EXHIBIT 2.1
_____________________________________________
ASSET PURCHASE AGREEMENT
among
LES EQUIPEMENTS SPORTIFS DAVTEC INC.,
USA SKATE CO., INC.,
USA SKATE CORPORATION,
CALIFORNIA PRO SPORTS, INC.,
RAWLINGS CANADA INC.
and
RAWLINGS SPORTING GOODS COMPANY, INC.
September 10, 1997
_____________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I - PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.. .1
1.1 USA Skate Assets. . . . . . . . . . . . . . . . . . . . . .1
1.2 Davtec Assets . . . . . . . . . . . . . . . . . . . . . . .4
1.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . .6
ARTICLE II - CLOSING . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III - PURCHASE PRICES. . . . . . . . . . . . . . . . . .7
3.1 USA Skate Purchase Price; Adjustment. . . . . . . . . . . .7
3.2 Davtec Purchase Price; Adjustment . . . . . . . . . . . . .9
3.3 Davtec Intellectual Property Purchase Price . . . . . . . 10
3.4 Determination of Net Assets . . . . . . . . . . . . . . . 11
3.5 Allocation of Purchase Price. . . . . . . . . . . . . . . 12
3.6 Proration of Taxes. . . . . . . . . . . . . . . . . . . . 12
3.7 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS
AND STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . 13
4.1 Organization and Qualification. . . . . . . . . . . . . . 13
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Subsidiaries and Affiliates . . . . . . . . . . . . . . . 14
4.4 Financial Statements. . . . . . . . . . . . . . . . . . . 14
4.5 Absence of Certain Changes or Events. . . . . . . . . . . 15
4.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . 16
4.7 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Accounts Receivable . . . . . . . . . . . . . . . . . . . 18
4.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.11 Adequate Facilities and Rights. . . . . . . . . . . . . . 20
4.12 Intellectual Property . . . . . . . . . . . . . . . . . . 20
4.13 No Breach of Statute, Decree, or Order. . . . . . . . . . 20
4.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 Employee Benefit Plans. . . . . . . . . . . . . . . . . . 21
4.16 Insurance Policies. . . . . . . . . . . . . . . . . . . . 22
4.17 Product Warranties, Product Return Policies and
Service Warranties . . . . . . . . . . . . . . . . . 22
4.18 Operating Licenses and Permits. . . . . . . . . . . . . . 22
4.19 Assets in Good Repair . . . . . . . . . . . . . . . . . . 23
4.20 Environmental Matters . . . . . . . . . . . . . . . . . . 23
4.21 Labor Disputes. . . . . . . . . . . . . . . . . . . . . . 27
4.22 Customers and Suppliers . . . . . . . . . . . . . . . . . 27
4.23 Workers' Compensation . . . . . . . . . . . . . . . . . . 27
4.24 Employment Matters. . . . . . . . . . . . . . . . . . . . 27
4.25 Unions and Labor Practices. . . . . . . . . . . . . . . . 28
4.26 Broker for Sellers. . . . . . . . . . . . . . . . . . . . 29
4.27 Organization and Qualification of Guarantors. . . . . . . 29
4.28 Authorization of Guarantors . . . . . . . . . . . . . . . 29
4.29 Accuracy of Statements. . . . . . . . . . . . . . . . . . 30
4.30 Survival. . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYERS . . . . . 30
5.1 Organization and Qualification. . . . . . . . . . . . . . 30
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Due Diligence . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Broker for Buyers . . . . . . . . . . . . . . . . . . . . 31
5.5 Accuracy of Statements. . . . . . . . . . . . . . . . . . 31
5.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI - COVENANTS . . . . . . . . . . . . . . . . . . . . 31
6.1 Buyers' Right to Inspect Assets . . . . . . . . . . . . . 31
6.2 Conduct of Sellers Before the Closing . . . . . . . . . . 32
6.3 Bulk Sales Compliance . . . . . . . . . . . . . . . . . . 33
6.4 Confidential Information. . . . . . . . . . . . . . . . . 34
6.5 Agreement Not to Compete. . . . . . . . . . . . . . . . . 34
6.6 Remedy at Law Inadequate. . . . . . . . . . . . . . . . . 34
6.7 Non-Transferred Contracts . . . . . . . . . . . . . . . . 34
6.8 Sellers' Right to Sell Remaining Assets . . . . . . . . . 35
6.9 Buyers' Performance of Assumed Liabilities. . . . . . . . 35
6.10 Access to Books, Records and Documents. . . . . . . . . . 35
ARTICLE VII - TITLE AND SURVEYS. . . . . . . . . . . . . . . . 35
7.1 Title Opinion . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Survey. . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII - BUYERS' CONDITIONS TO CLOSING . . . . . . . . . 36
8.1 Continued Truth of Warranties . . . . . . . . . . . . . . 36
8.2 Performance of Covenants. . . . . . . . . . . . . . . . . 36
8.3 Damages by Casualty or Otherwise. . . . . . . . . . . . . 36
8.4 No Adverse Change . . . . . . . . . . . . . . . . . . . . 37
8.5 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 Security Interests Released . . . . . . . . . . . . . . . 37
8.8 Title to Names. . . . . . . . . . . . . . . . . . . . . . 37
8.9 Insider Loans . . . . . . . . . . . . . . . . . . . . . . 37
8.10 No Legal Hypothecs. . . . . . . . . . . . . . . . . . . . 37
8.11 Release of Payables Owing to Stockholders . . . . . . . . 37
8.12 Transfer of Assets to Davtec. . . . . . . . . . . . . . . 37
8.13 Anjou Sublease. . . . . . . . . . . . . . . . . . . . . . 38
8.14 Due Diligence Investigation . . . . . . . . . . . . . . . 38
8.15 Tax Clearance Certificates. . . . . . . . . . . . . . . . 38
8.16 Section 116 Affidavit . . . . . . . . . . . . . . . . . . 38
8.17 Key Employees . . . . . . . . . . . . . . . . . . . . . . 38
8.18 Estoppel Certificates . . . . . . . . . . . . . . . . . . 38
8.19 Canadian Title Requirements . . . . . . . . . . . . . . . 38
8.20 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 38
8.21 Lock Box Agreement. . . . . . . . . . . . . . . . . . . . 38
8.22 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 38
8.23 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 38
8.24 Certificate . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX - SELLERS' AND STOCKHOLDERS' CONDITIONS TO CLOSING. 39
9.1 Continued Truth of Warranties . . . . . . . . . . . . . . 39
9.2 Performance of Covenants. . . . . . . . . . . . . . . . . 39
9.3 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 39
9.6 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 39
9.7 Termination of Xxxxxxx Employment Agreement . . . . . . . 39
9.8 Certificate . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X - ACTIONS TO BE TAKEN AT CLOSING; POST-CLOSING
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Actions to be taken at Closing by Sellers and
Stockholders . . . . . . . . . . . . . . . . . . . . 40
10.2 Actions to be taken at Closing by Buyer . . . . . . . . . 41
10.3 Post-Closing Cooperation. . . . . . . . . . . . . . . . . 42
ARTICLE XI - INDEMNIFICATION . . . . . . . . . . . . . . . . . 43
11.1 Indemnification . . . . . . . . . . . . . . . . . . . . . 43
11.2 Notice of, and Procedures for, Collecting
Indemnification . . . . . . . . . . . . . . . . . . 46
ARTICLE XII - MISCELLANEOUS. . . . . . . . . . . . . . . . . . 47
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 48
12.4 Binding on Successors and Assigns . . . . . . . . . . . . 48
12.5 Severability. . . . . . . . . . . . . . . . . . . . . . . 48
12.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . 48
12.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 49
12.9 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 49
12.10 Sellers Solidarily Liable. . . . . . . . . . . . . . . . 49
12.11 Entire Agreement; Law Governing. . . . . . . . . . . . . 49
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Sellers' Opinion
Exhibit C Guaranty
Exhibit D Buyers' Opinion
Exhibit E Xxxx of Sale and Assignment
Exhibit F Deed of Transfer
Exhibit G Assumption Agreement
SCHEDULES
1.1(a)(i) Excluded USA Skate Inventory
1.1(a)(ii) Excluded USA Skate Accounts Receivable
1.1(a)(iii) USA Skate Property, Plant and Equipment
1.1(a)(iv) USA Skate Contracts
1.1(a)(v) USA Skate Software
1.1(a)(vi) USA Skate Intellectual Property
1.2(a)(i) Excluded Davtec Inventory
1.2(a)(ii) Excluded Davtec Accounts Receivable
1.2(a)(iii) Davtec Equipment
1.2(a)(iv) Davtec Vehicles
1.2(a)(v) Daveluyville Property
1.2(a)(vi) Davtec Contracts
1.2(a)(vii) Davtec Software
1.2(c) Davtec Intellectual Property
1.3(a) USA Skate Assumed Liabilities
1.3(b) Davtec Assumed Liabilities
4.1 Foreign Qualifications
4.2 Required Consents
4.4 Financial Statements
4.5 Significant Corporate Events
4.6 Leased Assets
4.6(b) Permitted Encumbrances
4.7 Inventory On Consignment
4.8 Accounts Receivable in Dispute
4.9 Labor Contracts
4.10 Exceptions to Taxes; Audits
4.13 Breach of Statute, Decree or Order
4.14 Litigation
4.15 Employee Benefits Plans
4.16 Insurance Policies
4.17 Product Warranties, Product Return Policies
and Service Warranties
4.18 Operating Licenses and Permits
4.19 Assets Not in Good Repair
4.20 Environmental Matters
4.22 Material Customers and Suppliers
4.24 Employees
4.25 Unions and Labor Practices
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is
made and entered into this 10th day of September, 1997, by and
among LES EQUIPEMENTS SPORTIFS DAVTEC INC., a Canadian
corporation ("Davtec"), USA SKATE CO., INC., a New York
corporation and a stockholder of Davtec ("USA Skate;" hereinafter
Davtec and USA Skate are sometimes referred to individually as a
"Seller" and collectively as "Sellers"), USA SKATE CORPORATION, a
Delaware corporation and the sole stockholder of USA Skate
("Skate Corp."), CALIFORNIA PRO SPORTS, INC., a Delaware
corporation and the majority stockholder of Skate Corp. ("Cal
Pro;" hereinafter Skate Corp. and Cal Pro are sometimes referred
to individually as a "Stockholder" and collectively as
"Stockholders"), RAWLINGS CANADA INC., a Nova Scotia corporation
("Rawlings Canada"), and RAWLINGS SPORTING GOODS COMPANY, INC., a
Delaware corporation and the sole stockholder of Rawlings Canada
("Rawlings;" hereinafter Rawlings Canada and Rawlings are
sometimes referred to individually as a "Buyer" and collectively
as "Buyers").
