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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 11, 1999
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Royal Precision, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-71735 06-1453896
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
15170 North Hayden Road, Suite 1, Scottsdale Arizona 85260
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (602) 627-0200
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(Former Name or Former Address, if Changed Since Last Report)
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ROYAL PRECISION, INC.
FORM 8-K
CURRENT REPORT
Item 2. Acquisition or Disposition of Assets.
The Registrant disposed of the assets of Roxxi, Inc., a wholly owned
subsidiary of Royal Grip, Inc. which is a wholly owned subsidiary of the
Registrant, in a series of transactions beginning on March 11, 1999. Roxxi, Inc.
manufactured and sold headwear products.
Roxxi lost $400,000 from operations for the eight months ended January
1, 1999 and $587,000 for the Registrant's fiscal year ended May 31, 1998. The
Registrant believes that the sale of Roxxi's assets and the receipt of the
royalty payments discussed below will have a positive effect on the Registrant's
earnings and cash flow. The Registrant also believes that the cessation of
Roxxi's operations will allow the Registrant to focus on its core business of
manufacturing and selling golf shafts and golf grips.
Roxxi and Paramount Headwear, Inc. entered into an agreement dated
February 26, 1999 under which Roxxi agreed to sell its tradename, customer list,
design database and related computer software and hardware to Paramount
Headwear, and Paramount Headwear agreed to pay Roxxi a royalty of 16% of
Paramount Headwear's net sales for the two year period beginning May 1, 1999.
This sale closed effective March 17, 1999.
Roxxi and Big Play, Inc. entered into an agreement dated March 11, 1999
under which Roxxi agreed to sell Roxxi's headwear manufacturing equipment,
headwear inventory and raw materials to Big Play, Inc., and Big Play agreed to
pay Roxxi $300,000 at closing and 2% of Big Play's future net sales until Big
Play has paid Roxxi an additional $200,000. Big Play also assumed Roxxi's
facility lease and retained most of Roxxi's employees. The Registrant guaranteed
Roxxi's obligations under Roxxi's agreement with Big Play. This sale will result
in a loss of approximately $1,000,000 to the Registrant. This sale was closed
effective March 11, 1999.
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ROYAL PRECISION, INC.
FORM 8-K
CURRENT REPORT
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None
(c) Exhibits.
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION, OR
SUCCESSION
Exhibit 2.1. Asset Purchase Agreement dated February 26, 1999
between Roxxi, Inc and Paramount Headwear, Inc.
Exhibit 2.2. Asset Purchase Agreement dated March 11 between Roxxi,
Inc. and Big Play, Inc.
Exhibit 2.3 Guaranty by the Registrant dated March 11.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROYAL PRECISION, INC.
Date: March 22, 1999 By: /s/ Thomas A. Schneider
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Thomas A. Schneider, President and
Treasurer
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") made this 26th day of February, 1999, by
and between ROXXI, INC., a Nevada corporation, with its principal office at
15170 N. Hayden Road, Suite 1, Scottsdale, Arizona 85260 ("Seller"), and
PARAMOUNT HEADWEAR, INC., a Missouri corporation, with its principal office at
#1 Paramount Drive, Bourbon, Missouri 65441 ("Buyer").
WITNESSETH, THAT:
WHEREAS, Seller is engaged in the business of manufacturing and selling
headwear (the "Business");
WHEREAS, Seller desires to sell certain assets used or usable in
connection with the operation of the Business; and
WHEREAS, Buyer desires to purchase certain assets of Seller used in,
and related to the Business upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Assets to be Sold.
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At the Closing (as hereinafter defined), subject to the terms and
conditions hereafter set forth, Seller agrees to sell, assign, transfer and
convey, and Buyer agrees to purchase, acquire, assume and accept, all of
Seller's right, title and interest in and to the following assets used in the
Business (all of which are collectively referred to herein as the "Assets").
(a) Seller's custom headwear database which includes customer
and order information but specifically excludes accounts receivable used in
connection with the Business (the "Database");
(b) All of Seller's collegiate license agreements which are
transferable, as set forth on Schedule 1.01(b) attached hereto and incorporated
herein by reference ("License Agreements");
(c) All of Seller's custom headwear programs used in
connection with the Database and the source code therefor;
(d) Seller's registered trademark "ROXXI";
(e) Certain computer hardware designated by Seller as set
forth on Schedule 1.01(e) attached hereto and incorporated herein by reference;
and
(f) Seller's pulse systems digitizing database of which Buyer
shall have exclusive rights thereto, including one (1) read device, and personal
computer and software, which shall be delivered by Seller to Buyer within three
(3) weeks after Closing.
All hardware, software and digitizings are taken AS IS by Buyer, and Seller
makes no representations or warranties thereon.
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1.02 Purchase Price and Method of Payment.
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The total compensation to be paid to Seller shall be an amount equal to
sixteen percent (16%) of the net sales (gross sales less returns and allowances)
of all of the following and subject to the provisions set forth below:
(a) All headwear products sold using the "Roxxi" name;
(b) All headwear products sold by any representative that
represented Seller on the closing date and listed on Schedule 1.02(b) attached
hereto and incorporated herein by reference;
(c) All headwear products sold by representatives that are
hired to replace, in whole or in part, the representatives and their successors
that represented Seller on the Closing Date (Buyer agrees that a representative
will not be terminated without replacing such representative, and Buyer agrees
to use its best efforts to replace a representative who resigns);
(d) All headwear products sold by Roxxi representatives hired
after the Closing Date to sell products in previously uncovered territories;
(e) If Buyer discloses Seller's customer database to American
Dry Goods, then all headwear products sold to customers whose names are in
Seller's database being acquired by Buyer and (i) were sold products by Seller
within the last two (2) years from the date hereof, and (ii) not sold to by
Buyer or American Dry Goods within the last two (2) years from the date hereof;
and
(f) Sales by Buyer (excluding sales made by American Dry
Goods) to high schools, green grass golf shops or little leagues who are listed
on Seller's database and (i) were sold to by Seller within the last twenty-four
(24) months and (ii) not sold to by Buyer.
