Exhibit 10.6
[CATELLUS GROUP, LLC LOGO]
CATELLUS GROUP, LLC
REAL ESTATE INVESTMENT SERVICES
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AMENDED AND RESTATED
BUSINESS AND REAL ESTATE LEASEHOLD INTEREST
PURCHASE AGREEMENT
BY AND AMONG
GRAND DAKOTA MANAGEMENT LLC, A DELAWARE LIMITED LIABILITY COMPANY,
ASSIGNEE FROM STOW-AWAY SELF-STORAGE LIMITED PARTNERSHIP
A NORTH CAROLINA LIMITED PARTNERSHIP
"BUYER"
AND
SECURED DIVERSIFIED INVESTMENT, LTD.
A NEVADA CORPORATION
"SELLER"
PRESENTED BY:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CCIM, SEC
CATELLUS GROUP LLC
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NOVEMBER 9, 2004
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[CATELLUS GROUP, LLC LOGO]
CATELLUS GROUP, LLC
REAL ESTATE INVESTMENT SERVICES
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(▇▇▇) ▇▇▇-▇▇▇▇
AMENDED AND RESTATED
BUSINESS AND REAL ESTATE LEASEHOLD INTEREST
PURCHASE AGREEMENT
This AMENDED AND RESTATED BUSINESS AND REAL ESTATE LEASEHOLD INTEREST PURCHASE
AGREEMENT (the "Agreement") dated November 9, 2004, by and among SECURED
DIVERSIFIED INVESTMENT, LTD., a Nevada corporation whose address is ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ( hereinafter "Seller") and GRAND DAKOTA
MANAGEMENT LLC, a Delaware limited liability company (hereinafter "Buyer"), and
assignee of STOW-AWAY SELF-STORAGE LIMITED PARTNERSHIP, a North Carolina limited
partnership (hereinafter "Assignor").
PRELIMINARY RECITALS
Assignor and Seller entered into a certain Business and Real Estate Leasehold
Interest Purchase Agreement dated July 7, 2004 (the "Original Agreement").
Assignor assigned all of its interests and rights in the Original Agreement to
Buyer pursuant to an Assignment Agreement of even date herewith. Buyer and
Seller hereby enter into this Agreement for the purpose of amending and
restating the Original Agreement for all purposes.
Seller is engaged in a certain hospitality business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Business"); and Seller desires to sell to Buyer,
and Buyer desire to purchase from Seller, the Business and including all of the
personal property, leasehold interest and assets required to own and operate the
Business, excluding the right to sell and the business of selling or offering
for sale alcoholic beverages ( the "Alcoholic Beverage Business"), upon the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE PURCHASED ASSETS
1.1 AGREEMENT TO SELL. At the Closing hereunder (as hereinafter defined)
effective as of November 1, 2004 (the "Effective Date"), and on the terms and
subject to the conditions hereinafter set forth, Seller hereby sells, conveys,
transfers, assigns and delivers to Buyer, free and clear of all Liens (as
defined), except as set forth on SCHEDULE 1.2 and Buyer hereby purchases and
acquires from Seller, the Business excluding the Alcoholic Beverage Business and
all of Seller's right, title and interest in and to (a) the Business as a going
concern, (b) the name "The Hospitality Inn" and all goodwill associated
therewith, including the right to use this name in the name of the corporation
or other entity selected by Buyer to conduct the Business after Closing, and (c)
all of the properties, assets and rights of Seller constituting the Business, or
used therein, of every kind and description, real, personal, mixed, tangible and
intangible, and which are used in or arise out of the conduct of the Business or
are considered to be assets of Seller wherever located and whether or not all or
any of said property and assets appear on or are reflected upon Seller's books,
records or financial statements, which Business, name, goodwill, assets,
properties and rights are herein sometimes called the "Purchased Assets" (other
than Excluded Assets as defined in SECTION 1.2), which PURCHASED ASSETS include,
by way of example and not by way of limitation:
1.1.1 IMPROVEMENTS AND TANGIBLE PERSONAL PROPERTY. All buildings,
structures, leasehold improvements, fixtures, machinery, equipment,
vehicles (whether or not registered under motor vehicle registration
laws), furniture, furnishings and equipment, goods and other personal
property of Seller of every type or kind whether or not listed on
SCHEDULE 1.1.1. All buildings, structures, leasehold improvements and
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fixtures conveyed herein are sometimes referred to herein as the "Real
Estate Improvements." The parties hereto agree that the Real Estate
Improvements shall be conveyed to Grand Dakota Partners LLC at Closing
by warranty deed. In addition, Seller agrees to provide Grand Dakota
Partners LLC with a quit claim deed conveying its interest in the
underlying fee interest, if any ;
1.1.2 INVENTORIES AND SUPPLIES. All inventory of the Business, held for
resale and display, and office and operating and other supplies whether
or not any of the foregoing is listed on SCHEDULE 1.1.2;
1.1.3 PREPAID ASSETS. All prepaid assets, items and fees, expenses and
costs of the Business; excluding reimbursements for pre-paid insurance
premiums relating to periods after the Effective Date listed on
SCHEDULE 1.1.3;
1.1.4 CONTRACT RIGHTS. All agreements, contracts and leases of
equipment and personal property of the Business specified on SCHEDULE
1.1.4 as being assumed by Buyer;
1.1.5 PROPRIETARY RIGHTS. Any and all service marks, trademarks,
service ▇▇▇▇ and trademark registrations and applications, trade-names,
logos, copyrights, and other licenses thereof, know-how, trade secrets,
listings of past and presents customers, potential customers, recorded
knowledge, business plans, performance standards, research data,
analyses and computer software programs, sales data, sales and
advertising materials, scheduling and service methods, sales and
service manuals and all other proprietary, confidential and other
similar information (in whatever form or medium) relating to the
conduct of the Business (collectively, "Proprietary Rights") listed on
SCHEDULE 1.1.5;
1.1.6 REAL ESTATE LEASES. All leases to real property, whether as
Lessor or Lessee, as set out on SCHEDULE 1.1.6 wherein it is stipulated
that such leases are being transferred to Buyer;
1.1.7 RECORDS. All records, files, documents and papers of Seller
related to the conduct of the Business, including but not limited to,
correspondence, customer records, customer lists and books of account;
1.1.8 CLAIMS. All causes of action, claims, rights of recovery and
set-off of every kind and character pertaining or relating to the
Purchased Assets, including all insurance, warranty and condemnation
proceeds received after the Effective Date with respect to damage,
destruction or loss of any Purchased Assets arising after the Effective
Date;
1.1.9 NAME AND GOODWILL. The name "The Hospitality Inn" and all
combinations and variations thereof, and any other names utilized in
the Business together with all goodwill associated therewith and with
the Business;
1.1.10 INTELLECTUAL PROPERTY. All rights under any patent, trademark,
service ▇▇▇▇, trade ▇▇▇▇ or copyright, whether registered or
unregistered, and any applications therefore and all methods, formulas,
data bases, know how, inventions, trade secrets and other intellectual
property used in the Business or under development;
1.1.11 COMPUTER SOFTWARE. All computer software (including
documentation and related object and source codes);
1.1.12 CHOSES IN ACTION. All rights or choses in action arising out of
occurrences before or after the Effective Date, including without
limitation, all rights under express or implied warranties relating to
the Purchased Assets;
1.1.13 DOCUMENTATION. All information, files, records, data, plans,
contracts and recorded knowledge, including customer and supplier
lists, related to the foregoing.
1.2 EXCLUDED ASSETS. All other properties and assets owned or held by Seller
shall be retained by Seller and shall not be sold or transferred to Buyer
hereunder, including, but not limited to, the following:
1.2.1 ORGANIZATIONAL RECORDS. Seller's formal corporate records,
including its certificate of incorporation, by-laws, corporate seal,
minute books, stock books and other records having exclusively to do
with the corporate organization of Seller and the Business;
1.2.2 RIGHTS UNDER THIS AGREEMENT. Seller's rights pursuant to or under
this Agreement;
1.2.3 ACCOUNTS RECEIVABLE. All accounts receivable, notes, bonds or
other evidences of indebtedness of any corporation, entity or person
held by Seller relating to the Business arising prior to the Effective
Date, including any such receivables from officers, stockholders,
employees and companies affiliated with Seller;
1.2.4 CASH AND CASH EQUIVALENTS. Any and all cash and cash equivalent
assets of the Business as of the Effective Date, including rights to
tax refunds, insurance deposits or premiums and rights to return of
premiums;
1.2.5 PERSONAL ITEMS. The personal items located at the Business;
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1.2.6 CERTAIN CONTRACTS. Rights under those Contracts, if any, set
forth on SCHEDULE 1.2.6 and designated as not being assumed by Buyer
hereunder;
1.2.7 REAL ESTATE LEASES. Certain leases to real property as set out on
SCHEDULE 1.2.7 wherein it is stipulated that such leases are not being
transferred to Buyer;
1.2.8 ACCESS TO RECORDS. Buyer shall retain the records of the Business
that are included in the Purchased Assets for a period of five (5)
years after Closing or, if earlier, until Buyer shall have sold or
disposed of the Business, and during such period shall permit Seller to
inspect such records during normal business hours upon seven (7) days
prior request. Seller shall retain all organizational records of the
Business for a period of three (3) year after Closing and shall permit
Buyer to inspect such records and make copies and extracts thereof;
1.2.9 EMPLOYMENT RECORDS. Buyer shall maintain possession of the
employee records of the Business for a period of five (5) years and
during such period Buyer may, upon seven (7) days prior request, review
and make copies of such records during normal business hours;
1.2.10 ACCOUNT PAYABLES. All obligations, trade payable and other indebtedness
of Seller arising prior to the Effective Date; and
1.2.11 ALCOHOLIC BEVERAGE BUSINESS. Seller's license to sell and serve alcoholic
beverages and the Alcoholic Beverage Business
The Purchased Assets shall be deemed to include property and assets now in
existence and those hereafter acquired prior to the Closing (as defined in
Section 9.1 hereof) excluding only such items as may be disposed of by Seller
strictly in accordance with Section 6.1.1.
ARTICLE 2
PURCHASE PRICE
2.1 CLOSING AMOUNTS. The purchase price to be paid by Buyer to Seller for the
Business and the Purchased Assets shall be EIGHT HUNDRED THOUSAND ($800,000.00)
DOLLARS, plus the dollar value of Seller's inventory at the lower of cost or
current book value subject to the allocations as described in SCHEDULE 2.1, and
the Closing Adjustments provided for by SECTION 9.6 hereof ("Purchase Price").