WITNESSETH:
WHEREAS, Sellers are in the business of manufacturing,
sourcing and distributing the Victoriaville, Vic and XxXxxxxx
product lines of hockey sticks, skates, protective equipment and
other hockey equipment (the "Business"); and
WHEREAS, Sellers desire to sell to Buyers certain of
their properties and assets relating to the Business, and Buyers
desire to purchase such properties and assets, all upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
payments, mutual promises, agreements, warranties and covenants
herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.
1.1 USA SKATE ASSETS.
(a) Subject to the terms and conditions hereof,
including without limitation Section 1.1(b) hereof, and subject
to the representations and warranties made herein, on the Closing
Date, as hereinafter defined, USA Skate shall validly sell,
assign, transfer, grant, bargain, deliver and convey to Rawlings
its entire right, title and interest in and to the following
assets (the "USA Skate Assets"):
(i) All of USA Skate's inventory,
including all raw materials, work in process, finished
goods, packaging and shipping supplies, maintenance
items, spare parts, and all other materials and
supplies on hand at or in transit to USA Skate's
Commack, New York facility (the "New York Facility"),
relating to the Business, other than the inventory set
forth on Schedule 1.1(a)(i) (the "USA Skate
Inventory");
(ii) All of USA Skate's accounts
receivable, trade accounts and other trade debts due
Seller (and the benefit of all liens and litigation
relating thereto) relating to the Business, other than
the accounts receivable set forth on Schedule
1.1(a)(ii) (the "USA Skate Accounts Receivable");
(iii) All of USA Skate's machinery,
equipment, furniture, furnishings, fixtures,
accessories, computers and computing equipment relating
to the Business, including but not limited to the
equipment set forth on Schedule 1.1(a)(iii) and all
equipment located at the New York Facility (the "USA
Skate Property, Plant and Equipment");
(iv) The full benefit of (i) all
purchase orders to USA Skate relating to the Business,
(ii) the contracts, agreements and leases set forth on
Schedule 1.1(a)(iv), and (iii) all of USA Skate's
transferable licenses, quotas, consents, permits and
approvals relating to the Business (the "USA Skate
Contracts");
(v) All copies, both in
machine-readable and (to the extent they exist) in
human-readable form, of all computer programs and
software (whether stored on hard or floppy disks or
other media), and all interests therein or rights
thereto owned by USA Skate or to which it is entitled
by license or otherwise, together with the media on
which such software and programs are stored, and all
documents and information relating to any of the
foregoing, relating to the Business, including but not
limited to the software and other items set forth on
Schedule 1.1(a)(v);
(vi) All of USA Skate's foreign and
domestic patents, patent applications, utility and
design model registrations and applications therefor,
international priority rights, trademarks and service
marks (registered or unregistered), trademark and
service xxxx applications, trade names, service marks,
trade dress, copyrights, copyright applications,
intellectual designs, formulas, know-how, trade
secrets, technical and manufacturing processes and
information, operating techniques and procedures,
engineering data and plans including mold and
manufacturing drawings, assembly and installation
drawings, blueprints, procurement specifications, and
engineering and performance specifications, as well as
any marketing materials and information including
marketing plans, surveys and strategies, promotional
concepts, artwork, photographs, brochures, print,
television and radio advertising, product packaging and
packaging design and other intellectual property,
together with the benefit of all licenses granted by or
to USA Skate in respect of any of the foregoing and all
rights to xxx for past infringement of any of the
foregoing and all goodwill associated with the
foregoing, relating to the Business, including but not
limited to the patents, trademarks, trade names and
other intellectual property set forth on Schedule
1.1(a)(vi) (the "USA Skate Intellectual Property");
(vii) All of USA Skate's books,
records, books of account, sales and purchase records,
lists of customers and prospects, lists of suppliers,
product information, pricing information, operations
information, government inspection reports, waste
monitoring reports, and all other documents, files,
records and other data and information of USA Skate
(whether stored on hard or floppy disks or other
media), relating to the Business, but excluding all of
USA Skate's tax return files and working papers
relating thereto, corporate minutes, stock records and
related materials, and books and records relating to
USA Skate's assets which are not being purchased
pursuant to this Agreement; and
(viii) Except as specifically
excluded in this Section 1.1(a) or Section 1.1(b)
hereof, all of USA Skate's other property, assets and
rights relating to the Business.
(b) Notwithstanding the provisions of Section
1.1(a) hereof, the USA Skate Assets shall not include the
following assets:
(i) Any and all of USA Skate's cash,
cash-equivalents and investment securities on hand and
in banks and other depositories;
(ii) Any and all capital stock of
Amskate Holding Ltd.;
(iii) Any and all of USA Skate's prepaid
expenses;
(iv) Any and all real property to which
USA Skate holds fee simple title;
(v) Any and all of USA Skate's
contracts, agreements and leases not described in
clauses (i) or (iii) of Section 1.1(a)(iv) or not set
forth on Schedule 1.1(a)(iv) or Schedule 4.9;
(vi) Any and all United States federal or
state income tax refunds to USA Skate attributable to any
period ending on or before the Closing Date; and
(vii) Any and all of USA Skate's legal
defenses, set-offs, and insurance or similar claims
attributable to any period ending on or before the Closing
Date or relating to USA Skate's assets which are not being
purchased pursuant to this Agreement.
