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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 6, 1995
(Date of Report)
AJAY SPORTS, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
0-18204 39-1644025
(Commission File Number) (I.R.S. Employer Identification
Number)
1501 E. Wisconsin Street, Delavan, Wisconsin 53115
(Address of principal executive offices including zip code)
(414) 728-5521
(Registrant's telephone number, including area code)
1
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Item 2. Acquisition or Disposition of Assets
a) On September 29, 1995 Ajay Sports, Inc. ("the Company") formed a wholly
owned Colorado subsidiary, Palm Springs Golf, Inc. ("PSG"). On October 6, 1995,
the subsidiary acquired substantially all the assets of Palm Springs Golf
Company, Inc. ("PSGC"), a California corporation for approximately $3,656,000
and 666,667 shares of Ajay Sports, Inc. common stock issued and released and
valued at $407,000.
In addition, 333,333 common shares of Ajay Sports, Inc. will be issued and
delivered into escrow. Their release to PSGC will be restricted and based on a
reevaluation at a future date of certain reserves to the assets acquired. If
released these would increase the purchase price and the fair market value of
certain assets acquired.
In the future, the PSGC common shareholders may receive up to a total of 300,000
common shares of Ajay Sports, Inc. that will be issued and delivered into escrow
to be released based on the earnings of PSG in the years 1996, 1997 and 1998. If
released these would increase the purchase price and be considered goodwill.
Palm Springs Golf Company designs, manufactures and markets a full line of golf
clubs along with a line of golf bags and gloves under the Palm Springs Golf
name. The acquisition has been accounted for as a purchase.
The aggregated purchase price of $4,063,000 was allocated to the following
assets (1) accounts receivable of $1,199,000, (2) inventories of $1,810,000, (3)
notes receivable of $304,000, (4) equipment of $95,000 and (5) other assets
including intangibles of $655,000. The acquisition was financed by (1) the
assumption of accounts payable and accrued expenses of $521,000, (2) the
assumption of a capital lease of $5,000, (3) an advance under the Company's line
of credit with United States National Bank of Oregon of $3,130,000, (5) the
666,667 common shares of the Ajay Sports, Inc. at their fair market value of
$407,000, and (6) options to purchase Ajay Sports, Inc. common shares; 400,000
shares at $.90 per share and 400,000 shares at $.75 per share.
There is no material relationship between PSGC and the Company, or the officers,
directors or affiliates of the officers or directors of PSGC and those of the
Company.
b) Fixed assets include golf club production equipment and warehouse racking
installed in a 24,000 square foot leased manufacturing plant located in Palm
Desert, California. The facility is leased under a 10-year term which expires
April 30, 1997. The Company intends to continue to use the assets and the
facility to manufacture the Palm Springs Golf product line.
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Item 7. Financial Statements and Exhibits
a)(4) The necessary data to provide the required financial information is not
available at the time for this Form 8-K filing. The required financial
information will be filed no later than December 20, 1995.
c) Exhibits
2.1 Asset Purchase Agreement dated October 6, 1995 between Palms
Springs Golf, Inc., as purchaser, and Palms Spring Golf Company, Inc. as seller.
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.
Ajay Sports, Inc.
______________________________
Duane R. Stiverson
Chief Financial Officer
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of October 6, 1995, by and between Palm
Springs Golf, Inc., a Colorado corporation ("Purchaser" or "PSG") and Palm
Springs Golf Company, Inc., a California corporation ("Seller" or "Palm
Springs").
WHEREAS, Palm Springs is willing to sell, and PSG is willing to
purchase, the Assets (as hereinafter defined), and assume the Assumed
Liabilities (as hereinafter defined in Section ), of Palm Springs on the terms
and conditions hereinafter set forth.
WHEREAS, Purchaser is a wholly-owned subsidiary of Ajay Sports, Inc.
("Ajay"), a Delaware corporation with its common stock publicly traded in the
over-the-counter market.
WHEREAS, Palm Springs and Ajay entered into a letter of intent dated
August 20, 1995, which became effective on August 21, 1995 (the "LOI").
WHEREAS, it is the intention of the parties that the transactions
contemplated hereunder qualify for treatment as a tax-free reorganization under
Section 368(a)(i)(C) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE ASSETS
1.1 Purchase and Sale of the Assets. Subject to the terms and
conditions stated herein, the Seller hereby sells to the Purchaser, and the
Purchaser purchases from the Seller certain assets as hereinafter more
particularly described. For purposes of this Agreement, the assets acquired by
the Purchaser are sometimes referred to collectively as the "Assets;" the
business of Palm Springs is referred to as the "Business;" the lines of products
of the Business which are included in the Assets are referred to collectively as
the "Products;" and the manufacturing and warehouse facility of Seller is
referred to as the "Facility." Without limitation, the Assets shall include all
of the items enumerated in subsections 1.1.1 through 1.1.16 below:
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1.1.1 All cash of Seller.
1.1.2 The real property located in unincorporated San
Bernadino County, California, at lot 55, Tract 7064, as per map
recorded in Book 91, pages 86 through 88 of Maps, in the office of the
County Recorder of said county, including improvements thereto and
including all rights in easements legally described on Schedule (the
"Real Property").
1.1.3 All vehicles, machinery and equipment, tools, furniture,
fixtures, dies, jigs and supplies owned or leased by Seller whether at
the Facility, over the road or at any other location, all as described
on Schedule .
1.1.4 All finished goods, inventory, raw materials and
components, supplies and similar tangible assets of the Business
leased, owned or otherwise used by the Seller in the Business, whether
located at the Facility or which are in transit or in the possession of
other parties for storage or for any other reason.
1.1.5 All intellectual property, proprietary and business
information of the Seller relating to the Business, including, all of
Seller's right, title and interest in and to:
1.1.5.1 the name "Palm Springs Golf" and any derivative
thereof, such as "PSG;"
1.1.5.2 all licenses relating to the Business;
1.1.5.3 the Permits (as defined in Section );
1.1.5.4 Any and all inventions, discoveries trade
secrets, designs, prototypes, formulas and know-how relating
to the Business, including the ideas of Joseph C. Giuffre
("Giuffre") and other key employees of the Seller for designs
related to the Business which were conceived prior to the
Closing Date, including those set forth on Schedule ;
1.1.5.5 all patents (whether issued or pending),
copyrights, trademarks and tradenames, including those set
forth on Schedule ; and
1.1.5.6 copies of all business, financial and tax
records relating to the Business for the five fiscal
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years immediately preceding the Closing, including all sales
data, pricing and cost information, customer and supplier
lists, credit records, sales literature and business and
marketing plans relating to the Business.
