ASSET PURCHASE AGREEMENT
THIS AGREEMENT, entered into effective December 31, 1996 is by and among
Xxxxxxxx X. Xxxxx ("Xxxxx"), Star Point Enterprises, Inc. d/b/a Pro-Line Cap
Company, a Texas corporation ("Seller"), and Carlyle Golf, Inc., a Colorado
corporation ("Buyer").
RECITALS
A. Seller is engaged in the business of manufacturing headwear (the
"Business").
B. Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, certain assets of the Business upon the terms and conditions set forth
below.
AGREEMENTS
In consideration of the aforementioned premises and the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE I
Agreement to Sell and
Purchase Assets
Upon the terms and subject to the conditions herein set forth, Seller
hereby agrees to sell, transfer, convey, assign and deliver to Buyer on
Closing, free and clear of any liens, mortgages or encumbrances whatsoever
(other than (i) liens for current taxes not yet due and payable; (ii)
imperfections of title and encumbrances, if any, none of which, individually
or in the aggregate, (1) are substantial in amount, (2) materially detract
from the value of the property subject thereto, or (3) materially impair or
interfere with the use of the Transferred Assets in the Business, (the
foregoing in clauses (i) and (ii) are hereafter referred to as "Permitted
Liens")), by such bills of sale, assignments and other documents as have been
reasonably requested by counsel for Buyer, and Buyer hereby agrees on the date
hereof to purchase and accept delivery of certain assets relating to the
Business that are owned by Seller according to Seller's December 31, 1996
balance sheet (the "December Balance Sheet"), as shown in Exhibit A attached
hereto, that are necessary for Buyer to operate the Business (collectively,
the "Transferred Assets") including, without limitation:
1.1 all equipment located at Seller's manufacturing, distribution and
administrative facilities, as more fully described on Schedule 1.1(a) attached
hereto, but excluding certain assets separately described on Schedule 1.1(b)
consisting of certain personal effects and furnishings owned by Anton.
1.2 all inventory relating to the Business, including raw materials,
semi-finished product, finished product and stores and spare parts (the
"Inventory") but, excluding that obsolete inventory which secures the Summit
Bank loan for $88,338 (as shown on the December Balance Sheet and separately
described on Schedule 1.2) (the "Excluded Inventory") and any proceeds
therefrom;
1.3 all right, title and interest of Seller in and to all accounts
receivable, notes receivable, and receivables due from employees ("Accounts
Receivable").
1.4 all rights to (a) inventions directly relating to the Business,
including United States patents, their foreign equivalents and pending United
States patent applications (provided that Seller shall retain a royalty free,
non-exclusive license to such patents and patent applications for purposes
other than the Business), (b) trademarks and trade names used in connection
with the Business, (c) all other intellectual property rights, including
unpatented technical information, trade secrets and know-how, owned or
licensed by Seller that directly relate to the operation of the Business (the
"Intellectual Property"). The rights include, without limitation, all those
rights listed on Schedule 1.4 attached hereto;
1.5 all customer lists, prospect lists, supplier lists marketing
documents and promotional materials, proposals and other proprietary marketing
information of Seller;
1.6 all of Seller's rights under agreements (hereinafter "Contract
Rights"), including sales orders and facilities leases directly relating to
the Business, that have not been terminated prior to the Closing except those
relating to the Excluded Inventory, including, without limitation, those
Contract Rights listed on Schedule 1.6 attached hereto; and
1.7 all right, title and interest of Seller in and to all cash and cash
equivalents, including cash held in bank accounts listed, by bank and account
number, on Schedule 1.7 attached hereto;
ARTICLE II
Assets Not Purchased
Anything to the contrary in this Agreement notwithstanding, the following
assets of Seller are not being sold hereby:
(a) certain intangible assets totalling $332,653 reflected on the
December Balance Sheet and more fully described at Schedule 2(a) attached
hereto;
(b) certain merchandise samples totaling $45,000 reflected on the
December Balance Sheet more fully described at Schedule 2(b) attached hereto;
(c) the Excluded Inventory or any proceeds therefrom;
(d) assets which are related only to the proposed activities of Xxxxx
Xxxxx & Associates, Inc. in selling goods and providing services as more fully
described on Schedule 2(d) attached hereto (collectively the "LAA
Activities");
(e) claims for refunds of taxes and other governmental charges for
periods ending on or prior to the Closing Date;
(f) claims or rights against third parties relating solely to
liabilities and obligations that are not assumed by Buyer hereunder;
(g) rights under insurance policies, including rights to any
cancellation value on the Closing, except to the extent that such policies are
reflected as assets on the December Balance Sheet;
(h) security deposits paid by Seller to utility companies or other
parties, except to the extent that such deposits are reflected as assets on
the December Balance Sheet; and
(i) Seller's corporate minute books and other books and records other
than those set forth in Section 1.5 hereof (collectively, the "Excluded
Assets").
ARTICLE III
Closing
The Closing of this transaction shall take place simultaneously with the
execution hereof. If the transaction is not closed by that date, either party
may unilaterally terminate this Agreement without liability or notice to the
other.