1.2 DAVTEC ASSETS
(a) Subject to the terms and conditions hereof,
including without limitation Section 1.2 (b) hereof, and subject
to the representations and warranties made herein, on the Closing
Date Davtec shall validly sell, assign, transfer, grant, bargain,
deliver and convey to Rawlings Canada its entire right, title and
interest in and to the following assets (the "Davtec Assets"):
(i) All of Davtec's inventory,
including all raw materials, work in process, finished
goods, packaging and shipping supplies, maintenance
items, spare parts, rework shafts and all other
materials and supplies on hand at or in transit to
Davtec's Daveluyville, Quebec, Xxxxxxxx, Quebec, Anjou,
Quebec and London, Ontario facilities (the "Canadian
Facilities") relating to the Business, other than the
inventory set forth on Schedule 1.2(a)(i) (the "Davtec
Inventory.;" hereinafter the USA Skate Inventory and
the Davtec Inventory are referred to collectively as
the "Inventory");
(ii) All of Davtec's accounts
receivable, trade accounts and other trade debts due
Seller (and the benefit of all liens and litigation
relating thereto) relating to the Business, other than
the accounts receivable set forth on Schedule
1.2(a)(ii) (the "Davtec Accounts Receivable;"
hereinafter the USA Skate Accounts Receivable and the
Davtec Accounts Receivable are referred to collectively
as the "Accounts Receivable");
(iii) All of Davtec's machinery,
equipment, molds, tools, furniture, furnishings,
fixtures, accessories, computers and computing
equipment relating to the Business, including but not
limited to the equipment set forth on Schedule
1.2(a)(iii) and all equipment located at the Canadian
Facilities (the "Davtec Equipment;" hereinafter the USA
Skate Equipment and the Davtec Equipment are referred
to collectively as the "Equipment");
(iv) Davtec's automobiles, trucks, vans,
trailers and other vehicles and mobile equipment set
forth on Schedule 1.2(a)(iv) (the "Davtec Vehicles");
(v) The real property located in
Daveluyville, Quebec and more particularly described on
Schedule 1.2(a)(v) and all improvements thereon (the
"Daveluyville Property;" hereinafter the Davtec
Equipment, the Davtec Vehicles and Daveluyville
Property are referred to collectively as the "Davtec
Property, Plant and Equipment," and the USA Skate
Property, Plant and Equipment and the Davtec Property,
Plant and Equipment are referred to collectively as the
"Property, Plant and Equipment");
(vi) The full benefit of (i) all
purchase orders to Davtec relating to the Business,
(ii) the contracts, agreements and leases set forth on
Schedule 1.2(a)(vi), and (iii) all of Davtec's
transferable licenses, quotas, consents, permits and
approvals relating to the Business (the "Davtec
Contracts;" hereinafter the USA Skate Contracts and the
Davtec Contracts are referred to collectively as the
"Contracts");
(vii) All copies, both in
machine-readable and (to the extent they exist) in
human-readable form, of all computer programs and
software (whether stored on hard or floppy disk or
other media) and all interests therein or rights
thereto owned by Davtec or to which it is entitled by
license or otherwise, together with the media on which
such software and programs are stored, and all
documents and information relating to any of the
foregoing, relating to the Business, including but not
limited to the software and other items set forth on
Schedule 1.2(a)(vii);
(viii) All of Davtec's books,
records, books of account, sales and purchase records,
lists of customers and prospects, lists of suppliers,
product information, pricing information, operations
information, government inspection reports, waste
monitoring reports, and all other documents, files,
records and other data and information of Davtec
(whether stored on hard or floppy disks or other
media), relating to the Business, but excluding all of
Davtec's tax return files and working papers relating
thereto, corporate minutes, stock records and related
materials, and books and records relating to Davtec's
assets which are not being purchased pursuant to this
Agreement; and
(ix) Except for the Davtec Intellectual
Property (as hereinafter defined), all of Davtec's
goodwill relating to the Business and as specifically
excluded in Section 1.2(a) or Section 1.2(b) hereof
all of Davtec's other property, assets and rights
relating to the Business.
(b) Notwithstanding the provisions of Section
1.2(a) hereof, the Davtec Assets shall not include the following
assets:
(i) Any and all of Davtec's cash, cash-
equivalents and investment securities on hand and in
banks and other depositories;
(ii) Any and all of Davtec's prepaid
expenses;
(iii) Any and all real property to
which Davtec holds fee simple title, other than the
Daveluyville Property;
(iv) Any and all of Davtec's contracts,
agreements and leases not described in clauses (i) or
(iii) of Section 1.2(a)(vi) or not set forth on
Schedule 1.2(a)(vi) or Schedule 4.9;
(v) Any and all Canadian federal or
provincial research and development refunds to Davtec
attributable to any period ending on or before the
Closing Date;
(vi) Any and all of Davtec's legal
defenses, set-offs, and insurance or similar claims
attributable to any period ending on or before the
Closing Date or relating to Davtec's assets which are
not being purchased pursuant to this Agreement; and
(vii) Any and all capital stock of
811300 Ontario Inc.
(c) Subject to the terms and conditions hereof,
and subject to the representations and warranties made herein, on
the Closing Date Davtec shall validly sell, assign, transfer,
grant, bargain, deliver and convey to Rawlings its entire right,
title and interest in and to all of (i) Davtec's foreign and
domestic patents, patent applications, utility and design model
registrations and applications therefor, international priority
rights, trademarks and service marks (registered or
unregistered), trademark and service xxxx applications, trade
names, service marks, trade dress, copyrights, copyright
applications, intellectual designs, formulas, know-how, trade
secrets, technical and manufacturing processes and information,
operating techniques and procedures, engineering data and plans
including mold and manufacturing drawings, assembly and
installation drawings, blueprints, procurement specifications,
and engineering and performance specifications, as well as any
marketing materials and information including marketing plans,
surveys and strategies, promotional concepts, artwork,
photographs, brochures, print, television and radio advertising,
product packaging and packaging design, and other intellectual
property, together with the benefit of all licenses granted by or
to Davtec in respect of any of the foregoing and all rights to
xxx for past infringement of any of the foregoing and all
goodwill associated with the foregoing, relating to the Business,
including but not limited to the patents, trademarks, trade names
and other intellectual property set forth on Schedule 1.2(c) and
(ii) Davtec's goodwill relating to the Business (the items
described in clauses (i) and (ii) of this Section 1.2(c) are
collectively referred to in this Agreement as the "Davtec
Intellectual Property;" hereinafter the USA Skate Intellectual
Property and the Davtec Intellectual Property are referred to
collectively as the "Intellectual Property" and the USA Skate
Assets, Davtec Assets and Intellectual Property are referred to
collectively as the "Assets").
1.3 ASSUMED LIABILITIES.
(a) Subject to the terms and conditions of this
Agreement, Rawlings shall, as of the Closing Date, assume and
agree to discharge the trade payables of USA Skate on hand at the
Closing Date or received by Buyers within 40 days of the Closing
Date relating to products received by or services performed for
USA Skate before the Closing Date (the "USA Skate Accounts
Payable"), the accrued liabilities of USA Skate set forth in
Schedule 1.3(a) (the "USA Skate Accrued Liabilities"), and the
obligations and liabilities which arise after the Closing Date
and under the USA Skate Contracts which, but for the assignment
of the Contracts to Rawlings pursuant to this Agreement, would
have been obligations or liabilities of USA Skate.
Notwithstanding the foregoing, the USA Skate Accounts Payable and
the USA Skate Accrued Liabilities shall not include any trade
payable or accrued liability to any affiliate or related party of
USA Skate or Davtec, accrued interest or any debit balance with
respect to a payable.
(b) Subject to the terms and conditions of this
Agreement, Rawlings Canada shall, as of the Closing Date, assume
and agree to discharge the trade accounts payable of Davtec on
hand at the Closing Date or received by Buyers within 40 days of
the Closing Date relating to products received by or services
performed for Davtec before the Closing Date (the "Davtec
Accounts Payable;" hereinafter the USA Skate Accounts Payable and
the Davtec Accounts Payable are referred to collectively as the
"Accounts Payable"), the accrued liabilities of Davtec set forth
of Schedule 1.3(b) (the "Davtec Accrued Liabilities;" hereinafter
the USA Skate Accrued Liabilities and Davtec Accrued Liabilities
are referred to collectively as the "Accrued Liabilities"), and
the obligations and liabilities which arise after the Closing
Date under the Davtec Contracts and which, but for the assignment
of the Davtec Contracts to Rawlings Canada pursuant to this
Agreement, would have been obligations or liabilities of Davtec.
Notwithstanding the foregoing, the Davtec Accounts Payable and
the Davtec Accrued Liabilities shall not include any trade
payable or accrued liability to any affiliate or other related
party of Davtec or USA Skate, accrued interest or any debit
balance with respect to a payable.
(c) Except for the liabilities and obligations
assumed by Buyers pursuant to Sections 1.3(a) and (b)
(collectively, the "Assumed Liabilities"), any and all
obligations and liabilities of Sellers or Stockholders, whether
accrued or contingent or due or not due, shall be and remain the
sole obligations and liabilities of Sellers and Stockholders,
respectively, to pay and discharge, and Buyers shall not be
obligated in any respect therefor.
ARTICLE II
CLOSING
The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. on
September 11, 1997 (the "Closing Date"), at the office of
Xxxxxxx, Mag & Fizzell, P.C., 000 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000, or at such other time and place as the parties
shall mutually agree upon.