1.1.6 All computer documentation, computer files, telephone
numbers, computer disks, computer tapes and all information stored on
computer media used in connection with the operation of the Business,
subject to Seller's right to retain copies.
1.1.7 All accounting and other computer software used in
connection with the operation of the Business, including information
interfaced with those systems, as listed on Schedule , subject to
Seller's right to retain copies.
1.1.8 All rights to customer and supplier lists, signs,
advertising, catalogues and brochures and all related artwork relating
to the Business.
1.1.9 All rights of the Seller under the contracts relating to
the Business to which the Seller is a party, as listed in Schedule .
1.1.10 All rights of the Seller under open orders to purchase
raw materials or services in accordance with normal operating
procedures of the Business.
1.1.11 All rights of the Seller as lessee under leases of real
or personal property relating to the Business, as listed in Schedule .
1.1.12 All promissory notes payable to the Seller and accounts
receivable of the Seller relating to the Business.
1.1.13 All purchase orders, back orders, open orders or
contracts from customers, including the backlog and parts manufactured
or assigned to the Seller related to the Business.
1.1.14 All goodwill and other general intangibles related to
the Assets unless specifically excluded under Section below.
1.1.15 Except as specified in Schedule 1.2, all claims,
deposits, prepayments, refunds, causes of action, choses in action,
rights of recovery, rights of set-off and rights of recoupment related
to the Assets.
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1.1.16 All other assets of any nature useful and/or beneficial
to the Business whether owned or leased by the Seller unless
specifically excluded under Section below.
The Seller's sale, conveyance, assignment and transfer of the Assets
shall be free and clear of all liens, encumbrances, liabilities or obligations,
except for those expressly assumed by the Purchaser under Section .
1.2 Excluded Assets. The Assets shall not include the assets of the
Seller listed on Schedule .
1.3 Liabilities Assumed. The Purchaser hereby agrees to assume, pay and
perform when due the following liabilities of the Seller related to the Business
(the "Assumed Liabilities"):
1.3.1 All accounts payable, similar trade obligations and
accrued expenses of the Seller relating to the Business existing as of
the date hereof and reflected in the Financial Statements (as
hereinafter defined).
1.3.2 All contractual obligations relating to the Business
including those arising from legal commitments (in the form of accepted
purchase orders, or otherwise) to sell or buy products or components,
including outstanding quotations to purchasers or prospective
purchasers of goods, to which the Seller is a party, to the extent
reflected on the Financial Statements and performance of such
obligations is due on or after the date hereof.
1.3.3 All obligations of the Seller under existing licenses,
leases or other contracts relating to the Business which are to be
assigned to the Purchaser pursuant to Section , to the extent reflected
on the Financial Statements and performance of such obligations is due
on or after the date hereof.
1.4 Excluded Liabilities. Except as set forth in Section or as
otherwise provided in this Agreement, the Purchaser will not assume or agree to
pay or perform any obligations, liabilities, contracts or commitments of the
Seller or the Business. Specifically, but without limitation, the Purchaser is
not assuming any liability of the Seller that may result from claims or
potential claims by Dillon Gage Securities, Inc., Russo Securities, First
Philadelphia Corp. or Taft Capital, or any other expenses related to
transactions with said entities to the extent not reflected in the Financial
Statements as of the Closing Date.
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1.5 Purchase Price. In full consideration for the purchase of the
Assets, the Purchaser will deliver to Seller a commitment letter in the form of
EXHIBIT A to issue the following securities of Ajay:
1.5.1 Ajay Common Stock. A total of 1,300,000 restricted
shares of common stock of Ajay (the "Ajay Common Stock"), of which
666,667 shares will be issued and delivered directly to Palm Springs or
its designees, 333,333 shares will be issued and delivered into escrow,
as further provided in Section 2.1.1 below, and 300,000 shares will be
issued and delivered into escrow, as further provided in Section 2.1.2,
which shares, to the extent released from the escrow, shall be
deliverable only to the holders of the Seller's common stock. The
shares of Ajay Common Stock will be registered for resale as provided
in Section 2.3 below; provided, however, the actual resale of said
shares shall be subject to the limitations contained in Section 2.4
below.
1.5.2 Options. Options to purchase up to 800,000 shares of
Ajay Common Stock (the "Options"), issued and delivered directly to
Palm Springs or its designees, all exercisable for four years from the
Closing Date (as hereinafter defined), 400,000 of which shall have an
exercise price of $.75 per share of Ajay Common Stock, and 400,000 of
which shall have an exercise price of $.90 per share of Ajay Common
Stock, all subject to adjustment of the exercise price as provided in
Section 2.5 below and the registration rights as provided in Section
2.6 below.
1.6 Allocation of the Purchase Price. The purchase price shall be
allocated among the Assets as set forth on Schedule , which allocation shall be
reported consistently by the Purchaser and the Seller for all tax purposes. The
Purchaser and the Seller each covenant with the other that it will promptly give
written notice to the other of any inquiry or challenge of such allocation by
any tax authority.
1.7 Closing of the Purchase. The closing of the purchase provided for
herein (the "Closing") shall take place at the offices of Palm Springs located
at 74-824 Lennon Place, Palm Desert, California on October 6, 1995 at 11:00 a.m.
Pacific Daylight Time, or at such other time and place as the parties shall
mutually agree (the "Closing Date").
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ARTICLE 2
AGREEMENTS REGARDING THE AJAY COMMON STOCK AND OPTIONS
2.1 Escrows.
2.1.1 Reserve Escrow. The value of certain assets may be less
than anticipated at the Closing Date because the reserves established
by Seller for accounts receivable discounts taken by customers, bad
debts and inventory obsolescence (collectively, the "Seller's
Reserves") prior to the Closing Date may prove to be insufficient. Upon
their issuance by Ajay, 333,333 shares of the Ajay Common Stock will be
delivered by Purchaser into escrow with an escrow agent mutually agreed
to by the parties. The parties shall enter into an escrow agreement, in
the form of EXHIBIT H.
