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EXHIBIT 10.10
CONVERSION AGREEMENT
by and between
ARNOLD PALMER GOLF MANAGEMENT LLC,
a Delaware limited liability company
and
ORONOQUE GOLF, LLC,
a Delaware limited liability company
as Transferors,
and
APGM LIMITED PARTNERSHIP,
a Delaware limited partnership
as Transferee
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TABLE OF CONTENTS
ARTICLE PAGE
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1 DEFINITIONS ........................................................... 2
1.1 Definitions ...................................................... 2
2 CONVERSION; LEASE-BACK ................................................ 6
2.1 Conversion; Other Consideration .................................. 6
2.2 Property Lease ................................................... 7
3 ACCREDITED INVESTOR AND PROSPECTUS .................................... 7
3.1 Accredited Investor .............................................. 7
3.2 Prospectus ....................................................... 8
4 REPRESENTATIONS AND WARRANTIES ........................................ 8
4.1 Representation and Warranties of Transferors ..................... 8
4.2 Representation and Warranties of Transferee ...................... 16
5 COVENANTS ............................................................. 17
5.1 Transferors' Covenants ........................................... 17
5.2 Transferee's Covenants ........................................... 18
6 CONDITIONS PRECEDENT .................................................. 18
6.1 Conditions Precedent to the Obligations of Transferee ............ 18
6.2 Conditions Precedent to the Obligations of Transferors ........... 19
7 CLOSING ............................................................... 19
7.1 Time and Place ................................................... 19
7.2 Transferors' Deliveries .......................................... 19
7.3 Transferee's Deliveries .......................................... 20
7.4 Concurrent Transactions .......................................... 21
8 INDEMNIFICATION ....................................................... 21
8.1 Transferors' Indemnity ........................................... 21
8.2 Transferee's Indemnity ........................................... 21
9 DEFAULT ............................................................... 22
9.1 Transferee Default ............................................... 22
9.2 Transferors' Default ............................................. 22
10 BROKERAGE ............................................................. 23
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ARTICLE PAGE
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10.1 Brokerage ........................................................ 23
11 NOTICES ............................................................... 23
11.1 Notices .......................................................... 23
12 ADDITIONAL COVENANTS .................................................. 24
12.1 Entire Agreement, Amendments and Waivers ........................ 24
12.2 Further Assurances .............................................. 24
12.3 Survival and Benefit ............................................ 24
12.4 No Third Party Benefits ......................................... 24
12.5 Transferee's Investigation and Inspections ...................... 24
12.6 Interpretation .................................................. 24
12.7 Governing Law ................................................... 25
12.8 Attorneys' Fees ................................................. 25
12.9 Assignment ...................................................... 25
12.10 Offer and Acceptance ............................................ 25
Exhibit 1 - Contribution Agreements
Exhibit 2 - Description of the Land
Schedule A(1)
Schedule A(2)
Exhibit 3 - Liabilities
Exhibit 4 - Litigation
Exhibit 5 - Labor Matters
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CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT ("Agreement") is made and entered into as of May
14, 1998, by and among ARNOLD PALMER GOLF MANAGEMENT LLC, a Delaware limited
liability company ("APGM LLC"), ORONOQUE GOLF, LLC, a Delaware limited
liability company ("Oronoque") (collectively "Transferors"), and APGM LIMITED
PARTNERSHIP, a Delaware limited partnership ("Transferee").
RECITALS
A. Transferors are engaged in, among other things, the business of
operating, managing and leasing golf courses (the "Business").
B. Transferors and their principals are in the process of sponsoring a
real estate investment trust ("REIT"), the shares of which will be offered to
the public pursuant to an initial public offering (the "IPO") of common shares
of beneficial interest ("Common Shares"). As part of the IPO, it is
contemplated that (i) the REIT will become the managing general partner of
Transferee, (ii) the limited partnership interests in Transferee shall be
divided into units of limited partnership interest in Transferee ("Units"), and
(iii) the holders of Units will have the right to redeem Units for Common
Shares (on a one Unit for one share of Common Shares basis) or the cash
equivalent, subject to the restrictions and limitations which will be
established by an amended and restated partnership agreement of Transferee and
the organizational documents for the REIT which are in effect as of the
consummation of the date of the IPO.
C. Prior to the date hereof, (i) Transferors have contributed the Property
(as hereinafter defined) to Transferee, commonly known as the Oronoque Country
Club, located in Stratford, Connecticut, and the Brierwood Country Club,
located in Hamburg, New York, in consideration of Transferors' receipt of
partnership interests in Transferee, and (ii) Transferee has acquired fee
interests in and to four (4) other golf course properties (the "Paloma
Properties") from third party seller(s) thereof, commonly known as The Fox
Valley Club, Lancaster, New York, the Tan Tara Golf Club, North Tonawanda, New
York, the Emerald Valley Golf Club, Creswell, Oregon, and the Minebrook Golf
Club, Hackettstown, New Jersey.
D. In connection with the IPO, Transferors shall cause Palmer Management,
LLC, a Delaware limited liability company ("Old GP"), to withdraw as the
general partner of Transferee and shall execute and deliver the Amended and
Restated Agreement of Limited Partnership of Transferee and Transferee shall
(a) convert the then existing limited partnership interests in Transferee held
by the Transferors (the "Interest") into Units as provided hereinbelow, (b)
grant APGM LLC an option to purchase 75,000 Units at the IPO price (the
"Options") and (iii) pay APGM LLC the amount of $5,000,000 (the "Cash
Consideration").
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The Options and the Cash Consideration received by APGM LLC will constitute
consideration for APGM LLC's prior capital contribution to the Partnership of
the proceeds used to acquire the Paloma Properties.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Transferors and
Transferee agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. When used herein, the following terms shall have the
respective meanings set forth opposite each such term:
(a) ACCREDITED INVESTOR. As defined in Section 3.1.
(b) AGREEMENT. This Conversion Agreement, including the Exhibits
attached hereto which are by this reference incorporated herein and made
a part hereof.
(c) APGM LLC. As defined in the opening paragraph of this
Agreement.
(d) CASH CONSIDERATION. As defined in the Recitals hereto.
(e) CLOSING. The closing of transactions contemplated by this
Agreement, as described in Article 7 of this Agreement.
(f) CLOSING DATE. The date of closing determined pursuant to
Section 7.1 of this Agreement.
(g) COMMON SHARES. As defined in the Recitals hereto.
(h) CONTRACTS. All written or oral: (i) insurance, management,
leasing, service, maintenance, operating, repair, collective bargaining,
employment, employee benefit, severance, franchise, licensing, supply,
purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments in any way relating
to the Property or any part thereof, together with all supplements,
amendments and modifications thereto; and (ii) equipment leases and all
rights and options of Transferors or Transferee thereunder, including
rights to renew or extend the term or purchase the leased equipment,
entered into by Transferors, Transferee or their affiliates, relating to
equipment located in or upon the Property or used in connection therewith,
together with all supplements, amendments and modifications thereto.
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(i) CONTRACT DATE. The date Transferors deliver to Transferee an
original, fully executed counterpart of this Agreement, which date shall
be set forth in the introductory paragraph of this Agreement.
