EXHIBIT 2.1
ASSET SALE AGREEMENT
by and among
COBRA GOLF INCORPORATED
COYOTE SPORTS INC.
and
UNIFIBER CORPORATION
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Dated as of September 9, 1998
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TABLE OF CONTENTS
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ARTICLE I SALE AND PURCHASE OF ASSETS........................... 1
1.01. Sale and Purchase of Assets.......................... 1
ARTICLE II PURCHASE PRICE....................................... 4
2.01. Purchase Price for the Assets........................ 4
2.02. Allocation of Purchase Price......................... 5
ARTICLE III CLOSING............................................. 6
3.01. Closing.............................................. 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER............. 6
4.01. Organization and Authority........................... 6
4.02. Due Authorization; Binding Obligation............... 6
4.03. Non-Contravention.................................... 7
4.04. Financial Statements................................. 7
4.05. Regulatory Approvals................................. 7
4.06. Real Property........................................ 7
4.07. Personal Property.................................... 8
4.08. Permits; Compliance With Laws........................ 8
4.09. Litigation........................................... 8
4.10. Intellectual Property................................ 8
4.11. INTENTIONALLY OMITTED................................ 9
4.12. Employees............................................ 9
4.13. Environmental Matters................................ 9
i
4.14. Contracts............................................ 10
4.15. Disclaimer of Other Warranties....................... 11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER............... 11
5.01. Organization and Authority........................... 11
5.02. Due Authorization; Binding Obligation................ 11
5.03. Non-Contravention.................................... 11
5.04. Regulatory Approvals................................. 12
5.05. NON-Regulatory Approvals............................. 12
5.06. HIGHLY CONFIDENT LETTER.............................. 12
ARTICLE VI FURTHER AGREEMENTS AND ASSURANCES.................... 12
6.01. Government Filings and Approvals..................... 12
6.02. Consents............................................. 12
6.03. Access to Information................................ 13
6.04. Confidentiality...................................... 13
6.05. Sales and Transfer Taxes............................. 14
6.06. Insurance Matters.................................... 14
6.07. INTENTIONALLY OMITTED................................ 14
6.08. Cobra Trademarks..................................... 14
6.09. Warranty Service..................................... 15
6.10. Transitional Services Agreement...................... 15
6.11. Supply Agreement..................................... 15
6.12. Security interest.................................... 15
6.13. Financing Commitment................................. 15
ARTICLE VII CONDITIONS TO BUYER'S AND
COYOTE'S OBLIGATIONS................................. 15
ii
7.01. Accuracy of Representations and Warranties........... 16
7.02. Performance of Covenants............................. 16
7.03. Government Approvals................................. 16
7.04. No Legal Proceedings................................. 16
7.05. Transitional Services Agreement...................... 16
7.06. Supply Agreement..................................... 16
7.07. Opinion of Counsel................................... 16
7.08. Bills of Sale........................................ 16
7.09. Security Agreements.................................. 17
ARTICLE VIII CONDITIONS TO SELLER'S OBLIGATIONS................. 17
8.01. Accuracy of Representations and Warranties........... 17
8.02. Performance of Covenants............................. 17
8.03. Governmental Approvals............................... 17
8.04. No Legal Proceedings................................. 17
8.05. Transitional Services Agreement...................... 17
8.06. Supply Agreement..................................... 18
8.07. Opinion of Counsel................................... 18
8.08. Delivery of Note..................................... 18
8.09. Instruments of Assumption............................ 18
8.10. Security Agreements.................................. 18
8.11. Guaranty............................................. 18
ARTICLE IX SURVIVAL............................................. 18
9.01. Survival............................................. 18
iii
ARTICLE X EMPLOYEE MATTERS...................................... 19
10.01. Employment........................................... 19
10.02. Welfare Plan Benefits................................ 19
10.03. Prior Service........................................ 20
10.04. 401(k) Plan.......................................... 20
10.05. WARN Act............................................. 21
ARTICLE XI INDEMNIFICATION...................................... 21
11.01. Indemnification by Seller............................ 21
11.02. Indemnification by Buyer............................. 22
11.03. Third-Party Claims................................... 22
ARTICLE XII INTENTIONALLY OMITTED............................... 23
ARTICLE XIII MISCELLANEOUS...................................... 23
13.01. Integration; Amendment............................... 23
13.02. Assignment........................................... 23
13.03. Counterparts......................................... 23
13.04. Headings............................................. 23
13.05. Waiver; Requirement of Writing....................... 24
13.06. Finder's Fees; Brokers............................... 24
13.07. Bulk Transfers....................................... 24
13.08. Expenses............................................. 24
13.09. Notices.............................................. 24
13.10. Applicable Law; Consent to Jurisdiction.............. 25
13.11. Public Announcements................................. 26
13.12. No Third-Party Beneficiaries......................... 26
iv
EXHIBITS
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Exhibit A Form of Note
Exhibit B Form of Security Agreements
Exhibit C Form of Transitional Services Agreement
Exhibit D Form of Supply Agreement
Exhibit E Form of Opinion of Seller's Counsel
Exhibit F Form of Opinion of Buyer's Counsel
Exhibit G Form of Guaranty
SCHEDULES
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Schedule 1.01(a)(i) Tangible Assets
Schedule 1.01(a)(ii) Inventories
Schedule 1.01(a)(iii) Intellectual Property
Schedule 1.01(a)(iv) Leases
Schedule 1.01(a)(vi) Permits
Schedule 1.01(d)(vi) Excluded Assets
Schedule 4.04(a) Certain Financial Information
Schedule 4.07(a) Encumbrances; Personal Property
Schedule 4.08 Compliance With Laws
v
Schedule 4.09 Litigation
Schedule 4.12(b) Employee Matters
Schedule 4.12(c) Employee Benefit Plans
Schedule 4.13 Environmental Matters
Schedule 4.14 Contracts
Schedule 5.05 Non-Regulatory Approvals
Schedule 5.06 Highly Confident Letter
Schedule 10.01.1 Employees
Schedule 10.01.2 Severance Benefits
vi
ASSET SALE AGREEMENT
THIS ASSET SALE AGREEMENT, dated as of September 9, 1998 (this
"Agreement"), by and among COBRA GOLF INCORPORATED, a Delaware corporation
("Seller"), UNIFIBER CORPORATION, a California corporation ("Buyer") and COYOTE
SPORTS, INC., a Nevada corporation and the parent of Buyer ("Coyote").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller, through its West Coast Composites operation
("Composites"), is engaged in the manufacture of graphite golf club shafts, and
activities related thereto (collectively, the "Business"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase, on the
terms and conditions set forth in this Agreement, the Business and certain
assets of Composites;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto do hereby agree as follows:
ARTICLE I
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SALE AND PURCHASE OF ASSETS
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Section 1.01. Sale and Purchase of Assets.
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(a) Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties contained herein, on the Closing
Date (as defined in Section 3.01 below) Seller will sell, convey, assign,
transfer and deliver to Buyer, and Buyer will purchase and acquire, all of the
Seller's right, title and interest, as of the Closing (as defined in Section
3.01 below), in and to the following assets:
(i) all machinery, equipment, tooling, furniture and fixtures,
leasehold improvements, repair parts, other plant and office equipment and
supplies and other tangible personal property used by Seller in the
Business and located at the facility at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx, including, but not limited to, the tangible assets with book
value in excess of $5,000.00 each listed on Schedule 1.01(a)(i);
(ii) non-finished goods inventories, including work in process,
materials, parts, components, accessories and supplies of Seller and
pertaining exclusively to the Business included on Schedule 1.01(a)(ii)
less the materials consumed in production between September 7, 1998 and the
Closing Date (the "Inventories");
(iii) the trademark registration and licenses listed in Schedule
1.01(a)(iii) attached hereto, and any other proprietary and
intellectual property, rights and interests owned by or registered in the
name of Seller or owned by others and licensed by Seller, and used by
Seller exclusively in the Business (collectively, the "Intellectual
Property");
(iv) all leases, including real property leases, contracts,
purchase and sale orders and other agreements and commitments of Seller
involving payments to or from Seller in excess of $25,000 in the aggregate
over its term listed in Schedule 1.01(a)(iv) attached hereto, and other
leases, contracts, purchase and sale orders and other agreements and
commitments of Seller aggregating less than $25,000 pertaining exclusively
to the Business (each a "Contract" and collectively, the "Contracts");
(v) all accounting and operating data and records maintained by
Seller for the Business, including all books, records, cost information,
supplier lists, reference catalogs, payroll and personnel records, and
other similar property and information (provided that to the extent that
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any such items relate to any business of Seller or a subsidiary of Seller
other than the Business, copies thereof will be retained by Seller or such
subsidiary with all references to the Business redacted), but excluding any
such items to the extent (i) they are included in or primarily related to
any Retained Assets, as defined in Section 1.01(c) below or Retained
Liability, as defined in Section 2.01(c) below, (ii) any transfer thereof
is prohibited by law, or (iii) any transfer thereof would subject Seller or
any of its affiliates to any material liability;
(vi) all licenses, permits, authorizations, approvals and land
use variances and waste water discharge rights of Seller listed in Schedule
1.01(a)(vi) attached hereto (collectively, the "Permits"), to the extent
such Permits are transferable; and
(vii) any and all goodwill and going concern value of the
Business.
(b) The assets to be sold by Seller to Buyer pursuant to Section
1.01(a) above are hereinafter referred to collectively as the "Assets".
(c) Notwithstanding anything to the contrary contained in this
Agreement, Seller is not selling, conveying, assigning, transferring or
delivering to Buyer any assets other than as are specifically described in
Section 1.01(a); all other assets of Seller are being retained by Seller and are
hereinafter referred to as the "Retained Assets".
(d) Without limiting the generality of paragraph (c) of this Section
1.01, it is expressly understood and agreed that the following assets of Seller
shall be deemed to be Retained Assets:
(i) all bank accounts, cash and cash equivalents of Seller and
its subsidiaries and affiliates;
(ii) all insurance policies and all rights therein and related
thereto;
(iii) all assets that are used by Seller and its subsidiaries and
affiliates in providing general corporate, insurance, administrative and
research and development services to divisions, subsidiaries or operating
units of Seller or any of its subsidiaries or affiliates (other than the
Business), including without limitation assets relating to the provision of
financial, human resources, customer service, transportation, distribution,
legal, risk management, purchasing, research and development, management
information systems and product compliance services;
(iv) all of Seller's facilities other than those located at 0000
Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000;
(v) other than to the extent provided for in Section 6.08, all
rights in and use of the "Cobra" brand name and all corporate symbols and
logos related thereto and all names, trademarks, trade names and service
marks which include the "Cobra" brand name or any derivative thereof, and
any and all goodwill represented thereby and pertaining thereto;
(vi) all machinery, equipment, tooling, fixtures, supplies or
other tangible property used by Seller for machine shop operations or for
painting and other finishing processes of golf club heads, including but
not limited to that listed on Schedule 1.01(d)(vi) attached hereto; and
(vii) all rights, causes of action, claims, sums and fees arising
out of (i) any asset described in this definition of Retained Assets or
(ii) any Retained Liabilities (as defined in Section 2.01(c) below).