ARTICLE III
PURCHASE PRICES
3.1 USA SKATE PURCHASE PRICE; ADJUSTMENT.
(a) USA Skate Purchase Price. The total
consideration for the USA Skate Assets and the USA Skate Assumed
Liabilities (the "USA Skate Purchase Price"), upon the terms and
subject to the conditions of this Agreement, shall be
$10,140,922, plus or minus the difference between the USA Skate
Net Assets (as defined in Section 3.4) and $3,279,732. At
Closing, as payment of an estimated amount of the USA Skate
Purchase Price, Rawlings shall (i) pay $9,390,922 (the "USA Skate
Closing Consideration") to USA Skate by certified or bank
cashier's check payable to the order of USA Skate or by wire
transfer to the account designated in writing by USA Skate to
Rawlings at least 48 hours before the Closing, (ii) deposit
$250,000 (the "USA Skate Adjustment Deposit") in escrow pursuant
to an escrow agreement in the form of Exhibit A attached hereto
(the "Escrow Agreement") as a source for the payment of any
adjustment to the USA Skate Purchase Price and (iii) deposit
$500,000 in escrow pursuant to the Escrow Agreement as a source
for the payment of any indemnification hereunder. The balance of
the USA Skate Purchase Price, or any refund of the USA Skate
Purchase Price, shall be paid in accordance with Section 3.1(b).
(b) ADJUSTMENT OF THE USA SKATE PURCHASE PRICE.
(i) As of the close of business on the
day immediately preceding the Closing Date, or at such
other date and time as Rawlings and USA Skate shall
agree upon, Rawlings and USA Skate, or their
representatives, shall commence an accounts receivable
verification, a physical inventory, and such other
audit procedures as they shall agree are appropriate to
determine the USA Skate Net Assets in accordance with
Section 3.4. Rawlings shall not remove any USA Skate
tangible assets from the New York Facility until the
agreed upon audit procedures for such tangible assets
have been completed. Within forty-five (45) days of
the Closing Date, Rawlings or its representatives shall
prepare and deliver to USA Skate a statement, prepared
in accordance with Section 3.4, setting forth its
determination of the USA Skate Net Assets, together
with all of Rawlings' related work papers. If USA
Skate shall disagree in any respect with Rawlings'
determination of the USA Skate Net Assets, it shall
notify Rawlings of the items in dispute and the reasons
therefor within twenty (20) days of the giving by
Rawlings to USA Skate of its determination of the USA
Skate Net Assets, and the parties shall meet promptly
thereafter to resolve any differences. If Rawlings and
USA Skate are unable to resolve any such dispute within
fifteen (15) days of the giving by USA Skate to
Rawlings of notice of the dispute, the disputed items
shall be referred to Price Waterhouse LLP (the "Third
Party Accountants") for an opinion with respect to such
dispute, which opinion shall be delivered to Rawlings
and USA Skate within thirty (30) days of the referral
to the Third Party Accountants and shall be final and
binding on the parties hereto. Rawlings and USA Skate
shall each pay that proportion of the fees and expenses
of the Third Party Accountants as shall equal the
proportion that the aggregate amount in dispute awarded
to it by the Third Party Accountants bears to the
aggregate amount in dispute.
(ii) If the USA Skate Net Assets equal
$3,279,732, then Rawlings and USA Skate shall instruct
the escrow agent under the Escrow Agreement (the
"Escrow Agent") to, first, disburse $238,000 (or such
other amount as Rawlings and USA Skate shall agree to)
to Cortina International and, second, disburse the
balance of the USA Skate Adjustment Deposit, if any, to
USA Skate.
If the USA Skate Net Assets exceed
$3,279,732, then (i) Rawlings and USA Skate shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings and USA Skate shall
agree to) to Cortina International and, second,
disburse the balance of the USA Skate Adjustment, if
any, to USA Skate, and (ii) Rawlings shall pay the
difference between the USA Skate Net Assets and
$3,279,732 to USA Skate.
If $3,279,732 exceeds the USA Skate Net
Assets, (i) Rawlings and USA Skate shall instruct the
Escrow Agent to, first, disburse from the USA Skate
Adjustment Deposit the amount by which $3,279,732
exceeds the USA Skate Net Assets to Rawlings and,
second, disburse the balance of the USA Skate
Adjustment Deposit, if any, to USA Skate, and (ii) if
$3,279,732 exceeds the USA Skate Net Assets by more
than the USA Skate Adjustment Deposit, USA Skate also
shall pay to Rawlings the difference between (x) the
amount by which $3,279,732 exceeds the USA Skate Net
Assets less (y) the USA Skate Adjustment Deposit.
(iii) Any instructions to the Escrow
Agent and any payment made pursuant to this Section
3.1(b) shall be given or made within five (5) days of
the determination of the USA Skate Net Assets pursuant
to this Section 3.1(b). Any disbursement by the Escrow
Agent pursuant to this Section 3.1(b) shall include
interest and all other earnings accrued on the
disbursement.
3.2 DAVTEC PURCHASE PRICE; ADJUSTMENT.
(a) Davtec Purchase Price. The total
consideration for the Davtec Assets and the Davtec Assumed
Liabilities (the "Davtec Purchase Price"), upon the terms and
subject to the conditions of this Agreement, shall be
C$5,793,363, plus or minus the difference between the Davtec Net
Assets (as defined in Section 3.4) and C$5,793,363. At Closing,
as payment of an estimated amount of the Davtec Purchase Price,
Rawlings Canada shall (i) pay C$5,446,767 (the "Davtec Closing
Consideration") to Davtec by certified or bank cashier's check
payable to the order of Davtec or by wire transfer to the account
designated in writing by Davtec to Rawlings Canada at least 48
hours before the Closing and (ii) deposit C$346,596 (the "Davtec
Adjustment Deposit") in escrow pursuant to the Escrow Agreement
as a source for the payment of any adjustment to the Davtec
Purchase Price. The balance of the Davtec Purchase Price, or any
refund of the Davtec Purchase Price, shall be paid in accordance
with Section 3.2(b).
(b) ADJUSTMENT OF THE DAVTEC PURCHASE PRICE.
(i) As of the close of business on the
day immediately preceding the Closing Date, or at such
other date and time as Rawlings Canada and Davtec shall
agree upon, Rawlings Canada and Davtec, or their
representatives, shall conduct an accounts receivable
verification, a physical inventory, and such other
audit procedures as they shall agree are appropriate to
determine the Davtec Net Assets in accordance with
Section 3.4. Within forty-five (45) days of the
Closing Date, Rawlings Canada or its representatives
shall prepare and deliver to Davtec a statement,
prepared in accordance with Section 3.4, setting forth
its determination of the Davtec Net Assets, together
with all of Rawlings Canada's related work papers. If
Davtec shall disagree in any respect with Rawlings
Canada's determination of the Davtec Net Assets, it
shall notify Rawlings Canada of the items in dispute
and the reasons therefor within twenty (20) days of the
giving by Rawlings Canada to Davtec of its
determination of the Davtec Net Assets, and the parties
shall meet promptly thereafter to resolve any
differences. If Rawlings Canada and Davtec are unable
to resolve any such dispute within fifteen (15) days of
the giving by Davtec to Rawlings Canada of notice of
the dispute, the disputed items shall be referred to
the Third Party Accountants for an opinion with respect
to such dispute, which opinion shall be delivered to
Rawlings Canada and Davtec within thirty (30) days of
the referral to the Third Party Accountants and shall
be final and binding on the parties hereto. Rawlings
Canada and Davtec shall each pay that proportion of the
fees and expenses of the Third Party Accountants as
shall equal the proportion that the aggregate amount in
dispute awarded to it by the Third Party Accountants
bears to the aggregate amount in dispute.
(ii) If the Davtec Net Assets equal
C$5,793,363, then Rawlings Canada and Davtec shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings Canada and Davtec
shall agree to) to Cortina International and, second,
disburse the balance of the Davtec Adjustment Deposit,
if any, to Davtec.
If the Davtec Net Assets exceed
C$5,793,363, then (i) Rawlings Canada and Davtec shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings Canada and Davtec
shall agree to) to Cortina International and, second,
disburse the balance of the Davtec Adjustment, if any,
to Davtec, and (ii) Rawlings Canada shall pay the
difference between the Davtec Net Assets and
C$5,793,363 to Davtec.
If C$5,793,363 exceeds the Davtec Net
Assets, (i) Rawlings Canada and Davtec shall instruct
the Escrow Agent to, first, disburse from the Davtec
Adjustment Deposit the amount by which C$5,793,363
exceeds the Davtec Net Assets to Rawlings Canada and,
second, disburse the balance of the Davtec Adjustment
Deposit, if any, to Davtec, and (ii) if C$5,793,363
exceeds the Davtec Net Assets by more than the Davtec
Adjustment Deposit, Davtec also shall pay to Rawlings
Canada the difference between (x) the amount by which
C$5,793,363 exceeds the Davtec Net Assets less (y) the
Davtec Adjustment Deposit.