ARTICLE IV
Purchase Price for Transferred Assets
4.1(a) The purchase price (the "Purchase Price") to be paid by Buyer to
Seller for the Assets will be approximately $4,784,812, consisting of (1) the
assumption of certain Liabilities totaling $3,137,783 as more fully set forth
at Section 5.1(a) and (b) and supporting schedules (2) the assumption and
simultaneous conversion of all current and long-term debt, including accrued
interest, held by Anton and/or related entities of $976,489 (the "Anton
Debt"), into Preferred Stock as more fully set forth in Section 5.1(c) and
supporting exhibit and (3) the issuance of 322,375 shares of Common Stock to
Seller with an agreed upon value of $670,540, or $2.08 per share (representing
the average of the closing ask price of the Common Stock for the ten (10)
trading days beginning five (5) trading days prior to January 9, 1997). The
assumption of liabilities, including the assumption and conversion of the
Anton Debt together with the issuance of Common Stock as set forth above shall
constitute full payment for the Transferred Assets and Buyer will have no
obligation to make any cash payment in connection with this Transaction except
the payment of transfer, sales and use taxes in accordance with Section 16.1,
as set forth in Section 6.1 and as contemplated by Article VII.
(b) To assist Buyer in meeting its obligations at Section 4.1(a)(1)
above, Seller agrees to loan or cause to be loaned to the Buyer at Closing the
sum of $1,243,000 (the "New Anton Loan"), to be evidenced by a Secured
Promissory Note in the form attached hereto as Exhibit B, secured by a Deed of
Trust in the form attached hereto as Exhibit C.
(c) Buyer agrees that, immediately upon Closing, (1) it will use
its best efforts to obtain within sixty (60) days from Closing if possible
and, in any event, within 120 days from Closing, additional capital (the "New
Capital"), through the public or private sale of securities, in an amount at
least sufficient to permit the Buyer to retain $800,000 and to pay off the New
Anton Loan and (2) the first $800,000 of net proceeds from the New Capital
will be retained by the Buyer; the remaining net proceeds will be used to pay
off the New Anton Loan.
ARTICLE V
Assumption of Liabilities
5.1 Buyer hereby agrees to assume, to the extent the same remain unpaid
on the date hereof, the following liabilities of Seller;
(a) All accounts payable, accrued commissions and royalties, other
accrued liabilities (excluding accrued interest on the Anton Debt and the
current portion of long-term debt) and (X) the aggregate principal amount of
Seller's line of credit at Summit Bank as of December 31, 1996 (collectively
"Current Liabilities").
(b) all accrued interest, current and long-term debt, excluding
Anton Debt, on the December Balance Sheet as detailed in Schedule 5.1(b)
attached hereto, however, Buyer will not assume the Summit Bank loan related
to the Excluded Inventory;
(c) all Anton Debt, as detailed in Schedule 5.1(c) attached hereto,
which debt shall be simultaneously converted into Series A Convertible
Preferred Stock ("Preferred Stock") of the Buyer in accordance with the Debt
Conversion and Registration Right Agreement provided at Exhibit D attached
hereto;
(d) liabilities or obligations of Seller pertaining to the
Transferred Assets or the operation of the Business which arise under the
terms of a contract, agreement, license, lease or other commitment (i) which
is disclosed in the schedules to this agreement, and (ii) which was entered
into by Seller in the ordinary course of business of Seller; provided that, in
the case of any contract, agreement, license, or other commitment to be
assumed by Buyer hereunder, except as otherwise expressly agreed to herein,
only to the extent such liabilities arise out of and relate solely to the
period after the Closing Date and which by the terms thereof are to be
observed, paid, discharged or performed, as the case may be, at any time on
and after the Closing Date; and
(e) those obligations with respect to employees detailed in Article
XIV hereof.
5.2 Buyer does not assume any long term debt beyond the amount set forth
in the December Balance Sheet.
5.3 Seller hereby agrees and acknowledges that Buyer will assume no
liabilities, obligations or commitments of Seller other than those
specifically assumed in Section 5.1, above.
ARTICLE VI
Real Estate Purchase and Lease
6.1 At Closing, Buyer will also purchase from Xxxxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxx (the "Building Owner") a building located at 0000 Xxxxx
Xxxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxx for $567,364 (such amount being hereinafter
referred to as the "Building Purchase Price"), the contract for purchase and
sale being substantially in the form set forth at Exhibit E attached hereto.
The Building Purchase Price shall be payable by Buyer (a) by the issuance on
Closing of a Secured Promissory Note in the principal amount of $223,421 in
the form attached hereto as Exhibit F, secured by a Deed of Trust attached
hereto as Exhibit G, and (b) by the issuance of 343,943 shares of Preferred
Stock.
6.2 At Closing Buyer will enter into leases substantially in the form
set forth at Exhibit H attached hereto on real property located at 512
Xxxxxxxx and 0000 Xxxxx Xxxxxxxxxx Xxxx with certain Anton family entities.
ARTICLE VII
Consulting Agreement
At Closing Buyer and Anton agree to execute a Consulting Agreement in the
form set forth at Exhibit I attached hereto under which Anton will render
certain consulting services to the Buyer for a period of three (3) years from
Closing.