Seller shall be paid on all orders received from a customer or
representative within the first twenty-four (24) months following April 30,
1999. These amounts shall be paid to Seller on the twenty-fifth (25th) day of
each month following the shipment and collection of money without offset or
counterclaim. All amounts not collected within six (6) months after invoice due
date will not be payable to Seller and Buyer shall be under no further
responsibility to Seller for such uncollected amounts. Notwithstanding the
foregoing, Seller shall be paid a commission on re-orders placed with Buyer
after such twenty-four (24) month period, if and only if, (i) the reason for
placing such re-order was for receiving defective products sold within the
twenty-four (24) month period, and (ii) collected upon within six (6) months
after invoice due date. Buyer agrees to use and exert all commercially
reasonable efforts to collect accounts receivable described herein. Buyer will
provide Seller with monthly sales and collection reports on the twenty-fifth
(25th) day of each month along with its payment.
Seller may, at its option, review any document necessary to ensure that
the proper amounts are being paid. In the event that it is determined that the
amounts paid are incorrect by more than fifteen percent (15%), Buyer will
reimburse Seller for all reasonable expenses related to the audit of such
records.
1.03 Obligations of Seller After Closing.
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Within three (3) weeks after Closing, Seller shall install the Database
and Seller's order entry system, both AS IS, on the following items to be
provided by Buyer: (a) PC hardware; (b) Network Operating System; (c) Network
Topology; and (d) Oracle 8 database which will include client system data
structures, data and source code. Upon installation, Seller will be under no
obligation to make any modifications or enhancements to the system provided.
Seller shall continue to have all rights to use and/or sell the order entry
system, so long as any such use or sale in no way affects Buyer's right to use
and operate the order entry system installed by Seller.
Seller shall continue to employ Seller's existing employees through and
including April 15, 1999, in order to enter orders and train Buyer's employees
and to otherwise assist with the transition of Seller's customer service
functions to Buyer. After such date, Seller shall no longer have any obligation
to employ any of Seller's employees. Buyer and
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Seller agree to split any stay bonuses or severance pay in order to induce
Seller's employees to remain working for Seller after the announcement of this
Agreement and the transactions contemplated herein. Any amounts paid by Buyer
and Seller shall be agreed upon by both parties prior to any offer. After
Closing, Buyer may hire any and all of Seller's employees at its sole
discretion.
1.04 Obligations of Buyer After Closing.
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After Closing, Buyer shall manufacture and sell headwear similar to the
headwear sold by Seller prior to Closing (the "Products"). Buyer acknowledges
that Seller is required to out source forty thousand (40,000) caps to the third
party purchaser of Seller's equipment. Buyer and Seller shall work together to
provide a smooth transition of manufacturing operations. In connection
therewith, after Closing, Buyer shall (a) manufacture the Products and build
inventory to support sales of the Products; (b) set pricing policies; (c) be
responsible for marketing (and all costs associated therewith) the Products and
use commercially reasonable efforts to market and promote the Roxxi name and the
Products; and (d) manage the team of independent contractors/sales
representatives, each of whom shall receive a commission of up to ten percent
(10%) of net sales of the headwear they each sell.
1.05 Liabilities Not Assumed.
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Buyer is not assuming and shall not be held responsible for nor shall
be required to assume or be obligated to pay, discharge or perform, any debts,
taxes, adverse claims, obligations or liabilities of Seller of any kind or
nature or at any time existing or asserted, whether fixed, contingent or
otherwise, whether in connection with the Assets or otherwise and whether
arising before or after the consummation of the transactions contemplated herein
or bear any cost or charge with respect thereto, including, without limitation,
accounts, notes and taxes payable, warranty claims and personal injury claims
accrued prior to Closing, commissions, profit sharing, retirement, pension,
bonus, hospitalization, vacation or other employee benefits or any employment or
old-age benefits relating to the employees of Seller. Seller hereby agrees to
indemnify, defend and hold Buyer harmless from all liability therefor and
therefrom.
1.06 No Obligation to Employ Employees of Seller.
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Notwithstanding anything herein to the contrary, Buyer shall have no
obligation to hire or employ any of Seller's employees, regardless of whether
such employee is employed by Seller full-time, part-time or otherwise, and
regardless of when such employee's employment with Seller began or is scheduled
to begin.
1.07 Option.
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Buyer shall have the option to purchase some or all of Seller's
products bearing the Roxxi name at a price equal to fifty percent (50%) of
Seller's actual cost for such products exercised at Closing and paid in cash at
Closing.
ARTICLE II
CLOSING
2.01 Closing Date.
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The Closing and consummation of all transactions provided for in this
Agreement shall be at 10:00 a.m. on March 15, 1999 (the "Closing" or "Closing
Date"), at the offices of Blumenfeld, Kaplan & Sandweiss, P.C., 168 N. Meramec
Avenue, Suite 400, St. Louis, Missouri 63105, or at such other time and place as
the parties hereto may mutually agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
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3.01 Corporate Standing.
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Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has full power and lawful
authority to own and operate all of the Assets and to conduct its business as
and where the Business is now being conducted.
3.02 Authority.
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Seller has full corporate power and authority to enter into and
consummate the transactions provided for and contemplated in this Agreement,
including the sale, transfer and delivery of the Assets. Seller has taken all
such corporate actions and conducted such other proceedings as may be necessary,
advisable or proper, including all action required by law, its Articles of
Incorporation and Bylaws to authorize the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, and the
execution and delivery of each of the documents required to be delivered
hereunder so that Seller will have full right, power and authority to deliver
the Assets to Buyer and to perform all of their obligations under this Agreement
at Closing. Upon execution and delivery by the duly authorized officers of
Seller, this Agreement and all agreements and other documents provided for
herein or attached hereto shall be valid and binding obligations of Seller in
accordance with their terms subject to qualification that the binding nature of
such obligations may be limited by applicable bankruptcy, solvency,
reorganization, fraudulent conveyance or transfer or similar laws affecting the
enforcement of creditor's rights.
3.03 Absence of Restrictions.
------------------------
Seller has no agreement with any other party with respect to the sale
of the Assets and all encumbrances shall be released as of the Closing. The
execution, delivery and performance by Seller of this Agreement and any other
instrument, agreement or document executed or to be executed and delivered by
Buyer, and the consummation of the transactions provided hereunder do not
require any third party consent and do not violate, with or without the giving
of notice or the passage of time, conflict with, result in the breach of, or
cause the acceleration of or default under any provision of any obligation,
mortgage, lien, lease, agreement, instrument, law, order, regulation,
arbitration award, judgment, decree or any other restriction to which Seller is
a party or by which Seller is subject or bound, which could materially or
adversely affect the Business or the Assets except those to be received as of
the Closing.