2.1.2 Earn In Escrow. Upon their issuance by Ajay, 300,000
shares of the Ajay Common Stock will be delivered by Purchaser into
escrow under an escrow agreement in the form of EXHIBIT I.
2.2 Status of the Ajay Common Stock. The shares of Ajay Common Stock
and the Options will be issued pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933 (the "Securities
Act") and applicable state securities laws and, therefore, will be "restricted"
securities as that term is defined in Rule 144 promulgated under the Securities
Act. As a condition to Ajay's issuance of the Ajay Common Stock and the Options,
each of the person(s) to whom the shares and options are to be issued will
deliver a standard investment letter, in the form of EXHIBIT B, to Ajay to
enable Ajay to determine the availability of exemptions under the Securities Act
and applicable state securities laws for the issuance thereof.
2.3 Registration Statement Relating to the Ajay Common Stock. Within 90
days after the Closing Date, Ajay will file a registration statement (the
"Registration Statement") under the Securities Act to register for resale by the
holders thereof the 1,300,000 shares of Ajay Common Stock. In consideration of
Ajay agreeing to register the 1,300,000 shares of Ajay Common Stock for resale,
the holders of these shares or the persons entitled to them upon release from
the escrows provided in Section 2.1 above, will agree to certain restrictions on
the sale of their shares as described in Section 2.4 below. Ajay will use its
best efforts to maintain effectiveness of the Registration Statement for at
least two years following the effective date of the Registration Statement, it
being acknowledged that, generally, "restricted"
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securities may be publicly resold under Rule 144 of the Securities Act by the
holders thereof two years after the date of acquisition.
2.4 Agreement Regarding Resale of the Ajay Common Stock Under the
Registration Statement. Giuffre will agree that he will not sell any shares
issuable to him or any person affiliated with him for two years after the later
of the Closing Date or the effectiveness of the Registration Statement. All
other recipients of the Ajay Common Stock must agree not to sell any of their
shares for at least six months after the later of the Closing Date or the
effectiveness of the Registration Statement and, thereafter, not to sell in
excess of one-twelfth, or 8.33%, of their shares per month. Shares not sold in a
month during which sales are permissible may be sold in subsequent months;
provided, that, no person may sell more than 20% of his shares during any one
month. The agreements referenced herein shall be included in the investment
letter.
2.5 Price Protection for the Options. If, on the second anniversary of
the Closing Date, the Market Price (as defined below) of Ajay Common Stock is
less than the exercise price of the Options, the exercise price of all of the
Options with a higher exercise price shall be reset, as of the second
anniversary of the Closing Date, at the higher of the Market Price or $.65 per
share. If the exercise price is required to be reset under this provision,
within five business days after the second anniversary of the Closing Date, Ajay
will send a written notice, postage prepaid by registered or certified mail,
return receipt requested, to each holder of the Options at the address of record
for such holder, notifying the holders of the new exercise price and the basis
of the calculation thereof.
For the purposes of this section, "Market Price" shall mean per share
as of a particular date means the last sale price of Ajay common stock as
reported on a national securities exchange or on the NASDAQ National Market
System or, if the quotation for the last sale reported is not available for Ajay
common stock, the average of the per share closing bid and asked prices for Ajay
Common Stock as reported on the Nasdaq SmallCap Market or the OTC Bulletin Board
or, if none, the National Quotation Bureau's "Pink Sheets" for the ten trading
days immediately preceding the date for which Market Price is being determined.
2.6 Registration Rights. The holders of the Options shall have the
right to include, for resale, their shares of Ajay Common Stock underlying their
Options (the "Option Shares") in any appropriate registration statement filed by
Ajay within five years after the Closing Date. Ajay shall not be required to
include any of the Option Shares in a registration statement (a) related to an
underwritten offering to the extent the underwriter objects to
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inclusion of the Option Shares; or (b) which does not provide forthe inclusion
of securities for resale.
In addition, for five years after the Closing Date, the holders of the
Options and/or Option Shares shall have a right to demand that Ajay file one
registration statement registering the Option Shares, upon the request of the
holders of more than 50% of the Options and Option Shares. The costs of the
registration statement shall be paid by Ajay.
ARTICLE 3
REPRESENTATIONS OF THE SELLER
To induce the Purchaser to enter into this Agreement and to complete
the transactions contemplated hereby, and with the knowledge that the Purchaser
will rely thereon, the Seller hereby represents and warrants the following to
the Purchaser:
3.1 Due Incorporation. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
3.2 Title to Personal Property. Except as listed in Schedule (the
"Permitted Liens"), the Seller has good, valid and marketable title to all
personal property included in the Assets (tangible and intangible), in each case
subject to no encumbrance, lien, charge, option, right of first refusal, or
other restriction of any kind or character.
3.3 Authority of the Seller; Consents. The Seller has full power and
authority to execute and deliver this Agreement and the other agreements
required to be executed and delivered hereunder (this Agreement and such other
agreements being hereinafter referred to as the "Closing Documents") and to
carry out the transactions contemplated hereby. The Seller has taken all
requisite corporate action to authorize the execution, delivery and performance
of the Closing Documents and the Closing Documents are valid and binding
agreements of the Seller enforceable in accordance with their terms. No consent,
authorization or approval of, or declaration, filing or registration with, any
governmental or regulatory authority or any consent, authorization or approval
of any other third party is required to enable the Seller to enter into and
perform its obligations under the Closing Documents. Neither the execution and
delivery of the Closing Documents nor the consummation of the transactions
contemplated thereby will:
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3.3.1 Violate Seller's charter documents or bylaws or
constitute a breach of or cause a default under any evidence of
indebtedness or agreement to which Seller is a party; or
3.3.2 Violate any statute, law, regulation or court
order of any jurisdiction relating to the Assets.
3.4 Financial Statements. The Seller has furnished, or will prior to
the Closing Date, furnish the Purchaser with:
3.4.1 True and complete copies of the balance sheet, related
statements of income and retained earnings and related statements of
cash flows (the "Audited Financial Statements") of the Seller as of and
for the years ended December 31, 1994, 1993 and 1992, compiled by the
Seller's independent public accountants; and
3.4.2 A true and complete copy of the Seller's unaudited
financial statements for the period from January 1, 1995 up to and
through August 31, 1995.