ARTICLE VIII
Exchange of Documents
8.1 On closing, Buyer will receive from Seller and/or Anton:
(a) such bills of sale, deeds, assignments and other instruments as
may be necessary (or, in the opinion of Buyer's counsel, advisable) to
transfer, assign and convey the Transferred Assets from Seller to Buyer;
(b) the New Anton Loan;
(c) opinion dated the date hereof, of legal counsel for Seller in
substantially the form of Exhibit J attached hereto;
(d) certified copies of resolutions adopted by (i) the Board of
Directors of Seller and (ii) all of the stockholders of Seller authorizing the
execution, delivery and performance of this Agreement by Seller;
(e) such other documents or instruments as Buyer has reasonably
requested to effect the transactions contemplated hereby.
8.2 On closing, Seller, Anton, the Building Owner and/or the holders of
the Anton Debt, as the case may be will receive from Buyer:
(a) such assumption instruments as have been necessary (or, in the
opinion of Seller's counsel, advisable) to cause Buyer to assume the Assumed
Liabilities together with releases from all existing lenders to Seller of all
collateral securing indebtedness of Seller (other than the Transferred Assets)
and all guaranties respecting such indebtedness;
(b) an opinion, dated the date hereof, of legal counsel for Buyer
in substantially the form of Exhibit K attached hereto;
(c) certified copies of resolutions adopted by the Board of
Directors of Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer; and
(d) the Real Estate Purchase, Lease, Debt Conversion and
Registration Rights and Consulting Agreements as executed by Buyer;
(e) the Common Stock referenced at Section 4.1(a) and Series A
Convertible Preferred Stock referenced at Sections 5.1(c) and 6.1;
(f) the Secured Promissory Notes and Deeds of Trust referenced at
Sections 4.1(b) and 6.1; and
(g) such other documents or instruments as Seller has reasonably
requested to effect the transactions contemplated hereby.
ARTICLE IX
Representations and Warranties of Seller and Anton
Seller and Anton hereby represent and warrant to Buyer as follows:
9.1 Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Texas, and is duly qualified to
do business and in good standing as a foreign corporation in all other
jurisdictions where the nature of its business or the ownership of its
property requires such qualification except where the failure to be so
qualified would not have a material adverse effect on Seller's results of
operations, properties, assets or condition (financial or otherwise)
("Material Adverse Effect"). Seller has all requisite power and authority to
own, lease and operate its properties, and to carry on the Business as it is
now being conducted.
9.2 The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action (including unanimous consent of stockholders)
on the part of Seller, and this Agreement has been duly executed and delivered
by Seller and constitutes the valid and legally binding and enforceable
obligation of Seller, except (a) as rights to indemnity, if any, thereunder
may be limited by federal or state securities laws or the public policies
embodied therein, (b) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, and (c) as the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
discretion of the court before which any proceeding therefor may be brought.
Except as provided on Schedule 9.2 attached hereto neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by Seller with any of the provisions hereof
will contravene, violate, constitute a default or the creation of a lien (i)
under Seller's certificate of incorporation or bylaws, (ii) to the best of
Seller's knowledge, any law judgment, order, injunction, decree, regulation or
ruling of any court of governmental authority domestic or foreign, to which
Seller or any of its properties or assets is subject, or (iii) any material
agreement, lease, commitment or contract to which Seller is a party, or by
which it or any of its properties or assets may be bound.
9.3 To the best of Seller's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by Seller with any of the provisions hereof
will conflict with, or result in a breach or contravention of any of the terms
or provisions of any agreement or other instrument or obligation to which any
officer or director of Seller is a party, the violation of which could
reasonably be expected to have a Material Adverse Effect.
9.4 Except for the Excluded Assets, the Transferred Assets include all
of the rights and properties (tangible and intangible) used in the Business as
heretofore conducted, and constitute all of the material assets, properties,
rights and interests necessary to conduct the Business as now conducted.
9.5 Except as provided on Schedule 9.5 attached hereto, Seller owns all
of the Transferred Assets, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any nature whatsoever except Permitted Liens. All
of the contracts and other agreements acquired hereunder are in good standing
and are valid and effective in accordance with their respective terms and no
material breach or default by Seller exists or has been asserted and remains
uncured with respect to any thereof.
9.6 Seller has delivered to Buyer (a) its unaudited financial statements
for the calendar year ended December 31, 1996, (b) its audited financial
statements for the calendar years ended December 31, 1994 and December 31,
1995 and (c) the unaudited September 30, 1996 Balance Sheet (collectively the
"Financial Statements"). The Financial Statements (i) fairly and accurately
present the financial position of the Seller as of the balance sheet dates and
the results of the Seller's operations for the periods then ended and (ii)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") except as otherwise expressly stated
therein and except that the December and September Balance Sheets do not
contain footnotes as required by GAAP.
