EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this 15th day of May,
2000, by and between CARBITE, INC., a California corporation, (hereinafter
referred to as "Carbite"), CARBITE GOLF, INC., a British Columbia corporation,
and CARIZMA GOLF COMPANY, a California corporation (hereinafter referred to as
"Carizma").
WHEREAS, Carizma is a manufacturer and distributor of golf products;
WHEREAS, Carbite is a manufacturer and distributor of golf products and is
a wholly-owned subsidiary of Carbite Golf, Inc.:
WHEREAS, Carbite has agreed to purchase certain assets of Carizma;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
set forth below, the parties hereto agree as follows:
1. Purchase and Sale of Assets.
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A. Carbite agrees to purchase and Carizma agrees to sell, transfer, and
assign, the assets of Carizma set forth in Schedule A hereto (the
"Assets").
B. Carizma shall take all steps necessary to enable it to provide Carbite
good and marketable title to all the Assets, free and clear of all
liens, mortgages, encumbrances, equities or claims.
C. On or before May 15, 2000, Carizma shall provide to Carbite:
(i) possession of the Assets
(ii) all deeds of conveyance, bills of sale, transfers and
assignments in form and content satisfactory to Carbite
appropriate to effectively vest a good and marketable
title to the Assets in Carbite free and clear of all
Liens;
(iii) all consents, approvals, assignments or other instruments
necessary to assign to and perfect Carbite's interest in
the Intellectual Property Rights and to maintain the
registration or recording of those rights.
(iv) certified copies of such resolutions of the directors
and/or officers of Carizma as are required to be passed to
authorize the execution, delivery and implementation of
this Agreement.
2. Issuance of Common Shares of Carbite Golf, Inc.
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A. Carbite Golf, Inc. shall issue to Carizma or its assignee 792,632
common shares in the capital stock of Carbite Golf, Inc. at a deemed
price per share of $0.38.
B. Such issuance of shares shall be subject to regulatory approval by the
Canadian Venture Exchange and Carbite and Carbite Golf, Inc. shall use
their best efforts to expeditiously secure such approval. Such shares
shall be subject to the one-year hold period required by the Canadian
Venture Exchange and shall bear a Rule 144 legend.
3. Bonus Payment.
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A. For a period of five (5) years from the date of this Agreement,
Carbite shall pay to Carizma a bonus payment of $2.00 on each net
unit sold (gross units sold less returns) of Putterballs and
$7.50 on each net unit sold (gross units sold less returns) of
Power Ti-Pods which shall be due and payable to Carizma within
sixty (60) days after Carbite receives payment from its customer
on such sales.
B. Carbite shall pay to golf professional, Xxxx Xxxxxx, $1.00 on
each net unit sold (gross units sold less returns) of Putterballs
from the date of this Agreement through October 20, 2001.
C. If the aggregate bonus payments to Carizma at any time during the
five-year period exceed $220,000, the rate of the bonus payment
for the remainder of the period shall be reduced to $1.50 on the
Putterball and $5.00 on the Power Ti-Pods.
D. Carbite shall use its best efforts to sell the Putterballs and
Power Ti-Pods transferred under this Agreement, but shall not be
subject to any minimum number of sales.
E. The bonus payment shall not be payable on items distributed
without charge for samples, marketing, or promotional purposes.
F. Within thirty (30) days following the end of every other month.
Carbite shall provide Carizma a written statement setting forth
the bonus payments earned in the preceding sixty (60) days. The
first such statement shall be delivered on or before August 31,
2000.
G. Carizma shall have the right, upon ten (10) days written notice,
to inspect the sales records of Carbite relating to the Power Ti-
Pods and Putterball.
4. Private Placement.
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On or before May 30, 2000, Carizma shall tender or cause to be
tendered to Carbite a private placement of $400,000 for common shares
at a deemed price of $0.38 per share and share purchase warrants (a
"Unit") in the capital stock of Carbite Golf, Inc. Each Unit shall
consist of one common share and one-quarter of one share purchase
warrant, which share purchase warrant shall have an expiry date of
two (2) years from the date of subscription and the exercise price of
such share purchase warrants shall be $0.38 per share.
