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SALE OF ASSETS AGREEMENT
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AGREEMENT made June 23, 1999, between State of the Art Golf Company, Inc.,
a Michigan corporation, having its principal business office at 00000 Xxxxxxxxxx
Xx., Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 ("Seller"), and Ajay Sports, Inc., a
Delaware corporation, ("Purchaser").
Recitals
Seller is willing to sell certain assets described in Paragraph 1 below
(the "Property") to the Purchaser; and
Purchaser is willing to buy the Property in accordance with the terms of
this Agreement.
It is therefore agreed:
1. Sale of Assets.
On the Closing Date (as hereinafter defined), Seller shall sell to
Purchaser, and Purchaser shall purchase and acquire the Property, as
follows:
1.1. All equipment (as defined by the Michigan Uniform Commercial Code),
furniture and fixtures and, to the extent not otherwise constituting
equipment as defined above, all other items of tangible personal
property, in each case whether or not capitalized on Seller's books.
1.2. All inventory (as defined by the Michigan Uniform Commercial
Code).
1.3. All accounts receivable as listed on Schedule A (all as defined
in the Michigan Uniform Commercial Code) , and any security
Seller holds for the payment of these accounts and all of
Seller's general intangibles (as defined by the Michigan Uniform
Commercial Code), but excluding cash in bank, prepaid Corporate
Income Tax, and $106,824.00 owed by Pro Golf of Nevada L.L.C. to
Seller relating to Cadillac brand golf products and, to the
extent not constituting general intangibles as defined above, any
interest of Seller in any and all claims by Seller relating to
those accounts receivable being transferred to Purchaser against
any other person, whether now accrued or later to accrue,
contingent or otherwise, known or unknown, including but not
limited to, all rights under express or implied warranties from
suppliers (except as they may apply to Seller's liabilities which
were not assumed by Purchaser), claims for collection or
indemnity, claims in bankruptcy, and choses in action.
1.4. All Seller's right, title, benefit and interest in and to
trademarks, tradenames, inventions, discoveries, improvements,
designs, prototypes, know how, and other intellectual property as
defined by Michigan law.
1.5. The full benefit of (a) any and all purchase orders placed with
and accepted by Seller on or before the closing date that have
not been completely performed or filled before the closing date,
covering the purchase from Seller of products to be supplied by
Seller and including all deposits, progress, payments, and
credits, (b) Leases of personal property, and (c) all policies of
insurance and rights to make claims and other rights hereunder as
listed on Schedule B ("Contracts and Commitments").
1.6. All customer lists and supplier lists.
1.7. All security deposits, prepaid expenses, and similar items in the
amount accrued as of the closing date.
1.8. All transferable local, state and federal franchises, licenses,
bonds, permits, and similar items owned or held by Seller.
1.9. The business conducted by Seller as a going concern, including any
and all goodwill, telephone and facsimile numbers and yellow page
advertisements.
2. Purchase Price.
The purchase price for the Property shall be Six Hundred Fifty Thousand
($650,000) Dollars.
3. Payment of Purchase Price.
The purchase price for the Property shall be paid to Seller in cash or by
certified check at the closing.
4. Liabilities.
The Purchaser assumes no liabilities pursuant to this Agreement with
respect to the Property, whether accrued, absolute, contingent, known,
unknown or otherwise, except all of Seller's Accounts Payable and Seller's
Accounts Payable Accrual as listed on Schedule C (excluding $11,980.96
regarding possible amounts due Orlimar Golf Company which is addressed in
the Escrow Agreement referred to in Paragraph 5 hereof) and the Discounts
Available as of the Closing Date as well as any executory obligations of
Seller's continued performance arising in the ordinary course of business
under any Contracts and Commitments that become performable or payable on
or after the closing date. The Line of Credit Payable to Bank One and the
Loan Payable to Officers are not being assumed by Purchaser.
5. A. Escrow Agreement
The parties agree that the sum of $32,652.00 shall be escrowed pursuant to
an Escrow Agreement dated contemporaneously herewith to be administered
and distributed pursuant to said Escrow Agreement.
B. Cash Payment By Seller
It is the intent of Seller and Purchaser that the balance sheet of Seller
does, as of June 23, 1999, reflect approximately the same assets purchased
by Purchaser and the liabilities assumed by Purchaser as of the Closing
Date. In order to accomplish this, the parties have agreed that Seller
shall pay to Purchaser the sum of $32,652.00 at the Closing.
6. Indemnity Against Creditors' Claims.
Seller has requested Purchaser to waive the requirements of the bulk
transfer provisions of the Uniform Commercial Code, and Purchaser has
acceded to this request. Seller will indemnify Purchaser and hold it
harmless against all claims made by Seller's creditors, other than those
related to the liabilities Purchaser is assuming including, but not
limited to, reasonable attorney fees and costs of defending such claims.