9.7 All tax returns and related information required to be filed by or
on behalf of Seller with respect to the Business have been prepared and filed
in accordance with applicable law, and all taxes, interest, penalties,
assessments or deficiencies that have become due pursuant to such returns or
any assessments or otherwise have been paid in full. All such returns are
true and correct in all material respects. Seller has in all material
respects paid all taxes owed by it or which it is obligated to withhold from
amounts owing to any employee, creditor or third party. With respect to the
Business, Seller has not waived any statute of limitations with respect to
taxes or agreed to any extension of time with respect to a material tax
assessment or deficiency relating to Seller or the Business and there are no
existing extensions with respect to the filing by Seller of any tax return.
The amounts reflected as taxes (other than income taxes, any liabilities for
which is retained by Seller hereunder) payable on the December Balance Sheet
are sufficient for the payment of all accrued, unpaid or deferred taxes,
assessments and charges with respect to the Business for all periods up to and
through the date thereof.
9.8 Seller owns or has the right to use in the conduct of the Business,
without payment of any license fee, royalty or similar charge, the
Intellectual Property. There is no claim or demand of any person pertaining
to, or any proceeding pending or, to the best knowledge of Seller, threatened,
which challenges the rights of Seller in respect of the Intellectual Property.
None of the Intellectual Property owned by Seller is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any
court, arbitrator or administrative agency or infringes on the patent rights
or copyrights of other or, to the best knowledge of Seller, is being infringed
by others or, to the best knowledge of Seller, is used by others (whether or
not such use constitutes infringement). To the best knowledge of Seller, none
of the Intellectual Property is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court arbitrator or
administrative agency or infringes on the United States patent rights or
copyrights of others.
9.9 Attached hereto as Schedule 9.9 is a true and complete list of all
persons employed by Seller, including a description of all compensation
arrangements (including commission arrangements) affecting such persons and a
description of the basis for their compensation. Seller has heretofore
delivered to Buyer a copy of all employment agreements, non-competition
agreements and non-disclosure agreements covering any of its employees.
Schedule 9.9 hereto also describes all employee benefit plans or arrangements
for Seller's employees including, without limitation, incentive plans for
salesmen, bonus arrangements, pension or profit-sharing plans, employer
contributions to hospitalization and other insurance programs, and vacation
and sick leave policies. Seller has no contracts, agreements or
understandings, written or oral, with any labor union or other labor
organization or employee bargaining group relating to its employees. Seller
has no knowledge of any efforts being made on the part of any labor union or
other labor organization or employee bargaining group with respect to
representation or organization of any of Seller's employees.
9.10 Except as set forth on Schedule 9.10 attached hereto, there are no
actions, suits, proceedings, orders, investigations or claims pending or
threatened against or affecting Seller at law or in equity, or before or by
any governmental department, commission, board, bureau, agency or
instrumentality, or any arbitration proceedings pending under collective
bargaining agreements or otherwise, which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect or which seek to
prohibit, restrict or delay the consummation of transactions contemplated
hereby.
9.11 Seller is in compliance in all material respects with applicable
statutes and regulations of the United States of America, or of any state or
municipality or agency of any thereof having jurisdiction over it. Seller is
not in default with respect to any judgment, order, injunction or decree of
any court, administrative agency or other governmental authority in any
respect material to this transaction.
9.12 Seller has no knowledge, or reason to know, of any effective or
threatened termination, cancellation, or significant limitation, modification
or change in its business relationship with any customer or any group of
affiliated or interrelated customers, whose purchases individually or in the
aggregate constituted more than three percent (3%) of Seller's sales for the
year ended December 31, 1996.
9.13 Seller's operations, properties and assets are (a) in compliance in
all material respects with the requirements of all applicable federal, state,
and local environmental, health, and safety statutes, regulations and rules of
common law (the "Environmental Laws"), (b) not the subject of any "Superfund"
evaluation or investigation or subject to any state superlien environmental
law, and (c) not the subject of any federal, state, or local investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any hazardous substance, pollutant, hazardous waste, or
contaminant ("Hazardous Substances") into the environment. None of the
properties or assets of Seller are contaminated with Hazardous Substances.
9.14 Since September 30, 1996, except as set forth in Schedule 9.14
hereof, there has not been any:
(a) transaction by Seller except in the ordinary course of business
as conducted on that date;
(b) material adverse change in the financial condition,
liabilities, assets, business, or prospects of Seller;
(c) destruction, damage to, or loss of any Transferred Asset that
has or could reasonably be expected to result in a Material Adverse Effect;
(d) labor trouble or other event or condition of any character that
has or could reasonably be expected to result in a Material Adverse Effect;
(e) declaration, setting aside, or payment of a dividend or other
distribution in respect of the capital stock of Seller, or any direct or
indirect redemption, purchase, or other acquisition by Seller of any of its
shares of capital stock;
(f) increase in the salary or other compensation or benefit payable
or to become payable by Seller to any of its officers, directors, or
management and key employees, or the declaration, payment, or commitment or
obligation of any kind for the payment by Seller of a bonus or other
additional salary or compensation to any such person, except for normal
increases to non-officers and non-directors in accordance with Seller's
personnel policies;
(g) sale or transfer of any Transferred Assets, except in the
ordinary course of business;
(h) amendment or termination of any material contract, agreement,
or license to which Seller is a party and which is included in the definition
of Transferred Assets, or extension or renewal of any lease under which Seller
is a lessee;
(i) loan or salary advance by Seller to any person or entity, or
guaranty by Seller of any loan or repayment of any loan from any shareholder;
(j) mortgage, pledge, or other encumbrance of any asset of Seller
except which has arise by reason of purchase money liens on assets acquired in
the ordinary course of business;
(k) waiver or release of any right or claim of Seller, except in
the ordinary course of business;
(l) violation by Seller of any applicable laws, rules or
regulations which violations has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(m) other event or condition of any character that has resulted or
could reasonably be expected to result in a Material Adverse Effect;
(n) issuance or sale by Seller of any shares of its capital stock
of any class, or of any other of its securities; or
(o) agreement by Seller to do any of the things described in the
preceding clauses (a) through (n) of this section.
