SECURITIES PURCHASE AGREEMENT
Dated as of November 27, 1996
by and between
SPORT SUPPLY GROUP, INC.
and
XXXXXXX RADIO CORP.
336055-9
TABLE OF CONTENTS
PAGE
ARTICLE I
PURCHASE AND SALE.................... 1
1.1 Purchase and Sale of Shares and Warrants .......... 1
ARTICLE II
PURCHASE PRICE...................... 1
2.1 Purchase Price .................................... 1
2.2 Closing Payments .................................. 2
2.3 Deposit of Purchase Price ......................... 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SSG.......... 2
3.1 Organization and Qualification; Subsidiaries ...... 2
3.2 Capitalization; Minute Book ....................... 3
3.3 Title to Shares ................................... 3
3.4 Authority ......................................... 3
3.5 No Violations ..................................... 4
3.6 Reports ........................................... 4
3.7 Absence of Certain Changes or Events .............. 5
3.8 Condition of Tangible Assets ...................... 6
3.9 Taxes, Tax Returns and Other Reports .............. 6
3.10 Employment Contracts and Compensation ............. 7
3.11 Patents, Trademarks, Etc .......................... 7
3.12 Litigation ........................................ 7
3.13 Insurance ......................................... 8
3.14 Compliance with Laws; Permits ..................... 8
3.15 Hazardous and Toxic Substances; Hazardous Wastes
and Pollutants..................................... 8
3.16 Debt Instruments .................................. 10
3.17 Employee Benefit Plans; Collective Bargaining
Agreements......................................... 10
3.18 Customs ........................................... 10
3.19 Full Disclosure ................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX........ 11
4.1 Authority ......................................... 11
4.2 No Violations ..................................... 11
4.3 Investment Representations ........................ 11
4.4. Reports ........................................... 12
4.5. Opinion of Counsel ................................ 13
ARTICLE V
CONDUCT OF BUSINESS BY SSG PENDING CLOSING........ 13
5.1 Preservation of Existence ......................... 13
5.2 Compliance with Laws .............................. 13
5.3 Accounting Methods; Inspections; Cooperation ...... 13
5.4 Maintenance of Property ........................... 14
5.5 Payment of Taxes and Claims ....................... 14
5.6 Information Covenants ............................. 14
5.7. Action By Board of Directors ...................... 15
ARTICLE VI
ADDITIONAL AGREEMENTS OF SSG............... 15
6.1 Access to Information ............................. 15
6.2 Purchase or Sale of Assets ........................ 15
6.3 Acquisition Proposals ............................. 15
6.4 Indebtedness ...................................... 16
6.5 Compensation ...................................... 16
6.6 Agreements ........................................ 16
6.7 Issuance of Common Stock .......................... 16
6.8 Dividends ......................................... 16
6.9 Investments ....................................... 16
6.10 Merger, etc. ...................................... 16
6.11 Charter Amendment ................................. 17
ARTICLE VII ...................... 00
XXXX-XXXXXXX XXXXXXXXX XX XXX ............. 17
ARTICLE VIII
CONDITIONS TO XXXXXXX'X OBLIGATION TO CLOSE....... 17
ARTICLE IX
CONDITIONS TO SSG'S OBLIGATIONS TO CLOSE......... 18
ARTICLE X
CLOSING......................... 19
10.1 Time and Place of Closing ......................... 19
10.2 Delivery by SSG ................................... 20
10.3 Delivery by Xxxxxxx ............................... 20
10.4 Transaction Documents ............................. 21
ARTICLE XI
TERMINATION AND EXTENSION................ 21
11.1 Termination ....................................... 21
11.2 Effect of Termination ............................. 22
11.3 Extension ......................................... 23
ARTICLE XII
MISCELLANEOUS...................... 23
12.1 No Broker ......................................... 23
12.2 Public Statements ................................. 23
12.3 Survival of Representations and Warranties ........ 23
12.4 Officers' and Directors' Indemnification and
Insurance.......................................... 24
12.5 No Waiver ......................................... 24
12.6 Entire Agreement; Written Modifications ........... 24
12.7 Assignment; Binding Effect ........................ 25
12.8 Expenses .......................................... 25
12.9 Notices ........................................... 25
12.10 Cooperation ....................................... 25
12.11 No Benefit to Others .............................. 26
12.12 Headings, Gender, and "Person" .................... 26
12.13 Schedules ......................................... 26
12.14 Severability ...................................... 26
12.15 Counterparts ...................................... 26
12.16 Governing Law ..................................... 26
12.17 Construction ...................................... 27
336055-9
SECURITIES PURCHASE AGREEMENT dated as of November 27, 1996, by
and between SPORT SUPPLY GROUP, INC., a Delaware corporation having an
address at 0000 Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxx 00000 ("SSG") and
XXXXXXX RADIO CORP., a Delaware corporation having an address at Nine Xxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000-0000 ("Xxxxxxx").
W I T N E S S E T H:
WHEREAS, SSG has agreed to issue or grant, as the case may be,
and sell to Xxxxxxx, and Xxxxxxx has agreed to subscribe for and purchase
from SSG, (i) 1,600,000 newly-issued shares (the "Shares") of Common Stock,
$.01 par value, of SSG (the "Common Stock") and (ii) five-year warrants to
purchase up to 1,000,000 newly-issued shares of the Common Stock at an
exercise price of $7.50 per share, subject to adjustment (the "Warrants"),
subject to, and in accordance with, the terms and provisions set forth
herein.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE OF SHARES AND WARRANTS. Subject to the
terms and provisions of this Agreement, and on the basis of and in reliance
upon the representations, warranties, covenants, and agreements set forth
herein and in the Transaction Documents (as hereinafter defined), on the
Closing Date (as defined in Section 10.1 hereof), SSG shall validly issue
or grant, as the case may be, and sell to Xxxxxxx, and Xxxxxxx shall
validly subscribe for and purchase from SSG, the Shares and the Warrants.
ARTICLE II
PURCHASE PRICE
2.1 PURCHASE PRICE.
(a) In consideration of the issuance and sale of the
Shares, Xxxxxxx shall pay to SSG the sum of ELEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS ($11,500,000) (the "Stock Purchase Price").
(b) In consideration of the issuance and sale of the
Warrants, Xxxxxxx shall pay to SSG the sum of FIVE HUNDRED THOUSAND DOLLARS
($500,000) (the "Warrants Purchase Price," and together with the Stock
Purchase Price, the "Purchase Price").
2.2 CLOSING PAYMENTS. On the Closing Date, Xxxxxxx shall pay,
in immediately available funds by wire transfer to SSG's bank account
designated not later than two business days prior to the Closing Date, the
Purchase Price to SSG.
2.3 DEPOSIT OF PURCHASE PRICE. Concurrently herewith, Xxxxxxx
shall provide SSG with an irrevocable standby letter of credit in the
amount of $3,000,000 from a financial institution located in the United
States and reasonably satisfactory to SSG, on terms and conditions
reasonably satisfactory to Xxxxxxx and SSG, for purposes of satisfying
Xxxxxxx'x obligations under Section 11.2 of this Agreement. Xxxxxxx shall
also provide evidence reasonably satisfactory to SSG of Xxxxxxx'x
availability of funds in or from a financial institution located in the
United States for purposes of paying the Purchase Price at Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SSG
As a material inducement to Xxxxxxx to purchase the Shares and
the Warrants, SSG hereby represents and warrants to Xxxxxxx as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of SSG and its sole subsidiary, Sport Supply Group
International Holdings, Inc. ("SSGI"), 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 own its respective
properties and to carry on its respective businesses as now conducted.