3.4.3 A true and complete copy of the Seller's preliminary
balance sheet as of the Closing Date which shall be finalized within 15
days after the Closing Date (the "Closing Balance Sheet").
Hereinafter, the financial statements referred to in the foregoing
Subsections (a) - (c), together with the footnotes and supporting schedules
thereto, are referred to as the "Financial Statements." Copies of such Financial
Statements have been annexed hereto as Schedule , or at such time as they are
delivered will be considered to be a part of Schedule . All material
intercompany accounts have been eliminated on the Financial Statements. The
Financial Statements, including the footnotes thereto present fairly the
financial condition of the Seller at the dates thereof and reflect all material
claims against, and all material debts and liabilities of the Seller, fixed or
contingent, as at the dates thereof and the statements of income and retained
earnings which are a part of the Financial Statements present fairly the results
of the operations of the Seller, and the changes in their financial position for
the periods indicated except as otherwise disclosed in this Agreement and/or the
Exhibits and Schedules hereto. The Audited Financial Statements, including the
footnotes thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP").
Since December 31, 1994 there has been no material adverse change in
the assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations
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of the Seller, except in the ordinary course of business which, in the aggregate
would be materially adverse.
The Seller shall make available to Purchaser and Purchaser's
independent public accountants its work papers and those of its independent
public accountants related to the Financial Statements and the Seller's federal
and state tax returns for the years ended December 31, 1994, 1993, 1992, 1991
and 1990.
3.5 Inventory. Schedule 3.5 contains a complete description of all of
the inventory included in the Assets. Except as and to the extent reflected or
reserved against in the Financial Statements, the inventory reflected in the
Financial Statements or thereafter acquired consists of good and merchantable
products, of a quality and quantity usable and saleable in the ordinary course
of business. The amounts at which inventory is carried on the Financial
Statements fairly represent the cost thereof as determined in accordance with
GAAP.
3.6 Accounts and Notes Receivable. Schedule sets forth a summary of the
Seller's accounts receivable of the Business as of June 30, 1995. Said accounts
receivable have arisen in the ordinary course of business and represent valid
obligations due to the Seller. Such accounts receivable (net of the reserve
shown on Schedule ) are collectible in accordance with their terms, in the
ordinary course of business of the Seller in the aggregate recorded amounts
thereof. Except as set forth in Schedule , such accounts receivable are not
subject to any material set-offs or material counterclaims.
3.7 No Tax Liens. None of the Assets is subject to any lien in favor of
the United States or any state under which transferee liability might be imposed
upon the Purchaser.
3.8 Compliance with Laws; Permits. The Seller is not in violation of
any applicable order, judgment, injunction, award or decree relating to the
Assets or, to the knowledge of the Seller, any federal, state, local or foreign
law, ordinance or regulation or any other requirement of any governmental or
regulatory body, court or arbitrator applicable to the Assets.
The Seller holds all licenses, permits, orders and approvals of any
federal, state or local governmental or regulatory bodies (collectively,
"Permits") that are material to, required for or necessary for the conduct of
the Business as it relates to the Assets.
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3.9 Real Property. Schedule 1.1.2 sets forth all Real Property included
in the Assets. With respect to the Real Property:
3.9.1 The Real Property is a single lot zoned for residential
development and is undeveloped.
3.9.2 There are no outstanding leases, options or rights of
first refusal to purchase the Real Estate, or any portion thereof or
interest therein, either written or oral.
3.9.3 There are no parties other than the Seller in possession
of the Real Property.
3.9.4 The Real Property has access to, whether or not yet
connected, utilities and other services necessary for future
development, and is accessible via public roads or via permanent,
irrevocable, appurtenant easements benefitting the Real Property.
3.10 Litigation. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory body or
arbitration tribunal against or involving the Assets. Except as set forth in
Schedule , there are no actions, suits or claims against the Seller, whether for
Products Liability (as hereinafter defined) or otherwise, or, to the knowledge
of the Seller, investigations (whether or not the defense thereof or liabilities
in respect thereof are covered by insurance) pending or, to the knowledge of the
Seller, threatened against or involving the Assets, nor to the knowledge of the
Seller, is there any basis therefor. Responsibility for any litigation involving
the Assets pending prior to the Closing and the satisfaction of judgments
(including related costs and fees) shall remain with Seller.
For purposes of this Agreement, "Products Liability" means any
liability to which the Seller (or the Purchaser or any affiliate of the
Purchaser if deemed to be a successor to the Business) may become subject
insofar as such liability is based upon, arises out of or is otherwise in
respect of any express or implied representation, warranty, agreement or
guaranty to a customer, user or purchaser, or due to, or asserted to be arising
out of or due to, any Product manufactured on or before the Closing Date.
3.11 Solvency. The Seller is solvent and has not filed for federal
bankruptcy protection either voluntarily or involuntarily, nor has a receiver
been appointed with respect to the Assets.
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3.12 Contracts and Other Agreements. All contracts related to the
Assets to which Seller is a party are described in Schedule or in the other
Schedules to this Agreement. Seller has delivered to the Purchaser true and
complete copies of all of such contracts. All of such contracts are valid and
binding upon the Seller, and the Seller is not in default nor has it received
any notice of default under, or with respect to, any such contracts and/or other
agreements. Except as separately identified on Schedule , no approval or consent
of any person is needed in order that the contracts and other agreements set
forth on Schedule will continue in full force and effect following the
consummation of the transactions contemplated by this Agreement. The Seller is
not in the process of negotiating or entering into any agreements described in
this Section above which would involve the Assets.
3.13 Leases. Schedules and together contain a complete listing and
summary description of all leases or other agreements under which the Seller
uses personal property (the "Leases") which is included in the Assets. All of
the Leases, true and complete copies of which have been delivered to the
Purchaser, are in effect and the Seller is not in default under or with respect
to any such Lease. Except as set forth in Schedules and , no approvals or
consents of any persons are required in order that any Lease remains enforceable
as a result of the consummation of the transactions contemplated by this
Agreement.
3.14 Tangible Property. Schedule sets forth all machinery, equipment,
furniture, leasehold improvements, fixtures, vehicles, or any related
capitalized items and other tangible property included in the Assets (the
"Tangible Property"), all of which is in good operating condition and repair,
subject only to normal wear and tear.