(e) Notwithstanding anything to the contrary contained herein, this
Agreement shall not constitute an agreement to assign or transfer any lease,
contract or other agreement or understanding or Permit if an assignment,
transfer or attempted assignment or transfer of the same without the consent,
waiver or approval of the other or issuing party or parties thereto would
constitute a breach or violation thereof or in any way impair the rights of
Seller or Buyer thereunder and such consent, waiver or approval is not obtained
prior to the Closing Date. Seller shall use reasonable efforts, and Buyer and
Coyote will cooperate in all reasonable respects with Seller, to obtain all
consents, waivers and approvals and to resolve all impracticalities of
assignments or transfers necessary to assign and transfer to Buyer any such
lease, contract or other agreement or understanding or Permit. If such consent,
waiver or approval is not obtained or if an attempted assignment or transfer
would be ineffective or would impair Seller's or Buyer's rights under any such
lease, contract or other agreement or understanding or Permit so that Buyer
would not receive all such rights, Seller shall use reasonable efforts to
provide or cause to be provided to Buyer the benefits of any such lease,
contract or other agreement or understanding or Permit and Seller shall pay or
cause to be paid to Buyer when received all monies received by Seller with
respect to any such lease, contract or other agreement or understanding or
Permit, if applicable. In consideration of Seller providing or causing to be
provided to the Buyer the benefits thereof, Buyer shall perform and discharge
when due on behalf of Seller all of Seller's liabilities, obligations or
commitments thereunder in accordance with the provisions thereof.
ARTICLE II
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PURCHASE PRICE
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Section 2.01. Purchase Price for the Assets.
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(a) Subject to the terms and conditions of this Agreement, and in
reliance upon the representations and warranties contained herein and in
consideration for the sale, conveyance, assignment and transfer of the Assets,
Buyer will deliver on the Closing Date:
(i) $6,000,000 (the "Purchase Price"), payable by (A) good funds
in the amount of $500,000 to such account as Seller shall designate in writing;
and (B) by delivery at the Closing to Seller of a promissory note (the "Note"),
bearing interest at an annual rate which equals 12% or the maximum interest
allowable under the California Civil Code Section 1916 (the "Interest Rate"), in
the form attached hereto as Exhibit A. Principal and interest under such
promissory note shall be payable on the demand of Seller upon the date (the
"Payment Date") which is earlier to occur of (x) five business days after Coyote
receives net proceeds of any financing or recapitalization equal to or in excess
of $5.5 million excluding any replacement of existing credit facilities or (y)
March 31, 1999. The Note shall be secured according to the terms of the two
Security Agreements (the "Security Agreements") in the form attached hereto as
Exhibit B, granting Seller a purchase money security interest in all of the
Common Stock of Buyer and a purchase money security interest in the Assets until
Buyer makes full payment due under the Note; and
(ii) such written instruments of assumption in such form as
Seller shall reasonably request to effect or evidence the assumption by Buyer of
the following:
(A) all liabilities and obligations, whether accrued, absolute,
contingent or otherwise, incurred by Seller through the Closing Date in
respect of the Business which are reflected on Schedule 2.02 (a)(ii)(A).
(B) all liabilities and obligations relating to the Leased Real
Property (as defined in Section 4.06 below) arising under Environmental
Laws (as defined in Section 4.13 below) or otherwise relating to the
generation, use, storage, handling, disposal or Release (as defined in
Section 4.13 below) of Hazardous Substances (as defined in Section 4.13
below) on, about or from such premises or the disposal or Release of
Hazardous Substances from such premises onto any other premises;
(C) all liabilities and obligations of the Business under the
agreements, leases, purchase and sale orders and commitments entered into
in the ordinary course of business, including the items listed in Section
1.01(a)(vi); provided, however, that no such liabilities and obligations
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shall be for breach of or non-compliance with any such items referred to in
this clause (C) by Seller or the Business occurring as of or prior to the
Closing; and
(D) all other liabilities and obligations expressly assumed by
Buyer elsewhere in this Agreement, including without limitation those
liabilities and obligations contained in Article X.
(b) The liabilities to be assumed by Buyer pursuant to Section
2.01(a)(ii) above are hereinafter referred to collectively as the "Assumed
Liabilities".
(c) Notwithstanding anything to the contrary contained in this
Agreement, Buyer is not assuming any liabilities or obligations of Seller other
than as are specifically described in clauses (ii)(A), (B), (C), or (D) of
Section 2.01(a); all other liabilities and obligations of Seller are being
retained by Seller and are hereinafter referred to as the "Retained
Liabilities".
Section 2.02. Allocation of Purchase Price.
----------------------------
Commencing upon the Closing, Seller's representatives will prepare a
statement (the "Closing Statement") which sets forth the book value, as of the
Closing Date, of the Assets and the Assumed Liabilities, based on a physical
inventory and computed on a basis consistent with the past practices of Seller.
The parties acknowledge that Buyer has had the opportunity to review Seller's
schedule of property, plant and equipment (including leasehold improvements) and
the amounts and rates of depreciation and amortization in respect thereof, and
Seller agrees to use such values in preparing the Closing Statement. Buyer
will, not later than 90 days after the Closing Date, prepare and deliver to
Seller a schedule (the "Allocation Schedule") allocating for purposes of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), the Purchase
Price and the Assumed Liabilities among the Assets in accordance with Treas.
Reg. 1.1060-1T (or any comparable provisions of state or local tax law) or any
successor provision. Seller will have the right to raise reasonable objections
to the Allocation Schedule
within 30 days after its receipt thereof, in which event Seller and Buyer will
negotiate in good faith to resolve such objections. If the parties have not
resolved such objections within 30 days after the initiation of such attempts,
such objections will be resolved by an arbitration to be conducted by Deloitte &
Touche LLP, whose fees and expenses will be borne equally by Buyer and Seller.
Buyer and Seller will be bound by the determination of the arbitrator rendered
in such arbitration. Except to the extent otherwise required by applicable
laws, Buyer and Seller will make all tax returns in a manner consistent with the
Allocation Schedule (or, to the extent any objection shall have been made to the
Allocation Schedule, in a manner consistent with the resolution of such
objection by the parties or, if applicable, the arbitrator acting with respect
to such resolution) and will not make any inconsistent statement or adjustment
on any returns or during the course of any Internal Revenue Service or other tax
audit.
ARTICLE III
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CLOSING
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Section 3.01. Closing.
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The closing of the sale and purchase of the Assets (the "Closing")
will take place at the offices of Xxxx Xxxx Xxxx & Freidenrich LLC, 0000
Xxxxxxxxx Xxxxxx, Xxx Xxxxx, XX 00000-0000 at 10:00 a.m. local time (and
effective 12:01 a.m. local time) on September 9, 1998, or at such other place,
time or date as may be agreed to in writing by Seller and Buyer (such time and
date being herein sometimes referred to as the "Closing Date").
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants to Buyer and Coyote as follows:
Section 4.01. Organization and Authority.
--------------------------
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on the Business as it is now being conducted.
Section 4.02. Due Authorization; Binding Obligation.
-------------------------------------
Seller has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; the execution, delivery
and performance of this Agreement by Seller has been duly authorized by all
necessary corporate action on the part of Seller; and this Agreement has been
duly executed and delivered by Seller and constitutes the valid and legally
binding obligation of Seller enforceable in accordance with its terms, subject
to the qualification, however, that enforcement of the rights and remedies
created hereby is subject to bankruptcy and other similar laws of general
application relating to or affecting the rights and remedies of creditors.
Section 4.03. Non-Contravention.
-----------------
The execution, delivery and performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby do not and will not
contravene the Certificate of Incorporation or By-laws of Seller and do not and
will not conflict with or result in a breach of or default under, or result in
or permit the creation of any lien, charge or encumbrance upon any of the Assets
pursuant to any indenture, mortgage, lease, agreement, instrument, judgment,
decree, order or ruling to which Seller is a party or by which it or any of the
Assets is bound or affected, except for any such conflict, breach or default
that, individually or in the aggregate, would not have a material adverse effect
on (x) the business, financial condition or operations of the Business or (y)
the ability of Seller to consummate the transactions contemplated by this
Agreement (a "Material Adverse Effect").
Section 4.04. Financial Statements.
--------------------
Attached hereto as Schedule 4.04(a) are Seller's records of operating
expenses for Composites for the fiscal years 1996 and 1997 and as of the end of
the second fiscal quarters of 1997 and 1998. To the knowledge of Seller, in all
material respects, the operating expense data on Schedule 4.04(a), including the
selected notes thereto, present fairly the operating expense information of
Composites as included for the respective periods covered thereby.
Section 4.05. Regulatory Approvals.
--------------------
Seller is not required to file, seek or obtain any governmental or
regulatory notice, filing, authorization, approval, order or consent, or any
bond in satisfaction of any governmental regulation, in connection with the
execution, delivery and performance of this Agreement by Seller or in order to
prevent termination of any material right, privilege, license or agreement
relating to the Business.
Section 4.06. Real Property.
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(a) Seller has (A) valid and subsisting leasehold interests in the
real property leased by it included in the Assets (the "Leased Real Property")
and (B) either good and marketable title or a valid and subsisting leasehold
interest in and to all plants, buildings, improvements, fixtures and personal
property affixed to such real property located on the Leased Real Properties,
and shall transfer such leasehold interests at the Closing free and clear of all
liens, mortgages, pledges, defects, encumbrances and charges of all kinds
(collectively hereinafter referred to as "Encumbrances"), other than (i)
Encumbrances for current taxes not yet due and payable, (ii) zoning and building
statutes, ordinances, resolutions or regulations, and (iii) with respect to the
Leased Real Properties (and other leased Assets), rights of the owners set forth
therein (each a "Permitted Encumbrance").
(b) With respect to the lease of the Leased Real Property, to Seller's
knowledge, there is not (A) any material default or event of default on the part
of Seller as lessee thereunder, (B) any default or event of default on the part
of the lessor thereunder, or (C) any event that with the giving of notice or
passage of time or both would constitute such a default or event of default on
the part of Seller or, to Seller's knowledge, on the part of any such lessor.
Section 4.07. Personal Property.
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(a) Seller owns all personal property included in the Assets free and
clear of all Encumbrances, except for the items set forth on Schedule 4.07(a)
hereto and Permitted Encumbrances, and shall transfer title to the same at the
Closing free and clear of all Encumbrances other than Permitted Encumbrances.
(b) In all material respects, the machinery and equipment included in
the Assets is in reasonable operating condition and repair, ordinary wear and
tear excepted, and has been maintained in accordance with accepted industry
standards and practices.
Section 4.08. Permits; Compliance With Laws.
-----------------------------
(a) As of the date hereof, Seller possesses all Permits necessary to
enable it to own, lease or otherwise hold the Assets and to carry on the
Business as presently conducted, other than any such Permits which if not
obtained would not have a Material Adverse Effect.
(b) To Seller's knowledge, except as set forth on Schedule 4.08,
Seller (with respect to the Business) is in compliance with all Laws (other than
Environmental Laws) applicable to them, except for failures to so comply which
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.09. Litigation.
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Except as set forth on Schedule 4.09, on the date hereof Seller (with
respect to the Business) is not a party to any legal action, suit, investigation
or other proceeding by or before any Governmental Entity with respect to which
there is a reasonable likelihood of an adverse determination which, individually
or in the aggregate, would have a Material Adverse Effect or which would prevent
or materially impair the transactions contemplated by this Agreement, and, to
Seller's knowledge, no such legal action, suit, investigation or proceeding has
been threatened. Except as set forth on Schedule 4.09, on the date hereof there
are no outstanding orders, rulings, decrees or judgments to which Seller (with
respect to the Business) is a party or by which Seller is bound, by or with any
Governmental Entity, which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect or which would prevent or materially
impair the transactions contemplated by this Agreement.
Section 4.10. Intellectual Property.
---------------------
Seller is, or as of the Closing Date will be, the owner of, and will
transfer to Buyer, free and clear of any security interest, the Intellectual
Property identified in Schedule 1.01(a)(iii) hereto. To Seller's knowledge (a)
the Intellectual Property identified in Schedule 1.01(a)(iii) is in full force
and effect and (b) except as otherwise indicated on Schedule 1.01(a)(iii), there
is no existing claim or demand of any person alleging that Seller's use of the
Intellectual Property infringes the rights of such person. Except as otherwise
indicated on Schedule 1.01(a)(iii), there are no outstanding licenses of the
Intellectual Property.