Each of SSG and SSGI is duly qualified or licensed and has all permits
necessary to transact business, and is in good standing as a foreign
corporation, in each of the jurisdictions set forth in SCHEDULE 3.1 hereto,
which are the only jurisdictions wherein the nature of the respective
businesses conducted by SSG or SSGI or their respective leases of real
property require them to be so qualified or licensed or to hold such
permits, except where the failure to be so qualified or licensed or to hold
such permits would not have a material adverse effect on the financial
condition, results of operation, assets, liabilities, business, or
prospects of SSG and SSGI, taken as a whole (hereinafter, a "Material
Adverse Effect").
(b) SSG has no other direct or indirect subsidiaries and has no
ownership or equity interest, or right to acquire any ownership or equity
interest, whether by conversion, option exercise, or otherwise, in any
corporation, partnership, association, business trust, limited liability
company, or any other entity except for SSGI. The total authorized capital
stock of SSGI consists of 10,000 shares of its common stock, $.01 par value
per share, of which 1,000 shares are outstanding, all of which are owned by
SSG, free and clear of any adverse claims. There are no outstanding
subscriptions, options, warrants, rights, calls, contracts, commitments,
understandings, or agreements to purchase or otherwise acquire, or relating
to the issuance of (collectively, the "Rights"), any shares of capital
stock or other securities of SSGI, including without limitation, any Rights
of conversion or exchange under any outstanding securities or instruments.
3.2 CAPITALIZATION; MINUTE BOOK. The total authorized capital
stock of SSG consists of 20,000,000 shares of Common Stock, having a par
value of $0.01 per share, of which 6,764,834 shares are outstanding, and
100,000 shares of Preferred Stock, having a par value of $0.01 per share,
none of which are outstanding. Except as disclosed in the Reports (as
hereinafter defined) or in SCHEDULE 3.2 attached thereto, there are no
outstanding Rights to acquire any shares of Common Stock or other
securities of SSG, including, without limitation, any rights of conversion
or exchange under any outstanding securities or instruments. The minute
books of SSG and SSGI to be made available to Xxxxxxx are true and complete
in all material respects.
3.3 TITLE TO SHARES. The Shares upon issuance, and the shares
of Common Stock to be issued on exercise of the Warrants in accordance with
their terms, will be, and all other outstanding shares of Common Stock have
been, duly authorized and validly issued in full compliance with applicable
federal, state, and other securities and other laws, and without any
violation of any pre-emptive rights, and will be or are, as the case may
be, fully paid and non-assessable. Upon delivery by SSG to Xxxxxxx of the
Stock Certificates (as defined in Section 10.2) and upon exercise of the
Warrants in accordance with their terms, Xxxxxxx shall acquire the legal
and valid title to the Shares and shares of Common Stock underlying the
Warrants, free and clear of all adverse claims whatsoever not created by
Xxxxxxx, and shall become the lawful record and beneficial owner thereof.
3.4 AUTHORITY. SSG has all requisite corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents (as defined in Section 10.4) to which it may be a party and
consummate the transactions contemplated herein and therein. Except as may
be required by the rules of the New York Stock Exchange, Inc. ("NYSE"),
SSG's execution, delivery, and performance of this Agreement and the other
Transaction Documents to which SSG may be a party, and the consummation of
the transactions contemplated herein and therein, have been duly authorized
by its Board of Directors and no other action is required by law, the
Certificate of Incorporation or Bylaws of SSG, or otherwise, for such
authorization. This Agreement and each of the other Transaction Documents
to which SSG may be a party constitute the legal, valid, and binding
obligations of, and are enforceable against, SSG in accordance with their
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
3.5 NO VIOLATIONS. Except as set forth in SCHEDULE 3.5 and
except for matters which would not have a Material Adverse Effect and which
could not prevent or delay the Closing, the authorization, execution, and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated herein and therein by SSG do
not and will not, with or without the giving of notice or passage of time
or both (a) violate, conflict with, or result in the breach of any term or
provision of, or require any notice, filing or consent under (i) the
Certificate of Incorporation or Bylaws of SSG or SSGI, (ii) any statutes,
laws, rules, regulations, ordinances, or Permits (as defined in Section
3.14 below) of any governmental body, authority, or agency applicable to
SSG or SSGI, or (iii) any judgment, decree, writ, injunction, order, or
award of any arbitrator, court, or governmental body, authority, or agency
binding upon SSG or SSGI or any of their respective properties or assets;
(b) conflict with or result in the breach of any term or provision of,
require any notice or consent under, give rise to a right of termination
of, constitute a default under, result in the acceleration of, or give rise
to a right to accelerate any obligation under any loan agreement, mortgage,
indenture, financing agreement, lease, or any agreement or instrument of
any kind to which SSG or SSGI may be a party or by which any of their
respective properties or assets are bound; or (c) result in any lien,
claim, encumbrance, or restriction on any of the properties or assets of
SSG or SSGI.
3.6 REPORTS. Since December 31, 1994, SSG has filed all
required forms, reports, statements, and documents (the "Reports") with the
Securities and Exchange Commission ("SEC") required to be filed by it
pursuant to the Federal securities laws and the SEC rules and regulations
promulgated thereunder, all of which have complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated thereunder.
None of such Reports, including without limitation any financial statements
or schedules included therein, at the time filed, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The consolidated balance sheets and the related consolidated
statements of operations and cash flows (including the related notes
thereto) (the "Financial Statements") of SSG included in the Financial
Statements contained in SSG's Annual Report on Form 10-K for the fiscal
year ended October 31, 1995 (the "1995 10-K") and SSG's Quarterly Reports
on Form 10-Q for the fiscal quarters ended February 2, 1996, May 3, 1996,
and August 2, 1996 (the "Interim 10-Q's"), present fairly in all material
respects the consolidated financial position of SSG as of their respective
dates, and the results of consolidated operations and cash flows for the
periods presented therein, all in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP"), except as
otherwise noted therein and except that the Financial Statements included
in the Interim 10-Q's may not contain all footnotes required by GAAP and
are subject to year-end audit adjustments.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
specifically provided for herein or as set forth in SCHEDULE 3.7, since
August 2, 1996 (the "Balance Sheet Date"), neither SSG nor SSGI has:
(a) incurred any material obligation or liability except trade
or business obligations or liabilities incurred in the ordinary course of
business;
(b) other than pursuant to its existing lines of credit,
created, incurred, assumed, or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged, or subjected to any lien, pledge,
mortgage, charge, security interest, conditional sales contract, or other
encumbrance of any nature whatsoever any of its assets or properties,
except in the ordinary course of business consistent with past practices;
(c) sold or committed to sell or assigned, transferred, or
leased or subleased any of its material assets or properties, other than in
the ordinary course of business;
(d) canceled, compromised, modified, or waived any material debt
or claim owing to it, except for adjustments made in the ordinary course of
business consistent with past practices;
(e) declared, set aside, or paid any dividend or made or agreed
to make any other distribution or payment in respect of its capital stock;
or redeemed, purchased, or otherwise acquired or agreed to redeem,
purchase, or otherwise acquire any of its capital stock;
(f) transferred or granted any material rights under or with
respect to any Intellectual Property (as defined in Section 3.11 below);
(g) except as disclosed in SCHEDULE 3.2 hereto, issued or sold
any of its capital stock or any other securities or granted any options,
warrants, or other rights to subscribe therefor or entered into any other
commitments for the sale or purchase of any of its capital stock or other
securities;
(h) made, committed to make, or initiated any material capital
expenditure or capital addition or betterment or programs with respect
thereto, except such as may be involved in the replacement of its assets in
the ordinary course of business;
(i) made or granted any promotion in title or responsibility or
increase with respect to any wages, salaries, or other compensation (other
than increases in the ordinary course of its business consistent with past
practices) of any director or officer of SSG or SSGI; entered into any
employment contract or other compensation arrangement with any stockholder,
director, or officer of SSG or SSGI; made any advance (excluding advances
for ordinary and necessary business expenses) or loan to any stockholder,
director, or officer of SSG or SSGI; or made any increase in, or any
addition to, other benefits to which any stockholder, director, or officer
may be entitled;
(j) changed in any material respect any of the accounting
principles followed by it or the methods of applying such principles;
(k) entered into any transaction other than in the ordinary
course of business consistent with past practices; or
(l) experienced any Material Adverse Effect.