The parties will file Form 8594 with the Internal Revenue Services utilizing
such allocations. Buyer and Seller shall not treat the allocation of Purchase
Price inconsistently with the allocation under Section 2.1 and in no tax audit,
tax examination, tax review or tax litigation will either Buyer or Seller claim
or assert that the allocation of the Purchase Price is or should be inconsistent
with Section 2.1 or was not separately bargained for at arm's length and in good
faith. The Purchase Price is composed of the components set out in Section 2.2.
2.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid as follows:
2.2.1 CASH PORTION. The Purchase Price in the amount of THREE HUNDRED
THOUSAND AND NO/100 DOLLARS ($300,000.00) plus the Inventory and
Closing Adjustments pursuant to Section 2.2.3 shall be paid in cash or
other immediately available funds at Closing.
2.2.2 PROPERTY PORTION. The Purchase Price in the amount of FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) shall be paid by the
conveyance from the Buyer (or an affiliate of Buyer) to the Seller of
fee simple title to an approximate 1.6 acre parcel as more fully set
forth on SCHEDULE 2.2.2(A) attached hereto (the "▇▇▇▇▇▇▇▇▇ Property"),
together with all rights, privileges, and easements appurtenant to such
property, including all water and air rights, mineral rights, rights of
way, parking areas, roadbeds, alleyways, roadways, easements for
vehicular, pedestrian and utility purposes and all other reversions and
appurtenances used in connection therewith. The ▇▇▇▇▇▇▇▇▇ Property will
be conveyed by special warranty deed free from all liens and
encumbrances but subject to the Permitted Exceptions described on
SCHEDULE 2.2.2(B) attached and by reference made a part hereof.
2.2.3 INVENTORY PORTION AND CLOSING ADJUSTMENTS. The value of the
Inventory of the Business immediately prior to the Effective Date
valued at the lesser of its original cost or current net book value and
the Closing Adjustments (as defined in Section 9.6 shall be added to
the Purchase Price enumerated in Section 2.1 above and paid in cash
pursuant to Section 9.2.2; and
2. 3 ASSUMED LIABILITIES. Buyer shall not assume or agree to pay, perform and
discharge or in any manner be responsible for any debts, obligations or
liabilities of Seller or the Business of any kind or nature whatsoever arising
prior to the Effective Date.
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2.4 ACCOUNTS PAYABLE. As of October 31, 2004, Seller has outstanding certain
obligations, trade payable and other indebtedness, including but not limited to,
the accounts payable set forth Schedule 2.4 (the "Obligations"). Seller agrees
that if Buyer, in its reasonable commercial judgment, pays any part of the
Obligations to protect its business opportunity or so that such vendor will
continue supplying services and/or products to Buyer, then Seller shall
reimburse Buyer for such payment within fifteen (15) days of receipt of written
notice from Buyer.
ARTICLE 3
REVIEW RIGHTS
3.1 BUYER'S INSPECTIONS. Until November 12, 2004 (the "Review Period"), Buyer
and its authorized contractors, engineers, inspectors, agents, representatives
and employees shall be entitled to go upon the Property to make such
inspections, examinations, surveys, tests and other studies as may be required
by Buyer, including, without limitation: environmental audits and surveys the
Purchased Assets; and inspections of the roofs and the structural, mechanical
and other components (including, but not limited to, mechanical, heating,
cooling, electrical and plumbing systems) of all Improvements leased or occupied
by the Business. Buyer shall indemnify and hold Seller harmless from any
liability, claims, damages or expenses (including reasonable attorneys' fees)
proximately caused by its activities pursuant to the aforesaid permitted entry;
provided, however, it is acknowledged that if Buyer or its contractors, agents,
representatives or employees, as a result of its or their environmental audit
activities, may be required to report certain facts and circumstances to
governmental agencies having jurisdiction in respect of such matters, then it is
agreed that the aforesaid indemnity shall not extend to or cover liabilities
arising out of any such report. Seller agrees that Buyer shall incur no
obligations other than as set out in this subparagraph by virtue of exercising
any rights herein granted, and no exercise hereof shall diminish or otherwise
affect any representations made by Seller in this Agreement, including, without
limitation, the representations as to the condition of the structural and
mechanical elements of the Improvements hereinafter set out.
3.1.1 DELIVERIES FOR INSPECTION. Seller has delivered to Buyer, and
Buyer acknowledges receipt of, the following:
3.1.1.1 REVIEW OF PLANS AND SPECIFICATIONS. Buyer (and its
contractors and representatives) with Seller's full
cooperation shall be entitled to review and reproduce
all of the Plans and Specifications from which any
Improvements owned or occupied by the Business were
constructed or renovated, including all building
permits, curb cuts, utility agreements and other
documentation relating to the construction of such
Improvements (all plans and specification have been
delivered to Buyer as of the date of the opening of
escrow);
3.1.1.2 GOVERNMENTAL REGULATION AND FILINGS. Reports filed
and significant correspondence with any state or
federal regulatory agencies during the past five
years.
3.1.1.3 PERMITS AND LICENSES. All material governmental
permits and licenses of the Business.
3.2 DELIVERY OF SELLER MATERIAL AGREEMENTS. Seller has delivered to Buyer all
material agreements, contracts or commitments relating to the Business,
including:
3.2.1 Personnel policy manuals and literature relating to all current
programs and benefits and relating to programs and benefits to be
proposed or implemented in the future;
3.2.2 All agreements, indentures, or other instruments which contain
restrictions with respect to the sale or other transfer of a material
portion of the Purchased Assets or properties;
3.2.3 All agreements, contracts or commitments relating to capital
expenditures or the leasing, sale, distribution or purchase of any
products or services;
3.2.4 All licensing agreements, franchise agreements, equipment leases
and conditional sales contracts;
3.2.5 All loan agreements and all documentation relating to loans or
advances to, or investments in, any other person, firm, corporation or
other entity, and any agreements, contracts or commitments relating to
the making of any such loan, advance or investment;
3.2.6 All guarantees in respect of any indebtedness or any obligation
of any other person (other than endorsements of negotiable instruments
for collection in the ordinary course of business);
3.2.7 All management, service, consulting and other similar type
contracts;
3.2.8 All joint venture and partnership agreements relating to the
Business;
3.2.9 All mortgages and deeds of trust relating to the Business to
which Seller is a party or which cover property included in the
Purchased Assets;
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3.2.10 All deeds to real estate used in the Business together with
title reports and title insurance policies relating thereto and copies
of all surveys of any such property;
3.2.11 All agreements, contracts or commitments which involve or create
an obligation of the Business of $5,000.00 or more and are not
cancelable without penalty or costs within thirty days;
3.2.12 All agreements, contracts or commitments limiting the freedom of
the Business to engage in any line of business or to compete with any
other person;
3.2.13 All agreement, contracts, instruments, judgments or decrees that
materially adversely affect the business practices, operations or
conditions of the Business or any of the Purchase Assets or that would
impair or prevent the consummation of the transactions contemplated by
this Agreement;
3.2.14 All leases of real and personal property relating to the
Business to which the Seller is a party either as lessor or lessee;
3.2.15 A schedule of all insurance policies carried by Seller relating
to the Business as to each policy indicating the insurer, the amount of
insurance, the items, lives or property thereby insured, the expiration
date, the premium and all mortgagees;
3.2.16 A schedule of all patents, patent applications, service marks,
trademarks, trade names, brands and copyrights owned or licensed by
Seller relating to the Business;
3.2.17 All contracts and agreements with or pertaining to the Business
and to which any directors, officers or owners of more than 5% of the
stock of Seller are parties;
3.2.18 All documents relating to any other transaction between the
Business and any directors, officers or owners of more than 5% of the
stock of Seller; and
3.2.19 All documents pertaining to any receivables of the Business from
or payable to any directors, officers or owners of more than 5% of the
stock of Seller.
3.3 OTHER DOCUMENTS. Seller has delivered to Buyer, all litigation,
administrative proceedings or governmental investigations or inquiries pending
or threatened, affecting the Business or any of the Purchased Assets, including
but not limited to;
3.3.1 Information regarding compliance with federal and state
environmental protection acts, including copies of all environmental
permits necessary for the operation of the Business; information
regarding claims under environmental protection laws and all notices of
violation with respect thereto, including any claims under and notices
of violation with respect to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") and the Resource Conservation
and Recovery Act ("RCRA"); if applicable, the CERCLA notification of
hazardous substance disposal areas used by Seller and any RCRA or state
law notices of underground storage tanks; information regarding OSHA
citations and outstanding enforcement actions.
3.3.2 Information regarding the generation, treatment and disposal of
hazardous substances and/or solid wastes; history of all problems with
pollution control and environmental contamination and all
communications with federal or state environmental agencies with
respect thereto.
3.3.3 All consent decrees, judgments, administrative and other orders
or decrees, settlement agreements and other agreements, if any, to
which the Business is a party or is bound that requires or prohibits
any future actions or activities.
3.3.4 A schedule of major suppliers and customers, giving the name,
address, contact person and annual dollar amounts purchased or sold.
3.3.6 Backlog and order records.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows, all such
representations and warranties as conditioned or qualified by the Schedules
attached hereto:
4.1 ORGANIZATION; POWER; GOOD STANDING AND CAPITALIZATION OF SELLER. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada and has full corporate power and authority to carry
on the Business as now conducted and to own and operate the Purchased Assets.
Seller has full corporate power and authority to execute and deliver this
Agreement and the other agreements contemplated hereby, to perform its
obligations hereunder and there under and to consummate the transactions
contemplated hereby and thereby. To the best of Seller's 's knowledge and
belief, Seller is not required to be qualified or licensed to do business as a
foreign corporation in any jurisdiction(s) outside the State of Nevada except as
set forth in SCHEDULE 4.1. The Articles of Incorporation and By-laws of Seller
furnished to Buyer reflect all amendments thereto and are correct and complete
in all material respects and have not been amended or modified in any respect.
4.2 CORPORATE AUTHORIZATION. The execution and delivery of this Agreement and
the other agreements contemplated hereby and the performance by Seller of its
obligations hereunder and there under have been, or by the Closing Date will be,
duly authorized by all necessary corporate action and no other corporate act or
proceeding on the part of Seller or its Board of Directors which is necessary to
authorize the execution, delivery or performance by Seller of this Agreement or
any other agreement contemplated hereby or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been duly executed by Seller,
and constitutes, and the other agreements contemplated hereby, and the
instruments and documents to be delivered by Seller hereunder, also constitute,
the legal, valid and binding obligations of each of Seller and is enforceable
against the Seller in accordance with their respective terms.