3.15 Intangible Property. Schedule sets forth all patents, trademarks,
service marks, trade names and franchises related to the Assets, all
applications for any of the foregoing (collectively, "Intangible Property"), and
all permits, grants and licenses or other rights running to or from the Seller
relating to any of the foregoing, complete copies of which have been delivered
to the Purchaser. All Intangible Property included in the Assets is owned
outright by the Seller, free and clear and there exist no obligations with
respect to any such Intangible Property requiring the Seller to make any payment
in respect of its use or otherwise.
The Seller is not aware of any patent, invention, trade secret,
trademark, service mark, trade name or copyright of any other person that is
infringed by the Seller, nor does it have notice of any infringement claim of
any other person relating to
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any of the Intangible Property set forth on Schedule or any process or
confidential information of the Seller and the Seller knows of no basis for any
such charge or claim. The Seller has never agreed to indemnify any person for or
against any interference, infringement, misappropriation or other conflict with
respect to the Intangible Property included in the Assets.
3.16 Liabilities. Except as otherwise set forth in this Agreement or
any Schedule hereto, the Assets are not subject to any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, asserted or unasserted, fixed or unfixed,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise which affects or could affect the Seller's ability to transfer the
Assets to the Purchaser free and clear of any encumbrances as provided herein
("Liabilities").
3.17 Products and Warranties; Return Privileges. To the knowledge of
the Seller, there are no statements, citations or decisions by any governmental
or regulatory body that any Product which has been manufactured, marketed or
distributed by the Seller is defective or fails to meet any standards
promulgated by any such governmental or regulatory body. There has been no
recall ordered by any such governmental or regulatory body with respect to any
Product. To the knowledge of the Seller, there is no (a) fact relating to any
Product that may impose upon the Seller a duty to recall any Product or a duty
to warn customers of a defect in any Product, or (b) latent or overt design,
manufacturing or other material defect in any Product. Schedule sets forth a
description of all warranties and return privileges (written or otherwise) which
the Seller gives in connection with the manufacture and/or distribution of the
Products. The Seller has not extended any service obligations or return
privileges to customers other than in the ordinary course of business.
3.18 Relationships. No officer or director of the Seller possesses,
directly or indirectly, any financial interest in, or is a director, officer,
stockholder or employee of, any corporation, firm, association or business
organization which is a manufacturer for, or client, supplier or customer of the
Business as it relates to the Assets.
3.19 No Material Changes Prior to Closing Date. If the date of this
Agreement is a date other than the Closing Date, there will be no material
change in the book value of the Assets between the date of this Agreement and
the Closing Date.
3.20 Conduct/Preservation of Business. The Seller shall exert its best
efforts consistent with its past business practices
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to preserve the Business as it relates to the Assets, keep available the
services of its present employees, consultants and agents, maintain and continue
to develop its relationships with its suppliers and customers and preserve its
goodwill. From the date of the LOI through the Closing Date, Seller has made
sales of its inventory in the ordinary course and has not applied any
extraordinary discounts, extended extraordinary warranty or return privileges or
accelerated its sales.
3.21 Disclosure. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of the Seller in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading.
3.22 Bulk Sales Compliance. The Seller will comply with the provisions
of any applicable state bulk sales laws in connection with its sale of the
Assets to the Purchaser.
3.23 The WARN Act. The Seller will comply with the provisions of the
WARN Act, 29 U.S.C. Sections 2101, et seq. and any similar state laws relating
to notice to employees if such provisions apply to the transactions contemplated
hereunder.
3.24 COBRA. If applicable, the Seller will comply with the provisions
of COBRA, Pub. L. No. 99-272, 99th Cong., 2d Sess. (1987) relating to
continuation of health benefits to employees as they apply to the transactions
contemplated hereunder.
ARTICLE 4
REPRESENTATIONS OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, and with the knowledge that the
Seller will rely thereon, the Purchaser represents and warrants the following to
the Seller:
4.1 Due Incorporation/Ownership. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and is a wholly-owned subsidiary of Ajay.
4.2 Authority of the Purchaser. The Purchaser has full power and
authority to execute and deliver this Agreement and the
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Closing Documents and to carry out the transactions contemplated hereby. The
Closing Documents are valid and binding agreements of the Purchaser, enforceable
in accordance with their terms. No consent, authorization or approval of, or
declaration, filing or registration with, any governmental or regulatory
authority or any consent, authorization or approval of any other third party is
necessary in order to enable either Purchaser to enter into and perform its
obligations under the Closing Documents, and neither the execution and delivery
of the Closing Documents nor the consummation of the transactions contemplated
thereby will:
4.2.1 Violate Purchaser's charter documents or bylaws or
constitute a breach of or cause a default under any evidence of
indebtedness or agreement to which it is a party; or
4.2.2 Violate any statute, law, regulation or court order of
any jurisdiction relating to Purchaser.
4.3 Disclosure. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of the Purchaser in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 5
REPRESENTATIONS OF AJAY RELATED TO THE
AJAY COMMON STOCK AND THE OPTIONS
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, and with the knowledge that the
Seller will rely thereon, Ajay represents and warrants the following to the
Seller:
5.1 Status. Ajay is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The common stock of
Ajay is registered under Section 12(g) of the Securities Exchange Act of 1934
(the "Exchange Act"), and in accordance therewith files periodic reports, proxy
statements, and other informational reports required under the Exchange Act.
Ajay has filed with the Securities Exchange Commission all reports it is
required to file under the Exchange Act. Ajay's common stock is traded publicly
in the over-the-
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counter market and quoted on the Nasdaq SmallCap Market under the symbol "AJAY."
5.2 Information. Prior to the date of this Agreement, Ajay has provided
Palm Springs copies of its Annual Report to Stockholders for the year ended
December 31, 1994, its quarterly reports on Form 10-Q for the periods ended
March 31, 1995 and June 30, 1995, its proxy statement dated April 20, 1995, its
most recent reports filed under the Exchange Act and its Prospectus dated July
26, 1995 used in connection with a public offering of preferred stock, which was
included in a registration statement filed with the SEC under the Securities
Act. There have been no material events which have occurred subsequent to the
filing of these reports which would require additional filings or other
disclosure.