3.8 CONDITION OF TANGIBLE ASSETS. Neither SSG nor SSGI has
received notice that the Tangible Assets violate, and neither SSG nor SSGI
have any knowledge of any state of facts or the occurrence of any events
which might form a reasonable basis for a claim that the Tangible Assets
violate, any applicable laws, ordinances, codes, rules, or regulations
relating to the use and operation of the Tangible Assets, including,
without limitation, any local or municipal building, electrical, plumbing,
safety, engineering, environmental, or license or permit requirements in
any manner which would result in a Material Adverse Effect.
3.9 TAXES, TAX RETURNS AND OTHER REPORTS. All federal, state,
and local tax returns, reports, and statements required to be filed by SSG
or SSGI (collectively, the "Tax Returns") have been filed with the
appropriate governmental agencies in all jurisdictions in which the Tax
Returns are required to be filed, and all of the Tax Returns are complete
and correct in all material respects and properly reflect the tax
liabilities of SSG and SSGI for the periods, properties, or events covered
thereby. All federal, state, and local taxes, assessments, interest,
deficiencies, fees, and other governmental charges or impositions which are
called for by the Tax Returns (collectively, the "Taxes") have been
properly accrued or paid. The accruals for Taxes, if any, contained in the
Financial Statements are adequate in all material respects to cover the tax
liabilities of SSG and SSGI as of the dates thereof. Except for a sales
tax audit in the State of Florida, neither SSG nor SSGI has received any
notice of assessment or proposed assessment or been advised as to any tax
examination by any taxing authority in connection with any Tax Returns and
there are no pending tax examinations of, or tax claims asserted against,
SSG and SSGI or any of their respective assets or properties. There are no
tax liens on any of the assets or properties owned or used by SSG and SSGI.
Neither SSG nor SSGI is subject to any extension of a period for the
assessment of any Tax. Each of SSG and SSGI has made all deposits required
by law to be made by it with respect to employee withholding taxes. There
are no outstanding agreements or waivers extending the statute of
limitations with respect to, and neither SSG nor SSGI is now subject to any
extension of a period for the assessment of, any federal, state, or local
income tax or other tax.
3.10 EMPLOYMENT CONTRACTS AND COMPENSATION. Except as disclosed
in the Reports or on SCHEDULE 3.10, neither SSG nor SSGI is a party to any
written employment contracts or agreements with any stockholders, officers,
directors, or employees of SSG or SSGI or any contracts or agreements under
which individuals acting as independent contractors perform analogous
services for SSG or SSGI on a regular basis.
3.11 PATENTS, TRADEMARKS, ETC. SCHEDULE 3.11 contains a
complete and correct list of all material patents, trademarks, trademark
rights, trade names, trade name rights, service marks, copyrights, and
other similar proprietary rights, and material applications for any of the
foregoing, of SSG and SSGI and other material agreements pertaining to any
of the foregoing or to the transfer of technical information, know-how, or
technical assistance to which either SSG or SSGI is a party or which relate
to the business of SSG or SSGI (collectively, the "Intellectual Property").
Except as set forth in SCHEDULE 3.11, and except for matters which would
not have a Material Adverse Effect, (a) SSG or SSGI, as the case may be, is
the sole and exclusive owner of the Intellectual Property and has the sole
and exclusive right to use the same; (b) no proceedings have been
instituted or are pending or threatened which challenge the rights of
either SSG or SSGI in respect of any of the Intellectual Property or the
validity thereof; (c) to SSG's knowledge, none of the Intellectual Property
infringes upon or otherwise violates the rights of others or is being
infringed by others, and none is subject to any outstanding order, decree,
judgment, stipulation, or charge; (d) no licenses, sublicenses, or
agreements pertaining to any of the Intellectual Property have been granted
to or by either SSG or SSGI; (e) neither SSG nor SSGI has received any
charge of interference or infringement of any of the Intellectual Property;
(f) neither SSG nor SSGI has agreed to indemnify any person or entity for
or against any infringement of any patent, trademark, or copyright; and (g)
neither SSG nor SSGI has any knowledge of any trademarks or applications
therefor or similar property which infringe upon any of the Intellectual
Property or render obsolete or materially adversely affect the distribution
or sale of any of the products or services of the business of SSG or SSGI.
3.12 LITIGATION. Except as described in the Reports or SCHEDULE
3.12 hereto, there are no actions, suits, or legal, administrative,
arbitration, or other proceedings or governmental investigations pending
or, to SSG's knowledge, threatened against either SSG or SSGI before or by
any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, which, if adversely
determined, would result in a Material Adverse Effect.
3.13 INSURANCE. SSG has in full force and effect the insurance
policies listed on SCHEDULE 3.13 and all premiums due thereon have been
paid and SSG has complied in all material respects with the provisions of
such policies. SSG will use its best efforts to maintain or cause to be
maintained in full force and effect all such insurance policies or similar
insurance policies through the Closing Date.
3.14 COMPLIANCE WITH LAWS; PERMITS.
(a) Neither SSG nor SSGI has received notice of any violation by
SSG or SSGI of any federal, state, or local law, statute, rule, or
regulation applicable to SSG or SSGI, their respective assets or properties
or businesses as now conducted or any of the Permits (as defined in Section
3.14(b) below), which violation would have a Material Adverse Effect. Each
of SSG and SSGI has complied with, and is not in violation of, any
judgment, order, writ, injunction, or decree of any governmental authority,
court or administrative authority having jurisdiction over SSG or SSGI,
their respective assets or properties or businesses as now or heretofore
conducted, except where failure to comply would not have a Material Adverse
Effect.
(b) SSG has all licenses, permits, approvals, certificates of
occupancy, and other authorizations (collectively, the "Permits") which are
material to the conduct of its business as now conducted and has not failed
to adhere to the requirements thereof in any material respect. Each of SSG
and SSGI has taken all steps necessary to maintain all of the Permits, all
of which are valid, in good standing, and in full force and effect.
(c) No notice to, filing with, or consent from any governmental
body, authority, or agency is required as a result of, or as a condition to
the legality or validity of, the issuance or grant, as the case may be, and
sale of the Shares and Warrants (and the shares of Common Stock underlying
the Warrants) and the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents, nor will any Permit
otherwise be terminated, modified, or impaired or rendered invalid by
reason thereof.
3.15 HAZARDOUS AND TOXIC SUBSTANCES; HAZARDOUS WASTES AND
POLLUTANTS.
(a) SSG has complied in all material respects with, and is not
in material violation of, any material federal, state or local ordinance,
rule, regulation and statute governing the generation, transport, storage,
treatment, handling, release, emission, discharge, and disposal of solid or
hazardous wastes, hazardous substances, toxic substances or pollutants.
(b) Except as set forth in SCHEDULE 3.15, there are no locations
or premises currently or previously leased or operated by SSG or SSGI where
hazardous wastes, hazardous substances, toxic substances, or pollutants
have entered into the air, soil, surface water, groundwater, or other
bodies of water in violation of federal, state or local law, regulation or
ordinance, and neither SSG nor SSGI know of any on-site or off-site
locations to which SSG or SSGI has transported hazardous wastes, hazardous
substances, toxic substances or pollutants, which site is or may become the
subject of any federal, state, or local enforcement actions or other
investigations that may lead to claims against SSG or SSGI for remedial
investigation costs, clean-up costs, remedial work, damages to natural
resources, or personal injury or property damage, including, but not
limited to, claims under the Comprehensive Environmental Response
Compensation and Liability Act, as amended, the Resource Conservation and
Recovery Act, as amended, or any other federal, state, or local law, rule,
or regulation concerning the clean-up of the environment or discharges of
hazardous wastes, hazardous substances, toxic substances, or pollutants.
