, without limitation, notices and reports) which mentions the
Escrow Agent's name or the rights, powers, or duties of the Escrow Agent shall
be issued by the other parties hereto or on such parties' behalf unless the
Escrow Agent shall first have given its specific written consent thereto.
9
<PAGE>
V. Miscellaneous.
Section 5.01 Binding Effect. This Escrow Agreement shall be binding
upon, and inure solely to the benefit of, the parties hereto and their
respective successors and assigns, heirs, administrators, and representatives,
and shall not be enforceable by, or inure to the benefit of, any other third
party, except as provided in paragraph (ix) of Article V with respect to the
termination of, or resignation by, the Escrow Agent. No party may assign any of
its rights or obligations under this Agreement without the written consent of
the other parties.
Section 5.02 Choice of Law. This Agreement shall be construed in
accordance with, and governed by, the internal law of the State of Delaware
(without reference to its rules as to conflicts of law).
Section 5.03 Modification. This Agreement may only be modified by a
writing signed by all of the parties hereto.
Section 5.04 Headings. The section headings herein are for convenience
only and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles are to Sections and Articles, respectively,
contained herein.
Section 5.05 Counterparts. This Agreement may be executed in one or
more counterparts but all such separate counterparts shall constitute but one
and the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Krishnan P. Thampi
------------------------------------
Name: Krishnan P. Thampi
Title:
OWL'S CREEK GOLF CENTER, INC.
By: /s/ Thomas C. Broyles
--------------------------
Name: Thomas C. Broyles
Title: President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/ H.R. Drews
--------------------
Name: H.R. Drews
Title: Vice President
11
<PAGE>
Exhibit A
Escrow Agent Fees: $100.00 per month
12
REGISTRATION RIGHTS AGREEMENT
Agreement dated as of March 6, 1996, between certain stockholders of OWL'S CREEK
GOLF CENTER, INC. listed on Schedule I hereto (the "Holders") and FAMILY GOLF
CENTERS, INC., with an address at 225 Broadhollow Road, Melville, New York 11747
(the "Company").
WHEREAS, the Holders are the holders of an aggregate of 50,000 shares (the
"Shares") of the common stock, par value $.01 per share, of the Company ("Common
Stock");
WHEREAS, the Holders desire to have certain registration rights under the
securities laws, and the Company desires that the Holders have such registration
rights;
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the parties hereby agree as follows:
1. If, at any time during the period commencing six months from the
date hereof and terminating on the date on which the Shares become saleable
under Rule 144 promulgated under the Act (as defined below), the Company shall
determine to file any registration statement, or any post-effective amendment to
a registration statement, under the Securities Act of 1933 (the Act"), covering
equity securities of the Company (other than registration statements on Form S-8
or S-4 or any other form not generally available for the registration of
securities for sale to the public) for its own account or for the account of
others, the Company shall advise Thomas C. Broyles, as
representative of the Holders (the "Representative"), by written notice at least
10 business days prior to any filing, and shall, upon the request of the
Holders, and at the expense of the Company, include in any such registration
statement, or any such post-effective amendment to a registration statement, all
of the Registrable Securities (as hereinafter defined) that the Representative
has requested in writing to be registered, provided that such written request is
delivered by the Representative to the Company within ten business days of the
Representative's receipt of notice from the Company. As used in this Agreement,
Registrable Securities shall mean (i) the Shares, and (ii) any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
convertible security, option, warrant right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of the Shares. All costs and expenses of such registration
statement shall be borne by the Company, except underwriting discounts or
commissions applicable to any of the Registrable Securities sold by the Holders
and any counsel to the Holders. The Company shall not be required to register
securities of the Holders on more than one occasion; provided that if the
Holders have been prevented from selling all of the Shares Holders wished to
sell because of limitations imposed under paragraph (c) of this Section 1, then
the Holders shall be entitled to include the Shares in one or more additional
registration statements under the terms of this Section 1 until the Holders have
been able to sell all of the Shares of Common Stock Holders wishes to sell.
(a) The Company shall supply prospectuses and such
other documents as the Holders may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities, use its
reasonable best efforts to register and qualify any of the Registrable
- 2 -
Securities for sale in a reasonable number of states and do any and all other
acts and things which may be necessary or desirable to enable the Holders to
consummate the public sale or other disposition of the Registrable Securities
subject to the rights of others with similar rights.
(b) The Company shall also furnish indemnification
in the manner provided in Section 2 hereof, except that the maximum amount of
such indemnification shall be limited to the amount of proceeds received by each
of the Holders from the sale of the Registrable Securities. The Holders shall
furnish information and indemnification as set forth in Section 2 hereof, except
that the maximum amount which may be recovered from the Holders shall be limited
to the amount of proceeds received by each of the Holders from the sale of the
Registrable Securities.
(c) In connection with any offering involving an
underwriting of shares of the Company's Common Stock, the Company shall not be
required under Section 1 hereof to include any of the Holders' securities in
such underwriting unless the Holders accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize or limit
the success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
- 3 -
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata, subject to prior existing rights, among the selling stockholders according
to the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders).
(d) Notwithstanding anything contained herein to the
contrary, the Registrable Securities shall not include the shares held in escrow
pursuant to the Escrow Agreement, dated as of even date herewith, among the
Company, Owl's Creek Golf Center, Inc. and the Escrow Agent (as therein defined)
(the "Escrow Agreement") until such time, if any, and only to the extent that,
such shares are released from escrow and delivered to the Representative in
accordance with the terms of such Escrow Agreement.
2. (a) Whenever pursuant to Section 1, a registration
statement relating to any of the Registrable Securities is filed under the Act,
amended or supplemented, the Company shall, to the extent permitted by law,
indemnify and hold harmless Holders, and each person, if any, who controls
(within the meaning of the Act) Holders, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter, against such losses,
claims, damages, liabilities or actions, joint or several, to which Holders, any
such controlling person or any such underwriter may become subject, under the
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions in respect thereof, arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement or
- 4 -
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
Holders and each such controlling person and underwriter for any legal or other
expenses reasonably incurred by Holders or such controlling person or
underwriter in connection with investigating or defending any such losses,
claims, damages, liabilities or actions; provided, however, that the Company
will not be liable in any such case to the extent that any such losses, claims,
damages, liabilities or actions arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by Holders or any other underwriter, for use in the
preparation thereof.
(b) Each of the Holders shall indemnify and hold
harmless the Company, each of its directors, each of its officers and each
person, if any, who controls the Company within the meaning of the Act against
any losses, claims, damages, liabilities or actions, to which the Company or any
such director, officer or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue or alleged untrue statement of any
preliminary prospectus, said final prospectus, or said amendment or supplement,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading in each case to the extent, but only to the
- 5 -
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Holder for use
in the preparation thereof; and shall reimburse the Company or any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such losses, claims, damages, liabilities or actions.
(c) Promptly after receipt by an indemnified party
under this Section 2 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party shall not relieve
it from any liability which it may have to an indemnified party otherwise than
under this Section 2.
(d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party, the indemnifying party shall not be liable to such
indemnified party under this Section 2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation.
- 6 -
(e) To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under this Section 2 to the extent permitted by law,
provided that (i) no contribution shall be made under circumstances where the
indemnifying party would not have been liable for indemnification under the
fault standards set forth in this Section 2, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (iii) contribution by each Holder shall be limited in amount to the net
amount of proceeds received by him from the sale of the Registrable Securities
pursuant to such Registration Statement or prospectus.
3. The provisions of Sections 13 and 14 of the Purchase Agreement,
by and between Virginia Beach Family Golf Centers, Inc. and Owl's Creek Golf
Center, Inc., dated the date hereof, shall be applicable to this agreement as if
fully set forth herein.
- 7 -
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Krishnan P. Thampi
----------------------------
Title:
/s/ Thomas C. Broyles /s/ W. Mackenzie Jenkins
---------------------- -------------------------
Thomas C. Broyles W. Mackenzie Jenkins
/s/ Frank N. Bilisoly /s/ Catherine H. Doser
---------------------- -----------------------------
Frank N. Bilisoly Catherine H. Doser
Residuary Trust Under
Declaration of Trust
/s/ Alfred E. Abiouness /s/ Clarence John Doser
---------------------- -----------------------------
Alfred E. Abiouness Clarence John Doser
Declaration of Trust,
FBO Clarence John Doser
/s/ Marion R. Adams
--------------------------
Marion R. Adams
/s/ Craig L. Slingluff
-------------------------
Craig L. Slingluff
/s/ Grover Brook Parker
---------------------------
Grover Brook Parker
/s/ Richard A. Mladick
----------------------------
Richard A. Mladick
/s/ C. Randolph Hudgins, Jr.
-------------------------------
C. Randolph Hudgins, Jr.
- 8 -
SCHEDULE I
Name & Address Total Shares
-------------- ------------
Thomas C. Broyles 20,681
704 Crystal Lane
Virginia Beach, Va 23451
###-##-####
Frank N. Bilisoly 5,171
327 Freemason Street
Norfolk, VA 23510
###-##-####
Alfred E. Abiouness 5,171
7309 Colony Point Road
Norfolk, VA 23505
###-##-####
Marion R. Adams 1,358
2139 Wentworth Avenue
Myrtle Beach, SC 29575
###-##-####
Craig L. Slingluff 2,585
1217 North Bay Shore Drive
Virginia Beach, VA 23451
###-##-####
Grover Brook Parker 815
2336 Windy Pines Road
Virginia Beach, VA 23458
###-##-####
Richard A. Mladick 2,519
Elly D. Mladick, JTWRS
1224 East Bay Shore Drive
Virginia Beach, VA 23451
###-##-####
C. Randolph Hudgins, Jr. 5,171
7634 North Shore Drive
Norfolk, VA 23505
###-##-####
W. Mackenzie Jenkins 5,171
7300 Ocean Front
Virginia Beach, BA 23451
###-##-####
Catherine H. Doser 679
Residuary Trust Under
Declaration of Trust
728 Kitty Hawk Way
N. Palm Beach, FL 33408
###-##-####
Clarence John Doser 679
Declaration of Trust, FBO
Clarence John Doser
728 Kitty Hawk Way
N. Palm Beach, FL 33408
###-##-####
Total Shares 50,000
------------ ------
- 9 -
<PAGE>
THIS DEED OF ASSIGNMENT, made this 27th day of February, 1996, by and
between OWL'S CREEK GOLF CENTER, INC., a Virginia corporation (the
"Assignor") [index as grantor]; and VIRGINIA BEACH FAMILY GOLF CENTERS, INC.,
a Delaware corporation (the "Assignee") [index as grantee], the address of
which is 225 Broadhollow Road, Suite 196E, Melville, New York 11747; and THE
CITY OF VIRGINIA BEACH, VIRGINIA (the "City") [index as grantor];
WITNESSETH:
WHEREAS, by that certain Deed of Lease, dated March 17, 1987, and recorded
in the Clerk's Office of the Circuit Court of the City of Virginia Beach,
Virginia ("Clerk's Office"), in Deed Book 2620, at page 586, as corrected by
Correction to Deed of Lease dated December 9, 1992, recorded in the Clerk's
Office in Deed Book 3161, at page 1033, as amended by Amendment of Deed of
Lease dated November 30, 1994, recorded in the Clerk's Office in Deed Book
3476, at page 1451 (hereinafter collectively referred to as the "Lease"), the
City leased and demised to Assignor certain real property (hereinafter
referred to as the "Land") located in the City of Virginia Beach, Virginia,
which Land is more particularly described in the Lease; and
WHEREAS, Assignor desires to assign to Assignee all of Assignor's right,
title and interest as lessee under the Lease and Assignee desires to accept
such right, title and interest and to assume all obligations, covenants and
duties of Assignor as lessee under the Lease; and
WHEREAS, the Lease provides that the written consent of the City is
required prior to such an assignment by Assignor,
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), cash in hand paid, the Lease, and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
the parties hereto do hereby agree as follows:
1
<PAGE>
1. Assignor does here by assign, transfer and set over unto Assignee all
of Assignor's right, title and interest of every kind and nature in, to and
under the Lease.
2. Assignee covenants and agrees to perform and be solely responsible for
all obligations of the tenant under the Lease arising from and after the date
hereof, and shall indemnify and hold harmless Assignor from and against any
and all liabilities, costs, damages and expenses (including attorneys' fees)
arising from Assignee's failure to perform or observe the provisions of the
Lease.
3. The City does hereby grant its consent to the foregoing assignment of
the Lease from the Assignor to the Assignee.
IN WITNESS WHEREOF, the parties hereto have caused this Deed to be duly
executed by their proper officers and representatives thereunto duly
authorized:
ASSIGNOR:
OWL'S CREEK GOLF CENTER, INC., a
Virginia Corporation
By: Thomas C. Broyles
-----------------------------------
Its: President
-----------------------------------
2
<PAGE>
ASSIGNEE:
VIRGINIA BEACH FAMILY GOLF CENTERS,
INC., a Delaware corporation
By: /s/ Krishnan P. Thampi
-----------------------------------
Its: Exec. Vice Pres.
-----------------------------------
CITY:
CITY OF VIRGINIA BEACH, VIRGINIA
By: /s/ C. ORAL LAMBERT, JR.
-----------------------------------
C. ORAL LAMBERT, JR.,
Its: Chief of Staff
-----------------------------------
COMMONWEALTH OF VIRGINIA
AT LARGE, to wit:
The foregoing instrument was acknowledged before me in Virginia Beach,
Virginia, this 29th day of February, 1996, by Thomas C. Broyles, President of
Owl's Creek Golf Course, Inc., a Virginia corporation, on behalf of said
corporation.
Pamela J. Piscatelli
-----------------------------------
Notary Public
My commission expires:
7-31-98
3
<PAGE>
COMMONWEALTH OF VIRGINIA
AT LARGE, to-wit:
The foregoing instrument was acknowledged before me in Farmingdale, N.Y.
this 27th day of February, 1996, by Krishnan P. Thampi, Exec. Vice President
of Virginia Beach Family Golf Centers, Inc., a Delaware corporation, on
behalf of said corporation.
/s/ Barbara M. Wright
-----------------------------------
Notary Public
BARBARA M. WRIGHT
NOTARY PUBLIC
STATE OF NEW YORK
NO. 01WR5038497
SUFFOLK COUNTY
TERM EXPIRES 1/30/97
My commission expires:
1/30/97
COMMONWEALTH OF VIRGINIA
AT LARGE, to-wit:
The foregoing instrument was acknowledged before me in Virginia Beach,
Virginia, this 1st day of March, 1996, by C. Oral Lambert, Jr., Chief of
Staff of the City of Virginia Beach, Virginia, on its behalf.
/s/ Karen M. Akers
-----------------------------------
Notary Public
My commission expires:
1/31/99
4
<PAGE>
THIS DEED OF ASSIGNMENT, made this 1st day of March, 1996, by and between
OWL'S CREEK GOLF CENTER, INC., a Virginia corporation (the "Assignor") [index
as grantor]; and VIRGINIA BEACH FAMILY GOLF CENTERS, INC., a Delaware
corporation (the "Assignee") [index as grantee], the address of which is 225
Broadhollow Road, Suite 106E, Melville, New York 11747;
WITNESSETH:
WHEREAS, by that certain Deed of Lease, dated July 31, 1986, and recorded
in the Clerk's Office of the Circuit Court of the City of Virginia Beach,
Virginia ("Clerk's Office"), in Deed Book 2679, at page 971 (hereinafter
referred to as the "Lease"), Rober H. Braithwaite and Nancy F. Braithwaite
("Lessor") leased and demised to Assignor certain real property (hereinafter
referred to as the "Land") located in the City of Virginia Beach, Virginia
(the "City"), which Land is more particularly described in the Lease; and
WHEREAS, Assignor desires to assign to Assignee all of Assignor's right,
title and interest as lessee under the Lease and Assignee desires to accept
such right, title and interest and to assume all obligations, covenants and
duties of Assignor as lessee under the Lease;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), cash in hand paid, the Lease, and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
the parties hereto do hereby agree as follows:
1. Assignor does hereby assign, transfer and set over unto Assignee all of
Assignor's right, title and interest of every kind and nature in, to and
under the Lease.
2. Assignee covenants and agrees to perform and be solely responsible for
all obligations of the tenant under the Lease arising from and after the date
hereof, and shall indemnify and hold harmless Assignor from and against any
and all liabilities, costs, damages and expenses (including attorneys' fees)
arising from Assignee's failure to perform or observe the provisions of the
Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Deed to be duly
executed by their proper officers and representatives thereunto duly
authorized:
ASSIGNOR:
OWL'S CREEK GOLF CENTER, INC., a
Virginia corporation
By: /s/ Thomas C. Broyles
-----------------------
Its: President
-----------------------
ASSIGNOR:
VIRGINIA BEACH FAMILY GOLF
CENTERS, INC., a Delaware
corporation
By: /s/ Krishnan P. Thampi
-------------------------
Its: Executive Vice President
-------------------------
COMMONWEALTH OF VIRGINIA
AT LARGE, to-wit:
The foregoing instrument was acknowledged before me in Virginia Beach,
Virginia, this 1st day of March, 1996, by Thomas C. Broyles, President of
Owl's Creek Golf Course, Inc., a Virginia corporation, on behalf of said
corporation.
/s/ Pamela Piscatelli
-------------------------
Notary Public
My commission expires: 7-31-98
2
<PAGE>
STATE OF NEW YORK
AT LARGE, to-wit:
The foregoing instrument was acknowledged before me in Farmingdale, New
York, this 1st day of March, 1996, by Krishnan P. Thampi, Executive Vice
President of Virginia Beach Family Golf Centers, Inc., a Delaware
corporation, on behalf of said corporation.
/s/ Barbara M. Wright
-------------------------
Notary Public
BARBARA M. WRIGHT
NOTARY PUBLIC
STATE OF NEW YORK
NO. 01WR5038497
SUFFOLK COUNTY
My commission expires: 7/31/97
<PAGE>
THIS DEED is made as of the 1st day of March, 1996, by and between OWL'S
CREEK GOLF CENTER, INC., a Virginia corporation ("Grantor") and VIRGINIA
BEACH FAMILY GOLF CENTERS, INC., a Delaware corporation ("Grantee"), the
address of which is 225 Broadhollow Road, Suite 106E, Melville, N.Y. 11747.
W I T N E S S E T H:
That for and in consideration of the sum of Ten Dollars ($10), cash in
hand paid, and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Grantor hereby grants and
conveys, with general warranty and English Covenants of Title, to the
Grantee, the following described property ("Property"), to-wit:
SEE EXHIBIT A ATTACHED HERETO
AND MADE A PART HEREOF
WITNESS the following duly authorized signature.
OWL'S CREEK GOLF CENTER, INC.
By: /s/ Thomas C. Broyles
----------------------------
Title: President
-------------------------
COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH, to-wit:
The foregoing instrument was acknowledged before me this 1st day of March,
1996, by Thomas C. Broyles, as President of Owl's Creek Golf Center, Inc., a
Virginia corporation, on its behalf.
/s/ Carol D. Dahlquist
-----------------------------------
Notary Public
My Commission Expires: August 31, 1999
<PAGE>
EXHIBIT A
---------
All buildings, and all exterior and interior improvements and fixtures,
movable and immovable, of every kind and description, all located on, over or
under the following described land located in the City of Virginia Beach,
Virginia:
PARCEL I
--------
All that certain lot, piece or parcel of land being known and designated
as 40.899 acres, as shown on that certain plat entitled "Exhibit Plat for
Owl's Creek Golf Center, Inc.," which said plat is dated December, 1986 and
made by John E. Sirine and Associates, and being further identified as the
Eastern portion of parcel 478, being that portion of Parcel 478 located East
of the "100' VEPCO Easement, (M.B. 53, P.44)", as shown on that plat recorded
in the Clerk's Office of the Circuit Court of the City of Virginia Beach in
Map Book 162, page 15, et seq.
LESS AND EXCEPT that portion of the above described property conveyed to
the City of Virginia Beach from Robert H. Braithwaite, Jr., et ux, et al, by
Deed of Dedication dated October 1, 1987, duly recorded in the aforesaid
Clerk's Office in Deed Book 2687, at page 2199.
PARCEL II
---------
All that certain tract piece or parcel of land, situate, lying and being
in the City of Virginia Beach, Virginia described as follows: BEGINNING at a
point in the western right-of-way line of South Birdneck Road, which point is
2,810.76 feet in a northerly direction from the intersection of South
Birdneck Road and Bells Road; thence S 60 degrees 11'14"W 413.14 feet to a
point; thence S 59 degrees 48'00"W 489.60 feet to a point; thence S 59
degrees 14'43"W 276.28 feet to a point; thence N 28 degrees 16'27"W 100.32
feet to a point; thence N 11 degrees degrees 10'25"W 132.60 feet to a point;
thence N 20 degrees 17'20"W 132.50 feet to a point; thence N 44 degrees
17'08"W 131.98 feet to a point; thence N 68 degrees 00'00"W 248.73 feet to a
point; thence N 66 degrees 31'35"W 120.05 feet to a point; thence N 49
degrees 46'11"W 139.21 feet to a point; thence N 37 degrees 00'00" 166.39
feet to a point; thence N 61 degrees 43'37"W 115.71 feet to a point; thence N
67 degrees 57'49"W 154.80 feet to a point; thence S 81 degrees 43'37" W
115.71 feet to a point; thence N 67 degrees 57'49"W 184.80 feet to a point;
thence S 81 degrees 54'10"W 140.87 feet to a point; thence S 60 degrees
46'06"W 81.77 feet to a point; thence N 17 degrees 59'19"W 84.50 feet to a
point; thence N 83 degrees 11'32" E 50.98 feet to a point; thence N 17
degrees 59'19"W 200.21 feet to a point; thence N 83 degrees 39'27"E 2,279.62
feet to a point in the western right-of-way line of South Birdneck Road;
thence S 11 degrees 27'19"E 157.11 feet to a point; thence along a curve to
the right having a radius of 1,402.50 feet an arc distance of 636.73 feet to
the point of Beginning.
<PAGE>
BILL OF SALE
March 6, 1996
COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH
OWL'S CREEK GOLF CENTER, INC., a Virginia corporation (the "Assignor"),
for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00) and
other good and valuable consideration paid to Assignor by VIRGINIA BEACH
FAMILY GOLF CENTERS, INC., a Delaware corporation (the "Assignee"), the
receipt and sufficiency of which are hereby acknowledged, has ASSIGNED, SOLD,
CONVEYED and DELIVERED, and does hereby ASSIGN, CONVEY AND DELIVER Assignee,
its successors, heirs, executors, administrators, personal representatives
and assigns, all of Assignor's right, title and interest, if any, in and to
the following:
All of the fixtures, equipment, machinery and personal property (the
"Personal Property") placed or installed on or about the real property (the
"Land") being more particularly described in Exhibit A, attached hereto and
incorporated herein by reference except for those items listed on Exhibit B
attached hereto and incorporated herein by reference which Personal Property
is specifically scheduled on Exhibit C attached hereto and incorporated
herein by reference; and
This Bill of Sale is made and accepted subject to all of the liens,
security interests and other matters (the "Permitted Exceptions") shown in
any public records or listed in the Deed from Assignor to Assignee, of even
date herewith, covering certain improvements on the Land, and to the terms
and provisions of that certain Purchase Agreement ("Purchase Agreement") by
and between the Assignor and the Assignee of even date herewith;
ASSIGNEE TAKES THE PERSONAL PROPERTY "AS IS" AND "WITH ALL FAULTS."
ASSIGNOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS AS TO THE
PHYSICAL CONDITION, OPERATION OR ANY OTHER MATTER AFFECTING OR RELATED TO THE
PERSONAL PROPERTY AND THIS BILL OF SALE AND ASSIGNMENT, EXCEPT AS HEREIN
SPECIFICALLY SET FORTH OR REFERRED TO, AND ASSIGNEE HEREBY EXPRESSLY
ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE. ASSIGNOR EXPRESSLY
DISCLAIMS AND ASSIGNEE ACKNOWLEDGES AND ACCEPTS THAT ASSIGNOR HAS DISCLAIMED
TO THE MAXIMUM EXTENT PERMITTED BY LAW, AND ALL REPRESENTATIONS, WARRANTIES
OR GUARANTIES OF ANY KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, CONCERNING
THE PERSONAL PROPERTY, INCLUDING, WITHOUT LIMITATION, (i) THE VALUE,
CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE OF THE PERSONAL PROPERTY, (ii) THE
MANNER OR QUALITY OF THE CONSTRUCTION OF MATERIALS, IF ANY, INCORPORATED INTO
ANY OF THE PERSONAL PROPERTY AND (iii) THE
<PAGE>
MANNER, QUALITY, STATE OR REPAIR OR LACK OF REPAIR OF THE PERSONAL PROPERTY.
ASSIGNOR IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PERSONAL
PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR
OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO
HEREIN OR IN THE PURCHASE AGREEMENT.
EXECUTED this 6th day of March, 1996.
ASSIGNOR:
OWL'S CREEK GOLF CENTER, INC., a
Virginia corporation
By: Thomas C. Broyles
-------------------------------
Its: President
-------------------------------
AGREED TO AND ACCEPTED BY
ASSIGNEE:
VIRGINIA BEACH FAMILY GOLF
CENTERS, INC., a Delaware
corporation
By: Krishnan P. Thampi
-------------------------------
Its:
-------------------------------
2
<PAGE>
EXHIBIT A
PARCEL I
All that certain lot, piece or parcel of land being known and designated as
40.899 acres, as shown on that certain plat entitled "Exhibit Plat for Owl's
Creek Golf Center, Inc.," which said plat is dated December, 1986 and made by
John E. Sirine and Associates, and being further identified as the Eastern
portion of parcel 478, being that portion of Parcel 478 located east of the
"100' VEPCO Easement, (M.B. 53, P.44)", as shown on that plat recorded in the
Clerk's Office of the Circuit Court of the City of Virginia Beach in Map Book
162, page 15, et seq.
LESS AND EXCEPT that portion of the above described property conveyed to the
City of Virginia Beach from Robert H. Braithwaite, Jr., et ux, et al, by Deed
of Dedication dated October 1, 1987, duly recorded in the aforesaid Clerk's
Office in Deed Book 2687, at page 2199.
PARCEL II
All that certain tract piece or parcel of land, situate, lying and being in
the City of Virginia Beach, Virginia described as follows: BEGINNING at a
point in the western right-of-way line of South Birdneck Road, which point is
2,810.76 feet in a northerly direction from the intersection of South
Birdneck Road and Bells Road; thence S 60 degrees 11'14"W 413.14 feet to a
point; thence S 59 degrees 48'00"W 489.60 feet to a point; thence S 59
degrees 14'43"W 276.28 feet to a point; thence N 28 degrees 16'27"W 100.32
feet to a point; thence N 11 degrees 10'25"W 132.60 feet to a point; thence N
20 degrees 17'20"W 132.50 feet to a point; thence N44 degrees 17'08"W 131.98
feet to a point; thence N 68 degrees 00'00"W 248.73 feet to a point; thence N
66 degrees 31'35"W 120.05 feet to a point; thence N 49 degrees 46'11"W 139.21
feet to a point; thence N 37 degrees 00'00" 166.39 feet to a point; thence N
61 degrees 43'37"W 115.71 feet to a point; thence N 67 degrees 57'49"W 154.80
feet to a point; thence S 81 degrees 43'37"W 115.71 feet to a point; thence N
67 degrees 57'49" W 184.80 feet to a point; thence S 81 degrees 54'10"W
140.87 feet to a point; thence S 60 degrees 45'06"W 81.77 feet to a point;
thence N 17 degrees 59'19"W 84.50 feet to a point; thence N 83 degrees
11'32"E 50.98 feet to a point; thence N 17 degrees 59'19"W 200.21 feet to a
point; thence N 83 degrees 39'27"E 2,279.62 feet to a point in the western
right-of-way line of South Birdneck Road; thence S 11 degrees 27'19"E 157.11
feet to a point; thence along a curve to the right having a radius of
1,402.50 feet an arc distance of 636.73 feet to the point of Beginning.