5.3 Reservation of Shares and Issuance. Ajay has reserved a sufficient
number of shares of its common stock to cover the issuance of the Ajay Common
Stock and the issuance of common stock upon the exercise of the Options. The
Ajay Common Stock when issued in accordance with the provisions of this
Agreement will be lawfully issued as fully paid, nonassessable shares of Ajay.
ARTICLE 6
DOCUMENTS TO BE DELIVERED AT THE CLOSING
The following actions shall be taken at the Closing, each of which
shall be conditioned on completion of all the others and all of which shall be
deemed to have taken place simultaneously:
6.1 Transfer Documents. The Seller shall deliver duly executed transfer
documents and/or instruments of assignment including:
6.1.1 General Assignment and Bill of Sale substantially in the
form of EXHIBIT C;
6.1.2 Assignment of Registered Trademarks included in the
Assets substantially in the form of EXHIBIT E; and
6.1.3 General Warranty Deed conveying title to the Real Estate
free and clear of any liens or encumbrances, in the form of EXHIBIT F.
6.2 The Purchase Price. The Purchaser shall deliver to the Seller a
commitment letter, substantially in the form of EXHIBIT A, to issue the Ajay
Common Stock and the Options in accordance with
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the terms of Section and Article 2 and an Assumption Agreement in the form of
EXHIBIT D.
6.3 Investment Letters. Seller and each recipient of any of the Ajay
Common Stock or Options shall deliver to the Purchaser an investment letter
substantially in the form of EXHIBIT B.
6.4 Evidence of Name Change. The Seller shall deliver to Purchaser an
Amendment to its Certificate or Articles of Incorporation, in filing form, to
evidence to the Purchaser that it will change its corporate name to delete any
reference to "Palm Springs Golf" or any derivative thereof, such as PSG.
6.5 Certificate Regarding Resolutions of the Seller. The Seller shall
deliver to the Purchaser copies of resolutions duly adopted by the Seller's
board of directors authorizing and approving the execution and delivery of this
Agreement and the other Closing Documents, and the consummation of the
transactions contemplated thereunder, certified by the corporate secretary of
the Seller as of the Closing.
6.6 Certificate Regarding Resolutions of the Purchaser. The Purchaser
shall deliver to the Seller copies of resolutions duly adopted by the
Purchaser's board of directors authorizing and approving the execution and
delivery of this Agreement and the other Closing Documents, and the consummation
of the transactions contemplated thereunder, certified by the corporate
secretary of the Purchaser as of the Closing.
6.7 Repayment of Palm Springs' Bank Indebtedness. PSG, through Ajay's
existing credit facility with United States National Bank of Oregon ("US Bank")
shall arrange to pay off all of Palm Springs' obligations under its current loan
agreement with Bank IV Kansas, N.A. by wire transfer or other means agreed to
between the parties and, upon receipt of payment in full, said bank promptly
shall release all collateral and guaranties related thereto, including, without
limitation, all security interests and UCC financing statements.
6.8 Guaranty. Giuffre shall deliver to PSG, Ajay and Williams Controls,
Inc. a Guaranty in the form of EXHIBIT G.
6.9 Reserve Escrow Agreement. The parties shall enter into a Reserve
Escrow Agreement in the form of EXHIBIT H.
6.10 Earn-In Escrow Agreement. The parties shall enter into an Earn-In
Escrow Agreement in the form of EXHIBIT I.
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ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing for a period of three years after the Closing Date;
provided, however, that all representations and warranties with respect to taxes
shall survive for the period of time which is equal to the statute of
limitations period any federal or state tax statute applicable to any liability
for assessment of taxes covered thereby. Claims, other than claims involving
taxes, must be made (but need not be adjudicated) on or before the third
anniversary of the Closing Date. Claims involving taxes must be made (but need
not be adjudicated) on or before the expiration of the applicable statute of
limitations.
7.2 Indemnity Agreements of the Seller.
7.2.1 The Seller shall indemnify, defend, reimburse and hold
harmless the Purchaser from and against any and all claims, demands,
penalties, fines, liabilities, obligations, losses, settlements,
damages, costs and expenses resulting from:
7.2.1.1 Any inaccuracy in, or breach of, any
representation and warranty or nonfulfillment of any covenant
or other agreement on the part of the Seller contained in this
Agreement;
7.2.1.2 Any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of the Seller
contained in any other agreement, certificate or other
instrument furnished or to be furnished to the Purchaser by
the Seller pursuant to this Agreement;
7.2.1.3 Any infringement claim related to any patent,
invention, trade secret, trademark, service mark, trade name
or copyright where the infringement alleged is related to
Products designed prior to the Closing Date unless
subsequently modified by the Purchaser in a manner which
renders the Product to be infringing;
7.2.1.4 Any liability resulting from design defects
and/or product recalls with respect to Products designed
before the Closing Date unless subsequently
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modified by the Purchaser in a manner which renders the
Product defective;
7.2.1.5 Any liability resulting from actions by or
against Dillon Gage and Russo Securities and/or Taft Capital;
7.2.1.6 Any other liability of the Seller not
specifically assumed by the Purchaser; and
7.2.1.7 Reasonable fees and disbursement of counsel
incident to any of the foregoing.
7.2.2 As a condition to the designation, assignment or
transfer by the Seller of the Ajay Common Stock and/or the Options to
the Palm Springs shareholders, the Palm Springs shareholders will
assume the liability of Palm Springs under Section 7.2.1.
7.3 Indemnity Agreement of the Purchaser. The Purchaser shall
indemnify, defend, reimburse and hold harmless the Seller from and against any
and all claims, demands, penalties, fines, liabilities, obligations, losses,
settlements, damages, costs and expenses resulting from:
7.3.1 Any inaccuracy in, or breach of, any representation and
warranty or nonfulfillment of any covenant or other agreement on the
part of the Purchaser contained in this Agreement;
7.3.2 Any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of the Purchaser, contained
in any other agreement, certificate or other instrument furnished or to
be furnished to the Seller by the Purchaser pursuant to this Agreement;
7.3.3 Any liability of the Seller specifically assumed by the
Purchaser; and
7.3.4 Reasonable fees and disbursement of counsel incident to
any of the foregoing.