9.15 From and after Closing, Seller and Anton will use their best efforts
to assist Buyer in obtaining all third party consents which may be required or
desired in connection with existing contracts.
9.16 As of December 31, 1996 Seller did not have, and as of the date
hereof Seller does not have, any debt, liability, or obligation of any nature,
including, but not limited to, claims by or liability to past or present
employees for wages and employee benefits, whether accrued, absolute,
contingent, or otherwise and whether due or to become due, that may or could
be asserted against Buyer except such liabilities as are being expressly
assumed by Buyer.
9.17 No representation or warranty by Seller or Anton set forth herein or
in any schedule hereto or certificate furnished in connection with the
transactions contemplated hereby contains as of the date hereof any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein not misleading.
ARTICLE X
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
10.1 Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Colorado, and has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
10.2 The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Buyer, and this Agreement has
been duly executed and delivered by Buyer and constitutes the valid and
legally binding and enforceable obligation of Buyer, except (a) as rights to
indemnify, if any, thereunder may be limited by federal or state securities
laws or the public policies embodied therein, (b) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, and (c) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to discretion of the court before which any proceeding therefor
may be brought. Neither the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby nor compliance by Buyer
with any of the provisions hereof will contravene, violate, constitute a
default or the creation of a lien (i) under Buyer's certificate of
incorporation or bylaws, (ii) to the best of Buyer's knowledge, any law
judgment, order, injunction, decree, regulation or ruling of any court of
governmental authority domestic or foreign, to which Buyer or any of its
properties or assets is subject, or (iii) any material agreement, lease,
commitment or contract to which Buyer is a party, or by which it or any of its
properties or assets may be bound.
10.3 To the best of Buyer's knowledge, except as provided on Schedule
10.3, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance by Buyer
with any of the provisions hereof will conflict with, or result in a breach or
contravention of any of the terms or provisions of any agreement or other
instrument or obligation to which any officer or director of Buyer is a party,
the violation of which could reasonably be expected to have a Material Adverse
Effect.
10.4 The loan agreement between the Buyer and Norwest Bank which will be
used by the Buyer to assist it in meeting its obligations at Section 4.1(a)(1)
(the "Norwest Loan") will permit payment of the principal amount of the New
Anton Loan in the manner set forth at Section 4.1(c) and will permit payments
of interest on the New Anton Loan in the manner set forth in the promissory
note evidencing the New Anton Loan. The provisions of the Norwest Loan
referenced above will not be changed without the prior written approval of the
Seller.
ARTICLE XI
Brokerage
Each of Seller and Buyer represents and warrants to the other that,
except for fees payable by the Buyer to the Xxxxxxx Company, it has not taken
any action on account of which a claim by any person could arise for any
brokerage fee or commission with respect to the negotiation, execution and
performance of this Agreement, and each of Seller and Buyer agrees to
indemnify, defend and hold harmless the other from and against any loss, claim
or expense arising from a breach of its foregoing representation and warranty.
ARTICLE XII
Conditions to Transaction
12.1 The respective obligations of the Buyer and Seller to effect the
transaction described herein shall be subject to the satisfaction, prior to
Closing, of the following conditions:
(a) all consents (except those referenced at Schedule 9.2),
approvals, orders or authorizations of, the failure of which to occur, file or
be obtained would be reasonably likely to have a material adverse affect on
Buyer's ability to conduct the Business shall have occurred;
(b) no order, ruling or injunction issued by any court of competent
jurisdiction restraining and enjoining or otherwise prohibiting the
consummation of the transaction, or limiting or restricting Buyer's conduct or
operation of the Seller's Business after the transaction shall have been
issued and then be in effect.