4.3 VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution, delivery and
performance of this Agreement by the Seller does not and will not violate,
conflict with or result in the breach of any term, condition, or provision of,
ore require the consent of any other person under, (a) any existing law,
ordinance or governmental rule or regulation to which Seller is subject, (b) any
judgment, order, writ, injunction, decree, or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Seller, (c) the charter documents of Seller or any securities issued by Seller,
(d) any mortgage, deed of trust, indenture, agreement, contract, lease, plan,
authorization or other instrument, document, or understanding, oral or written,
relating to the Business to which Seller is a party, by which the Business may
have rights or by which the Business or the Purchased Assets may be bound or
affected or give any party with rights there under the right to terminate,
modify, accelerate or otherwise change the existing rights or obligations of
Seller there under. Except as aforesaid, no authorization, approval or consent
of, and no registration or filing with, any governmental or regulatory official,
body or authority is required in connection with the execution, delivery, or
performance of this Agreement by Seller.
4.4 ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no liabilities or obligations
with respect to the Business, direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:
4.4.1 those liabilities or obligations set forth on the most recent
financial statements of Seller delivered to and initialed by Buyer's
representative and not heretofore paid or discharged;
4.4.2 liabilities arising in the ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed
to Buyer on SCHEDULE 4.4.2;
4.4.3 those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course
of business since the date of the most recent financial statements of
Seller delivered to and initialed by Buyer's representative.
For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured.
4.5 NO ILLEGAL PAYMENTS. With respect to the Business, Seller has not made or
committed to make any bribe, kickback payments or other illegal payments.
4.6 NO CONTRACT MODIFICATION. No party (including Seller) has accelerated,
terminated, modified, or canceled any contract, lease, sublease, license,
sublicense or other agreement set forth on the Schedules attached hereto.
4.7 TITLE TO PURCHASED ASSETS. Except for the Excluded Assets, the Purchased
Assets constitute all of the property and assets which are used in or considered
part of the Business as presently conducted and all assets which were used to
conduct the Business since the date of the Latest Balance Sheet, other than
assets sold or disposed in the ordinary course of business to nonaffiliated
third parties. Except as set forth in SCHEDULE 4.7.1, Seller owns good and
marketable title, free and clear of all Liens (as defined below) to all of its
properties and assets, real, personal and mixed, which would be included in the
Purchased Assets if the Closing took place on the date hereof, which Seller
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purports to own, including without limitation all of the real and personal
property and assets shown on the latest Balance Sheet or acquired thereafter and
all real, intangible and personal property and assets of Seller included within
the Purchased Assets. Seller has the right to convey, and upon consummation of
the transactions which are the subject of this Agreement, Buyer will be vested
with good and marketable title to the Purchased Assets, free and clear of all
liens, mortgages, charges, security interests, pledges, or other encumbrances
(collectively, "Liens").
4.8 INVENTORY. The inventories of the Business are in a good and merchantable
condition and quality; consists substantially of a quality, quantity and
condition useable, leasable and saleable in the ordinary course of business; is
valued at reasonable amounts based on costs; and is not subject to any
write-down or write-off. Seller is not under any liability or obligation with
respect to the return of inventory in the possession of wholesalers, retailers
or customers. None such inventory is of a type which is not utilized or readily
useable in conducting the Business as of the date hereof.
4.9 NO PATENTS, TRADEMARKS, ETC. The Business has no patents and no registered
trademarks or service marks. The Business has not trademark or service ▇▇▇▇,
trade name and logo. The Seller has no other copyrights, licenses and other
similar rights.
4.10 CONTRACTS AND AGREEMENTS. SCHEDULE 4.10 identifies every agreement,
license, lease and contract, written or oral, to which Seller is a party that
relates to the Business and/or the Purchased Assets (the "Contracts"), and
except as disclosed on SCHEDULE 4.10, all of such Contracts may be assigned and
transferred to Buyer without the consent, approval, novation or waiver
(collectively, "Defined Consents") of any party to such contract (other than
Seller) or any other third party or governmental authority or instrumentality.
To the best of Seller's knowledge or belief, Seller is not in default, and no
event has occurred which with the giving of notice or the passage of time or
both would constitute a default, under any Contract made or obligation owed by
Seller with respect to its Business or the Purchased Assets which default would
adversely affect, either individually or together with such other defaults, the
financial condition, assets or properties of Seller and no default and no event
has occurred which with the giving of notice or the passage of time or both
would constitute a default by any other party to any such Contract or agreement.
Seller has furnished to Buyer accurate and complete copies of all of the
agreements and Contracts referred to in the first sentence of this SECTION 4.10
and a summary of all oral agreements and contracts so listed.
4.11 LICENSES AND PERMITS. Seller holds all the permits, licenses (including any
licenses held by any employees pertaining to the Business), and approvals of
governmental authorities and agencies necessary or desirable for the current
conduct of the Business and the ownership, use, occupancy, or operation of the
Purchased Assets, all of which are identified on SCHEDULE 4.11 ("Permits").
Without limitation of the foregoing, Seller holds all such Permits which relate
specifically to, are unique to, or are otherwise required for the Business.
Seller, the Business and the Purchased Assets are in compliance with such
Permits and Seller has received no notices to the contrary. Except as disclosed
in SCHEDULE 4.12, each of the Permits is freely transferable and will constitute
party of the Purchased Assets.
4.12 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 4.12, Seller has
complied with each, and is not in violation of any, law, ordinance, or
governmental or regulatory rule or regulation, whether federal, state, local or
foreign, to which the Business or the Purchased Assets are subject
("Regulations"). Seller own, holds, possesses or lawfully uses in the operation
of the Business all franchises, licenses, permits, easements, rights,
applications, filings, registrations and other authorizations ("Authorizations")
which are in any manner necessary for it to conduct its business as now or
previously conducted or for the ownership and use of the Purchased Assets or
used buy Seller of the Business, free and clear of all liens, charges,
restrictions and encumbrances and in compliance with all Regulations. All such
Authorizations are listed and described on SCHEDULE 4.12. Seller is not in
default, nor has it received any notice of any claim of default, regarding any
such Authorization. All such Authorizations are renewable by their terms or in
the ordinary course of business without the need to comply with any special
qualifications procedures or to pay any amounts other than routine filing fees.
None of such Authorizations will be adversely affected by consummation of the
transactions contemplated hereby. No director, officer, employee or former
director, officer or employee of Seller owns or has any proprietary, financial
or other interest (direct or indirect) in any Authorization which Seller owns,
possesses or uses in the operation of the Business as now or previously
conducted.
4.13 PERSONNEL AGREEMENTS, PLANS AND ARRANGEMENTS. Except as listed in SCHEDULE
4.13, Seller is not a party to or obligated in connection with its Business with
respect to any (a) outstanding contracts with current or former employees,
agents, consultants, advisers, salesmen, sales representatives, distributors,
sales agents or dealers or (b) collective bargaining agreements or contracts
with any labor union or other representative of employees or any employee
benefits provided for by any such agreement. Seller has furnished Buyer with a
true and complete copy of each document listed in SCHEDULE 4.13. Except as
listed in SCHEDULE 4.13, no strike, union organizational activity, allegation,
charge or complaint of employment discrimination or other similar occurrence has
occurred during Seller's past five completed fiscal years, or is pending or
threatened against Seller; nor does Seller know any basis for any such
allegation, charge, or complaint. Except as listed in SCHEDULE 4.13, Seller has
complied with all applicable laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes. Except as listed
on SCHEDULE 4.13 there are no administrative charges or court complaints pending
or, to Seller's best knowledge, threatened against the Seller before the U.S.
Equal Employment Opportunity Commission or any state or federal court of agency
concerning alleged employment discrimination or any other matter relating to the
8
employment of labor. Except as listed in SCHEDULE 4.13, there is no unfair labor
practice charge or complaint pending or threatened against Seller before the
National Labor Relations Board ("NLRB") or any similar state or local body.
4.14 EMPLOYEE SALARIES. Attached hereto as SCHEDULE 4.14 is a correct and
complete list setting forth (i) the names and current salaries of the employees
of the Business, regardless of the amount of annual compensation, and (ii) the
names and total annual compensation for all independent contractors who render
services on a regular basis to the Business whose current annual compensation is
$10,000 or more. Except as listed in SCHEDULE 4.14 the Business has no promise
to any employee orally or in writing of any bonus or increase in compensation or
a general increase or change in any Employee Benefit Plan, whether or not
legally binding.
4.15 LITIGATION. Except as described in SCHEDULE 4.15 to the best of Seller's 's
knowledge and belief, there is no claim, counter-claim, action, suit,
arbitration, other proceeding or governmental investigation pending before any
court, arbitrator or governmental ore regulatory official or, to the best
knowledge of Seller, threatened against or involving Seller with respect to or
affecting the Business or Purchase Assets or relating to the transactions
contemplated hereby, before any court, agency, commission, board, bureau or
other governmental body or instrumentality. Seller does not know of or have any
reasonable grounds to know of any basis for any such claim, action, suit,
proceeding or governmental investigation. Neither the Business nor the Purchased
Assets is directly subject to or affected by any order, judgment, decree or
ruling of any court or governmental agency. Seller has not received any opinion
or memorandum or legal advice from legal counsel to the effect that the Business
is exposed, from a legal standpoint, to any liability or disadvantage which may
be material to Seller, the Business or the Purchased Assets.
4.16 TAXES. Except as listed on SCHEDULE 4.16 all taxes due and payable by the
Seller with respect to the Business or Purchased Assets have been paid in full.
Seller has timely paid all taxes and filed all federal, state, county, local and
foreign tax returns (including without limitation all income tax, unemployment
compensation, social security, payroll, sales and use, excise, privilege,
property, ad valorem, franchise, license, school, water and sewer, and other tax
or similar governmental charge) which it is required to have paid and filed the
returns with respect thereto, and such returns are complete and correct. Any
deficiencies proposed as a result of any federal state or local audits have been
paid or settled, and there are no present disputes as to taxes payable by
Seller. There are no unexpired waivers by Seller of any statute of limitations
with respect to any taxes, and Seller is not a party to any action or
proceedings by any governmental authority for the collection or assessment of
taxes.
4.17 NO LEGAL OBSTRUCTION. All consents and approvals by governmental agencies
that are required for the consummation of transactions contemplated hereby or
the other agreements contemplated hereby or by third parties that are required
in order to prevent a breach of, or a default under, or a termination or
modification of, any instrument, contract, lease or other agreement to which the
Purchased Assets are subject, and releases of all Liens, charges and other
restrictions on the Purchased Assets, have been obtained on terms and conditions
no less favorable to Buyer than they are to Seller.