(c) As used in this Agreement, (i) the term "hazardous wastes"
shall have the meaning given to such term in the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, and
the regulations promulgated thereunder or under any similar federal, state,
or local law, rule, or regulation dealing with the generation, transport,
storage, treatment, handling, release, emission, discharge, or disposal of
hazardous wastes; (ii) the term "hazardous substances" shall have the
meaning given to such term in the Comprehensive Environmental Response,
Compensation, and Liability Act and the regulations promulgated thereunder
or under any similar federal, state, or local law, rule, or regulation
dealing with the generation, transport, storage, treatment, handling,
release, emission, discharge, or disposal of hazardous substances or the
presence of which requires investigation or remediation under any federal,
state, or local statute, rule, regulation, ordinance, order, action,
policy, or under common law, including all petroleum products; (iii) the
term "toxic substances" shall have the meaning given to such term in the
Toxic Substances Control Act or the regulations promulgated thereunder or
under any similar federal, state, or local law, rule, or regulation dealing
with the generation, transport, storage, treatment, handling, release,
emission, discharge, or disposal of toxic substances; (iv) the term
"pollutants" shall mean all substances the emission or discharge of which
is regulated pursuant to the Federal Water Pollution Control Act and the
regulations promulgated thereunder, the Federal Clean Air Act and the
regulations promulgated thereunder, or under any similar federal, state, or
local law, rule, or regulation dealing with the generation, transport,
storage, treatment, handling, release, emission, discharge, or disposal of
pollutants; and (v) the terms "hazardous wastes," "hazardous substances,"
"toxic substances," and "pollutants" shall also include all other
substances which are toxic, explosive, corrosive, flammable, infective,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and are or
become regulated by any federal, state, or local governmental authority,
department, commission, board, agency, or instrumentality, or the presence
of which causes or threatens to cause a nuisance or a hazard to health and
safety.
3.16 DEBT INSTRUMENTS. The exhibit indexes to the 1995 10-K and
the Interim 10-Q's contain a complete and correct list of all material
outstanding indentures, mortgages, chattel mortgages, deeds of trust,
conditional sales agreements, bank loans, credit agreements, and guarantees
to which either SSG or SSGI is a party or by which either SSG or SSGI or
any of their respective properties is bound.
3.17 EMPLOYEE BENEFIT PLANS; COLLECTIVE BARGAINING AGREEMENTS.
Except as set forth in the Reports or in SCHEDULE 3.17, neither SSG nor
SSGI maintains or offers any retirement or similar benefit plan for their
respective employees. Each of SSG and SSGI has performed all material
obligations required to be performed under, and is not in default under or
in violation of, any retirement or similar benefit plan for their
respective employees which it maintains or offers (each a "Plan"). Each of
SSG and SSGI is in compliance in all material respects with the
requirements prescribed by all statutes, orders, or governmental rules or
regulations applicable to the Plans, including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended, and the
Internal Revenue Code of 1986, as amended. Neither SSG nor SSGI maintains
or participates as an employer under any collective bargaining agreement,
nor has either been advised of any labor organizational activity or
proceedings which are pending or to their knowledge, threatened.
3.18 CUSTOMS. SSG and SSGI have at all times been in compliance
with all requirements administered and enforced by the U.S. Customs Service
and any foreign government customs service which has authority over the
respective businesses of SSG and SSGI, including, but not limited to, the
classification, valuation, and marketing of articles imported into or
exported from the United States or any such other country, except where the
failure to comply would not have a Material Adverse Effect.
3.19 FULL DISCLOSURE. The representations and warranties of SSG
in this Agreement and the other Transaction Documents are on the date
hereof true, correct and complete in all material respects. Except as
otherwise noted in the Schedules, SSG has provided to Xxxxxxx true, correct
and complete copies of all documents referred to or described in the
Schedules hereto. No representation or warranty by SSG in this Agreement,
any Schedule hereto, any Transaction Document, or in any closing
certificate furnished or to be furnished pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to SSG as follows:
4.1 AUTHORITY. Xxxxxxx has all requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to
which it is a party and consummate the transactions contemplated herein and
therein. Xxxxxxx'x execution, delivery, and performance of this Agreement
and the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated herein and therein, have been
duly authorized by its Board of Directors and no other action is required
by law, the Certificate of Incorporation, or Bylaws of Xxxxxxx, or
otherwise, for such authorization. This Agreement and each of the other
Transaction Documents to which Xxxxxxx is a party constitute the legal,
valid, and binding obligations of, and are enforceable against, Xxxxxxx in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting creditors'
rights generally or the availability of equitable remedies.
4.2 NO VIOLATIONS. Except for matters which would not have a
material adverse effect on the financial condition, results of operation,
assets, liabilities, business, or prospects of Xxxxxxx and its
subsidiaries, taken as a whole and which would not prevent or delay the
Closing or the availability or providing of trade financing credit by
Xxxxxxx to SSG, the authorization, execution, and delivery of this
Agreement and the Transaction Documents and the consummation of the
transactions contemplated herein and therein by Xxxxxxx do not and will
not, with or without the giving of notice or passage of time or both, (a)
violate, conflict with, or result in the breach of any term or provision
of, or require any notice, filing, or consent under (i) any statutes, laws,
rules, regulations, ordinances, licenses, or permits of any governmental
body, authority, or agency applicable to Xxxxxxx or (ii) any judgment,
decree, writ, injunction, order, or award of any arbitrator, court, or
governmental body, authority, or agency binding upon Xxxxxxx or any of its
properties or assets; (b) conflict with or result in the breach of any term
or provision of, require any notice or consent under, give rise to a right
of termination of, constitute a default under, result in the acceleration
of, or give rise to a right to accelerate any obligation under any loan
agreement, mortgage, indenture, financing agreement, lease, or any
agreement or instrument of any kind to which Xxxxxxx is a party or by which
its properties or assets are bound; or (c) result in any lien, claim,
encumbrance, or restriction on any of the properties or assets of Xxxxxxx.
4.3 INVESTMENT REPRESENTATIONS. Xxxxxxx is acquiring the Shares
and the Warrants for its own account, for investment, and not with a view
toward the resale or distribution thereof. Xxxxxxx understands that it
must bear the economic risk of such investment for an indefinite period of
time because the sale and issuance of the Shares and the Warrants are not
registered under the Securities Act or any applicable state securities
laws, and may not be resold unless subsequently registered under the
Securities Act and such other laws, or unless an exemption from such
registration is available. Xxxxxxx also understands that, except as
provided in the Registration Rights Agreement, it is not contemplated that
any registration will be made under the Securities Act to permit resale of
the Shares and Warrants. Xxxxxxx agrees not to pledge, transfer, convey or
otherwise dispose of any of the Shares and the Warrants, except in a
transaction that is the subject of either (i) an effective Registration
Statement under the Securities Act and any applicable state securities
laws, or (ii) an exemption under the Securities Act or such state
securities laws. Xxxxxxx agrees that each certificate representing Shares
or Warrants will contain a restrictive legend restricting the sale,
transfer or other disposition of the Shares or Warrants unless the Shares
and/or Warrants are registered under the Securities Act or laws or
exemptions from registration are available. Xxxxxxx acknowledges that stop
transfer instructions will be given to SSG's transfer agent for the Shares.
Xxxxxxx further acknowledges that is has received copies of the Reports and
has had the opportunity to ask questions of, and receive answers from,
officers of SSG with respect to the business and financial condition of SSG
and to obtain any additional information necessary to verify such
information or can acquire it without unreasonable effort or expense.