3
<PAGE>
EXHIBIT B
[Property not being sold]
Golf carts described in that certain lease dated April 1, 1995, by and
between Owl's Creek Golf Course [sic] and Eastern Golf Car, Inc.
4
<PAGE>
EXHIBIT C
<TABLE>
<CAPTION>
<S> <C>
PRO SHOP-EQUIPMENT AND FIXTURES:
Miscellaneous Golf Clubs for Rent Signs
Fixture Display Telephone equipment
Club pro Time clock
Window blinds Cash register
Carpet Display fixtures
Vacuum Security System
SNACK BAR-EQUIPMENT AND FIXTURES:
Refrigerators Sneeze guard
Walk in box freight Steamer
Walk in refrigerators Slicer
Ice Machine Cash register
Marketer merchandiser cooler 16 Tables
Two freezers (upright) 4 Table
Utility sink and drainboard 40 Chairs
2 Door over Television
Roll warmer Griddle
Hot Plate Hot dog grill
Updrafted equipment stand Updraft unit 66" with stand
Sandwich display case Utensils
Snack Bar Equipment Carpet
OFFICE:
Safe
2 Desks
2 Cabinets
Credenza
Copying machine
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
GOLF COURSE MAINTENANCE EQUIPMENT:
Backhoe-Cat 416#5PC0167 Dump truck '79 Ford
Tools (misc.) chain saw (McCullock) Toro Fringe Mower (0432761005)
Chain saw (Eager Beaver) National Mower riding mower (vertical)
John Deere 1250 w/loader tractor
(CH 30780002010)
1 used Toro Sand Pro (08890-40103)
1 used Jacobsen Green Mower walk behind 22"
#62208-741
Ryan Greensairs
Ryan Jr. sod cutter Greensmater Toro 1000 Walker
Toro GM 3000 Greens Mower (04350-9181) Truck-Isuzu 1990 (pickup)
Jacobsen Greensking Mower IV Fringe Mower engine
John Deere #935 (JD72) #MDF935X475232 Toro 3250 Groundsmaster (Model 30988)
John Deere 756 Turf Mower 2 Desk
John Deere 1500 spray tank vehicle 2 Chairs
John Deere AMT 600 Leaf blower
2" T-10 meter gallons-flow meter Compressor
Lely Spreader #9410639 Spreader Epoxy-Lesco
Gang Mower (Pull) 2 Weed Eaters (Stihl 44)
DRIVING RANGE EQUIPMENT:
Washer-dryer Automatic T-up machine
Wittex electric ball striper Wittex racks and displays
Wittex ball hawk Wittex small equipment
Range baskets Wittex ball washer brush model
Conversion kit picker Display case
Range station divider Range case screen
Repair equipment for clubs Golf ball picker
Twister ball washer Trash receptacles
Bag Caddie Yamaha range car
Range mats Range ball washer
</TABLE>
PURCHASE AGREEMENT
by and between
FLEMINGTON EQUITIES VII,
Seller,
and
FLEMINGTON FAMILY GOLF CENTERS, INC.,
Purchaser
PURCHASE AGREEMENT
PURCHASE AGREEMENT, made as of the 7th day of March, 1996 (this
"Agreement"), by and between FLEMINGTON EQUITIES VII, a New Jersey general
partnership having an address at Route 202/31, Flemington, New Jersey
("Seller"), and FLEMINGTON FAMILY GOLF CENTERS, INC., a Delaware corporation
having an address at 225 Broadhollow Road, Suite 106E, Melville, New York
11747 ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is the owner of certain real property located in
Flemington, New Jersey and more particularly described on Exhibit A attached
hereto and made a part hereof (the "Land") and the buildings and improvements
located on the Land (the "Improvements" and, together with the Land, the
"Premises");
WHEREAS, Seller has leased the Premises to Flemington Golf and
Sports Center, LLC ("FGSC");
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Purchaser is entering into a purchase agreement with FGSC (the
"FGSC Agreement") and purchasing from Seller the certain property of FGSC's
relating to the Premises;
WHEREAS, simultaneously and in connection with the execution and
delivery of this Agreement, the lease between Seller and FGSC with respect to
the Land (the "Lease") is being terminated; and
WHEREAS, Seller wants to sell the Land to Purchaser, and
Purchaser wants to purchase the Land from Seller, on the terms, and subject to
the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the
terms and conditions set forth herein, and other good and valuable
consideration, the
<PAGE>
mutual receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree to the foregoing and as follows:
1. Agreement to Sell and Purchase.
1.1 Property to be Purchased by Purchaser. Seller agrees to
sell and convey to Purchaser, and Purchaser agrees to purchase and acquire
from Seller, upon the terms and conditions hereinafter set forth, all of
Seller's right, title and interest in and to the following property
(collectively, the "Property"):
1.1.1 the Land;
1.1.2 the Improvements;
1.1.3 the easements, rights of way, appurtenances and other
rights and benefits of Seller in and to the Premises, including without
limitation, all of Seller's interest in any air rights, water rights and
irrigation rights;
1.1.4 the files, books, notices and other correspondence
from any governmental agencies, and other records used or employed by Seller
or its affiliates in connection with the ownership and/or operation of the
Premises (collectively, the "Records"); and
1.1.5 any consents, authorizations, variances, waivers,
licenses, certificates, permits and approvals held by or granted to Seller in
connection with the ownership of the Premises (collectively, the "Permits").
2. Purchase Price. The purchase price for the Property shall be One
Million Seven Hundred Thousand and 00/100 Dollars ($1,700,000.00), payable by
Purchaser's note to Seller in the amount of the purchase price (the "Note").
The Note shall be secured by a mortgage (the "Mortgage"), UCC-1 Financing
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<PAGE>
Statements (the "UCCs"), a Security Agreement (the "Security Agreement") and a
guaranty by Family Golf Centers, Inc. (the "Guaranty").
3. Title; Permitted Exceptions.
3.1 Seller will convey the Property to Purchaser, free and
clear of any and all liens, charges, encumbrances, mortgages, pledges,
security interests, easements, agreements and other interests and adverse
claims (collectively, "Encumbrances"), other than the matters set forth in
Exhibit B attached hereto and made a part hereof (the "Permitted Exceptions").
3.2 Purchaser may order an examination of title from a title
company licensed or authorized to issue title insurance in the State of New
Jersey ("Title Company"), and shall cause a copy of any title report to be
forwarded to Seller's attorney upon receipt. If a title examination shall
disclose any Encumbrances other than the Permitted Exceptions, Seller shall
cause the same to be discharged of record or otherwise cured.
3.3 If a search of the title discloses judgments, bankruptcies
or other returns against other persons having names the same as or similar to
that of Seller, Seller will on request deliver to the Title Company or
Purchaser an affidavit showing that such judgments, bankruptcies or other
returns are not against Seller, in form sufficient to permit deletion of such
exception from the title policy.
4. Apportionments. All customary apportionments will be made
between Purchaser and FGSC under the FGSC Agreement.
5. The Closing.
5.1 The closing of the transaction provided for in this
Agreement (the "Closing") shall take place simultaneously with the execution
and delivery of this Agreement (the actual date of the Closing being referred
to
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<PAGE>
herein as the "Closing Date"), at 10:00 a.m. at the offices of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York
10176, or at such other place as may be mutually agreed to by Seller and
Purchaser.
5.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser physical possession of the Property (receipt of which
may be actual or constructive) and the following:
5.2.1 a deed with covenants against grantor's acts, duly
executed and acknowledged by Seller, in proper statutory form for recording,
so as to convey to Purchaser fee simple title to the Premises, subject to and
in accordance with the provisions of this Agreement (the "Deed");
5.2.2 an owner's affidavit of title;
5.2.3 a Certificate or Certificates of Occupancy for all
Improvements;
5.2.4 an original counterpart of the instrument terminating
the FGSC Lease, duly executed and acknowledged by Seller and FGSC;
5.2.5 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;
5.2.6 an affidavit (the "FIRPTA Affidavit") duly executed
and acknowledged by Seller pursuant to Section 1445 (b)(2) of the Internal
Revenue Code of 1986, as amended, stating that Seller is not a foreign person
within the meaning of such provision;
5.2.7 and IRS form 1099-S executed by Seller;
5.2.8 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Seller to Purchaser pursuant
to any of the other provisions of this Agreement; and
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<PAGE>
5.2.9 such other documents as may be reasonably required
by Purchaser's counsel in connection with this transaction.
5.3 At the Closing, Purchaser shall deliver or cause to be
delivered to Seller the following:
5.3.1 Note;
5.3.2 the Mortgage;
5.3.3 the UCCs;
5.3.4 the Security Agreement;
5.3.5 the Guaranty;
5.3.6 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Purchaser to Seller; and
5.3.7 such other documents as may be reasonably required
by Seller's counsel in connection with this transaction.
6. Representations and Warranties.
6.1 Seller hereby represents and warrants to Purchaser as of
the date hereof as follows:
6.1.1 Organization; Power and Authority. Seller is a
general partnership duly formed, validly existing and in good standing under
the laws of the State of New Jersey, and has all requisite power and authority
to carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The only partners of Seller are Steven
Kalafer and Suzanne Kalafer.
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<PAGE>
6.1.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary partnership action required to be taken on the
part of Seller. This Agreement has been duly and validly executed and
delivered by Seller and constitutes the valid and binding obligation of
Seller, enforceable in accordance with its terms. The execution, delivery and
performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Seller is subject; (b) violate any order, judgment
or decree applicable to Seller; or (c) conflict with or result in a breach of
or a default under any term or condition of Seller's Partnership Agreement or
any agreement or other instrument to which Seller is a party or by which it or
its assets may be bound, except in each case, for violations, conflicts,
breaches or defaults which in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby.
6.1.3 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been obtained.
6.1.4 Compliance with Applicable Laws. Seller is not
engaging in any activity or omitting to take any action as a result of which
Seller is in violation of any law, rule, regulation, ordinance, statute,
order, injunction or decree, or any other requirement of any court or
governmental or
- 6 -
<PAGE>
administrative body or agency, applicable to the Property, and neither the
execution and delivery by Seller of this Agreement or of any of the other
agreements and instruments to be executed and delivered by it pursuant hereto,
the performance by Seller of its obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby will result in
any such violation. The Premises are not subject to any notice of violation of
law, municipal ordinance, orders or requirements issued by any building
department or other governmental agency or subdivision having jurisdiction.
6.1.5 Permits. All Permits required by any federal, state,
or local law, rule or regulation and necessary for the operation of the
Property as currently being conducted have been obtained and are currently in
effect. No registrations, filings, applications, notices, transfers, consents,
approvals, orders, qualifications, waivers or other actions of any kind are
required by virtue of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby (a) to avoid the loss of
any Permit or the violation of any law, regulation, order or other requirement
of law, or (b) to enable Purchaser to continue the operation of the Property
as presently conducted after the Closing. The current use and occupation of
any portion of the Property does not violate any of, and, where applicable, is
in material compliance with, the Permits, any applicable deed restrictions or
other covenants, restrictions or agreements including without limitation, any
of the Permitted Exceptions, site plan approvals, zoning or subdivision
regulations or urban redevelopment plans applicable to the Premises.
6.1.6 Title to Assets. Seller has good and marketable
title to the Property free and clear of all Encumbrances other than the
Permitted Exceptions.
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<PAGE>
6.1.7 Contracts. Except for the Lease, which is being
terminated simultaneously with the execution and delivery of this Agreement,
Seller is not a party to any leases, contracts, orders or agreements relating
to the Property.
6.1.8 Environmental Matters.
6.1.8.1 As used in this Agreement "Hazardous
Material" shall mean: (i) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. ss. 9601(33); (ii) any "pollutant or contaminant"
as defined in 42 U.S.C. ss. 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum,
including crude oil and any fraction thereof; (v) natural or synthetic gas
usable for fuel; (vi) any "hazardous chemical" as defined pursuant to 29
C.F.R. Part 1910; (vii) any asbestos, asbestos containing material,
polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any material or
thing containing or composed of such substance or substances; and (viii) any
other pollutant, contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as such in (or
for purposes of any Environmental Law (as hereinafter defined) and any other
toxic, reactive or flammable chemicals.
6.1.8.2 To Seller's knowledge, there is no
Hazardous Material at, under or on the Premises and there is no ambient air,
surface water, groundwater or land contamination within, under, originating
from or relating to the Premises. Seller has not, and has not caused to be,
manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any Hazardous Material at, on or under the Premises.
- 8 -
<PAGE>
6.1.8.3 To Seller's knowledge, Seller has no
obligation or liability imposed or based upon any provision under any foreign,
federal, state or local law, rule, or regulation or common law, or under any
code, order, decree, judgment or injunction applicable to Seller or the
Property or any notice, or request for information issued, promulgated,
approved or entered thereunder, or under the common law, or any tort, nuisance
or absolute liability theory, relating to public health or safety, worker
health or safety, or pollution, damage to or protection to the environment,
including without limitation, laws relating to emissions, discharges, releases
or threatened releases of Hazardous Material into the environment (including
without limitation, ambient air, surface water, groundwater, land surface or
subsurface), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, generation, disposal, transport or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes (hereinafter collectively referred to as
"Environmental Laws").
6.1.8.4 Seller has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.
6.1.8.5 The Premises are not (a) listed or
proposed for listing on the National Priority List or (b) listed on the
Comprehensive Environmental Response, Compensation, Liability Information
System List ("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C. ss. 9601(9),
or any comparable list maintained by any foreign, state or local government
authority.
- 9 -
<PAGE>
6.1.8.6 There are no underground storage tanks
at the Premises and Seller further warrants and represents that any prior use
and operation of underground storage tanks has been in compliance with all
Environmental Laws.
6.1.9 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises.
6.1.10 Utilities. All water, storm and sanitary
sewer, gas, electricity, telephone and other utilities adequately service the
Premises, enter the Premises through lands as to which valid public or private
easements exist that will inure to the benefit of Purchaser and the Premises
are furnished by facilities of public utilities and the cost of installation
of such utilities has been fully paid.
6.1.11 Access. To the best of Seller's knowledge,
there are no federal, state, county, municipal or other governmental plans to
change the highway or road system in the vicinity of the Premises which could
materially restrict or change access from any such highway or road to the
Premises or any pending or threatened condemnation or eminent domain
proceedings relating to or affecting the Premises. All roads bounding the
Premises are public roads and the Deed is the only instrument necessary to
convey to Purchaser full access to and the right to use such roads freely as
well as to convey all rights appurtenant to the Premises in such roads.
6.1.12 Intentioanlly Deleted.
6.1.13 Litigation. There is no action or proceeding
(zoning or otherwise) or governmental investigation pending, or, to the best of
Seller's knowledge, threatened against, or relating to, Seller (insofar as it
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<PAGE>
relates to the Premises), or the transactions contemplated by this Agreement,
nor is there any basis for any such action, proceeding or investigation.
6.1.14 Assessments. There are no special or other
assessments for public improvements or otherwise now affecting the Premises
nor does Seller know of (a) any pending or threatened special assessments
affecting the Premises or (b) any contemplated improvements affecting the
Premises that may result in special assessments affecting the Premises.
6.1.15 Employee Agreements. There are no union or
employment contracts or agreements (written or oral) involving employees of
Seller or its affiliates affecting the Property which will survive the
Closing.
6.1.16 Work at the Premises. No services, material
or work have been supplied to the Premises for which payment has not been made
in full.
6.1.17 Full Disclosure. To the best knowledge of
Seller, none of the information supplied by Seller herein or in the exhibits
hereto contains any untrue statement of a material fact or omits to state a
material fact required to be stated herein or necessary in order to make the
statements herein, in light of the circumstances under which they are made, not
misleading.
6.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
6.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its
- 11 -
<PAGE>
obligations under this Agreement and to consummate the transactions contemplated
hereby.
6.2.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Purchaser. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms. The execution, delivery
and performance by Purchaser of this Agreement and the consummation by
Purchaser of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (a) violate any provision
of any law, rule or regulation to which Purchaser is subject; (b) violate any
order, judgment or decree applicable to Purchaser; or (c) conflict with or
result in a breach of or a default under any term or condition of Purchaser's
Certificate of Incorporation or By-Laws or any agreement or other instrument
to which Purchaser is a party or by which it or its assets may be bound,
except in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
6.3 Survival. The representations and warranties of the
parties made in this Article 6 shall survive the Closing.
7. Further Assurances. At any time and from time to time after the
Closing Date, Seller shall, at the request of Purchaser, execute and deliver any
further instruments or documents and take all such further action as Purchaser
may reasonably request in order to transfer into the name of Purchaser any and
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<PAGE>
all Property contemplated to be sold pursuant to this Agreement and to further
consummate the transactions contemplated by this Agreement. This Article shall
survive the Closing.
8. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein. Purchaser and Seller
hereby respectively agree to indemnify and hold harmless the other party from
and against all loss, liability, damage and expense (including, without
limitation, attorneys' fees) imposed upon or incurred by the other party by
reason of any claim for commissions or other compensation for bringing about
this transaction by any broker, finder or similar agent or party who claims to
have dealt with the indemnifying party in connection with this transaction.
The provisions of this Article shall survive the Closing.
9. "As Is". Purchaser represents that it has inspected the Property
and is familiar with the physical condition thereof, and that it agrees to
accept the Property "as is", in its condition at the date of this Agreement.
10. Costs and Fees. Documentary stamps for the Deed, deed
transfer or conveyancing taxes, if any, shall be payable by Seller, and in no
event be payable by Purchaser. Recording fees for the Deed shall be payable by
Purchaser. Purchaser shall also pay the expenses incurred in connection with
(a) the examination of title, (b) the issuance of a policy of title insurance
for Purchaser, and (c) a survey of the Property, if obtained by Purchaser. Any
other similar costs not expressly provided for elsewhere in this Agreement
shall be divided and borne in accordance with the usual practices in the
jurisdiction
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<PAGE>
where the Premises are located. It is agreed that no portion of the
consideration paid by Purchaser hereunder shall be allocated toward items of
personal property conveyed hereunder. The provisions of this Article shall
survive the Closing.
11. Indemnification.
11.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs of investigation, litigation, settlement, and judgment and
interest) ("Losses") that may be suffered or incurred by any of them arising
from or by reason of (i) any and all liabilities or obligations of any nature
whatsoever in connection with or relating to the Property or Seller or any
predecessor owner of the Property or other liability or obligation of Seller
arising prior to the Closing Date; (ii) the breach of any representation,
warranty, covenant or agreement of Seller contained in this Agreement or in
any document or other writing delivered pursuant to this Agreement; and (iii)
any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including without limitation, interest,
penalties, reasonable legal fees and accounting fees) incident to the
foregoing and the enforcement of the provisions of this Section 11.1.
11.2 Subject to the further provisions of this Article,
Purchaser shall protect, defend, hold harmless and indemnify Seller, its
partners, employees and agents, and its successors and assigns from, against
and
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<PAGE>
in respect of any and all Losses that may be suffered or incurred by any of
them arising from or by reason of (i) any and all liabilities or obligations
of any nature whatsoever in connection with or relating to the Property or
Purchaser arising on and after the Closing Date, (ii) the breach of any
representation, warranty, covenant or agreement of Purchaser contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.2.
11.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision
of this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such
facts within the Indemnified Party's knowledge with respect to such claim and
the amount thereof (a "Notice of Claim"). If, prior to the expiration of
fifteen (15) days from the mailing of a Notice of Claim, the Indemnifying
Party shall request, in writing, that such claim not be paid, the Indemnified
Party shall not pay the same, provided the Indemnifying Party proceeds
promptly, at its or their own expense (including employment of counsel
reasonably satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the Indemnifying Party
requesting the Indemnified
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<PAGE>
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expense
subsequently incurred by the Indemnified Party in connection with the defense
thereof. However, the Indemnified Party shall have the right to participate at
its expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 11.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 11.3.
11.4 For purposes of this Article, any assertion of fact and/or
law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make
operational an indemnification obligation hereunder, shall, on the date that
such assertion is made, immediately invoke the Indemnifying Party's obligation
to protect, defend, hold harmless and indemnify the Indemnified Party pursuant
to this Article.
12. Notices.
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<PAGE>
12.1 All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Alan Schacter, Esq. A copy
of any Notice given by Purchaser to Seller shall simultaneously be given in
either manner provided above to Harlan L. Schlossberg, Esq., 82 Musiker
Avenue, P.O. Box 443, Mt. Freedom, New Jersey 07970. Notices given in the
manner aforesaid shall be deemed to have been given three (3) business days
after the day so mailed, the day after delivery to any overnight express
carrier and on the day so delivered by hand. Either party shall have the right
to change its address(es) for the receipt of Notices by giving Notice to the
other party in either manner aforesaid. Any Notice required or permitted to be
given by either party may be given by that party's attorney.
13. Miscellaneous.
13.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
13.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of New Jersey.
13.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
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<PAGE>
13.4 This Agreement has been fully negotiated by the parties and
rules of construction construing ambiguities against the party responsible for
drafting agreements shall not apply.
13.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.
13.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
13.7 This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized
in writing or as otherwise expressly permitted herein.
13.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein contained. No
extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.
13.9 This Agreement may be executed in one or more counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which taken together shall constitute but one and the same original.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
FLEMINGTON EQUITIES VII
By: /s/ Steven Kalafer
_______________________
Name: Steven Kalafer
Title: Partner
By: /s/ Suzanne Kalafer
_______________________
Name: Suzanne Kalafer
Title: Partner
FLEMINGTON FAMILY GOLF
CENTERS, INC.
By: /s/ Dominic Chang
______________________
Name: Dominic Chang
Title: President
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B PERMITTED EXCEPTIONS
[LETTERHEAD]
EXHIBIT A
DESCRIPTION OF A TRACT OF LAND TO BE DEEDED TO FLEMINGTON FAMILY GOLF CENTERS,
INC. AS SITUATED IN RARITAN TOWNSHIP, HUNTERDON COUNTY, NEW JERSEY - TAX MAP
BLOCK 84; LOT NO. 34
Beginning at a concrete highway monument found in the westerly right-of-
way line of the public highway leading from Flemington to Ringoes known as New
Jersey State Highway Route No. 31 and U.S. Highway Route No. 202, said highway
monument being located at the termination of course number 2 as previously set
forth in Deed Book 1001; Page No. 570 and running thence:
(1.) Along the westerly right-of-way line of said New Jersey State
Highway Route No. 31 and U.S. Highway Route No. 202, South 02 degrees 54' 53''
East- a distance of one thousand two hundred fifty-nine and thirty-seven one-
hundredths feet (1259.37') to an old solid iron pin found in the same; thence;
(2.) Along the same, South 87 degrees 05' 07'' West - a distance of
three and zero one-hundredths feet (3.00') to a concrete highway monument found
in the same; thence:
(3.) Along the same being the jughandle leading to Everitts road, on a
curve to the right with a radius of three hundred ninety and zero one-hundredths
feet (390.00'), an arc distance of two hundred fifty-four and twenty-five one
hundredth feet (254.25') and having a chord bearing and distance of South 15
degrees 45' 42'' West - two hundred forty-nine and seventy-seven one-hundredths
feet (249.77') to an old solid iron pin found at a point of tangency for the
same; thence:
(4.) Along the same, South 34 degrees 26' 17'' West - a distance of one
hundred twenty-one and fifty-four one-hundredths feet (121.54') to an old iron
pin found at a point of curvature for the same; thence:
(5.) Along the same on a curve to the left with a radius of two hundred
ten and zero one-hundredths feet (210.00'), an arc distance of seventeen and
sixty-nine one-hundredths feet (17.69') and having a chord bearing and distance
of South 32 degrees 01' 29'' West - seventeen and sixty-eight one-hundredths
feet (17.68') to an old iron pipe found in the same, corner to land now or
formerly of Speir Drive Realty Associates (Block 84; Lot No. 37); thence:
(6.) Along land of now or formerly Speir Drive Realty Associaates (Block
84; Lot No. 37), North 83 degrees 54' 22'' West - a distance of one hundred
sixty-four and five one-hundredths feet (164.05') to an old iron pipe found for
a corner to the same in line of land of the Black River & Western Corporation
(Block 84; Lot No. 100.01); thence:
(7.) Along land of the Black River & Western Corpration (Block 84; Lot
No. 100.01), North 16 degrees 15' 30'' West - a distance of seven hundred
sixteen and eighty-five one-hundredths feet (716.85') to an old iron pin found
for a corner to the same in the westerly right-of-way line of other land of the
Black River & Western Corporation, said iron pin being located thirty-three and
zero one-hundredths feet (33.00') more or less as measured radially from the
centerline of the railroad tracks; thence:
(8.) Along the westerly right-of-way line of land of the Black River &
Western Corporation parallel with the thirty-three and zero one-hundredths feet
(33.00') more or less as measured radially from the centerline of the railroad
tracks, on a curve to the right with a radius of three thousand two hundred
forty-one and five one-hundredths feet (3241.05'), an arc distance of two
hundred seventy-seven and ninety-six one-hundredths feet (277.96') and having a
chord bearing and distance of North 03 degrees 55' 42'' West- two hundred
seventy-seven and eighty-eight one-hundredths feet (277.88') to an old solid
iron pin found for a corner to the same; thence:
(9.) Along the same parallel with and thirty-three feet and zero one-
hundredths feet (33.00') as measured at right angles from the centerline of the
railroad tracks, North 01 degrees 26' 20'' West - a distance of six hundred
seventy-one and twenty one-hundredths feet (671.20') to an old H.C.E. capped
iron pin found along the same, corner to land of 153 Broad Street Associates
(Block 84; Lot No. 34.01); thence:
(10.) Along land of 153 Broad Street Associates (Block 84; Lot No.
34.01), North 81 degrees 34' 53'' East - a distance of four hundred eighty and
eighty-three one-hundredths feet (480.83') to an old H.C.E. capped monument
found in the westerly right-of-way line of the aforementioned New Jersey State
Highway Route No. 31 and U.S. Highway Route No. 202, said monument found being
located at the termination of course number one as contained in the
aforementioned Deed Book 1001; Page No. 570; thence:
(11.) Along the westerly right-of-way line of said New Jersey State
Highway Route No. 31 and U.S. Highway Route No. 202 following along course
number 2 as contained in the aforementioned Deed Book 1001; Page No. 570, on a
curve to the right with a radius of one thousand eight hundred forty-six and
eighty-six one-hundredths feet (1846.86'), an arc distance of one hundred eleven
and eight one-hundredths feet (111.08') and having a chord bearing and distance
of South 04 degrees 38' 16'' East - one hundred eleven and six one-hundredths
feet (111.06') to the point and place of beginning and containing 17.2546 Acres
+ - (751,612.12 sq. ft.) being the same more or less as surveyed by Heritage
Consulting Engineers in March of 1996.
All bearings herein refer to Deed Book 1001; Page No. 570.
Subject to any gas company easements.
Subject to any overhead and/or underground consumer type electric,
telephone and/or cable distribution line easements.
Subject to any and all easements, ordinances, covenants, agreements
and/or restrictions of record.
Subject to any slope, drainage and/or maintenance easements, rights, as
the same now exists, if any, along, near, to or from New Jersey State Highway
Route No. 31 and U.S. Highway Route No. 202 as granted to the New Jersey Highway
Department.
Subject to that portion of a 30' x 100' sight triangle easement as
previously set forth in Deed Book 1033; Page No. 938
Subject to a 30' x 100' sight triangle easement as previously set forth
in Deed Book 1078; Page No. 0133.
Subject to a 30' x 100' sight triangle easement as previously set forth
in Deed Book 1078; Page No. 0135.
Subject to and together with the rights and conditions of an easement
for non-obstruction of storm water flow and maintenance of storm water
management facility as previously set forth in Deed Book 1078; Page No. 0128.