Section 4.11. Intentionally Omitted
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Section 4.12. Employees.
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(a) Seller (with respect to the Business) is not on the date hereof a
party to any collective bargaining agreement relating to any of its Employees
(as defined in Section 10.01).
(b) Except as set forth on Schedule 4.12(b), on the date hereof there
is no labor strike or work stoppage pending or, to Seller's knowledge,
threatened against Seller (with respect to the Business) which, individually or
in the aggregate, would have a Material Adverse Effect.
(c) Schedule 4.12(c) sets forth each material pension, retirement,
profit sharing, deferred compensation, stock bonus or other similar plan; each
material medical, vision, dental or other health plan; each material life
insurance plan; and any other material employee benefit plan, in each case, to
which Seller (with respect to the Business) is on the date hereof required to
contribute, or which Seller (with respect to the Business) on the date hereof
sponsors for the benefit of any of its employees, or under which employees (or
their beneficiaries) of Seller (with respect to the Business) are on the date
hereof eligible to receive benefits (each a "Plan"), including, without
limitation, any material ERISA Benefit Plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")).
(d) All Plans which are ERISA Benefit Plans are on the date hereof in
compliance in all material respects with the provisions of the Code and the
rules and regulations promulgated thereunder to the extent that ERISA, the Code
and such rules and regulations are intended to apply. No reportable event (as
defined in Section 4043 of ERISA) has occurred with respect to any Plan which is
an ERISA Benefit Plan subject to Title IV of ERISA which would subject Seller
(with respect to the Business) on the date hereof to any liability which,
individually or in the aggregate, would have a Material Adverse Effect.
Section 4.13. Environmental Matters.
---------------------
(a) Except as set forth in Schedule 4.13, and except as would not,
individually or in the aggregate, have a Material Adverse Effect, during the two
years prior to the date of this Agreement, (i) Seller has not received any
written communication from a Governmental Entity or third party that alleges
that Seller (with respect to the Business) is not in compliance in all material
respects with any Environmental Laws (as defined below); (ii) to the knowledge
of Seller, Seller (with respect to the Business) is and has been in compliance
in all material respects with all Environmental Laws, (iii) Seller (with respect
to the Business) has not received notice of or entered into any judgment, decree
or order issued by any Governmental Entity pertaining to compliance with any
Environmental Law or to any investigation or cleanup of Hazardous Substances (as
defined below) under any Environmental Law, and (iv) Seller has not received any
written or, to the knowledge of the Seller, oral communication alleging that
Seller has any liability under any Environmental Law as a result of arising from
any Release of Hazardous Substances from the operation of the Business at any
facilities currently or formerly owned by Seller.
(b) For purposes of this Agreement, "Environmental Law" shall mean any
applicable law, statute, constitution, rule, regulation, judgment, ruling,
order, decree, injunction and determination of a Governmental Entity existing on
the date hereof which deals with (i) pollution or protection of the environment
or (ii) exposure of persons to toxic or hazardous substances, raw materials,
chemicals or wastes; provided, however, that the term "Environmental Law" shall
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not include any such law, statute, constitution, rule, regulation, judgment,
ruling, order, decree, injunction and determinations to the extent they relate
to product liability matters. For purposes of this Agreement, "Hazardous
Substance" means any substance that (i) is or contains asbestos, polychlorinated
biphenyls, petroleum or petroleum-derived substances or wastes, (ii) requires
removal or remediation under any Environmental Law, or is defined, listed or
identified as a "Hazardous Waste" or "Hazardous Substance", or words of similar
import, thereunder or (iii) is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated as such by any Governmental Entity under any Environmental Law. For
purposes of this Agreement, the term "Release"
means any action, event or occurrence qualifying as a "release" under 42 U.S.C.
(S) 9601 (22).
(c) Notwithstanding the generality of any other representations and
warranties contained in this Agreement, this Section 4.13 will be deemed to
contain the only representations and warranties in this Agreement with respect
to environmental matters or Environmental Laws.
Section 4.14. Contracts.
---------
Except as set forth on Schedule 4.14, on the date hereof, to Seller's
knowledge, there are no (i) defaults, violations or breaches on the part of
Seller (with respect to the Business) under the provisions of any Contract (and
no event has occurred and is continuing that constitutes, or with notice or
passage of time or both, would constitute a default, violation or breach by
Seller (with respect to the Business) under any Contract) or (ii) defaults,
violations or breaches on the part of the other party or parties under the
provisions of any Contract, except in either case (A) for defaults, violations
or breaches which would not, individually or in the aggregate, have a Material
Adverse Effect and (B) that in order to avoid a default, violation or breach
under any Contract the consent of the other party or parties thereto may be
required in connection with the transactions contemplated hereby. Each Contract
constitutes a legal, valid and binding obligation of Seller (and, to the
knowledge of Seller, the other party or parties thereto), enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting the enforcement of creditors' rights in general and by general
principles of equity.
Section 4.15. Disclaimer of Other Warranties.
------------------------------
Other than as contained in this Agreement, Seller has made and makes
no representation or warranty to Buyer of any kind whatsoever. Thus, except as
otherwise provided in this Agreement, the sale and transfer of the Assets
provided for herein is made "as is" and "where is"; furthermore, with the
exception of the representations and warranties stated in this Agreement, there
are no other warranties of any kind, express or implied, which attach to the
Assets, or as to the condition, quality and/or performance capability of any of
the Assets, including the capability of any computers, computer circuitry,
information systems, manufacturing systems or maintenance systems to calculate
calendar dates correctly.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF BUYER AND COYOTE
--------------------------------------------------
Buyer and Coyote hereby jointly and severally represent and warrant to
Seller as follows:
Section 5.01. Organization and Authority.
--------------------------
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of California with full corporate power and
authority to own and operate its business and properties and to carry on the
Business as it is now being conducted. All of the outstanding shares of capital
stock of Buyer are owned beneficially and of record by Coyote.
Section 5.02. Due Authorization; Binding Obligation.
-------------------------------------
Each of Buyer and Coyote has full corporate power and authority to
execute and deliver this Agreement and perform its respective obligations
hereunder; the execution, delivery and performance of this Agreement by Buyer
and Coyote have been duly authorized by all necessary corporate action on the
part of Buyer and Coyote; and this Agreement has been duly executed and
delivered by Buyer and Coyote and constitutes the valid and legally binding
obligation of Buyer and Coyote enforceable in accordance with its terms, subject
to the qualification, however, that enforcement of the rights and remedies
created hereby is subject to bankruptcy and other similar laws of general
application relating to or affecting the rights and remedies of creditors.
Section 5.03. Non-Contravention.
-----------------
The execution, delivery and performance of this Agreement by Buyer and
Coyote and the consummation of the transactions contemplated hereby do not and
will not contravene the Certificate of Incorporation or By-laws of Buyer or of
Coyote and do not and will not conflict with or result in a breach of or default
under any indenture, mortgage, lease, agreement, instrument, judgment, decree,
order or ruling to which Buyer or Coyote is a party or by which either of them
or any of their respective properties are bound or affected.
Section 5.04. Regulatory Approvals.
--------------------
Neither Buyer nor Coyote is required to file, seek or obtain any
governmental notice, filing, authorization, approval, order or consent, or any
bond in satisfaction of any governmental regulation, in connection with the
execution, delivery and performance of this Agreement by Buyer and Coyote.
Section 5.05. Non-Regulatory Approvals.
------------------------
Other than as listed on Schedule 5.05, neither Buyer nor Coyote is
required to file, seek or obtain any notice, filing, authorization, approval,
order or consent, in connection with the execution, delivery and performance of
this Agreement by Buyer and Coyote.
Section 5.06. Highly Confident Letter.
-----------------------
Coyote has received a letter (the "Letter"), reproduced as Schedule
5.06, from EBI Securities Corporation stating that they are "highly confident"
that they will be able to raise between $6 million and $12 million by December
31, 1998 in a private financing (the "Private Financing") for Coyote. The
Letter also acknowledges that $6 million of the Private Financing will be used
to discharge the Note.
ARTICLE VI
----------
FURTHER AGREEMENTS AND ASSURANCES
---------------------------------
Section 6.01. Government Filings and Approvals.
--------------------------------
Seller, Buyer and Coyote agree to use their best efforts to comply
promptly with any requests or requirements which applicable Federal or state law
or governmental officials may impose on them with respect to the transactions
which are the subject of this Agreement.
Section 6.02. Consents.
--------
Prior to the Closing Date, Seller, Buyer and Coyote will cooperate in
using their reasonable efforts to obtain any required consents to assignments of
the agreements, leases, Permits, rights, licenses, purchase and sale orders and
commitments listed in Schedules 1.01(a)(iii) and (vi) hereto. From time to time
after the Closing Date, at Buyer's request and without further consideration,
Seller will execute and deliver such instruments of conveyance, assignment and
transfer and take such other action as Buyer may reasonably require to enable
Seller more effectively to transfer to Buyer and to put Buyer in possession of
the Assets.
Section 6.03. Access to Information.
---------------------
From and after the Closing, Seller will make or cause to be made
available to Buyer or any affiliate of Buyer and any of their agents and
employees (i) the reasonable assistance of Seller and Seller's employees and
(ii) all business records and files of Seller and their affiliates related to
the Business which do not constitute Assets (other than information which is
legally privileged, subject to confidentiality obligations to third parties or
the provision of which is prohibited by law), in each case, during regular
business hours as may be reasonably necessary for (A) preparing financial
statements covering operations and transactions after the Closing Date, (B)
investigating, settling, preparing for the defense or prosecution of, defending
or prosecuting any existing or future action, suit or proceeding, (C) preparing
reports to stockholders and governmental or regulatory entities, or (D) such
other purposes for which access to such employees or documents is reasonably
necessary; provided, however, that access to such employees and business records
-------- -------
and files will not unreasonably interfere with or adversely affect the normal
operations of Seller and its affiliates and the reasonable out-of-pocket
expenses of Seller incurred in connection therewith will be paid by Buyer.
Section 6.04. Confidentiality.
---------------
(a) Until the Closing Date, Buyer and Coyote shall, and shall cause
each of their affiliates and each of the directors, officers, employees, agents,
advisors and representatives of Buyer and Coyote and their affiliates to, (i)
maintain in confidence any and all information concerning the Business provided
to them by Seller or otherwise learned by them in the course of the negotiation
of this Agreement and the transactions contemplated hereby and by their
investigation of the Business and (ii) disclose such information only to
persons, corporations or other entities which are under the control of Buyer or
an affiliate thereof, or to third parties serving as Buyer's advisors. If the
transactions contemplated by this Agreement shall not be consummated (whether
this Agreement is terminated pursuant to Article XII or otherwise), such
confidence shall be maintained and such information shall not be used in
competition with Seller. It is understood that neither Buyer nor Coyote shall
have liability hereunder for disclosure or use of any such information which (w)
is in or, through no fault of Buyer or Coyote, their affiliates, the
representatives of Buyer or Coyote or their affiliates, comes into the public
domain, or (x) was known to Buyer or Coyote prior to July 28, 1998, or (y) was
acquired by Buyer or Coyote from other sources, provided such sources are not,
--------
to Buyer's or Coyote's knowledge, bound by any confidentiality agreement with
Seller or any affiliate thereof or (z) which Buyer or Coyote is legally required
to disclose.