Xxxxxxx further represents that it is an "accredited investor" as such term
is defined in Rule 501 of Regulation D of the SEC under the Securities Act
and that it has not been formed for the purpose of purchasing the Shares
and the Warrants.
4.4. REPORTS. Since December 31, 1994, Xxxxxxx has filed all
forms 00-X, 00-X, 0-X and all proxy statements in connection with any
annual or special meeting of Xxxxxxx'x stockholders (the "Xxxxxxx Reports")
with the SEC required to be filed by it pursuant to the Federal securities
laws and the SEC rules and regulations promulgated thereunder, all of which
have complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder. None of such Xxxxxxx Reports, including without
limitation any financial statements or schedules included therein, at the
time filed, nor any of the information contained in the section entitled
"Board of Directors and Executive Officers - Designation of Directors;
Xxxxxxx'x Designees" and in the table, the first heading of which is
"Persons to be Designated Directors" and the information with respect to
Xxxxxxx in the table, the first heading of which is "Principal Stockholders
(in each case, including the footnotes thereto), in the section entitled
"Beneficial Ownership of Common Stock" (copies of which are attached as
EXHIBIT A) to be included in the Information Statement to be provided by
SSG to its shareholders pursuant to Section 14(f) of the Exchange Act
contained (or contains) any untrue statement of a material fact or omitted
(or omits) to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.5. OPINION OF COUNSEL. Concurrently herewith Xxxxxxx is
providing to SSG an opinion of Xxxxx & Samson, counsel to Xxxxxxx, in the
form attached as EXHIBIT B.
ARTICLE V
CONDUCT OF BUSINESS BY SSG PENDING CLOSING
As a material inducement to Xxxxxxx to purchase the Shares and
Warrants, SSG covenants and agrees that, until the Closing Date, SSG will
comply with the following covenants and agreements:
5.1 PRESERVATION OF EXISTENCE. SSG will do or cause to be done
all things necessary to preserve and maintain in full force and effect the
corporate existence and all material contracts, rights, licenses, permits,
franchises, patents, trademarks, and trade names necessary to the proper
conduct of its business and shall qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in which the
character of the property owned or the nature of the business conducted by
it makes such qualification or authorization necessary, except such
jurisdictions in which the lack of qualification or authorization does not
result in a Material Adverse Effect.
5.2 COMPLIANCE WITH LAWS. SSG will, and will cause SSGI to,
comply with all laws, ordinances, and governmental rules and regulations to
which it or its respective properties or assets is subject, the
noncompliance with which would materially interfere with the performance of
SSG's obligations under this Agreement or the Transaction Documents or
would result in a Material Adverse Effect.
5.3 ACCOUNTING METHODS; INSPECTIONS; COOPERATION. SSG will, and
will cause SSGI to, keep adequate records and books of account in which
complete entries will be made in all material respects. SSG will, and will
cause SSGI to, consult with Xxxxxxx and its representatives on their
respective accounting practices. SSG will, and will cause SSGI to, permit
Xxxxxxx and its agents and representatives (including without limitation
Xxxxxxx'x lenders or potential lenders to SSG, and their agents and
representatives) to visit and inspect any of the properties or assets of
SSG and SSGI and to examine and make extracts of the books of account of
SSG and SSGI at all reasonable times and to such extent as Xxxxxxx or such
lenders may reasonably request. SSG will cooperate with Xxxxxxx and use
its best efforts to arrange access by Xxxxxxx'x representatives to
representatives of SSG's primary lender to discuss SSG's current defaults
and the nature of its current and future relationship with SSG.
5.4 MAINTENANCE OF PROPERTY. SSG will, and will cause SSGI to,
keep all of their respective properties in good working order and
condition, subject to ordinary wear and tear and routine maintenance.
5.5 PAYMENT OF TAXES AND CLAIMS. SSG will, and will cause SSGI
to, pay and discharge promptly all Taxes and all other claims, demands,
charges, or levies imposed by governmental authorities upon SSG or SSGI or
upon their respective income or profits or upon any of their respective
properties or assets before the same shall become delinquent; PROVIDED,
HOWEVER, that none of the foregoing need be paid while being contested in
good faith and by appropriate proceedings, so long as adequate book
reserves have been established in accordance with GAAP with respect thereto
and the title of SSG or SSGI to, and the right to use, their respective
properties are not materially adversely affected thereby.
5.6 INFORMATION COVENANTS. SSG will furnish the following
information to Xxxxxxx:
(a) REPORTS. Concurrently with their filing with the SEC, all
Reports of SSG filed from and after the date hereof.
(b) NOTICE OF LITIGATION AND OTHER MATTERS. Prompt notice of:
(i) the commencement of any material proceeding or
investigation by or before any governmental body and any material action
and proceeding in any court or before any arbitrator against or in any
other way relating adversely to SSG or any of its properties, assets, or
businesses;
(ii) any written notice received from any administrative
official or agency relating to any order or ruling which may result in, or
cause, a Material Adverse Effect;
(iii) any amendment of the Certificate of Incorporation or
Bylaws of SSG or SSGI;
(iv) any breach by SSG of any of its obligations hereunder
or under any of the Transaction Documents; and
(v) the receipt of any proposal for a merger,
consolidation, sale of all or substantially all of its assets, tender
offer, sale of an equity interest, or other business combination involving
SSG, SSGI, or any future direct or indirect subsidiary of SSG (an
"Acquisition Proposal") and its position with respect thereto.
(c) OTHER INFORMATION. From time to time, such other
information or documents as Xxxxxxx may reasonably request.
5.7. ACTION BY BOARD OF DIRECTORS. The Board of Directors of SSG
will not vote to approve or recommend or otherwise take any action with
respect to the matter which is the subject of the memorandum to the Board
of Directors referred to in item (h) of Schedule 3.7.
ARTICLE VI
ADDITIONAL AGREEMENTS OF SSG
As a material inducement to Xxxxxxx to purchase the Shares and
Warrants, SSG covenants and agrees that, until the Closing Date, SSG will
not take any of the following actions:
6.1 ACCESS TO INFORMATION. SSG shall afford to Xxxxxxx and its
accountants, counsel, and other representatives reasonable access during
normal business hours throughout the period prior to the Closing Date to
all of its properties, books, contracts, commitments and records
(including, but not limited to, tax returns) and to its officers,
consultants, and, subject to any applicable privilege rules, professional
advisors.
6.2 PURCHASE OR SALE OF ASSETS. SSG will not, and will cause
SSGI not to, purchase or acquire, or sell, lease, or otherwise dispose of,
any asset other than (i) in the ordinary course of their respective
businesses or (ii) assets having a price or value which does not exceed
$100,000 (the "Threshold Amount"). Notwithstanding any other provision of
this Agreement, SSG may proceed with its efforts to sell its golf business
in the manner previously disclosed to Xxxxxxx provided, further, that SSG
shall obtain the prior written consent of Xxxxxxx if such sale would be at
a price less than the book value of such business as reflected in SSG's
balance sheet filed with its Form 10-Q for the fiscal quarter ended August
2, 1996.
6.3 ACQUISITION PROPOSALS. Except for the proposed sale of its
golf business, SSG shall not, and shall cause SSGI not to, directly or
indirectly, through any officer, director, employee, representative, agent,
or otherwise, solicit, initiate, or encourage any Acquisition Proposal,
from any person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act) or entity other than with respect to
the transactions contemplated by this Agreement (collectively, a "SSG
Acquisition Transaction"); PROVIDED, HOWEVER, that SSG or SSGI may take any
of the actions otherwise prohibited by this Section 6.3 if counsel to SSG
or its outside directors advises the Board of Directors of SSG or SSGI that
the failure to take such action or actions could subject the directors to
liability for breach of their fiduciary duties.