(iii) Any instructions to the Escrow
Agent and any payment made pursuant to this Section
3.2(b) shall be given or made within five (5) days of
the determination of the Davtec Net Assets pursuant to
this Section 3.2(b). Any disbursement by the Escrow
Agent pursuant to this Section 3.2(b) shall include
interest and all other earnings accrued on the
disbursement.
3.3 DAVTEC INTELLECTUAL PROPERTY PURCHASE PRICE. The
total consideration for the Davtec Intellectual Property, upon
the terms and subject to the conditions of this Agreement, shall
be C$250,000 (the "Davtec Intellectual Property Purchase Price").
At Closing, Rawlings shall pay the Davtec Intellectual Property
Purchase Price to Davtec by certified or bank cashier's check
payable to the order of Davtec or by wire transfer to the account
designated in writing by Davtec to Rawlings at least 48 hours
before the Closing.
3.4 DETERMINATION OF NET ASSETS. As used in this
Agreement,
(a) "USA SKATE NET ASSETS" shall mean the book
value as of the Closing Date of the USA Skate Accounts
Receivable, plus the USA Skate Inventory, plus the USA Skate
Property, Plant and Equipment, less the USA Skate Accounts
Payable, less the USA Skate Accrued Liabilities, and
(b) "DAVTEC NET ASSETS" shall mean the book value
as of the Closing Date of the Davtec Accounts Receivable, plus
the Davtec Inventory, plus the Davtec Property, Plant and
Equipment, less the Davtec Accounts Payable, less the Davtec
Accrued Liabilities,
all determined in accordance with United States generally
accepted accounting principles, except that:
(i) The value of the Accounts
Receivable (other than Accounts Receivable outstanding
sixty or more days as of the Closing Date which are not
collected by Buyers within the forty days following the
Closing Date (the "Uncollected Receivables")) shall
equal 95% of the book value of such Accounts
Receivable. The value of the Uncollected Receivables
shall be zero. Sellers and Stockholders shall promptly
pay and, with respect to any Account Receivable
received by a lock box maintained on behalf of Sellers
or Stockholders, shall cause their lenders to promptly
pay to the appropriate Buyer any Account Receivable
received by Sellers or Stockholders (including any
Account Receivable received by a lock box maintained on
behalf of Sellers or Stockholders) after the Closing.
On the date(s) the Escrow Agent distributes the USA
Skate Adjustment Deposit and the Davtec Adjustment
Deposit pursuant to the Escrow Agreement, Buyers shall
assign the Uncollected Receivables to USA Skate and
Davtec, as applicable. Buyers shall promptly pay to
the appropriate Seller (i) any account receivable owing
to Sellers collected by Buyers which is not included in
the Accounts Receivable and (ii) any Uncollected
Receivable assigned to Sellers pursuant to this Section
3.4(b)(i).
(ii) The quantity of the Inventory shall
be determined by a physical inventory conducted jointly
by the appropriate Buyer and Seller or their
representatives as of the Closing Date. Inventory
values shall be based upon the lower of cost determined
on the first-in-first-out method or net realizable
value. The net realizable value for rework shafts
(which had a book value of C$138,515 as of June 30,
1997) shall be zero. The net realizable value for any
inventory not in Sellers' current product line will be
cost determined on a first-in-first-out method, except
that the net realizable value of all lacrosse gloves,
in-line skates and golf inventory shall equal 50% of
cost determined on a first-in-first-out method (which
values, as of June 30, 1997, were $7,565, $58,698 and
$17,591 respectively).
(iii) The Property, Plant and
Equipment shall be determined by a physical inventory
of the items listed in Schedules 1.1(a)(iii),
1.1(a)(iv), 1.2(a)(iii) and 1.2(a)(iv) conducted
jointly by the appropriate Buyer and Seller or their
representatives as of the Closing Date. Property,
Plant and Equipment values shall be adjusted from their
book value for a valuation reserve determined in
accordance with SFAS #121.
(iv) The Accounts Payable shall equal
the unpaid bills on hand at the Closing Date or
received by Buyers within 40 days of the Closing Date
relating to products received by or services performed
for Sellers before the Closing Date, and shall exclude
all accounts payable to any affiliate or related party
of a Seller, all interest payable, all debit balances
with respect to any Account Payable and all other
liabilities not related to the Assets.
(v) The Accrued Liabilities shall equal
the liability as of the Closing Date for each of the
liabilities outlined in Schedule 1.3(a) and Schedule
1.3(b) determined in accordance with generally accepted
accounting principles, applied on a consistent basis.
The Xxx Xxxxxxx employment agreement liability shall be
deemed to be $160,000.
3.5 ALLOCATION OF PURCHASE PRICE.
(a) The USA Skate Purchase Price shall be
allocated among the USA Skate Assets and USA Skate's agreement
not to compete in accordance with an appraisal to be obtained by
Rawlings and Section 1060 of the Internal Revenue Code of 1986,
as amended (the "Code"). USA Skate and Rawlings shall provide to
the other all information appropriate to permit any party to
make, in a timely manner, any filing appropriate under Section
1060 of the Code. USA Skate and Rawlings each shall make all
required filings under the Code with respect to the allocation of
the USA Skate Purchase Price.
(b) The Davtec Purchase Price shall be allocated
among the Davtec Assets and Davtec's agreement not to compete in
accordance with an appraisal to be obtained by Rawlings Canada.
Rawlings Canada and Davtec shall each execute and file a joint
election under Section 22 of the Income Tax Act (Canada) and the
corresponding provisions of any other applicable taxing statute
or regulation, within the prescribed time periods, in respect of
the Davtec Accounts Receivable. Buyers and Davtec agree to
prepare and file their respective tax returns in a manner
consistent with such elections and the allocation of the Davtec
Purchase Price determined pursuant to this Section 3.5(b).
Sellers jointly and severally shall indemnify and save harmless
Buyers, and Buyers jointly and severally shall indemnify and save
harmless Sellers, in respect of any liability, loss, cost,
expense, additional tax, interest, penalty or legal or accounting
fees paid or incurred by the indemnified party as a result of the
failure of Sellers or Buyers (as the case may be) to perform
their respective obligations pursuant to this Section.
3.6 PRORATION OF TAXES. Sellers shall pay when due
all sales, use, transfer and similar taxes arising out of the
transactions contemplated hereunder. All other taxes against or
in respect of the Assets, including real and personal property
taxes, for the taxable period which includes the Closing Date
shall be prorated between Buyers and Sellers as of the Closing
Date. In the event the amount of such taxes or assessments
cannot be ascertained as of the Closing Date, proration shall be
made on the basis of the preceding year, and, to the extent that
such proration may be inaccurate, Sellers and Buyers agree to
make such payment to the appropriate party after the tax
statements have been received which are necessary to allocate
such taxes properly between Sellers and Buyers as of the Closing
Date. Sellers agree to pay such taxes and assessments when due,
and Buyers' prorated portion thereof shall be paid by Buyers to
Sellers upon Sellers' request therefor.
3.7 TRANSFER TAXES. Davtec and Rawlings Canada shall
jointly elect to have Section 167(1) of the Goods and Service Tax
levied under Part IX of the Excise Tax Act, R.S.C., 1985, c.E-15
(together with the regulations promulgated thereunder, as amended
or supplemented from time to time, the "Excise Tax Act") and
Section 75.1 of the Act respecting the Quebec Sales Tax, R.S.Q.,
c.T-0.1 (together with the regulations promulgated thereunder, as
amended or supplemented from time to time, the "Quebec Sales Tax
Act") apply to the purchase and sale of the Davtec Assets
pursuant to the provisions of this Agreement. Rawlings Canada
shall file the joint elections in the manner and within the time
prescribed by the Excise Tax Act and the Quebec Sales Tax Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND STOCKHOLDERS
Each of Sellers and Stockholders hereby jointly and
severally represent and warrant to Buyers as follows:
4.1 ORGANIZATION AND QUALIFICATION. USA Skate is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York, Davtec is a corporation
duly organized, validly existing and in good standing under the
laws of Canada, Skate Corp. is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and Cal Pro is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Sellers have all requisite corporate power and
authority to own, lease and operate their properties and to carry
on the Business as it is now being conducted and are qualified to
do business as a foreign corporation in the jurisdictions set
forth on Schedule 4.1, and there is no other jurisdiction where
the nature of the Business or the ownership or lease of the
Assets requires such qualification, except for those
jurisdictions where the failure to so qualify would not have a
material adverse effect on the Business or the Assets.