(b) If the transactions contemplated by this Agreement shall be
consummated, Seller shall, and shall cause each of its affiliates and each of
the representatives of Seller and their affiliates to (i) maintain in confidence
any and all information concerning the Business and (ii) refrain from using any
and all information for their own benefit or in competition with or otherwise to
the detriment of Buyer or Coyote or their affiliates or the Business. It is
understood that Seller shall have no liability hereunder for disclosure or use
of any such information which
(x) is in or, through no fault of Seller, its affiliates, the representatives of
Seller or their affiliates, comes into the public domain, or (y) was acquired by
Seller from other sources after the Closing, provided such sources are not, to
--------
Seller's knowledge, bound by any confidentiality agreement with Buyer or Coyote
or any affiliate of Buyer or Coyote, or (z) which Seller is legally required to
disclose.
Section 6.05. Sales and Transfer Taxes.
------------------------
All applicable sales, use and transfer taxes (including, without
limitation, taxes, if any, imposed upon the transfer of personal property) and
filing, recording, registration, stamp, documentary and other similar taxes and
fees that are payable in connection with this Agreement, the transactions
contemplated by this Agreement or the documents giving effect to such
transactions will be borne by Buyer, and Buyer and Coyote will indemnify and
hold Seller harmless from any such liabilities.
Section 6.06. Insurance Matters.
-----------------
Buyer and Coyote acknowledge that, as of the Closing Date, Seller and
Fortune Brands, Inc. intend to cancel all insurance coverage relating to the
Assets and the Business (other than in respect of workers' compensation and
medical expenses to the extent Seller retains liability therefor pursuant to
Article X below), and Buyer will, as of the Closing Date, be responsible for its
own insurance coverage.
Section 6.07. Intentionally Omitted.
---------------------
Section 6.08. Cobra Trademarks.
----------------
The parties hereto acknowledge and agree that (i) certain finished
products, packaging materials and advertising materials included as part of the
Assets bear the "Cobra" brand name and corporate symbols and logos related
thereto and certain names, trademarks, trade names and service marks which
include the "Cobra" brand name or derivatives thereof, and that the "Cobra"
brand name and, except as listed on Schedule 1.01(a)(iii), such corporate
symbols, logos, names, trademarks, trade names and service marks (the "Marks")
do not constitute Assets, are not being transferred to Buyer or to Coyote and
(ii) all products bearing such Marks shall be sold or delivered only to Seller
or Seller's designee.
Section 6.09. Warranty Service.
----------------
Buyer shall xxxx all products produced by the Business following the
Closing in a manner agreed to by the parties such that the date of manufacture
of such products may be determined.
Buyer shall provide warranty service in accordance with Seller's
existing warranty policy on all products sold by the Business from and after the
Closing. Prior to the date hereof, Seller has delivered to Buyer copies of
Seller's existing warranties on such products. Seller shall be responsible for
warranty service for all products manufactured prior to the Closing.
Section 6.10. Transitional Services Agreement.
-------------------------------
Seller and Buyer shall enter into an agreement regarding the provision
by Seller to Buyer of certain transitional services, substantially in the form
of Exhibit C hereto (the "Transitional Services Agreement").
Section 6.11. Supply Agreement.
----------------
Buyer and Seller shall enter into an agreement regarding the provision
of certain graphite golf club shafts by Buyer to Seller, substantially in the
form of Exhibit D hereto (the "Supply Agreement").
Section 6.12. Security Interest.
-----------------
As security for the performance of Coyote's obligations to Seller
under this Agreement, Coyote, pursuant to the Security Agreement, grants to
Seller and Seller shall retain a senior security interest in all of the Common
Stock of Buyer, Buyer to further secure Coyote's obligations under this
Agreement and Buyer's obligations under this Agreement and the Supply Agreement,
grants to Seller a purchase money security interest in the Assets. Buyer shall
execute and deliver to Seller such further documents and instruments, including
UCC filings, as Seller may reasonably request to further evidence and perfect
Seller's security interest in the Assets during the term of this Agreement.
Section 6.13. Financing Commitment.
--------------------
Buyer shall diligently pursue financing sufficient to enable Buyer to
pay in cash the Purchase Price in accordance with Section 2.01 (a)(i) above (the
"Financing"), and Buyer shall notify Seller within one business day of receipt
of an unconditional commitment for the Financing and shall deliver to Seller a
true and correct copy of such financing commitment within three business days of
its receipt.
ARTICLE VII
-----------
CONDITIONS TO BUYER'S AND COYOTE'S OBLIGATIONS
----------------------------------------------
The obligations of Buyer and Coyote hereunder are subject to the
satisfaction, or waiver in writing by Buyer, on or prior to the Closing Date, of
the following conditions:
Section 7.01. Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of Seller set forth in Article IV
hereof shall be true and correct in all material respects on the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date, and Seller shall have delivered to Buyer a certificate
to that effect, dated the Closing Date, and signed by the President or a Vice
President of Seller.
Section 7.02. Performance of Covenants.
------------------------
Each and all of the covenants and agreements of Seller to be performed
or complied with prior to or on the Closing Date shall have been duly performed
or complied with by Seller, and Seller shall have delivered to Buyer a
certificate to that effect, dated the Closing Date, and signed by the President
or a Vice President of Seller.
Section 7.03. Government Approvals.
--------------------
Any required governmental approvals shall have been obtained.
Section 7.04. No Legal Proceedings.
--------------------
No investigation, action or proceeding by or before any court or other
governmental authority shall have been commenced or threatened, and no inquiry
shall have been received, that in the reasonable judgment of the Board of
Directors of Buyer may lead to an action or proceeding to restrain or challenge
the transactions contemplated by this Agreement or may impose material liability
on Buyer or its affiliates or the Assets if such transactions are consummated.
Section 7.05. Transitional Services Agreement.
-------------------------------
Seller shall have executed and delivered to Buyer the Transitional
Services Agreement, substantially in the form of Exhibit C hereto.
Section 7.06. Supply Agreement.
----------------
Seller shall have executed and delivered to Buyer the Supply
Agreement, substantially in the form of Exhibit D hereto.
Section 7.07. Opinion of Counsel.
------------------
Buyer shall have received the opinion of counsel for Seller, to the
effect set forth in Exhibit E hereto.
Section 7.08. Bills of Sale.
-------------
Seller shall have delivered to Buyer such bills of sale, assignments
and instruments of transfer and conveyance as will be reasonably required by
Buyer for the transfer to Buyer of all of Seller's right, title and interest to
and in the Assets.
Section 7.09. Security Agreements.
-------------------
Seller shall have executed and delivered to Buyer the Security
Agreements.
ARTICLE VIII
------------
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller hereunder are subject to the satisfaction,
or waiver in writing by Seller, on or prior to the Closing Date of the following
conditions:
Section 8.01. Accuracy of Representations and Warranties.
------------------------------------------
The representations and warranties of Buyer and Coyote set forth in
Article V hereof shall be true and correct in all material respects on the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, and Buyer shall have delivered to Seller a
certificate to that effect, dated the Closing Date, and signed by the President
or a Vice President of Buyer.
Section 8.02. Performance of Covenants.
------------------------
Each and all of the covenants and agreements of Buyer and Coyote to be
performed or complied with prior to or on the Closing Date shall have been duly
performed or complied with by Buyer and Coyote, and Buyer shall have delivered
to Seller a certificate to that effect, dated the Closing Date, and signed by
the President or a Vice President of Buyer.
Section 8.03. Governmental Approvals.
----------------------
Any required governmental approvals shall have been obtained.
Section 8.04. No Legal Proceedings.
--------------------
No investigation, action or proceeding by or before any court or other
governmental authority shall have been commenced or threatened, and no inquiry
shall have been received, that in the reasonable judgment of Seller may lead to
an action or proceeding to restrain or challenge the transactions contemplated
by this Agreement or may impose material liability on Seller or its affiliates
if such transactions are consummated.
Section 8.05. Transitional Services Agreement.
-------------------------------
Buyer shall have executed and delivered to Seller the Transitional
Services Agreement, substantially in the form of Exhibit C hereto.
Section 8.06. Supply Agreement.
----------------
Buyer shall have executed and delivered to Seller the Supply
Agreement, substantially in the form of Exhibit D hereto.
Section 8.07. Opinion of Counsel.
------------------
Seller shall have received the opinions of counsel for Buyer and
Counsel for Coyote, to the effect set forth in Exhibit F hereto.
Section 8.08. Delivery of Note.
----------------
Buyer shall have delivered to Seller, and Seller shall have received,
the Note representing that portion of the Purchase Price payable to Seller at
the Closing pursuant to Section 2.01.
Section 8.09. Instruments of Assumption.
-------------------------
Buyer shall have executed and delivered to Seller the instruments of
assumption required by Section 2.01(a)(ii).
Section 8.10. Security Agreements.
-------------------
Buyer and Coyote respectively shall have executed and delivered to
Seller the Security Agreements.
Section 8.11. Guaranty.
--------
At or prior to the Closing, Coyote shall have executed and delivered
to Seller a guaranty in the form attached hereto as Exhibit G.
ARTICLE IX
----------
SURVIVAL
--------
Section 9.01. Survival.
--------
The representations, warranties and covenants of each of Seller, Buyer
and Coyote set forth in this Agreement shall survive the Closing Date. All
representations and warranties contained in this Agreement (including the
Schedules hereto) or in any certificate delivered with respect thereto will be
deemed to be representations and warranties hereunder and, except for those
representations and warranties contained in Section 13.06, shall remain in full
force and effect for one year following the Closing Date; the representations
and warranties in Section 13.06 shall remain in full force and effect until
sixty (60) days after the expiration of any applicable statute of limitations
(including any extensions thereof).
ARTICLE X
---------
EMPLOYEE MATTERS
----------------
Section 10.01. Employment.
----------
Buyer will offer employment as of the Closing Date to each Employee
(as defined below) of the Business, in each case at a base rate of pay and bonus
at least equal to such Employee's base rate of pay and bonus in effect on the
day immediately prior to the Closing Date, and on other terms and conditions,
including those benefits and benefit plans listed on Schedule 4.11(c) except the
Fortune Brands Stock Purchase Plan, that are equivalent to those in effect on
the day immediately prior to the Closing Date, with benefits to be provided by
Buyer in accordance with this Article X. The term "Employees" shall mean all
employees of Seller listed on Schedule 10.01.A attached hereto. The term
"Transferred Employees" shall mean any Employees who accept Buyer's offer of
employment. The term "Employee" or "Transferred Employee" shall mean any of the
Employees or Transferred Employees, respectively. If Buyer terminates any
Transferred Employee during the first year subsequent to the Closing Date, Buyer
shall provide benefits payable upon such termination of employment, including
but not limited to severance benefits equivalent to those listed on Schedule
10.01.B.
Section 10.02. Welfare Plan Benefits.
----------------------
(a) Seller shall be responsible for any liability arising from or in
connection with its welfare plan benefit programs covering the Transferred
Employees relating to periods prior to the Closing Date (including liability for
all claims, expenses and treatments, including administrative expenses related
thereto, which are in fact covered and payable under the terms of its welfare
plan benefit programs and incurred prior to the Closing Date) irrespective of
whether any claim relating to such liability is filed or submitted after the
Closing Date.
(b) Buyer shall be responsible for any liability relating to periods
on and after the Closing Date that arises from or is connected with Buyer's
welfare plan benefit programs.
(c) Buyer agrees to waive for the Transferred Employees and their
eligible dependents (i) any eligibility waiting periods and (ii) any pre-
existing conditions and actively-at-work exclusions; except that Buyer may
require any Transferred Employee or any eligible dependent thereof who, as of
the Closing Date, is then in the process of satisfying any similar exclusion or
waiting period under Seller's welfare plan benefit programs to satisfy fully the
balance of the applicable time period for such exclusion or waiting period under
Buyer's welfare plan benefit programs.