6.4 INDEBTEDNESS. Subject to fiduciary duties under applicable
law, SSG will not, and will cause SSGI not to, create, incur, assume,
guarantee, or in any way become liable or obligated in respect of any
indebtedness for borrowed money other than (i) in the ordinary course of
the business of SSG or SSGI or (ii) under its existing credit lines.
6.5 COMPENSATION. Except as reflected in the Reports and except
for fees owing to Xxxxxx Xxxxxxxx, LLP described in SCHEDULE 3.7, SSG will
not, and will cause SSGI not to, pay any salary or other compensation, or
enter into any agreement which obligates SSG or SSGI to pay any salary or
other compensation, to any officer, director, consultant, or independent
contractor in any amount which exceeds the Threshold Amount.
6.6 AGREEMENTS. Except as provided in Section 6.3, SSG will
not, and will cause SSGI not to, enter into any agreement, contract,
understanding, arrangement, or transaction other than (i) in the ordinary
course of business or (ii) which has a price or value, or imposes upon
either SSG or SSGI any obligation in an amount, which exceeds the Threshold
Amount.
6.7 ISSUANCE OF COMMON STOCK. Subject to fiduciary duties under
applicable law, SSG will not, and will cause SSGI not to, authorize, issue,
or enter into any agreement providing for the issuance (contingent or
otherwise) of (i) any notes or debt securities containing equity features,
including without limitation, any notes or debt securities convertible into
or exchangeable for equity securities or containing profit participation
features or (ii) any equity securities or capital stock, or any securities
convertible into or exchangeable for equity securities or capital stock,
except for the issuance of shares of Common Stock upon exercise of
currently outstanding options or warrants, in each case upon the terms and
conditions in effect on the date of this Agreement.
6.8 DIVIDENDS. SSG will not, and will cause SSGI not to,
directly or indirectly (i) declare or pay any dividends or make any
distributions upon any of its equity securities or (ii) redeem, purchase or
otherwise acquire any of their respective equity securities (including
without limitation, warrants, options, and other rights to acquire equity
securities).
6.9 INVESTMENTS. SSG will not, and will cause SSGI not to, make
any loan or advance to, or purchase or acquire any equity interest in, any
corporation, partnership, association, business trust, limited liability
company, governmental agency, or any individual, except for (i) reasonable
advances to employees in the ordinary course of business, (ii) certificates
of deposit of U.S. commercial banks, or (iii) obligations of, or guaranteed
by, the U.S. government or any agency or instrumentality thereof.
6.10 MERGER, ETC. Subject to fiduciary duties under applicable
law, SSG will not, and will cause SSGI not to, enter into or effectuate any
merger, consolidation, or sale of all or substantially all of the assets of
SSG or SSGI, or liquidation, dissolution, reincorporation, reorganization,
or restructuring or assignment of all or substantially all of its assets
for the benefit of creditors, or file (or consent to the filing of) any
petition in bankruptcy.
6.11 CHARTER AMENDMENT. SSG will not, and will cause SSGI not
to, amend, modify, or restate their respective Certificates of
Incorporation or Bylaws or take any action which would increase the number
of authorized shares of Common Stock or create any new class of capital
stock or adversely affect or otherwise impair the rights or relative
priority of the holders of the Common Stock.
ARTICLE VII
POST-CLOSING COVENANTS OF SSG
The parties further agree as follows:For a period of at least two
(2) years after the Closing Date, the parties further agree that:
(a) for a period of at least two (2) years after the Closing
Date, unless approved by a majority of SSG's directors who do not have a
direct or indirect material financial interest in the agreement or
transaction (which shall include a majority of the Independent Directors,
as defined in clause (b) immediately below), SSG shall not, and shall not
permit any of its subsidiaries to, enter into or be a party to any
agreement or transaction with any Affiliate (as defined under the Exchange
Act) of SSG or Xxxxxxx, except in the ordinary course of SSG's or its
subsidiaries' business and on terms no less favorable to SSG or its
subsidiaries than would be obtained in a comparable arms' length
transaction with a person not an Affiliate of SSG or Xxxxxxx;
(b) for a period of at least two (2) years after the Closing
Date, SSG's Board of Directors shall be comprised of at least two persons
who are not officers or employees of SSG or Xxxxxxx or directors of Xxxxxxx
("Independent Directors"); and
(c) for so long as they shall be applicable, SSG shall comply
with the rules of the NYSE with respect to related party transactions.
ARTICLE VIII
CONDITIONS TO XXXXXXX'X OBLIGATION TO CLOSE
The obligation of Xxxxxxx to consummate the purchase of the
Shares and the Warrants is subject to the satisfaction on or prior to the
Closing Date of all of the following conditions (any of which may be waived
by Xxxxxxx):
(a) The representations and warranties of SSG contained in this
Agreement shall be true in all material respects (to the extent any such
representation and warranty is not already qualified by materiality) on and
as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date.
(b) There shall not have been issued any order of any court or
tribunal of competent jurisdiction restraining or enjoining the
transactions contemplated by this Agreement and the Transaction Documents
or prohibiting Xxxxxxx'x ownership or operation of all or any portion of
the business of Xxxxxxx or SSG and SSGI and there shall be no proceeding
pending by or brought by any governmental agency or authority seeking any
of the foregoing.
(c) There shall not be pending before any court or tribunal of
competent jurisdiction any action relating to the transactions contemplated
by this Agreement and the Transaction Documents which, might reasonably be
expected to result in a Material Adverse Effect to SSG.
(d) Effective as of the Closing Date, SSG shall cause its Board
of Directors to consist of such of Xxxxxxx'x designees listed on EXHIBIT A
hereto as Xxxxxxx shall specify on or prior to the Closing.
(e) All consents and approvals of third parties to this
Agreement, the Transaction Documents, and the transactions contemplated
hereby and thereby, the failure to receive which could have a Material
Adverse Effect, shall have been obtained by SSG.
(f) An exception to the Shareholder Approval Policy contained in
Section 312.04 of the NYSE rules shall have been obtained by SSG, and SSG
shall have complied with the requirements for such an exception contained
in such Section. SSG also shall have complied with its obligations under
Section 14(f) of the Exchange Act, it being understood that SSG shall rely
upon the accuracy of the representation and warranty of Xxxxxxx set forth
in Section 4.4 hereof in so far as such representation and warranty relates
to information to be included by SSG in the filing to be made pursuant to
such Section of the Exchange Act.
(g) SSG shall secure the listing upon official notice of
issuance of (i) the Shares upon the NYSE on or prior to the Closing Date
and (ii) the shares underlying the Warrants upon the NYSE as set forth in
the Warrant Agreement.
ARTICLE IX
CONDITIONS TO SSG'S OBLIGATIONS TO CLOSE
The obligation of SSG to consummate the sale of the Shares and
Warrants at the Closing is subject to the satisfaction on or prior to the
Closing Date of all of the following conditions (any of which may be waived
by SSG):
(a) The representations and warranties of Xxxxxxx contained in
this Agreement shall be true in all material respects (to the extent any
such representation and warranty is not already qualified by materiality)
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
(b) There shall not have been issued under any order of any
court or tribunal of competent jurisdiction restraining or enjoining the
transactions contemplated by this Agreement and the Transaction Documents
(including, without limitation, the sale of the Shares or Warrants) and
there shall be no proceeding pending by any governmental agency or
authority seeking to restrain or enjoin such sale.
(c) There shall not be pending before any court or tribunal of
competent jurisdiction any action relating to the transactions contemplated
by this Agreement and the Transaction Documents which, if adversely
determined, might reasonably be expected to result in a Material Adverse
Effect to SSG.
(d) All consents and approvals of third parties to this
Agreement, the Transaction Documents, and the transactions contemplated
hereby and thereby, the failure to receive which could have a material
adverse effect to Xxxxxxx, shall have been obtained by Xxxxxxx.