(j) ENVIRONMENTAL LAWS. All current and future federal, state and
local statutes, regulations, ordinances and rules relating to (i) the
emission, discharge, release or threatened release of a Hazardous
Material into the air, surface water, groundwater or land; (ii) the
manufacturing, processing, use, generation, treatment, storage, disposal,
transportation, handling, removal, remediation or investigation of a
Hazardous Material; or (iii) the protection of human health, safety or
the indoor or outdoor environment, including without limitation, the
Clean Air Act, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Occupational Safety and Health Act,
all amendments thereto, all regulations promulgated thereunder, and their
state or local statutory and regulatory counterparts.
(k) HAZARDOUS MATERIAL. Any solid, liquid or gaseous substance,
chemical, compound, product, byproduct, waste or material that is or
becomes regulated, defined or designated by any applicable federal, state
or local governmental authority or by any Environmental Law as hazardous,
extremely hazardous, imminently hazardous, dangerous or toxic, or as a
pollutant or contaminant, and shall include, without limitation,
asbestos, polychlorinated biphenyls, and oil, petroleum, petroleum
products and petroleum byproducts.
(l) INTEREST. As defined in The Recitals hereto.
(m) IPO. As defined in the Recitals hereto.
(n) IPO CONDITION. As defined in Section 6.3.
(o) INTEREST CONVERSION. Shall mean the issuance to Transferors
concurrently with the Closing of that number of Units which will result
in Transferors owning a number of Units equal to:
(i) the total number of Units outstanding, as set forth in the
Prospectus, exclusive of any Units issuable in connection with any
over allotment option granted to any underwriter in the IPO;
minus
(ii) the total number of Units owned by the REIT as reflected
in the Prospectus;
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minus
(iii) the total number of Units issued pursuant to those
Contribution Agreements described in Exhibit 1 hereto.
(p) IMPROVEMENTS. Any and all buildings and improvements located on
the Land. Improvements shall include any and all cart paths, tees,
greens, holding ponds, water wells, effluent systems, irrigation lines,
drainage facilities, pump stations, cart barns, entrance signage and
pavilions located on the Land.
(q) INVENTORY. Any and all maintenance facility inventory and all
other inventory of goods owned by Transferors and/or Transferee and held
for resale in connection with the operation of the subject Property
including, without limitation, golf equipment and golf related goods sold
in the pro shops and food and beverage items sold at the clubhouse
facilities and elsewhere throughout each golf course.
(r) LAND. The land legally described on Exhibit 2 attached hereto
and incorporated herein by this reference.
(s) LEGAL REQUIREMENTS. All laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, orders, directions and requirements of
all governments and governmental authorities having jurisdiction of the
Property (including, for purposes hereof, any local Board of Fire
Underwriters), and the operation thereof, and all deed restrictions or
other covenants, restrictions, or agreements, site plan approvals, zoning
or subdivision regulations and urban redevelopment plans governing or
regulating the use or operation of the Property.
(t) LESSEE. APGM LLC, or any wholly owned affiliate of APGM LLC,
or any other affiliate of APGM LLC as may be designated by APGM LLC, in a
written notice thereof delivered to Transferee no later than thirty (30)
days following the Contract Date (which other affiliate shall, in any
event, be subject to the reasonable approval of Transferee as more
particularly described in Section 2.2 hereof).
(u) LESSEE PROPERTY. Collectively, the Inventory, the Membership
Agreements, the Contracts and the Operating Permits.
(v) LICENSES AND PERMITS. All (i) licenses, permits, franchises,
certifications, authorizations, approvals, certificates of occupancy and
entitlements issued, approved or granted by any governmental authority or
body having jurisdiction over the Property and relating to the operation,
ownership or maintenance of the Property or any part thereof; (ii)
development rights in any way related to or used in connection with
the Property and its operations; and (iii) licenses, certifications,
authorizations, approvals,
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easements and rights of way required from private parties to make use of
utilities and to insure vehicular and pedestrian ingress and egress to
the Property; provided that the term "Licenses and Permits" shall not
include Operating Permits.
(w) LOAN DOCUMENTS. All loan agreements, notes, mortgages, deeds of
trust, assignments, guarantees, indemnitees and other instruments
evidencing, securing, guarantying or otherwise relating to any mortgage
or secured financing currently encumbering the Property.
(x) MEMBERSHIP AGREEMENTS. As defined in Section 4.1(g).
(y) OFFEREES. As defined in Section 3.1.
(z) OPERATING PERMITS. All licenses, permits and other
authorizations or approvals granted by any governmental authority or
other body having jurisdiction over the Property which relate solely to
the business operations currently being conducted at the Property (e.g.
liquor licenses, restaurant permits and licenses and health spa licenses)
and which would remain in full force and effect if held by APGM LLC or
its affiliates as the lessee of the Property pursuant to the Property
Lease.
(aa) OTHER CONTRIBUTION AGREEMENTS. As specifically described in
Exhibit 1.
(ab) PALOMA PROPERTIES. As defined in the Recitals hereto.
(ac) PERMITTED TITLE EXCEPTIONS. Those exceptions to title to the
Property set forth in the title policies heretofore issued in favor of
Transferee relative to the Land and Improvements.
(ad) PERSONAL PROPERTY. All machinery, vehicles, spare parts,
supplies, equipment, fixtures, furnishings and other tangible personal
property of every kind and character (excluding, however, the Inventory)
owned by Transferors and/or Transferee and situated in or upon or used in
connection with the operation or maintenance of the Property or any part
thereof, and all replacements, additions or accessories thereto between
the Contract Date and the Closing Date.
(ae) PROPERTY. Collectively, the Land and Improvements, the
Personal Property, the Licenses and Permits, the Trade Names and
Trademarks, the Warranties, and all tangible and intangible assets
arising out of or relating to the foregoing (excluding, however, the
Lessee Property described herein) all of which has heretofore been
contributed by Transferors to Transferee and being commonly referred to
as the Oronoque Country Club, Stratford, Connecticut, and the Brierwood
Country Club, Hamburg, New York.
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(af) PROPERTY LEASE. As defined in Section 2.2.
(ag) PROSPECTUS. As defined in Section 3.2.
(ah) REIT. As defined in the Recitals hereto.
(ai) SECURITIES ACT. As defined in Section 3.2.
(aj) TRANSFERORS. Shall mean, collectively, Arnold Palmer Golf
Management LLC and its subsidiary Oronoque Golf, LLC.
(ak) TRADE NAMES AND TRADEMARKS. All of Transferee's rights in and
to any and all trade names and trademarks relating to the current
operations at the Property and previously transferred from Transferors to
Transferee, and any and all derivatives and forms thereof, together with
all other service marks and logos, whether or not registered, relating to
the current operations at the Property and previously transferred from
Transferors to Transferee.
(al) UNITS. As defined in the Recitals hereto.
(am) WARRANTIES. All guarantees and warranties in effect with
respect to the Property or any portion thereof, which, by their terms,
shall survive Closing, including, without limitation, all guarantees and
warranties of contractors, materialmen, manufacturers, mechanics or
suppliers who have been engaged by Transferors or any of their agents to
furnish labor, materials, equipment or supplies to all or any portion of
the Property.
ARTICLE 2
CONVERSION; LEASE-BACK
2.1 CONVERSION; OTHER CONSIDERATION. Subject to the conditions and on the
terms contained in this Agreement, Transferors' Interest shall be converted at
Closing, into the number of Units as determined by the Interest Conversion.