(d) With respect to the calendar year in which the Closing Date
occurs, all medical and dental expenses incurred with respect to any Transferred
Employee and/or eligible dependent thereof in the portion of such calendar year
preceding the Closing Date shall be taken into account for purposes of
satisfying any deductible and any out-of-pocket calendar year limit under the
medical and dental coverage of Buyer's welfare plan benefit programs for such
calendar year, provided any such expenses were qualified to be taken into
account for satisfying any deductible or any out-of-pocket calendar year limit
under the welfare plan benefit programs.
(e) With respect to any employees of the Business, or their spouses,
former spouses or other qualifying beneficiaries who are entitled to continuing
medical coverage under the Consolidated Omnibus Budget Reconciliation Act
("COBRA") by reason of qualifying events occurring on or prior to the Closing
Date, Seller shall provide such benefits from and after the Closing Date through
the remaining period of coverage. Buyer and Coyote shall be responsible for,
and shall indemnify and save Seller harmless from, any claims for COBRA coverage
arising on and after the Closing Date.
(f) Seller and Buyer shall cooperate in providing all notices and
certifications required under the Health Insurance Portability and
Accountability Act of 1996.
(g) Seller shall retain responsibility for benefits accrued to the
Closing Date for Transferred Employees who were covered under Seller's flexible
spending account benefit plan.
(h) Transferred Employees shall receive full credit with Buyer for all
accrued and unused vacation benefits as of the Closing Date.
(i) Seller shall retain all liabilities and obligations relating to or
arising from Transferred Employees, who are absent from work on account of long-
term disability that commenced prior to the Closing Date. Buyer shall assume
all liabilities in respect of long-term disability relating to Transferred
Employees, provided that such long-term disability commenced on or after the
Closing Date.
Section 10.03. Prior Service.
-------------
Buyer shall count each Transferred Employee's service with Seller and
its affiliates and predecessors for purposes of determining (i) eligibility for
vacation benefits, short-term disability or weekly accident and sickness
benefits and severance benefits, and (ii) eligibility, vesting and benefits
under all other employee benefit plans and policies of Buyer applicable to the
Transferred Employees, to the extent such service was counted under similar type
plans of Seller for such purposes, immediately prior to the Closing Date
provided that Buyer shall not be obligated to give credit for such service to
the extent it (x) would result in duplication of any benefits to which a
Transferred Employee is entitled or had previously received under any similar
type plans, programs or arrangements maintained by Seller prior to the Closing
Date or Buyer after the Closing Date, or (y) was not service which was
recognized for purposes of such similar type plans, programs or arrangements of
Seller.
Section 10.04. 401(k) Plan.
-----------
Effective as of the Closing Date, Buyer shall provide to Transferred
Employees the opportunity to roll into an existing 401(k) plan, which shall
provide for a level of employee 401(k) contributions not less than available to
the respective Transferred Employees under the Cobra Golf Incorporated 401(k)
Savings Plan. Buyer shall cause its plan or plans to accept rollover
contributions on behalf of the Transferred Employees from the Cobra Golf
Incorporated 401(k) Savings Plan.
Section 10.05. WARN Act.
--------
Buyer agrees that it shall be responsible and solely liable for any
notification (or payment in lieu of notice) required under the Worker Adjustment
and Retraining Notification Act (the "WARN Act") and shall indemnify Seller and
hold Seller harmless from and against any fines, payments, expenses (including,
without limitation, reasonable attorney's fees) and any other liability which
may become due under the WARN Act in respect of any "mass layoff" or "plant
closing" (as defined under the WARN Act) which takes place after the Closing,
regardless of when any notification under the WARN Act is or was to have taken
place.
ARTICLE XI
----------
INDEMNIFICATION
---------------
Section 11.01. Indemnification by Seller.
-------------------------
Seller will indemnify, defend, save and hold Buyer and Coyote and any
of their affiliates and any of their respective directors, officers, employees
or agents ("Buyer's Affiliates") harmless from and against any and all damage,
liability, loss, tax, penalty, expense, assessment, judgment or deficiency of
any nature whatsoever (including, without limitation, reasonable attorneys' fees
and expenses, consultants' and investigators' fees and expenses, and other costs
and expenses incident to any suit, action or proceeding) (together, "Losses")
incurred or sustained by Buyer or any of Buyer's Affiliates or which may be
claimed against Buyer or Coyote or any of Buyer's Affiliates which shall arise
out of or result from (a) any breach of any representation or warranty given or
made by Seller herein or in any certificate delivered with respect thereto, (b)
the noncompliance with or nonperformance of any agreement, obligation or
covenant of Seller under this Agreement or (c) the Retained Liabilities. Seller
shall be obligated to indemnify Buyer and Buyer's Affiliates pursuant to clause
(a) of this Section 11.01 to the extent that the Losses incurred as a result of
such breaches have exceeded $250,000 in the aggregate. Any claim for
indemnification hereunder must be made by notice to Seller within the applicable
time period specified in Section 9.01. In determining the amount of any
indemnifiable Losses under this Section 11.01, such amount shall be (A) reduced
to take into account any net tax benefit realized by Buyer or Buyer's Affiliates
arising from the incurrence or payment by Buyer or Buyer's Affiliates of such
Losses and (B) increased to take into account any net tax cost incurred by Buyer
or Buyer's Affiliates as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase), in each case determined by treating
Buyer or Buyer's Affiliates as recognizing all other items of income, gain,
loss, deduction or credit before recognizing any item arising from such Losses.
Any Losses of Buyer or Coyote or Buyer's Affiliates due from Seller pursuant to
this Section 11.01 shall first be set off against any principal amount then
outstanding under the Note. Notwithstanding anything to the contrary contained
in this Section
11.01, in no event shall Buyer be entitled to recover Losses from Seller in an
aggregate amount in excess of $2,500,000.
Section 11.02. Indemnification by Buyer.
------------------------
Buyer and Coyote will indemnify, defend, save and hold Seller and any
of its affiliates and any of its or their respective directors, officers,
employees or agents ("Seller's Affiliates") harmless from and against any and
all Losses incurred or sustained by Seller or any of Seller's Affiliates or
which may be claimed against Seller or any of Seller's Affiliates which shall
arise out of or result from (a) any breach of any representation or warranty
given or made by Buyer or Coyote herein or in any certificate delivered with
respect thereto, (b) the noncompliance with or nonperformance of any agreement,
obligation or covenant of Buyer or Coyote under this Agreement or (c) the
Assumed Liabilities. Any claim for indemnification hereunder for any breach of
a representation or warranty must be made by notice to Buyer within the
applicable time period specified in Section 9.01. In determining the amount of
any indemnifiable Losses under this Section 11.02, such amount shall be (A)
reduced to take into account any net tax benefit realized by Seller or Seller's
Affiliates arising from the incurrence or payment by Seller or Seller's
Affiliates of such Losses and (B) increased to take into account any net tax
cost incurred by Seller or Seller's Affiliates as a result of the receipt or
accrual of payments hereunder (grossed-up for such increase), in each case
determined by treating Seller or Seller's Affiliates as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any item
arising from such Losses.
Section 11.03. Third-Party Claims.
------------------
Reasonably promptly after service of notice of any claim or of process
by any third person in any matter in respect of which indemnity may be sought
from the other party pursuant to this Agreement, the party in receipt of the
claim (the "Indemnified Party") shall notify the other party (the "Indemnifying
Party") of the receipt thereof. Failure to give such notice reasonably promptly
shall not relieve the Indemnifying Party of its obligation hereunder; provided,
--------
however, that if such failure to give notice reasonably promptly adversely
-------
affects the ability of the Indemnifying Party to defend such claims or
materially increases the amount of indemnification which the Indemnifying Party
is obligated to pay hereunder, the amount of indemnification to which the
Indemnified Party will be entitled to receive shall be reduced to an amount
which the Indemnified Party would have been entitled to receive had such notice
been timely given. Unless the Indemnifying Party shall notify the Indemnified
Party that it elects to assume the defense of any such claim or process or
settlement thereof (such notice to be given as promptly as reasonably possible
in view of the necessity to arrange for such defense), the Indemnified Party
shall assume the defense of any such claim or process or settlement thereof.
Such defense shall be conducted expeditiously (but with due regard for obtaining
the most favorable outcome reasonably likely under the circumstances, taking
into account costs and expenditures) and the Indemnifying Party or Indemnified
Party, as the case may be, shall be advised promptly of all developments. If
the Indemnifying Party assumes the defense, the Indemnified Party will have the
right to participate fully in any such action or proceeding and to retain its
own counsel, but the fees and expenses of such counsel will be at its own
expense unless (i) the Indemnifying Party shall have agreed to the retention of
such counsel for both the indemnifying and indemnified parties or (ii) the named
parties to any such suit, action or proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and, in the
reasonable opinion of the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No settlement of a claim by either party shall be made
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, the
Indemnifying Party shall not be entitled to assume the defense of any such
action or proceeding (and shall be liable for the fees and expenses of counsel
incurred by the Indemnified Party in
defending such matter) seeking an order, injunction or other equitable relief or
relief for other than money damages against the Indemnified Party.
ARTICLE XII
-----------
Intentionally Omitted
ARTICLE XIII
------------
MISCELLANEOUS
-------------
Section 13.01. Integration; Amendment.
----------------------
This Agreement (including the Schedules and Exhibits attached hereto)
constitutes the entire agreement and understanding of the parties relating to
the subject matter hereof and supersedes all prior agreements and
understandings, whether oral or written, relating to the subject matter hereof.
The terms of this Agreement cannot be changed, modified, released or discharged
orally.
Section 13.02. Assignment.
----------
This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by Buyer or Coyote without the prior written
consent of Seller or by Seller without the prior written consent of Buyer.
Section 13.03. Counterparts.
------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
Section 13.04. Headings.
--------
The headings in this Agreement are included for convenience of
reference only and shall not in any way affect the meaning or interpretation of
this Agreement.
Section 13.05. Waiver; Requirement of Writing.
------------------------------
This Agreement cannot be changed or any performance, term or condition
waived in whole or in part except by a writing signed by the party against whom
enforcement of the change or waiver is sought. Any term or condition of this
Agreement may be waived at any time by the party hereto entitled to the benefit
thereof. No delay or failure on the part of any party in exercising any rights
hereunder, and no partial or single exercise thereof, will constitute a waiver
of such rights or of any other rights hereunder.
Section 13.06. Finder's Fees; Brokers.
----------------------
Seller represents and warrants to Buyer and Coyote, and Buyer and
Coyote represent and warrant to Seller that there are no claims (or any basis
for any claims) for brokerage commissions, finder's fees or like payments in
connection with this Agreement or the transactions contemplated hereby resulting
from any action taken by it or on its behalf.
Section 13.07. Bulk Transfers.
--------------
Buyer and Coyote hereby waive compliance by Seller with the provisions
of any bulk transfer laws applicable to the transactions contemplated by this
Agreement. Seller agrees to promptly and diligently pay and discharge when due
or to contest or litigate all claims of creditors which are asserted against
Buyer or Coyote by reason of any non-compliance with such laws, and to
indemnify, defend and hold Buyer and Coyote and any of Buyer's Affiliates
harmless from and against, and pay or reimburse, as the case may be, Buyer or
any of Buyer's Affiliates for, any and all losses based upon, arising out of or
otherwise in any way relating to or in respect of such noncompliance.
Section 13.08. Expenses.
--------
Each of the parties hereto shall pay, without right of reimbursement
from the other party, all the costs incurred by it incident to the preparation,
execution and delivery of this Agreement and the performance of its obligations
hereunder, whether or not the transactions contemplated by this Agreement shall
be consummated.
Section 13.09. Notices.