(e) Xxxxxxx shall have provided evidence, reasonably
satisfactory to SSG, of its ability to provide $2 million of available
trade finance credit to SSG for the purchase of goods sourced in the Far
East through a foreign subsidiary of Xxxxxxx.
(f) As a result of the application by SSG to the NYSE for (i) an
exception to the Shareholder Approval Policy contained in Section 312.04 of
the NYSE rules or (ii) the listing of the Shares upon the NYSE on or prior
to the Closing Date and the shares underlying the Warrants upon the NYSE as
set forth in the Warrant Agreement, SSG shall not have been notified by the
NYSE of its intention to delist other shares of common stock of SSG.
ARTICLE X
CLOSING
10.1 TIME AND PLACE OF CLOSING. Subject to Section 11.1, the
closing (the "Closing") of the issuance, sale or grant, and purchase of the
Shares and the Warrants shall take place at the corporate offices of SSG at
10:00 a.m. on December 12, 1996, or at such other place or on such other
date as shall be agreed to by the parties hereto (the "Closing Date").
10.2 DELIVERY BY SSG. On the Closing Date, SSG shall deliver,
or cause to be delivered, to Xxxxxxx the following:
(a) A Common Stock certificate or certificates evidencing the
Shares (the "Stock Certificates");
(b) A Warrant Agreement evidencing the Warrants (the "Warrant
Agreement"), to be executed substantially in the form attached hereto as
EXHIBIT C;
(c) A Registration Rights Agreement (the "Registration
Agreement") duly executed and delivered by SSG substantially in the form
attached hereto as EXHIBIT D; and
(d) A Certificate (the "SSG Secretary's Certificate") of the
Secretary of SSG dated the Closing Date to the effect that (i) the
Certificates of Incorporation of SSG and SSGI attached to the SSG
Secretary's Certificate are true, correct, and complete copies thereof and
the same have not been amended, restated, supplemented, or modified in any
respect and are in full force and effect on the Closing Date, (ii) the
Bylaws of SSG and SSGI attached to the SSG Secretary's Certificate are
true, correct, and complete copies thereof and the same have not been
amended, restated, supplemented, or modified in any respect and are in full
force and effect on the Closing Date, (iii) the resolutions of the Board of
Directors of SSG authorizing the issuance or grant, as the case may be, and
sale of the Shares and the Warrants and the consummation of the
transactions contemplated by the Transaction Documents attached to the SSG
Secretary's Certificate are true, correct, and complete copies thereof and
the same have not been amended, restated, supplemented, or modified in any
respect and are in full force and effect on the Closing Date, and (iv) the
specimen signatures of the officers of SSG executing this Agreement and the
other Transaction Documents are true and correct specimens thereof and such
officers are duly authorized to execute and deliver this Agreement and the
other Transaction Documents on behalf of SSG;
(e) A good standing certificate as of a recent date to the
Closing Date issued by the Secretary of State of Delaware that SSG is
validly existing and in good standing in such jurisdiction;
(f) All other Transaction Documents signed by authorized
officers of SSG; and
(g) All other documents, instruments, and writings required to
be delivered by SSG at or prior to the Closing pursuant to this Agreement,
including, without limitation, all other documents and agreements set forth
in Article VIII hereof.
10.3 DELIVERY BY XXXXXXX. On the Closing Date, Xxxxxxx shall
deliver, or cause to be delivered, to SSG the following:
(a) Payment of the Purchase Price by wire transfer to SSG's
designated account(s) as contemplated by Section 3.2;
(b) A Certificate (the "Xxxxxxx Secretary's Certificate") of the
Secretary of Xxxxxxx dated the Closing Date to the effect that (i) the
Certificate of Incorporation of Xxxxxxx attached to the Xxxxxxx Secretary's
Certificate is true, correct, and complete copy thereof and the same has
not been amended, restated, supplemented, or modified in any respect and is
in full force and effect on the Closing Date, (ii) the Bylaws of Xxxxxxx
attached to the Xxxxxxx Secretary's Certificate are true, correct, and
complete copies thereof and the same have not been amended, restated,
supplemented, or modified in any respect and are in full force and effect
on the Closing Date, (iii) the resolutions of the Board of Directors of
Xxxxxxx authorizing the purchase of the Shares and the Warrants and the
consummation of the transactions contemplated by the Transaction Documents
attached to the Xxxxxxx Secretary's Certificate are true, correct, and
complete copies thereof and the same have not been amended, restated,
supplemented, or modified in any respect and are in full force and effect
on the Closing Date, and (iv) the specimen signatures of the officers of
Xxxxxxx executing this Agreement and the other Transaction Documents are
true and correct specimens thereof and such officers are duly authorized to
execute and deliver this Agreement and the other Transaction Documents on
behalf of Xxxxxxx;
(c) A good standing certificate as of a recent date to the
Closing Date issued by the Secretary of State of Delaware evidencing that
Xxxxxxx is validly existing and in good standing in such jurisdiction;
(d) All other documents, instruments, and writings required to
be delivered by Xxxxxxx at or prior to the Closing pursuant to this
Agreement, including, without limitation, all other documents and
agreements set forth in Article IX hereof.
10.4 TRANSACTION DOCUMENTS. As used herein, the term
"Transaction Documents" shall mean collectively this Agreement, the Warrant
Agreement, and the Registration Agreement, as the same may be amended,
modified, supplemented, or waived from time to time.
ARTICLE XI
TERMINATION AND EXTENSION
11.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual written consent of SSG and Xxxxxxx;
(b) By either SSG or Xxxxxxx if there has been a material
misrepresentation or breach of warranty not qualified by materiality, or a
misrepresentation or breach of warranty qualified by materiality, on the
part of the other party in the representations and warranties set forth in
this Agreement, which breach is incapable of cure on or prior to the
Closing Date;
(c) By either Xxxxxxx or SSG if the purchase and sale of the
Shares and the Warrants shall not have been consummated on or before
December 16, 1996 (the "Termination Date");
(d) By SSG, if it accepts an Acquisition Proposal relating to an
SSG Acquisition Transaction, other than with Xxxxxxx.
11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become void and
there shall be no liability under this Agreement on the part of SSG or
Xxxxxxx (except for a breach of this Agreement) or their respective
officers or directors; PROVIDED, HOWEVER, that in the event of termination
of this Agreement (x) under Section 11.1(d), or as a result of (y) the
failure of SSG to comply with its covenants contained in Article VI hereof
or satisfy the condition in clause (d) of Article VIII or (z) any other act
or failure to act on the part of SSG constituting the willful failure to
close by SSG and Xxxxxxx has not in any way contributed to the failure to
so close, SSG shall pay Xxxxxxx, as its exclusive remedy, a termination fee
of $750,000, to be paid on the Termination Date by SSG to Xxxxxxx by wire
transfer to a bank account designated by Xxxxxxx; PROVIDED, FURTHER, that
in the event of termination of this Agreement as a result of the failure of
SSG to satisfy the conditions in clauses (a), (f) and (g) of Article VIII
and Xxxxxxx has not in any way contributed to the failure to so close, SSG
shall pay to Xxxxxxx, as its exclusive remedy, a termination fee equal to
the actual out-of-pocket expenses paid or incurred by Xxxxxxx in connection
with the transactions contemplated by this Agreement but, in any event, not
in excess of $150,000, such amount to be paid immediately by SSG to
Xxxxxxx, by wire transfer to a bank account designated by Xxxxxxx, upon
presentation by Xxxxxxx to SSG of a certificate of the chief financial
officer of Xxxxxxx setting forth the amount of such out-of-pocket expenses;
and PROVIDED, FURTHER, in the event of the termination of this Agreement
solely as a result of the financial inability or willful failure to close
by Xxxxxxx and SSG has not in any way contributed to the failure to so
close, Xxxxxxx shall pay to SSG, as its exclusive remedy, a termination fee
of $3,000,000 to be paid from the irrevocable standby letter of credit
provided to SSG by Xxxxxxx pursuant to Section 2.3 of this Agreement; and
PROVIDED, FURTHER, in the event of the termination of this Agreement as a
result of the failure of Xxxxxxx to satisfy the conditions in clauses (a),
(d) and/or (e) of Article IX and SSG has not in any way contributed to the
failure to so close, Xxxxxxx shall pay to SSG, as its exclusive remedy, a
termination fee equal to the actual out-of-pocket expenses paid or incurred
by SSG in connection with the transactions contemplated by this Agreement,
but, in any event, not in excess of $150,000, such amount to be paid
immediately by Xxxxxxx to SSG, by wire transfer to a bank account
designated by SSG, upon presentation to Xxxxxxx of a certificate of the
chief executive officer or President of SSG setting forth the amount of
such out-of-pocket expenses. Notwithstanding the foregoing, the failure of
any party to waive any condition or grant any extension or enter into any
amendment shall not be deemed contributory to the failure to close.