4.2 AUTHORIZATION. Sellers and Stockholders have the
full corporate power to enter into this Agreement and to carry
out their obligations hereunder. The execution, delivery and
performance of this Agreement by Sellers and Stockholders have
been duly and effectively authorized and approved by all
requisite corporate action and no other corporate acts or
proceedings are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of Sellers and Stockholders,
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to creditors' rights and by general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). Assuming the
consents set forth on Schedule 4.2 have been obtained, neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (i) violate, or
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under any of the terms,
conditions or provisions of the Certificate or Articles of
Incorporation, By-Laws or other constating document of Sellers or
Stockholders, any Contract, any other note, bond, mortgage,
indenture, deed of trust, lease, license, contract, agreement or
other instrument or obligation by which the Assets are bound or
affected, or any other material note, bond, mortgage, indenture,
deed of trust, lease, license, contract, agreement or other
instrument or obligation by which Sellers or any of their other
properties or assets are bound or affected, (ii) violate any
statute, rule or regulation or, to the best of Seller's and
Stockholders' knowledge, any order, writ, injunction or decree
applicable to Sellers or any of their properties or assets,
(iii) result in the creation of any lien, security interest,
hypothec, prior claim, charge or encumbrance upon the Assets or
(iv) result in the modification, termination or revocation of any
license, permit or right material to the Business. Except as set
forth on Schedule 4.2 hereto, no consent or approval by, notice
to or registration with any natural person, partnership,
corporation, limited liability company, firm, company, trust,
estate, association, government or governmental authority or
other entity ("Person") is required on the part of Sellers or
Stockholders in connection with the execution and delivery of
this Agreement or the consummation by Sellers and Stockholders of
the transactions contemplated hereby.
4.3 SUBSIDIARIES AND AFFILIATES. Cal Pro owns 100% of
the issued and outstanding stock of Skate Corp. Skate Corp. owns
75% of the issued and outstanding stock of USA Skate and 100% of
the issued and outstanding stock of Three R Sales, Inc. Three R
Sales, Inc. owns 25% of the issued and outstanding stock of USA
Skate. USA Skate owns 100% of the issued and outstanding stock
of Amskate Holding Ltd. and one-third of the issued and
outstanding stock of Davtec. Amskate Holding Ltd. owns 100% of
the issued and outstanding stock of 2984334 Canada Ltd., and
2984334 Canada Ltd. owns 38% of the issued and outstanding stock
of Gestion Davtec Inc. and one-third of the issued and
outstanding stock of Davtec. Gestion Pintade Inc., 0000-0000
Xxxxxx Inc., 0000-0000 Xxxxxx Inc. and Gestion Xxxxxxx Xxxxxxxx
Inc. each own 15.5% of the issued and outstanding stock of
Gestion Davtec Inc. 2984334 Canada Ltd. owns 100% of the issued
and outstanding stock of Gestion Pintade Inc., 0000-0000 Xxxxxx
Inc., 0000-0000 Xxxxxx Inc. and Gestion Xxxxxxx Xxxxxxxx Inc.
Gestion Davtec Inc. owns one-third of the issued and outstanding
stock of Davtec, and Davtec owns 100% of the issued and
outstanding stock of 811300 Ontario Inc. Hereinafter Three R
Sales, Inc., Amskate Holding Ltd., 29843334 Canada Ltd., Gestion
Pintade Inc., 0000-0000 Xxxxxx Inc., 0000-0000 Xxxxxx Inc.,
Gestion Xxxxxxx Xxxxxxxx Inc. and Gestion Davtec Inc. are
referred to collectively as the "Guarantors." Except as set
forth in the preceding sentence, Sellers do not, directly or
indirectly, own any subsidiary and there is no Person who is
controlled by Sellers.
4.4 FINANCIAL STATEMENTS. Sellers have delivered to
Buyers true, correct and complete copies of their financial
statements identified on Schedule 4.4 (the "Financial
Statements"), each of which, except as noted on Schedule 4.4, (i)
is accurate and complete in all material respects and presents
fairly in all material respects the financial position and
results of operations of the Seller to which it refers for the
period stated and (ii) has been prepared in accordance with
generally accepted accounting principles consistently applied.
The Financial Statements do not contain any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein not misleading. Except as set forth
in the Financial Statements, Sellers have no material
liabilities, absolute or contingent which are required to be
reflected in the Financial Statements in accordance with
generally accepted accounting principles. Included in Schedule
4.4 are true, correct and complete copies of all reports and
correspondence from Sellers' auditors to the officers, directors
or management of Sellers regarding the accounting procedures,
financial controls or management procedures of Sellers.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth on Schedule 4.5, since December 31, 1996, there has not
been:
(a) any change in the financial condition,
assets, operations, properties, liabilities, earnings or business
of Sellers which has been or will be, individually or in the
aggregate with other changes, materially adverse to Sellers or
the Business;
(b) any damage, destruction or casualty loss
(whether or not covered by insurance) materially and adversely
affecting the financial condition, assets, operations,
properties, earnings of Sellers or the Business;
(c) any increase in the compensation payable or
to become payable by Sellers to any director, officer, employee
or agent of Sellers other than routine increases made in the
ordinary course of business consistent with the past practice of
Sellers, or any bonus, incentive compensation, service award or
other like benefit, granted, made or accrued, contingently or
otherwise, to or to the credit of any of such officer, employee
or agent, or any employee welfare, pension, retirement or similar
payment or arrangement made or agreed to by Sellers with respect
to any such officer, employee or agent, except pursuant to the
existing plans and arrangements described in Schedule 4.15;
(d) any labor trouble, or any controversies or
unsettled grievances pending or, to be best of Sellers' and
Stockholders' knowledge, threatened, between Sellers and any of
their employees or a collective bargaining organization
representing or seeking to represent such employees, or any
entrance into any collective bargaining agreement by Sellers with
respect to any such employees;
(e) any addition to, or modification of, any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plans, arrangements and
practices described on Schedule 4.15, other than accruals made
for Sellers' fiscal years 1997 in accordance with the normal
practices of Sellers;
(f) any sale, assignment, license or transfer of
any asset, property or right of Sellers or any conduct of the
business of Sellers other than in the ordinary course of
business;
(g) any capital expenditure or commitment to make
a capital expenditure (exclusive of expenditures for repair or
maintenance of equipment in the ordinary course of business) or
the execution of any lease or similar arrangement (except in the
ordinary course of business) with respect to any aspect of the
Business, or any incurring of liability therefor;
(h) any incurring of any extraordinary loss or
the knowing waiver of any right of substantial value by Sellers
in connection with any aspect of the Business;
(i) any cancellation, termination or amendment of
any material contract, agreement, license or other instrument
relating to the Business;
(j) any change in Sellers' accounting practices;
(k) any failure on the part of Sellers to operate
the Business in the ordinary course so as to preserve their
business organizations intact, including the services of their
present officers and employees and the goodwill of Sellers'
suppliers, customers and others having business relations with
them;
(l) any transaction by Sellers relating to the
Business not in the ordinary course of business;
(m) any agreement by Sellers to do any of the
foregoing; or
(n) any other event or condition of any character
which, in any one case or in the aggregate, has adversely and
materially affected, or any event or condition which might
reasonably be expected, in any one case or in the aggregate, to
adversely and materially affect the financial condition, assets,
operations, properties, liabilities, earnings of Sellers or the
Business.
4.6 TITLE TO ASSETS.
(a) Sellers have, and at the Closing will
transfer to Buyers, good and marketable title to all of the
Assets, except for those Assets identified on Schedule 4.6 as
leased by Davtec or USA Skate or on Schedules 1.1(a)(vi) or
1.2(c)(i) as licensed by Davtec or USA Skate. Except for the
assets and properties identified on Schedule 4.6 as leased by USA
Skate or Davtec or on Schedules 1.1(a)(vi) or 1.2(c)(i) as
licensed by USA Skate or Davtec, all of the assets and properties
used in the Business as it is currently conducted are owned by
Davtec or USA Skate. The leases identified on Schedule 4.6 are
the only leases with respect to the Assets and each such lease is
in full force and effect and constitutes a legal, valid and
binding obligation of the lessor thereunder, enforceable in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally and by
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity). There is no default and no event or omission has
occurred which, but for the passing of time or the giving of
notice or both, would be a default on the part of Sellers or, to
the best knowledge of Sellers and Stockholders, any other Person
under any of such leases. With the exception of liens for taxes
accrued but not yet payable, the leases set forth on Schedule 4.6
and the security interests set forth on Schedule 4.6 (all of
which security interests shall be released at the Closing), the
Assets are not subject to any mortgage, pledge, lien, security
interest, claim, hypothec, prior claim, charge or other
encumbrance of any kind ("Encumbrance").