3.04 Title to Assets.
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Seller shall, as of Closing, own all of the Assets, free and clear of
any and all liabilities, mortgages, conditional sales agreements, security
interests, leases, liens, pledges, encumbrances, deeds of trust, equities,
charges, claims, imperfections of title or other burdens of every nature and
kind, either of record or otherwise, and whether absolute, accrued, contingent
or otherwise, so that Buyer shall, after consummation of the transactions
contemplated hereunder, be free to utilize, sell or otherwise dispose of the
Assets in whatever manner Buyer may desire.
3.05 Contracts.
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Seller has no contracts or commitments of any kind or nature,
including, but not limited to, distribution agreements, purchase orders or
licensing agreements, which affect the Assets and/or the Business except as set
forth on Schedule 3.05 or on Schedule 1.01(b). Seller is not a party to any
pension or profit sharing plan which requires that Buyer, as the purchaser of
certain assets of Seller, assume or become obligated to pay any of the
obligations or liabilities of Seller under such pension or profit sharing plan.
3.06 Litigation and Claims.
----------------------
Seller is not infringing any patents, copyrights, trademarks, service
marks, trade names, or similar rights of others and no claim, suit, action,
judicial or administrative proceeding, arbitration or investigation or similar
proceeding involving Seller or any of the Assets is pending or has been made to
such effect.
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3.07 No Broker.
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Seller has not engaged or retained any investment banking firm or
broker to assist with this transaction and Seller agree to indemnify and hold
harmless Buyer from any fees due and any suits or claims for fees as a result of
any such claim by any firm or broker.
3.08 License Agreements.
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The agreements set forth on Schedule 1.01(b) are freely assignable to
Buyer, or, if consent of the contracting party to an assignment is required,
such consent shall be secured by Seller prior to the Closing Date.
3.09 General Warranty.
-----------------
No representation or warranty made by Seller in this Agreement, or in
any certificate, schedule, exhibit or other document furnished to Buyer or its
agents as provided herein, or in connection with the transaction contemplated
hereby or filed with any government agency, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading. The representations and warranties made by
Seller and pursuant to this Article III shall be true and accurate in all
respects on the Closing Date and shall survive the Closing Date. Seller makes
the representations and warranties set forth herein with the knowledge and
expectation that Buyer is placing reliance on them in its decision to enter into
this Agreement.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agree as follows:
4.01 Conduct of Business.
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To conduct the Business pending the Closing in the normal and usual
manner consistent with the operation thereof and keeping Buyer advised of all
facets of the operation of the Business. Without the prior written approval of
Buyer (which approval may be withheld by Buyer for any reason in its sole
discretion), Seller will not make any change in the policies affecting the
operation and conduct of the Business, nor commence negotiations for, or enter
into, any material or unusual contracts or agreements affecting employment, the
Business or the Assets; nor shall Seller enter into any contracts or agreements
extending beyond the Closing. Buyer acknowledges, however, that Seller will sell
its equipment to a third party prior to or as of the Closing.
4.02 Cooperation.
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To execute, acknowledge and deliver to Buyer at Closing, or earlier if
otherwise specified in this Agreement, all such instruments, consents,
authorizations, certifications, books, records and data (the "Instruments"), and
to take all other action, as heretofore agreed or as may be reasonably necessary
or advisable in the opinion of Buyer to (i) effectuate the provisions and intent
of this Agreement; and (ii) to better assign, transfer and convey title and
possession of the Assets to Buyer. Seller shall be given access to all
Instruments delivered to Buyer hereunder and Buyer shall provide Seller with
notice prior to destroying any Instruments, giving Seller the opportunity to
take possession thereof in lieu of destruction.
4.03 Change of Name.
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On the Closing Date, Seller will amend its Articles of Incorporation so
as to change its name and will thereafter cooperate with Buyer in making its
present corporate name available to Buyer in Arizona, Nevada and each State in
which Seller transacts, or has transacted, business, and Seller shall cease to
use the name, Roxxi, Inc., and all derivations thereof and will thereafter
cooperate with Buyer in making such names available to Buyer.
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4.04 Retention of Business.
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To use and exert its commercially reasonable efforts between the date
hereof and Closing to keep and retain the Business as a going concern and to
instruct Buyer concerning the Business and its operations, including such
assistance and cooperation as may be requested or necessary to assure the
orderly transfer of the Assets to Buyer and the continuation thereof by Buyer
subsequent to the Closing.
4.05 Consents.
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In each case where license agreements or other contract rights of
Seller which are to be transferred to Buyer pursuant to this Agreement are not
transferable or assignable to Buyer without the consent of another party, Seller
will use its commercially reasonable efforts to obtain, prior to the Closing
Date, all such consents of such other party to the transfer of such licenses or
other contract rights to Buyer pursuant to this Agreement. All reasonable costs
associated with such transfers or assignments shall be borne by Buyer.
4.06 Changes.
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Between the date hereof and Closing, to notify Buyer of any changes,
problems or developments with respect to the Business and the status of Seller's
liabilities, obligations or relationships with creditors, customers and
suppliers, so that an uninterrupted and efficient transfer of the ownership of
the Assets may be made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.01 Corporate Standing.
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Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri with full power and authority
to own its own properties and to carry on its own business as currently
conducted.
5.02 Authority.
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Buyer has full corporate power and authority to enter into and
consummate the transactions provided for and contemplated in this Agreement,
including the purchase of the Assets. Buyer has taken all such corporate actions
and conducted such other proceedings as may be necessary, advisable or proper,
including all action required by law, its Articles of Incorporation and Bylaws,
to authorize the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby, and the execution and delivery of each of
the documents required to be delivered hereunder so that Buyer will have full
right, power and authority to perform all of its obligations under this
Agreement at Closing. Upon execution and delivery by the duly authorized
officers of Buyer, this Agreement and all agreements and other documents
provided for herein or attached hereto will be valid and binding obligations of
Buyer in accordance with their terms.
5.03 Absence of Restrictions.
------------------------
Buyer has no agreement with any other party with respect to the
purchase of the Assets. The execution, delivery and performance by Buyer of this
Agreement and any other instrument, agreement or document executed or to be
executed and delivered by Buyer, and the consummation of the transactions
provided hereunder do not require any third party consent and do not violate,
with or without the giving of notice or the passage of time, conflict with,
result in the breach of, or cause the acceleration of or default under any
provision of any obligation, mortgage, lien, lease, agreement, instrument, law,
order, regulation, arbitration award, judgment, decree or any other restriction
to which Buyer is a party or by which Buyer is subject or bound, which could
materially or adversely affect Buyer's ability to purchase the Assets.