4.18 INSURANCE POLICIES. Attached hereto as SCHEDULE 4.18 are copies of all
insurance policies which include policy numbers, names and addresses of insurers
and expiration dates, of all insurance policies owned by Seller with respect to
the Business or the Purchased Assets. Such policies are in full force and
effect, and there is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default there under. Seller
has not received any notice of (i) cancellation or intent to cancel or, (ii)
increase or intent to increase premiums, with respect to such insurance
policies. Seller has not been refused any insurance, nor has its coverage been
limited, by any insurance carrier during the past five years. SCHEDULE 4.18 also
contains a true and complete description of all bonds and other surety
arrangements issued or entered into in connection with the business, assets and
liabilities of Seller, if any.
4.19 INTEREST OF SELLER IN CUSTOMERS; AFFILIATED, ETC. Except as set forth in
SCHEDULE 4.19, neither the Seller nor any of its affiliates has any direct or
indirect interest in any competitor, supplier or customer of the Business or in
any person from whom or to whom the Seller leases any real or personal property
or in any other person with whom the Seller has any business relationship. An
affiliate means any person or entity controlling, controlled by or under common
contract with Seller.
4.20 ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION. Seller
hereby represents and warrants to Buyer, their heirs, successors and assigns
that:
4.20.1 To the best of its knowledge, there are no violations regarding
the Purchased Assets of any federal, state or local statute, law,
ordinance, code, or regulation that creates standards of conduct or
imposes liability concerning petroleum products, flammables,
explosives, radioactive materials, and any other hazardous, toxic,
explosive, or other dangerous wastes, substances or materials
("Hazardous Materials"); and
4.20.2 During the period of Seller's ownership of the Purchased Assets
(up to and including the Effective Date) there has been no litigation
brought or threatened against Seller nor any settlements reached by or
with any party or parties alleging the presence, disposal, release or
threatened release of any Hazardous Materials in, from, or under the
premises on which the Purchased Assets is located.
9
4.21 SURVIVAL. All representation and warranties made Seller in this Agreement
or any certificate, schedule, statement, document or instrument furnished or to
be furnished to Buyer pursuant hereto, or in connection with the negotiation,
execution or performance of this Agreement shall survive the Closing for a
period of three (3) years. Notwithstanding any investigation, audit or review
conducted before or after Closing, Buyer shall be entitled to rely upon the
representations and warranties set forth herein and therein.
4.22 DISCLOSURE. To the best of Seller's knowledge and belief, neither this
ARTICLE 4 nor any writing delivered by Seller to Buyer in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained herein
and therein, in light of the circumstances in which they were made, not
misleading. There is no material fact which has not been disclosed to Buyer
which materially adversely affects or could reasonably be anticipated to
materially adversely affect the Business or the Purchased Assets or Seller's
ability to consummate the transactions contemplated hereby.
4.23 CONDITIONS AFFECTING SELLER. There is no fact, development or threatened
development with respect to the markets, products, services, clients, customers,
facilities, computer software data bases, personnel, vendors, suppliers,
operations, assets, or prospects of the Business which are known to Seller which
would materially adversely affect the business, operations or prospects of the
Business considered as a whole, other than such conditions as may affect the
economy generally. Seller has used its best efforts to keep available for Buyer
the services of the employees, agent, customers and suppliers of Seller who are
active in the conduct of the Business. Seller does not have any reason to
believe that any loss of any employee, agent, customer or supplier or other
advantageous arrangement will result because of the consummation of the
transactions contemplated by this Agreement.
4.24 CONDITION OF TANGIBLE ASSETS. All buildings, structures, facilities,
equipment and other material items of tangible property and assets which could
be included in the Purchased Assets if the Closing took place on the date hereof
are in good operating condition and repair, subject to normal wear and tear, are
useable in the regular and ordinary course of business and conform to all
applicable laws, ordinances, codes, rules and regulations and Authorizations
relating to their construction, use and operation and none of the said tangible
assets require any repair or replacement except for maintenance in the ordinary
course of Seller's operations. No person other than Seller has any ownership
interest in any of the Seller's tangible assets unless disclosed on SCHEDULE
4.24 attached to this Agreement.
4.25 LEASES. All leases of real and personal property leased by the Seller and
utilized in the Business, including all such leases with related parties or
affiliates are listed on SCHEDULE 4.25, which Schedule lists the name and
address of each landlord or sub landlord, and as to each lease or sublease,
itemizes the description and square footage of the leased space, the
commencement and expiration date or each lease term, all renewal options, the
rent rates (including base rent and all additional rents [and how such
additional rents are computed or derived]) for the initial and all renewal terms
of lease, the security deposit made by Seller, whether Seller may assign each
such lease to Buyer, and whether Seller must obtain the consent of its lessor or
any other person to the assignment of the lease to Buyer. Within sixty (60))
days of the date Seller has received a fully executed copy of this Agreement,
Seller shall deliver to Buyer accurate and complete copies of all such leases
and subleases. As to each such lease:
(i) Seller enjoys peaceful and undisturbed possession under
each such of the leases, and each such Lease is, and at
Closing shall be, in full force and effect and has not been
assigned, modified, supplemented or amended, and neither
Seller nor the landlord or sub landlord from whom Seller
leases such premises is in default, and no state of facts or
circumstance exists which, with the giving of notice or
passage of time, or both, would permit such landlord or sub
landlord to terminate the lease or claim the right to invoke
any remedy available under the lease or at law upon the
occurrence of default by Seller;
(ii) The real property which Seller possesses under such
leases is in good condition and repair with adequate plumbing,
heating and air conditioning and with access to public roads
and adequate public utility service as required for the
conduct of the Business;
(iii) At Closing, Seller shall assign to Buyer all right,
title and interest of Seller in and to all Leases and shall
deliver to Buyer original copies of all consents required for
such assignments;
(iv) Seller has received no oral or written notice, an has not
reason to believe, that any governmental body having the power
of eminent domain over any premises leased by Seller has
commenced or intends to exercise its power of eminent domain;
and, if any leasehold to be assigned or transferred hereunder
is hereafter taken by eminent domain, or is threatened to be
taken or notice of any such taking is given, prior to Closing,
then Buyer may elect to terminate this Agreement; provided if
Buyer does not terminate, then (a) Buyer shall have the sole
right, in the name of Seller, to negotiate for, claim, contest
and receive all damages on account thereof, (b) Seller shall
be relieved of its obligation to transfer the leasehold to
Buyer, (c) at Closing, Seller shall assign to Buyer all of
Seller's rights to damages payable for such taking or injury
to such premises and shall pay to Buyer all damages
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theretofore paid to Seller by reason thereof, and (d)
following Closing, Seller shall give Buyer such further
assurances of such rights and assignments as Buyer may from
time to time reasonable request;
(v) All premises leased by Seller and used in the Business
comply with the Regulations of all governmental bodies having
jurisdiction thereof; and Seller has received no notices ,
oral or written, from any governmental body, and has no reason
to believe, that any leased premises or the uses conducted
thereon or therein, violate any Regulations having
jurisdiction there over;
(vi) Between the date hereof and Closing, Seller shall not
encumber or transfer or suffer the transfer of any of its
leased premises and shall not do or permit any act which
diminishes the title to or value of any such leased premises
4.26 REPORTS AND RECORDS. Seller has not ordered, not is it in possession of,
analyses (within the last two years) of the Business or its industry prepared by
investment bankers, engineers, management consultants or others, including
marketing studies, credit reports and financial and other types of reports.
Seller does not have projections, budgets or business plans of the Business for
the past three years and for any future periods.
4.27 ABSENCE OF CERTAIN DEVELOPMENTS. Since December 31, 2003, Seller has
conducted the Business only in the ordinary course of business consistent with
past custom and practice, and has incurred no liabilities other than in the
ordinary course of business consistent with past custom and practice. Without
limitation of the foregoing, since December 31, 2003 Seller has not:
(i) sold, assigned or transferred any of the Purchased Assets,
or mortgaged, pledged or subjected them to any Lien, charge or
other restriction, except for Liens for current property taxes
not yet due and payable;
(ii) made or granted any bonus or any wage or salary increase
to any employee or made any other change in employment terms
for any employee, except as set forth on SCHEDULE 4.27;
(iii) made or granted any increase in or amended or
terminated, any existing plan, program, policy or arrangement,
including without limitation, any Employee Benefit Plan (as
defined) or arrangement or adopted any new Employee Benefit
Plan or arrangement, or entered into any new collective
bargaining agreement or multiemployer plan, except as set
forth on SCHEDULE 4.27;
(iv) conducted its cash management customs and practices
(including the timing of collection of receivables and payment
of payable and other current liabilities) and maintained its
books and records other than in the usual and ordinary course
of business consistent with past customs and practice;
(v) made any loans or advances to, or guarantees for the
benefit of, or entered into any transaction with any employee,
officer or director of Seller;
(vi) suffered any extraordinary loss, damage, destruction or
casualty loss to the Purchased Assets or the Business or
waived any rights of material value, whether or not covered by
insurance and whether or not in the ordinary course of
business;
(vii) received notification that any customer will stop or
decrease in any material respect the rate of business done
with the Business except as disclosed on SCHEDULE 4.27;
(viii) declared, set aside or paid any dividend or
distribution of cash or other property to any stockholder or
purchased, redeemed or otherwise acquired any shares of its
capital stock, or made any other payments to any stockholder;
(ix) entered into any other material transaction, other than
in the ordinary course of business consistent with past custom
and practice; or
(x) has committed to do any of the foregoing.
4.28 NO OTHER WARRANTIES. Except the specific representations made in this
Agreement, Buyer acknowledges and agrees that Seller has not made, does not make
and specifically negates and disclaims any representations or warranties
whatsoever whether express or implied, oral or written, past, present or future,
with respect to (i) the value, nature, quality or condition of the Purchased
Assets, (ii) the income or losses to be generated by the Purchased Assets, (iii)
11
the suitability of the Purchased Assets for any or all activities that the Buyer
desires to conduct, (iv) the compliance of the Purchased Assets with any laws,
rules, ordinances or regulations of any governmental authority or body, (v) the
habitability, merchantability, marketability, profitability or fitness for a
particular purpose of the Purchased Assets, (vi) the manner or quality of
construction of any improvements included in the Purchased Assets, and (vii) the
manner, quality, state of repair or lack of repair of the Purchased Assets.