(b) Except as set forth on Schedule 4.6(b) (the
exceptions set forth on Schedule 4.6(b) hereinafter are referred
to as the "Permitted Encumbrances"), the Daveluyville Property
shall be conveyed to Rawlings Canada at and by the Closing with
legal warranty and a good and marketable title in and to such
property, free and clear of all encumbrances, including without
limitation prior claims, hypothecs, charges and servitudes,
restrictive covenants, encroachments, taxes and other title
defects or charges of any nature whatsoever.
(c) The Daveluyville Property, together with all
immoveable and real property leased by Sellers (the "Properties")
and every improvement, building or structure located thereon (the
"Improvements") are in compliance in all material respects with
all applicable building, zoning, subdivision, and other land use
and similar laws (collectively, "Real Property Laws"), and
Sellers have not received any notice of violation or claimed
violation of any Real Property Law and such Properties and
Improvements and their continued use, occupancy and operation as
currently used, occupied and operated do not constitute a non-
conforming use under any Real Property Law. No dispute currently
exists with any governmental authority having jurisdiction over
any such Properties or Improvement with respect to any Real
Property Law or the application thereof to any such Properties or
Improvement.
(d) None of the Assets is subject to any right of
first refusal, option or other restriction of a similar nature,
or subject to any pending or, to the best of Sellers' and
Stockholders' knowledge, threatened condemnation or similar proceeding.
(e) (i) Sellers are not a party to or bound
by any leases of real or immoveable property other than
the leases described in Schedule 4.6 (the "Leases").
Each of the Leases permits Sellers to carry on the
Business as presently carried on.
(ii) The rent and all other required
payments under each Lease which have become due have
been duly paid and the covenants, obligations and
conditions contained in each Lease have been duly
observed and performed in all material respects by
Sellers.
(iii) There are no work orders
issued to or received by Sellers which are outstanding
against the premises contemplated by the Leases (the
"Leased Premises") and Sellers have received no
deficiency notices, requests or written advice of any
breach of any applicable law in respect of the Leased
Premises which could, if not corrected, become a work
order or could require performance of work or
expenditure of money to correct.
(iv) From the date hereof until the
Closing, Sellers shall use commercially reasonable
efforts to obtain from each lessor of each Lease which
requires consent of the lessor to the assignment
thereof to the Buyers, a consent to the assignment of
such Lease to the relevant Buyer without any conditions
attached to such consent and, after receipt of the
necessary consent, to obtain an estoppel certificate
from the lessor with respect to such Lease, each of
which shall be in form and substance satisfactory to
Buyers, acting reasonably.
(v) In respect of each Lease which does
not require consent of the lessor to the assignment
thereof, Sellers shall use commercially reasonable
efforts to obtain, prior to Closing, an estoppel
certificate in respect of such Leases, each of which
shall be in form and substance satisfactory to Buyers,
acting reasonably.
4.7 INVENTORY. All pieces of Inventory are carried on
the Financial Statements at the lower of cost (on a first-in-first-
out basis) or market. All pieces of Inventory consist of
pieces purchased or manufactured in the ordinary course of
business. Except for Inventory whose cost, in the aggregate, is
less than $5,000, each piece of Inventory is merchantable in fact
and fit for its intended purpose. Except as set forth on
Schedule 4.7, Sellers do not hold any piece of Inventory on
consignment and no piece of Inventory is in the possession or
control of any Person other than the Sellers.
4.8 ACCOUNTS RECEIVABLE. The Accounts Receivable have
been incurred in the ordinary course of the Business, and to the
best of Stockholders' knowledge, constitute valid claims not
subject to any offset or defense. Except as disclosed in
Schedule 4.8, there is no dispute regarding the amounts billed to
customers in connection with goods delivered or services rendered
by Sellers in the course of its business
4.9 CONTRACTS. Except as disclosed on Schedule 4.9,
neither Seller is a party to or bound by: (i) any employment
contract or agreement, consulting, independent contractor or
other similar agreement or any collective bargaining or labor
agreement or any other agreement or arrangement with any officer,
employee, independent contractor, sales representative or
consultant, advisor or person serving in a similar capacity,
relating to the Business; (ii) any pension, retirement, stock
option, stock purchase, savings, profit-sharing, "401(k)" plan,
deferred compensation, retainer, consultant, bonus, group
insurance, or any vacation pay or severance pay or other
incentive or welfare, contract, plan or so-called fringe benefit
agreement, relating to the Business; (iii) any contract for the
purchase of any materials, supplies, equipment or inventory
relating to the Business, or for the sale of any inventory
relating to the Business, except contracts concluded in the
ordinary course of business, which do not (as to contracts for
purchase by a Seller) either involve an unperformed commitment in
excess of $5,000 or terminate more than one year from the date
hereof; (iv) any lease, license or similar agreement to use any
real or personal property, including but not limited to
intellectual property, relating to the Business; (v) any
contract, agreement or other commitment relating to the Business
requiring a payment by either Seller after the date hereof of
more than $5,000, or (vi) any contract, agreement or other
commitment relating to the Business which is not cancelable by
Sellers on notice of not more than thirty days without liability,
penalty or premium. Sellers have made available for inspection
by Buyers a true, correct and complete copy of each written
Contract. Sellers' purchase commitments for materials, supplies,
raw materials or other items are not, in the aggregate,
materially in excess of the customary requirements of its
business or at a price materially in excess of current market
prices for similar items deliverable at the same time. Sellers
have not breached and are not in default of any Contract, and no
event or omission has occurred which, but for the passing of time
or the giving of notice or both, would constitute a breach of or
default under any Contract on the part of Sellers. To the best
knowledge of Sellers and Stockholders, no other party has
breached or is in default under any Contract, and, to the best
knowledge of Sellers and Stockholders, no event or omission has
occurred which, but for the passing of time or the giving of
notice or both, would constitute a breach of or default under any
Contract on the part of any other party. To the best of Sellers'
and Stockholders' knowledge, each of the Contracts is the legal,
valid and binding obligation of the other party thereto,
enforceable in accordance with its terms.
4.10 TAXES.
(a) Except as set forth on Schedule 4.10, Sellers
have timely filed all United States and Canadian federal, state,
provincial, foreign and local tax returns and tax information
returns required to be filed on or before the date hereof, and
have paid all taxes, interest, payments and penalties due and
payable on or before the date hereof, and Sellers are not
delinquent in the payment of any tax or government charge of any
nature whatsoever, including all sales and use taxes. Except as
set forth on Schedule 4.10, no tax return of Sellers has been
audited, and no audit, examination or investigation is presently
being conducted or, to the best of Sellers' and Stockholders'
knowledge, threatened by any taxing authority. No unpaid tax
deficiency or additional liability of any sort has been proposed
to Sellers by any governmental representative. Sellers have
withheld (and timely paid to the appropriate governmental entity)
proper and accurate amounts from its payrolls for all periods in
compliance in all material respects with all tax withholding
provisions (including, without limitation, income, social
security, Canada Pension Plan, Quebec Pension Plan, and
unemployment tax and withholding for all forms of compensation)
of applicable United States and Canadian federal, foreign, state,
provincial and local laws. Sellers are not liable for any taxes
due and unpaid which might result in a lien or other encumbrance
affecting any of the Assets.
(b) (i) Davtec has charged, collected and
remitted on a timely basis all amounts as required by
applicable law on any sale, supply or delivery
whatsoever, made by Davtec in respect of the Business,
including without limitation sales and goods and
services taxes.
(ii) Davtec is a registrant for the
purposes of the goods and services tax provided for
under the Excise Tax Act and its registration number is
103182481RT. Davtec is a registrant for the purposes
of the taxes provided for under the Quebec Sales Tax
Act and its registration number is 0000000000.
(iii) Davtec has paid all taxes due
under the Retail Sales Tax Act (Ontario) on the
acquisition of its tangible personal property (as
defined in the Retail Sales Tax Act (Ontario))
constituting Davtec Assets. The foregoing is accurate,
mutatis mutandis, with respect to all sales or transfer
taxes imposed under comparable legislation of other
provinces.
(iv) Davtec is not a non-resident of
Canada within the meaning of the Income Tax Act
(Canada).