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5.04 No Broker.
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Buyer has not engaged or retained any investment banking firm or broker
to assist with this transaction and Buyer agrees to indemnify and hold harmless
Seller from any fees due and any suits or claims for fees as a result of any
such claim by any firm or broker.
5.05 Financial Statements.
---------------------
The financial statements of Buyer which have been or will be delivered
to Seller (a) are true and accurate in all respects; (b) fairly present the
financial condition of Seller at the respective dates; and (c) have been
prepared in accordance with generally accepted accounting principles
consistently applied.
ARTICLE VI
CONDITIONS TO CLOSING BY BUYER
The obligation of Buyer to consummate the transactions contemplated by
this Agreement shall be subject, at the sole option of Buyer, to the
satisfaction of the following conditions precedent:
6.01 Representations.
----------------
All of the representations and warranties of Seller herein contained
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing, as if made on and as of the Closing.
6.02 Performance of Covenants.
-------------------------
All of the covenants to be performed and all of the conditions to be
satisfied by Seller prior to the Closing shall have been performed or satisfied
in all material respects on or before the Closing.
6.03 Delivery of Documents.
----------------------
Buyer shall have received all such documents, certificates and papers
required of Seller pursuant to the terms of this Agreement, or which shall have
been reasonably requested by Buyer in connection therewith, all of which are
dated as of the Closing Date, except as indicated to the contrary, in form and
substance as approved by counsel for Buyer, including, but not limited to, the
following:
(a) A duly executed Bill of Sale and Assignment conveying to
Buyer the Assets hereto and sold pursuant to this Agreement.
(b) Assignment of the License Agreements.
(c) A Secretary's Certificate as to resolutions adopted by the
Board of Directors and Shareholder of Seller, authorizing the execution of this
Agreement, the consummation of the transactions contemplated hereby and the
execution and delivery of the documents required to be delivered hereunder.
(d) Releases from Norwest Business Credit, Inc. and Norwest
Bank of Arizona, N.A., of their security interests in and to the Assets.
(e) Release of Assignment of the ROXXI trademark by Norwest
Business Credit, Inc., recorded in the United States Patent and Trademark Office
at Reel 1593, Frame 0507 on February 27, 1997.
(f) Certificate of Good Standing for Seller from the Secretary
of State of Nevada.
<PAGE> 8
(g) Evidence of the recordation of an Assignment of the ROXXI
trademark from Roxxi, Inc., an Oklahoma corporation, to Roxxi, Inc., a Nevada
corporation, in the United States Patent and Trademark Office.
(h) Assignment of Seller's registered trademark, "ROXXI" and
corporate name. Buyer shall be responsible for all costs associated with
recording this Assignment in the United States Patent and Trademark Office.
(i) All other documents affecting title to and possession of
the Assets and necessary to sell, assign, convey and transfer the same to Buyer,
and to vest in Buyer all right, title and interest of Seller in and to the
Assets free and clear of all liens, charges and encumbrances.
(j) Such other documents relative to the operation of the
Business as may be reasonably requested by Buyer.
ARTICLE VII
CONDITIONS TO CLOSING BY SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject, at the sole option of Seller, to the
satisfaction of the following conditions precedent:
7.01 Representations.
----------------
All of the representations and warranties of Buyer herein contained
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing, as if made on and as of the Closing.
7.02 Performance of Covenants.
-------------------------
All of the covenants to be performed and all of the conditions to be
satisfied by Buyer prior to Closing shall have been performed or satisfied on or
before the Closing.
7.03 Delivery of Documents.
----------------------
Seller shall have received all such documents and papers required of
Buyer pursuant to the terms of this Agreement, or which shall have been
reasonably requested by Seller, including, but not limited to, the following:
(a) Resolution adopted by the Board of Directors of Buyer,
authorizing the execution of this Agreement, the consummation of the
transactions contemplated hereby and the execution and delivery of the documents
required to be delivered hereunder;
(b) Certificate of Good Standing for Buyer from the Secretary
of State of the State of Missouri; and
(c) Such other documents as may be reasonably requested by
Seller.
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification for Breach of Representation, Warranty, Covenant
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or Agreement or for Liability of Seller.
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Seller hereby agrees to indemnify Buyer and hold it harmless against
and from any and all loss, liability, damage, claim, cost and expense of any
nature whatsoever, including, without limitation, reasonable attorney's fees
(collectively "Damages"), arising from or in connection with:
<PAGE> 9
(a) Any breach of any representation, warranty, covenant or
agreement on the part of Seller under this Agreement or under any agreement or
instrument contemplated hereby; or
(b) Any liability of Seller arising from the operation of the
Business up to the time of Closing.
8.02 Indemnification for Breach of Representation, Warranty, Covenant
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or Agreement or for Liability of Buyer.
- ---------------------------------------
Buyer hereby agrees to indemnify Seller and hold it harmless against
and from any and all Damages arising from or in connection with:
(a) Any breach of representation, warranty, covenant or
agreement on the part of Buyer under this Agreement, or under any agreement or
instrument contemplating hereby; or
(b) Any liability arising out of the operation of the Business
by Buyer from and after the Closing.
8.03 Indemnification Procedures.
---------------------------
The indemnified party shall give the indemnifying party prompt written
notice of any claim, demand, action, controversy or suit (accompanied by a copy
thereof) which may give rise to a claim for indemnification under this Article
VIII. The indemnifying party shall have the right to undertake the defense of
any claim, demand, action, controversy or suit by representatives of its own
choosing, at its own cost and expense; provided, however, that in the event the
indemnifying party shall fail to notify the indemnified party in writing that
the indemnifying party shall undertake the defense thereof within ten (10) days
of the date the indemnified party delivers written notice to the indemnifying
party, then the indemnified party shall have the right to undertake the defense,
compromise or settlement thereof at the risk of the indemnifying party.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Survival of Representations and Warranties.
-------------------------------------------
All of the terms and conditions of this Agreement, including the
representations and warranties in Articles III, IV, and V and the
indemnification provisions of Article VIII shall survive Closing and the
transfer of the Assets.