-------
Any notice, request, consent, waiver or other communication required
or permitted hereunder shall be effective only if it is in writing and
personally delivered or sent by prepaid cable or telecopy or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, cabled or
telecopied, or if mailed, ten days after mailing (two business days in the case
of express mail or overnight courier service), as follows:
If to Seller: Cobra Golf Incorporated
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to: Xxxx X. Xxxxx, Esq.
Vice President and General Counsel
Fortune Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
If to Buyer or Coyote: Unifiber Corporation
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
or such other person or address as the addressee may have specified in a notice
duly given to the sender as provided herein.
Section 13.10. Applicable Law; Consent to Jurisdiction.
---------------------------------------
This Agreement will be construed and interpreted in accordance with
and governed by the laws of the State of California without regard to conflicts
of laws principles. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of California and of the United States of America located in the
City of San Diego, California for any actions, suits or proceedings arising out
of or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts), and further agrees that, except as set forth below, service of any
process, summons, notice or document by U.S. registered mail to its respective
address set forth in Section 13.09 shall be effective service of process for any
action, suit or proceeding brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
California of the United States of America located in the City of San Diego,
California, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 13.11. Public Announcements.
--------------------
Neither party nor any of their respective affiliates shall make any
press release or public announcement with respect to the transactions
contemplated hereby without obtaining the prior approval of the other party,
except as may be required by law or regulations of securities exchanges.
Approvals under this Section 13.11 shall not be unreasonably withheld.
Section 13.12. No Third-Party Beneficiaries.
----------------------------
Nothing in this Agreement will be construed as giving any person,
firm, corporation or other entity, other than the parties hereto, their
successors and permitted assigns, any right, remedy or claim under or in respect
of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the date first above written.
COBRA GOLF INCORPORATED
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
UNIFIBER CORPORATION
By /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Vice President and
General Manager
COYOTE SPORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
EXHIBIT 2.1.A
-------------
NOTE
----
$5,500,000.00 Carlsbad, California
------------- September 9, 1998
FOR VALUE RECEIVED, the undersigned, UNIFIBER CORPORATION, a
California corporation (the "Maker"), hereby promises to pay to the order of
COBRA GOLF INCORPORATED ("Cobra" or the "Holder"), by wire transfer to such
place or places and to such account or accounts as Holder may direct from time
to time by notice to Maker in accordance with the Asset Sale Agreement, dated as
of September 9, 1998, by and between Maker and Cobra (the "Asset Sale
Agreement"), in lawful money of the United States in immediately available
funds, the principal amount equal to FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
($5,500,000.00), payable, subject to the terms hereof, on or before March 31,
1999, as provided in subsection 2.01(a)(i) of the Asset Sale Agreement. Maker
may prepay (without penalty) the outstanding principal sum and interest thereon
at anytime prior to such date in whole or in part.
Interest shall accrue on the outstanding principal amount hereof in
accordance with the terms of the Asset Sale Agreement and shall be payable on
such dates and in such amounts as determined in accordance with the Asset Sale
Agreement. In no contingency or event whatsoever shall the interest rate
charged pursuant to the terms of this Note exceed the maximum amount of interest
permitted by applicable law. In the event that a court of competent
jurisdiction determines that the Asset Sale Agreement provides for interest in
excess of the maximum amount of interest permitted by applicable law, the excess
amount of interest paid shall be promptly refunded.
This Note is issued to evidence the outstanding balance of the
Purchase Price (as defined in the Asset Sale Agreement) payable pursuant to the
provisions of section 2.01(a)(i) of the Asset Sale Agreement as to which
reference is hereby made for a statement of the terms, conditions and covenants
under which the indebtedness evidenced hereby was and will be made and is to be
repaid.
This Note is secured by the security agreement of even date herewith
executed by Buyer, as debtor, Coyote, as Guarantor, and Cobra, as the secured
party (the "Security Agreement I"), and the security agreement executed by
Buyer, as guarantor, and Cobra, as the secured party (the "Security Agreement
II" and together with the Security Agreement I, the "Security Agreements") and
Cobra and Buyer are entitled to the benefits of all pertinent provisions of the
Security Agreements.
The following shall constitute "Events of Default" hereunder:
(a) Default in any payment when due and payable under the
Asset Sale Agreement if such default shall continue for longer than
the notice and grace periods provided therein or, if none is provided
for, ten (10) days after knowledge of such default by Buyer.
(b) Default in the observance or performance of any term,
covenant or condition in this Note (or any document to which this Note
is subject) on Buyer's part to be observed or performed and the
continuance of such default for longer than ten (10) days after
knowledge of such default by Buyer.
If an Event of Default shall occur and be continuing, Cobra may, by
notice in writing delivered to Buyer in accordance with the terms of the Asset
Sale Agreement, declare the entire amount of this Note immediately due and
payable, whereupon the same shall forthwith become and be due and payable
without any presentment, demand, or other notice of any kind, all of which are
expressly waived by Buyer.
Holder may proceed against Maker, in such manner as it deems
desirable. None of the rights or remedies of Holder hereunder are to be deemed
waived or affected by failure or delay on the part of Holder to exercise the
same. All remedies conferred upon Holder by this Note or any other instrument or
agreement shall be cumulative and none is exclusive, and such remedies may be
exercised concurrently or consecutively at Holder's option.
Maker hereby waives presentment, demand for payment, protest and
notice of protest, notice of dishonor and all other notices in connection with
this Note.
This Note has been executed and delivered in Carlsbad, California and
shall be governed by the laws of the State of California without giving effect
to principles of conflicts of law.
This Note shall be binding upon Buyer, its successors and assigns and
shall inure to the benefit of Cobra and its successors and assigns; and each
reference herein to Buyer or to Cobra shall, except where the context shall
otherwise require, be deemed to include their successors and assigns.
WITNESS the hand of Maker.
UNIFIBER CORPORATION
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President and
General Manager
2
EXHIBIT 2.1.B
SECURITY AGREEMENT I
THIS AGREEMENT is dated as of September 9,1998, by and between Cobra Golf
Incorporated, a Delaware corporation ("Seller") and Coyote Sports, Inc., a
Nevada corporation ("Guarantor") with reference to the following facts:
Guarantor proposes to make certain guarantees to Seller pursuant to a
Guaranty of even date herewith (the "Guaranty"). To secure the obligations, as
described in the Guaranty, Guarantor has agreed to pledge to Seller the shares
of stock listed on Exhibit A hereto (the "Shares").
---------
NOW, THEREFORE, Seller and Guarantor agree as follows:
1. Pledge of Securities.
--------------------
(a) Guarantor hereby pledges, assigns and delivers to Seller and
grants to Seller a security interest in the Shares, together with all proceeds
and substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing
(all hereinafter called the "Pledged Collateral"), as security for the prompt
performance of all of Guarantor's obligations, as described in the Guaranty (the
"Secured Indebtedness").
(b) The term "Pledged Collateral" shall also include any securities,
instruments or distributions of any kind issuable, issued or received by
Guarantor upon conversion of, in respect of, or in exchange for any other
Pledged Collateral, including, but not limited to, those arising from a stock
dividend, stock split, reclassification, reorganization, merger, consolidation,
sale of assets or other exchange of securities or any dividends or other
distributions of any kind upon or with respect to the Pledged Collateral.
(c) The certificate or certificates for the securities included in the
Pledged Collateral, accompanied by an instrument of assigm-nent duly executed in
blank by Guarantor, have been, or will be immediately upon the subsequent
receipt thereof by Guarantor, delivered by Guarantor to Seller. Guarantor shall
cause the books of each corporation whose stock is part of the Pledged
Collateral to reflect the pledge of the Shares. Upon the occurrence of an Event
of Default hereunder, Seller may effect the transfer of any securities included
in the Pledged Collateral into the name of Seller and cause new certificates
representing such securities to be issued in the name of Seller. Guarantor will
execute and deliver such documents, and take or cause to be taken such actions,
as Seller may reasonably request to perfect or continue the perfection of
Seller's security interest in the Pledged Collateral.
2. Representations, Warranties and Covenants. Guarantor represents and
-----------------------------------------
warrants to and covenants with Seller that:
(a) The Pledged Collateral is owned by Guarantor free and clear of any
security
interests, liens or encumbrances;
(b) Guarantor has full power and authority to create a first lien on
the Pledged Collateral in favor of Seller and no disability or contractual
obligation exists which would prohibit Guarantor from pledging the Pledged
Collateral pursuant to this Agreement, and Guarantor will not assign, create or
permit to exist any other claim to, lien or encumbrance upon, or security
interest in any of the Pledged Collateral;
(c) There are no subscriptions, warrants or other options exercisable
with respect to the Shares;
(d) The Shares represent the percentage of the issued and outstanding
stock of the Subsidiaries listed on Exhibit A, there are no agreements that
---------
require any Subsidiaries to issue any additional shares of such Subsidiaries,
and there are no outstanding options to purchase such additional shares;
(e) The Shares have been duly authorized and validly issued, and are
fully paid and non-assessable; and
(f) The Pledged Collateral is not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding, and
Guarantor knows of no reasonable grounds for the institution of any such
proceedings.
All the above representations and warranties shall survive the making of
this Agreement.
3. Voting Prior to Demand. Unless an Event of Default (as defined below)
----------------------
shall have occurred and be continuing, Guarantor shall be entitled to exercise
any voting rights with respect to the Pledged Collateral and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
--------
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights of Guarantor to
vote and give consents, waiver and ratifications shall upon notice to Guarantor
cease in case such an Event of Default hereunder shall occur and be continuing.
4. Events of Default. Each of the following shall constitute an event of
-----------------
default ("Event of Default") hereunder:
(a) The occurrence of an Event of Default under the Note; or
(b) The breach of any provision of this Agreement by Guarantor or the
failure by Guarantor to observe or perform any of the provisions of this
Agreement.
5. Seller's Remedies Upon Default.
------------------------------
2
(a) Upon the occurrence and during the continuance of an Event of
Default, Seller shall have the right to exercise all such rights as a secured
party under the Uniform Commercial Code of the State of California as it, in its
sole judgment, shall deem necessary or appropriate, including the right to sell
all or any part of the Pledged Collateral at one or more public or private sales
upon ten (10) days' written notice to Guarantor, and any such sale or sales may
be made for cash, upon credit, or for future delivery, and in connection
therewith, Seller may grant options, provided that any such terms or options
shall, in the best judgment of Seller, be extended only in order to obtain the
best possible price.
(b) Guarantor recognizes that Seller may be unable to effect a public
sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended ("Act"), so
that Seller may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Pledged Collateral for their own account, for investment and
without a view to the distribution or resale thereof. Guarantor understands
that private sales so made may be at prices and on other terms less favorable to
the seller than if the Pledged Collateral were sold at public sales, and agrees
that Seller has no obligation to delay the sale of any of the Pledged Collateral
for the period of time necessary (even if Seller would agree), to register such
securities for sale under the Act. Guarantor agrees that private sales made
under the foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner.
(c) After the sale of any of the Pledged Collateral, Seller may deduct
all reasonable legal and other expenses and attorney's fees for preserving,
collecting, selling and delivering the Pledged Collateral and for enforcing its
rights with respect to the Secured Indebtedness, and shall apply the residue of
the proceeds to the Secured Indebtedness in such manner as Seller in its
reasonable discretion shall determine, and shall pay the balance, if any to
Guarantor.
6. Release of Pledged Collateral. The pledge of and grant of a security
-----------------------------
interest in the Pledged Collateral pursuant to this Agreement shall be of no
further force or effect and, subject to the terms of the Guaranty, the Pledged
Collateral shall be returned to Guarantor upon payment in full of the Secured
Indebtedness to Seller.
7. Miscellaneous.
-------------
(a) All notices, consents, approvals and other communications required
or permitted hereunder shall be addressed to the receiving party at the address
set forth below its signature. All such communications shall be delivered
personally or by facsimile or by courier or sent by first class mail, postage
prepaid. Communications by mail shall be deemed delivered upon receipt.