The ratio of the number of such Units to be held by APGM LLC and Oronoque shall
be determined by the mutual agreement of APGM LLC and Oronoque. In addition,
subject to the conditions contained herein, at Closing, Transferee shall (i)
grant APGM LLC the Options, and (ii) pay Transferors the Cash Consideration
(which Cash Consideration shall be payable in cash or by cashier's check or
wire transfer of funds and shall be payable to such party or parties as
Transferors shall mutually designate). The Options and the Cash Consideration
received by APGM LLC will constitute consideration for APGM LLC's prior capital
contribution to the Partnership of the proceeds used to acquire the Paloma
Properties.
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2.2 PROPERTY LEASE. Notwithstanding anything herein to the contrary, it
is understood and agreed that Transferee, as lessor, and APGM LLC, as lessee,
shall be entering into one or more leases for the Property and the Paloma
Properties (collectively, the "Property Lease") commencing upon the Closing
Date, in form and substance designated by Transferee (which shall be in
substantially the same form as heretofore agreed upon for the Crofton, Maryland
golf course property). In the event APGM LLC desires an entity other than APGM
LLC or a wholly owned affiliate of APGM LLC to be the "Lessee" under the
Property Lease, APGM LLC shall deliver notice to Transferee, within thirty (30)
days following the Contract Date, identifying the entity which they proposes to
be the lessee under the Property Lease, and APGM LLC shall thereafter deliver
to Transferee such other information concerning such proposed lessee as
Transferee may request. Transferee shall have the right to approve any entity
designated by APGM LLC (other than a wholly owned affiliate of APGM LLC) to be
the lessee under the Property Lease, which approval shall not be unreasonably
withheld. Upon such approval (or, in case of any wholly owned affiliate of
APGM LLC, where no approval of Transferee shall be required), the entity so
designated shall be the "Lessee" under the Property Lease being entered into at
Closing, and, at Closing, Transferors and Transferee shall convey all of their
respective right, title and interest in and to the Lessee Property to said
Lessee by assignment or other conveyance documents acceptable to Lessee and
Transferee. If Transferee does not so approve the proposed entity as lessee
under the Lease, then APGM LLC or a wholly owned affiliate of APGM LLC (as
designated by APGM LLC) shall be the "Lessee" thereunder.
ARTICLE 3
ACCREDITED INVESTOR AND PROSPECTUS
3.1 ACCREDITED INVESTOR. Transferee acknowledges that the issuance of
Units to Transferors pursuant to this Agreement are sales exempt from
registration under the Securities Act (as defined in Section 3.4 below) and
that the issuance of said Units will be based upon the representation and
warranty of Transferors that Transferors and every person that is a member of
Transferors (collectively, all of such persons are referred to herein as
"Offerees") is an "Accredited Investor", as such term is defined in Rule 501(a)
promulgated under the Securities Act. Transferors shall cause each Offeree to
whom Units will be distributed ("Recipient Offeree") to execute and deliver an
Investor Questionnaire in form and substance satisfactory to Transferee to the
effect that the proposed recipient of Units is an Accredited Investor.
Transferors has heretofore delivered to Transferee a written notice identifying
each of the Recipient Offerees. Transferors hereby agree to deliver to each
Offeree an offering letter prepared by Transferee or its general partner and to
cause each Recipient Offeree to provide to Transferee or its general partner
such representations as Transferee may reasonably require with the advice of
counsel in connection with such private placement of the Units meeting the
requirements of Rule 506 under Regulation D.
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3.2 PROSPECTUS. Transferors understand that in connection with the IPO,
Transferee will require certain information in order to comply with the
Securities Act of 1933, as amended, the regulations promulgated thereunder, and
any applicable states' securities laws governing the offering and sales of
securities (collectively, the "Securities Act"), and such information will be
used in the preparation of and/or included in a final prospectus (the
"Prospectus") to be distributed in connection with the sale of the Common
Shares of the REIT. Transferors agree to provide to Transferee, at
Transferee's sole cost and expense (unless otherwise specified in this
Agreement), all information which Transferee, the underwriters of the IPO and
their respective attorneys or accountants deem necessary or desirable to
prepare the Prospectus. Within ten (10) days after request therefore by
Transferee, Transferors shall, from time to time, update and recertify any
information previously provided by Transferors pursuant hereto. Transferors
agree to carefully review the portions of the Prospectus concerning the
Transferors and the Business to verify that such portions of the Prospectus do
not contain any untrue statement of material fact and do not omit to state a
material fact necessary in order to make the statements made in such portions
of the Prospectus, in light of the circumstances under which they were made,
not misleading. If Transferors find any portion of the Prospectus relating to
the Transferors or the Business inaccurate, Transferors shall promptly notify
Transferee in detail in writing as to the reasons it finds such portions of the
Prospectus inaccurate so that the Prospectus may be modified. This Agreement
is not intended to constitute an offering of securities under the Securities
Act or otherwise, and no securities have been offered to Transferors by virtue
hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATION AND WARRANTIES OF TRANSFERORS. In connection with the
Property heretofore contributed by Transferors to Transferee and to induce
Transferee to execute, deliver and perform this Agreement, Transferors hereby
represent and warrant to Transferee on and as of the Contract Date and, by an
updated certificate to be delivered at Closing, on and as of the Closing Date,
as follows:
(a) OTHER REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Transferors appearing in other Sections of this Agreement
are true and correct in all material respects as of the date hereof, and
shall be true and correct in all material respects as of the Closing
Date, except to the extent any such representation or warranty expressly
relates to a specific date, in which case it is and shall be true and
correct in all material respects as of such specific date.
(b) AUTHORITY. Transferors are duly organized and validly existing
limited liability companies in good standing under the laws of the State
of Delaware. Transferors have full capacity, right, power and authority
to execute, deliver and perform this Agreement and all documents to be
executed by Transferors pursuant hereto, and all
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required action and approvals therefor have been duly taken and obtained.
The individuals signing this Agreement and all other documents executed
or to be executed pursuant hereto on behalf of Transferors are and shall
be duly authorized to sign the same on Transferors' behalf and to bind
Transferors thereto. This Agreement and all documents to be executed
pursuant hereto by Transferors are and shall be binding upon and
enforceable against Transferors in accordance with their respective
terms.
(c) CONTRACTS. Transferors have provided to Transferee prior
hereto, true, correct and complete copies of all material Contracts
(i.e., meaning Contracts which have projected or actual payment
obligations in excess of $25,000.00 during any quarterly period or which
are otherwise material to the business operations currently being
conducted at the Property). To Transferors' knowledge, there are no
defaults under any of the Contracts and all of the Contracts are in good
standing and in full force and effect. Transferors and Transferee shall
assign all of their respective rights and obligations under the Contracts
following the Closing to Lessee, as the operator of the business being
conducted at the Property pursuant to the Property Lease.
(d) LICENSES AND PERMITS. Transferors have provided to Transferee
prior hereto a true, correct and complete list of all material Licenses
and Permits. To Transferors' knowledge, Transferee currently possesses
all Licenses and Permits necessary and required for the current
ownership, use and maintenance the Property and each of the Licenses and
Permits is in full force and effect and in good standing, and Transferors
have not received notice of any intention on the part of the issuing
authority to cancel, suspend or modify any of the Licenses and Permits or
to take any action or institute any proceedings to effect such a
cancellation, suspension or modification. To Transferors' knowledge, no
notice to, filing or registration with, or License or Permit from, any
governmental or regulatory body or authority, or any other person or
entity is required to be made or obtained in connection with the
execution, delivery or performance of this Agreement by Transferors. To
Transferors' knowledge, the interests of Transferee in the Licenses and
Permits are free and clear of all encumbrances and have not been assigned
to any other person, other than collateral assignment thereof to the
existing lender under the Loan Documents.