9.02 Risk of Loss.
-------------
All risk of loss with respect to the Assets to be transferred hereunder
shall remain with Seller until the transfer of the Assets and the Business on
the Closing Date. Anything to the contrary in this Agreement notwithstanding, in
the event there has been any material damage to or destruction of any of the
Assets prior to the Closing Date and Buyer elects to consummate the transactions
contemplated herein, at Closing Seller shall assign to Buyer all of Seller's
right to receive insurance proceeds toward the repair or replacement of such
Assets, if any, and if no such insurance is in effect or the amount payable
thereunder is insufficient to repair or replace any such Assets, the parties
shall equitably adjust the Purchase Price.
9.03 Benefit and Assignability.
--------------------------
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.
9.04 Notices.
--------
Any and all notices or communications required or desired to be given
in connection with this Agreement shall be in writing and shall be deemed to
have been duly given when (i) personally delivered, (ii) sent by facsimile with
a
<PAGE> 10
corresponding confirmation, or (iii) two (2) business days after deposited with
the United States Postal Service, registered or certified mail, postage prepaid,
return receipt requested, to the respective parties as follows, or to such other
address as either party may from time to time designate by notice given in
accordance with the provisions of this Section 9.04:
If to Buyer: Paramount Headwear, Inc.
#1 Paramount Drive
Bourbon, Missouri 65441
Attention: President
Fax: (573) 732-5211
With a Copy to: Mark Z. Schraier, Esq.
Blumenfeld, Kaplan & Sandweiss, P.C.
168 N. Meramec Avenue, Suite 400
St. Louis, Missouri 63105
Fax: (314) 863-9388
If to Seller: Roxxi, Inc.
15170 N. Hayden Road, Suite 1
Scottsdale, Arizona 85260
Attention: President
Fax: (602) 627-0271
With a Copy to: Kenneth Warren, Esq.
5920 Cromdale Drive, Suite 1
Dublin, Ohio 43017
Fax: (614) 766-1974
9.05 Waiver.
-------
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate as, nor be construed as, a waiver of any subsequent
breach thereof.
9.06 Entire Agreement.
-----------------
This Agreement represents the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and may be modified
only by a subsequent written document executed by the parties hereto.
9.07 Headings.
---------
The headings of the Articles and Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9.08 Incorporation.
--------------
All schedules and exhibits attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.
9.09 Days.
-----
In computing the number of days for purposes of this Agreement, all
days shall be counted including Saturdays, Sundays and holidays; provided,
however, that if the final day of any time period falls on a Saturday, Sunday or
holiday, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or holiday.
<PAGE> 11
9.10 Counterparts.
-------------
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties hereto agree
that facsimile signatures shall be sufficient to bind the parties to the
Agreement herein.
9.11 Severability.
-------------
In the event any one or more of the provisions contained in this
Agreement or any application thereof shall be invalid, illegal or unenforceable
in any respect, the validity, legality or enforceability of the remaining
provisions of this Agreement and any other application thereof shall not in any
way be affected or impaired thereby.
9.12 Expenses.
---------
Each party shall be responsible for paying the expenses it incurs in
connection with this Agreement and the transactions contemplated hereby.
9.13 Termination of Agreement.
-------------------------
This Agreement and the transactions contemplated by this Agreement may
be terminated at any time prior to Closing (a) by mutual consent of Seller and
Buyer, or (b) by either Buyer or Seller if the conditions to Closing set forth
herein are not satisfied.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
SELLER: BUYER:
Roxxi, Inc., a Nevada corporation Paramount Headwear, Inc., a Missouri
corporation
By: /s/ Thomas Schneider By: /s/ Peter Brink
----------------------------- --------------------------------
Print Name: Tom Schneider Print Name: Peter Brink
--------------------- -----------------------
Title: President Title: Chief Operating Officer
-------------------------- -----------------------------
<PAGE> 1
EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 11th day of March, 1999,
between Big Play, Inc., an Ohio corporation ("Purchaser"), and Roxxi, Inc., a
Nevada corporation ("Seller").
R E C I T A L:
Purchaser desires to purchase, and Seller desires to sell to Purchaser, the
assets of Seller related to the cap and hat business of Seller ("Business") in
exchange for cash and future payments.
NOW, THEREFORE, Purchaser, and Seller agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Transfer of Assets. Seller hereby sells to Purchaser on the date hereof
(the "Closing Date") all of the assets listed on Exhibit A-1 to this Agreement
(collectively, the "Subject Assets") which will not include any college
licensing agreements, digitized designs or the "Roxxi" tradename.
1.2 Assumption of Liabilities. Purchaser will not assume any obligations or
liabilities of Seller. Seller will continue to be responsible for all
obligations and liabilities of Seller, whether they are known or unknown and
whether they arise prior to, in connection with, or subsequent to the Closing
Date, and Seller will satisfy each such obligation and liability as it becomes
due. Purchaser will enter into an assignment and assumption agreement with Royal
Grip, Inc., a Nevada corporation, and HM Real Estate LLC ("Landlord") for the
plant (the "Leased Property") located at 2621 S.E. 15th Street, Oklahoma City,
Oklahoma 73129.
ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 Payment by Purchaser. The purchase price ("Purchase Price") for the
Subject Assets is the sum of: (a) Three Hundred Thousand Dollars ($300,000.00)
("Cash Amount"), plus (b) the "Earn Out Amount" (as hereinafter defined). The
Purchase Price will be paid as provided in Section 2.2.
2.2 Payment of Purchase Price.
(a) Purchaser will pay the Cash Amount by way of a bank check or wire
transfer at Closing.
(b) the Earn Out Amount will be paid as follows:
<PAGE> 2
Purchaser shall pay to Seller an amount equal to two percent (2%) of
its "net revenues" from the manufacturing and sale of hats and caps
up to a maximum of Two Hundred Thousand Dollars ($200,000) ("Earn
Out Amount"). The Earn Out Amount shall be paid in quarterly
installments based on revenues for the prior three calendar months
beginning with the period ending August 31, 1999 (which shall cover
the period from Closing to that date) and continuing for each
three-month period ending November 30, February 28, May 31 and
August 31 thereafter until the maximum amount has been paid.
Installments shall be paid within 60 days of the end of the period
and will be accompanied by a certificate of an officer of Purchaser
("Earn-Out Certificate") verifying Purchaser's net revenues from the
sale of hats and caps and the calculation of the prior year's annual
payment. For purposes of this Agreement, "net revenues" shall mean
gross revenues less the sum of returns and allowances.