7.4 Indemnification Procedure for Third Party Claims.
7.4.1 Notice of Claim and Defense. The party seeking
indemnification under this Article shall give the party from whom
indemnification is sought prompt written notice of the assertion of any
third party claim of which said party has knowledge which is covered by
the indemnity agreements set
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forth in Section or Section , and the party obligated to indemnify will
undertake the defense thereof by representatives chosen by the party
seeking indemnification but acceptable to the party obligated to
indemnify. If the party obligated to indemnify, within a reasonable
period of time after notice of any such claim fails to defend, the
party seeking indemnification will have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for
the account and risk of the party obligated to indemnify, subject to
the right of the party seeking indemnification to assume the defense of
such claim at any time prior to settlement, compromise or final
determination thereof.
7.4.2 Payment of Sums Due. After any final judgment or award
shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction, or a settlement shall
have been consummated, or the parties shall have arrived at a mutually
binding agreement, with respect to each separate third party claim
indemnified by the party obligated to indemnify, the party seeking
indemnification shall forward to the party obligated to indemnify
notice of any sums due and owing (and the times when due) by the party
seeking indemnification with respect to such claim and the party
obligated to indemnify shall pay such sums to the party seeking
indemnification in cash, within 30 days after the date of such notice
or, if any such sums are due more than 90 days after the date of such
notice, ten days prior to the date each such sum is due.
7.5 Good Faith Efforts to Settle Disputes. Each of the parties agrees
that, prior to commencing any litigation against the other concerning any matter
arising in connection with this Agreement, such parties shall meet in a timely
manner and attempt in good faith to negotiate a settlement of such dispute.
7.6 Fees and Expenses. Notwithstanding any other provision in this
Article , in the event of any dispute or controversy, the prevailing party in
such dispute shall, in addition to any other remedies the prevailing party may
obtain in such dispute, be entitled to recover from the other party all of its
reasonable legal fees and out-of-pocket costs incurred by such party in
enforcing or defending its rights hereunder, excluding any costs incurred under
Section .
7.7 Litigation Support. If, and for so long as, any party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (a) any
transaction contemplated
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hereunder, or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Business, the other
party will cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel and provide such testimony
and access to its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party, unless the contesting or defending party is entitled to
indemnification therefor under this Article .
ARTICLE 8
COVENANTS OF PALM SPRINGS AND GIUFFRE
As further consideration of the Purchaser buying the Assets from Seller
under this Agreement, Seller and Giuffre hereby agree as follows:
8.1 Non-Competition. The provisions set forth below hereinafter are
collectively referred to as the "Covenant."
8.1.1 Covenant Not to Solicit. Seller and Giuffre agree
that commencing on the date of this Agreement and continuing through
December 31, 1998, for any reason whatsoever, they shall not directly
or indirectly, on their own behalf or on behalf of anyone else, solicit
or attempt to solicit, direct or take away any client, customer,
employee or prospective client or customer of the Business.
8.1.2 Covenant Not to Compete. Commencing on the date of
this Agreement and continuing through December 31, 1998 (the "Covenant
Term"), Seller and Giuffre warrant, represent and agree that, jointly
or severally, directly or indirectly, they will not own, manage,
operate, control, join, be employed by, participate in the ownership,
management, operation or control of, or be connected in any manner,
including, but not limited to, the positions of shareholder, director,
officer, consultant, independent contractor, employee, partner,
principal, agent or proprietor, with any business conducted in the
United States of America (the "Territory"), that is engaged in a
business which is the same or similar to that of the Business, for
product lines and types of products which are the same or similar to
those handled by the Business as of the Closing Date.
8.2 Confidentiality. Seller and Giuffre warrant, represent and agree
that any and all designs, methods, systems, developments,
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ideas, suggestions, improvements, devices, inventions, trade secrets or
processes relating in any manner to the operations, businesses, assets or
activities of the Business (hereinafter collectively referred to as
"Information"), whether protected or protectable by patent, trademark or
copyright or not, which were developed, disclosed to or otherwise obtained by
them during association or other involvement with the Business are confidential
and proprietary information and are the sole and absolute property of the
Business. The Seller and Giuffre further covenant and agree to keep secret the
Information at all times during the Covenant Term and not to disclose the
Information to anyone not directly associated with the Business (except as
directed by the Board or as may be necessary for the ordinary conduct of PSG's
business) and not to use the Information or knowledge of the same for their own
benefit within the Territory.
8.3 Covenants are Necessary and Reasonable. Giuffre acknowledges that
by virtue of the experience, access of information or other opportunity made
available to him during the course of his employment with the Seller, Giuffre
has acquired extensive skill and information specifically suited to immediate
application by a business in competition with the Business in manufacturing and
selling golf products and accessories. Seller and Giuffre agree that the
Covenants and Non-Disclosure provisions contained in this Article 8 above are
fair and appropriate in the circumstances. Prior to agreeing to this Article 8,
Seller and Giuffre have reviewed the entirety hereof of with counsel of their
choice.
8.4 Breach of Covenant; Remedies. In the event of a breach or
threatened breach by Seller or Giuffre of any term, covenant or provision of the
Covenant, or the unauthorized disclosure of any Information, PSG shall be
entitled to specific performance and/or injunctive relief, both pendente lite
and permanently, without the posting of bond or other security, because any
remedy at law would be inadequate and insufficient, provided, however, that this
Section 8.4 shall not be construed as prohibiting PSG from pursuing any other
available remedies for such breach or threatened breach, including, but not
limited to, the recovery of such damages as it can show it has sustained by
reason of such breach or threatened breach.
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ARTICLE 9
CERTAIN ADDITIONAL AGREEMENTS
9.1 Broker/Finder Fees. Each party will be responsible for any fees or
expenses of any broker or other finder retained by it or on its behalf. Any
broker or other finder fees and expenses of Palm Springs will not be charged
against or otherwise paid out of the Business.
9.2 Continued Services of Giuffre. For three years after the Closing
Date, Giuffre shall be available to provide consulting services to PSG without
payment of any consulting fees. PSG shall reimburse Giuffre for all reasonable
business expenses incurred by him in performing consulting services, including
all reasonable business entertainment expenses, reasonable expenses of travel
and reasonable living expenses while away from home on business or at the
request of and in the service of PSG, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established or
practiced, from time to time, by PSG.
9.3 Public Statements. The Seller shall not issue any public statement
or announcement concerning the transactions contemplated by this Agreement
without the prior consent of the Purchaser. Ajay or its counsel shall prepare a
press release and any other disclosure as may be required under applicable
securities laws or otherwise warranted and will provide Seller with copies
concurrently with the release of said disclosure.