(e) OPERATING PERMITS. Transferors have previously provided to
Transferee, a true, correct and complete list of all material Operating
Permits. To Transferors' knowledge, Transferors and/or Transferee
currently possess all Operating Permits necessary and required for the
lawful operation of the current business at the Property and each of the
Operating Permits is in full force and effect and in good standing, and
Transferors have not received notice of any intention on the part of the
issuing authority to cancel, suspend or modify any of the Operating
Permits or to take any action or institute any proceedings to effect such
a cancellation, suspension or modification. To Transferors' knowledge no
notice to, filing or registration with, or License or Permit from, any
governmental or regulatory body or authority, or any other person or
entity
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is required to be made or obtained in connection with the execution,
delivery or performance of this Agreement by Transferors. To
Transferors' knowledge, the interests of Transferors and/or Transferee in
the Operating Permits are free and clear of all encumbrances and have not
been assigned to any other person, other than collateral assignments
thereof to the existing lender under the Loan Documents.
(f) PERSONAL PROPERTY. Transferors have previously provided to
Transferee a true, correct and complete list of the Personal Property.
To Transferors' knowledge, Transferee has good and marketable title to
the Personal Property and each item thereof free and clear of liens,
security interests, encumbrances, leases and restrictions of every kind
and description, except as previously disclosed and except for liens of
the lender under the Loan Documents. The Personal Property is in good
operating condition and repair, ordinary wear and tear excepted.
(g) MEMBERSHIP. Transferors have previously provided to Transferee
a true, correct and complete list of all of the members of any type of
respective golf courses comprising the Property. The list describes all
classes of memberships and all persons with any membership rights,
including, without limitation, honorary and lifetime members and persons
holding first offer and refusal rights. Except as may be disclosed in
the membership agreements ("Membership Agreements") and other membership
materials previously furnished to Transferee, Transferors have made no
written or oral representations, covenants or agreements (including any
rules, regulations or by-laws relating to membership or any
correspondence delivered to members or prospective members), concerning
(i) the total allowable number of members or classes of membership in the
clubs; (ii) qualifications or approval required for new members, (iii)
the amount of initiation fees, deposits, restrictions or waiver of
monthly dues or other fees to be charged to the membership for their
usage of the clubs, or (iv) rights of members of the clubs.
(h) VIOLATIONS OF LAWS. To Transferors' knowledge, the Improvements
have been constructed and are presently used and operated in material
compliance with all Licenses and Permits and Operating Permits, all Legal
Requirements and all covenants, easements and restrictions affecting the
Property. Transferors have received no written notices of any violations
of any Legal Requirements pertaining to the Property which have not been
entirely corrected in all material respects.
(i) CONDITION OF PROPERTY. Transferors have previously provided to
Transferee a list of all reports, assessments and investigations
commissioned by Transferors or within Transferors' possession or control
relating to the physical condition of the Improvements and the condition
of soils at the Land, and Transferors have delivered to Transferee true,
correct and complete copies thereof. To Transferors' knowledge, the
Improvements are structurally sound, weather tight and in good condition
and repair. To Transferors' knowledge, there are no structural defects
in any of the
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Improvements. To Transferors' knowledge, the soil condition of the Land
is such that it will support all of the Improvements without need for
additional subsurface excavations, fill, footings, caissons or other
installations.
(j) LITIGATION. Except as previously disclosed to Transferee and
incorporated herein by this reference, Transferors have not been served
with notice of any action, order, writ, injunction, judgment or decree
outstanding, or of any claims, causes of action or other litigation or
proceeding pending, nor, to the best of Transferors' knowledge, are any
such matters threatened, with respect to (i) the ownership or operation
of the Property or any part thereof (including, without limitation,
disputes with mortgagees, governmental authorities, utilities,
contractors, adjoining land owners or suppliers of goods or services),
(ii) Transferors' ability to consummate the transactions contemplated
hereby.
(k) CONDEMNATION. There is no pending (i) condemnation of any part
of the Property, or (ii) widening, change of grade or limitation on use
of streets abutting the Property and, to the best of Transferors'
knowledge, there is no existing, contemplated, threatened or anticipated
(i) condemnation of any part of the Property, (ii) widening, change of
grade or limitation on use of streets abutting the Property or (iii)
change in the zoning classification of the Property.
(l) ASSESSMENTS. Transferors have received no notice and have no
knowledge of any pending liens, special taxes or assessments to be made
against the Property by any governmental agency or authority, nor have
Transferors received notice of any planned change in the tax assessment
or assessed valuation of the Property. To the best of Transferors'
knowledge, there are no other special taxes or special assessments levied
against Transferors or the Property arising out of the specific use of
the Property for operation as a golf course (as opposed to general
business operation, for example: a special recreational or entertainment
tax payable to the local municipality for the privilege of operating a
golf course). The representation and warranty contained in this Section
6.1(l) shall not include income, sales, use, liquor, tobacco, real
property, personal property, value added, ad valorem, gross receipts,
license tax, business tax, employment and other similar taxes imposed by
governmental agencies.
(m) WATER. To Transferors' knowledge, the Property has sufficient
water and water rights provided by the municipalities in which the
Property is located, or otherwise, as required or necessary to (i)
satisfy the requirements to operate the subject golf courses, and (ii)
irrigate and maintain the subject golf courses in a first class
condition, and all permits and licenses required to use said water have
heretofore been transferred to Transferee.
(n) UTILITIES. To Transferors' knowledge, all water, sewer, gas,
electric, telephone and drainage facilities and all other utilities and
public or quasi-public
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improvements upon or adjacent to the Property required by law or for the
normal operation of the Property are installed, are connected under valid
permits, are in good working order, are adequate to service the Property
and are fully paid for. Transferors have no knowledge of any fact or
condition which would result in the termination or impairment in the
transmitting of utility services to the Property.
(o) Intentionally Omitted.
(p) NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement by Transferors, or any related documents or
instruments, nor the consummation of the transactions contemplated
hereby, nor compliance by Transferors with any of the provisions hereof,
will (a) result in a breach of or constitute a default under any
agreement to which Transferors are bound, or (b) violate or conflict with
any provision of the organizational documents of Transferors, or (c)
violate, conflict with, or result in a breach of any provision of, or
constitute a default under, or result in the termination or acceleration
under, or result in the creation of any encumbrance upon the Property
under, any material contract, commitment, agreement or other instrument
or obligation to which Transferors are a party or by which the Property
is bound, or (d) violate any order, judgment, injunction, award or decree
of any court or arbitration body, or any governmental, administrative or
regulatory authority, or any other body, by or to which Transferors or
the Property are or may be bound or subject, or (e) violate, conflict
with or result in a default or breach under, any license, permit or other
governmental authorization (such matter described in this clause (e)
being referred to as a "License Violation"), which License Violation
would reasonably be expected to have a material adverse affect on the
Property or on Transferors' ability to consummate the transactions
contemplated hereby.