2.3 Audit. Seller shall have fifteen (15) days from the date the Earn-Out
Certificate is delivered to it to furnish Purchaser with a letter requesting
access to the books and records of Purchaser necessary to compute the Earn-Out
Amount and upon receipt of such request, Purchaser shall promptly make available
such books and records to Seller. Seller shall have ten (10) days after such
access is granted to furnish Purchaser with a letter setting forth those items
with which it disagrees and the reasons for each such disagreement. The parties
shall promptly seek to reconcile any such disagreement; if they fail to reach an
agreement within thirty (30) days of receipt by Purchaser of such letter, then
Arthur Andersen shall be retained by the parties to settle any remaining
disagreement, and the decision of that firm shall be final and binding on the
parties. The fees of all accounting firms involved shall be paid by the party
which fails to prevail with respect to the dispute. The payment of the portion
of the Earn-Out Amount in dispute, as it may be ultimately determined (pursuant
to the procedures set forth in this paragraph) shall be made within fifteen (15)
days of such determination. In the event any audit discloses that Purchaser's
calculation of the Earn-out Amount was inaccurate by at least 10%, Seller shall
be entitled to audit any prior period not previously audited.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
Seller represents and warrants to, and agrees with, Purchaser as follows:
3.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada.
3.2 Authority of Seller; Consents. The execution, delivery and consummation
of this Agreement by Seller has been duly authorized by the Board of Directors
and the shareholder of Seller, and no further corporate action is necessary
<PAGE> 3
on the part of Seller or its shareholder to make this Agreement valid and
binding on Seller and enforceable against Seller in accordance with its terms.
The execution, delivery and consummation of this Agreement by Seller is not
prohibited or restricted by any law, court order, charter document or contract.
3.3 Title to and Condition of Assets. Seller owns and possesses all right,
title and interest in and to Subject Assets, in each case free and clear of all
liens ("Liens"). Seller has the right, power and capacity to convey, transfer,
assign and deliver the Subject Assets free and clear of any Liens. All tangible
Subject Assets of Seller are sold "as-is". Except for the assets set forth on
Schedule 3,3, the Subject Assets comprise all assets of any kind or character
used in the operation of the Business as it is presently conducted.
3.4 Employment Matters.
(a) Except as set forth on Schedule 3.4, Seller is not bound by any
union contract or employment, bonus, deferred compensation, insurance,
pension, profit sharing or similar personnel arrangement or any employee
termination or severance arrangement relating to the Business. Seller
represents that no labor organization or union has been certified by the
National Labor Relations Board or any other governmental agency or
recognized by Seller, as a collective bargaining representative of any
employees of the Business and that no collective bargaining relationship
otherwise exists, with any labor organization or union. Seller further
represents that no labor organization or union has within the past 18
months, invoked the processes of the National Labor Relations Board or any
other governmental agency seeking to represent for purposes of collective
bargaining any of the employees of the Business, that no labor organization
or union has, within the last 18 months, requested or demanded recognition
as a collective bargaining representative of any of the employees of the
Business, and that, to the best of Seller's knowledge, no labor organization
or union is in any way actively seeking to represent any of the employees of
the business for purposes of collective bargaining. Seller shall continue to
be responsible for all obligations and liabilities of Seller for wages,
benefits, accrued vacation pay, sick pay and other similar payment
obligations arising prior to and including the date of the Closing, and
Seller will satisfy each such obligation as it becomes due. There are no
pending or threatened strikes or other labor disputes and the relations
between the Seller and the employees of the Business is good.
(b) Except as set forth on Schedule 3.4, there are no active, pending
or threatened administrative or judicial proceedings under Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Fair Labor Standards Act, Family and
Medical Leave Act, the Occupational
<PAGE> 4
Safety and Health Act, the National Labor Relations Act or any other
foreign, federal, state or local law (including common law), ordinance or
regulation relating to applicants, past employees and employees of the
Seller working in the Business.
3.5 [INTENTIONALLY LEFT BLANK]
3.6 Purchase Orders and Open Invoices. Schedule 3.6 is a true and complete
list of all purchase orders and open invoices outstanding as of the date hereof.
3.7 Litigation. There are no administrative or judicial proceedings to which
Seller, or any shareholder, director, officer, employee or agent of Seller, is a
party or to which it or he or she is overtly threatened to be made a party with
respect to the Business, including, without limitation, proceedings that could
affect title to or interests in the Subject Assets.
3.8 Employees. Schedule 3.8 is a true and correct list of all of the
Business' full- and part-time employees, their wage or salary rates, the fringe
benefits which they currently receive and their dates of hire. Except as set
forth in Schedule 3.8, all employees of the Business are employed at-will and no
such employee is party to any written employment agreement.
3.9 Patents. Seller does not own nor does it use any patents in connection
with the Business.
3.10 Compliance with Laws. Seller has complied with all laws, regulations,
rules and orders affecting the Business and its operations and is not in default
under or in violation of any provision of any federal, state or local law,
regulation, rule or order as it relates to the Business except where any failure
to comply or series of failures to comply would have an economic impact of less
that $1,000.
3.11 Licenses and Rights. Seller possesses all franchises, licenses, permits
and other authorizations from governmental or regulatory authorities and from
all other persons or entities that are necessary to permit it to engage in the
Business as presently conducted in and at the location where it is presently
operating.
3.12 Schedule of Government Reports. Schedule 3.12 lists and Seller has
furnished to the Purchaser complete copies of all reports, if any, filed since
January 1, 1995 with the Department of Labor, Equal Employment Opportunity
Commission, Occupational Safety and Health Administration, Environmental
Protection Agency or any similar state, county or local agency with respect to
the Business or the Subject Assets. Schedule 3.12 also contains a list of any
inquiries from any of the foregoing agencies received during that time period.
In addition, Purchaser has received from Seller true and complete copies of all
workers compensation claims, accident reports and all other insurance claims or
<PAGE> 5
similar evidence that would indicate the safety record of the machinery and
operations of the Business since January 1, 1995 that Seller has or has
received.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser warrants and represents to, and agrees with, Seller as follows:
4.1 Organization and Good Standing of Purchaser. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio, has full power and authority to carry on its business as and
where now conducted and to own or lease and operate its properties at and where
now owned or leased and operated by it, and is duly qualified to do business and
is in good standing in every jurisdiction in which the property owned, leased or
operated by it, or the nature of the business conducted by it, makes such
qualification necessary.