12.2 The obligations of Buyer to effect the transaction are subject to
the satisfaction of each of the following conditions, any of which may be
waived in writing by Buyer:
(a) the representations and warranties of Seller as set forth in
this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing as though made on and as of the
Closing, except for changes contemplated by this Agreement; and Buyer shall
have received a certificate signed on behalf of Seller by the President and
Treasurer of the Seller to such effect;
(b) Seller and Anton shall have performed in all material respects
all obligations required to be performed by each of them under this Agreement
at or prior to Closing; and Buyer shall have received a certificate signed on
behalf of the Seller by the President and the Treasurer of the gage, pledge,
or other encumbrance of any asset of Seller except which has arise by reason
of purchase money liens on assets acquired in the ordinary course of business;
(c) waiver or release of any right or claim of Seller, except in
the ordinary course of business;
(d) violation by Seller of any applicable laws, rules or
regulations which violations has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(e) other event or condition of any character that has resulted or
could reasonably be expected to result in a Material Adverse Effect;
(f) issuance or sale by Seller of any shares of its capital stock
of any class, or of any other of its securities; or
(g) agreement by Seller to do any of the things described in the
preceding clauses (a) through (n) of this section.
12.3 From and after Closing, Seller and Anton will use their best efforts
to assist Buyer in obtaining all third party consents which may be required or
desired in connection with existing contracts.
12.4 As of December 31, 1996 Seller did not have, and as of the date
hereof Seller does not have, any debt, liability, or obligation of any nature,
including, but not limited to, claims by or liability to past or present
employees for wages and employee benefits, whether accrued, absolute,
contingent, or otherwise and whether due or to become due, that may or could
be asserted against Buyer except such liabilities as are being expressly
assumed by Buyer.
12.5 No representation or warranty by Seller or Anton set forth herein or
in any schedule hereto or certificate furnished in connection with the
transactions c on behalf of the Buyer by the President and Treasurer of the
Buyer to such effect; and
(a) Buyer shall have executed and delivered the Consulting
Agreement, the Debt Conversion and Registration Rights Agreement, the
Promissory Note and Deed of Trust evidencing the New Anton Loan, the contract
for the purchase and sale of the building, attached as Exhibit E, and the
related Promissory Note and Deed of Trust attached as Exhibit F and G, the
leases attached as Exhibit H and the documents regarding the LAA Activities;
ARTICLE XIII
Survival and Indemnification
13.1 The respective representations and warranties of the Seller and
Xxxxx Xxxxx, on the one hand, and Buyer, on the other hand, contained in
Articles IX and X respectively shall survive the Closing and shall remain in
full force and effect thereafter until the date one (1) year after the Closing
Date; provided, (a) the representations and warranties of Seller and Anton
contained in Section 9.2 and 9.5 shall survive the Closing and shall remain in
full force and effect thereafter; and (b) the representations and warranties
of the Seller and Xxxxx Xxxxx contained in Sections 9.7 and 9.13 shall survive
the Closing and shall remain in full force and effect thereafter until the
expiration of the applicable statute of limitations, as extended. No party
may assert a claim or bring an action for indemnification in respect to
breaches or inaccuracies of representations and warranties by another party
set forth in this Agreement unless written notice of such claim is received by
the party from whom indemnification is sought within the time periods set
forth above.
13.2 Upon the terms and subject to the conditions set forth in Section
13.5, from and after the Closing Date, Seller and Anton jointly and severally
agree to indemnify and defend Buyer and hold Buyer harmless from, against, and
in respect of any and all claims (including, without limitation, product
liability claims), demands, losses, costs, expenses, damages, and
deficiencies, including, without limitation, interest, penalties, and
attorneys' fees (collectively "Damages"), that Buyer shall suffer or incur,
which arise or result from or relate to (a) the ownership, management,
operation, or use of the Transferred Assets by Seller prior to the date
hereof, (b) the conduct of the Business prior to the date hereof, (c) any and
all liabilities, obligations, or commitments of Seller of any nature, whether
absolute, accrued, contingent, or otherwise, except those expressly assumed by
Buyer pursuant to Section 5.1 above, (d) any breach by Seller of any of the
agreements, warranties, or covenants of Seller set forth in this Agreement,
and (e) any inaccuracy in any of the representations of Seller set forth in
this Agreement.
13.3 Upon the terms and subject to the conditions set forth in Section
13.5, from and after the Closing Date, Buyer agrees to indemnify and defend
Seller and hold Seller harmless from, against, and in respect of any and all
Damages that Seller shall suffer or incur, which arise or result from or
relate to (a) the ownership, management, operation or use of the Transferred
Assets by Buyer subsequent to the date hereof, (b) the conduct of the Business
after the date hereof, (c) any and all liabilities or obligations of Seller of
any nature, whether absolute, accrued, contingent, or otherwise, expressly
assumed by Buyer pursuant to Section 5.1 above, (d) any breach of any of the
agreements, warranties, or covenants of Buyer set forth in this Agreement, and
(e) any inaccuracy in any of the representations of Buyer set forth in this
Agreement.