Buyer has been given an opportunity to inspect, and has inspected the Purchased
Assets. Buyer is relying on its own investigation of the Purchased Assets and
not on any information provided by Seller other than this Agreement and the
Schedules and Exhibits hereto. Buyer further acknowledges that any information
provided by Seller to Buyer regarding the Purchased Assets other than this
Agreement has been obtained from a variety of sources and the Seller has not
made an independent investigation as to the accuracy or completeness of the
information.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, all such representations and
warranties as conditioned or qualified by the Schedules attached hereto:
5.1 ORGANIZATION; POWER; GOOD STANDING AND CAPITALIZATION OF SELLER. Buyer is a
limited liability company duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has full power and authority to
carry on the Business as now conducted and to own and operate the Purchased
Assets. Buyer has full power and authority to execute and deliver this Agreement
and the other agreements contemplated hereby, to perform its obligations
hereunder and there under and to consummate the transactions contemplated hereby
and thereby. Buyer is authorized to do business in North Dakota and to acquire
title to the Purchased Assets.
5.2 AUTHORIZATION. The execution and delivery of this Agreement and the other
agreements contemplated hereby and the performance by Buyer of its obligations
hereunder and there under have been duly authorized by necessary partnership
action, to the extent (if any) that is required, and no other act or proceeding
on the part of Buyer is necessary to authorize the execution, delivery or
performance by Buyer to this Agreement or any other agreement contemplated
hereby or the consummation of the transactions contemplated hereby or thereby.
This Agreement has been duly executed by Buyer and constitutes, and the other
agreements contemplated hereby, the legal, valid and binding obligations of and
enforceable against Buyer in accordance with their respective terms.
5.3 NO BREACH. The execution, delivery and performance by Buyer of this
Agreement and the other agreements contemplated hereby and the consummation of
the transactions contemplated hereby and thereby do not (i) violate, conflict
with, result in any breach of, constitute a default under, result in the
termination or acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any contract,
agreement, indenture, loan agreement, lease, sublease, license, sublicense,
franchise, permit, indenture, obligation or instrument to which Buyer is a party
or by which Buyer is bound or affected (ii) other than as provided in this
Agreement, require any authorization, consent, approval, exemption or other
person or entity under, the provisions of any law, statute, rule, regulation,
judgment, order or decree or any contract, agreement, lease, sublease, license,
franchise, permit, indenture, obligation or instrument to which Buyer is
subject, bound or affected or (iii) violate or require any consent or notice
under law, statute, regulation, rule, judgment, decree, order, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which Buyer is subject, bound or affected.
5.4 ABSENCE OF UNDISCLOSED LIABILITIES. Buyer has no liabilities or obligations
with respect to the ▇▇▇▇▇▇▇▇▇ Property, direct or indirect, matured or unmatured
or absolute, contingent or otherwise, except:
5.4.1 those liabilities or obligations set forth on the most recent
financial statements of Buyer delivered to and initialed by Seller's
representative and not heretofore paid or discharged;
5.4.2 liabilities arising in the ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed
to Seller on SCHEDULE 5.4.2;
5.4.3 those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course
of business since the date of the most recent financial statements of
Buyer delivered to and initialed by Seller's representative.
For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured.
5.5 TITLE TO ▇▇▇▇▇▇▇▇▇ PROPERTY. Seller owns good and marketable title to the
▇▇▇▇▇▇▇▇▇ Property, free and clear of all Liens. Seller has the right to convey,
and upon consummation of the transactions which are the subject of this
Agreement, Buyer will be vested with good and marketable title to the ▇▇▇▇▇▇▇▇▇
Property, free and clear of all Liens.
12
5.6 INTENTIONALLY OMITTED.
5.7 NO ILLEGAL PAYMENTS. With respect to the ▇▇▇▇▇▇▇▇▇ Property, Buyer has not
made or committed to make any bribe, kickback payments or other illegal
payments.
5.8 NO CONTRACT MODIFICATION. No party (including Buyer) has accelerated,
terminated, modified, or canceled any contract, lease, sublease, license,
sublicense or other agreement set forth on the Schedules attached hereto.
5.9 TAXES. Except as listed on SCHEDULE 5.9 all taxes due and payable by the
Buyer with respect to the ▇▇▇▇▇▇▇▇▇ Property have been paid in full. Buyer has
timely paid all taxes and filed all federal, state, county, local and foreign
tax returns (including without limitation all income tax, unemployment
compensation, social security, payroll, sales and use, excise, privilege,
property, ad valorem, franchise, license, school, water and sewer, and other tax
or similar governmental charge) which it is required to have paid and filed the
returns with respect thereto, and such returns are complete and correct. Any
deficiencies proposed as a result of any federal state or local audits have been
paid or settled, and there are no present disputes as to taxes payable by Buyer.
There are no unexpired waivers by Buyer of any statute of limitations with
respect to any taxes, and Buyer is not a party to any action or proceedings by
any governmental authority for the collection or assessment of taxes.
5.10 NO LEGAL OBSTRUCTION. All consents and approvals by governmental agencies
that are required for the consummation of transactions contemplated hereby or
the other agreements contemplated hereby or by third parties that are required
in order to prevent a breach of, or a default under, or a termination or
modification of, any instrument, contract, lease or other agreement to which the
▇▇▇▇▇▇▇▇▇ Property subject, and releases of all Liens, charges and other
restrictions on the ▇▇▇▇▇▇▇▇▇ Property, have been obtained on terms and
conditions no less favorable to Seller than they are to Buyer.
5.11 ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION. Buyer hereby
represents and warrants to Seller, their heirs, successors and assigns that
during the period of Buyer's ownership of the ▇▇▇▇▇▇▇▇▇ Property (up to and
including the Closing Date) there has been no litigation brought or threatened
against Buyer nor any settlements reached by or with any party or parties
alleging the presence, disposal, release or threatened release of any Hazardous
Materials in, from, or under the ▇▇▇▇▇▇▇▇▇ Property.
5.12 BROKER'S FEES. No agent, broker, investment banker, or other person or firm
acting on behalf of Buyer or under its authority is or will be entitled to any
broker's or finder's fee or any other commission or similar fee, directly or
indirectly, from Buyer in connection with the transactions contemplated by this
Agreement. If applicable, Seller agrees to pay any and all fees or commissions
regarding the sale of its property to duly authorized brokerage agents.
5.13 LITIGATION. There are no legal, administrative, arbitration or other
proceedings or governmental investigations pending or threatened against Buyer
or the ▇▇▇▇▇▇▇▇▇ Property that would give any third party the right to enjoin
the transactions contemplated by this Agreement.
5.14 SURVIVAL. All representation and warranties made by Buyer in this Agreement
or any certificate, schedule, statement, document or instrument furnished or to
be furnished to Seller pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement shall survive the Closing for a
period of three (3) years. Notwithstanding any investigation, audit or review
conducted before or after Closing, Seller shall be entitled to rely upon the
representations and warranties set forth herein and therein.
5.15 NO WARRANTIES. Except the specific representations made in this Agreement,
Seller acknowledges and agrees that Buyer has not made, does not make and
specifically negates and disclaims any representations or warranties whatsoever
whether express or implied, oral or written, past, present or future, with
respect to (i) the value, nature, quality or condition of the ▇▇▇▇▇▇▇▇▇
Property, (ii) the income or losses to be generated by the ▇▇▇▇▇▇▇▇▇ Property,
(iii) the suitability of the ▇▇▇▇▇▇▇▇▇ Property for any or all activities that
the Seller desires to conduct, (iv) the compliance of the ▇▇▇▇▇▇▇▇▇ Property
with any laws, rules, ordinances or regulations of any governmental authority or
body, and (v) the habitability, merchantability, marketability, profitability or
fitness for a particular purpose of the ▇▇▇▇▇▇▇▇▇ Property. Seller has been
given an opportunity to inspect, and has inspected the Purchased Assets. Buyer
is relying on its own investigation of the ▇▇▇▇▇▇▇▇▇ Property and not on any
information provided by Buyer other than this Agreement and the Schedules and
Exhibits hereto. Seller further acknowledges that any information provided by
Buyer to Seller regarding the ▇▇▇▇▇▇▇▇▇ Property other than this Agreement has
been obtained from a variety of sources and Buyer has not made an independent
investigation as to the accuracy or completeness of the information.
ARTICLE 6
AGREEMENTS PENDING CLOSING
6.1 AGREEMENTS OF SELLER PENDING CLOSING. Seller covenants and agrees with Buyer
that, pending the Closing and except as otherwise agreed to in writing by Buyer:
13
6.1.1 BUSINESS IN THE ORDINARY COURSE. Seller shall use commercially
reasonable efforts to operate the Business in the ordinary course
consistent in all material respects with past practices; use reasonable
commercial efforts to preserve the Business' present operations,
organization and goodwill and to preserve Seller's present
relationships with customers, suppliers and other persons having
business dealings with the Business; and to the extent practicable,
keep available the services of Seller's present employees relating to
the Business; use its best efforts to conduct the Business in such a
manner that on the Closing Date, the representations and warranties of
Seller contained in this Agreement shall be true, except as otherwise
contemplated in Article 6, as though such representations and
warranties were made on such date. Seller will cooperate with Buyer and
use its best efforts to cause all of the conditions to the obligations
of Seller under this Agreement to be satisfied on or prior to the
Closing Date.
6.1.2 MAINTAIN THE PURCHASED ASSETS. Seller shall use and operate the
Purchased Assets in a reasonable manner and maintain all of the
tangible Purchased Assets in substantially their current condition,
ordinary wear and tear excepted;
6.1.3 UPDATE SCHEDULES. Seller shall promptly disclose to Buyer any
information contained in its representations and warranties or the
Schedules which, because of an event occurring after the date hereof,
is incomplete or no longer correct as of all times after the date
hereof until the Closing Date; provided none of such disclosures shall
be deemed to modify, amend or supplement the representations and
warranties of Seller or the schedules hereto for the purposes of
Article VII hereof, unless Buyer shall have consented thereto in
writing.
6.1.4 SALE OR ENCUMBRANCE OF ASSETS; NEGOTIATIONS. Seller shall not
directly or indirectly sell, lease, pledge or otherwise dispose of any
of the Purchased Assets, except for dispositions of Inventory in the
ordinary course of Business consistent with past practice or initiate
or participate in any discussions or negotiations or enter into any
agreement to do any of the foregoing. Seller shall not provide any
confidential information concerning the Business or its properties or
assets to any third party other than in the ordinary course of
business.