4.2 Authority of Purchaser. The execution, delivery and consummation of this
Agreement by Purchaser has been authorized by the board of directors of
Purchaser in accordance with all applicable laws and the Articles of
Incorporation and Code of Regulations of Purchaser, and no further corporate
action is necessary on the part of Purchaser to make this Agreement valid and
binding on Purchaser and enforceable against Purchaser in accordance with its
terms.
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1 Survival of Representations and Warranties. Notwithstanding the closing
of the transactions contemplated under this Agreement (the "Closing"), or any
investigation made by or on behalf of Seller or Purchaser, the representations
and warranties of Seller and Purchaser contained in this Agreement will survive
until March 1, 2001.
5.2 Indemnification by Seller. Seller will indemnify and save harmless
Purchaser and its subsidiaries, shareholders, directors, officers, employees and
agents from any and all costs, expenses, losses, damages and liabilities
incurred or suffered, directly or indirectly, by any of them (including, without
limitation, reasonable legal fees and expenses) resulting from or attributable
to (a) the breach of, or misstatement in, any one or more of the
representations, warranties or covenants of Seller made in or pursuant to this
Agreement, (b) any and all obligations, debts or other liabilities of Seller
(other than the Lease), or (c) Seller's conduct of the Business prior to the
Closing Date. Anything
<PAGE> 6
to the contrary notwithstanding, Seller shall not be obligated to indemnify
Purchaser with respect to any breach of or misstatement in Section 3.10 in an
amount in excess of $300,000.
5.3 Purchaser's Indemnification. Purchaser covenants and agrees to indemnify
and save harmless Seller from any and all costs, expenses, losses, damages and
liabilities incurred or suffered by Seller (including reasonable legal fees and
costs) resulting from or attributable to (a) the breach of, or misstatement in,
any one or more of the representations, warranties or covenants of Purchaser
made in or pursuant to this Agreement or (b) Purchaser's conduct of its business
after the Closing.
ARTICLE VI
NONCOMPETITION
6.1 Covenants and Confidential Information.
(a) For a period of three (3) years from the Closing, Seller will not
and will cause its affiliates to not, directly or indirectly (except in
connection with its current royalty arrangement with Paramount Headware
Inc.), do or suffer any of the following:
(i) Own, manage, control or participate in the ownership, management
or control of, or be employed or engaged by or otherwise affiliated or
associated as a consultant, independent contractor or otherwise with,
any other corporation, partnership, proprietorship, firm, association,
or other business entity, or otherwise engage in any business, which is
engaged in any manner in the manufacturing of hats or caps; provided,
however, that the ownership of not more than one percent (1%) of the
stock of any publicly traded corporation will not be deemed a violation
of this requirement;
(ii) Employ, assist in employing, or otherwise associate in business
with any employee, officer or agent of Purchaser;
(iii) Induce any person who is an employee, officer, agent or customer
of Purchaser to terminate said relationship; and
(iv) Disclose, divulge, discuss, copy or otherwise use or suffer to
be used in any manner, in competition with, or contrary to the
interests of, Purchaser, the business methods, or other trade secrets
of Purchaser, it being acknowledged by Seller that all information
regarding the manufacturing of hats and caps is confidential
information and Purchaser's exclusive property.
(b) Seller expressly agrees and understands that the remedy at law for
any breach by it or its affiliates of Section 6.1 will be inadequate and
that the damages flowing from such breach are not readily susceptible to
being measured in monetary terms. Accordingly, it is acknowledged that upon
adequate proof of a violation by Seller or its affiliates of any legally
enforceable provision of Section 6.1, Purchaser will be entitled to
immediate injunctive relief and may obtain a temporary order restraining any
threatened or further breach. Nothing in Section 6.1 will
<PAGE> 7
be deemed to limit Purchaser's remedies at law or in equity for any breach
by Seller or its affiliates of any of the provisions of this Section 6.1
which may be pursued or availed of by Purchaser.
(c) Section 6.1 shall not be deemed to limit Seller from engaging in
the business of selling hats or caps.
(d) Seller has carefully considered the nature and extent of the
restrictions upon it and the rights and remedies conferred upon Purchaser
under Section 6.1, and hereby acknowledges and agrees that the same are
reasonable in time and territory, are designed to eliminate competition
which otherwise would be unfair to Purchaser, are fully required to protect
the legitimate interests of Purchaser and do not confer a benefit upon
Purchaser disproportionate to the detriment to Seller.
ARTICLE VII
LEASED PROPERTY IMPROVEMENTS; CLOSING DELIVERIES
7.1 Sublease. Purchaser will execute an Assignment and Assumption of Lease
(the "Assignment"), a copy of which is attached to the Agreement as Exhibit "C."
7.2 Deliveries by Seller. On the Closing Date, Seller is delivering to the
Purchaser the following:
(a) a general bill of sale transferring to Purchaser all of Seller's
right, title and interest in the Subject Assets, together with delivery of
the Subject Assets;
(b) corporate resolutions of Seller authorizing the execution and
delivery of this Agreement and the performance by Seller of its obligations
hereunder;
(c) the Assignment executed by Royal Grip, Inc. and Landlord;
(d) certified resolutions of the Board of Directors of Coyote Sports,
Inc. approving the transaction contemplated by this Agreement and agreeing
to be bound by the terms of Article VI of this Agreement; and
(e) an unconditional guarantee of Seller's obligations hereunder from
Royal Precision, Inc. in form and substance satisfactory to Purchaser.
7.3 Deliveries by Purchaser. On the Closing Date, Purchaser is delivering:
(a) That portion of the Purchase Price which is equal to the Cash
Amount; and
(b) the Assignment executed by Purchaser. In addition to Purchaser's
Closing Date deliveries, Purchaser will offer employment to at least 45
employees it determines in its sole discretion to offer employment to,
effective as of the Closing Date. The offer of employment will
<PAGE> 8
be on an "at-will" basis on terms and conditions as Purchaser shall
determine in its sole discretion. Nothing in this Agreement will be
construed as, or deemed to be, a guarantee of employment.
ARTICLE VIII
THIRD PARTIES; BINDING EFFECT
Nothing contained in this Agreement is intended to convey upon any person or
entity, other than the parties and their successors in interest and permitted
assigns, any rights or remedies under or by reason of this Agreement unless
expressly stated. All covenants, agreements, representations and warranties of
the parties contained in this Agreement are binding on and will inure to the
benefit of Purchaser and Seller, and their respective successors and permitted
assigns.