Subject to the rights and conditions of a 30' x 100' drainage and access
easement as previously set forth in Deed Book 1033; Page No. 0214 and Page No.
934.
Subject to a right-of-way agreement to New Jersey Power & Light
Company and United Telephone Co. Of New Jersey as previously set forth in Deed
Book 1085; Page No. 0101.
Subject to right-of-way grants as previously set forth in Deed Book 330;
Page No. 444 and Deed Book 492; Page No. 52
Exhibit B
Exceptions to title set forth in title policy obtained by Purchaser in
connection with the Closing.
PURCHASE AGREEMENT
by and between
FLEMINGTON GOLF AND SPORTS CENTER, LLC
Seller,
and
FLEMINGTON FAMILY GOLF CENTERS, INC.,
Purchaser
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT, made as of the 7th day of March, 1996 (this
"Agreement"), by and between FLEMINGTON GOLF AND SPORTS CENTER, LLC, a New
Jersey limited liability company having an address at 1594 Route 10, Randolph,
New Jersey 07869 ("Seller"), and FLEMINGTON FAMILY GOLF CENTERS, INC., a
Delaware corporation having an address at 225 Broadhollow Road, Suite 106E,
Melville, New York 11747 ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is the lessee of certain real property located
in Flemington, New Jersey and more particularly described on Exhibit A
attached hereto and made a part hereof (the "Land") and the buildings and
improvements located on the Land (the "Improvements" and, together with the
Land, the "Premises") pursuant to a lease (the "Lease") from Flemington
Equities VII ("Landlord");
WHEREAS, Seller operates a driving range and related facilities
at the Premises under the name "Flemington Golf and Sports Center" (the
"Business");
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Purchaser is entering into a purchase agreement with Landlord and
purchasing the Land from Landlord;
WHEREAS, simultaneously and in connection with the execution and
delivery of this Agreement the Lease is being terminated; and
WHEREAS, Seller wants to sell certain property relating to the
Business to Purchaser, and Purchaser wants to purchase such property from
Seller, on the terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the
terms and conditions set forth herein, and other good and valuable
consideration, the
<PAGE>
mutual receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree to the foregoing and as follows:
1. Agreement to Sell and Purchase.
1.1 Property to be Purchased by Purchaser. Seller agrees to
sell and convey to Purchaser, and Purchaser agrees to purchase and acquire
from Seller, upon the terms and conditions hereinafter set forth, all of
Seller's right, title and interest in and to the following property
(collectively, the "Property"):
1.1.1 intentionally deleted;
1.1.2 all furnishings, fixtures, machinery, equipment,
vehicles and personalty attached or appurtenant to or used in connection with
the Premises that are owned by Seller, and all supplies, sales, marketing and
instructional materials of every kind and description relating to the
Business, wherever located, including without limitation, the items described
on Exhibit B attached hereto and made a part hereof (but specifically
excluding Seller's sales inventory) (the "Personal Property");
1.1.3 intentionally deleted;
1.1.4 any consents, authorizations, variances, waivers,
licenses, certificates, permits and approvals held by or granted to Seller in
connection with the ownership of the Premises (collectively, the "Permits");
1.1.5 intentionally deleted;
1.1.6 unliquidated rights under manufacturers' and vendors'
warranties and guarantees, except to the extent the same relate solely to any
Retained Assets or Retained Liabilities (as hereinafter defined) (the
"Claims"); and
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<PAGE>
1.1.7 any other properties and assets of every kind and
nature, real or personal, tangible or intangible (including the trade name
"Flemington Golf and Sports Center"), relating in any way whatsoever to the
Premises or the Business, except to the extent the same relate solely to the
Retained Assets or Retained Liabilities.
1.2 Assets to be Retained by Seller. Anything herein to the
contrary notwithstanding, Seller shall not sell, and Purchaser shall not
acquire, the following assets of Seller (the "Retained Assets"):
1.2.1 all claims of Seller for refunds or credits with
respect to federal, state or local income taxes or foreign income taxes of
whatever nature or taxable period involved;
1.2.2 any rights of Seller with respect to insurance
policies owned by Seller or for which Seller is the named insured;
1.2.3 all cash, funds in bank accounts and cash equivalents
existing as of the Closing Date (as hereinafter defined);
1.2.4 intentionally deleted;
1.2.5 any patents, trademarks, trademark registrations,
copyrights, copyright registrations, trade names (other than the name
"Flemington Golf and Sports Center") and all registrations thereof and all
applications for any of the foregoing, whether issued or pending, if any, and
all goodwill associated with any of the foregoing (the "Intangible Assets");
and
1.2.6 intentionally deleted.
1.3 Intentionally Deleted.
1.4 Liabilities to be Retained by Seller. Seller shall retain,
and Purchaser shall not assume, perform, discharge or pay, and shall not be
responsible for, any and all liabilities or obligations of any nature whatsoever
- 3 -
<PAGE>
in connection with or relating to the Premises, the Property, Seller or the
Business or any predecessor owner of the Property or the Business
(collectively, the "Retained Liabilities").
2. Consideration. In consideration for the Property, Purchaser
shall:
2.1 cause Family Golf Centers, Inc. ("Parent") to issue 100,000
validly issued, fully paid and non-assessable shares of common stock, par
value $.01 per share, of Parent (the "Common Stock") and to deliver at Closing
a certificate representing 100,000 shares of Common Stock to Bear, Stearns
Securities Corp., as pledgee of Seller. Seller acknowledges and agrees that
the Common Stock has not been registered under the Securities Act of 1933, as
amended (the "Act") and is and will be deemed to be "restricted securities" as
such term is defined in Rule 144 promulgated under the Act ("Rule 144").
Seller further acknowledges and agrees that the Common Stock can only be sold
or otherwise disposed of in accordance with the provisions of Rule 144,
including the applicable holding period or such other exemption from
registration under the Act as may be available. If prior to the expiration of
the holding period set forth in Rule 144 Parent files a registration statement
to register any of its securities for public offering, Parent shall, subject
to the approval of the underwriter for such public offering, include to the
extent then permissible under the Act, all of the Common Stock acquired
hereunder and then owned by Seller; and
2.2 intentionally deleted.
3. Title; Permitted Exceptions.
3.1 Seller will convey the Property to Purchaser, free and
clear of any and all liens, charges, encumbrances, mortgages, pledges, security
- 4 -
<PAGE>
interests, easements, agreements and other interests and adverse claims
(collectively, "Encumbrances").
3.2 Purchaser may order an examination of title from a title
company licensed or authorized to issue title insurance in the State of New
Jersey ("Title Company"), and shall cause a copy of any title report to be
forwarded to Seller's attorney upon receipt. If a title examination shall
disclose any Encumbrances, Seller shall cause the same to be discharged of
record or otherwise cured.
3.3 If a search of the title discloses judgments, bankruptcies
or other returns against other persons having names the same as or similar to
that of Seller, Seller will on request deliver to the Title Company or
Purchaser an affidavit showing that such judgments, bankruptcies or other
returns are not against Seller, in form sufficient to permit deletion of such
exception from the title policy.
4. Apportionments.
4.1 The following items shall be apportioned as of 11:59 PM of
the day immediately preceding the Closing Date:
4.1.1 real estate taxes, on the basis of the fiscal year
for which the same are levied, imposed or assessed, subject to Section 4.2
hereof;
4.1.2 charges for water, sewer rents, electricity, steam,
gas and telephone, which are not metered; provided that if the consumption of
any of such utilities is measured by meters, at the Closing (as hereinafter
defined) Seller shall furnish a current reading of each meter; and further
provided that if there is not a meter or if the current bill for any of such
utilities has not been issued prior to the Closing Date, the charges therefore
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<PAGE>
shall be adjusted at the Closing on the basis of the charges for the prior
period for which bills were issued and shall be further adjusted when the
bills for the current period are issued;
4.1.3 utility deposits, to the extent actually assigned to
Purchaser;
4.1.4 fuel, if any, at Seller's cost therefore (as
determined by Seller's fuel supplier); and
4.1.5 intentionally deleted.
4.2 If the Closing shall occur before the real estate tax rate
is fixed, the apportionment of real estate taxes shall be based upon the tax
rate for the next preceding year applied to the latest assessed valuation.
4.3 If on the Closing Date the Premises shall be affected by
any special or other assessment for public improvements or otherwise which is
or may become payable by Seller in annual installments, of which the first
installment is then a charge or lien, or has been paid, then, for the purposes
of this Agreement, all the unpaid installments of such assessment, including
those which are to become due and payable after the Closing, shall be deemed
to be due and payable and to be liens upon the Premises and shall be paid and
discharged by Seller upon the Closing.
4.4 Seller and Purchaser shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article 4 shall survive the
Closing.
5. The Closing.
5.1 The closing of the transaction provided for in this
Agreement (the "Closing") shall take place simultaneously with the execution and
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<PAGE>
delivery of this Agreement (the actual date of the Closing being referred to
herein as the "Closing Date"), at the offices of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 551 Fifth Avenue, New York, New York 10176, or at such other
place as may be mutually agreed to by Seller and Purchaser.
5.2 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser physical possession of the Property (receipt of which
may be actual or constructive) and the following:
5.2.1 intentionally deleted;
5.2.2 a bill of sale conveying, transferring and selling
to Purchaser all right, title and interest of Seller in and to all of the
Personal Property, which bill of sale shall contain a warranty that such
property is free and clear of all Encumbrances, duly executed and acknowledged
by Seller;
5.2.3 an assignment and assumption agreement (the
"Assignment and Assumption Agreement") assigning to Purchaser all of Seller's
right, title and interest in and to the Permits and the Claims, duly executed
and acknowledged by Seller;
5.2.4 a settlement statement (the "Settlement Statement")
setting forth the amounts paid by or on behalf of and/or credited to each of
Purchaser and Seller pursuant to this Agreement;
5.2.5 intentionally deleted;
5.2.6 a Certificate or Certificates of Occupancy for all
Improvements;
5.2.7 intentionally deleted;
5.2.8 an original counterpart of the instrument terminating
the Lease, duly executed and acknowledged by Seller and Landlord;
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<PAGE>
5.2.9 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;
5.2.10 intentionally deleted;
5.2.11 keys to all locks relating to the Property,
appropriately labeled;
5.2.12 the Escrow Agreement (as hereinafter defined),
executed by Seller;
5.2.13 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Seller to Purchaser pursuant
to any of the other provisions of this Agreement; and
5.2.14 such other documents as may be reasonably required
by Purchaser's counsel in connection with this transaction.
5.3 At the Closing, Purchaser shall deliver or cause to be
delivered to Seller the following:
5.3.1 the stock certificate referred to in Section 2(a)
hereof, registered in the name of "Bear, Stearns Securities Corp., as pledgee"
representing, in the aggregate, 100,000 shares of Common Stock of Parent;
5.3.2 the Escrow Agreement, executed by Purchaser;
5.3.3 the Assignment and Assumption Agreement, duly
executed and acknowledged by Purchaser;
5.3.4 the Settlement Statement, duly executed and
acknowledged by Purchaser;
5.3.5 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Purchaser to Seller; and
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<PAGE>
5.3.6 such other documents as may be reasonably required
by Seller's counsel in connection with this transaction.
6. Representations and Warranties.
6.1 Seller hereby represents and warrants to Purchaser as of
the date hereof as follows:
6.1.1 Organization; Power and Authority. Seller is a
limited liability Company duly organized, validly existing and in good
standing under the laws of the State of New Jersey, and has all requisite
power and authority to carry on its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
6.1.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary corporate action required to be taken on the part
of Seller. This Agreement has been duly and validly executed and delivered by
Seller and constitutes the valid and binding obligation of Seller, enforceable
in accordance with its terms. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (a) violate any provision of any law, rule or
regulation to which Seller is subject; (b) violate any order, judgment or
decree applicable to Seller; or (c) conflict with or result in a breach of or
a default under any term or condition of Seller's Certificate of Incorporation
or By-Laws or any agreement or other instrument to which Seller is a party or
by which it or its assets may be bound, except in each case, for violations,
conflicts, breaches
- 9 -
<PAGE>
or defaults which in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
6.1.3 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been obtained.
6.1.4 Compliance with Applicable Laws. Seller is not
engaging in any activity or omitting to take any action as a result of
which Seller is in violation of any law, rule, regulation, ordinance, statute,
order, injunction or decree, or any other requirement of any court or
governmental or administrative body or agency, applicable to the Property or
the Business, and neither the execution and delivery by Seller of this
Agreement or of any of the other agreements and instruments to be executed and
delivered by it pursuant hereto, the performance by Seller of its obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby will result in any such violation. To Seller's knowledge,
Seller is in compliance with all requirements imposed in writing by any
insurance carrier of Seller to the extent such carrier is an insurer or
indemnitor of the Property. The Premises are not subject to any notice of
violation of law, municipal ordinance, orders or requirements issued by any
building department or other governmental agency or subdivision having
jurisdiction.
6.1.5 Permits. All Permits required by any federal, state,
or local law, rule or regulation and necessary for the operation of the Property
and the Business as currently being conducted have been obtained and are
currently in effect. No registrations, filings, applications, notices,
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transfers, consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby (a)
to avoid the loss of any Permit or the violation of any law, regulation, order
or other requirement of law, or (b) to enable Purchaser to continue the
operation of the Property as presently conducted after the Closing. The
current use and occupation of any portion of the Property does not violate any
of, and, where applicable, is in material compliance with, the Permits, any
applicable deed restrictions or other covenants, restrictions or agreements
including without limitation, any site plan approvals, zoning or subdivision
regulations or urban redevelopment plans applicable to the Premises.
6.1.6 Title to Assets. Seller has good and marketable
title to the Property free and clear of all Encumbrances.
6.1.7 Contracts. Seller is not a party to any leases,
subleases, occupancy agreement, contracts, orders or agreements relating to
the Property or the Business (written or otherwise) other than the Lease being
terminated simultaneously herewith.
6.1.8 Condition of the Improvements. To Seller's
knowledge, there are no material structural or mechanical defects in the
Improvements, and there are no leaks in any roof on any Improvement.
6.1.9 Condition of Personal Property. To Seller's
knowledge, the Personal Property is in good operating condition and repair,
ordinary wear and tear excepted, and is and as of the Closing Date will be
adequate, suitable and sufficient to meet the needs of and to operate the
Property as currently conducted.
6.1.10 Environmental Matters.
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6.1.10.1 As used in this Agreement "Hazardous
Material" shall mean: (i) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. ss. 9601(33); (ii) any "pollutant or contaminant"
as defined in 42 U.S.C. ss. 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum,
including crude oil and any fraction thereof; (v) natural or synthetic gas
usable for fuel; (vi) any "hazardous chemical" as defined pursuant to 29
C.F.R. Part 1910; (vii) any asbestos, asbestos containing material,
polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any material or
thing containing or composed of such substance or substances; and (viii) any
other pollutant, contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as such in (or
for purposes of any Environmental Law (as hereinafter defined) and any other
toxic, reactive or flammable chemicals.
6.1.10.2 To Seller's knowledge, there is no
Hazardous Material at, under or on the Premises and there is no ambient air,
surface water, groundwater or land contamination within, under, originating
from or relating to the Premises. Seller has not, and has not caused to be,
manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any Hazardous Material at, on or under the Premises.
6.1.10.3 To Seller's knowledge, Seller has no
obligation or liability imposed or based upon any provision under any foreign,
federal, state or local law, rule, or regulation or common law, or under any
code, order, decree, judgment or injunction applicable to Seller or the
Property or any notice, or request for information issued, promulgated,
approved or entered thereunder, or under the common law, or any tort, nuisance
or absolute
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liability theory, relating to public health or safety, worker health or
safety, or pollution, damage to or protection to the environment, including
without limitation, laws relating to emissions, discharges, releases or
threatened releases of Hazardous Material into the environment (including
without limitation, ambient air, surface water, groundwater, land surface or
subsurface), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, generation, disposal, transport or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes (hereinafter collectively referred to as
"Environmental Laws").
6.1.10.4 Seller has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.
6.1.10.5 To Seller's knowledge, the Premises are
not (a) listed or proposed for listing on the National Priority List or (b)
listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List ("CERCLIS") promulgated pursuant to CERCLA, 42 U.S.C.
ss. 9601(9), or any comparable list maintained by any foreign, state or local
government authority.
6.1.10.6 To Seller's knowledge, there are no
underground storage tanks at the Premises and Seller further warrants and
represents that, to its knowledge, any prior use and operation of underground
storage tanks has been in compliance with all Environmental Laws.
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<PAGE>
6.1.11 Tax Proceedings. There are no proceedings pending
regarding the reduction of real estate taxes or assessments in respect of the
Premises.
6.1.12 Utilities. To the best of Seller's knowledge, all
water, storm and sanitary sewer, gas, electricity, telephone and other
utilities adequately service the Premises, enter the Premises through lands as
to which valid public or private easements exist that will inure to the
benefit of Purchaser and the Premises are furnished by facilities of public
utilities and the cost of installation of such utilities has been fully paid.
6.1.13 Access. To the best of Seller's knowledge, there
are no federal, state, county, municipal or other governmental plans to change
the highway or road system in the vicinity of the Premises which could
materially restrict or change access from any such highway or road to the
Premises or any pending or threatened condemnation or eminent domain
proceedings relating to or affecting the Premises. All roads bounding the
Premises are public roads and the Deed is the only instrument necessary to
convey to Purchaser full access to and the right to use such roads freely as
well as to convey all rights appurtenant to the Premises in such roads.
6.1.14 Insurance Requirements. All requirements or
recommendations by any insurer or by any board of fire underwriters or similar
body in respect of the Premises and the Property have been satisfied.
6.1.15 Litigation. There is no action or proceeding
(zoning or otherwise) or governmental investigation pending, or, to the best
of Seller's knowledge, threatened against, or relating to, Seller (insofar as
it relates to the Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any basis for any
such
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action, proceeding or investigation, other than Valley National Bank v.
Randolph Driving Range and Golf Center, Inc., et al.,, filed in the Superior
Court of New Jersey Law Division, Passaic County, Docket No. l-1365-96, which
action is being dismissed and vacated upon the closing of the transactions
contemplated hereby.
6.1.16 Assessments. There are no special or other
assessments for public improvements or otherwise now affecting the Premises
nor does Seller know of (a) any pending or threatened special assessments
affecting the Premises or (b) any contemplated improvements affecting the
Premises that may result in special assessments affecting the Premises.
6.1.17 Employee Agreements. There are no union or
employment contracts or agreements (written or oral) involving employees of
Seller or its affiliates affecting the Property or the Business which will
survive the Closing. All employees of Seller will have been terminated as of
the Closing Date.
6.1.18 Work at the Premises. No services, material or
work have been supplied to the Premises for which payment has not been made in
full.
6.1.19 Financial Statements. Seller agrees to deliver to
Purchaser as soon as reasonably practicable, and in any event within thirty
(30) days after the date hereof, audited financial statements consisting of
balance sheets and income statements of Seller for the calendar year 1995.
6.1.20 Common Stock. Seller is acquiring the Common Stock
for its own account (and not for the account of others) for investment and not
with a view to the distribution thereof. Upon any sale or disposition of the
Common Stock made in reliance on an exemption from the registration provisions
of the Act, Seller shall deliver or cause to be delivered to Purchaser an
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opinion of counsel satisfactory to Purchaser to the effect that such sale or
disposition may be made without registration of such Common Stock under the
Act. In making any such subsequent sale or disposition of the Common Stock,
Seller will be acting only for itself and not as part of a sale or planned
distribution in violation of the Act.
6.1.21 Full Disclosure. To the best knowledge of Seller,
none of the information supplied by Seller herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.
6.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
6.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
6.2.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Purchaser. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms. The execution, delivery
and
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<PAGE>
performance by Purchaser of this Agreement and the consummation by Purchaser
of the transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Purchaser is subject; (b) violate any order,
judgment or decree applicable to Purchaser; or (c) conflict with or result in
a breach of or a default under any term or condition of Purchaser's
Certificate of Incorporation or By-Laws or any agreement or other instrument
to which Purchaser is a party or by which it or its assets may be bound,
except in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
6.3 Survival. The representations and warranties of the
parties made in this Article 6 shall survive the Closing.
7. Further Assurances. At any time and from time to time after
the Closing Date, Seller shall, at the request of Purchaser, execute and
deliver any further instruments or documents and take all such further action
as Purchaser may reasonably request in order to transfer into the name of
Purchaser any and all Property contemplated to be sold pursuant to this
Agreement and to further consummate the transactions contemplated by this
Agreement. This Article shall survive the Closing.
8. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein, other than Richardson
Commercial Realtors and Bridgeport Properties ("the Brokers"). Purchaser and
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Seller hereby respectively agree to indemnify and hold harmless the other
party from and against all loss, liability, damage and expense (including,
without limitation, attorneys' fees) imposed upon or incurred by the other
party by reason of any claim for commissions or other compensation for
bringing about this transaction by any broker, finder or similar agent or
party other than the Brokers who claims to have dealt with the indemnifying
party in connection with this transaction. Seller agrees to be responsible for
any commissions due the Brokers in connection with this transaction. The
provisions of this Article shall survive the Closing.
9. "As Is". Purchaser represents that it has inspected the Property
and is familiar with the physical condition thereof, and that it agrees to
accept the Property "as is", in its condition at the date of this Agreement.
10. Costs and Fees. Purchaser shall pay the expenses incurred in
connection with (a) the examination of title, (b) the issuance of a policy of
title insurance for Purchaser, and (c) a survey of the Property, if obtained
by Purchaser. Any other costs not expressly provided for elsewhere in this
Agreement shall be divided and borne in accordance with the usual practices in
the jurisdiction where the Premises are located. The provisions of thisArticle
shall survive the Closing.
11. Indemnification.
11.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs
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<PAGE>
of investigation, litigation, settlement, and judgment and interest)
("Losses") that may be suffered or incurred by any of them arising from or by
reason of (i) any Retained Liability or other liability or obligation of
Seller; (ii) the breach of any representation, warranty, covenant or agreement
of Seller contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement; and (iii) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses
(including without limitation, interest, penalties, reasonable legal fees and
accounting fees) incident to the foregoing and the enforcement of the
provisions of this Section 11.1.
11.2 Subject to the further provisions of this Article,
Purchaser shall protect, defend, hold harmless and indemnify Seller, its
partners, employees and agents, and its successors and assigns from, against
and in respect of any and all Losses that may be suffered or incurred by any
of them arising from or by reason of (i) the breach of any representation,
warranty, covenant or agreement of Purchaser contained in this Agreement or in
any document or other writing delivered pursuant to this Agreement and (ii)
any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including without limitation, interest,
penalties, reasonable legal fees and accounting fees) incident to the
foregoing and the enforcement of the provisions of this Section 11.2.
11.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying
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Party") to indemnify the Indemnified Party under any provision of this
Agreement, before paying the same or agreeing thereto, the Indemnified Party
shall promptly notify the Indemnifying Party in writing of all such facts
within the Indemnified Party's knowledge with respect to such claim and the
amount thereof (a "Notice of Claim"). If, prior to the expiration of fifteen
(15) days from the mailing of a Notice of Claim, the Indemnifying Party shall
request, in writing, that such claim not be paid, the Indemnified Party shall
not pay the same, provided the Indemnifying Party proceeds promptly, at its or
their own expense (including employment of counsel reasonably satisfactory to
the Indemnified Party), to settle, compromise or litigate, in good faith, such
claim. After notice from the Indemnifying Party requesting the Indemnified
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expense
subsequently incurred by the Indemnified Party in connection with the defense
thereof. However, the Indemnified Party shall have the right to participate at
its expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 11.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
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Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 11.3.
11.4 For purposes of this Article, any assertion of fact and/or
law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make
operational an indemnification obligation hereunder, shall, on the date that
such assertion is made, immediately invoke the Indemnifying Party's obligation
to protect, defend, hold harmless and indemnify the Indemnified Party pursuant
to this Article.
11.5 The obligation of Seller under Section 11.1 shall be
satisfied first from the Escrow Fund under that certain Escrow Agreement being
entered into among the parties and Continental Stock Transfer and Trust
Company simultaneously herewith (the "Escrow Agreement"), and, if the Escrow
Fund is inadequate to provide indemnification to Purchaser, then from Seller
directly.
12. Notices.
12.1 All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Alan Schacter, Esq. A copy
of any Notice given by Purchaser to Seller shall simultaneously be given in
either manner provided above to Ravin, Greenberg & Marks, 101 Eisenhower
Parkway, Roseland, New Jersey
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07068, Attention: Allen M. Harris, Esq. Notices given in the manner aforesaid
shall be deemed to have been given three (3) business days after the day so
mailed, the day after delivery to any overnight express carrier and on the day
so delivered by hand. Either party shall have the right to change its
address(es) for the receipt of Notices by giving Notice to the other party in
either manner aforesaid. Any Notice required or permitted to be given by
either party may be given by that party's attorney.
13. Miscellaneous.
13.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
13.2 This Agreement shall be governed by, interpreted under and
construed and enforced in accordance with, the laws of the State of New Jersey.
13.3 The captions or article headings in this Agreement are for
convenience only and do not constitute part of this Agreement.
13.4 This Agreement has been fully negotiated by the parties and
rules of construction construing ambiguities against the party responsible for
drafting agreements shall not apply.
13.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.
13.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
13.7 This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
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instrument signed by the party to be charged or by its agent duly authorized
in writing or as otherwise expressly permitted herein.
13.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein contained. No
extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.
13.9 This Agreement may be executed in one or more counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which taken together shall constitute but one and the same original.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
FLEMINGTON GOLF AND SPORTS CENTER, LLC
By: /s/ Richard Wenz
-----------------------------------
Name: Richard Wenz
Title: General Manager
FLEMINGTON FAMILY GOLF CENTERS, INC.
By: /s/ Dominic Chang
-----------------------------------
Name: Dominic Chang
Title: President
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<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B PERSONAL PROPERTY
<PAGE>
HERITAGE CONSULTING ENGINEERS
EXHIBIT A
DESCRIPTION OF A TRACT OF LAND TO BE DEEDED TO FLEMINGTON FAMILY GOLF
CENTERS, INC. AS SITUATED IN RARITAN TOWNSHIP, HUNTERDON COUNTY, NEW JERSEY -
TAX MAP BLOCK 84; LOT NO. 34
Beginning at a concrete highway monument found in the westerly
right-of-way line of the public highway leading from Flemington to Ringoes
known as New Jersey State Highway Route No. 31 and U.S. Highway Route No.
203, said highway monument being located at the termination of course number
2 as previously set forth in Deed Book 1001; Page No. 570 and running thence:
(1) Along the westerly right-of-way line of said New Jersey State Highway
Route No. 31 and U.S. Highway Route No. 202, South 02854'53" East - a
distance of one thousand two hundred fifty-nine and thirty-seven
one-hundredths feet (1259.37') to an old solid iron pin found in the same;
thence:
(2) Along the same, South 87 [degrees]05'07' West - a distance of three
and zero one-hundredths feet (3.00') to a concrete highway monument found in
the same; thence:
(3) Along the same being the jughandle leading to Everitts Road, on a
curve to the right with a radius of three hundred ninety and zero
one-hundredths feet (390.00), an arc distance of two hundred fifty-four and
twenty-five one-hundredths feet (254.25') and having a chord bearing and
distance of South 15 [degrees] 45'42" West - two hundred forty-nine and
seventy-seven one-hundredths feet (249.77') to an old solid iron pin found at
a point tangency for the same; thence:
(4) Along the same, South 34 [degrees] 26'27" West - a distance of one
hundred twenty-one and fifty-four one-hundredths feet (121.54') to an old
iron pin found at a point of curvature for the same; thence:
(5) Along the same on a curve to the left with a radius of two hundred ten
and zero one-hundredths feet (210.00'), an arc distance of seventeen and
sixty-nine one-hundredths feet (17.69') and having a chord bearing and
distance of South 32 [degrees] 01'29" West - seventeen and sixty-eight
one-hundredths feet (17.68') to an old iron pipe found in the same, corner to
land now or formerly of Speir Drive Realty Associates (Block 84; Lot No. 37);
thence:
(6) Along land of now or formerly Speir Drive Realty Associates (Block 84;
Lot No. 37), North 83 [degrees] 54'22" West - a distance of one hundred
sixty-four and five one-hundredths feet (164.05') to an old iron pipe found
for a corner to the same in line of land of the Black River & Western
Corporation (Block 84; Lot No. 100.01); thence:
(7) Along land of the Black River & Western Corporation (Block 84; Lot No.