6.1.5 ACCESS. Seller shall give to Buyer's employees, counsel,
accountants and other representatives and agents free and full access
to and the right to inspect during normal business hours the Purchased
Assets and the records, contracts and other documents relating thereto
or identified in the schedules delivered hereunder or referred to in
documents delivered with or pursuant to such schedules, and Seller
shall permit them to consult with the officers, employees, accountants,
counsel, representatives and agents of Seller for the purpose of making
such investigations and reviews of the Business and/or the Purchased
Assets (including the Seller's Financial Statements delivered or to be
delivered to Buyer) provided such investigation and review shall not
unreasonable interfere with Seller's business operations. Further,
Seller shall furnish to Buyer all such documents and copies of
documents and records and information with respect to the Purchased
Assets and the Business and its conduct by Seller (and working papers
with respect thereto) as Buyer shall from time to time reasonably
request and shall permit Buyer and its agents to make physical
inventories and inspections of the Purchased Assets as Buyer may
request from time to time.
6.1.6 TAX RETURNS AND PAYMENTS.
(i) All tax returns, estimates, and reports required to be
filed by Seller prior to the Closing Date or relating to periods prior
to the Closing Date will be timely filed by Seller when due with the
appropriate governmental agencies; and
(ii) All Federal, state and local taxes, including but not
limited to, pro rated ad valorem, withholding and unemployment taxes,
pertaining to ownership of the Purchased Assets or operation of the
Business prior to the Closing Date will be paid by Seller when due and
payable.
6.1.8 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
Seller shall obtain the release of all liens and encumbrances disclosed
in the Schedules hereto and any other liens or encumbrances on the
Purchased Assets and shall duly file releases of all such liens in each
governmental agency or office in which any such lien or evidence
thereof shall have been previously filed, and Seller shall transfer and
convey, been previously filed, and Seller shall transfer and convey, or
cause to be transferred and conveyed, to Buyer at Closing good and
marketable title to all of the Purchased Assets free and clear of all
liens and encumbrances with the exception of that certain land lease
noted herein.
6.1.9 PRESS RELEASE. Except as required by applicable law, Seller shall
not give notice to third parties or otherwise make any public statement
or releases concerning this Agreement or the transactions contemplated
hereby except for such written information as shall have been approved
in writing as to form and content by Buyer, which approval shall not be
unreasonably withheld.
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6.1.10 EMPLOYEES AND BUSINESS RELATIONS. Seller shall use its best
efforts to keep available the present employees and agents of the
Business and to maintain the relations and goodwill with the suppliers,
customers, distributors and any others having business relations with
the Business.
6.1.11 MAINTENANCE OF INSURANCE. Seller shall notify Buyer of any
changes in the terms of the insurance policies and binders referred to
on SCHEDULE 4.18.
6.1.12 MAINTENANCE OF FRANCHISES, ETC. Seller shall use its best
efforts to maintain in full force and affect all Franchises currently
in effect used in the conduct of the business of the Business.
6.1.13 COMPLIANCE WITH LAWS, ETC. Seller shall comply with all laws,
ordinances, rules, regulations and orders applicable to the Business or
Seller's operations, assets or properties in respect thereof, the
noncompliance with which might materially affect the Business or the
Assets.
6.1.14 UPDATE SCHEDULES. Seller shall promptly disclose to Buyer any
information contained in its representations and warranties or the
Schedules which, because of an event occurring after the date hereof,
is incomplete or is no longer correct as of all times after the date
hereof until the Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or supplement the
representations and warranties of Seller or the schedules hereto for
the purposes of Article 4 hereof, unless Buyer shall have consented
thereto in writing.
6.2 AGREEMENTS OF BUYER PENDING THE CLOSING. Buyer covenants and agrees with
Seller that, pending the Closing and except as otherwise agreed to in writing by
Seller:
6.2.1 CONDUCT OF BUSINESS. Buyer shall use its best efforts to conduct
its business in such a manner that on the Closing Date the
representations and warranties of Buyer contained in this Agreement
shall be true, except as specifically contemplated by this Article 6,
as though such representations and warranties were made on and as of
such date. Furthermore, Buyer shall cooperate with Seller and use its
best efforts to cause all of the conditions to the obligations of Buyer
and Seller under this Agreement to be satisfied on or prior to the
Closing Date.
6.2.2 SALE OR ENCUMBRANCE OF ASSETS; NEGOTIATIONS. Buyer shall not,
directly or indirectly, sell or encumber all or any part of the
▇▇▇▇▇▇▇▇▇ Property, other than in the ordinary course of business
consistent with past practice or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of
the foregoing. Buyer shall not provide any confidential information
concerning Buyer or the ▇▇▇▇▇▇▇▇▇ Property to any third party other
than in the ordinary course of business.
6.2.3 CONFIDENTIALITY. Unless and until the Closing has been
consummated, Buyer will hold, and shall cause their counsel and
independent public accountants, appraisers and other representatives to
hold in confidence any confidential data or information made available
to Buyer in connection with this Agreement with respect to the Business
using the same standard of care to protect such confidential data and
information as is used to protect Buyer's confidential information. If
the transactions contemplated by this Agreement are not consummated,
Buyer agrees that it shall return to Seller all written materials and
all copies thereof that were supplied to Buyer by Seller and that
contain such confidential data or information.
6.2.5 PRESS RELEASE. Except as required by applicable law, Buyer shall
not give notice to third parties or otherwise make any public statement
or releases concerning this Agreement or the transactions contemplated
hereby except for such written information as shall have been approved
in writing as to form and content by Seller, which approval shall not
be unreasonably withheld.
6.2.6 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
Buyer shall obtain the release of all liens and encumbrances disclosed
in the Schedules hereto and any other liens or encumbrances on the
▇▇▇▇▇▇▇▇▇ Property and shall duly file releases of all such liens in
each governmental agency or office in which any such lien or evidence
thereof shall have been previously filed, and Buyer shall transfer and
convey, or cause to be transferred and conveyed, to Seller at Closing
good and marketable title to all of the ▇▇▇▇▇▇▇▇▇ Property free and
clear of all liens and encumbrances.
6.2.7 INTENTIONALLY OMITTED.
6.2.8 COMPLIANCE WITH LAWS, ETC. Buyer shall comply with all laws,
ordinances, rules, regulations and orders applicable to its business or
operations, assets or properties in respect thereof, the noncompliance
with which might materially affect Buyer or the ▇▇▇▇▇▇▇▇▇ Property.
6.2.9 UPDATE SCHEDULES. Buyer shall promptly disclose to Seller any
information contained in its representations and warranties or the
Schedules which, because of an event occurring after the date hereof,
15
is incomplete or is no longer correct as of all times after the date
hereof until the Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or supplement the
representations and warranties of Buyer or the schedules hereto for the
purposes of Article 6 hereof, unless Seller shall have consented
thereto in writing.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
All of Buyer's obligations under this Agreement are subject to the satisfaction
and fulfillment on or prior to the Closing Date, of each of the following
conditions precedent unless waived by Buyer in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement or in any other Document shall
be true and correct in all material respects on the date hereof and at the
Closing Date with same effect as though made at such time.
7.2 COMPLIANCE WITH THIS AGREEMENT. Seller shall have performed or complied with
all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
7.3 INTENTIONALLY OMITTED.
7.4 OPINIONS OF COUNSEL FOR SELLER. Seller shall have delivered to Buyer a
written opinion of its legal counsel, dated the Closing Date, in the form of
EXHIBIT A hereto with only such changes as shall be in form and substance
reasonably satisfactory to Buyer and its counsel.
7.5 NO THREATENED OR PENDING LITIGATION. On the Closing Date, no suit, action or
other proceeding, or injunction or final judgment relating thereof, shall be
threatened or pending before any court or governmental or regulatory official,
body or authority in which relief is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such suit, action or proceeding shall be pending or threatened.
7.6 CONSENTS AND APPROVALS. The holders of debt of the Seller, the lessors and
lessees of any real or personal property or assets leased by Seller, the parties
(other than Seller) to any contract, commitment, or agreement, to which Seller
is a party or subject, any governmental or regulatory official, body or
authority or any other person that owns or has authority to grant any Franchise
and any governmental, judicial or regulatory official, body or authority having
jurisdiction over, Seller or Buyer to the extent that their consent or approval
is required or necessary under the pertinent debt, lease, contract, commitment,
agreement or other document or instrument or under applicable orders, laws,
rules or regulations, for the consummation of the transactions contemplated
hereby in the manner herein provided, shall have granted such consent or
approval.
7.7 ESCROW AGREEMENT. Seller and Escrow Agent shall have executed and delivered
the Escrow Agreement, a copy of which is attached as EXHIBIT B.
7.8 CLOSING OF BUYER'S ACQUISITION OF LAND. Concurrently with Closing or
immediately prior thereto, Buyer shall have consummated its acquisition of the
land underlying the Purchased Assets and the ▇▇▇▇▇▇▇▇▇ Property from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ et al.
7.9 OPTION AGREEMENT. Buyer and Seller shall enter into an Option Agreement
whereby Buyer shall have the option to purchase the ▇▇▇▇▇▇▇▇▇ Property for a
period of three years for $500,000.00 (the "Option Agreement").
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, unless waived by Seller in writing:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer herein contained shall be true in all material respects at
the date hereof and at the Closing Date with the same effect as though made at
such time.
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8.2 COMPLIANCE WITH THIS AGREEMENT. Seller shall have performed or complied with
all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 INTENTIONALLY OMITTEDL.
8.4 OPINIONS OF COUNSEL FOR BUYER. Buyer shall have delivered to Seller a
written opinion of its legal counsel, dated the Closing Date, in the form of
EXHIBIT C hereto with only such changes as shall be in form and substance
reasonably satisfactory to Seller and its counsel.
8.5 NO THREATENED OR PENDING LITIGATION. On the Closing Date, no suit, action or
other proceeding, or injunction or final judgment relating thereof, shall be
threatened or pending before any court or governmental or regulatory official,
body or authority in which relief is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such suit, action or proceeding shall be pending or threatened.
8.6 CONSENTS AND APPROVALS. The holders of debt of Buyer, the lessors and
lessees of any real or personal property or assets leased by Buyer, the parties
(other than Buyer) to any contract, commitment, or agreement, to which Buyer is
a party or subject, any governmental or regulatory official, body or authority
or any other person that owns or has authority to grant any Franchise and any
governmental, judicial or regulatory official, body or authority having
jurisdiction over Seller or Buyer to the extent that their consent or approval
is required or necessary under the pertinent debt, lease, contract, commitment,
agreement or other document or instrument or under applicable orders, laws,
rules or regulations, for the consummation of the transactions contemplated
hereby in the manner herein provided, shall have granted such consent or
approval.