5. Representation and Warranties.
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A. Carizma represents and warrants that:
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(i) Carizma is a corporation duly incorporated pursuant to the laws of
the State of California and the legal and beneficial owner of the
Assets and has the due right, power and corporate authority to
transfer the Assets to Carbite;
(ii) the Assets are of good and merchantable quality and are free and
clear of any and all mortgages, security interests or other
encumbrances;
(iii) Carizma is not party to or bound by any express or implied product
warranties or representations or product guarantees other than
those warranties, if any, implied by law.
(iv) As to the Intellectual Property Rights, Carizma also represents
and warrants that:
a. none of the Intellectual Property Rights are subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by Carizma or restricting the sale
or licensing thereof by Carizma to any person;
b. Carizma has no knowledge that would cause a person to believe
that the use of the Intellectual Property Rights conflicts
with, infringes upon or violates any trademark, trade name,
trademark or trade name registration, service xxxx, brand xxxx
or brand name or any pending application relating thereto, or
any trade secret, know-how, programs or processes, or any
similar rights, of any person;
c. all registrations and filings necessary to preserve the rights
of Carizma in and to the Intellectual Property Rights have been
made.
(v) The values listed for the Assets in Schedule A are not the lower
of cost or fair market value.
B. Carbite, Inc. represents and warrants that it is a corporation duly
incorporated and validly existing and in good standing under the laws of
the State of California, that it has the power and capacity to enter into
this Agreement and carry out its terms, and that the Agreement has been
duly and validly authorized by all necessary corporate action on the part
of Carbite.
C. Carbite Golf, Inc. represents and warrants that:
(i) It is a corporation duly incorporated, validly existing and in
good standing under the laws of British Columbia, that it has the
power and capacity to enter into this Agreement and carry out its
terms, and that the Agreement has been duly and validly authorized
by all necessary corporate action on the part of Carbite Golf,
Inc.
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(ii) It is a reporting issuer in the Province of British
Columbia and listed on the Canadian Venture Exchange.
6. Indemnities.
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A. Carizma agrees to indemnify and save harmless Carbite and Carbite
Golf, Inc. from and against any and all losses, claims, damages,
liabilities, and costs incurred or suffered by Carbite or Carbite
Golf, Inc. (including lost profits, consequential damages, interest,
penalties, fines, monetary sanctions, attorney fees and costs) by
reason or resulting from, in connection with, or arising in any manner
whatsoever out of (i) the breach of any representation, warranty or
covenant or the inaccuracy of any representation of Carizma contained
or referred to in this Agreement or in any agreement, instrument or
document delivered by or on behalf of Carizma in connection therewith
and (ii) any disputes between Carizma and its shareholders, directors,
vendors, or any other third parties, specifically including but not
limited to the pending litigation entitled General Titanium v. Carizma
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Golf Company in San Diego County.
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B. Carbite agrees to indemnify and save harmless Carizma from and against
any and all losses, claims, damages, liabilities, and costs incurred
or suffered by Carizma (including lost profits, consequential damages,
interest, penalties, fines, monetary sanctions, attorney fees and
costs) by reason or resulting from, in connection with, or arising in
any manner whatsoever out of the breach of any warranty or covenant or
the inaccuracy of any representation of Carbite contained or referred
to in this Agreement or in any agreement, instrument or document
delivered by or on behalf of Carbite in connection therewith.
C. Carbite Golf, Inc. agrees to indemnify and save harmless Carizma from
and against any and all losses, claims, damages, liabilities, and
costs incurred or suffered by Carizma (including lost profits
consequential damages, interest, penalties, fines, monetary sanctions,
attorney fees and costs) by reason or resulting from, in connection
with, or arising in any manner whatsoever out of the breach of any
warranty or covenant or the inaccuracy of any representation of
Carbite Golf, Inc. contained or referred to in this Agreement or in
any agreement, instrument or document delivered by or on behalf of
Carbite Golf, Inc. in connection therewith
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7. Regulatory Approval.
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The issuance of shares and warrants in Carbite Golf, Inc. referenced
in this Agreement are subject to approval by the Canadian Venture
Exchange and will be subject to the one-year hold period required by
the Canadian Venture Exchange and shall bear a Rule 144 legend.