100.01), North 16 [degrees] 15'30" West - a distance of seven hundred sixteen
and eighty-five one-hundredths feet (716.85') to an old iron pin found for a
corner to the same in the westerly right-of-way line of other land of the
Black River & Western Corporation, said iron pin being located thirty-three
and zero one-hundredths feet (33.00') more or less as measured radially from
the centerline of the railroad tracks; thence:
(8) Along the westerly right-of-way line of land of the Black River &
Western Corporation parallel with and thirty-three and zero one-hundredths
feet (33.00') more or less as measured radially from the centerline of the
railroad tracks, on a curve to the right with a radius of three thousand two
hundred forty-one and five one-hundredths feet (3241.05') an arc distance of
two hundred seventy-seven and ninety-six one-hundredths feet (277.96') and
having a chord bearing and distance of North 03 [degrees] 55'42" West - two
hundred seventy-seven and eighty-eight one-hundredths feet (277.88') to an
old solid iron pin found for a corner to the same; thence:
(9) Along the same parallel with and thirty-three feet and zero
one-hundredths feet (33.00') as measured at right angles from the centerline
of the railroad tracks, North 01 [degrees] 26'20" West - a distance of six
hundred seventy-one and twenty one-hundredths feet (671.20') to an old H.C.E.
capped iron pin found along the same, corner to land of 153 Broad Street
Associates (Block 84; Lot No. 34.01); thence:
<PAGE>
(10) Along land of 153 Broad Street Associates (Block 84; Lot No. 34.01),
North 81[degrees]34'53" East - a distance of four hundred eighty and
eighty-three one-hundredths feet (480.83') to an old H.C.E. capped monument
found in the westerly right-of-way line of the aforementioned New Jersey
State Highway Route No. 31 and U.S. Highway Route No. 202, said monument
found being located at the termination of course number one as contained in
the aforementioned Deed Book 1001; Page No. 570; thence:
(11) Along the westerly right-of-way line of said New Jersey State Highway
Route No. 31 and U.S. Highway Route No. 202 following along course number 2
as contained in the aforementioned Deed Book 1001; Page No. 570, on a curve
to the right with a radius of one thousand eight hundred forty-six and
eighty-six one-hundredths feet (1846.86'), an arc distance of one hundred
eleven and eight one- hundredths feet (111.08') and having a chord bearing
and distance of South 04 [degrees) 38'16" East - one hundred eleven and six
one-hundredths feet (111.06') to the point and place of beginning and
containing 17.2546 Acres + - (751,612.12 sq. ft.) being the same more or less
as surveyed by Heritage Consulting Engineers in March of 1996.
All bearings herein refer to Deed Book 1001; Page No. 570.
Subject to any gas company easements.
Subject to any overhead and/or underground consumer type electric,
telephone and/or cable distribution line easements.
Subject to any and all easements, ordinances, covenants, agreements and/or
restrictions of record.
Subject to any slope, drainage and/or maintenance easements, rights, as
the same now exists, if any, along, near, to or from New Jersey State Highway
Route No. 31 and U.S. Highway Route No. 202 as granted to the New Jersey
Highway Department.
Subject to that portion of a 30' x 100' sight triangle easement as
previously set forth in Deed Book 1033; Page No. 938.
Subject to a 30' x 100' sight triangle easement as previously set forth in
Deed Book 1078; Page No. 0133.
Subject to a 30' x 100' sight triangle easement as previously set forth in
Deed Book 1078; Page No. 0135.
Subject to and together with the rights and conditions of an easement for
non-obstruction of storm water flow and maintenance of storm water management
facility as previously set forth in Deed Book 1078; Page No. 0128.
Subject to the rights and conditions of a 30' x 100' drainage and access
easement as previously set forth in Deed Book 1033; Page No. 0214 and Page
No. 934.
Subject to a right-of-way agreement to New Jersey Power & Light Company
and United Telephone Co. Of New Jersey as previously set forth in Deed Book
1085; Page No. 0101.
Subject to right-of-way grants as previously set forth in Deed Book 330;
Page No. 444 and Deed Book 492; Page No. 52.
<PAGE>
EXHIBIT B
Office Equipment
<TABLE>
<CAPTION>
<S> <C>
Manager's Office ....... Desk Credenza 2 Book Shelves Safe
Staff Office ........... 2 Desks 2 File Cabinets Conference Table
and Chairs Credenza Refrigerator
Pro Shop: .............. Fixtures 2 Putter Racks 3 Club Racks
Cigarette Machine 24 Wall Club Racks
Driving Range Clubs 5 Clothing Racks
Baseballs 2 Dressing Room Mirror and Benches
Baseball Hats Miscellaneous Shelving
Baseball Bats 3 Snack Tables and Chairs
5-10 Cases Soda Vacuum Cleaner Various Cleaning Supplies
Outside Equipment: .... Tractor Golf Cart Driving Range Mats Range
Balls Miniature Golf Putters
Basement ............... 12-15 Wooden Tables and Chairs
</TABLE>
<PAGE>
GUARANTY
March 7, 1996
GUARANTY made by FAMILY GOLF CENTERS, INC., a Delaware corporation (called
the "Guarantors"), with a mailing address of 225 Broadhollow Road, Melville,
NY 11747, for the benefit of FLEMINGTON EQUITIES VII, A NEW JERSEY
PARTNERSHIP, its successors in interest and/or assigns (called "Equities"),
with a mailing address of P.O. Box 1007, Flemington, NJ 08822.
In consideration of One Dollar ($1.00) lawful money of the United States paid
by Guarantors, receipt whereof is hereby acknowledged, and
To induce Equities to lend One Million Seven Hundred Thousand ($1,700,000.00)
dollars to and accept a Mortgage and Note, a copy of which is annexed hereto,
from Flemington Family Golf Centers, Inc. (called "Borrower"), with respect
to real property to be conveyed simultaneously by Equities to Borrower known
as Block 84 Lot 34, Raritan Township, Hunterdon County, New Jersey, now or in
the future, and with full knowledge that the said loan would not be made
without this guaranty, the undersigned Guarantor does agree as follows:
The undersigned hereby guarantees prompt, full, and unconditional payment of
all liabilities of Borrower under the aforementioned Note and Mortgage. This
guaranty is a primary obligation of the undersigned and shall be a continuing
inexhaustible Guaranty without limitation as to amount of duration and may
not be revoked by the Guarantor.
Without incurring responsibility to the undersigned guarantors, and without
impairing or releasing the obligations of the undersigned guarantors.
Equities may at any time without consent of, or notice to the undersigned
guarantors, upon any terms and conditions and in whole or part:
a) change the manner, place, or terms of payment of the note, and the
guaranty herein made shall apply to the liability of Borrower as so changed,
extended, renewed, or altered;
b) assign and or sell the note and or mortgage and the liability of
Guarantors shall apply to the liability of Borrower and for the benefit of
any such assignee(s);
c) sell, or otherwise deal with any property in which a security interest is
given to secure the liability of Borrower;
d) settle or compromise any liability of Borrower;
e) a default by Borrower of the non-monetary portions of the note and/or
mortgage shall give rise to Guarantor's liability under the terms of this
guaranty.
No delay by Equities in exercising any right hereunder, or in taking any
action to collect or enforce payments of any liability of Borrower shall
operate as a waiver of any such right or in any manner prejudice the rights
of Equities against the undersigned. It shall not be a condition to
enforcement of any of the undersigned's obligations hereunder that Equities
either prior or subsequent to such enforcement against the undersigned (1)
institute any judicial action against Borrower or any other party primarily
or secondarily liable, or (3) take any action to realize upon any property
assigned, pledged or otherwise available to Equities as a security for the
performance of the liability of Borrower.
The undersigned Guarantor shall not be entitled to assert as a defense to any
claim based upon this Guaranty (1) any set-off or counterclaim, except as may
relate to payments made in reduction of the amount due, (2) any claim of
waiver or laches, or any demand for marshaling of assets or like procedure,
or (3) the pendency of any bankruptcy, reorganization, insolvency,
liquidation or other federal or state proceeding to which Borrower is a party
or by which it is affected, whether or not any proceeding of the type
described in this clause would constitute a defense to, or operate as a stay
of, a claim or action by Equities against Borrower.
Upon the happening of any of the following events the insolvency of Borrower,
or suspension of business of Borrower, or the making by Borrower of an
assignment for the benefit of creditors, or any proceeding being commenced by
or against Borrower under and bankruptcy or insolvency law which is not
vacated
1
<PAGE>
within sixty days, then in such event and at any time thereafter. Equities
may, without notice to Borrower, make the liability of Borrower immediately
due and payable hereunder as to the undersigned, and Equities shall be
entitled to enforce the obligations of the undersigned hereunder. In the
event any proceedings are undertaken by Equities to effect collection
hereunder, the undersigned shall pay all costs and expenses of every kind for
collection (including reasonable attorney fees) incurred by Equities in
connection with the enforcement of this Guaranty.
All rights of Equities shall be cumulative and in addition to all remedies
provided Equities by law.
No modification or amendment of this Guaranty shall be deemed to be made by
Equities unless the same shall be in writing.
The undersigned waives notice of acceptance of this Guaranty and notice of
any liability of Borrower to which it may apply and waives notice of default,
nonpayment, partial payment, presentment, demand, protest, notice of protest
or dishonor and all other notices to which any guarantor might otherwise be
entitled, or which might be required by law and required to be given by
Equities.
Any part of this Guaranty contrary to the law of any state having
jurisdiction shall not invalidate other parts of this Guaranty in that state.
This Guaranty shall be construed in accordance with the laws of the State of
New Jersey.
Attest FAMILY GOLF CENTERS, INC.
By
--------------------------- -------------------------
Sec DOMINIC CHANG, Pres.
<PAGE>
[LETTERHEAD]
MORTGAGE NOTE
This Mortgage Note is made on March 7, 1995.
BETWEEN the Borrower(s) FLEMINGTON FAMILY GOLF CENTERS, INC., a corporation
of Delaware whose address is 225 Broadhollow Road, Melville, NY 11747
referred to as "I",
AND the Lender FLEMINGTON EQUITIES VII, a New Jersey partnership whose
address is P.O. Box 1007, Flemington, NJ 08822 referred to as the "Lender".
If more than one Borrower signs this Note, the word "I" shall mean each
Borrower named above. The word "Lender" means the original Lender and anyone
else who takes this Note by transfer.
BORROWER'S PROMISE TO PAY PRINCIPAL AND INTEREST. In return for a loan
that I received, I promise to pay $1,700,000.00, (called "principal"), plus
interest to the Lender. Interest, at a yearly rate of 5 1/4 % will be charged
on that part of the principal which has not been paid from the date of this
Note until all principal has been paid.
PAYMENTS. I will pay interest only with monthly payments of $7,437.50 on
the seventh day of each month beginning on May 1, 1996. I will pay all
amounts owed under this Note no later than March 7, 2001. All payments will
be made to the Lender at the address shown above or to a different place if
required by the Lender. Entire balance of principal is due no later than
March 7, 2001.
EARLY PAYMENTS. I have the right to make payments at any time before they
are due. These early payments will mean that this Note will be paid in less
time. In such event, the amount of monthly interest payments will be
recalculated.
LATE CHARGE FOR OVERDUE PAYMENTS. If the Lender has not received any
payment within 15 days after its due date, I will pay the Lender a late
change of 4% of the payment. This charge will be paid with the late payment.
MORTGAGE TO SECURE PAYMENT. The Lender has been given a Mortgage dated
March 7, 1996, to protect the Lender if the promises made in this Note are
not kept. I agree to keep all promises made in the Mortgage covering property
I own located at Routes 202/31 South, Flemington in the Township of Raritan
(Block 84 Lot 34) in the County of Hunterdon and State of New Jersey. All
terms of the Mortgage are made part of this Note.
DEFAULT. If I fail to make any payment required by this Note within 30
days after its due date, or if I fail to keep any other promise I make in
this Note or in the Mortgage, the Lender may declare that I am in default on
the Mortgage and this Note. Upon default, I must immediately pay the full
amount of all unpaid principal, interest, other amounts due on the Mortgage
and this Note and the Lender's costs of collection and reasonable attorney
fees.
WAIVERS. I give up my right to require that the Lender do the following:
(a) to demand payment (called "presentment"); (b) to notify me of nonpayment
(called "notice of dishonor"); and (c) to obtain an official certified
statement showing nonpayment (called a "protest"). The Lender may exercise
any right under this Note, the Mortgage or under any law, even if Lender has
delayed in exercising that right or has agreed in an earlier instance not to
exercise that right. Lender does not waive its right to declare that I am in
default by making payments or incurring expenses on my behalf.
EACH PERSON LIABLE. The Lender may enforce any of the provisions of this
Note against any one or more of the Borrowers who sign this Note.
NO ORAL CHANGES. This Note can only be changed by an agreement in writing
signed by both the Borrower(s) and the Lender.
SIGNATURES. I agree to the terms of this Note. If the Borrower is a
corporation, its proper corporate officers sign and its corporate seal is
affixed. SEE RIDER ANNEXED HERETO REGARDING FACILITY USE CREDITS.
Witnessed or Attested by:
FLEMINGTON FAMILY GOLF CENTERS, INC.
BY: /s/ Dominic Chang (SEAL)
------------------------
DOMINIC CHANG, PRES. (SEAL)
------------------------
<PAGE>
RIDER TO MORTGAGE NOTE DATED MARCH 7, 1996,
MADE BY FLEMINGTON FAMILY GOLF CENTERS, INC. (BORROWER)
TO FLEMINGTON EQUITIES VII (LENDER)
Until the Note is paid in full, Borrower shall grant Lender or Lender's
designees an annual credit in the sum of Twelve Thousand Seven Hundred Fifty
($12,750.00) dollars, to be applied against the use of the mortgaged
facilities for customers of Lender or of Lender's designees. The credit shall
be based upon the regular prices charged by Borrower, or its operator, to the
general public for the use of the driving range, miniature golf, and other
facilities, it being understood, however, that the credit may not be applied
against food, beverage, or merchandise purchases. Any portion of the credit
not used after any annual period shall carry over and be added to the
subsequent annual period.
/s/Dominic Chang
-----------------------------------
DOMINIC CHANG, PRES.
CASH ESCROW AGREEMENT
CASH ESCROW AGREEMENT, dated as of March 7, 1996 (this "Agreement"),
by and among FLEMINGTON GOLF AND SPORTS CENTER, LLC, a New Jersey limited
liability Company having an address at 1594 Route 10, Randolph, New Jersey
07869 ("Seller"), FLEMINGTON FAMILY GOLF CENTERS, INC., a Delaware corporation
having an address at 225 Broadhollow Road, Suite 106E, Melville, New York
11747 ("Purchaser"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
incorporated under the laws of the United States of America with executive
offices at 2 Broadway, New York, New York 10004 (together with its successors,
the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution hereof, Seller and
Purchaser are consummating the transactions contemplated by the Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), between
Seller and Purchaser;
WHEREAS, pursuant to the Purchase Agreement, Seller is required to
deposit $112,500 into an escrow account to be maintained by Escrow Agent to be
held against any claims for indemnity under Article 14 of the Purchase
Agreement; and
WHEREAS, this is the Escrow Agreement referred to in Article 5 of the
Purchase Agreement. Capitalized terms used in this Escrow Agreement and not
otherwise defined herein shall have the respective meanings given to them in
the Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. ESCROW.
1.01 APPOINTMENT OF ESCROW AGENT.
(a) Seller and Purchaser hereby appoint Escrow Agent, and Escrow
Agent hereby agrees to serve, as Escrow Agent in accordance with, and pursuant
to, this
<PAGE>
Agreement.
(b) Escrow Agent shall establish at Chemical Bank a separate
Federally insured, interest bearing account (the "Escrow Account") for any
amounts received by it hereunder.
(c) All monies held in the Escrow Account shall immediately upon
receipt thereof be invested or reinvested by the Escrow Agent in Chemical Bank
commercial paper. All monies, including interest thereon, held by Escrow Agent
in the Escrow Fund pursuant to the terms hereof shall be hereinafter referred
to as the "Escrowed Funds".
(d) Seller's tax indemnification or social security number is
22-3324974. Seller shall be responsible for the payment of any income taxes
payable in connection with any interest earned in the Escrow Account.
1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree that the
Escrow Account shall operate as follows:
(a) Simultaneously with the execution and delivery hereof,
Seller shall deliver or cause to be delivered to Escrow Agent $112,500. Escrow
Agent shall hold such amount as Escrowed Funds in the Escrow Account.
(b) At any time prior to the first anniversary of the
Closing Date, Purchaser shall be entitled to give a notice to Escrow Agent,
signed by Purchaser's President or any Vice President (with a copy to Seller),
to the effect that there has been an event entitling Purchaser to
indemnification from Seller pursuant to the Purchase Agreement, which notice
shall specify the amounts owed by Seller pursuant to the Purchase Agreement,
the calculation of such amounts and the basis therefore.
- 2 -
<PAGE>
(c) Twenty (20) days after Escrow Agent has received a
notice pursuant to Section 1.02(b) hereof (or, if not a business day, on the
next business day following such twentieth day) Escrow Agent shall deliver to
FGC such portion of the Escrowed Funds as is specified in such notice unless
Seller shall have notified Escrow Agent (with a copy to Purchaser and FGC) in
writing before such date that Seller disagrees with Purchaser's determination
that Purchaser is entitled to indemnification with respect to the Purchase
Agreement, which notice shall be set forth in reasonable detail the basis for
such disagreement.
(d) Should any dispute arise with respect to the delivery,
ownership, or right of possession of any of the Escrowed Funds, Escrow Agent,
as more fully set forth in Section 3.11 hereof, is authorized and directed to
retain in its possession without liability to anyone all or any part of the
Escrowed Funds until such dispute shall have been settled either by mutual
agreement by the parties concerned or by a final order, decree, or judgment of
a court of competent jurisdiction in the United States of America and time for
appeal has expired and no appeal has been perfected, but Escrow Agent shall be
under no duty whatsoever to institute or defend any such proceedings, and may,
in its discretion, deposit such Escrowed Funds with a court of competent
jurisdiction in the United States of America and be relieved of any and all
liability to any of the parties hereto upon such deposit.
1.03 DISTRIBUTION OF ESCROWED FUNDS. Unless a notice under Section
1.02(b) hereof has been given and Escrowed Funds in satisfaction of such
notice have not been delivered to Purchaser, either because the 20-day period
has not yet run out or because a dispute relating to the claim made by such
notice is
- 3 -
<PAGE>
then pending, the Escrowed Funds or such portion of them as at the time
remains in escrow, together with all dividends and distributions received by
Escrow Agent with respect thereto, shall be returned to Seller on the first
anniversary of the Closing Date.
1.04 TERMINATION OF ESCROW ACCOUNT. This Agreement and the Escrow
Account will terminate at 5:00 P.M., New York City local time, on the date on
which all of the Escrowed Funds contained in the Escrow Account shall be
distributed as set forth above.
2. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b)
facsimile, or (c) over-night delivery with proper postage prepaid, and
addressed as follows:
If to Purchaser to:
225 Broadhollow Road
Melville, New York 11747
Attention: Dominic Chang, President
Telephone: (516) 694-1666
Facsimile: (516) 694-0918
If to Seller to:
c/o Rickel & Associates
875 Third Avenue
New York, New York 10022
Attention: Kenneth Rickel
Telephone: (212) 339-9808
Facsimile: (212) 754-9636
- 4 -
<PAGE>
with a copy to:
Ravin, Greenberg & Marks
101 Eisenhower Parkway
Roseland, New Jersey 07068
Attention: Howard S. Greenberg, Esq.
Telephone: (201) 226-1500
Facsimile: (201) 226-6888
If to Escrow Agent, to:
2 Broadway
New York, New York 10004
Telephone: (212) 509-4000
Facsimile: (212) 509-5150
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. Except as
otherwise provided herein, no notice or communication shall be effective until
received.
3. CONCERNING ESCROW AGENT.
To induce Escrow Agent to act hereunder, it is further agreed by each
of Seller and FGC that:
3.01 Escrow Agent shall not be under any duty to give the Escrowed
Funds held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Agreement.
3.02 This Agreement expressly sets forth all the duties of Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties
or obligations shall be read into this Agreement against Escrow Agent. Escrow
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
- 5 -
<PAGE>
3.03 Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully
asserted against Escrow Agent, the other parties hereto shall jointly and
severally indemnify and hold harmless Escrow Agent (and any successor Escrow
Agent) from and against any and all losses, liabilities, claims, actions,
damages, and expenses, including reasonable attorneys' fees and disbursements,
arising out of, and in connection with, this Agreement. Without limiting the
foregoing, Escrow Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in good faith, in
accordance with the terms hereof, including, without limitation, any liability
for any delays (not resulting from gross negligence or willful misconduct) in
the investment or reinvestment of the Escrowed Funds, or any loss of interest
incident to any such delays. This Section 3.03 shall survive notwithstanding
any termination of this Agreement or the resignation of Escrow Agent.
3.04 Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument, or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in
good faith, that any person purporting to give notice or receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
- 6 -
<PAGE>
3.05 Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in good faith and in accordance with
such advice.
3.06 Escrow Agent does not have any interest in the Escrowed Funds
deposited hereunder, but is serving as escrow holder only. Any payments of
income from the Escrow Account shall be subject to withholding regulations
then in force with respect to United States taxes. This Section 3.06 shall
survive notwithstanding any termination of this Agreement or the resignation
of Escrow Agent.
3.07 Escrow Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other documents or
instrument held by, or delivered to, it.
3.08 Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
3.09 Escrow Agent (and any successor escrow agent) at any time may be
discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by Purchaser and Seller or at any time may resign
by giving written notice to such effect to Purchaser and Seller. Upon any such
termination or resignation, Escrow Agent shall deliver the Escrowed Funds to
any successor escrow agent jointly designated by the other parties hereto in
writing, or to any court of competent jurisdiction if no such successor escrow
agent is agreed upon, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Escrow
Agreement. The
- 7 -
<PAGE>
termination or resignation of Escrow Agent shall take effect on the earlier of
(a) the appointment of a successor (including a court of competent
jurisdiction) or (b) the day that is thirty (30) days after the date of
delivery: (i) to Escrow Agent of the other parties' notice of termination or
(ii) to the other parties hereto of Escrow Agent's written notice of
resignation. If at that time Escrow Agent has not received a designation of a
successor escrow agent, Escrow Agent's sole responsibility after that time
shall be to keep the Escrowed Funds safe until receipt of a designation of
successor escrow agent or a joint written disposition instruction by the other
parties hereto or an enforceable order of a court of competent jurisdiction.
3.10 Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
3.11 In the event of any disagreement among or between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Funds, or in the event that Escrow Agent in good faith is in
doubt as to what action it should take hereunder, Escrow Agent shall be
entitled to retain the Escrowed Funds until Escrow Agent shall have received
(a) a final and non-appealable order of a court of competent jurisdiction
directing delivery of the Escrowed Funds or (b) a written agreement executed
by the other parties hereto directing delivery of the Escrowed Funds, in which
event Escrow Agent shall disburse the Escrowed Funds in accordance with such
order or agreement. Any court order referred to in (a) above shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect
- 8 -
<PAGE>
that said court order is final and non-appealable. Escrow Agent shall act on
such court order and legal opinions without further question.
3.12 As consideration for its agreement to act as Escrow Agent as
herein described, Purchaser, on the one hand, and Seller, on the other hand,
agrees to share equally Escrow Agent's fees determined in accordance with the
terms set forth on Exhibit A hereto (and made a part of this Escrow Agreement
as if herein set forth). In addition, FGC and Seller agree to reimburse Escrow
Agent (on a 50/50 basis) for all reasonable expenses, disbursements, and
advances incurred or made by Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses, and disbursements of its
counsel).
3.13 No publicly distributed material or other matter in any language
(including, without limitation, notices and reports) which mentions Escrow
Agent's name or the rights, powers, or duties of Escrow Agent shall be issued
by the other parties hereto or on such parties' behalf unless Escrow Agent
shall first have given its specific written consent thereto.
4. MISCELLANEOUS.
4.01 BINDING EFFECT. This Escrow Agreement shall be binding upon, and
inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators, and representatives, and shall
not be enforceable by, or inure to the benefit of, any other third party,
except as provided in Section 3.09 hereof with respect to the termination of,
or resignation by, Escrow Agent. No party may assign any of its rights or
obligations under this Agreement without the written consent of the other
parties.
- 9 -
<PAGE>
4.02 CHOICE OF LAW. This Agreement shall be construed in accordance
with, and governed by, the internal law of the State of New York (without
reference to its rules as to conflicts of law).
4.03 MODIFICATION. This Agreement may only be modified by a writing
signed by all of the parties hereto.
4.04 HEADINGS. The section headings herein are for convenience only
and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles are to Sections and Articles,
respectively, contained herein.
4.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and
the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
FLEMINGTON FAMILY GOLF CENTERS, INC.
By: /s/ Dominic Chang
------------------------------------
Name: Dominic Chang
Title: President
FLEMINGTON GOLF AND SPORTS CENTER, LLC
By: /s/ Richard Wenz
------------------------------------
Name: Richard Wenz
Title: General Manager
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/ Steven Nelson
------------------------------------
Name: Steven Nelson
Title: Chairman
- 11 -
<PAGE>
[LETTERHEAD]
FOR: FAMILY GOLF CENTERS, INC.
FROM: Hal Le Vay
COMPANY Krishnan Thampi
CONTACT: (516) 694-1666
FOR IMMEDIATE RELEASE
FAMILY GOLF REPORTS 4TH QUARTER/YEAR-END RESULTS;
1995 OPERATING INCOME RISES 229% ON 95% REVENUE GAIN
MELVILLE, NY, MARCH 8 -- Family Golf Centers, Inc. (NASDAQ: NM: FGCI),
which owns, operates and manages golf-related facilities, today reported
results for the fourth quarter and year ended Dec. 31, 1995.
"We achieved record results for 1995, our first full year as a public
company, as we added nine centers, penetrated new geographical regions,
increased same stores sales and completed a successful equity offering that
helped strengthen our balance sheet and provide the fuel for our growth,"
Dominic Chang, chairman, president and chief executive officer, said.
"The fourth quarter, traditionally a weak period, was impacted by severe
weather along the East Coast in December," he noted.
Fourth quarter revenues rose 125 percent to $2,562,000 from $1,140,00 for
the 1994 period. Loss from operations was $86,000 versus a loss of $135,000
for the prior year's final quarter. For the 1995 fourth quarter, the company
had a net loss of $182,000 or three cents per share on 5,874,000 average
shares outstanding, before an extraordinary charge of $181,000 or three cents
per share, reflecting the writeoff of costs related to debt retirement. The
net loss for the fourth quarter of 1994 was $162,000 or four cents per share
on 4,358,000 average shares outstanding.
Revenues for 1995 increased 95 percent to $12,432,000 from $6,362,000 in
1994. Operating income climbed 229 percent to $2,796,000 from $849,000. Net
income rose 120 percent to $1,073,000, after the extraordinary item, from
$488,000 for 1994. On a per share basis, the company had 1995 net income of
20 cents, after a four-cent loss from the extraordinary item, on 5,271,000
average shares outstanding versus 13 cents on 3,636,000 average shares
outstanding in 1994. In 1995, Family Golf Centers had an income tax expense
of $669,000 compared with a tax benefit of $65,000 in 1994.