13.4 Each party agrees to notify the party or parties from whom
indemnification is to be sought ("Indemnitor") promptly after learning of the
assertion of any claim, demand, examination, audit, or action in consequence
of which Indemnitor might become liable under the provisions of this Article;
provided, however, that the failure to give any such notice shall not
adversely affect any rights to indemnification hereunder unless Indemnitor
shall have been materially prejudiced by such failure. Such notice shall
include a description of, and furnish reasonable details with regard to, any
such claim, demand, examination, audit, or action. If the claim involves a
third party claim, then the Indemnitor shall have the right, at its sole cost,
expense and ultimate liability regardless of the outcome, and through counsel
of its choice, to litigate, defend, settle or otherwise attempt to resolve
such claim, except that the party claiming indemnification (the "Indemnitee")
may elect, at any time and at the Indemnitee's sole cost, expense and ultimate
liability, regardless of the outcome, and through counsel of its choice, to
litigate, defend, settle or otherwise attempt to resolve such Claim. If the
Indemnitee so elects (for reasons other than the Indemnitor's failure or
refusal to provide a defense to such claim), then the Indemnitor shall have no
obligation to indemnify the Indemnitee with respect to such claim. In the
event of any litigation with a third party to which the foregoing provisions
of this Article relate, Indemnitee agrees to cooperate with Indemnitor in
connection therewith and to make all books, records, and documents in its
possession and in existence available to Indemnitor, or its duly authorized
representatives, upon request, for inspection and copying at Indemnitor's
expense. Nothing contained in this Section shall be construed to limit the
rights of the parties to discovery under the procedural rules relevant to any
proceeding. Indemnitor shall reimburse Indemnitee on demand for any payment
made or cost incurred by Indemnitee at any time in respect of any claims to
which the foregoing indemnity relates.
13.5 Notwithstanding anything to the contrary contained herein (but not
including the separate indemnification provided at Section 13.6) no
indemnification shall be required to be made by any party hereto until the
aggregate amount of losses incurred or suffered by the Indemnitee exceeds
$25,000 (and then only to the extent of such excess).
13.6 Separately, Buyer hereby indemnifies and holds harmless the Seller
against any costs, losses or expenses incurred by the Seller as the result of
Buyer's use of Summit National Bank's Irrevocable Standby Letter of Credit No.
1046 in the face amount of $70,000 issued on behalf of the Seller for the
benefit of Forstmann & Company, Inc.
ARTICLE XIV
Employment Matters
14.1 Those employees of Seller who accept an offer of employment from
Buyer and who become employed by Buyer (the "Transferred Employees') will be
entitled after Closing to participate in Buyer's employee benefit programs in
accordance with the terms thereof as of the Closing Date (including any and
all amendments to those programs made thereafter).
14.2 Buyer agrees to pay severance benefits, to the extent that the
nature and the amount of such benefits are set forth on Schedule 14.2, to
those employees employed by Seller immediately prior to the Closing Date which
Buyer does not employ as of the Closing Date.
14.3 Buyer will assume liability arising from workers' compensation
claims which are based on injuries occurring prior to Closing for which an
award or judgment has not yet been made or rendered and which are fully
disclosed on Schedule 14.3.
14.4 Buyer will assume responsibility for the satisfaction of all claims
for medical, dental, life insurance, health, accident, disability or other
benefits brought by or in respect of Transferred Employees under any of
Seller's welfare benefit plans where the claims were incurred prior to the
Closing to the extent that the nature and amount of such claims are fully
disclosed on Schedule 14.4 hereto.
14.5 The Transferred Employees shall be credited by Buyer with all
accrued but unused vacation time to which they are entitled under Seller's
vacation policy as described in Schedule 14.5 hereto.
14.6 Effective as of the Closing Date, Buyer will cover the Transferred
Employees and their dependents under Buyer's health insurance plan in
accordance with the terms thereof or will otherwise provide medical benefits
comparable to those currently provided by Buyer to its Employees. In
addition, Buyer will offer health insurance coverage or comparable medical
benefits to former employees of Seller (together with their eligible
dependents) who had been employed by Seller immediately prior to termination
of employment and who, as of the Closing Date, either (i) already had elected
continued coverage under the Consolidated Omnibus Budget Reconciliation Act
("COBRA") or (ii) are in an election period status under COBRA as of the
Closing Date (for purposes of this subsection), (iii) only, Seller's employees
on the Closing Date who are not Transferred Employees will be considered to be
in an election period as of the Closing Date) provided that such coverage
shall not extend beyond the period that Seller would have had to provide
continuation coverage under COBRA.
14.7 Should Buyer's action result in a plant closing or mass layoff
pursuant to the provisions of the Worker Adjustment Retraining Notification
Act ("WARN"), Buyer agrees that Buyer shall be responsible for providing
notice to said employees of Seller who are not employed by Buyer on the
Closing Date in accordance with the provisions of WARN and further agrees to
indemnify and hold Seller harmless against and to reimburse Sellers for any
and all liabilities and/or losses incurred by Seller as a result of Buyer's
breach of this Section 14.7.
ARTICLE XV
Termination
15.1 This Agreement may be terminated before the Closing (i) by mutual
written consent of Seller and Buyer; (ii) by written notice from Seller to
Buyer if Seller is not in default or breach in a material respect of their
representations, warranties, covenants or agreements under this Agreement, if
all the conditions in Section 12.3 have not been satisfied by the date
scheduled for Closing; (iii) by written notice from Buyer to Seller, if Buyer
is not in default or breach in any material respect of its representations,
warranties, covenants or agreements under this Agreement, if all the
conditions set forth in Section 12.2 have not been satisfied by the date
scheduled for Closing; or (iv) by either party to the other if the Closing has
not taken place on or before January 31, 1997.