ARTICLE IX
NOTICES
All notices, requests, demands and other communications under this Agreement
must be in writing and will be deemed duly given, unless otherwise expressly
indicated to the contrary in this Agreement, (i) when personally delivered, (ii)
upon receipt of a telephonic facsimile transmission with a confirmed telephonic
transmission answer back, (iii) three (3) days after having been deposited in
the United States mail, certified or registered, return receipt requested,
postage prepaid, or (iv) one (1) business day after having been dispatched by a
nationally recognized overnight courier service, addressed to the parties or
their permitted assigns at the following addresses (or at such other address or
number as is given in writing by either party to the other) as follows:
To Purchaser: Big Play, Inc.
15919 Industrial Parkway
Cleveland, Ohio 44135
Facsimile No.: (216) 267-8625
Attention: Craig S. McAllester
With a copy to: Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Facsimile No.: (216) 363-4588
Attention: Irv Berliner
<PAGE> 9
To Seller: c/o Royal Precision, Inc.
Suite 1
15170 North Hayden Road
Scottsdale, Arizona 85260
Facsimile No.: (602) 627-0270
Attention: President
With a copy to: Kenneth Warren
Suite 1
5920 Cromdale Drive
Dublin, Ohio 43017
Facsimile No.: (614) 766-1974
ARTICLE X
REMEDIES NOT EXCLUSIVE
No remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy will be
cumulative and will be in addition to every remedy given under this Agreement or
now or subsequently existing, at law or in equity, by statute or otherwise. The
election of any one or more remedies by Purchaser or Seller will not constitute
a waiver of the right to pursue other available remedies.
ARTICLE XI
MISCELLANEOUS
11.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same document.
11.2 Captions and Section Headings. Captions and section headings are for
convenience only, are not a part of this Agreement and may not be used in
construing it.
11.3 Amendments, Supplements or Modifications. Each of the parties agrees to
cooperate in the effectuation of the transactions contemplated under this
Agreement and to execute any and all additional documents to take such
additional action as is reasonably necessary or appropriate for such purposes.
11.4 Time of Essence. The time of making payments and keeping the agreements
made herein is specifically made of the essence of this Agreement.
11.5 Right of Set-Off. Purchaser shall have the right to set off, against
any payments owed with respect to the Earn Out Amount, any amounts owed
Purchaser by Seller either as a result of a breach of representation, warranty
or covenant or other right of indemnification that Seller has pursuant to this
Agreement or as a result of the breach by
<PAGE> 10
Seller or its affiliates of Article VI. Any amount to be set off will be
indicated in the certificate provided for in Article II and certified to by an
officer of Purchaser.
11.6 Entire Agreement. This Agreement, including any certificate, schedule,
exhibit or other document delivered pursuant to its terms, constitutes the
entire agreement between the parties, and supersedes all prior agreements and
understandings between the parties. There are no verbal agreements,
representations, warranties, undertakings or agreements between the parties, and
this Agreement may not be amended or modified in any respect, except by a
written instrument signed by the parties to this Agreement.
11.7 Governing Laws. This Agreement is to governed by and construed in
accordance with the internal laws of the State of Ohio.
11.8 Transfer Taxes. Any sales or transfer taxes resulting from the
transactions contemplated under this Agreement shall be borne by Seller.
11.9 Cap Order. Seller agrees to purchase at least 40,000 caps from Seller
during the first four months after Closing at a price of $5.50 per cap.
11.10 Additional Training. Seller will provide, at its expense, three days
of training by Tana Boersma and two days of training by Gordon Johnson at the
Leased Property by April 30, 1999.
11.11 Delivery of Certain Assets. Seller will deliver to Purchaser in
working order, at the Leased Property, (i) a 2 head embroidery unit currently in
Arizona by May 31, 1999 and (ii) two personal computers used in the Business
currently in Arizona by April 30, 1999. Purchaser shall pay the shipping costs.
11.12 Assets of Seller. Purchaser will not employ, assist in employing, or
otherwise associate in business with any of the people set on Schedule 11.12
until the earlier of (i) two (2) years from the date hereof or (ii) six (6)
months after they no longer work for or on behalf of Paramount Headware, Inc.
11.13 Transfer of Machinery. Purchaser shall not transfer any hat or cap
making equipment to any affiliate unless that affiliate agrees to be bound by
the provisions of Article II.
11.14 Vacation Pay. Seller shall pay all accrued vacation pay to employees
of the Business within five (5) days of the Closing.
<PAGE> 11
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
BIG PLAY, INC.
By: /s/ Craig McAllester
-------------------------------
ROXXI, INC.
By: /s/ Thomas A. Schneider
-------------------------------
Thomas A. Schneider, President
<PAGE> 1
Exhibit 2.3
GUARANTY
THIS GUARANTY ("Guaranty") is made as of March 11, 1999.
A. WHEREAS, Big Play, Inc., an Ohio corporation ("Purchaser"), and
Roxxi, Inc., a Nevada corporation ("Seller"), have entered into an Asset
Purchase Agreement (the "Agreement") dated March 11, 1999.
B. WHEREAS, Royal Precision, Inc. ("Guarantor"), has agreed to
guarantee all of Seller's obligations pursuant to the Agreement and all of Royal
Grip, Inc.'s ("Royal") obligations under the Assignment and Assumption of Lease
between Purchaser and Royal ("Assignment"), Seller and Royal being subsidiaries
of Guarantor.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor hereby makes this
Guaranty on the following terms and conditions:
1. Guaranty of Payment. Guarantor hereby unconditionally and
irrevocably guarantees the prompt performance and payment by Seller of all sums
and obligations of Seller pursuant to the terms of the Agreement and all sums
and obligations of Royal Grip, Inc. pursuant to the Assignment.
2. Governing Law. This Guaranty and all amendments hereto shall be
governed by the laws of the State of Ohio without regard to conflicts of law.
3. Successors and Assigns. This Guaranty shall bind the successors and
assigns of Guarantor, and shall inure to the benefit of Purchaser's successors
and assigns.
4. Construction of This Guaranty. This Guaranty is intended to give
rise to absolute and unconditional obligations of Guarantor; hence, in any
construction hereof, notwithstanding any provision of any other document to the
contrary, this Guaranty shall be construed strictly in favor of Purchaser in
order to accomplish its stated purpose.
GUARANTOR
Royal Precision, Inc.
Date: 3/11/98 By: /s/ Thomas A. Schneider
----------------------- -----------------------------
Its: President
----------------------------