The company had 14 centers in operation at the close of 1995 versus five
centers operating at the end of 1994. Only two centers -- Farmingdale, NY,
and Wayne, NJ, were open for the full 12 months of both years and their
combined revenues climbed 10 percent in 1995.
"Much of our acquisition activity in 1995 was focused on the Southeast and
West Coast, with strong demographic characteristics and the potential to
moderate the seasonality of results," Chang pointed out. "In addition, we are
now operating three domed centers which generated strong consumer demand
during the first two months of 1996," he added. The company opened domed
centers near Syracuse, NY, in January 1995 and suburban Rochester, NY, in
January 1996, and acquired a domed center in Cleveland, OH, in November 1995.
"We are optimistic about prospects for continued profitable growth and
remain dedicated to further enhancing shareholder value," Chang concluded.
In February, the company announced agreements to acquire golf centers in
Mesa, AZ; Flemington, NJ; Virginia Beach, VA; and in the Norfolk Virginia
area. Completion of these acquisitions is expected by the end of March 1996.
<PAGE>
FAMILY GOLF CENTERS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
-------------------------- ---------------------------
12/31/95 12/31/94 12/31/95 12/31/94
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues ................................... $2,562,000 $1,140,000 $12,432,000 $6,362,000
Income (loss) from operations .............. (86,000) (135,000) 2,796,000 849,000
Income (loss) before income taxes,
extraordinary item and minority interest . (357,000) (239,000) 1,923,000 552,000
Income tax expense (benefit) ............... 175,000 (65,000) 669,000 (65,000)
Income (loss) before extraordinary item and
minority interest ......................... (182,000) (174,000) 1,254,000 617,000
Minority interest in (income) loss ........ 12,000 (129,000)
Extraordinary item (net of tax effect) (a) (181,000) (181,000)
Net income (loss) .......................... (363,000) (162,000) 1,073,000 488,000
Net income (loss) per share:
Before extraordinary item ................. ($.03) $.24
Extraordinary item (a) .................... ($.03) ($.04)
Net income (loss) .......................... ($.06) ($.04) $.20 $.13
Weighted average shares outstanding ....... 5,874,000 4,358,000 5,271,000 3,636,000
</TABLE>
------------
(a) Writeoff of costs related to debt retirement.
PURCHASE AGREEMENT
by and between
202 GOLF ASSOCIATES, INC.
Seller,
YORKTOWN FAMILY GOLF CENTERS, INC.,
Purchaser
and
FAMILY GOLF CENTERS, INC.,
Parent
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT, made as of the 8th day of April, 1996 (this
"Agreement"), by and between 202 GOLF ASSOCIATES, INC., a New York corporation
having an address at 2710 Lexington Avenue, Mohegan Lake, New York 10547
("Seller"), YORKTOWN FAMILY GOLF CENTERS, INC., a Delaware corporation having
an address at 225 Broadhollow Road, Suite 106E, Melville, New York 11747
("Purchaser") and FAMILY GOLF CENTERS, INC., a Delaware corporation having an
address at 225 Broadhollow Road, Suite 106E, Melville, New York 11747
("Parent").
W I T N E S S E T H :
WHEREAS, Seller is the owner of certain real property located in
Yorktown Heights, New York and more particularly described on Exhibit A
attached hereto and made a part hereof (the "Land") and the buildings and
improvements located on the Land (the "Improvements" and, together with the
Land, the "Premises");
WHEREAS, Seller operates a driving range and related facilities
at the Premises under the name "RT 202 Golf Center" (the "Business"); and
WHEREAS, Seller wants to sell the Premises to Purchaser, and
Purchaser wants to purchase the Premises from Seller, on the terms, and
subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the
terms and conditions set forth herein, and other good and valuable
consideration, the mutual receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to the foregoing and as follows:
1. Agreement to Sell and Purchase.
1.1 Property to be Purchased by Purchaser. Seller agrees to
sell and convey to Purchaser, and Purchaser agrees to purchase and acquire
from Seller, upon the terms and conditions hereinafter set forth, all of
Seller's
<PAGE>
right, title and interest in and to the following property (collectively, the
"Property"):
1.1.1 the Land;
1.1.2 the Improvements;
1.1.3 the easements, rights of way, appurtenances and other
rights and benefits of Seller in and to the Premises, including without
limitation, all of Seller's interest in any air rights, water rights and
irrigation rights;
1.1.4 all furnishings, fixtures, machinery, equipment,
vehicles and personalty attached or appurtenant to or used in connection with
the Premises that are owned by Seller, and all inventories, supplies, sales,
marketing and instructional materials of every kind and description owned by
Seller relating to the Business, wherever located, including without
limitation, the items described on Exhibit B attached hereto and made a part
hereof (the "Personal Property");
1.1.5 the files, books, notices and other correspondence
from any governmental agencies, and other records used or employed by Seller
or its affiliates in connection with the ownership and/or operation of the
Premises and the Business (collectively, the "Records");
1.1.6 any consents, authorizations, variances, waivers,
licenses, certificates, permits and approvals held by or granted to Seller in
connection with the ownership of the Premises (collectively, the "Permits");
1.1.7 the contracts, leases, orders and other agreements
of or relating to the Business described on Exhibit C attached hereto and made
a part hereof (the "Contracts");
1.1.8 any monetary and non-monetary claims against third
parties including, without limitation, unliquidated rights under manufacturers'
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<PAGE>
and vendors' warranties and guarantees, except to the extent the same relate
solely to any Retained Assets or Retained Liabilities (as hereinafter defined)
(the "Claims"); and
1.1.9 any other properties and assets of every kind and
nature, real or personal, tangible or intangible, relating in any way
whatsoever to the Premises or the Business, except to the extent the same
relate solely to the Retained Assets or Retained Liabilities.
1.2 Assets to be Retained by Seller. Anything herein to the
contrary notwithstanding, Seller shall not sell, and Purchaser shall not
acquire, the following assets of Seller (the "Retained Assets"):
1.2.1 all trade accounts receivable arising out of the sale
of goods or services prior to the Closing Date (as hereinafter defined);
1.2.2 all claims of Seller for refunds or credits with
respect to federal, state or local income taxes or foreign income taxes of
whatever nature or taxable period involved;
1.2.3 any rights of Seller with respect to insurance
policies owned by Seller or for which Seller is the named insured;
1.2.4 all cash, funds in bank accounts and cash equivalents
existing as of the Closing Date including, without limitation, funds held in
escrow for payment of real estate taxes;
1.2.5 intentionally deleted; and
1.2.6 any patents, trademarks, trademark registrations,
copyrights, copyright registrations, trade names and all registrations thereof
and all applications for any of the foregoing, whether issued or pending, if
any, and all goodwill associated with any of the foregoing.
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<PAGE>
1.3 Assumption of Certain Liabilities. Purchaser shall assume
and agree to pay and discharge when due all liabilities and obligations of
Seller under the Contracts to the extent the same arise from and after the
Closing Date (the "Assumed Liabilities").
1.4 Liabilities to be Retained by Seller. Seller shall retain,
and Purchaser shall not assume, perform, discharge or pay, and shall not be
responsible for, any and all liabilities or obligations of any nature
whatsoever in connection with or relating to the Property or Seller other than
the Assumed Liabilities (collectively, the "Retained Liabilities").
2. Consideration. In consideration for the Property, Purchaser
shall:
2.1 pay to Seller the sum of $1,601,605.20, subject to
adjustment as hereinafter provided, payable in cash, certified or bank check or
wire transfer on the Closing Date;
2.2 cause Parent to issue 30,900 validly issued, fully paid and
non-assessable shares of common stock, par value $.01 per share, of Parent
(the "Common Stock") and to deliver at Closing, free and clear of all liens,
claims and encumbrances, (a) a certificate representing 20,000 shares of
Common Stock to Seller and (b) a certificate representing 900 shares of Common
Stock to Seller and (c) a certificate representing 10,000 shares of Common
Stock to the Escrow Agent (the "Escrow Agent") under the Escrow Agreement
referred to in Section 5 hereof, such certificate to be held and dealt with as
provided in the Escrow Agreement; and
2.3 assume the Assumed Liabilities.
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<PAGE>
3. Title; Permitted Exceptions.
3.1 Seller will convey the Property to Purchaser, free and
clear of any and all liens, charges, encumbrances, mortgages, pledges,
security interests, easements, agreements and other interests and adverse
claims (collectively, "Encumbrances"), other than the matters set forth in
Exhibit D attached hereto and made a part hereof (the "Permitted Exceptions").
3.2 Purchaser may order an examination of title from a
reputable title company licensed or authorized to issue title insurance in the
State of New York ("Title Company"), and shall cause a copy of any title
report to be forwarded to Seller's attorney upon receipt.
3.3 If a search of the title discloses judgments, bankruptcies
or other returns against other persons having names the same as or similar to
that of Seller, Seller will on request deliver to the Title Company or
Purchaser an affidavit showing that such judgments, bankruptcies or other
returns are not against Seller, in form sufficient to permit deletion of such
exception from the title policy.
4. Apportionments.
4.1 The following items shall be apportioned as of 11:59 PM of
the day immediately preceding the Closing Date:
4.1.1 real estate taxes and assessments, on the basis of
the fiscal year for which the same are levied, imposed or assessed, subject to
Section 4.2 hereof;
4.1.2 charges for water, sewer rents, electricity, steam,
gas and telephone, which are not metered; provided that if the consumption of
any of such utilities is measured by meters, at the Closing (as hereinafter
defined) Seller shall furnish a current reading of each meter; and further
provided that if there is not a meter or if the current bill for any of such
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<PAGE>
utilities has not been issued prior to the Closing Date, the charges therefore
shall be adjusted at the Closing on the basis of the charges for the prior
period for which bills were issued and shall be further adjusted when the
bills for the current period are issued;
4.1.3 utility deposits, to the extent actually assigned to
Purchaser;
4.1.4 fuel, if any, at Seller's cost therefore (as
determined by Seller's fuel supplier); and
4.1.5 amounts paid, payable or received under the
Contracts.
4.2 If the Closing shall occur before the real estate tax rate
is fixed, the apportionment of real estate taxes shall be based upon the tax
rate for the next preceding year applied to the latest assessed valuation.
5. The Closing.
5.1 The closing of the transaction provided for in this
Agreement (the "Closing") shall take place immediately upon the execution and
delivery of this Agreement (the actual date of the Closing being referred to
herein as the "Closing Date"), at 10:00 a.m. at the offices of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York
10176, or at such other place as may be mutually agreed to by Seller and
Purchaser.
5.2 Intentionally Deleted.
5.3 Intentionally Deleted.
5.4 At the Closing, Seller shall deliver or cause to be
delivered to Purchaser physical possession of the Property (receipt of which
may be actual or constructive) and the following:
5.4.1 a bargain and sale deed with covenants against
grantor's acts, duly executed and acknowledged by Seller, in proper statutory
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<PAGE>
form for recording, so as to convey to Purchaser fee simple title to the
Premises, subject to and in accordance with the provisions of this Agreement
(the "Deed");
5.4.2 a bill of sale conveying, transferring and selling
to Purchaser all right, title and interest of Seller in and to all of the
Personal Property, which bill of sale shall contain a warranty that such
property is free and clear of all Encumbrances other than the Permitted
Exceptions, duly executed and acknowledged by Seller;
5.4.3 an assignment and assumption agreement (the
"Assignment and Assumption Agreement") assigning to Purchaser all of Seller's
right, title and interest in and to the Contracts, the Permits and the Claims,
duly executed and acknowledged by Seller;
5.4.4 a settlement statement (the "Settlement Statement")
setting forth the amounts paid by or on behalf of and/or credited to each of
Purchaser and Seller pursuant to this Agreement;
5.4.5 an owner's affidavit of title;
5.4.6 a Certificate or Certificates of Occupancy for all
Improvements if the same is required by law;
5.4.7 original counterparts or certified copies of each of
the Contracts;
5.4.8 intentionally deleted;
5.4.9 any transfer tax or other return required by any
applicable governmental authority in connection with the sale of the Property,
duly executed and acknowledged by Seller;
5.4.10 an affidavit (the "FIRPTA Affidavit") duly executed
and acknowledged by Seller pursuant to Section 1445 (b)(2) of the Internal
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<PAGE>
Revenue Code of 1986, as amended, stating that Seller is not a foreign person
within the meaning of such provision;
5.4.11 keys to all locks relating to the Property,
appropriately labeled;
5.4.12 an Escrow Agreement relating to certain of the
Common Stock (the "Escrow Agreement"), executed by Seller;
5.4.13 a Registration Rights Agreement relating to the
Common Stock (the "Registration Rights Agreement"), executed by Seller;
5.4.14 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Seller to Purchaser pursuant
to any of the other provisions of this Agreement; and
5.4.15 such other documents as may be reasonably required
by Purchaser's counsel in connection with this transaction.
5.5 At the Closing, Purchaser shall deliver or cause to be
delivered to Seller (except as otherwise set forth below) the following:
5.5.1 the cash consideration referred to in Section 2.1
hereof;
5.5.2 the stock certificate referred to in Section 2.2(a)
hereof, registered in the name of Seller or its designee(s) representing, in the
aggregate, 30,000 shares of Common Stock of Parent;
5.5.3 the stock certificate referred to in Section 2.2(b)
hereof, registered in the name of Seller or its designee(s) representing, in
the aggregate, 10,000 shares of Common Stock of Parent shall be delivered to
the Escrow Agent;
5.5.4 the Escrow Agreement, executed by Purchaser and the
Escrow Agent;
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<PAGE>
5.5.5 the Registration Rights Agreement, executed by
Parent;
5.5.6 the Assignment and Assumption Agreement, duly
executed and acknowledged by Purchaser;
5.5.7 the Settlement Statement, duly executed and
acknowledged by Purchaser;
5.5.8 an opinion of Purchaser's counsel in form and
substance acceptable to Seller;
5.5.9 such bonds, letters of credit or other security, if
any, as may be necessary to replace the bonds posted by Seller and/or Barbara
K. Murphy with the Town of Yorktown for (a) the blacktop, dividers and
sidewalks at the Premises ($8,710.50) and (b) the Astro-Turf and wetlands at
the Premises ($30,000 in the aggregate);
5.5.10 all other instruments and documents to be executed,
acknowledged where appropriate and/or delivered by Purchaser to Seller; and
5.5.11 such other documents as may be reasonably required
by Seller's counsel in connection with this transaction.
6. Representations and Warranties.
6.1 Seller hereby represents and warrants to Purchaser as of
the date hereof as follows:
6.1.1 Organization; Power and Authority. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
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<PAGE>
6.1.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary corporate action required to be taken on the part
of Seller. This Agreement has been duly and validly executed and delivered by
Seller and constitutes the valid and binding obligation of Seller, enforceable
in accordance with its terms, except to the extent that such enforceability
may be limited by bankruptcy, insolvency, or other similar laws relating to
creditors' rights generally. The execution, delivery and performance by Seller
of this Agreement and the consummation by Seller of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (a) violate any provision of any law, rule or
regulation to which Seller is subject; (b) violate any order, judgment or
decree applicable to Seller; or (c) conflict with or result in a breach of or
a default under any term or condition of Seller's Certificate of Incorporation
or By-Laws or any agreement or other instrument to which Seller is a party or
by which it or its assets may be bound, except in each case, for violations,
conflicts, breaches or defaults which in the aggregate would not materially
hinder or impair the consummation of the transactions contemplated hereby.
6.1.3 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Seller of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been, or by the
Closing Date will be, obtained.
6.1.4 Compliance with Applicable Laws. Seller is not
engaging in any activity or omitting to take any action as a result of which
- 10 -
<PAGE>
Seller is in violation, in any material respect, of any law, rule, regulation,
ordinance, statute, order, injunction or decree, or any other requirement of
any court or governmental or administrative body or agency, applicable to the
Property or the Business, and neither the execution and delivery by Seller of
this Agreement or of any of the other agreements and instruments to be
executed and delivered by it pursuant hereto, the performance by Seller of its
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby will result in any such violation. Seller is in
compliance with all material requirements imposed in writing by any insurance
carrier of Seller to the extent such carrier is an insurer or indemnitor of
the Property. The Premises are not subject to any notice of violation of law,
municipal ordinance, orders or requirements issued by any building department
or other governmental agency or subdivision having jurisdiction.
6.1.5 Permits. All Permits required by any federal, state,
or local law, rule or regulation and necessary for the operation of the
Property and the Business as currently being conducted have been obtained and
are currently in effect. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other
actions of any kind are required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby (a)
to avoid the loss of any Permit or the violation of any law, regulation, order
or other requirement of law, or (b) to enable Purchaser to continue the
operation of the Property as presently conducted after the Closing. The
current use and occupation of the Property does not violate any of, and, where
applicable, is in material compliance with, the Permits, any applicable deed
restrictions or other covenants, restrictions or agreements including without
limitation, any
- 11 -
<PAGE>
of the Permitted Exceptions, site plan approvals, zoning or subdivision
regulations applicable to the Premises.
6.1.6 Title to Assets. Seller has good and marketable
title to the Property free and clear of all Encumbrances other than the
Permitted Exceptions.
6.1.7 Contracts. Except as set forth on Exhibit C, Seller
is not a party to any Contracts. Exhibit C sets forth a full and complete
description of the Contracts described therein, and none of such Contracts
have been amended or modified except as reflected on said Exhibits. Seller is
not holding any security deposits under any of said Contracts. Each of the
Contracts are in full force and effect and no party under any such Contract,
including Seller, is in default, or has sent or received notice of default, in
any respect of any such Contract.
6.1.8 Condition of the Improvements. To the best knowledge
of Seller, there are no material structural or mechanical defects in the
Improvements, and there are no leaks in any roof on any Improvement.
6.1.9 Condition of Personal Property. To the best
knowledge of Seller, the Personal Property is in good operating condition and
repair, ordinary wear and tear excepted, and is adequate, suitable and
sufficient to meet the needs of and to operate the Property as currently
conducted.
6.1.10 Environmental Matters.
6.1.10.1 As used in this Agreement "Hazardous
Material" shall mean: (i) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. ss. 9601(33); (ii) any "pollutant or contaminant"
as defined in 42 U.S.C. ss. 9601(33); (iii) any material now defined as
"hazardous waste"
- 12 -
<PAGE>
pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil and
any fraction thereof; (v) natural or synthetic gas usable for fuel; (vi) any
"hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (vii) any
asbestos, asbestos containing material, polychlorinated biphenyl ("PCB"), or
isomer of dioxin, or any material or thing containing or composed of such
substance or substances; and (viii) any other pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of any
Environmental Law (as hereinafter defined) and any other toxic, reactive or
flammable chemicals.
6.1.10.2 To the best knowledge of Seller, there is
no Hazardous Material at, under or on the Premises and there is no ambient
air, surface water, groundwater or land contamination within, under,
originating from or relating to the Premises. Seller has not, and has not
caused to be, manufactured, processed, distributed, used, treated, stored,
disposed of, transported or handled any Hazardous Material at, on or under the
Premises.
6.1.10.3 To the best knowledge of Seller, Seller has
no obligation or liability imposed or based upon any provision under any
foreign, federal, state or local law, rule, or regulation or common law, or
under any code, order, decree, judgment or injunction applicable to Seller or
the Property or any notice, or request for information issued, promulgated,
approved or entered thereunder, or under the common law, or any tort, nuisance
or absolute liability theory, relating to public health or safety, worker
health or safety, or pollution, damage to or protection to the environment,
including without limitation, laws relating to emissions, discharges, releases
or threatened releases of Hazardous Material into the environment (including
without limitation, ambient air, surface water, groundwater, land surface or
subsurface), or otherwise relating to the manufacture, processing,
distribution,
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<PAGE>
use, treatment, storage, generation, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes (hereinafter collectively referred to as "Environmental
Laws").
6.1.10.4 Seller has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of violation,
investigation, inquiry or proceeding for failure to comply with, or received
notice of any violation or potential liability under the Environmental Laws in
respect of the Premises.
6.1.10.5 To the best knowledge of Seller, the
Premises are not (a) listed or proposed for listing on the National Priority
List or (b) listed on the Comprehensive Environmental Response, Compensation,
Liability Information System List ("CERCLIS") promulgated pursuant to CERCLA,
42 U.S.C. ss. 9601(9), or any comparable list maintained by any foreign, state
or local government authority.
6.1.10.6 To the best knowledge of Seller, there are
no underground storage tanks at the Premises and Seller further warrants and
represents that any prior use and operation of underground storage tanks has
been in compliance with all Environmental Laws.
6.1.11 Tax Proceedings. There are no proceedings
pending regarding the reduction of real estate taxes or assessments in respect
of the Premises.
6.1.12 Utilities. To the best knowledge of Seller, all
water, storm and sanitary sewer, gas, electricity, telephone and other
utilities adequately service the Premises, enter the Premises through lands as
to which valid public or private easements exist that will inure to the
benefit of
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<PAGE>
Purchaser and the Premises are furnished by facilities of public utilities and
the cost of installation of such utilities has been fully paid.
6.1.13 Access. To the best of Seller's knowledge, there
are no federal, state, county, municipal or other governmental plans to change
the highway or road system in the vicinity of the Premises which could
materially restrict or change access from any such highway or road to the
Premises or any pending or threatened condemnation or eminent domain
proceedings relating to or affecting the Premises.
6.1.14 Insurance Requirements. Seller has not received any
notices of non-compliance or violation of any requirements or recommendations
by any insurer or by any board of fire underwriters or similar body in respect
of the Property.
6.1.15 Litigation. There is no action or proceeding
(zoning or otherwise) or governmental investigation pending, or, to the best
of Seller's knowledge, threatened against, or relating to, Seller (insofar as
it relates to the Premises or the Business), the Premises, the Business or the
transactions contemplated by this Agreement, nor is there any basis for any
such action, proceeding or investigation.
6.1.16 Assessments. There are no special or other
assessments for public improvements or otherwise now affecting the Premises
nor does Seller know of (a) any pending or threatened special assessments
affecting the Premises or (b) any contemplated improvements affecting the
Premises that may result in special assessments affecting the Premises.
6.1.17 Employee Agreements. There are no union or
employment contracts or agreements (written or oral) involving employees of
Seller or its affiliates affecting the Property or the Business which will
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<PAGE>
survive the Closing. All employees of Seller will have been terminated as of
the Closing Date.
6.1.18 Work at the Premises. No services, material or work
have been supplied to the Premises for which payment has not been made in full.
6.1.19 Financial Condition. Seller has delivered to
Purchaser true and correct copies of audited financial statements consisting
of balance sheets and income statements of Seller as of December 31, 1994 and
December 31, 1995. Each such balance sheet presents fairly the financial
condition, assets and liabilities of Seller as of its date; each such
statement of income presents fairly the results of operations of Seller for
the period indicated. The financial statements referred to in this Section are
in accordance with the books and records of Seller. Since December 31, 1995:
(a) there has at no time been a material adverse change in the financial
condition, results of operations, businesses, properties, assets, liabilities
or future prospects of Seller, the Property or Business; (b) the Business has
been conducted in all respects only in the ordinary course; and (c) Seller has
not suffered an extraordinary loss (whether or not covered by insurance) or
waived any right of substantial value.
6.1.20 Common Stock. Seller understands that the Common
Stock is and will be deemed to be "restricted securities" as such term is
defined in Rule 144 ("Rule 144") promulgated under the Securities Act of 1933
(as amended, the "Act") and can only be sold (a) in accordance with the
provisions of the Rule or such other duly available exemption from the
registration requirements of the Act or (b) pursuant to an effective
registration statement as set forth in the Registration Rights Agreement.
Seller is acquiring the Common Stock for its own account (and not for the
account of others) and not with a view to the distribution or resale thereof.
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<PAGE>
Upon any subsequent transfer or disposition of the Common Stock made in
reliance on an exemption from the registration provisions of the Act, Seller
agrees to deliver to Purchaser either an opinion of counsel satisfactory to
Purchaser to the effect that such transfer or disposition may be made without
registration of such Common Stock under the Act and/or such other documents or
certificates as Purchaser or Parent may require; provided, however, that
Seller shall not be required to deliver an opinion of counsel with respect to
a transfer made pursuant to Rule 144, provided that Seller provides Parent's
counsel with such certificates as it may require in order to give any
customary opinion required by the transfer agent in connection with such
transfer.
6.1.21 Full Disclosure. To the best knowledge of Seller,
none of the information supplied by Seller herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.
6.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as of the date hereof as follows:
6.2.1 Organization; Power and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. Purchaser is wholly-owned and controlled by
Parent.
6.2.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part
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<PAGE>
of Purchaser. This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes the valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, or other similar laws
relating to creditors' rights generally. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser
of the transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (a) violate any provision of any law,
rule or regulation to which Purchaser is subject; (b) violate any order,
judgment or decree applicable to Purchaser; or (c) conflict with or result in
a breach of or a default under any term or condition of Purchaser's
Certificate of Incorporation or By-Laws or any agreement or other instrument
to which Purchaser is a party or by which it or its assets may be bound,
except in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
6.2.3 Full Disclosure. To the best knowledge of Purchaser,
none of the information supplied by Purchaser herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.
6.3 Representations and Warranties of Parent. Parent hereby
represents and warrants to Seller as of the date hereof as follows:
6.3.1 Organization; Power and Authority. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite power and authority to
carry on its business as it is now being conducted, to execute, deliver and
perform its
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obligations under this Agreement and to consummate the transactions contemplated
hereby. Purchaser is wholly-owned and controlled by Parent.
6.3.2 Due Authorization and Execution; Effect of Agreement.
The execution, delivery and performance by Parent of its obligations under
this Agreement, the consummation by Parent of its obligations as contemplated
hereby and the issuance of the Common Stock have been duly authorized by all
necessary corporate action required to be taken on the part of Parent. This
Agreement has been duly and validly executed and delivered by Parent and
constitutes the valid and binding obligation of Parent, enforceable in
accordance with its terms, except to the extent that such enforceability may
be limited by bankruptcy, insolvency, or other similar laws relating to
creditors' rights generally. The execution, delivery and performance by Parent
of this Agreement and the consummation by Parent of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (a) violate any provision of any law, rule or
regulation to which Parent is subject; (b) violate any order, judgment or
decree applicable to Parent or (c) conflict with or result in a breach of or a
default under any term or condition of Parent's Certificate of Incorporation
or By-Laws or any agreement or other instrument to which Parent is a party or
by which it or its assets may be bound, except in each case, for violations,
conflicts, breaches or defaults which in the aggregate would not materially
hinder or impair the consummation of the transactions contemplated hereby.
6.3.3 Common Stock. The Common Stock issued to Seller is
duly and validly issued, fully paid and non-assessable. Parent agrees to take
such reasonable actions as may be necessary and customary under the
circumstances to enable Seller to sell the Common Stock as eligible shares for
resale under Rule 144.
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<PAGE>
6.3.4 Litigation. There is no action or proceeding or
governmental investigation pending, or, to the best of Parent's knowledge,
threatened against, or relating to, Parent or any of Parent's subsidiaries,
including Purchaser, which, if adversely determined, would have a material
adverse effect on the business of Parent, with the exception of Alpha-Omega
Amusements, Inc. v. Richmond Family Golf Centers, Inc., Case No. 3:96 CV 186
filed in the U.S. District Court - Eastern District of Virginia.
6.3.5 Consents. No consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by Parent of this Agreement, except for consents, approvals,
authorizations, exemptions and filings, if any, which have been, or will be
within the appropriate time periods, obtained or made, as the case may be.
6.3.6 Compliance with Applicable Laws. Neither Parent nor
any of its subsidiaries, including Purchaser, is engaging in any activity or
omitting to take any action as a result of which any such entity is in
violation, in any material respect, of any law, rule, regulation, ordinance,
statute, order, injunction or decree, or any other requirement of any court or
governmental or administrative body or agency, which would have a material
adverse effect on the business and operations, in the aggregate, of Parent,
and neither the execution and delivery by Parent of this Agreement or of any
of the other agreements and instruments to be executed and delivered by it
pursuant hereto, the performance by Parent of its obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby will result in any such violation.