8. Miscellaneous.
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A. Waiver. Any waiver by Carbite of the strict performance by
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Carizma of the covenants herein contained or any failure on the
part of Carizma to enforce the same shall not extend to or be
taken in any manner whatsoever to effect a waiver of any
subsequent or other breach of any such covenant.
B. Governing Law. This Agreement shall be construed and enforced in
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accordance with the laws of the State of California, U.S.A.
C. Arbitration. Should there be a disagreement or a dispute between
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the parties hereto with respect to this agreement or the
interpretation thereof, the same shall be referred to a single
arbitrator pursuant to applicable arbitration legislation in
effect in the State of California, U.S.A., and any amendments or
regulation pertaining thereto, and shall be governed by the rules
of the American Arbitration Association and in respect of a
disagreement or dispute, the determination of such arbitrator
shall be final and binding upon the parties hereto. Each of the
Parties hereto agrees to bear 50% of the costs of such
arbitration proceedings and the prevailing party shall be
entitled to recover reasonable attorneys fees.
D. Successors. This Agreement shall inure to the benefit of and be
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binding upon the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.
E. Notices. All notices, requests, demands, directions, and other
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communications provided for hereunder shall be deemed to have
been given, delivered or made if they are in writing and either
mailed by certified mail, return receipt requested, telegraphed,
telefaxed, or actually delivered to the applicable party at the
following address:
To Carbite, Inc. or Carbite Golf, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx X.X.X. 00000
Telephone: (000) 000-0000 / Fax: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxxxxxxxx, President
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To Carizma Golf Company:
0000 Xxxxx Xxxxxx, Xx Xx
Xxxxxx Xxxxx, Xxxxxxxxxx X.X.X. 00000
Attention: Xxxxx Xxxxx
With a copy to:
Xxxxxxx Xxxxx:
0000 Xxxx Xxxxx Xxxx
XxXxxx, Xxxxx 00000
All notices, requests, demands, directions and other communications
shall be deemed to have been received: when telefaxed, on
transmission; when mailed, on the third calendar day after being
deposited in the mail, addressed as described above; and when
telegraphed or delivered, when actually received.
F. Entire Agreement. This Agreement contains the entire agreement between the
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parties hereto and no modification of same shall be binding upon the
parties unless the same is in writing and is signed by the respective
parties hereto.
G. Severability. Should any part of this Agreement be declared or held invalid
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for any reason, such invalidity shall not affect the validity of the
remainder which shall continue in force and effect and be construed as if
this Agreement had been executed without the invalid portion and it is
hereby declared the intention of the parties hereto that this Agreement
would have been executed without reference to any portion which may, for
any reason, be hereafter declared or held invalid.
H. No Deemed Partnership. Nothing contained in this Agreement shall, except to
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the extent specifically authorized hereunder, be deemed to constitute
either party a partner, agent or legal representative of the other party.
I. Further Assurances. The parties shall promptly execute or cause to be
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executed all documents, deeds, conveyances or any other instruments of
further assurance which may be reasonably necessary or advisable to carry
out fully the intent of this Agreement.
J. Counterparts. This Agreement may be executed in several parts in the same
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form and such parts so executed shall together form one original agreement
and such parts if more than one shall be read together and construed as if
all the signing parties hereto had executed one copy of this Agreement.
K. Currency. All references to currency herein are to currency of the United
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States of America.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day and year first written above.
CARBITE, INC.
BY: /s/ Xxxxxxx Xxxxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxxxx
Title: President
CARBITE GOLF, INC.
BY: /s/ Xxxxxxx Xxxxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxxxx
Title: President
CARIZMA GOLF COMPANY
BY: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
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SCHEDULE "A"
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ASSETS
1. Golf Products
11,500 Putterballs @ $12.00
180 Power Ti-Pods @ $90.00
7,800 Putters @ 15.00
Molds and molding equipment
Valued at $271,200
2. Other
A. Marketing materials including brochures, print advertisements,
artwork, shirts, caps and infomercials, 60 second spot and images
of pro golfer endorsers
B. Furniture, equipment, computers, storage and display racks
C. Intellectual Property Rights, specifically including: the names
and trademarks "Carizma," "Putterball," and "Balorizite",
the internet URL "xxxxxxxxxxx.xxx", and the pending patent on
the Putterball
Valued at $ 30,000
Total Value $301,200
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