8.7 CLOSING OF BUYER'S ACQUISITION OF LAND. Concurrently with Closing or
immediately prior thereto, Buyer shall have consummated its acquisition of the
land underlying the Purchased Assets and the ▇▇▇▇▇▇▇▇▇ Property from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ et al.
8.8 MANAGEMENT AGREEMENT. Buyer shall have entered into that certain Management
Agreement with ▇▇▇▇▇▇▇▇▇ Management Inc.
ARTICLE 9
CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
CONSENTS, CHANGE IN NAME AND FURTHER ASSURANCES
9.1 Closing. The closing (the "Closing") of the sale and purchase of the
Purchased Assets shall take place at 10:00 a.m., local time, on or before
November 12, 2004 or on such other date as may be mutually agreed upon in
writing by Buyer and Seller. The date of the Closing is sometimes herein
referred to as the "Closing Date". The effective date of the transfer of the
Purchased Assets shall be October 31, 2004. The Escrow Holder shall be Alliance
Title Company, (affiliate of First American Title), % ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇-▇▇▇-▇▇▇▇, Cell: ▇▇▇-▇▇▇-▇▇▇▇.
The Closing shall be held simultaneously with the exchange by and
between Grand Dakota Partners, LLC and ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ et al herewith,
concerning that certain exchange agreement by and among the parties which is
attached hereto and made an integral part hereof. The Closing of this Agreement
is contingent upon the simultaneous closing of the aforementioned exchange
agreement.
9.2 Items to be delivered at Closing. At the Closing and subject to the terms
and conditions herein contained:
9.2.1 Seller shall execute, acknowledge in form sufficient for
recording and deliver to Buyer the following:
(i) such bills of sale with covenants of warranty,
assignments, endorsements and other good and sufficient
instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as shall be
necessary and effective to transfer and assign to, and vest
in, Buyer all of Seller's rights, title and interest in and to
the Purchased Assets free and clear of all liens and
encumbrances, which instruments and documents shall include,
without limitation, (A) good and valid title in and to all of
the Purchased Assets owned by Seller, (B) good and valid
leasehold interests in and to all of the Purchased Assets
leased by Seller as lessee, and (C) all of Seller's rights
under all agreements, contracts, commitments, leases, plans,
bids, quotations, proposals, instruments and other documents
included in the Purchased Assets to which Seller is a party or
by which it has rights on the Closing Date: and
17
(ii) all of the agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments, computer
programs and software, databases, whether in the form of
computer tapes or otherwise, related object and source codes,
manuals and guidebooks, price books, and price lists, customer
and subscriber lists, supplier lists, sales records, files,
correspondences, legal opinions, rulings issued by
governmental entities and other documents, books, records,
papers, files, office supplies and data belonging to Seller
which are part of the Purchased Assets;
(iii) Certified resolutions of the Board of Directors of
Seller approving the execution and delivery of this Agreement
and each of the other Documents and authorizing the
consummation of the transactions contemplated hereby and
thereby;
(iv) Such additional information and materials as Buyer shall
have reasonably requested to evidence the satisfaction of the
conditions to its obligations hereunder, including without
limitation, evidence that all consents and approvals required
as a condition to Buyer's obligation to close hereunder have
been obtained, and any other documents expressly required by
this Agreement to be delivered by Seller at Closing;
(v) A Closing Statement describing with particularity the
source and application of the funds payable at Closing and
simultaneously with such delivery, all such steps will be
taken as may be required to put Buyer in actual possession and
operating control of the Purchased Assets; and
(vi) A warranty deed conveying the Real Estate Improvements
and a quit claim deed conveying Seller's interest in the
underlying fee interest, if any.
9.2.2 Buyer shall deliver to Seller the following:
(i) the Cash Portion in an accordance with Sections 2.2.1 and
2.2.3 hereof;
(ii) a warranty deed to the ▇▇▇▇▇▇▇▇▇ Property in form
suitable for recording;
(iii) Certified resolutions of the Board of Directors of Buyer
approving the execution and delivery of this Agreement and
each of the other Documents and authorizing the consummation
of the transactions contemplated hereby and thereby;
(iv) Such additional information and materials as Seller shall
have reasonably requested to evidence the satisfaction of the
conditions to its obligations hereunder, including without
limitation, evidence that all consents and approvals required
as a condition to Seller's obligation to close hereunder have
been obtained, and any other documents expressly required by
this Agreement to be delivered by Buyer at Closing; and
(v) A Closing Statement describing with particularity the
source and application of the funds payable at Closing and
simultaneously with such delivery, all such steps will be
taken as may be required to put Seller in actual possession
and operating control of the ▇▇▇▇▇▇▇▇▇ Property.
At or prior to the Closing, the parties hereto shall also deliver to each other
the agreements, opinions, certificates an and other documents and instruments
referred to in Article 7 and 8 to the extent such are not specifically required
to be delivered pursuant to Article 9.
9.3 THIRD PARTY CONSENTS. To the extent that Seller's rights under any
agreement, contract, commitment, lease, Authorization (as defined in Section
4.12) or other Purchased Asset to be assigned to Buyer hereunder may not be
assigned without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its best efforts to obtain any such required consent(s) as
promptly as possible. To the extent that Buyer's rights under any agreement,
contract, commitment, lease, Authorization (as defined in Section 4.12) may not
be assigned without the consent of another person which has not been obtained,
this Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful, and
Buyer, at its expense, shall use its best efforts to obtain any such required
consent(s) as promptly as possible. If any such consent shall not be obtained or
if any attempted assignment would be ineffective or would impair a party's
rights under the asset in question so that such party would not in effect
acquire the benefit of all such rights, each party, to the maximum extent
permitted by law, shall act after the Closing as the other party's agent in
order to obtain for it the benefits there under and shall cooperate, to the
maximum extent permitted by law, in any other reasonable arrangement designed to
provide such benefits to appropriate party.
9.4 FURTHER ASSURANCES. Seller, from time to time after the Closing at Buyer's
request, will execute, acknowledge and deliver to Buyer such other instruments
of conveyance and transfer and will take such other actions and execute and
18
deliver such other documents, certifications and further assurances as Buyer may
reasonably require in order to vest more effectively in Buyer or to put Buyer
more fully in possession of any of the Purchased Assets. Each of the parties
hereto will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
9.6 CLOSING ADJUSTMENTS. Set forth on Schedule 9.6 is a list of all Closing
Adjustments which shall be added to or subtracted from the Cash Portion of the
Purchase Price to be paid at Closing. Such Closing Adjustment shall include the
following items:
9.6.1 TAXES. Set for on Schedule 9.6 is a list of all taxes relating to
the Purchased Assets for period after the Effective Date that have been
paid or advanced by the Seller. All real estate and personal property
taxes, ad valorem taxes and any other taxes that are or will become a
lien upon the Purchased Assets or the ▇▇▇▇▇▇▇▇▇ Property or an
obligation of the Tenant under all Leases assumed by Buyer or Seller,
shall be prorated for the year of Closing as of the Effective Date. Any
delinquent taxes or assessments on the Purchased Property or the
▇▇▇▇▇▇▇▇▇ Property, and all personal property taxes and other
assessments and charges, shall be paid by the transferor thereof prior
to or at Closing. Proration shall be made on the basis of the most
recent mill levy assessment and valuation; provided however, if the
levy rate or valuation increases after the Closing, each transferee
reserves the right to require an equitable re-proration thereof from
its transferor. The provisions of this Paragraph shall survive the
Closing.
9.6.2 EXPENSES. All expenses of operation of the leased premises of all
leaseholds to be transferred to Buyer at Closing and of the ▇▇▇▇▇▇▇▇▇
Property to be transferred to Seller, whether billed or unbilled
(including rent payments, utilities and maintenance) shall be the
responsibility of the owner and transferor until the day of Effective
Date and shall be so prorated. Thereafter, such expenses are the
responsibility of the transferee.
9.6.3 PREPAIDS. Set forth on Schedule 9.6 is a list of all payments and
premiums relating to the Purchased Assets for period after the
Effective Date. The parties shall prorate the payments or premiums,
relating to periods after the Effective Date, with regard to any
warranties, service, management or brokerage contracts, maintenance
agreements or insurance policies which each party has elected or agreed
to assume. As of the date of Effective Date, Buyer and Seller shall
prorate operating expenses relating to the Purchased Assets not
specified above.
9.6.4 RENTAL RECEIPTS. As of the day before the date of closing, each
of the parties shall prorate rentals from tenants and other receipts,
revenues and income from the property it is transferring for the month
of closing and each transferee shall receive a credit for rents
actually received by the transferor for the month of closing. Any
prepaid rents shall be adjusted and the transferor shall receive a
credit from the transferee for the amount of payment relating to any
period after the Closing Date.
9.6.5 EMPLOYEE COSTS. On or before Closing, Buyer will inform Seller of any
employees it intends to hire. If Buyer elects to hire any of Seller's
employees as provided above, either Seller shall pay or Buyer shall
receive a credit against the Cash Portion of the Purchase Price due at
Closing for the value of said accrued but unpaid wages and salaries and
all employee's sick leave, vacation or other employee benefits earned
but not yet paid or used, whether accrued on Seller's books or not.
9.6.6 ESCROW FEES AND COSTS. Seller and Buyer shall pay the costs and
expenses of the escrow agent, title insurance and related matters as
set forth on Schedule 9.6.
9.7 TRANSFER OF THE ALCOHOLIC BEVERAGE BUSINESS. Upon receipt by Buyer of a
valid license to sell alcoholic beverages under North Dakota law and the
ordinances of Dickinson, North Dakota, but not later than the expiration date of
the Management Agreement, Seller hereby agrees to transfer, convey and assign to
Buyer the Alcoholic Beverage Business for additional consideration of $1.00.
Seller and Buyer acknowledge and agree that such sale and transfer of the
Alcoholic Beverage Business is an inherent and inseparable part of the
consideration for the purchase of the Business. Until the date the Alcoholic
Beverage Business is transferred to Buyer, ▇▇▇▇▇▇▇▇▇ Management Inc. shall
remain the owner of and in control of the Alcoholic Beverage Business pursuant
to the terms of the Management Agreement.