6.3.7 Public Information. The information regarding Parent
currently on file with the Securities and Exchange Commission is accurate in all
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<PAGE>
material respects. Since the date such information was filed: (a) there has at
no time been a material adverse change in the financial condition, results of
operations, business, properties, assets or liabilities of Parent; (b) the
business conducted by Parent has been conducted in all material respects only
in the ordinary course; and (c) Parent has not suffered an extraordinary loss
(whether or not covered by insurance) or waived any right of substantial
value. Excepted from this Section 6.3.7 is (i) such information as may have
been disclosed in any press releases issued by Parent since the last such
filing, (ii) information regarding any acquisitions made by Parent or its
operating subsidiaries since the last such filing, and (iii) information
regarding any stock options granted since the last such filing.
6.3.8 Full Disclosure. To the best knowledge of Parent,
none of the information supplied by Parent herein or in the exhibits hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary in order to make the statements
herein, in light of the circumstances under which they are made, not
misleading.
6.4 Survival. The representations and warranties of Seller
made in Section 6.2 hereof shall survive the Closing for a period of six (6)
months. The representations and warranties of Purchaser and Parent made in
Sections 6.3 and 6.4 hereof shall survive the Closing for so long as Seller is
restricted from selling all or any portion of the Common Stock pursuant to
Rule 144 or six (6) months, whichever is longer.
7. Further Assurances. At any time and from time to time after
the Closing Date, Seller shall, at the request of Purchaser, execute and
deliver any further instruments or documents and take all such further action
as Purchaser may reasonably request in order to transfer into the name of
Purchaser any and all Property contemplated to be sold pursuant to this
Agreement and to further
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consummate the transactions contemplated by this Agreement. This Section 7.6
shall survive the Closing.
8. Intentionally Deleted.
9. Brokers. Seller and Purchaser warrant and represent to each
other that they dealt with no broker, finder or similar agent or party who or
which might be entitled to a commission or compensation on account of
introducing the parties, the negotiation or execution of this Agreement and/or
the closing of the transaction provided for herein. Purchaser and Seller
hereby respectively agree to indemnify and hold harmless the other party from
and against all loss, liability, damage and expense (including, without
limitation, attorneys' fees) imposed upon or incurred by the other party by
reason of any claim for commissions or other compensation for bringing about
this transaction by any broker, finder or similar agent or party who claims to
have dealt with the indemnifying party in connection with this transaction.
The provisions of this Article 9 shall survive the Closing or any termination
of this Agreement.
10. "As Is". Purchaser represents to Seller that Purchaser has
examined, inspected, and investigated to its full satisfaction, the physical
nature and condition of the land, improvements, fixtures and equipment at the
Property; that neither Seller nor any broker or finder, nor any agent,
officer, employee, or representative thereof, has made any representation
whatsoever (other than as is expressly represented in this Agreement)
regarding the subject matter of this sale or any part thereof, including
(without limiting the generality of the foregoing) representations as to the
physical nature or condition thereof, value, profitability, zoning or
development potential of the Property, or operating expenses, or carrying
charges affecting the same; and that Purchaser, in executing, delivering
and/or performing this Agreement, does not rely upon any statement,
information or representation to whomsoever made
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<PAGE>
or given (except as herein expressly stated), whether to Purchaser or others,
and whether directly or indirectly, verbally or in writing, made by any
person, firm or corporation. Without limiting the foregoing but in addition
thereto, Purchaser takes all of the Property and other property interests
hereby contracted to be sold, in their current "as is" condition subject to
such reasonable wear and tear as may occur between the date hereof and the
Closing, and without any reduction in or credit or allowance against the
purchase price or claim of any kind by reason of any further deterioration
thereto subsequent to the date of this Agreement caused by ordinary wear and
tear, by the presently existing physical condition or state of repair of such
fixtures, improvements and equipment, or otherwise.
11. Valuation and Allocation of Purchase Price. The parties
agree that, given the restrictions on the Common Stock, the price at which the
shares of common stock of Parent are trading on the NASDAQ exchange on the
Closing Date may not be an accurate measure of the value of the Common Stock.
Therefore, in order to properly prepare transfer, gains, sales, income and
other tax and similar forms, the parties have agreed that a fair and
reasonable valuation of the Common Stock as of the Closing Date is $20 per
share, making the total purchase price, in cash equivalent, $2,219,605.20. In
addition, the parties agree that 100% of the purchase price be allocated to
the Premises and that no portion of the purchase price be allocated to the
Personal Property, Claims or any of the other Property.
12. Intentionally Deleted.
13. Costs and Fees. Documentary stamps for the Deed, deed transfer
or conveyancing taxes, if any, shall be payable by Seller, and in no event be
payable by Purchaser. Recording fees for the Deed shall be payable by
Purchaser. Purchaser shall also pay the expenses incurred in connection with
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<PAGE>
(a) the examination of title, (b) the issuance of a policy of title insurance
for Purchaser, and (c) a survey of the Property, if obtained by Purchaser.
Purchaser shall pay any sales tax in respect of any Personal Property. Any
other similar costs not expressly provided for elsewhere in this Agreement
shall be divided and borne in accordance with the usual practices in the
jurisdiction where the Premises are located. The provisions of this Article
shall survive the Closing.
14. Indemnification.
14.1 Subject to the further provisions of this Article, Seller
shall protect, defend, hold harmless and indemnify Purchaser, its officers,
directors, shareholders, employees, agents and affiliates, and their
respective successors and assigns, from, against and in respect of any and all
losses, liabilities, deficiencies, penalties, fines, costs, damages and
expenses whatsoever (including without limitation, reasonable professional
fees and costs of investigation, litigation, settlement, and judgment and
interest) ("Losses") that may be suffered or incurred by any of them arising
from or by reason of (i) any Retained Liability or other liability or
obligation of Seller which is not an Assumed Liability; (ii) the breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement; and (iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 14.1.
14.2 Subject to the further provisions of this Article,
Purchaser and Parent shall protect, defend, hold harmless and indemnify
Seller, its partners, employees and agents, and its successors and assigns
from, against
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<PAGE>
and in respect of any and all Losses that may be suffered or incurred by any
of them arising from or by reason of (i) any of the Assumed Liabilities on and
after the Closing Date, (ii) the breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement or in any
document or other writing delivered pursuant to this Agreement; and (iii) any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses (including without limitation, interest, penalties,
reasonable legal fees and accounting fees) incident to the foregoing and the
enforcement of the provisions of this Section 14.2.
14.3 Whenever a party hereto (such party and each of its
affiliates which is entitled to indemnification pursuant to any provision of
this Agreement, an "Indemnified Party") shall learn after the Closing of a
claim that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"Indemnifying Party") to indemnify the Indemnified Party under any provision
of this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such
facts within the Indemnified Party's knowledge with respect to such claim and
the amount thereof (a "Notice of Claim"). If, prior to the expiration of
fifteen (15) days from the mailing of a Notice of Claim, the Indemnifying
Party shall request, in writing, that such claim not be paid, the Indemnified
Party shall not pay the same, provided the Indemnifying Party proceeds
promptly, at its or their own expense (including employment of counsel
reasonably satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the Indemnifying Party
requesting the Indemnified Party not to pay such claim and the Indemnifying
Party's assumption of the defense of such claim at its or their expense, the
Indemnifying Party shall not
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<PAGE>
be liable to the Indemnified Party for any legal or other expense subsequently
incurred by the Indemnified Party in connection with the defense thereof.
However, the Indemnified Party shall have the right to participate at its
expense and with counsel of its choice in such settlement, compromise or
litigation. The Indemnified Party shall not be required to refrain from paying
any claim which has matured by a court judgment or decree, unless an appeal is
duly taken therefrom and execution thereof has been stayed, nor shall the
Indemnified Party be required to refrain from paying any claim where the delay
in paying such claim would result in the foreclosure of a lien upon any of the
property or assets then held by the Indemnified Party. The failure to provide
a timely Notice of Claim as provided in this Section 14.3 shall not excuse the
Indemnifying Party from its or their continuing obligations hereunder;
however, the Indemnified Party's claim shall be reduced by any damages to the
Indemnifying Party resulting from the Indemnified Party's delay or failure to
provide a Notice of Claim as provided in this Section 14.3.
15. Site Approvals. Notwithstanding anything herein to the
contrary, in the event that all planning board and site plan approvals
required in order to operate a miniature golf course (the "Miniature Golf
Approvals") and a batting cage (the "Batting Cage Approvals" and, together
with the Miniature Golf Approvals, the "Approvals") on the Premises are not
obtained or are denied (in either case, in final, non-appealable form) on or
before the second anniversary of the Closing Date, then the purchase price set
forth in Article 2 hereof shall be adjusted such that the amount of Common
Stock to be delivered to Seller shall be reduced by 7,500 shares if the
Miniature Golf Approvals are not obtained or are denied and 2,500 shares if
the Batting Cage Approvals are not obtained or are denied. Such 10,000 shares
shall be held by the Escrow Agent and dealt with as set forth in the Escrow
Agreement. Prior to and after the Closing, Seller
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<PAGE>
shall, at its own cost and expense, diligently and in good faith seek to
obtain the Miniature Golf Approvals as soon as reasonably practicable. Prior
to and after the Closing, Seller shall, at Purchaser's cost and expense (which
costs and expenses shall be approved by Purchaser in advance and shall only
include payment of actual out-of-pocket third party expenses, and shall not
include any compensation to Seller or its principals or employees), diligently
and in good faith seek to obtain the Batting Cage Approvals as soon as
reasonably practicable. Purchaser shall cooperate with Seller in good faith to
obtain the Approvals and shall not perform any work or take any action at the
Premises that would hinder the issuance of the Approvals. The provisions of
this Article shall survive the Closing.
16. Notices.
16.1 All notices, demands, requests, consents or other
communications ("Notices") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth. A copy of any
Notice given by Seller to Purchaser shall simultaneously be given in either
manner provided above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551
Fifth Avenue, New York, New York 10176, Attention: Kenneth R. Koch, Esq. A
copy of any Notice given by Purchaser to Seller shall simultaneously be given
in either manner provided above to McGowan & Cousins, P.C., 350 Bedford
Street, Stamford, Connecticut 06901, Attention: Frank McGowan, Jr., Esq.
Notices given in the manner aforesaid shall be deemed to have been given three
(3) business days after the day so mailed, the business day after delivery to
any overnight express carrier and on the day so delivered by hand (if
delivered on a business
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<PAGE>
day prior to 5 p.m. and if not then on the next business day). Either party
shall have the right to change its address(es) for the receipt of Notices by
giving Notice to the other party in either manner aforesaid. Any Notice
required or permitted to be given by either party may be given by that party's
attorney.
17. Intentionally Deleted.
18. Miscellaneous.
18.1 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
18.2 This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with, the laws of the State of New
York.
18.3 The captions or article headings in this Agreement are
for convenience only and do not constitute part of this Agreement.
18.4 This Agreement has been fully negotiated by the parties and
rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.
18.5 It is agreed that, except where otherwise expressly
provided in particular Articles or Sections of this Agreement, none of the
provisions of this Agreement shall survive the Closing.
18.6 This Agreement (including the Exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
18.7 This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized
in writing or as otherwise expressly permitted herein.
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<PAGE>
18.8 No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein contained. No
extension of the time for performance of any obligations or acts shall be
deemed an extension of the time for performance of any other obligations or
acts.
18.9 This Agreement may be executed in one or more counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which taken together shall constitute but one and the same original.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
202 GOLF ASSOCIATES, INC.
By: /s/ Kathryn B. Murphy
-----------------------------
Name: Kathryn B. Murphy
Title: President
YORKTOWN FAMILY GOLF CENTERS,
INC.
By: /s/ Robert J. Krause
-----------------------------
Name: Robert J. Krause
Title: Vice President
FAMILY GOLF CENTERS, INC.
By: /s/ Robert J. Krause
-----------------------------
Name: Robert J. Krause
Title: Vice President
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<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B PERSONAL PROPERTY
EXHIBIT C CONTRACTS
EXHIBIT D PERMITTED EXCEPTIONS
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN plot, piece or parcel of land with the buildings or
improvements thereon, erected, situate, lying and being in the Town of
Yorktown, County of Westchester and State of New York, being Lots .001 and
2.1 of map entitled "Foley's Industrial Park, Inc.", filed in the Westchester
County Clerk's Office, Division of Land Records on 7-27-95 as Map #25484 and
being bounded and described as follows;
BEGINNING at a point on the easterly side of Lexington Avenue, said point
being the division line of Lot .001 and Lot 2 of said map;
RUNNING THENCE along said line North 85 degrees 58 minutes 30 seconds East
11.93 feet;
THENCE South 82 degrees 01 minutes 42 seconds East along said line 310.06
feet to a point;
THENCE South 77 degrees 29 minutes 20 seconds East and continuing on said
line 525.66 feet to a point;
THENCE North 08 degrees 07 minutes 00 seconds West 399.36 feet to the
southerly line of lands now or formerly of John H. Van Kirk;
THENCE RUNNING along the said southerly line of lands now or formerly of John
H. Van Kirk, North 82 degrees 39 minutes 40 seconds East 310.76 feet; North
12 degrees 13 minutes 32 seconds East 60.55 feet, South 85 degrees 31 minutes
09 seconds East 14.82 feet; North 44 degrees 16 minutes 01 seconds East 47.96
feet, North 69 degrees 48 minutes 15 seconds East 65.26 feet, North 78
degrees 26 minutes 25 seconds East 60.62 feet, North 88 degrees 09 minutes 22
seconds East 55.91 feet; South 84 degrees 35 minutes 56 seconds East 53.86
feet, South 84 degrees 13 minutes 41 seconds East 13.88 feet and North 68
degrees 08 minutes 25 seconds East 586.82 feet to the westerly line of lands
now or formerly of John H. Van Kirk;
RUNNING THENCE along the westerly line of lands now or formerly of John H.
Van Kirk, South 08 degrees 07 minutes 00 seconds East 421.71 feet to the
northerly line of lands now or formerly of the County of Westchester;
RUNNING THENCE along the northerly and westerly lines of lands now or
formerly of the County of Westchester, South 82 degrees 38 minutes 50 seconds
West 517.12 feet, South 10 degrees 11 minutes 30 seconds West 292.79 feet,
South 09 degrees 35 minutes 30 seconds West 83.02 feet, South 14 degrees 18
minutes 00 seconds West 30.63 feet, South 89 degrees 56 minutes 30 seconds
West 151.81 feet, North 88 degrees 45 minutes 30 seconds West 99.92 feet,
South 88 degrees 35 minutes 30 seconds West 184.85 feet and North 88 degrees
51 minutes 30 seconds West 143.79 feet to the northerly line of lands now or
formerly of the Westchester County Park Commission, Bronx Parkway Extension;
RUNNING THENCE along the same on a curve to the left having a radius of
2,400.00 feet a distance of 831.39 feet to the east side of Lexington Avenue;
RUNNING THENCE along the east side of Lexington Avenue, North 09 degrees 00
seconds 33 minutes West 70.00 feet to the southerly line of lands now or
formerly of John H. Van Kirk, aforesaid, and the point and place of
BEGINNING.
<PAGE>
EXHIBIT B
PERSONAL PROPERTY
80,000 Golf Balls
1 Zenith Television Set
1 File Cabinet
Entrance Sign
Office Furniture
54 Golf Ball Mats and Tees
AT&T Phone System
18 Gas Tee Heaters
1 Range Servant Ball Picker
Cash Register
30 Rental Golf Clubs
<PAGE>
EXHIBIT C
CONTRACTS
1. AWD-Waste Disposal. Two years, $236 per month.
2. Lease to Fairway Cafe.
3. Lease to Golf Link.
4. Two (2) Astro Turf Leases (being paid off by Purchaser at Closing).
5. Ball Picker Lease (being paid off by Purchaser at Closing).
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<PAGE>
EXHIBIT D
PERMITTED EXCEPTIONS
1. Taxes, water rents and sewer rents not yet due and payable.
2. Rights of tenants under leases described on Exhibit C attached to this
Agreement.
3. Facts shown on survey made by Donald Donnelly L.S. dated March 6,
1996.
4. Declaration recorded in Liber 11020, cp. 339.
5. Utility Company Agreement in Liber 3983, cp. 239.
6. Utility Company Easement in Liber 6955, cp. 699.
7. Easements in Liber 6921, cp. 707; Liber 10853, cp. 47; Liber 10853,
cp. 53; and Liber 10853, cp. 63.
8. Notes on File Map #25484.
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of April 8, 1996, among FAMILY GOLF
CENTERS, INC., a Delaware corporation with executive offices at 225
Broadhollow Road, Melville, New York 11747 ("FGC"), YORKTOWN FAMILY GOLF
CENTERS, INC., a Delaware corporation with executive offices at 225
Broadhollow Road, Melville, New York 11747 ("Purchaser"), 202 GOLF ASSOCIATES,
INC., a New York corporation with executive offices at 2710 Lexington Avenue,
Mohegan Lake, New York 10547 ("Seller") and CONTINENTAL STOCK TRANSFER & TRUST
COMPANY incorporated under the laws of the United States of America with
executive offices at 2 Broadway, New York, New York 10004 (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution hereof, Seller, FGC and
Purchaser (a wholly-owned subsidiary of FGC), are consummating the
transactions contemplated by the Purchase Agreement, dated as of the date
hereof (the "Purchase Agreement"), among Seller and Purchaser, pursuant to
which, among other things, Purchaser is purchasing certain property of Seller
in exchange for (i) $1,601,605.20 in cash and (ii) 30,900 shares of common
stock, par value $.01 per share (the "FGC Common Stock");
WHEREAS, pursuant to Section 2.2 of the Purchase Agreement, 10,000
shares (the "Escrowed Shares") of the FGC Common Stock are required to be held
in escrow by Escrow Agent;
WHEREAS, 7,500 shares of the Escrowed Shares (the "Miniature Golf
Shares") are to be held pending the receipt of the Miniature Golf Approvals in
accordance with Article 15 of the Purchase Agreement and 2,500 shares of the
Escrowed Shares (the "Batting Cage Shares") are to be held pending the receipt
of the Batting
<PAGE>
Cage Approvals in accordance with Article 15 of the Purchase Agreement; and
WHEREAS, this is the Escrow Agreement referred to in Section 5 of
the Purchase Agreement. Capitalized terms used in this Escrow Agreement and
not otherwise defined herein shall have the respective meanings given to them
in the Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. ESCROW.
1.01 APPOINTMENT OF ESCROW AGENT.
(a) Seller, Purchaser and FGC hereby appoint Escrow Agent, and Escrow
Agent hereby agrees to serve, as Escrow Agent in accordance with, and pursuant
to, this Agreement.
(b) Escrow Agent shall establish at Chemical Bank a separate
Federally insured, interest bearing account (the "Escrow Account") for any
amounts received by it hereunder.
(c) All monies held in the Escrow Account shall immediately upon
receipt thereof be invested or reinvested by the Escrow Agent in Chemical Bank
commercial paper. All monies, including interest thereon, held by Escrow Agent
in the Escrow Account pursuant to the terms hereof shall be hereinafter
referred to as the "Escrowed Funds"; provided, however, that upon the request
of Seller, Escrow Agentr shall disburse any such interest to Seller.
(d) Seller's tax indemnification or social security number is
13-3643753. Seller shall be responsible for the payment of any income taxes
payable in connection with any interest earned in the Escrow Account.
2
<PAGE>
1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree that the
Escrow Account shall operate as follows:
(a) Simultaneously with the execution and delivery hereof,
FGC shall deliver to Escrow Agent an aggregate of 10,000 shares of FGC Common
Stock. Escrow Agent shall hold the Escrowed Shares in the Escrow Account.
(b) At any time prior to the second anniversary of the
Closing Date, Seller shall be entitled to give a notice to Escrow Agent,
signed by Seller's President or any Vice President (with a copy to Purchaser
and FGC), to the effect that the Miniature Golf Approvals and/or the Batting
Cage Approvals, as the case may be, have been obtained in accordance with
Article 15 of the Purchase Agreement, which notice shall specify the basis
therefore.
(c) Twenty (20) days after Escrow Agent has received a
notice pursuant to Section 1.02(b) hereof (or, if not a business day, on the
next business day following such twentieth day) Escrow Agent shall deliver to
Seller the Miniature Golf Shares and/or the Batting Cage Shares, as the case
may be, unless Purchaser or FGC shall have notified Escrow Agent (with a copy
to Seller) in writing before such date that Purchaser or FGC disagrees with
Seller's determination that Purchaser is entitled to the Miniature Golf Shares
and/or the Batting Cage Shares, as the case may be, which notice shall set
forth in reasonable detail the basis for such disagreement.
(d) At any time following the final, non-appealable denial
of the Miniature Golf Approvals and/or the Batting Cage Approvals, as the case
may be, in accordance with Article 15 of the Purchase Agreement, Purchaser
shall be entitled to give a notice to Escrow Agent, signed by Purchaser's
President or any
3
<PAGE>
Vice President (with a copy to Purchaser and FGC), to such effect, which
notice shall specify the basis therefore.
(e) Twenty (20) days after Escrow Agent has received a
notice pursuant to Section 1.02(d) hereof (or, if not a business day, on the
next business day following such twentieth day) Escrow Agent shall deliver to
Purchaser the Miniature Golf Shares and/or the Batting Cage Shares, as the
case may be, unless Seller shall have notified Escrow Agent (with a copy to
Purchaser) in writing before such date that Seller disagrees with Purchaser's
determination that Purchaser is entitled to the Miniature Golf Shares and/or
the Batting Cage Shares, as the case may be, which notice shall set forth in
reasonable detail the basis for such disagreement.
(f) Should any dispute arise with respect to the delivery,
ownership, or right of possession of any of the Escrowed Shares, Escrow Agent,
as more fully set forth in Section 3.11 hereof, is authorized and directed to
retain in its possession without liability to anyone all or any part of the
Escrowed Shares until such dispute shall have been settled either by mutual
agreement by the parties concerned or by a final order, decree, or judgment of
a court of competent jurisdiction in the United States of America and time for
appeal has expired and no appeal has been perfected, but Escrow Agent shall be
under no duty whatsoever to institute or defend any such proceedings, and may,
in its discretion, deposit such Escrowed Shares with a court of competent
jurisdiction in the United States of America which is hearing such dispute.
4
<PAGE>
1.03 DISTRIBUTION OF ESCROWED SHARES.
(a) Unless a notice under Section 1.02(b) hereof has been
given and the Approval Shares have not been delivered to Seller, either
because the 20-day period has not yet run out or because a dispute relating to
the claim made by such notice is then pending, the Miniature Golf Shares
and/or the Batting Cage Shares, as the case may be, together with all
dividends and distributions received by Escrow Agent with respect thereto,
shall be returned to FGC on the second anniversary of the Closing Date.
1.04 TERMINATION OF ESCROW. This Agreement and the Escrow Account
will terminate at 5:00 P.M., New York City local time, on the date on which
all of the shares of FGC Common Stock held by Escrow Agent and all amounts
contained in the Escrow Account shall be distributed as set forth above.
1.05 VOTING. The shares of FGC Common Stock held by Escrow Agent
shall be voted by Seller.
1.06 SUBSTITUTION. Seller shall have the right at any time to
substitute cash, in United States Dollars, for all or any portion of the
Escrowed Shares. In connection therewith, Seller shall deliver to Escrow
Agent, in immediately available funds, an amount equal to the value of the
Escrowed Shares, which value shall be determined by multiplying the average
daily closing sales price of the Common Stock as reported on the NASDAQ Stock
Market for the five (5) consecutive days immdeiately preceding the date of
determination by the number of Escrowed Shares being substituted. Upon recipt
of such amount, Escrow Agent shall deliver
5
<PAGE>
the substituted Escrowed Shares to Seller, and the cash so delivered shall be
deposited into the Escrow Account and deemed for all purposes hereunder as
Escrow Funds.
2. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b)
facsimile, or (c) over-night delivery with proper postage prepaid, and
addressed as follows:
If to FGC to:
225 Broadhollow Road
Melville, New York 11747
Attention: Dominic Chang, President
Telephone: (516) 694-1666
Facsimile: (516) 694-0918
If to Seller to:
Raymond D. Murphy
PO Box 500
Bedford Hills, New York 10507
with a copy to:
McGowan & Cousins, P.C.
350 Bedford Street
Stamford, Connecticut 06901
Attention: Frank A. McGowan, Jr., Esq.
Telephone: (203) 328-7200
Facsimile: (203) 328-7250
If to Escrow Agent, to:
2 Broadway
New York, New York 10004
Telephone: (212) 509-4000
Facsimile: (212) 509-5150
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. Except as
6
<PAGE>
otherwise provided herein, no notice or communication shall be effective until
received.
3. CONCERNING ESCROW AGENT.
To induce Escrow Agent to act hereunder, it is further agreed by each
of Seller and FGC that:
3.01 Escrow Agent shall not be under any duty to give the Escrowed
Shares held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Agreement.
3.02 This Agreement expressly sets forth all the duties of Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties
or obligations shall be read into this Agreement against Escrow Agent. Escrow
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
3.03 Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully
asserted against Escrow Agent, the other parties hereto shall jointly and
severally indemnify and hold harmless Escrow Agent (and any successor Escrow
Agent) from and against any and all losses, liabilities, claims, actions,
damages, and expenses, including reasonable attorneys' fees and disbursements,
arising out of, and in connection with, this Agreement. Without limiting the
foregoing, Escrow Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in good faith, in
accordance with the terms hereof,
7
<PAGE>
including, without limitation, any liability for any delays (not resulting
from gross negligence or willful misconduct) in the investment or reinvestment
of the Escrowed Funds, or any loss of interest incident to any such delays.
This Section 3.03 shall survive notwithstanding any termination of this
Agreement or the resignation of Escrow Agent.
3.04 Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument, or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in
good faith, that any person purporting to give notice or receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
3.05 Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in good faith and in accordance with
such advice.
3.06 Escrow Agent does not have any interest in the Escrowed Funds
deposited hereunder, but is serving as escrow holder only. Any payments of
income from the Escrow Account shall be subject to withholding regulations
then in force with respect to United States taxes. This Section 3.06 shall
survive notwithstanding any termination of this Agreement or the resignation
of Escrow Agent.
8
<PAGE>
3.07 Escrow Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other documents or
instrument held by, or delivered to, it.
3.08 Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
3.09 Escrow Agent (and any successor escrow agent) at any time may be
discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by FGC, Purchaser and Seller or at any time may
resign by giving written notice to such effect to FGC, Purchaser and Seller.
Upon any such termination or resignation, Escrow Agent shall deliver the
Escrowed Shares to any successor escrow agent jointly designated by the other
parties hereto in writing, or to any court of competent jurisdiction if no
such successor escrow agent is agreed upon, whereupon Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The termination or resignation of Escrow Agent
shall take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day that is thirty
(30) days after the date of delivery: (i) to Escrow Agent of the other
parties' notice of termination or (ii) to the other parties hereto of Escrow
Agent's written notice of resignation. If at that time Escrow Agent has not
received a designation of a successor escrow agent, Escrow Agent's sole
responsibility after that time shall be to keep the Escrowed Shares safe until
receipt of a designation of successor escrow agent or a joint written
disposition instruction by the other parties hereto or an enforceable
9
<PAGE>
order of a court of competent jurisdiction.
3.10 Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
3.11 In the event of any disagreement among or between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Shares, or in the event that Escrow Agent in good faith is
in doubt as to what action it should take hereunder, Escrow Agent shall be
entitled to retain the Escrowed Shares until Escrow Agent shall have received
(a) a final and non-appealable order of a court of competent jurisdiction
directing delivery of the Escrowed Shares or (b) a written agreement executed
by the other parties hereto directing delivery of the Escrowed Shares, in
which event Escrow Agent shall disburse the Escrowed Shares in accordance with
such order or agreement. Any court order referred to in (a) above shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that said court order is final and
non-appealable. Escrow Agent shall act on such court order and legal opinions
without further question.