(q) LABOR MATTERS. Except as described in Exhibit 5 attached
hereto, Transferors are in material compliance with all applicable laws
respecting employment practices, terms and conditions of employment,
management-labor relations and wages and hours which are in effect as of
the date of this Agreement. With respect to the Property, (i)
Transferors are not a party to any labor agreement with any labor
organization, (ii) there is no unfair labor practice charge or complaint
against Transferors pending or threatened before the National Labor
Relations Board, (iii) there is no labor strike or labor disturbance
pending or, to Transferors' knowledge, threatened against Transferors nor
is any material written grievance currently being asserted, (iv)
Transferors have not experienced a work stoppage or work slowdown at any
time during the three (3) years prior to the Contract Date, and (v) there
is, to Transferors' knowledge no organization campaign being conducted
and no dispute as to representation of any employee of Transferors. All
employment contracts or similar arrangements entered into by Transferors,
whether written or oral, are of a type that can be effectively terminated
by Transferors on or before the expiration or earlier termination of the
Property Lease and, in any event, Transferee shall have no obligations or
liabilities under such
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employment contracts or similar arrangements entered into by Transferors
at any time, whether before or after the expiration or termination of the
Property Lease, unless expressly assumed by Transferee.
(r) ENVIRONMENTAL MATERIALS. Transferors have previously provided
to Transferee a list of all reports, assessments, investigations or
audits commissioned by Transferors or within Transferors' possession or
control relating to the environmental condition of, or environmental
issues concerning, the Property ("Transferors' Environmental Reports").
Transferors have heretofore delivered to Transferee correct and complete
copies of the Transferors' Environmental Reports. Except as may be
disclosed in Transferors' Environmental Reports, and to Transferors'
knowledge, no Hazardous Material is or has been used, generated,
manufactured, processed, treated, stored, transported, incinerated,
released or disposed of in, on, under, to or from the Property, except in
strict compliance with all applicable Environmental Laws. Except as may
be disclosed in Transferors' Environmental Reports, and to Transferors'
knowledge, no underground storage tank currently exists or has ever
existed in, on or under the Property. Except as may be disclosed in
Transferors' Environmental Reports, and to Transferors' knowledge, no
asbestos containing material is present within or on the Property.
Except as may be disclosed in Transferors' Environmental Reports and to
Transferors' knowledge, no part of the Property has been used for
landfill, dumping or other waste disposal activities or operations,
excluding disposal of grass cuttings, landscape clippings, pruning
debris, leaves, vegetation and similar matters. Transferors have not
received notice, and Transferors have no knowledge, of any prior owner or
occupant of the Property receiving, any citation, directive, demand,
pleading, complaint, claim, inquiry, notice of potential responsibility,
notice of violation, order, notice of investigation, or other written
communication, actual or threatened, from any governmental authority, or
any person or entity, regarding (a) the existence of any Hazardous
Material in, on, under, or migrating to or from, the Property in excess
of levels permissible under applicable Environmental Laws; or (b) the
potential liability or responsibility of Transferors, or any past or
present owner or occupant of the Property, under any Environmental Law.
(s) BANKRUPTCY. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending or, to Transferors' knowledge, threatened
against Transferors or any members of Transferors, nor are any of such
proceedings contemplated by Transferors or any members of Transferors.
(t) TAXES. Other than as disclosed in the tax bills previously
delivered to Transferee, Transferors have received no notice that any
real property taxes or special assessments or charges have been levied
against the Property or will result from work, activities or improvements
done to the Property by Transferors. Transferors have no knowledge and
Transferors have received no notice of any intended public improvements
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which will result in any new charge being levied against, or in the
creation of any new lien upon, the Property or any portion thereof.
Transferors have no knowledge and have received no notice of any intended
changes in the assessed valuation of the Property.
(u) CERTIFICATES OF OCCUPANCY. Transferors have received a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Property and, to Transferors' knowledge, Transferors
have received all other approvals of governmental authorities required in
connection with the operation of the Property as golf course facilities.
(v) ENCUMBRANCES. To Transferors' knowledge, the current interest
of Transferee in the Licenses and Permits, Property, Trade Names and
Trademarks and Warranties is free and clear of all encumbrances and has
not been assigned to any other person, except for the security interests
in the Property previously disclosed to Transferee and except for the
Loan Documents.
(w) EASEMENTS AND RIGHTS OF WAY. To Transferors' knowledge,
Transferee has heretofore obtained all easements and rights-of-way,
including proof of dedication, required from all governmental authorities
having jurisdiction over the Property or from private parties for the
current use of the Property, and to make use of all utilities serving the
Property and to insure vehicular and pedestrian ingress and egress to and
from the Property.
(x) BROKERS. Transferors have not entered into any agreement or
arrangement, and have no understanding, with any person or entity to pay,
or to obligate Transferee to pay, any finder's fee, brokerage commission
or similar payment in connection with any of the transactions
contemplated by this Agreement.
(y) WETLANDS AND ENDANGERED SPECIES. Except as previously disclosed
to Transferee, and to Transferors' knowledge, there are no portions of
the Property which constitute (i) "wetlands" under any applicable,
federal, state or local law, ordinance or regulation, or (ii) habitat for
any species which is deemed to be endangered under any applicable
federal, state or local law, ordinance or regulation.
(z) NO MECHANICS' LIENS. Transferors have paid for all material
supplied and services performed with respect to the Property, under
contracts entered into by Transferors and of a type for which a
mechanic's lien may be filed.
(aa) GRAVEYARD. To Transferors' knowledge, no portion of the
Property is or has been used as a graveyard.
(ab) WASTE DISPOSAL ACTIVITIES. Transferors have provided
Transferee, prior hereto, a true, correct and complete list setting forth
(i) all waste management activities
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at the Property initiated or controlled by Transferors, and to
Transferors' knowledge, all waste management activities at the Property
initiated or controlled by any other party, (ii) to Transferors'
knowledge, all sites to which Transferors have directly or indirectly
released, stored, dumped, buried, injected, treated, or otherwise
disposed of, hazardous substances or hazardous waste or other toxic or
hazardous material generated at the Property, and (iii) all parties with
whom Transferors contracted to do the same.
(ac) LIABILITIES. Except as disclosed prior hereto, or as otherwise
set forth in the items listed in Exhibits to this Agreement (including,
without limitation, the obligations and liabilities described in Exhibit
3 attached hereto), there are no material obligations or liabilities
arising based upon Transferors' actions which shall be binding upon
Transferee or the Property after Closing.
(ad) FIRPTA REPRESENTATION. Transferors are not a "foreign person"
within the meaning of Section 1445 of the Code.
(ae) TRADEMARKS AND TRADENAMES; PROPRIETARY RIGHTS. To Transferors'
knowledge, there are no actions or other judicial or administrative
proceedings involving Transferors or the Property pending, or threatened
that concern any copyrights, copyright application, trademarks, trademark
registrations, trade names, service marks, service mark registrations,
trade names and trade name registrations or any trade secrets heretofore
transferred to Transferee (the "Proprietary Rights"). To Transferors'
knowledge, Transferee has the right and authority to use each Proprietary
Right necessary in connection with the operation of the Property in the
manner in which it is currently used. To Transferors' knowledge, the
current use of the Proprietary Rights does not, and did not in the past,
conflict with, infringe upon or violate any copyright, trade secret,
trademark or registration of any other person. There are no outstanding
or, to Transferors' knowledge, threatened disputes or disagreements with
respect to any Proprietary Right or any license, contract, agreement or
other commitment, written or oral, relating to the same.