(b) This Agreement shall be construed in accordance with, and the
rights of the parties shall by governed by, the law of the State of California.
3
(c) This Agreement may not be amended or modified except by a written
instrument signed by Seller and Guarantor.
(d) This Agreement and the Note and instruments executed in connection
therewith constitute the entire agreement between Seller and Guarantor with
respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written.
(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall together constitute
one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
Guarantor: COYOTE SPORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
Seller: COBRA GOLF INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
4
EXHIBIT A
---------
List of Shares Pledged
Type or Issuer Name and Percent of Total
Number of Shares Class of Shares State of Formation Shares Outstanding
------------------ --------------- ------------------ ------------------
68,919 Common Stock Unifiber 100%
Corporation
5
CONFIDENTIAL TREATMENT OF REDACTED PORTIONS
-------------------------------------------
APPLIED FOR
-----------
EXHIBIT 2.1.C
-------------
SUPPLY AGREEMENT
----------------
THIS SUPPLY AGREEMENT (the "Agreement") is made and entered into as of
September 9, 1998, by and between Cobra Golf Incorporated, a Delaware
corporation (the "Company") and Unifiber Corporation, a California Corporation
(the "Supplier").
RECITALS
--------
WHEREAS, the Supplier is willing to supply to the Company and its
affiliates and licensees and the Company is willing to purchase and to direct
its affiliates and licensees to purchase from the Supplier certain quantities of
the Company's and its affiliates and licensees requirements for Cobra branded
graphite golf shafts (the "Products").
NOW THEREFORE, in consideration of the mutual covenants and promises set
forth herein, and for other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the Company and the Supplier agree as
follows:
AGREEMENT
---------
ARTICLE I.
GENERAL OBLIGATIONS OF THE PARTIES
----------------------------------
A. Exclusive Purchase . The Company agrees to purchase and direct its
-------------------
affiliates and licensees to purchase from the Supplier, and the Supplier agrees
to sell to the Company and its affiliates and licensees, at least ninety percent
(90%) of the Company's and its affiliates and licensees requirements for the
Products pursuant to all of the terms and conditions of this Agreement.
However, notwithstanding the foregoing, the Company and its affiliates and
licensees shall have the ability but not the obligation to purchase any or all
of their requirements for Products for the Asian markets pursuant to the terms
of this Agreement. Specifications for the Products are set forth in Exhibit A,
attached hereto, as may be amended by agreement of the parties from time to time
and the Supplier agrees to manufacture all Products in accordance with such
Specifications. Specifications for new Products must be submitted and agreed to
sixty (60) days prior to the first requested delivery date.
The Supplier acknowledges that the Company may own intellectual property
rights related to certain of the Products. Supplier shall not sell or otherwise
provide those Products identified on Exhibit A as patented or patentable or
otherwise proprietary to the
Company (the "Proprietary Products") to any party other than the Company without
the Company's prior written consent, which may be withheld in its sole
discretion. In the event that the specifications describe a product which is
generic, non-patentable, or within the public domain, (the "Non-Proprietary
Products") then and in that event, Supplier shall remain free to sell the same
to any purchaser in any market, without restriction. The Company hereby grants
to the Supplier, under the Company's intellectual property rights in the
Products, a non-exclusive, non-transferable, non-assignable, personal, limited
license to (i) make, have made, import and sell the Non-Proprietary Products and
(ii) make, have made, import and sell the Proprietary Products solely to the
Company or third parties authorized by the Company in writing.
B. Sub-Contracts. Supplier may at its option enter into sub-contracts or
-------------
other arrangements with other persons or entities to fulfill its obligations
under this Agreement with the prior written consent of Company, which may be
withheld in its sole discretion.
C. R&D Facility. Supplier agrees to provide for the Company's exclusive
------------
use a segregated and secure space at Supplier's facility in San Diego county to
enable the Company to conduct shaft research, development and testing activities
commensurate with those presently being conducted by the Company. Supplier
further agrees to meet the reasonable requests of the Company in providing
technical support for such activities. The details regarding the size, location
and equipment are subject to agreement of the parties.
ARTICLE II.
ORDERS FOR PRODUCTS
-------------------
A. Forecasts and Purchase Orders. The Company shall submit to the
-----------------------------
Supplier in writing a non-binding ninety (90) day rolling forecast projecting
the anticipated weekly requirements for the Products. Such forecast shall be
provided by the tenth day of each month. The Company shall submit purchase
orders for the Products to the Supplier in writing, whether by mail, e-mail, or
facsimile which shall set forth, at a minimum:
1. an identification of the Products ordered
2. quantities
3. requested delivery dates
4. shipping instructions and shipping addresses
The Company shall submit its purchase orders so that they are received by the
Supplier at least fourteen (14) days prior to the delivery date requested in the
order or in the case of Product sourced outside of the United States twenty-one
(21) days.
B. Acknowledgment of Orders. All purchase orders shall be acknowledged
------------------------
by the Supplier in writing within three (3) business days of receipt by the
Supplier, which acknowledgment (the "Acknowledgment") shall be delivered by
mail, e-mail or facsimile to
-2-
the Company. Acknowledgment shall include a written representation by Supplier
that it will meet all quantity requirements and requested delivery dates as
specified in any purchase order. In the event that the Supplier is unable to
meet the quantity requirements and/or requested delivery dates specified in a
purchase order, the Acknowledgment shall propose alternate quantities and/or
delivery dates. The Company shall reply in writing within three (3) business
days accepting or rejecting the proposed modifications to quantities and/or
delivery dates. In the event the Company accepts, the writing indicating the
acceptance shall be deemed to be an amendment to the original purchase order,
and if the Company rejects, the original purchase order shall remain in force.
If any purchase order or acknowledgment is not replied to, the party expecting
the same shall request a written confirmation within three (3) business days. If
the party to whom the request is made fails to reply after the second request,
the party making the request may cancel the order, by written notice to the
other, within three (3) business days. If any terms of the purchase order or
confirmation are in addition to or inconsistent with the terms of this
Agreement, the terms of this Agreement shall prevail.
C. Modification of Orders. No acknowledged purchase order shall be
----------------------
modified or canceled except upon the written agreement of both parties hereto.
Mutually agreed upon change orders shall be subject to all of the provisions of
this Agreement, whether or not the change order so states.
D. Delivery Terms. All deliveries of Products shall be F.O.B. -
--------------
Supplier's San Diego facility. The Supplier agrees to package the Products for
shipment to the Company in commercially reasonable packaging to protect the
Products in transit to the Company.
E. Delivery Schedule. All orders shall be delivered in a timely manner
-----------------
as set forth in the purchase orders and Supplier confirmation. The parties
agree that deliveries within five percent (5%) of the order quantities and
deliveries within two (2) calendar days of the date in the purchase order by
line item shall be acceptable deliveries. Provided however, that for purchase
orders for quantities in excess of the forecasted quantities the Company will
accommodate the Supplier's reasonable requests to adjust the above stated
requirements for deliveries A line item means the individual shaft and flex
designation set forth in each purchase order.
ARTICLE III.
PRICES AND PAYMENTS
-------------------
A. Prices. Subject to the Adjustments as hereinafter provided for,
------
the prices to be paid by the Company for the Products purchased pursuant to
this Agreement shall be set forth on Exhibit B, attached hereto.
B. Adjustments in Price. The Company and Supplier recognize that the
--------------------
-3-
manufacturing costs of the Product may change in relation to production volume,
production methods, production location, raw material costs and other costs.
Accordingly, by November 1st of each year beginning November 1, 2000, Supplier
shall provide to the Company, the raw material, direct labor and overhead costs
directly related to each Product being purchased by Company. The Supplier shall
provide such supporting information relating thereto as Buyer shall reasonably
request. Beginning January 1, 2001 and based on such information as verified
and agreed to by the Company, the price for each Product shall be adjusted to
reflect XXXXXXXXXXXXXXXXXXX of the aggregate incremental change in raw material,
direct labor and overhead costs directly relating to such Product; provided
however the price for any standard shaft shall in no event exceed XXXXX per
shaft. Suppler shall continue to process and complete all open orders for the
products in accordance with the terms of the Agreement.
C. Payment Terms. Payment in full for the Products shall be made by the
-------------
Company not later than thirty (30) days after receipt of invoice by the
Company.
ARTICLE IV.
TERM AND TERMINATION
--------------------
A. Term. This Agreement shall take effect as of the date first written
----
above and shall continue in force until December 31, 2003.
B. Termination. Notwithstanding the provisions of Section IV-A above,
-----------
this Agreement may be terminated for any of the following reasons:
1. Either party hereto may terminate this Agreement by giving notice
in writing to the other party in the event that the other party is in material
breach of this Agreement and shall have failed to cure such breach within thirty
(30) days of receipt of written notice thereof from the non-breaching party;
2. Either party hereto may terminate this Agreement at any time by
giving notice in writing to the other party, which notice shall be effective
upon dispatch, should the other party or any creditor of such other party file a
petition of any type as to such other party's bankruptcy, be declared bankrupt,
become insolvent, make an assignment for the benefit of its creditors, or go
into liquidation or receivership. Provided however, that in the event an
involuntary petition is filed against the Supplier, then the Supplier will have
90 days to have the petition withdrawn and in the event the Supplier goes into
receivership, the Buyer will outsource for its supply needs for 90 days and if
the Supplier comes out of receivership within that 90 days then this Agreement
will be reinstated; and
3. Either party hereto may terminate this Agreement by giving notice
in writing to the other party should an event constituting a Force Majeure
continue for more than one hundred and eighty (180) consecutive days. "Force
Majeure" shall mean any
-4-
event or condition, not existing as of the date of the execution and delivery of
this Agreement, not reasonably foreseeable as of such date and not reasonably
within the control of any party hereto, which prevents in whole or in material
part the performance by one of the parties of its obligations hereunder. Without
limiting the foregoing, the following shall constitute events or conditions of
Force Majeure: acts of State or other governmental action, riots, disturbance,
war, strikes, lockouts, slowdowns, prolonged shortage of energy supplies,
epidemics, fire, flood, hurricane, typhoon, earthquake, lightning and explosion.
During the period that the performance by one of the parties hereto of its
obligations hereunder has been suspended by reason of an event of Force Majeure,
the other party may likewise suspend the performance of all or part of its
obligations hereunder to the extent that such suspension is commercially
reasonable.
4. The Company may terminate this Agreement upon the failure to
deliver Products in a timely manner as set forth in Article II (E); or upon the
failure to deliver quality Products (e.g. Products which do not conform to the
specifications set forth in Exhibit A), meaning a reject rate exceeding three
percent (3%) of scheduled and acknowledged Product deliveries; if a failure for
either reason occurs more than two (2) times in any six (6) month period or
three (3) times in any twelve (12) month period.
5. The Company may terminate this Agreement upon the occurrence of a
Change of Control of the Supplier. For purposes of this Agreement, a "Change of
Control" means (i) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of the Supplier, in one
transaction or a series of related transactions, or (ii) any person, group, or
entity other than Coyote Sports, Inc., is or becomes the beneficial owner,
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock of the Supplier then outstanding and
entitled to vote in elections of directors.
6. In the event that the Supplier breaches any of its
representations or warranties or fails to timely perform any of its obligations
under that Certain Asset Sale Agreement (the "Asset Sale Agreement") dated as of
September 9, 1998 by and among Cobra Golf Incorporated, a Delaware corporation,
Coyote Sports, Inc., a Nevada corporation, and Unifiber Corporation, a
California corporation, or the Note dated September 9, 1998 delivered by the
Supplier to the Company pursuant to the Asset Sale Agreement, then the Company
shall have the right to terminate this Agreement upon five days written notice
to the Supplier. Provided however, that in the event the breach to the Asset
Sale Agreement does not cause the Company any monetary loss, then with respect
to that breach, and only to that breach, the Supplier will have 30 days to
remedy the breach.