9.4 Expenses. Each party shall bear its own costs and expenses
(including all legal, accounting, bank, investment banking and other costs) with
respect to the transactions contemplated hereunder. Costs and expenses, included
attorney fees, in excess of $10,000 incurred by Palm Springs and/or its
shareholders in connection with the LOI and this Agreement shall not be charged
against or otherwise paid out of the Business.
9.5 Waivers and Consents. All waivers and consents given hereunder
shall be in writing. No waiver by either party hereto of any breach or
anticipated breach of any provision hereof by the other party shall be deemed a
waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar, on the part of the same or the other
party.
9.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given only if and when (a) personally
delivered, or (b) three business days after mailing, postage prepaid, by
certified mail, or
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(c) when delivered (and receipted for) by an overnight delivery service, or (d)
when delivered by facsimile transmission for which automatic confirmation has
been received, addressed in each case as follows:
If to the Seller or Giuffre, to:
Joseph C. Giuffre
c/o Palm Springs Golf, Inc.
74-824 Lennon Place
Palm Desert, CA 92260
FAX NO. (619) 341-9563
with a copy to:
Richard I. Roemer, Esq.
Roemer & Harnik
45025 Manitou Dr.
Indian Wells, CA 92210
FAX NO.(619) 360-1211
If to the Purchaser, to:
Thomas W. Itin, Chief Executive Officer
Palm Springs Golf, Inc.
7001 Orchard Lake Road, Suite 424
West Bloomfield, MI 48322-3608
FAX NO. (810) 851-9080
with copies to:
Mary M. Maikoetter, Esq.
Friedlob Sanderson Raskin Paulson
& Tourtillott, LLC
1400 Glenarm Place, Suite 300
Denver, CO 80202
FAX NO. (303) 595-3970
Any party to this Agreement may change the address for the giving of notices and
communications to it or him, and/or copies thereof, by written notice to the
other parties in conformity with the foregoing.
9.7 Confidentiality. For a period of five years after the Closing Date,
Seller and its executive officers and agents shall keep confidential all
documents or other information included in the Assets and shall not use any of
such information or documents in any manner which could have the effect of
diminishing the value of the Assets purchased and sold hereunder.
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9.8 Examinations and Investigations. No review, examination or
investigation by the Purchaser shall diminish or obviate any of the
representations, warranties, covenants or other agreements of the Seller under
this Agreement.
9.9 Further Assurances. Each of the parties hereto will cooperate with
each other and will use its or his best efforts to obtain all necessary waivers
and consents from third parties. The Seller, at any time and from time to time
on and after the Closing, upon request by the Purchaser and without further
consideration, shall take or cause to be taken such actions and execute,
acknowledge and delivery, or cause to be executed, acknowledged and delivered,
such transfers, conveyances and assurances as may be reasonably requested by
Purchaser for the better conveying, transferring, assigning, delivering,
assuring and confirming the Assets to the Purchaser.
9.10 Retention of/Access to Business Records. For at least six years
following the Closing Date, Seller shall retain all business records related to
the Assets or the Business not conveyed to the Purchaser. During this period,
from time to time on and after the Closing, upon reasonable request by the
Purchaser and without further consideration, the Seller shall provide Purchaser
access to or copies of said business records.
9.11 Entire Agreement. This Agreement, including all Schedules and
Exhibits hereto, and the other Closing Documents constitute the entire agreement
of the parties with respect to the subject matter hereof, and may not be
modified, amended or terminated except by a written instrument specifically
referring to this Agreement signed by each of the parties hereto or as otherwise
provided in this Agreement.
9.12 Construction. If an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. The word "including" shall mean including without limitation.
The parties intend that the each representation, warranty and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter, regardless of the relative levels of specificity, which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
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9.13 Rights of Third Parties. All conditions of the obligations of the
parties hereto, and all undertakings herein, are solely and exclusively for the
benefit of the parties hereto and their successors and assigns, and no other
person or entity shall be deemed a beneficiary hereof or have standing to
require satisfaction of such conditions or to enforce such undertakings in
accordance with their terms or be entitled to assume that any party hereto will
refuse to consummate the exchange contemplated hereby in the absence of strict
compliance with any or all thereof.
9.14 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Michigan.
9.15 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
9.16 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
"PURCHASER"
PALM SPRINGS GOLF, INC.
By S/Thomas W. Itin
----------------------------------
Thomas W. Itin, Chief Executive
Officer
"SELLER"
PALM SPRINGS GOLF COMPANY, INC.
By S/Joseph C. Giuffre
----------------------------------
Joseph C. Giuffre, Chairman
and Chief Executive Officer
"AJAY"
AJAY SPORTS, INC. *
By S/Thomas W. Itin
----------------------------------
Thomas W. Itin, Chief Executive
Officer
"GIUFFRE" **
S/Joseph C. Giuffre
----------------------------------
Joseph C. Giuffre, Individually
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________________
* Solely for purposes of the representations contained in Article 5.
** Solely for purposes of the covenants contained in Article 8 and
the agreement contained in Section 9.2.
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LIST OF SCHEDULES AND EXHIBITS
Schedules:
1.1.2 Legal Description of Real Property
1.1.3 Furniture and Equipment
1.1.5.4 Inventions and Trade Secrets
1.1.5.5 Patents and Trademarks
1.1.7 Computer Software
1.1.9 Contracts
1.1.11 Personal and Real Property Leases
1.2 Excluded Assets
1.6 Allocation of Purchase Price
3.2 Permitted Liens
3.4 Financial Statements
3.5 Inventory
3.6 Accounts Receivable Ledger
3.10 Litigation
3.17 Warranties and Return Privileges
Exhibits:
Exhibit A Purchaser's Commitment Letter
Exhibit B Investment Letter - Ajay Sports, Inc.
Exhibit C Assignment and Bill of Sale
Exhibit D Assumption Agreement
Exhibit E Assignments of Trademarks
United States
Spain
State of California
Canada
Great Britain
Exhibit F Grant Deed
Exhibit G Giuffre Guaranty
Exhibit H Reserve Escrow Agreement
Exhibit I Earn in Escrow Agreement
<PAGE>