(af) COMPLIANCE WITH ERISA. To Transferors' knowledge, Transferors
are not in default with respect to any of their obligations under any
plan, agreement or trust, and Transferors have filed or caused to be
filed all reports with respect to the foregoing required by, and is
otherwise in compliance with, the Employees Retirement Income Security
Act of 1974, as amended, and all rules and regulations thereunder with
respect thereto.
(ag) NO OTHER AGREEMENTS TO SELL. Transferors have not made any
agreement with, and has no obligation (absolute or contingent) to, any
person or firm other than Transferee (a) to sell, transfer or in any way
encumber (except for Permitted Title Exceptions) the Property or (b) to
enter into any agreement with respect to a sale, transfer or encumbrance
or put or call or other purchase option right with respect to the
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Property, except for certain option rights relating to a driving range
parcel located at the Oronoque property granted pursuant to that certain
Option and Right of First Refusal Agreement dated December 3, 1996 by and
between ST. Realty and Oronoque Golf, LLC (a true and correct copy of
which has heretofore been delivered to Transferee).
The representations and warranties of Transferors contained in this
Section 4.1 shall be deemed remade by Transferors as of the Closing with the
same force and effect as if made at that time, except to the extent that any
such representation or warranty expressly relates to a specific date, in which
case it shall be true and correct in all material respects as of such specific
date. Transferors shall give written notice to Transferee of any information
that makes any representation and warranty untrue within five (5) business days
of obtaining such information. The representation and warranty of Transferors
set forth in Section 4.1(b), as well as Transferee's right to enforce and/or
seek damages for any breach of the same, shall survive the Closing and continue
in full force and effect indefinitely. All other representations and
warranties of Transferors set forth in Section 4.1, as well as Transferee's
right to enforce and/or seek damages for any breach of the same, shall survive
the Closing for a period of one (1) year (i.e., meaning that Transferee must
give notice to Transferors of such claim prior to the expiration of said one
(1) year period). Notwithstanding anything to the contrary contained in this
Section 4.1, (i) Transferee shall have no right to enforce or seek damages for
any breach of representations and warranties unless the total damage resulting
from any such breaches, in the aggregate, as estimated by Transferee in good
faith, exceeds Fifty Thousand Dollars ($50,000.00), and (ii) Transferors'
maximum liability for all such breaches shall not exceed the sum of (A) the
total value of the Property, based upon the Units given and cash paid as
consideration, plus (B) the total value of all other Units received by
Transferors and/or their Affiliates pursuant to the Other Contribution
Agreements. As used in this Section 4.1, the phrase "to Transferors'
knowledge" shall mean the actual knowledge of Peter Nanula, George Haworth,
Bryan Noreen, Daryl Jones, Jim Ellison and Tom Ahern, General Manager of
Brierwood Country Club, and Jim Lyman, General Manager of Oronoque Country
Club.
4.2 REPRESENTATION AND WARRANTIES OF TRANSFEREE. Transferee hereby
represents and warrants to Transferors, as of the date hereof and as of the
Closing Date, as follows:
(a) ORGANIZATION, STANDING AND PARTNERSHIP AUTHORITY. Transferee is
a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has full power and
authority to enter into and perform this Agreement and consummate the
transactions contemplated hereby. The execution, delivery and
performance hereof and the consummation of the transactions contemplated
hereby by Transferee have been duly authorized by all necessary
partnership action and this Agreement is a valid and binding agreement of
Transferee, enforceable against Transferee in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws.
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(b) NO RESTRICTIONS UPON TRANSFEREE. Transferee is not subject to
any restriction, agreement, law, judgment or decree which would prohibit
or be violated by the execution and delivery hereof or the consummation
of the transactions contemplated hereby, and no consent or approval is
required to be obtained by Transferee from any third party or
governmental agency with respect to this Agreement or the consummation of
the transactions contemplated hereby.
ARTICLE 5
COVENANTS
5.1 TRANSFERORS' COVENANTS. Transferors covenant and agree to the
following, which covenants and agreements shall survive Closing, shall have
been complied with as of the Closing Date, and shall not be deemed merged in
the conveyance contemplated herein:
(a) LITIGATION, CLAIMS, OR PROCEEDINGS. In the event a lien, claim,
or cause of action affecting the Interest should arise prior to Closing,
Transferors shall advise Transferee in writing (or if discovered by
Transferee, Transferee shall advise Transferors in writing), and
Transferors shall use commercially reasonable efforts to satisfy any such
matter prior to Closing and furnish Transferee with evidence thereof.
(b) ASSESSMENTS. If any governmental agency or authority gives
notice prior or subsequent to Closing of any improvements, liens,
supplemental tax bills or special assessments made or to be made against
the Interest which relate to time periods prior to Closing, Transferors
shall satisfy and indemnify Transferee from any such claim and shall
furnish Transferee evidence thereof.
(c) LIENS. From the Contract Date to the Closing Date, Transferors
shall not sell, assign, or create any right, title, or interest
whatsoever in or to any of the Interest, or create or permit to exist any
liens, encumbrance, or charge thereon, without promptly discharging same
prior to the Closing.
(d) CONTRACTS. Transferors agree not to enter into any contracts,
commitments, leases, or agreements after the date hereof to which the
Interest or the Transferee may be or may become subject without the
express written approval of Transferee, which shall not be unreasonably
withheld.
(e) VIOLATION OF REPRESENTATIONS. From the Contract Date to the
Closing Date, Transferors shall not take any action or omit to take any
action which action or omission would have the effect of violating, in
any material respect, any of the representations, warranties, or
covenants of Transferors contained in this Agreement.
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(f) ACCESS PENDING CLOSING. From the date hereof to and including
the Closing Date, Transferors shall cause Transferee and its accountants
and other representatives to have the right of full and complete access
to the books, records, offices and other facilities of Transferors during
normal business hours, for the purpose of making such investigation of
the financial condition and operations of Transferors as Transferee may
reasonably deem necessary.
(g) CONSENT OF THIRD PARTIES. Prior to the Closing, Transferors
shall obtain or cause to be obtained all consents and other approvals of
all lessors, lenders, governmental authorities and other third parties
which are required to be obtained by Transferors as a result of the
transactions contemplated by this Agreement which consents and approvals
shall continue each applicable lease, loan or other arrangement on
substantially identical terms as exist on the date hereof.
(h) GOOD STANDING CERTIFICATES. On or before the Closing Date,
Transferors, at their expense, shall deliver to Transferee UCC, judgment
and tax lien search reports and Certificates of Good Standing with
respect to Transferors.
(i) FURTHER ACTIONS. After the Closing, Transferors will take all
actions necessary to complete the Interest conversion.
(j) CLOSING CONDITIONS. Transferors shall use their best efforts to
cause the conditions specified in Article 7 hereof which require
satisfaction by Transferors to be satisfied on or before the Closing
Date.
5.2 TRANSFEREE'S COVENANTS. Transferee hereby covenants and agrees with
Transferors as follows:
(a) CLOSING CONDITIONS. Transferee will use its best efforts to
cause the conditions specified in Article 7 hereof which require
satisfaction by Transferee to be satisfied on or before the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TRANSFEREE. Transferee's
obligation to complete the Interest conversion pursuant to this Agreement shall
be subject to the satisfaction, prior to the Closing Date, of all of the
following conditions precedent, each of which is for the benefit of Transferee
and may be waived by Transferee in its sole discretion:
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(a) all representations and warranties of Transferors set forth in
the Agreement shall be true and correct in all material respects as of
the Closing Date, except to the extent such representations or warranties
relate to a specific date, in which case they shall be true and correct
in all material respects as of such specific date; and
(b) Transferors shall have performed, in all material respects, all
of their covenants and obligations under this Agreement.