11.3 EXTENSION. At any time prior to the Closing, the parties
hereto, by duly authorized action taken by their respective officers, may
extend the time for the performance of any of the obligations or other acts
of the other party hereto.
ARTICLE XII
MISCELLANEOUS
12.1 NO BROKER. Each party hereto represents and warrants to
the other that, except for the retention by SSG of Principal Financial
Securities, no broker or finder has been employed or retained in connection
with the transactions contemplated by this Agreement or is entitled to any
fee, commission or other compensation in connection herewith.
12.2 PUBLIC STATEMENTS. The parties shall release a press
release in a form to be mutually agreed upon between Xxxxxxx and SSG.
Neither party hereto shall issue any press release or make any other public
statements, in each case relating to or connected with or arising out of
this Agreement or the matters contemplated herein, without obtaining the
prior written approval of the other parties to the contents and the manner
of presentation and publication thereof, PROVIDED, HOWEVER, that nothing
herein shall prevent any party from making any disclosures required by
applicable law or regulation (including regulations of the SEC and the
NYSE).
12.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties, and agreements made by the parties in this
Agreement or in any agreement, document, statement, list, certificate, or
instrument furnished hereunder or in connection with the negotiation,
execution, and performance of this Agreement shall survive the Closing for
a period to and including January 31, 1998. Notwithstanding the foregoing,
in the event that, prior to the Closing, either party has knowledge that
any representation, warranty or covenant made by the other party is
incorrect or is breached in any material respect as of the date hereof or
will be incorrect or breached in any material respect as of the Closing
Date, the party with such knowledge shall have as its sole remedy hereunder
the option (a) to terminate this Agreement and enforce its remedies herein
provided as a result thereof or (b) to proceed with the Closing and, upon
the Closing, such party shall be conclusively deemed to have waived all
claims hereunder relating to such misrepresentation, breach of warranty or
covenant.
12.4 OFFICERS' AND DIRECTORS' INDEMNIFICATION AND INSURANCE. The
parties to this Agreement agree that all rights to indemnification now
existing in favor of the directors or officers of SSG and SSGI as provided
in their respective Certificate of Incorporation or bylaws or in any
indemnification agreement, will survive the Closing and stay in effect in
accordance with their respective terms as presently in effect. For a
period of three years after the Closing Date, SSG will provide officers'
and directors' liability insurance from a sound and reputable insurer in
respect of acts or omissions occurring up to and including the Closing Date
covering each such person currently covered by SSG's officers' and
directors' liability insurance policy on terms with respect to coverage and
in an amount (including deductibles) no less favorable than those of such
policy in effect on the date hereof. For purposes of this Section, the
officers and directors of SSG and SSGI shall be deemed to be third party
beneficiaries of this Agreement and each such person shall be entitled to
enforce the terms of this Section against SSG to its full extent and seek
and obtain remedies from SSG for non-performance of this Section as if such
person was a named party to this Agreement.
12.5 NO WAIVER. No failure on the part of any party hereto at
any time to require the performance by the other party of any term of this
Agreement shall be taken or held to be a waiver of such term or in any way
affect such party's right to enforce such term, and no waiver on the part
of any party hereto of any term of this Agreement shall be taken or held to
be a waiver of any other term hereof or the breach thereof.
12.6 ENTIRE AGREEMENT; WRITTEN MODIFICATIONS. This instrument
(and the Confidentiality Agreement between Xxxxxxx and SSG, to the extent
the transactions contemplated by this Agreement are not consummated for any
reason) and any and all documents executed by the parties hereto on or as
of the date hereof contains the entire agreement among the parties hereto
with respect to the subject matter hereof; all representations, promises,
and prior or contemporaneous understandings among the parties with respect
to the subject matter hereof are merged into and expressed in this
instrument and such documents; and any and all prior agreements among the
parties with respect to the subject matter hereof (other than the
Confidentiality Agreement as described above) are hereby canceled. This
Agreement shall not be amended, modified, or supplemented without the
written agreement of Xxxxxxx and SSG at the time of such amendment,
modification or supplement.
12.7 ASSIGNMENT; BINDING EFFECT.
(a) This Agreement and the rights and obligations of the parties
hereto may not be assigned or transferred by either party hereto.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
successors and assigns of each of the parties thereto.
12.8 EXPENSES. Each of the parties hereto shall bear the costs
and expenses attributable to such party under this Agreement and the
transactions contemplated hereby.
12.9 NOTICES. Any notice, request, demand, waiver, consent,
approval, or other communication which is required or permitted hereunder
shall be in writing and shall be sent by hand delivery, overnight courier,
or by registered or certified mail, and shall be deemed given when received
at the address set forth below:
If to Xxxxxxx: Nine Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: President
- with copy to -
Xxxxx & Samson, P.A.
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to SSG 0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Corporate Secretary
- with a copy to -
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
or such other party or address as may be expressly designated by either
party by notice given in accordance with the foregoing provisions.
12.10 COOPERATION. Subject to the terms and conditions herein
provided, the parties hereto shall use their best efforts to take, or cause
to be taken, such action to execute and deliver, or cause to be executed
and delivered, such additional documents and instruments and to do, or
cause to be done, all things reasonably necessary, proper or advisable
under the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this
Agreement.
12.11 NO BENEFIT TO OTHERS. Except as provided in Section 12.4,
the representations, warranties, covenants, and agreements contained in
this Agreement are for the sole benefit of the parties hereto, and their
permitted successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
12.12 HEADINGS, GENDER, AND "PERSON". All section headings
contained in this Agreement are for convenience of reference only, do not
form a part of this Agreement, and shall not affect in any way the meaning
or interpretation of this Agreement. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context requires. Any reference to
a "person" herein shall include an individual, firm, corporation,
partnership, trust, governmental authority or body, association,
unincorporated organization, or other entity.
12.13 SCHEDULES. All Schedules referred to herein are intended
to be and hereby are specifically made a part of this Agreement.
12.14 SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the
extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
12.15 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such
counterpart, each of which when executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall
constitute but one and the same instrument. This Agreement shall become
binding when one or more counterparts taken together shall have been
executed and delivered by the parties. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for
any of the other counterparts.
12.16 GOVERNING LAW. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of
Delaware, without regard to the conflicts of law principles thereof.
12.17 CONSTRUCTION. The parties hereto agree that each party
and its counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation hereof or thereof or any amendments, exhibits, or schedules
hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date above written.
XXXXXXX RADIO CORP.
By:/S/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx, President
SPORT SUPPLY GROUP, INC.
By:/S/ XXXXX X. XXXXXXXXXX
Xxxxx X. Xxxxxxxxxx
President
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