ARTICLE XVI
Miscellaneous
16.1 Buyer will pay all transfer, sales and use taxes with respect to the
transfer of the Transferred Assets. To the extent that such taxes are
required to be and are paid to Seller, Seller agrees to remit all such amounts
paid on behalf of Buyer to the appropriate tax authorities.
16.2 On and after Closing each party, at the request of the other party
and without additional consideration, shall execute and deliver or cause to be
executed and delivered from time to time such further instruments of
conveyance and transfer and shall take such other action as the other may
require to convey and deliver the Transferred Assets to Buyer, to perfect
Buyer's title thereto and to accomplish the orderly transfer of the
Transferred Assets and the Business to Buyer in the manner contemplated by
this Agreement.
16.3 Except as otherwise specifically set forth in this Agreement, Seller
and Buyer shall each bear their own expenses which they incur in connection
with the execution and performance of this Agreement.
16.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither party may assign this Agreement without the prior written consent
of the other party.
16.5 Except to the extent required by law, no public announcements
regarding the existence of this Agreement or the transactions contemplated
hereunder will be made without first receiving the prior written consent and
approval of the other party, which consent shall not be unreasonably withheld.
Seller agrees to give such consent to Buyer at the time a bank commitment for
the transaction is received by Buyer.
16.6 This Agreement is for the sole benefit of the parties hereto, and
for the benefit of no other person. Nothing contained herein is intended or
shall be construed to give any person other than Buyer and Seller any legal or
equitable right, duty, power, privilege, remedy or claim under or in respect
to this Agreement or any provision contained herein.
16.7 Any notice or other communication required or permitted to be given
by either party hereto to the other party hereto shall be in writing and
delivered in person, delivered by commercial overnight delivery service or
mailed by prepaid registered or certified mail, addressed:
If to Seller, to:
Star Point Enterprises, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxx
With a copy to:
Xxxxx X. Xxxx, Esq.
Xxxxx, Xxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxx, Xxxxx 00000
If to Buyer, to:
Carlyle Golf, Inc.
00000 X. 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
With a copy to:
S. Xxx Xxxxx, Jr., Esq.
Xxxxxxx, Xxxxxx L.L.C.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
or to such other address for such party as may be designated by it by notice
pursuant hereto. A notice shall be deemed delivered when delivered personally
or by commercial overnight delivery service or, if given by mail as aforesaid,
at the time and date the same is postmarked.
16.8 This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and, except as herein set
forth, there are no warranties, express or implied, by either party hereto to
the other.
16.9 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Colorado.
16.10 This Agreement may not be amended or modified in any respect
except by a writing executed by the parties hereto. Any failure by either
party to comply with any of its obligations, agreements, covenants or
indemnities contained in this Agreement may be waived in writing, but not in
any other manner, by the party against which enforcement of the waiver is
sought.
16.11 This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
16.12 In the event any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable, such illegality,
invalidity or unenforceability shall not affect any other provisions of this
Agreement.
16.13 From and after the Closing, Buyer will reasonably cooperate with
Seller in connection with the audit by the Internal Revenue Service for the
year ended December 31, 1994, along with any other audits, and will make
available to Seller such books and records with respect to the Business as
Seller may reasonably request.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
BUYER:
CARLYLE GOLF, INC.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
President and Chief Operating Officer
SELLER:
STAR POINT ENTERPRISES, INC. d/b/a
PRO-LINE CAP COMPANY
By: /s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
President and Chief Executive Officer
XXXXXXXX X. XXXXX
/s/ Xxxxxxxx X. Xxxxx
SCHEDULES
1.1(a) Equipment to be Acquired and Certain Permitted Liens
1.1(b) Excluded Assets Including Personal Affects and Furnishing Owned by
Xxxxx Xxxxx
1.2 Inventory and Excluded Inventory
1.4 Intellectual Property Rights
1.6 Contract Rights
1.7 Bank Accounts
2(a) Certain Excluded Intangible Assets
2(b) Excluded Merchandise Samples
2(d) Certain Assets Related to the Proposed Activities of Xxxxx Xxxxx &
Associates, Inc.
5.1(b) Debt and Accrued Interest Assumed
5.1(c) Anton Debt
9.2 No Conflicts (Seller)
9.5 Liens and Encumbrances
9.9 Employees and Employee Benefits
9.10 Claims and Litigation
9.14 Material Events since September 30, 1996
10.3 No Conflicts (Buyer)
14.2 Severance Benefits
14.3 Workers' Compensation Claims
14.4 Benefits Claims
14.5 Vacation Policy
EXHIBITS
A Seller's December 31, 1996 Balance Sheet
B Secured Promissory Note for the New Anton Loan
C Deed of Trust
D Debt Conversion and Registration Rights Agreement
E Contract for Purchase and Sale of Building
F Secured Promissory Note for the Building
G Deed of Trust
H Building Leases
I Consulting Agreement
J Opinion of Seller's Counsel
K Opinion of Buyer's Counsel
[EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED]