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TRANSFERORS. Transferors'
obligation to complete the conversion of the Interest to Transferee pursuant to
this Agreement shall be subject to the satisfaction, prior to the Closing Date,
of all of the following conditions precedent, each of which is for the benefit
of Transferors and may be waived by Transferors in their sole discretion:
(a) all of the representations and warranties of Transferee set
forth in this Agreement shall be true and correct in all material
respects as of the Closing Date, except to the extent such
representations or warranties relate to a specific date, in which case
they shall be true and correct in all material respects as of such
specific date; and
(b) Transferee shall have performed, in all material respects, all
of its covenants and obligations under this Agreement.
6.3 IPO CONDITION. The obligation of either Transferors or Transferee to
close the transaction contemplated hereby is, at the option of each party,
subject to the consummation of the IPO (the "IPO Condition").
ARTICLE 7
CLOSING
7.1 TIME AND PLACE. The Closing of the transaction contemplated hereby
("Closing") shall take place at the offices of Transferee's attorney on a date
(the "Closing Date") to be specified by written notice from Transferee to
Transferors. Unless the parties otherwise agree, it is contemplated that the
Closing shall take place concurrently with the consummation of the IPO. In any
event, the Closing shall take place immediately prior to the closing of the
transactions contemplated by those Contribution Agreements described in Exhibit
1 hereto.
7.2 TRANSFERORS' DELIVERIES. On or before the Closing Date, Transferors
shall deliver or cause to be delivered to Transferee the following documents,
each of which shall be in form and substance reasonably acceptable to
Transferee:
(a) Such instruments of transfer as Transferee may reasonably
request to effect the completion of the conversion of the Interest in
accordance herewith;
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(b) Transferors' certificate dated as of the Closing Date confirming
the representations and warranties of Transferors under Section 4.1
hereof and, if applicable, describing any change in facts or
circumstances which would make any of such representations or warranties
untrue as of the Closing Date;
(c) Such evidence as may be reasonably satisfactory to Transferee
evidencing the due authorization, execution and delivery of this
Agreement and the other documents to be executed in connection herewith
by Transferors;
(d) Transferors shall have delivered all consents to the transaction
contemplated hereby as Transferee may deem necessary or desirable; and
(e) Such other documents, instruments, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement to fully effect and consummate the
transactions contemplated hereby (including, without limitation, the
execution and delivery of the Property Lease by Lessee and the execution
and delivery of the other conveyance documentation pertaining to the
Lessee Property as contemplated by Section 2.2 hereof).
7.3 TRANSFEREE'S DELIVERIES. On or before the Closing Date, Transferee
shall deliver or cause to be delivered to Transferors the following documents
or other deliveries, each of which shall be in form and substance reasonably
acceptable to Transferors:
(a) Transferee shall deliver a certified copy of its Certificate of
Limited Partnership, as amended from time to time and a certified copy of
a resolution of its general partner, authorizing the execution and
delivery of this Agreement and the performance of its obligations
hereunder;
(b) Transferee's certificate dated as of the Closing Date confirming
the representations and warranties of Transferee under Section 4.2 hereof
and, if applicable, describing any change in facts or circumstances which
would make any of such representations or warranties untrue as of the
Closing Date;
(c) The Units;
(d) The Options;
(e) the Cash Consideration; and
(f) Such other documents, instrument, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement to fully effect and consummate the
transactions contemplated hereby (including, without limitation, the
execution and delivery of the Property Lease by Transferee and the
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execution and delivery of the other conveyance documentation pertaining
to the Lessee Property as contemplated by Section 2.2 hereof).
7.4 CONCURRENT TRANSACTIONS. All documents or other deliveries required
to be made by Transferee or Transferors at Closing, and all transactions
required to be consummated concurrently with Closing, shall be deemed to have
been delivered and to have been consummated simultaneously with all other
transactions and all other deliveries, and no delivery shall be deemed to have
been made, and no transaction shall be deemed to have been consummated, until
all deliveries required by Transferee, or its nominee, and Transferors shall
have been made, and all concurrent or other transactions shall have been
consummated.
ARTICLE 8
INDEMNIFICATION
8.1 TRANSFERORS' INDEMNITY. Transferors hereby agree to indemnify, defend
and hold harmless Transferee, and its partners, members, officers,
shareholders, directors, employees and agents from and against any and all
losses, liabilities, fines and penalties and damages (including, without
limitation, any damages or injury to persons, property or the environment as
provided hereunder), or actions or claims in respect thereof (including,
without limitation, amounts paid in settlement and reasonable cost of
investigation, reasonable attorneys' fees and other legal expenses), resulting
from third party claims (based upon the allegations set forth in such claims
and whether or not ultimately successful) to which Transferee, and its
partners, members, officers, shareholders, directors, employees and agents may
become subject or which Transferee, and its partners, members, officers,
shareholders, directors, employees and agents may suffer or incur, either
directly or indirectly, insofar as such losses, liabilities or damages (or
actions or claims in respect thereof) arise out of, are with respect to, or are
based upon:
(i) Transferors' breach of any representation or warranty set
forth in this Agreement; or
(ii) Transferors' default in the performance of any of
Transferors' covenants set forth in this Agreement.
8.2 TRANSFEREE'S INDEMNITY. Transferee hereby agrees to indemnify, defend
and hold Transferors harmless from and against any and all losses, liabilities,
fines and penalties and damages (including, without limitation, any damages or
injury to persons, property or the environment as provided hereunder), or
actions or claims with respect thereto, except for liabilities specifically
assumed by Transferors pursuant to the terms of this Agreement (including,
without limitation, amounts paid in settlement and reasonable costs of
investigation, reasonable attorneys' fees and other legal expenses) resulting
from third party claims (based upon the allegations set forth in such claims
whether or not ultimately successful) to which Transferors
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may become subject or which Transferors may suffer or incur, either directly or
indirectly, insofar as such losses, liabilities or damages (or actions or
claims in respect thereof) arise out of, are with respect to, or are based
upon:
(i) Transferee's breach of any representation or warranty set
forth in this Agreement or a breach of any covenant of Transferee
contained herein; or
(ii) Transferee's default in the performance of any of
Transferee's covenants set forth in this Agreement.
ARTICLE 9
DEFAULT
9.1 TRANSFEREE DEFAULT. Notwithstanding anything to the contrary
contained in this Agreement, if (a) the conversion of the Interest is not
consummated due to Transferee's failure to perform any act required of
Transferee hereunder, and (c) all of the conditions precedent to Transferee's
obligation to close have been satisfied or waived by Transferee, then
Transferors shall execute and deliver to Transferee written notice of such
breach, which notice shall set forth complete information above the nature of
the breach. Transferee shall have a period of three (3) business days to cure
such breach. If such breach remains uncured beyond the three (3) business day
period described above, then, as Transferors' sole and exclusive remedy in lieu
of all other legal or equitable remedies shall be either: (i) to cancel this
Agreement, in which event Transferors shall have the right to recover from
Transferee all of Transferors' actual, reasonable out-of-pocket third party
costs, fees and expenses incurred in connection with this transaction, or (ii)
to specifically enforce the provisions of this Agreement. Nothing herein shall
be deemed to limit, in any manner, Transferee's indemnity obligations described
in Section 8.2 hereof.