Seller represents that there are no liabilities of any nature (accrued,
absolute, contingent or otherwise), liens, encumbrances, or security
interests on any of the property to be sold to Purchaser, except the
liabilities being assumed and except any of the foregoing which are to be
discharged at closing, and warrants that the title conveyed to Purchaser
will be free and clear. All of the provisions, warranties and
representations in this Paragraph shall survive the closing.
7. Representation by Purchaser.
Purchaser warrants and represents that the merchandise and inventory to be
purchased as part of the Property will be purchased for the purpose of
resale, and that it has applied, or will immediately apply, to the proper
authorities of the State of Michigan for a registration certificate under
the Michigan sales tax law. Purchaser will indemnify and hold harmless
Seller against all claims for any Michigan sales tax on such merchandise
and any claims by any creditors relating to non-payment of amounts
relating to those liabilities assumed by Purchaser, including, but not
limited to, reasonable attorney fees and costs of defending such claims.
All the provision, warranties and representations in this Paragraph shall
survive the closing.
8. Broker.
Purchaser warrants and represents that no broker was involved in
negotiating this Agreement, and agrees to indemnify and hold Seller
harmless against all claims for brokerage, including any actual costs,
expenses and attorney fees incurred as a result of any claim for
brokerage.
9. Closing.
The closing is contingent upon and shall take place simultaneously with
the Closing on the Stock Purchase Agreement between Pro Golf of America,
Inc. and its shareholders, and Purchaser, and at same location (the
"Closing Date"). At the closing, Seller shall deliver to Purchaser an
appropriate xxxx of sale of the property specified to be sold in Paragraph
1. The parties agree that prior to the Closing Date, the parties shall
agree on the allocation of the Purchase Price.
10. No Violation or Breach.
Each party, as to such party, warrants and represents to the other party
that the performance of this agreement does not violate any federal, state
or local law, statute, ordinance, or regulation regarding controlled
substances, or otherwise, or any agreement, court or administrative order
or ruling by which such party may be bound.
11. Binding Effect.
This agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns, except
that this Agreement is not assignable by Purchaser without Seller's prior
written consent.
12. Authority.
The parties represent that they have full authority to bind their
respective corporations by this agreement, and that all appropriate and
necessary corporate action has been taken in order to authorize the
transaction contemplated thereby. Both parties are corporations in good
standing under the laws of the State of Michigan.
13. No Untrue Statements.
Seller represents and warrants that to their knowledge none of the
information disclosed to Purchaser in relation to the transaction
contemplated by this Agreement omits or will omit to state any material
fact necessary to make any representation or warranty herein made not
misleading.
14. Non-Waiver.
No delay or failure by either party to exercise any right hereunder, and
no partial or single exercise of any such right, shall constitute a waiver
of that or any other right, unless otherwise expressly provided herein.
15. Headings.
Headings in this Agreement are for convenience only and shall not be used
to interpret or construe its provisions.
16. Governing Law.
This Agreement shall be governed by, enforced, remedied and construed in
accordance with the laws of the State of Michigan.
17. Choice of Forum.
Any dispute arising out of this Agreement shall be litigated only in the
Courts of the State of Michigan, County of Oakland. The parties consent to
the jurisdiction of Michigan Courts and to the venue of the Courts of
Oakland County, Michigan. The parties agree not to assert venue as a
defense to an action arising under this Agreement, unless the action is
brought other than in Oakland County, Michigan.
18. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and the same instrument.
19. Time of Essence.
Time is of the essence of this agreement.
20. Entire Agreement; Modification.
This Agreement supersedes all prior agreements and constitutes the entire
agreement between the parties with respect to the subject matter hereof.
It may be changed only by a written agreement, signed by the party against
whom enforcement of any waiver, change, modification or discharge is
sought.
21. Notices.
All notices hereunder shall be in writing and delivered personally or
mailed by certified mail, postage prepaid, addressed to the parties at
their last known addresses.
22. Use of Facsimile Machine. The parties agree that for purposes of
negotiating and finalizing this Agreement, any signed documentation,
including this Agreement and any subsequent amendments, transmitted by
facsimile machine shall be treated in all manners and in all respects
as an original document and shall have the same binding legal effect as
an original contract. The signature of any party shall be considered
for these purposes as an original signature. At the request of either
party, any facsimile document shall be re-executed by both parties in
an original form; provided, that, the failure of any party to do so
will not invalidate the signature delivered by facsimile transmission.
IN WITNESS WHEREOF, the parties have executed this Agreement.
STATE OF THE ART GOLF COMPANY, INC.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
Its: President
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Its: Chairman of the Board
AJAY SPORTS, INC.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Its: President