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ARTICLE VI
ARTICLE 10
6.1 INDEMNIFICATION
10.1 INDEMNITY BY SELLER. Without limitation of any other provision of this
Agreement or any other rights and remedies available to Buyer at law or in
equity, Seller covenants and agrees to protect, indemnify, defend and hold
harmless Buyer and its business and properties (including the Business, the
Purchased Assets, and any other properties transferred to the Buyer hereunder)
and Buyer's affiliates, officers, directors, employees, representatives,
successors and assigns from all liabilities, losses, claims, demands, damages,
interest, penalties, fines, costs and expenses, whether or not arising out of
third party claims (including without limitation, diminution in value and
consequential damages, reasonable attorneys' and accountants' fees and expenses)
actually or allegedly arising out of, in connection with or relating to (i) any
act or omission, or any condition (including without limitation any
environmental condition) occurring or existing, or any contract performed, on or
prior to the Effective Date, in each case by or with respect to the Business or
its operations or properties, and (ii) any misrepresentation, breach of warranty
or nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, statement document or instrument furnished to Buyer pursuant hereto or
in connection with the negotiation, execution or performance of this Agreement,
and (iii) any debts, obligations or liabilities (including contingent
liabilities) incurred by Seller, excepting only those specific limited Assumed
Liabilities assumed by Buyer in accordance with this Agreement; and (iv) any and
all actions, suits, claims, proceedings investigations, demands, assessments,
audits, fines, judgments, costs and other expenses (including without limitation
reasonable attorneys fees and expenses) incident to any of the foregoing or to
the enforcement of this Section.
10.2 INDEMNITY BY BUYER. Without limitation of any other provision of this
Agreement, Buyer covenants and agrees to protect, indemnify, defend and hold
harmless Seller from all third party liabilities, obligations, losses, suits,
claims, breaches, demands, damages, judgments, interest, penalties, fines, costs
and expenses (including reasonable attorneys' and accountants' fees and
expenses) actually or allegedly arising out of, or in connection with, or
relating to (i) only those specific limited Assumed Liabilities expressly
assumed by Buyer as of the Effective Date in accordance with this Agreement;
(ii) any act or omission occurring or arising after the Effective Date and
caused by the wrongful acts or omissions of Buyer; (iii) any breach of any
covenant, representation or warranty of Buyer; or (iv) any debts, obligations or
liabilities incurred by Buyer.
10.3. PROCEDURE AND PAYMENT. If after the Closing Date either Seller or the
Buyer or their representatives, directors or officers (the "Indemnitee") shall
receive notice of any third party claim or alleged third party claim asserting
the existence of any matter of the nature as to which the Indemnitee has been
indemnified against under this ARTICLE 10 by the other party hereto
("Indemnitor"), Indemnitee shall promptly notify Indemnitor in writing with
respect thereto. Indemnitor shall have the right to defend against any such
claim provided (i) Indemnitor shall, within 10 days after the giving of such
notice by Indemnitee, notify Indemnitee that it disputes such claim, give
reasons therefore together with a copy of any complaint or other documents
asserting such claim, and that Indemnitor will, at its own cost and expense,
defend the same, and (ii) such defense is instituted and continuously maintained
in good faith by Indemnitor. In such event the defense may, if necessary, be
maintained in the name of Indemnitee. Indemnitee may, if it so elects, designate
its own counsel and at its own cost and expense to participate with the counsel
selected by Indemnitor in the conduct of such defense. Indemnitor shall not
permit any lien or execution to attach to the assets of the Indemnitee as a
result of such claim, and the Indemnitor shall provide such bonds or deposits as
shall be necessary to prevent the same. In any event Indemnitee shall be kept
fully advised as to the status of such defense. If Indemnitor shall be given
notice of a claim as aforesaid and shall fail to notify Indemnitee of its
election to defend such claim within the time and as prescribed herein, or after
having so elected to defend such claim shall fail to institute and maintain such
defense in accordance with the foregoing, or if such defense shall be
unsuccessful then, in any such event, the Indemnitor shall fully satisfy and
discharge the claim within twenty (20) days after notice from Indemnitee
requesting Indemnitor to do so.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ASSIGNMENT.
11.1.1 The representations and warranties of Seller in this Agreement
or in any certificate or document delivered prior to or on the Closing
Date shall survive the Closing for a period of three (3) year
subsequent to the Closing Date and shall be considered in effect
thereafter for claims alleging a breach thereof as to which Seller, and
have been notified in writing during such period; provided, that the
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representations and warranties of Seller set forth at SECTION 4.16
hereof regarding Taxes shall survive for a period not less than the
statutes of limitations applicable to the matters addressed therein. In
addition, the rights to indemnity provided in ARTICLE 10 shall survive
the Closing of this Agreement and shall inure to the parties'
respective successors and assigns. This Agreement shall not be assigned
by any party without the prior written consent of the other party,
provided that Seller hereby consent to the Assignment by Buyer of
Buyer's benefits hereunder to the lenders of Buyer as security for
borrowings, or to any affiliates of Buyer. Subject to the foregoing,
this Agreement shall be for the benefit of and shall be binding upon
the parties hereto and their respective successors and assigns.
11.1.2 The representations and warranties of Buyer in this Agreement or
in any certificate or document delivered prior to or on the Closing
Date shall survive the Closing for a period of three (3) year
subsequent to the Closing Date and shall be considered in effect
thereafter for claims alleging a breach thereof as to which Buyer, and
have been notified in writing during such period; provided, that the
representations and warranties of Buyer set forth at SECTION 5.9 hereof
regarding Taxes shall survive for a period not less than the statutes
of limitations applicable to the matters addressed therein. In
addition, the rights to indemnity provided in this agreement shall
survive the Closing of this Agreement and shall inure to the parties'
respective successors and assigns. This Agreement shall not be assigned
by any party without the prior written consent of the other party,
provided that Buyer hereby consent to the Assignment by Seller of
Seller's benefits hereunder to the lenders of Seller as security for
borrowings, or to any affiliates of Seller. Subject to the foregoing,
this Agreement shall be for the benefit of and shall be binding upon
the parties hereto and their respective successors and assigns.
11.2 CONSTRUCTION. This Agreement shall be construed and enforced in accordance
with, and all questions concerning this construction, validity, interpretation
and performance of this Agreement shall be governed by, the laws of the state of
North Dakota without giving effect to provisions thereof regarding conflict of
laws.
11.3 CONSENT TO JURISDICTION. Seller and Buyer hereby consent to the
jurisdiction of any state or federal courts located in the State of North Dakota
and irrevocably agree that all actions or proceedings arising out of or relating
to this Agreement or the other related documents shall be litigated in such
courts. Seller and Buyer each accept for itself and in connection with its
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waive any defense of forum non convenience, and irrevocably
agree to be bound by any judgment rendered thereby in connection with this
Agreement.
11.4 NOTICES. All necessary notices, demands and requests required or permitted
to be given hereunder shall be deemed duly given when personally delivered
subject to the subsequent designation of another address, addressed as follows:
If to Buyer:
Grand Dakota Management, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
704-332-7052
With a copy to:
% ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇, Attorneys at Law,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
% ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Secured Diversified Investment, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to Escrow Agent:
% ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Alliance Title Company,
(Affiliate of First American Title)
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇)-▇▇▇-▇▇▇▇, Cell: (▇▇▇)-▇▇▇-▇▇▇▇.
Such notice shall be effective immediately upon personal delivery, twenty-four
(24) hours after delivery through a national courier service or three (3)
business days after deposit in the U.S. mail.
11.5 HEADINGS; PRONOUNS. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof. Pronouns used herein shall include the other genders whether used in the
masculine, feminine or neuter gender, and the singular shall include the plural
whenever and as often as may be appropriate.
11.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other.
11.7 BROKERS. Each party warrants to the other that it has not employed or used
the services of any broker or finder in connection with the transaction
contemplated by this Agreement and shall indemnify and hold the other party
harmless from any loss or damage arising from any claim made by any broker or
finder claiming to have acted on behalf of or at the instance of such
indemnifying party.
11.8 RELIANCE. All covenants, warranties and representations made herein by any
party shall be deemed to be material and relied upon by the other party,
notwithstanding any investigation by or knowledge of such other party.
11.9 EXPENSES WITH RESPECT TO TRANSACTION. Each party hereto shall pay all fees,
costs and expenses incurred by it in connection with this transaction.
11.10 COMPLETENESS OF AGREEMENT. This Agreement, and the Schedules hereto and
the other documents referred to or provided for herein represent the entire
contract among the parties with respect to the subject matter hereof, and shall
not be modified or affected by any offer, proposal, statement or representation,
oral or written, and by or for any party in connection with the negotiation of
the terms hereof.
11.11 AMENDMENT AND WAIVER. This Agreement may be amended, or any provision of
this Agreement may be waived, provided that any such amendment or waiver will be
binding only if such amendment or waiver is set forth in a writing executed by
the party to be charged. The waiver of any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other breach. Any waiver shall be effective only if in writing and then only in
accordance with its express terms.
11.12 PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set forth in the
Preamble hereto are hereby incorporated and made a part of this Agreement.
11.13 THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person, firm or corporation, other than
the parties hereto and their respective permitted successors and assigns, any
rights or remedies under or by reason of this Agreement, such third parties
specifically including, without limitation, any employees of Seller. Except as
otherwise provided herein, this Agreement shall insure to the benefit of and be
binding upon the parties hereto and their respective successors or and permitted
assigns.
11.14 ASSIGNMENT. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the
Buyer. Buyer may assign this Agreement, but such assignment shall not relieve it
of its duties hereunder.
11.15 GOVERNING LAW. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of North Dakota, including
all matters of construction, validity and performance applicable to contracts
made and to be performed in such state.
11.16 AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be
amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
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11.17 SEVERABILITY. Any provision of this Agreement which is unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof, and
any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof. Pronouns used herein
shall include the other genders whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural whenever the plural
whenever and as often as may be appropriate.
11.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
11.19 REFERENCES. All references in this Agreement to Articles and Sections are
to Articles and Sections contained in this Agreement unless a different document
is expressly specified.
11.20 SCHEDULES. Unless otherwise specified herein, each Schedule referred to in
this Agreement is attached hereto, and each such Schedule is hereby incorporated
by reference and made a part hereof as if fully set forth herein. Any disclosure
contained in any Schedule to this Agreement shall be deemed to be included in
all other Schedules required by this Agreement as if specifically included
therein and each party shall be deemed to have knowledge of any disclosure
contained in all Schedules.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, Seller, Buyer and Escrow Agent each have caused this
Agreement to be duly executed, sealed and delivered in its name and on its
behalf, all as of the day and year first above written.
[GRAPHIC OMITTED]
"BUYER"
GRAND DAKOTA PARTNERS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
-------------------------------------
BY: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MANAGER
[GRAPHIC OMITTED]
"SELLER"
SECURED DIVERSIFIED INVESTMENT, LTD.
A NEVADA CORPORATION
-------------------------------------
By: ▇.▇. ▇▇▇▇▇▇
Its: President
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