9.2 TRANSFERORS' DEFAULT. Notwithstanding anything to the contrary
contained in this Agreement, if Transferors fail to perform any act required of
Transferors hereunder, or otherwise are in breach of any of their
representations or warranties hereunder, then Transferee shall execute and
deliver to Transferors written notice of such default or breach, which notice
shall set forth complete information about the nature of the default or breach.
Transferors shall have a period of three (3) business days to cure such
default or breach. If such default or breach remains uncured beyond the three
(3) business day period described above, then Transferee's sole and exclusive
remedy, in lieu of any and all other remedies at law or in equity shall be
either: (i) to cancel this Agreement, in which event Transferee shall have the
right to recover from Transferors all of Transferee's actual, reasonable
out-of-pocket third party costs, fees and expenses incurred in connection with
this transaction, or (ii) to specifically enforce the provisions of this
Agreement. Nothing herein shall be deemed to limit, in any manner,
Transferors' indemnity obligations described in Section 8.1 hereof.
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ARTICLE 10
BROKERAGE
10.1 BROKERAGE. Transferors hereby represent and warrant to Transferee
that Transferors have not dealt with any broker or finder with respect to the
transaction contemplated hereby and Transferors hereby agree to indemnify,
defend and hold harmless Transferee for any claim for brokerage commission or
finder's fee asserted by any person, firm or corporation claiming to have been
engaged by Transferors. Transferee hereby represents and warrants to
Transferors that Transferee has not dealt with any broker or finder in respect
to the transaction contemplated hereby and Transferee hereby agrees to
indemnify, defend and hold harmless Transferors for any claim for brokerage
commission or finder's fee asserted by a person, firm or corporation claiming
to have been engaged by Transferee.
ARTICLE 11
NOTICES
11.1 NOTICES. Any notice, request, demand, instruction or other document
to be given or served hereunder or under any document or instrument executed
pursuant hereto shall be in writing and shall be delivered personally, or
transmitted by facsimile (provided that the original thereof together with the
facsimile confirmation sheet shall thereafter be promptly sent by regular
United States Mail), or sent by United States registered or certified mail,
return receipt requested, or sent by overnight express courier, postage
prepaid, and shall be addressed to the parties at their respective addresses
set forth below, and the same shall be effective upon receipt if delivered
personally, or two (2) business days after deposit in the mails, if mailed as
aforesaid, or one (1) business day after deposit with an overnight express
courier, or immediately upon being sent by facsimile transmission. A party may
change its address for receipt of notices by service of a notice of such change
in accordance herewith.
If to Transferee: APGM Limited Partnership
Building 106, Montgomery Street
Presidio Main Post, P.O. Box 29355
San Francisco, California 94129
Attn: Mr. George Haworth
Facsimile: 415/561-4680
If to Transferors: Arnold Palmer Golf Management LLC
Building 106, Montgomery Street
Presidio Main Post P.O. Box 29355
San Francisco, California 94129
Attn: Peter Nanula
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Facsimile: (415) 561-4680
ARTICLE 12
ADDITIONAL COVENANTS
12.1 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement contains
the entire agreement and understanding of the parties with respect to the
subject matter hereof, and the same may not be amended, modified or discharged
nor may any of its terms be waived except by an instrument in writing signed by
the party to be bound thereby.
12.2 FURTHER ASSURANCES. The parties each agree to do, execute,
acknowledge and deliver all such further acts, instruments and assurances and
to take all such further action before or after the Closing as shall be
necessary or desirable to fully carry out this Agreement and to fully
consummate and effect the transactions contemplated hereby.
12.3 SURVIVAL AND BENEFIT. All agreements, obligations and indemnities of
the parties shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Except as otherwise expressly set forth
herein, all representations, warranties and indemnities shall survive Closing
for a period of one (1) year; provided, however, that if Transferors and
Transferee mutually agree to a different survival period in a given Closing
document, claims for indemnification made pursuant to such Closing document
shall be governed by such document.
12.4 NO THIRD PARTY BENEFITS. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
12.5 TRANSFEREE'S INVESTIGATION AND INSPECTIONS. Any investigation or
inspection conducted by Transferee, or any agent or representative of
Transferee, pursuant to this Agreement, in order to verify independently
Transferors' satisfaction of any conditions precedent to Transferee's
obligations hereunder or to determine whether Transferors' warranties are true
and accurate, shall not affect, or constitute a waiver by Transferee of, any of
Transferors' obligations hereunder or Transferee's reliance thereon.
12.6 INTERPRETATION. The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or Sections to which they apply or otherwise affect the
interpretation hereof. This Agreement and any document or instrument executed
pursuant hereto may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Whenever under the terms of this Agreement the time for
performance of a covenant or condition falls upon a Saturday, Sunday or
holiday, such time for performance shall
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be extended to the next business day. Otherwise all references herein to
"days" shall mean calendar days. Time is of the essence of this Agreement.
12.7 GOVERNING LAW. With respect to general issues regarding enforcement
of this Agreement, this Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. With respect to specific
issues relating to a particular golf course property, the laws of the state
where the subject Improvements are located shall govern and control.
12.8 ATTORNEYS' FEES. In any action or proceeding involving this
Agreement or the contents hereof, the prevailing party shall be entitled to
recover from the other party the prevailing party's reasonable costs and
expenses in such action or proceeding, including reasonable attorneys' fees.
12.9 ASSIGNMENT. Neither party shall have the right to assign this
Agreement, or any interest herein, to any other person or entity, without first
having obtained the prior written consent of the other party (which consent may
be withheld at the other party's sole and exclusive discretion).
12.10 OFFER AND ACCEPTANCE. Delivery by Transferee to Transferors of a
copy of this Agreement executed by Transferee shall constitute an offer to
convert the Interest upon the terms and conditions herein set forth which shall
be effective for a period of seventy-two (72) hours following the time of such
delivery. If Transferors fail to deliver a fully executed counterpart of this
Agreement to Transferee prior to expiration of such seventy-two (72) hour
period, then at Transferee's sole option, said offer may be revoked and
rescinded in its entirety at any time thereafter, and upon such revocation and
rescission, said offer and this Agreement shall have no further force or
effect.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
TRANSFEREE:
APGM LIMITED PARTNERSHIP, a Delaware
limited partnership
By: PALMER MANAGEMENT, LLC, a Delaware
limited liability company, its
general partner
By: ARNOLD PALMER GOLF MANAGEMENT LLC,
a Delaware limited liability company,
its managing member
By: /s/ George T. Haworth
---------------------
Name: George T. Haworth
Title: CFO, Secretary & Treasurer
TRANSFERORS:
ARNOLD PALMER GOLF MANAGEMENT LLC, a
Delaware limited liability company
By: /s/ Peter J. Nanula
-------------------
Name: Peter J. Nanula
Title: President
ORONOQUE GOLF, LLC, a Delaware limited
liability company
By: ARNOLD PALMER GOLF MANAGEMENT LLC,
a Delaware limited liability company,
its managing member
By: /s/ Peter J. Nanula
-------------------
Name: Peter J. Nanula
Title: President
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