3.12 As consideration for its agreement to act as Escrow Agent as
herein described, FGC agrees to pay Escrow Agent's fees determined in
accordance with the terms set forth on Exhibit A hereto (and made a part of
this Escrow Agreement as if herein set forth). In addition, FGC agrees to
reimburse Escrow Agent for all reasonable expenses, disbursements, and
advances incurred or made by Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses, and disbursements of its
counsel).
10
<PAGE>
3.13 No publicly distributed material or other matter in any language
(including, without limitation, notices and reports) which mentions Escrow
Agent's name or the rights, powers, or duties of Escrow Agent shall be issued
by the other parties hereto or on such parties' behalf unless Escrow Agent
shall first have given its specific written consent thereto.
4. MISCELLANEOUS.
4.01 BINDING EFFECT. This Escrow Agreement shall be binding upon, and
inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators, and representatives, and shall
not be enforceable by, or inure to the benefit of, any other third party,
except as provided in Section 3.09 hereof with respect to the termination of,
or resignation by, Escrow Agent. No party may assign any of its rights or
obligations under this Agreement without the written consent of the other
parties.
4.02 CHOICE OF LAW. This Agreement shall be construed in accordance
with, and governed by, the internal law of the State of New York (without
reference to its rules as to conflicts of law).
4.03 MODIFICATION. This Agreement may only be modified by a writing
signed by all of the parties hereto.
4.04 HEADINGS. The section headings herein are for convenience only
and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles are to Sections and Articles,
respectively, contained herein.
11
<PAGE>
4.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and
the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
BY: /s/ Robert Krause
--------------------------------
NAME: Robert Krause
TITLE: Vice President
YORKTOWN FAMILY GOLF CENTERS, INC.
BY: /s/ Robert Krause
--------------------------------
NAME: Robert Krause
TITLE: Vice President
202 GOLF ASSOCIATES, INC.
BY: /s/ Kathryn B. Murphy
--------------------------------
NAME: Kathryn B. Murphy
TITLE: President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
BY: /s/ H.R. Drews
--------------------------------
NAME: H.R. Drews
TITLE: Vice President and
Senior Trust Officer
13
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 8, 1996, between 202
GOLF ASSOCIATES, INC., with an address at 2710 Lexington Avenue, Mohegan Lake,
New York 10547 (the "Holder") and FAMILY GOLF CENTERS, INC., with an address
at 225 Broadhollow Road, Melville, New York 11747 (the "Company").
WITNESSETH:
WHEREAS, the Holder is the beneficial owner of 30,000 shares (the
"Shares") of the common stock, par value $.01 per share, of the Company
("Common Stock");
WHEREAS, the Holder desires to have certain registration rights under
the securities laws, and the Company desires that the Holder have such
registration rights;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the parties hereby agree as
follows:
1. If, at any time during the period commencing four (4) months from
the date hereof and terminating on the date on which the Shares become
saleable under Rule 144 promulgated under the Act (as defined below), the
Company shall determine to file any registration statement, or any
post-effective amendment to a registration statement, under the Securities Act
of 1933, as amended (the Act"), covering equity securities of the Company
(other than registration statements on Form S-8 or S-4 or any other form not
generally available for the registration of securities for sale to the public)
for its own account or for the account of others, the Company shall advise the
Holder, by written notice at least 10 business days prior to any filing, and
shall, upon the request of the Holder, and at the expense of the Company,
include in any such registration statement, or any such post-effective
amendment to a registration statement, all of the Registrable Securities (as
hereinafter defined) that the Holder has requested in writing to be
registered, provided that such written request is
<PAGE>
delivered to the Company within seven business days of the Holder's receipt of
notice from the Company. As used in this Agreement, "Registrable Securities"
shall mean (i) the Shares, and (ii) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any convertible security,
option, warrant right or other security which is issued as) a dividend or
other distribution with respect to, or in exchange for or in replacement of
the Shares. All costs and expenses of such registration statement shall be
borne by the Company, except underwriting discounts or commissions applicable
to any of the Registrable Securities sold by the Holder and any counsel to the
Holder. The Company shall not be required to register securities of the Holder
on more than one occasion; provided that if the Holder has been prevented from
selling all of the Registrable Securities Holder wished to sell because of
limitations imposed under paragraph (c) of this Section 1, then the Holder
shall be entitled to include the Registrable Securities in one or more
additional registration statements under the terms of this Section 1 until the
Holder has been able to sell all of the Registrable Securities the Holder
wishes to sell.
(a) The Company shall supply prospectuses and such other
documents as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities, use its
reasonable best efforts to register and qualify any of the Registrable
Securities for sale in a reasonable number of states and do any and all other
acts and things which may be necessary or desirable to enable the Holder to
consummate the public sale or other disposition of the Registrable Securities
on a basis no less favorable than offered to holders of shares of Common Stock
of the Company that are subject to Rule 144.
(b) The Company shall also furnish indemnification in the
manner provided in Section 2 hereof, except that the maximum amount of such
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<PAGE>
indemnification shall be limited to the amount of proceeds received by the
Holder from the sale of the Registrable Securities. The Holder shall furnish
information and indemnification as set forth in Section 2 hereof, except that
the maximum amount which may be recovered from the Holder shall be limited to
the amount of proceeds received by the Holder from the sale of the Registrable
Securities.
(c) In connection with any offering involving an
underwriting of shares of the Company's Common Stock, the Company shall not be
required under this Section 1 to include any of the Holder's Registrable
Securities in such underwriting unless the Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters), and then only
in such quantity as the underwriters determine in their sole discretion will
not jeopardize or limit the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
selling stockholders to be included in such offering exceeds the amount of
securities that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their
sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata (subject to the registration
rights set forth on Schedule I attached hereto and made a part hereof) among
the selling stockholders (whether such selling stockholders acquire or have
acquired such Common Stock before, on or after the date hereof) according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed
to by such selling stockholders).
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<PAGE>
(d) The Holder acknowledges and agrees that any Shares which
are held in escrow pursuant to that certain Escrow Agreement, dated as of even
date herewith, among the Company, the Holder and the Escrow Agent (as therein
defined) (the "Escrow Agreement") may not be sold while so held in escrow,
notwithstanding any registration of such Shares pursuant to this Agreement.
2. (a) Whenever pursuant to Section 1 hereof, a registration
statement relating to any of the Registrable Securities is filed under the
Act, amended or supplemented, the Company shall, to the extent permitted by
law, indemnify and hold harmless Holder, and each person, if any, who controls
(within the meaning of the Act) Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter, against such losses,
claims, damages, liabilities or actions, joint or several, to which Holder,
any such controlling person or any such underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions in respect thereof, arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
such registration statement or any preliminary prospectus or final prospectus
constituting a part thereof or any amendment or supplement thereto, or arise
out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse Holder and each such controlling person and
underwriter for any legal or other expenses reasonably incurred by Holder or
such controlling person or underwriter in connection with investigating or
defending any such losses, claims, damages, liabilities or actions; provided,
however, that the Company will not be liable in any such case to the extent
that any such losses, claims, damages, liabilities or actions arise out of or
are based upon an untrue statement or
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<PAGE>
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by Holder or any other underwriter, for use in the
preparation thereof.
(b) The Holder shall indemnify and hold harmless the
Company, each of its directors, each of its officers and each person, if any,
who controls the Company within the meaning of the Act against any losses,
claims, damages, liabilities or actions, to which the Company or any such
director, officer or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue or alleged untrue statement of any
preliminary prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Holder for use in the preparation thereof; and
shall reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such losses, claims, damages,
liabilities or actions. The Company acknowledges that as of the date hereof no
information (written or otherwise) has been furnished to the Company by the
Holder for use in the preparation of any such materials.
- 5 -
<PAGE>
(c) Promptly after receipt by an indemnified party under
this Section 2 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 2.
(d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party, the indemnifying party shall not be liable to
such indemnified party under this Section 2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation.
(e) To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under this Section 2 to the extent permitted by law,
provided that (i) no contribution shall be made under circumstances where the
indemnifying party would not have been liable for indemnification under the
fault standards set forth in this Section 2, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (iii) contribution by
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<PAGE>
the Holder shall be limited in amount to the net amount of proceeds received
by him from the sale of the Registrable Securities pursuant to such
Registration Statement or prospectus.
3. All notices, requests, consents or other communications
("Notices") which either party may desire or be required to give to the other
hereunder shall be in writing and shall be delivered by hand, overnight
express carrier, or sent by registered or certified mail, return receipt
requested, postage prepaid, in any event, addressed to the parties at their
respective addresses first above set forth. A copy of any Notice given by the
Holder to the Company shall simultaneously be given in any manner provided
above to Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New
York, New York 10176, Attention: Kenneth R. Koch, Esq. A copy of any Notice
given by the Company to the Holder shall simultaneously be given in either
manner provided above to McGowan & Cousins, 350 Bedford Street, Stamford,
Connecticut 06901, Attention: Frank A. McGowan, Jr., Esq. Notices given in the
manner aforesaid shall be deemed to have been given three (3) business days
after the day so mailed, the following business day after delivery to any
overnight express carrier and on the day so delivered by hand (if delivered on
a business day prior to 5 p.m., or if not, then on the next business day).
Either party shall have the right to change its address(es) for the receipt of
Notices by giving Notice to the other party in either manner aforesaid. Any
Notice required or permitted to be given by either party may be given by that
party's attorney.
4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors.
(b) This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with, the laws of the State of New
York.
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<PAGE>
(c) This Agreement has been fully negotiated by the parties
and rules of construction construing ambiguities against the party responsible
for drafting agreements shall not apply.
(d) This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
understandings, if any, with respect thereto.
(e) This Agreement may not be modified, changed,
supplemented or terminated, nor may any obligations hereunder be waived,
except by written instrument signed by the party to be charged or by its agent
duly authorized in writing or as otherwise expressly permitted herein.
(f) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, will not operate as a waiver thereof. No waiver will be
effective unless and until it is in writing and signed by the party giving the
waiver.
(g) This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the
same original.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Robert Krause
--------------------------
Name: Robert Krause
Title: Vice President
202 GOLF ASSOCIATES, INC.
By: /s/ Kathryn B. Murphy
--------------------------
Name: Kathryn B. Murphy
Title: President
- 9 -
<PAGE>
Schedule I
1. The registration rights attaching to the 300,000 shares to be
issued upon exercise of the Warrants for such shares (not yet exercised)
issued in connection with a public offering in December 1995, (See Exhibit
10.28 of the Registration Statement dated October 3, 1995 (Registration Number
33-97686)).
2. Any registration rights in respect of the Common Stock or any
other class of capital stock of the Company, except those registration rights
in respect of shares of Common Stock issued in connection with the acquisition
by the Company of a golf center.
- 10 -
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. 202 GOLF ASSOCIATES, INC., a New York corporation ("Assignor"), in
consideration of the mutual promises and covenants herein contained and in
that certain Purchase Agreement, dated as of the date hereof (the
"Agreement"), among Assignor, Yorktown Family Golf Centers, Inc., a Delaware
corporation ("Assignee") and Family Golf Centers, Inc., a Delaware
corporation, hereby assigns, transfers and conveys to Assignee, its successors
and assigns, all of Seller's right, title and interest in and to the
Contracts, the Permits and the Claims (as such terms are defined in the
Agreement).
2. Assignee from and after the date hereof, hereby undertakes to pay,
perform or discharge when due the liabilities and obligations of the Assignor
under the Contracts and the Permits arising from and after the date hereof.
3. The covenants, representations and warranties of the Assignor
contained in the Agreement relating to the Contracts, the Permits and the
Claims are incorporated herein by reference. If there is any conflict as to
the terms of this Assignment and Assumption Agreement and the Agreement, the
terms of the Agreement shall prevail. All capitalized terms used herein and
not otherwise defined herein shall have the meanings attributed to them in the
Agreement unless the context requires otherwise.
4. This Assignment and Assumption Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement effective as of the 8th day of April, 1996.
ASSIGNOR:
202 GOLF ASSOCIATES, INC.
By: /s/ Kathryn B. Murphy
------------------------------
Name: Kathryn B. Murphy
Title: President
ASSIGNEE:
YORKTOWN FAMILY GOLF CENTERS, INC.
By: /s/ Robert Krause
------------------------------
Name: Robert Krause
Title: Vice President
BILL OF SALE
1. 202 GOLF ASSOCIATES, INC., a New York corporation ("Seller"), for
$10 in hand paid and other good and valuable consideration, as designated in
that certain Purchase Agreement, dated as of the 8th day of April, 1996 (the
"Agreement"), by and among Seller, Yorktown Family Golf Centers, Inc., a
Delaware corporation ("Purchaser") and Family Golf Centers, Inc., a Delaware
corporation, hereby grants, sells, assigns, transfers, conveys and delivers to
Purchaser, its successors and assigns, all of Seller's right, title and
interest in and to the Personal Property (as defined in the Agreement) and the
property referred to in Section 1.1.9 of the Agreement, free and clear of all
mortgages, liens, claims, charges, options, rights of tenants, security
interests and encumbrances of any kind or nature whatsoever.
2. Seller hereby represents and warrants to Purchaser that all of
such property is free and clear of all mortgages, liens, claims, charges,
options, rights of tenants, security interests and encumbrances of any kind or
nature whatsoever.
3. Seller shall execute and deliver such further instruments of sale,
conveyance, transfer and assignment and take such other actions reasonably
requested by Purchaser in order to more effectively bargain, sell, assign,
transfer, convey to and vest in Purchaser all rights and title to the property
referred to herein.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be
executed, effective as of the 8th day of April, 1996.
202 GOLF ASSOCIATES, INC.
By: /s/ Kathryn B. Murphy
-------------------------------
Name: Kathryn B. Murphy
Title: President
<PAGE>
CONSULT YOUR LAWYER BEFORE SIGNING THIS INSTRUMENT--THIS INSTRUMENT SHOULD BE
USED BY LAWYERS ONLY
-----------------------------------------------------------------------------
THIS INDENTURE, made the 8th day of April, 1996
BETWEEN
202 Golf Associates, Inc., having an address at 2710 Lexington Avenue,
Mohegan Lake, New York 10547
party of the first part, and
Yorktown Family Golf Centers, Inc., having an address at 225 Broadhollow
Road, Suite 106E, Melville, New York 11747
party of the second part
WITNESSETH, that the party of the first part, in consideration of
dollars paid by the party of the second part, does hereby grant and release
unto the party of the second part, the heirs or successors and assigns of the
party of the second part forever.
ALL that certain plot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the Town of
Yorktown, County of Westchester and State of New York as more particularly
described on Schedule A attached hereto and made a part hereof.
TOGETHER with all right, title and interest, if any, of the party of the
first part in and to any streets and roads abutting the above described
premises to the center lines thereof. TOGETHER with the appurtenances and all
the estate and rights of the party of the first part in and to said premises;
TO HAVE AND TO HOLD the premises herein granted unto the party of the second
part, the heirs or successors and assigns of the party of the second part
forever.
AND the party of the first part covenants that the party of the first part
has not done or suffered anything whereby the said premises have been
encumbered in any way whatever except as aforesaid.
AND the party of the first part, in compliance with Section 13 of the Lien
Law, covenants that the party of the first part will receive the
consideration for this conveyance and will hold the right to receive such
consideration as a trust fund to be applied first for the purpose of paying
the cost of the improvement and will apply the same first to the payment of
the cost of the improvement before using any part of the total of the same
for any other purpose. The word "party" shall be construed as if it read
"parties" whenever the sense of this indenture so requires.
IN WITNESS WHEREOF, the party of the first part has duly executed this deed
the day and year first above written
202 Golf Centers, Inc.
IN PRESENCE OF: BY: /S/ KATHRYN B. MURPHY
--------------------------
KATHRYN B, MURPHY
PRESIDENT
PRESIDENT
------------------------------- --------------------------
<PAGE>
TITLE NO. F-951925
(W-412722)
SCHEDULE A
ALL THAT CERTAIN plot, piece or parcel of land with the buildings or
improvements thereon, erected, situate, lying and being in the Town of
Yorktown, County of Westchester and State of New York, being Lots .001 and
2.1 of map entitled "Foley's Industrial Park, Inc.", filed in the Westchester
County Clerk's Office, Division of Land Records on 7-27-95 as Map #25484 and
being bounded and described as follows;
BEGINNING at a point on the easterly side of Lexington Avenue, said point
being the division line of Lot .001 and Lot 2 of said map;
RUNNING THENCE along said line North 85 degrees 58 minutes 30 seconds East
11.93 feet;
THENCE South 82 degrees 01 minutes 42 seconds East along said line 310.06
feet to a point;
THENCE South 77 degrees 29 minutes 20 seconds East and continuing on said
line 525.66 feet to a point;
THENCE North 08 degrees 07 minutes 00 seconds West 399.36 feet to the
southerly line of lands now or formerly of John H. Van Kirk;
THENCE RUNNING along the said southerly line of lands now or formerly of John
H Van Kirk, North 82 degrees 39 minutes 40 seconds East 310.76 feet; North 12
degrees 13 minutes 32 seconds East 60.55 feet; South 85 degrees 31 minutes 09
seconds East 14.82 feet; North 44 degrees 16 minutes 01 seconds East 47.96
feet, North 69 degrees 48 minutes 15 seconds East 65.26 feet, North 78
degrees 26 minutes 25 seconds East 60.62 feet, Noth 88 degrees 09 minutes 22
seconds East 55.91 feet; South 84 degrees 35 minutes 56 seconds East 53.86
feet, South 84 degrees 13 minutes 41 seconds East 13.88 feet and North 68
degrees 08 minutes 25 seconds East 586.82 feet to the westerly line of lands
now or formerly of John H. Van Kirk;
RUNNING THENCE along the westerly line of lands now or formerly of John H Van
Kirk, South 08 degrees 07 minutes 00 seconds East 421.71 feet to the
northerly line of lands now or formerly of the County of Westchester;
RUNNING THENCE along the northerly and westerly lines of lands now or
formerly of the County of Westchester, South 82 degrees 38 minutes 50 seconds
West 517.12 feet, South 10 degrees 11 minutes 30 Seconds West 292.79 feet,
South 09 degrees 35 minutes 30
3
<PAGE>
seconds West 83.02 feet, South 14 degrees 18 minutes 00 seconds West 30.63
feet, South 89 degrees 56 minutes 30 seconds West 151.81 feet, North 88
degrees 45 minutes 30 seconds West 99.92 feet, South 88 degrees 35 minutes 30
seconds West 184.85 feet and North 88 degrees 51 minutes 30 seconds West
143.79 feet to the northerly line of lands now or formerly of the Westchester
County Park Commission, Bronx Parkway Extension;
RUNNING THENCE along the same on a curve to the left having a radius of
2,400.00 feet a distance of 831.39 feet to the east side of Lexington Avenue;
RUNNING THENCE along the east side of Lexington Avenue, North 00 degrees 00
seconds 33 minutes West 70.00 feet to the southerly line of lands now or
formerly of John H. Van Kirk, aforesaid, and the point and place of
BEGINNING.
4
<PAGE>
STATE OF NEW YORK, COUNTY OF ss:
On the day of 19 , before me personally came to me known
to be the individual described in and who executed the foregoing
instrument, and acknowledged that executed the same.
-----------------------------
STATE OF NEW YORK, COUNTY OF New York ss:
On the day of April 1996, before me personally came Kathryn B. Murphy to
me known, who, being by me duly sworn, did depose and say that she resides at
Route 22, North Salem, New York that she is the President of 202 Golf
Associates, Inc., the corporation described in and which executed the
foregoing instrument; that she knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that she
signed her name thereto by like order.
/s/ Gregory P. Murphy
------------------------
Gregory P. Murphy
Notary Public, State of New
York
No. 5008883
Qualified in Westchester County
Commission Expires March 1,
1997
Bargain and Sale Deed
with covenant against Grantor's Acts
Title No. F-951925
202 Golf Associates, Inc.
TO
Yorktown Family Golf Centers, Inc.
Standard Form of New York Board of Title Underwriters Distributed by
COMMONWEALTH.
Land Title Insurance Company
5
<PAGE>
STATE OF NEW YORK, COUNTY OF ss:
On the day of 19 , before me personally came to me known
to be the individual described in and who executed the foregoing
instrument, and acknowledged that executed the same.
----------------------
STATE OF NEW YORK, COUNTY OF ss:
On the day of 19 , before me personally came the
subscribing witness to the foregoing instrument, with whom I am personally
acquainted, who, being by me duly sworn, did depose and say that he resides
at ; that he knows to be the individual described in
and who executed the foregoing instrument; that he, said subscribing
witness, was present and saw execute the same; and that he, said
witness, at the same time subscribed h name as witness thereto.
----------------------
Section 3.1
Parcel 48
Lot 2
County or Town
Street Address
Recorded at Request of
Commonwealth Land
Title Insurance Company
Return by mail to
Squadron, Ellenoff, Pleasant
& Sheinfeld, LLP
551 Fifth Avenue
New York, NY 10176
6
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Officers and Directors
Owls Creek Golf Center, Inc.
Virginia Beach, Virginia
I have audited the accompanying balance sheet of Owls Creek Golf Center,
Inc. as of December 31, 1995, and the related statement of operations,
retained earnings, and cash flow for the year then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit 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. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Owls Creek Golf Center,
Inc. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted
accounting principles.
ANNE E. GORRY
February 12, 1996
<PAGE>
OWLS CREEK GOLF CENTER, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
-------------
<S> <C>
ASSETS
Current assets:
Cash on hand ...................................................................... $ 700
Cash in banks ..................................................................... 13,154
Utility deposits .................................................................. 2,231
-------------
16,085
-------------
Inventory (Note 1):
Maintenance supplies and parts ................................................... 7,724
Merchandise and snack bar ........................................................ 25,143
Range balls ...................................................................... 3,581
Gas and oil ...................................................................... 300
-------------
36,748
Prepaid expenses .................................................................. 21,564
-------------
Total current assets ........................................................... 74,397
-------------
Property & equipment (Note 1):
Golf course ....................................................................... 1,220,308
Cart paths ........................................................................ 208,741
Buildings ......................................................................... 391,258
Irrigation system ................................................................. 192,761
Parking lot ....................................................................... 195,798
Fences and landscaping ............................................................ 3,835
Bridges ........................................................................... 39,828
Equipment -- trucks, signs and fixtures ........................................... 338,361
Underground gas tanks ............................................................. 15,936
Golf clubs for rent ............................................................... 965
-------------
2,607,791
Less accumulated depreciation ..................................................... 746,809
-------------
1,860,982
-------------
Other assets:
Unamortized loan cost ............................................................ 19,488
Deferred interest expense ........................................................ 1,366
-------------
20,854
-------------
Total assets ................................................................... $ 1,956,233
=============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable .................................................................. $ 28,345
Payroll & sales taxes ............................................................. 1,718
Accrued interest payable .......................................................... 8,218
Notes payable to stockholders ..................................................... 498,056
Current portion of long term liabilities .......................................... 1,593,585
-------------
Total current liabilities ...................................................... 2,129,922
-------------
Long-term liabilities:
Banks (Note 2) .................................................................... 70,266
-------------
Total long-term liabilities .................................................... 70,266
-------------
Stockholders' equity:
Capital stock -- $1 par value; 5,000 shares authorized, 1,252 issued and
outstanding ....................................................................... 1,252
Additional paid-in capital ........................................................ 1,250,748
Retained earnings (deficit) ....................................................... (1,495,955)
-------------
Total stockholders' equity (deficit) ........................................... (243,955)
-------------
Total liabilities and stockholders' equity (deficit) ......................... $ 1,956,233
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
See accountant's report.
<PAGE>
OWLS CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Income:
Sales -- pro shop ............... $ 92,137
Less -- cost of sales ........... 72,437
---------
Gross profit on pro shop sales 19,700
---------
Sales -- snack bar .............. 64,913
Less -- cost of sales ........... 30,466
---------
Gross profit on snack bar sales 34,447
---------
Green fees ...................... 272,174
Cart rentals .................... 134,526
Driving range ................... 75,014
Club and pullcart rentals ...... 11,684
Membership fees ................. 9,960
Tournament income ............... 42,122
Lessons ......................... 3,345
Hole sponsor .................... 1,350
Club repair ..................... 1,140
---------
Total operating income ...... 605,462
---------
Operating expenses:
Salaries:
Pro shop ....................... 22,837
Concessions .................... 10,551
Golf pros ...................... 41,482
Carts, attendants, starters ... 17,649
Range .......................... 15,400
Course maintenance ............. 66,482
---------
174,401
---------
Payroll tax .................... 15,380
---------
Pro shop:
Utilities ..................... 3,720
Supplies ...................... 5,955
Clubhouse maintenance ......... 1,435
Cash -- over or short ......... (402)
---------
10,690
---------
Concessions:
Utilities ..................... 3,482
Supplies ...................... 441
Repairs and maintenance ...... 40
Cash -- over or short ......... 401
---------
4,365
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
See accountant's report
<PAGE>
OWLS CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) --(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Course operations:
Score cards .................... $ 896
Supplies ....................... 488
Range repair and maintenance .. 4,106
Range balls .................... 5,304
Carts -- gas and oil ........... 735
Carts -- repairs and
maintenance .................... 540
Cart rental .................... 35,973
Utilities ...................... 4,434
--------
52,476
--------
Course maintenance:
Golf course repair ............. 738
Chemicals ...................... 5,144
Equipment rental ............... 520
Equipment repair ............... 7,037
Fertilizer & lime .............. 4,908
Gas and oil .................... 4,828
Sand and top dressing .......... 105
Supplies ....................... 1,605
Water system repairs ........... 603
Educational .................... 35
Utilities ...................... 7,960
--------
33,483
--------
General expenses:
Accounting and legal ........... 6,000
Advertising .................... 6,824
Bad debts ...................... 3,923
Bank charges ................... 214
Contributions .................. 136
Cox cable ...................... 320
Credit card discount ........... 2,533
Dues and subscriptions ......... 573
Insurance -- general ........... 21,865
Insurance -- group ............. 2,817
Medical ........................ 298
Miscellaneous .................. 109
Office expense ................. 306
Personal property tax .......... 3,362
Pest control ................... 492
Postage, UPS, freight .......... 490
Real estate taxes .............. 9,431
</TABLE>
The accompanying notes are an integral part of these financial statements.