C. No Compensation. In the event that either party hereto terminates
---------------
this Agreement for any reason in accordance with its terms, then:
-5-
1. each party hereto shall automatically be released from all of its
obligations hereunder except as provided in Article V, Article VI and Article
VII; and the licenses granted herein shall terminate; and
2. except for termination for material breach, neither party hereto
shall be entitled to any compensation or like payment as a result of such
termination, except for payment due to the Supplier for Products purchased,
received and accepted by the Company prior to any termination.
ARTICLE V.
WARRANTY
--------
A. Warranty. The Supplier warrants that all Products delivered by the
--------
Supplier to the Company shall conform with the specifications contained in
Exhibit A hereto, will be of first quality and will be free from manufacturing
defects. The Supplier will replace any Product which does not conform to this
warranty if returned by the Company within two (2) years from the date of
delivery to the Company. All costs of shipment of replacement Products shall be
paid by the Supplier. The Supplier may reprocess or destroy any returned
Products and agrees that it shall not sell or otherwise dispose of returned
Products without the prior written consent of the Company. The Supplier's
liability to the Company shall include replacement of defective Product. The
Supplier shall maintain product liability insurance for itself. Notwithstanding
any other provision in this Agreement, the Supplier shall defend, indemnify, and
hold harmless the Company from and against any claims, demands, liabilities, or
expenses (including attorney's fees and costs) for any personal or bodily injury
or property damage, arising out of or resulting in any way from any defect in
Products. This duty to indemnify Company shall be in addition to the warranty
obligations of Supplier. The Company shall have the right to (i) tender any and
all such claims to Supplier for disposition by the Supplier at the Supplier's
sole expense or (ii) to dispose of nominal claims ($5,000.00 or less in value)
itself and receive reimbursement from the Supplier for such costs.
Except for obligations arising under the preceding paragraph, either party's
maximum liability arising out of or relating to this Agreement shall be limited
to the total payments made by the Company or currently due to the Supplier under
bona fide purchase orders in the twelve month period immediately preceding the
imposition of such liability. Except for obligations arising under the
preceding paragraph, in no event shall either party be liable to the other party
or any other person or entity for any special, consequential, incidental,
indirect, exemplary or punitive damages, however caused, whether for breach of
contract, tort, negligence, strict product liability or otherwise (including,
without limitation, damages based on loss of profits or business opportunity),
and whether or not such party has been advised of the possibility of such
damages. This limitation shall apply notwithstanding any failure of essential
purpose of any limited remedy provided herein.
-6-
ARTICLE VI.
INFORMATION
-----------
A. Inventions.
----------
1. "Inventions", as used in this Article VI, means any inventions,
discoveries, trade secrets, know how, improvements and ideas (whether or not
they are in writing or reduced to practice) or works of authorship (whether or
not they can be patented or copyrighted) that the Supplier or the Company makes,
authors, or conceives (either alone or with others) and that:
(a) result from any work the Supplier performs for the Company;
and
(b) directly relate to the Products or improvement or variations
thereof; and
(c) designated as an Invention and clearly and accurately
described by the Company in writing, delivered to the
Supplier within a reasonable time after its creation.
2. The Supplier agrees that all Inventions during the term of this
Agreement will be the Company's sole and exclusive property and that the Company
shall own all rights, title and interest in and to such Inventions. The
Supplier hereby assigns, sells and transfers to the Company any rights it may
have in such Inventions. The Supplier represents that, except as previously
disclosed to the Company in writing, as of the date of this Agreement, the
Supplier has no rights under, and will make no claims against the Company with
respect to any invention, discoveries, improvements, ideas or works of
authorship which would be Inventions if made, conceived, authored or acquired by
the Company during the term of this Agreement.
B. Confidential Information. The Supplier acknowledges that, in and as a
-------------------------
result of this Agreement, the Supplier will be making use of, acquiring or
adding to confidential information of a special and unique nature and value,
including without limitation, the Company's trade secrets, formulas, know-how,
processes, marketing information and strategies, sales forecasts, sales trends,
delivery schedules, drawings, materials, goods, equipment, and all
specifications for the Products ("Confidential Information"). The Supplier
further acknowledges that any information and materials received by the Company
from third parties in confidence (or subject to non-disclosure covenants) which
directly relate to the Products shall be deemed to be and shall be Confidential
Information within the meaning of this paragraph. As a material inducement to
the Company to enter into this Agreement, the Supplier covenants and agrees that
all Confidential Information
-7-
shall be treated by the Supplier as confidential, proprietary information of the
Company and shall not, except with the prior written consent of the Company,
directly or indirectly, use, divulge, reveal, report, publish, transfer or
disclose, for any purposes whatsoever, any Confidential Information which has
been transmitted to the Supplier by the Company; provided, however, it is
understood that either party may publicly announce that it has entered into a
contractual arrangement with the other without announcing any other information
about the nature or subject matter of this Agreement. The foregoing obligation
of the Supplier shall not apply to knowledge or information which is public
knowledge as of the date of this Agreement, or which becomes public knowledge
through no violation of this Agreement, or which is required by law to be
disclosed to any governmental regulatory body or agency. Upon ten (10) days
notice by the Company or upon termination of this Agreement under Article VI,
the Supplier will promptly deliver to the Company all records and any
compositions, articles, notes, memoranda, devices, apparatus and other items
that disclose, describe or embody Confidential Information, including all
copies, reproductions and specimens of the Confidential Information in its
possession, regardless of who prepared them and will promptly deliver any other
property of the Company in the Supplier's possession, whether or not
Confidential Information. Upon termination of this Agreement under Article VI,
the Supplier will promptly deliver to the Company all records and any
compositions, articles, notes, memoranda, devices, apparatus and other items
that disclose, describe or embody any Invention regardless of who prepared them.
ARTICLE VII.
GENERAL TERMS AND CONDITIONS
----------------------------
A. Relationship. This Agreement does not make either party hereto the
------------
employee, agent or legal representative of the other for any purpose whatsoever.
Neither party hereto is granted any right or authority to assume or to create
any obligation or responsibility, express or implied, on behalf of or in the
name of the other party. In fulfilling its obligations pursuant to this
Agreement, each party hereto shall be acting as an independent contractor.
B. Assignment. Neither party hereto shall have the right to assign or
----------
otherwise transfer its rights and obligations under this Agreement except with
the prior written consent of the other party, provided however, that (i) a
successor in interest by merger, by operation of law, assignment, purchase or
otherwise of the entire business of the Company shall acquire all of the
Company's interest hereunder and (ii) the Supplier may enter into agreements
with other suppliers to fulfill its obligations under this Agreement as set
forth in Article I B and (iii) the Company may source requirements for Products
with other suppliers if the Supplier is in breach of this Agreement.
C. Notices. Notices permitted or required to be given hereunder shall be
-------
deemed sufficient if given by registered or certified mail, postage prepaid,
addressed as follows (or to such other addresses as the respective parties may
designate by like notice
-8-
from time to time):
If to the Company:
-----------------
Cobra Golf Incorporated
0000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
If to the Supplier:
------------------
Unifiber Corporation
0000 Xxxxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
Notices so given shall be effective upon receipt by the party to which notice is
given.
D. Entire Agreement. This Agreement, including the Exhibits attached
----------------
hereto and by this reference made an integral part hereof, constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all previous proposals, oral or written, express or implied, and
all negotiations, conversations or discussions heretofore had between the
parties hereto related to the subject matter of this Agreement.
E. Amendment. This Agreement shall not be deemed or construed to be
---------
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a writing signed by each party hereto.
F. Severability. In the event that any of the terms of this Agreement
------------
are in conflict with any rule of law or statutory provision or otherwise
unenforceable under the laws or regulations of any government or subdivision
thereof, such terms shall be deemed stricken from this Agreement, but such
invalidity or unenforceability shall not invalidate any of the other terms of
this Agreement, and this Agreement shall continue in force, unless the
invalidity or unenforceability of any such provisions comprise an integral part
of or are otherwise inseparable from, the remainder of this Agreement.
G. Waiver. No failure by either party hereto to take any action or
------
assert any right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise to such
right.
-9-
H. Dispute Resolution. The parties shall attempt in good faith to
------------------
resolve any dispute arising out of or relating to this Agreement promptly by
negotiation between executives who have authority to settle the controversy.
Any party may give the other party written notice of any dispute not resolved in
the normal course of business. Within fifteen (15) days after delivery of the
notice, the receiving party shall submit to the other a written response. The
notice and the response shall include: (a) a statement of each party's position
and a summary of arguments supporting that position, and (b) the name and title
of the executive who will represent that party. Within thirty (30) days after
delivery of the disputing party's notice, the executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable
requests for information made by one party to the other will be honored. All
negotiations pursuant to this section are confidential and shall be treated as
compromise and settlement negotiations of purposes of applicable rules of
evidence. If the dispute has not been resolved by negotiation within forty five
(45) days of the disputing party's first notice, or if the parties fail to meet
within thirty (30) days, the parties shall endeavor to settle the dispute by
non-binding meditation under the then current CPR Model Mediation Procedure for
Business Disputes. Unless otherwise agreed, the parties will select a mediator
from the CPR Panels of Neutrals and shall notify CPR to initiate the selection
process.
I. Attorney's Fees and Court Costs. In the event that any action or
-------------------------------
proceeding is brought to interpret or enforce this Agreement, the party
prevailing in such action or proceeding shall be entitled to recover from the
non prevailing party its reasonable costs and expenses (which shall include
reasonable attorney's fees and court costs), as well as such costs and expenses
incurred in any appeal and in any post-judgment collection efforts.
J. Governing Law. This Agreement shall be governed by, and interpreted
-------------
and construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first written above.
THE COMPANY: THE SUPPLIER:
Cobra Golf Incorporated Unifiber Corporation
By /s/ Xxxxxx X. Xxxxxx By /s/ Xxxxx Xxxxx
----------------------------- ------------------------------------
Xxxxxx X. Xxxxxx Xxxx Xxxxx
President Vice President and General Manager
-10-
EXHIBIT A
---------
Product Specifications
----------------------
Specifications for each product are contained in a binder provided to
Supplier upon execution of this Agreement and are hereby made a part of this
Exhibit A.
All specifications shall designate whether the shaft is a "standard" shaft
or a "non-standard" shaft. For purposes of this Agreement a "standard" shaft is
defined as a shaft with the following characteristics:
WEIGHT: XXXXXXXXXXX
GEOMETRY: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
MATERIAL: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
FINISH: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
MANUFACTURING
PROCESS: XXXXXXXXXXXXXXXXXX
A "non-standard" shaft is defined as any shaft whose specifications calls
for one or more characteristics that are inconsistent with the above.
Any new technologies or other characteristics of comparable cost can be
substituted for those described above. Specifications for new "standard"
Products will be accepted by Supplier and added to this Exhibit as a matter of
course. Specifications for all new "non-standard" Products must be approved by
the mutual agreement of the parties prior to being added to this Exhibit.
EXHIBIT B
---------
Product Pricing
---------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXX XXXX XXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX ------ ------- ------
XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXX XXXXX XXXX
XXXXX XXXXXX XXXXXXX XXXXXX
For all "non-standard" shafts (excluding Hump) pricing will be based on
standard shaft pricing with adjustments to reflect incremental changes in raw
material, direct labor and overhead directly related to such Products.
Pricing for years 2001 and beyond shall be determined in accordance with
Article IIIB, but will in no event exceed XXXXXXXXXXXXXXXXXXXX per shaft for
"standard" shafts.