See accountant's report
<PAGE>
OWLS CREEK GOLF CENTER, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) --(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
-------------
<S> <C>
Refunds ..................................... $ 237
Rent -- land ................................ 43,000
Rent -- equipment ........................... 559
Security systems ............................ 525
Seminars and meetings ....................... 588
Supplies .................................... 157
Taxes and licenses .......................... 2,986
Telephone ................................... 3,533
Trade show .................................. 800
Trash removal ............................... 1,216
Amortization ................................ 6,519
Depreciation ................................ 82,974
-------------
202,787
-------------
Total operating expenses ................. 493,582
-------------
Net gain from operations .................... 111,880
-------------
Other income (loss):
Sales tax discount .......................... 362
Disposal of equipment ....................... (6,228)
Insurance claims ............................ 2,813
Putting course rent ......................... 1,720
Commissions, telephone and cigarettes ...... 200
-------------
(1,133)
-------------
Other expenses:
Interest .................................... 192,072
-------------
Net loss ..................................... (81,325)
Retained earnings (deficit) beginning of year (1,426,484)
Prior period adjustments (Note 6) ............ 11,854
-------------
Retained earnings (deficit) end of year ..... $(1,495,955)
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
See accountant's report
<PAGE>
OWLS CREEK GOLF CENTER, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Cash flows provided from operating activities:
Net income ...................................................................... $ (81,325)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization .................................................. 89,493
Loss on sale of property and equipment ......................................... 6,228
Decrease in trade accounts receivable .......................................... 3,540
Decrease in utility deposit .................................................... 1,100
Decrease in inventories ........................................................ 8,750
Increase in prepaid expenses and other assets .................................. (2,516)
Decrease in accounts payable ................................................... (8,948)
Increase in accrued liabilities ................................................ 8,521
-----------
Net cash provided by operating activities .................................... 105,988
-----------
Cash flows from investing activities:
Purchase of property and equipment .............................................. (20,231)
Deferred interest ............................................................... (2,583)
-----------
Net cash provided (used) by investing activities ............................. (22,814)
-----------
Cash flow from financing activities:
Proceeds from long-term debt .................................................... 18,552
Proceeds from stockholders ...................................................... 106,250
Repayment of long-term debt ..................................................... (120,962)
-----------
Net cash provided (used) by financing activities ............................. 3,840
-----------
Net increase in cash ......................................................... 5,689
Cash at beginning of year .................................................... 8,165
-----------
Cash at end of year .......................................................... $ 13,854
===========
Supplemental disclosure of cash flow information:
Interest payments .............................................................. $ 183,854
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
See accountant's report
<PAGE>
OWLS CREEK GOLF CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Purpose
Owls Creek Golf Center, Inc. was formed in 1985 under the laws of the
Commonwealth of Virginia for the purpose of developing and operating Owls
Creek Golf Course.
Method of Accounting
The financial statements have been prepared using the accrued basis of
accounting in accordance with generally accepted accounting principles.
Inventory
Inventories of parts, maintenance supplies, gas, oil, merchandise and
snack bar supplies are stated at the lower of cost or market.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed
using MACRS over useful lives ranging from 15 to 31.5 years for buildings and
land improvements and 5 to 15 years for other property and equipment.
Income Taxes
The shareholders have elected to be taxed as an S-Corporation. Net income
or loss is passed through to shareholders. Therefore, there is no provision
for income taxes reflected in these financial statements.
Other Assets
Loan costs for bank loans are being amortized over 15 years.
NOTE 2 -- NOTES PAYABLE
<TABLE>
<CAPTION>
BANKS CURRENT LONG-TERM TOTAL
----------------------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Central Fidelity -- secured by deed of trust and deed of trust
note on improvements. Payments of $6,000.00 principal, and prime
plus one and one-half percent (1 1/2 %) interest are due on the
first of each month for 32 months leaving a balance of
$1,545,761 at December 12, 1995. Central Fidelity has agreed to
extend this note for three months considering the pending sale.
In the event the assets of the corporation are not sold, Central
Fidelity has agreed to continue with the same terms for 36
months. ......................................................... $1,545,761 $ -- $1,545,761
Resource Bank -- note dated May 27, 1993. Interest rate is prime
plus one percent, with principal payments of $3,500 per month
plus interest beginning June 27, 1993. .......................... 42,000 64,442 106,442
------------ ----------- ------------
Associates Commercial Corporation -- secured by one (1) Toro
Groundsmaster 325-D. Payments of $961.42 are due May through
October for 1995, 1996 and 1997. Liability $11,648 less deferred
interest ........................................................ 5,824 5,824 11,648
------------ ----------- ------------
$1,593,585 $70,266 $1,663,851
============ =========== ============
</TABLE>
See accountant's report.
<PAGE>
OWLS CREEK GOLF CENTER, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1995
NOTE 3 -- RELATED PARTY TRANSACTIONS
Merchandise
Inventory is bought and sold at cost between Owls Creek Golf Center and
Hells Point Golf Course, a golf course owned in part by some of the officers
of the company.
NOTE 4 -- COMMITMENTS
Deed of Lease betwen Owls Creek Golf Center, Inc. and City of Virginia
Beach, Virginia, for the 30.681 (plus or minus) acre tract of land on which
the golf center has been constructed. The lease term is for forty years
commencing April 1, 1987. In 1995 the due date was moved to August 1st for
the remaining years of the lease. The rent was prorated and paid at $1,500
per month for these four months. Schedule of annual rent is as follows:
<TABLE>
<CAPTION>
<S> <C>
1st 10 years $10,000 for 1st 2 years
$18,000 for last 8 years
2nd 10 years $22,000 yearly
3rd 10 years $25,000 yearly
4th 10 years $30,000 yearly
</TABLE>
Deed of Lease between Owls Creek Golf Center, Inc. and Robert H.
Braithwaite, Jr. and Nancy F. Braithwaite for the 41 (plus or minus) acre
tract of land on which the golf center has been constructed. The lease term
is for forty years commencing March 20, 1987. Schedule of annual rent is as
follows:
<TABLE>
<CAPTION>
<S> <C>
1st 10 years $15,000 for 1st 2 years
$25,000 for last 8 years
2nd 10 years $30,000 yearly
3rd 10 years $35,000 yearly
4th 10 years $40,000 yearly
</TABLE>
NOTE 5 -- RENTALS UNDER OPERATING LEASES
The annual requirements to meet the lease commitment with Eastern Golf
Car, Inc. for 50 golf carts as of December 31, 1995, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------------------------------
<S> <C>
1996 .............................. $ 35,974
1997 .............................. 35,974
1998 .............................. 35,973
1999 .............................. 35,973
2000 .............................. 35,973
---------
Total minimum payments required $179,867
=========
</TABLE>
NOTE 6 -- PRIOR PERIOD ADJUSTMENTS
Errors in accruals of prior year expenses have been corrected.
NOTE 7
The Company is under negotiations with an unrelated third party to sell
the assets of the company during February, 1996.
See accountant's report.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Members
Flemington Golf & Sports Center LLC
Flemington, New Jersey
We have audited the accompanying balance sheet of Flemington Golf & Sports
Center LLC as of December 31, 1995, and the related statements of operations
and members' deficit and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present farily,
in all material respects, the financial position of Flemington Golf & Sports
Center LLC as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company suffered recurring losses from operations
and has a net members' deficiency, which raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Certified Public Accountants
February 28, 1996
(Except for Note 8, as to which
the date is March 7, 1996)
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Current Assets
Cash ................................. $ 715
----------
Total Current Assets ................. $ 715
Building and Equipment, at fair value 1,600,000
------------
$1,600,715
============
LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities
Bank loans payable ................... $516,397
Note payable ......................... 744,152
Accounts payable and accrued expenses 521,583
Due to related parties ............... 107,814 $1,889,946
----------
Members' Deficit ...................... (289,231)
------------
$1,600,715
============
</TABLE>
See notes to financial statements.
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
STATEMENT OF OPERATIONS AND MEMBERS' DEFICIT
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Sales ............................. $ 500,657
Cost of Sales ..................... 486,053
-----------
Gross Profit ...................... $ 14,604
Operating Expenses ................ 413,381
-------------
Loss from Operations .............. (398,777)
Other Deductions
Impairment of facility ........... 2,448,045
Interest expense ................. 128,190 2,576,235
----------- -------------
Net Loss .......................... (2,975,012)
Members' Equity, beginning of year 2,696,408
-------------
(278,604)
Withdrawals ....................... 10,627
-------------
Members' Deficit, end of year .... $ (289,231)
=============
</TABLE>
See notes to financial statements.
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
STATEMENT OF CASH FLOWS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Flows from Operating Activities
Net loss ................................................ $(2,975,012)
Adjustments to reconcile net loss to net cash provided
by operating activities
Impairment of facility ................................. 2,448,045
Depreciation and amortization .......................... 46,771
Decrease in operating assets
Inventories ........................................... 201,069
Increase in operating liabilities
Accounts payable and accrued expenses ................. 286,621
--------------
Net cash provided by operating activities ............. $ 7,494
Cash Flows from Investing Activities
Purchase of property and equipment ...................... (50,822)
--------------
Net cash used in investing activities ................. (50,822)
Cash Flows from Financing Activities
Repayment of bank loans ................................. (59,018)
Repayments of notes payable ............................. (46,828)
Withdrawals by members .................................. (10,625)
Borrowings from related parties ......................... 98,660
--------------
Net cash used in financing activities ................. (17,811)
----------
Net decrease in cash ..................................... (61,139)
Cash, beginning of year .................................. 61,854
----------
Cash, end of year ........................................ $ 715
==========
</TABLE>
See notes to financial statements.
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
The Company is a New Jersey limited liability company in the business of
operating and managing a golf and sports center.
Income Taxes
The Company is treated as a partnership for Federal income tax purposes.
Consequently, Federal income taxes are not payable by, or provided for the
Company. Members are taxed individually on their share of the Company's
earnings or losses. The Company's net income or loss is allocated among the
members in accordance with the operating agreement of the Company. The
financial statements do not reflect a provision for income taxes.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 -- IMPAIRMENT OF FACILITY
The Company has adopted Statement of Financial Accounting Standards No.
121 (Accounting for the impairment of long-lived assets and for long-lived
assets to be disposed of).
If the sum of the expected future cash flows is lesser than the carrying
amount of the asset, an impairment loss is recognized. The expected future
cash flows of the property, plant and equipment would be $1,600,000 compared
to the carrying amount of the asset of $4,048,045, resulting in an impairment
loss of $2,448,055 (see below).
On February 1, 1996, the Company received and accepted a letter of intent
from a public company, offering to acquire all of the assets and ownership
interests of the Flemington Golf and Sports Center. The consideration to be
paid consists of 100,000 shares of the acquiror's common stock, which has an
approximate fair market value of $2,000,000 at the balance sheet date. The
stock is deemed to be "restricted securities" as such term is defined under
Rule 144 of the Securities Act of 1933 and such shares can only be sold in
accordance with the provisions of this Rule including a holding period.
Management of the Company has advised that arrangements have been made
with a brokerage firm to immediately purchase the restricted stock at a
discount of 20% which would result in a payment to the Company of $1,600,000.
NOTE 3 -- CONTINGENCIES
Going Concern
As shown in the accompanying financial statement, the Company incurred a
net loss of $2,975,012 during the year ended December 31, 1995, and as of
that date, the Company's current liabilities exceeded its current assets by
$1,889,231 and its total liabilities exceeded its total assets by $289,231.
In addition, the Company has sustained significant operating losses since
inception.
Those factors, as well as the uncertain condition that the Company faces
regarding its loan agreements create an uncertainty about the Company's
ability to continue as a going concern.
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 3 -- CONTINGENCIES (Continued)
Management of the Company has accepted a letter of intent to sell the assets
(as discussed in Note 2), however, the ability of the company to continue as
a going concern is dependent on the successful completion of the sale and a
possible guarantee by the members to fund any shortfall of funds in order to
provide full payment to all the creditors. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
NOTE 4 -- BANK LOANS PAYABLE
The obligations consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Note payable, Valley National Bank, requiring monthly payments
of $44,167 plus interest at 1 1/2 % over the base commercial
lending rate of the bank. The loan matures May 18, 1998. The
loan is collateralized by the inventory and personally
guaranteed by the members and is in default at this date. (a) . $383,333
Note payable, Valley National Bank, requiring monthly payments
of $2,381 plus interest at 1 1/2 % over the base commercial
lending rate of the bank. The loan is collateralized by the
members and is in default at this date. (a) .................... 133,064
----------
$516,397
==========
</TABLE>
------------
(a) There is currently pending litigation filed against the Company and
other defendants by Valley National Bank (because of loan covenant
violations). At present, no answer has been filed, however, it is
anticipated that the revenues from the proposed sale will resolve the
litigation.
NOTE 5 -- NOTE PAYABLE
<TABLE>
<CAPTION>
<S> <C>
The Company is obligated to a company affiliated with the
land-owner, requiring monthly payments of $9,496 to be applied
first to interest at 7 1/2 % per annum and the balance to
principal. The note matures on May 1, 1998 and is
collateralized by all assets of the Company (excluding the
inventory) and is in default at this date. ..................... $744,152
=========
</TABLE>
NOTE 6 -- RELATED PARTY TRANSACTIONS
The company has purchased and sold merchandise from a related party on
open account and at no mark-up. Purchases for the year amounted to $9,932 and
sales for the year were $32,784.
F-39
<PAGE>
FLEMINGTON GOLF AND SPORTS CENTER LLC
NOTES TO FINANCIAL STATEMENTS -- (Continued)
NOTE 7 -- LEASE COMMITMENTS
The Company is obligated under a ten year lease which terminates April 30,
2003. Rent expense for the year was $102,000. Under the negotiated terms of
the pending sale, the landlord will release the Company from this obligation
(see Note 2). Rental payments under the lease are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 ......... $102,000
1997 ......... 102,000
1998 ......... 102,000
1999 ......... 102,000
2000 ......... 102,000
Thereafter .. 238,000
----------
$748,000
==========
</TABLE>
NOTE 8 -- SUBSEQUENT EVENT
In March 1996, the Company successfully completed the sale of all the
assets to a public company (see Note 2).
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
202 Golf Associates, Inc.
Yorktown Heights, New York
We have audited the balance sheet of 202 Golf Associates, Inc. as of
December 31, 1995 and the related statements of operations, changes in
shareholders' deficit and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly the
financial position of 202 Golf Associates, Inc. at December 31, 1995 and the
results of its operations, changes in shareholders' deficit and cash flows
for the year ended December 31, 1995 in conformity with generally accepted
accounting principles.
MANGINI, TRAEGER & COMPANY, P.C.
April 8, 1996
<PAGE>
202 GOLF ASSOCIATES, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current Assets:
Cash ....................................................................... $ 166,833
Construction bid bonds ..................................................... 41,710
------------
208,543
------------
Property and equipment -- net of accumulated depreciation of $147,916 ...... 2,130,220
Deferred charges -- net of accumulated amortization of $54,879 ............. 198,266
Deposits .................................................................... 2,900
------------
2,331,386
------------
Total Assets ............................................................ $2,539,929
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Current portion of long term debt .......................................... $ 72,675
Accounts payable ........................................................... 47,856
------------
120,531
Long term debt, net of current portion ...................................... 2,445,472
Shareholders' loans payable ................................................. 504,807
------------
3,070,810
------------
Shareholders' Deficit:
Common stock -- no par value, 200 shares authorized, issued and outstanding 1,000
Accumulated deficit (of which $76,256 was accumulated during the
development stage) ........................................................ (402,831)
------------
(401,831)
Less: treasury stock, at cost .............................................. (129,050)
------------
(530,881)
------------
Total Liabilities and Shareholders' Deficit ............................. $2,539,929
============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
202 GOLF ASSOCIATES, INC.
STATEMENT OF OPERATIONS & SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Revenues ......................................... $ 388,261
Cost of sales .................................... 88,768
-----------
Gross Profit ................................. 299,493
-----------
Operating Expenses:
Salaries ........................................ 59,181
Payroll taxes ................................... 6,046
Equipment lease ................................. 50,538
Telephone and utilities ......................... 28,367
Landscaping maintenance ......................... 8,785
Depreciation and amortization ................... 185,742
Advertising and marketing ....................... 26,620
Professional fees ............................... 5,011
Office expense and utilities .................... 21,302
Insurance ....................................... 27,892
Interest expense ................................ 172,790
Vehicle expense ................................. 2,071
Miscellaneous ................................... 3,622
Property taxes .................................. 27,725
State taxes ..................................... 376
-----------
626,068
-----------
Net Loss ..................................... (326,575)
Deficit accumulated during the development stage (76,256)
-----------
Accumulated Deficit -- Ending .................... $(402,831)
===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
202 GOLF ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Cash Flows From Operating Activities:
Net loss .................................................................. $(326,575)
Adjustments to reconcile net loss to net cash used by operating
activities:
Amortization ............................................................ 50,629
Depreciation ............................................................ 135,113
Decrease in prepaid expenses ............................................. 6,150
Increase in accounts payable ............................................. 6,125
------------
Net Cash Used by Operating Activities ................................. (128,558)
------------
Cash Flows From Investing Activities:
Increase in bonds receivable .............................................. (41,710)
Acquisition of fixed assets ............................................... (67,301)
Decrease in deferred charges .............................................. 1,871
------------
Net Cash Used by Investing Activities ................................. (107,140)
------------
Cash Flows From Financing Activities:
Proceeds of shareholder loans ............................................. 302,903
Payments on long term debt ................................................ (70,903)
------------
Net Cash Provided by Financing Activities ............................. 232,000
------------
Net decrease in cash ....................................................... (3,698)
Cash at beginning of period ........................................... 170,531
------------
Cash at end of period ...................................................... $ 166,833
============
Cash paid for interest ..................................................... $ 172,790
============
Cash paid for taxes ........................................................ $ 376
============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
202 GOLF ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE A -- ORGANIZATION
The Company was formed in January, 1992. Operations of the golf driving
range began upon the completion of construction in December of 1994. Prior to
that time operations were devoted primarily to raising capital, obtaining
financing, constructing the facility, advertising, and administrative
functions.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Property and Equipment
Property and equipment are carried at cost. Depreciation is charged to
expense over the estimated useful lives of the assets using straight-line and
accelerated methods.
Deferred Charges
Deferred charges are comprised of organization costs and financing costs
and are being amortized using the straight-line method over five years.
Amortization charged to operations was $50,629 for the period.
Income Taxes
The financial statements do not include a provision for income taxes
because the company has elected S corporation status for federal and state
purposes. Instead, its earnings and losses are included in the shareholders'
personal income tax returns.
Concentration of Credit Risk
The Company maintains cash balances at financial institutions which may
exceed federally insured amounts of $100,000. At the balance sheet date this
excess was $106,758.
NOTE C -- PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at cost, less
accumulated depreciation:
<TABLE>
<CAPTION>
<S> <C>
Land and improvements ......... $ 824,742
Buildings and improvements ... 1,314,278
Machinery and equipment ...... 127,951
Furniture and fixtures ........ 11,165
-----------
2,278,136
Less: accumulated depreciation 147,916
-----------
$2,130,220
===========
</TABLE>
The useful lives of properly and equipment for computing depreciation are:
<TABLE>
<CAPTION>
<S> <C>
Land and improvements .........10-15 years
Buildings and improvements ... 20-30 years
Machinery and equipment ...... 3-5 years
Furniture and fixtures ........ 7 years
</TABLE>
Depreciation charged to expense for the period was $135,113.
<PAGE>
202 GOLF ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
December 31, 1995
NOTE D -- LONG-TERM DEBT
The following is a summary of notes and mortgages payable as of December
31, 1995.
<TABLE>
<CAPTION>
<S> <C>
Mortgage payable to bank with a fixed monthly payment of $4,596 plus interest at
2% above the banks prime lending rate on the unpaid balance; personally
guaranteed by all shareholders. The loan is due and payable in full in December
1999. .......................................................................... $1,444,843
Mortgage payable to shareholders, dated May 1994 with no stated terms for
principal or interest payments. This mortgage is subordinate to the bank
mortgage. Additional funds will be provided when required. ..................... 1,000,000
Note payable to former shareholders for the purchase of treasury stock for 100%
of the shareholders interest, bearing an interest rate of 9%; payable as
follows:
A principal installment in the sum of $5,325, together with accrued interest
of $4,675 payable on June 1, 1995.
The remaining principal balance is to be paid in equal monthly installments
of $2,083. ................................................................... 73,304
------------
2,518,147
Less: current portion ........................................................... 72,675
------------
Long-term debt, net of current portion .......................................... $2,445,472
============
</TABLE>
NOTE E -- TREASURY STOCK
In October 1994, the Company entered into an agreement to purchase all of
the stock of certain shareholders for a total of $129,050.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996
The following pro forma condensed statements of operations reflect the
acquisitions of the Pelham Enterprises, Inc., Hiland Park Golf Course, RFC
Enterprises, Inc., Upper Hembree Partners, L.P., The Practice Tee, Inc ("TPT"),
Golf Masters Limited Partnership and Air Dome Limited Partnership (collectively,
"Valley View"), Owls' Creek Golf Center, Inc., ("Virginia Beach"), Flemington
Golf and Sports Center, LLC ("Flemington") and associated land, 202 Golf
Associates Inc., ("Yorktown") (collectively, the "Acquired Companies") acquired
during 1995 and 1996 as if the Acquired Companies had been acquired on January
1, 1995. The acquisitions of the Acquired Companies except TPT have been
accounted for as purchases in accordance with Accounting Principles Board
Opinion No. 16. Since TPT has been acquired from related parties, the
acquisition has been recorded using historical basis. In the opinion of
management of the Company, all adjustments necessary to present fairly such pro
forma statements of operations have been made.
These pro forma condensed statements of operations should be read in
conjunction with the notes thereto, the financial statements of the Company
and the Acquired Companies and the related notes thereto, each included
elsewhere in this filing. The pro forma condensed statements of operations are
not necessarily indicative of what the actual results of operations would have
been had the transactions occurred at January 1, 1995, or January 1, 1996 nor do
they purport to indicate the results of future operations.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
------------------------------------------------------------------
PELHAM HILAND PARK UPPER HEMBREE
THE ENTERPRISES, GOLF RFC ENTERPRISES PARTNERS,
COMPANY INC.(a) COURSE(a) INC.(a) L.P.(a)
------- ------------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Operating revenues ................... $ 9,795 $117 $ 100 $363 $386
Merchandise sales .................... 2,637 150 17
------- ------------------ ------------ --------------- ---------------
Total revenue ....................... 12,432 267 117 363 386
------- ------------------ ------------ --------------- ---------------
Operating expenses ................... 6,614 87 297 234 317
Cost of merchandise
sold ................................ 1,779 111 152
Selling, general and administrative
expenses ............................ 1,242 39 44 110 46
------- ------------------ ------------ --------------- ---------------
Operating income (loss) .............. 2,797 30 (376) 19 23
Interest expense ..................... 939 16 61 112
Other (income) expense ............... (66) (6)
------- ------------------ ------------ --------------- ---------------
Income (loss) before income taxes and
extraordinary item .................. 1,924 14 (376) (42) (83)
Income tax (benefit) expense ......... 669
------- ------------------ ------------ --------------- ---------------
INCOME (LOSS) before extraordinary
item ................................ $ 1,255 $ 14 $(376) $(42) $(83)
======= ================== ============ =============== ===============
Income (loss) per share before
extraordinary item .................. $ 0.24
=======
Weighted average shares outstanding . 5,271
=======
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
VALLEY VIRGINIA PRO FORMA
TPT(a) VIEW(a) BEACH(b) FLEMINGTON(b) YORKTOWN(b) ADJUSTMENTS PRO FORMA
------ ------ -------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ................... $ 244 $ 668 $616 $ 501 $ 388 $13,178
Merchandise sales .................... 44 92 2,940
------ ------ -------- ----------- --------- ----------- ---------
Total revenue ....................... 244 712 708 501 388 16,118
------ ------ -------- ----------- --------- ----------- ---------
Operating expenses ................... 86 395 404 900 393 $ (171)(A) 9,556
Cost of merchandise
sold ................................ 36 72 2,150
Selling, general and administrative
expenses ............................ 264 404 119 101 35 (A) 2,404
------ ------ -------- ----------- --------- ----------- ---------
Operating income (loss) .............. (106) (123) 113 (399) (106) 136 2,008
Interest expense ..................... 3 34 192 128 164 (156) 1,805
Other (income) expense ............... (1) (2) 2 2,448 (2,448)(A) (73)
------ ------ -------- ----------- --------- ----------- ---------
Income (loss) before income taxes and
extraordinary item .................. (108) (155) (81) (2,975) (270) 2,428 276
Income tax (benefit) expense ......... 1 570 100
------ ------ -------- ----------- --------- ----------- ---------
INCOME (LOSS) before extraordinary
item ................................ $(109) $(155) (81) (2,975) (270) 1,858 176
====== ====== ======== =========== ========= =========== =========
Income (loss) per share before
extraordinary item .................. 0.03
=========
Weighted average shares outstanding .. 366 (C) 5,637
=========== =========
</TABLE>
---------------
(a) Represents operations from January 1, 1995 through date of acquisition.
(b) Represents operations for the year ended December 31, 1995.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) Expense adjustments for the period ended December 31, 1995 to reflect
the acquisition of the Acquired Companies as if the acquisitions had
taken place at January 1, 1995:
<TABLE>
<CAPTION>
IMPAIRMENT
INTEREST DEPRECIATION AMORTIZATION IN VALUE OF
COMPANY DATE ACQUIRED ADJUSTMENT(1) ADJUSTMENT OF GOODWILL ASSETS
------------------------------ --------------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Pelham Enterprises, Inc. ..... April 1995 $ (30) $ 12
Hiland Park Golf Course ...... May 1995 (212) 14
RFC Enterprises, Inc. ......... August 1995 9 (33) 8
Upper Hembree Partners, L.P. . August 1995 (4) (108)
TPT ........................... November 1995 26
Valley View ................... November 1995 (56)
Virginia Beach ................ March 1996 12 22
Flemington .................... March 1996 39 (2,448)
Yorktown ...................... April 1996 4 5
------------- -------------- -------------- ------------
$(156) $(171) $35 $(2,448)
============= ============== ============== ============
</TABLE>
---------------
(1) Assumes average rate of borrowing at 10%.
(B) To reflect the income tax effect arising from the losses of the
Acquired Companies.
(C) To reflect the issuance of common stock for the Acquired Companies.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
--------------------------------------------
THE VIRGINIA BEACH PRO FORMA
COMPANY (a) FLEMINGTON (a) YORKTOWN ADJUSTMENTS
--------- ---------------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Operating revenues ................. 2,691 35 -- 74 --
Merchandise sales .................. 671 2 -- -- --
--------- ---------------- -------------- ---------- -------------
Total revenue ..................... 3,362 37 -- 74 --
Operating expenses ................. 2,252 39 25 88 9
Cost of merchandise sold ........... 457 2 -- --
Selling, general and administrative
expenses .......................... 643 27 -- 22
--------- ---------------- -------------- ---------- -------------
Operating income (loss) ............ 10 (31) (25) (36) 9
Interest expense ................... 100 34 -- 26 (60)
Other (income) expense ............. (197) 14 -- (3) 21
--------- ---------------- -------------- ---------- -------------
Income (loss) before income taxes . 107 (79) (25) (59) (30)
Income tax (benefit) expense ...... 38 -- -- (47)
--------- ---------------- -------------- ---------- -------------
NET INCOME (LOSS) .................. 69 (79) (25) (59) 77
Net income (loss) per share ....... 0.01
Weighted average shares outstanding 8,648 131
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PRO FORMA
--------------
<S> <C>
Operating revenues ................. 2,800
Merchandise sales .................. 673
--------------
Total revenue ..................... 3,473
Operating expenses ................. 2,413
Cost of merchandise sold ........... 459
Selling, general and administrative
expenses .......................... 692
--------------
Operating income (loss) ............ (91)
Interest expense ................... 100
Other (income) expense ............. (165)
--------------
Income (loss) before income taxes . (26)
Income tax (benefit) expense ...... (9)
--------------
NET INCOME (LOSS) .................. (17)
Net income (loss) per share ....... 0.00
Weighted average shares outstanding 8,779
</TABLE>
---------------
(a) Represents operations from January 1, 1996 through date of acquisition.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) Expense adjustments for the period ended March 31, 1996 to reflect the
acquisition of the Acquired Companies as if the acquisitions had taken
place at January 1, 1996:
<TABLE>
<CAPTION>
DATE INTEREST DEPRECIATION OTHER OTHER
COMPANY(1) ACQUIRED ADJUSTMENT(1) ADJUSTMENT INCOME EXPENSE
-------------- ------------ ------------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Virginia Beach March 1996 $(34) $ 9 $15 $(14)
Flemington .... March 1996 -- -- -- --
Yorktown ...... April 1996 (26) -- $20 --
------------- -------------- -------- ---------
$(60) $ 9 $35 $(14)
============= ============== ======== =========
</TABLE>
---------------
(1) Assumes average rate of borrowing at 10%.
(B) To reflect the income tax benefit arising from the losses of the
Acquired Companies.
(C) To reflect the issuance of common stock for the Acquired Companies.