4.11 ADEQUATE FACILITIES AND RIGHTS. Upon their
conveyance to Buyers, the Assets will permit Buyers to operate
the Business in substantially the same manner as Sellers
currently operate the Business, without violating the rights of
any third parties and without incurring any liability for license
fees, royalties or any claim of infringement of patent, trademark
or similar rights.
4.12 INTELLECTUAL PROPERTY. Schedules 1.1(a)(vi) and
1.2(c)(i) hereto set forth a list of all patents and applications
therefor, utility and design model registrations and applications
therefor, trademarks, trademark registrations and applications
therefor, trade names, service marks and applications therefor,
copyrights, copyright registrations and applications therefor,
both foreign and domestic, owned, possessed, used or held by or
licensed to Sellers relating to the Business, and a list of all
licenses to or from Sellers respecting any of the Intellectual
Property. Sellers own the entire right, title and interest in
and to the Intellectual Property, together with the goodwill
associated therewith. Sellers have the right to use and are
transferring to Buyers the unrestricted right to use trade
secrets, know-how, formulas, technical and manufacturing
processes and information, testing and operating techniques and
procedures, all engineering data and plans, all marketing
materials and information and all other business data and
information used by Sellers in the Business or which is necessary
for the Business as now conducted. None of the items in the
categories listed in this Section 4.12 are subject to any pending
or, to the best knowledge of Sellers and Stockholders,
threatened challenge or infringement, and no impediment exists as
to Sellers' exclusive ownership and use or validity of any such
item. The Intellectual Property comprises all patents and
applications therefor, utility and design model registrations and
applications therefor, trademarks, trademark registrations and
applications therefor, trade names, service marks and
applications therefor, copyrights and copyright registrations and
applications therefor, both foreign and domestic, necessary to
permit the conduct from and after the Closing Date of the
Business, as the Business is and has normally been conducted.
All acts necessary under all provisions of applicable law to
protect the Intellectual Property, including, without limitation,
the filing of required affidavits of use and incontestability,
applications for renewals of registrations, recordal of
registered user, notice of registration and payment of
maintenance and annuity fees, have been taken by Sellers. All
licenses granted to Sellers by others which are essential or
useful to any part of the Business are assignable to Buyers
without consent of or notice to any Person, without change in the
terms or provisions thereof and without premium. Sellers have
not infringed any unexpired patent, utility or design model
registration, trademark, trademark registration, trade name,
copyright, copyright registration, trade secret or any other
proprietary or intellectual property right of any Person.
4.13 NO BREACH OF STATUTE, DECREE, OR ORDER. Except as
set forth on Schedule 4.13, Sellers have complied in all material
respects, and currently are in compliance in all material
respects, with all applicable statutes, laws, codes, ordinances,
rules, regulations, orders, decrees and other laws of the United
States, Canada, and all state, provincial and local governments,
agencies and courts ("Laws") to which any aspect of the Business
or any part of the Assets are subject. No claim, action or
proceeding is pending or, to the best of Sellers' or
Stockholders' knowledge, threatened against Sellers with respect
to a default under or a violation in respect of any Law. Neither
any of the Assets nor their operation or maintenance as they are
now operated and maintained contravenes any applicable zoning,
building or other law, ordinance, code, rule or other
administrative regulation. No notice from any governmental body
has been served upon Sellers claiming any violation of any Law,
or requiring or calling attention to the need for any work,
repairs, construction, alterations or installation on or in
connection with the Assets or any change in the operations of
Sellers.
4.14 LITIGATION. Except as disclosed on Schedule 4.14,
there is no suit, claim, action, proceeding or, to the best of
Sellers' and Stockholders' knowledge, governmental investigation
against the Sellers which is now pending or, to the best of
Sellers' and Stockholders' knowledge, threatened. There is no
basis (including any condition or set of facts) known to Sellers
or Stockholders for any suit, claim, action, proceeding or
governmental investigation (i) arising out of or relating to any
aspect of the Business or any of the Assets, or (ii) concerning
the transactions contemplated by this Agreement. There is no
decree, injunction or order of any court or governmental
department or agency outstanding against the Sellers relating to
any aspect of the Business or any part of the Assets.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.15 contains a list of all
qualified and nonqualified pension, profit-sharing and other
employee benefit plans of Sellers affecting employees of the
United States domiciled or residing in the United States (the
"U.S. Employee Plans"). The U.S. Employee Plans have been
authorized by the Boards of Directors of Sellers and those U.S.
Employee Plans which are qualified plans are qualified in form
and operation under Sections 401(a) and 501(a) of the Code.
Except as disclosed on Schedule 4.15, all reports, filings and
other documents with respect to the U.S. Employee Plans required
to be filed or distributed under the Employee Retirement Income
Security Act of 1974 ("ERISA"), and regulations promulgated
thereunder, including without limitation all returns and reports
to be filed with the Department of Labor, Internal Revenue
Service and Pension Benefit Guaranty Corporation, and all
distributions to participants, beneficiaries and others, have
been made on a proper and timely basis. Sellers have not
incurred any accumulated funding deficiency within the meaning of
Section 302 of ERISA with respect to any U.S. Employee Plan, or
any material liability to the Pension Benefit Guaranty
Corporation with respect to any U.S. Employee Plan, and there
exists no event or condition which would permit the institution
of proceedings to terminate any U.S. Employee Plan under Section
4042 of ERISA. With respect to each of the U.S. Employee Plans
which is a deferred compensation or pension plan and which is not
subject to the periodic reporting and disclosure requirements of
ERISA, there is included on or attached to Schedule 4.15 a
complete description or copy of the text of the plan, a list of
the individuals covered thereby, the amount of any current
obligations under the plan to each such individual, the amount of
any contingent or deferred obligations under the plan to each
such individual, and the time at which such obligation will, or
is likely to, become payable. None of the U.S. Employee Plans
meet the definition of a "multi-employer plan" under ERISA as
amended by The Multiemployer Pension Plan Amendments Act of 1980,
Xxx.X.Xx. 96-364, as amended. Sellers are not parties to any
pending or threatened action, claim, suit or proceeding by any
person or governmental instrumentality concerning the U.S.
Employee Plans. All payments due from Sellers (on account of
employment contracts or otherwise) for U.S. Employee Plans and
employee health and welfare insurance have been paid.
(b) Schedule 4.15 contains an accurate and
complete description of, and sets forth the annual amount payable
pursuant to, each of the pension, profit sharing, retirement,
death benefit, welfare, severance pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, stock
purchase arrangements or policies, life insurance, scholarship or
other employee benefit plan, program, policy or arrangement
maintained by the Sellers or to which the Sellers have any
liability (contingent or otherwise) with respect to employees,
officers, directors or shareholders of the Sellers domiciled or
residing in Canada (the "Canadian Employee Plans"). The
Financial Statements reflect in the aggregate an accrual of all
amounts accrued but unpaid under all the Canadian Employee Plans
as of the dates thereof. Sellers have no commitment, whether
formal or informal, and whether legally binding or not, to create
any additional Canadian Employee Plan. Each of the Canadian
Employee Plans disclosed in Schedule 4.15 is in effect and
Sellers are in compliance with all laws, rules and regulations
applicable thereto. All Canadian Employee Plans have been duly
registered where required by, and are in good standing under, all
applicable legislation and Sellers have fulfilled their funding
obligations under all the Canadian Employee Plans and no past
service funding liabilities exist thereunder. With respect to
each current Canadian Employee Plan or plan under which benefits
may be due to, or liabilities may exist in respect of, current or
former Canadian employees, the Sellers have delivered to the
Buyer accurate and complete copies of (i) all currently
applicable plan texts and agreements; (ii) all summary plan
descriptions and material employee communications; (iii) the most
recent annual report; (iv) the most recent annual and periodic
accounting of plan assets; (v) the most recent actuarial
valuation. Each Canadian Employee Plan has been administered
materially in accordance with its terms. All material reports,
returns and similar documents with respect to the Canadian
Employee Plans required to be filed with any governmental body or
distributed to any Canadian Employee Plan participant has been
duly and timely filed or distributed. There are no pending
investigations by any governmental body, termination proceedings
or other claims (except claims for benefits payable in the normal
operation of the Canadian Employee Plans), suits or proceedings
against or involving any Canadian Employee Plan or asserting any
rights or claims to benefits under any Canadian Employee Plan
that could give rise to any material liability.
4.16 INSURANCE POLICIES. Set forth on Schedule 4.16 is
a list of all insurance policies and bonds in force covering
Sellers and their properties, operations and personnel. Each of
said policies, together with all records and documents relating
to insured losses and claims paid or made during the past two
years have been furnished to Buyers for their review. No notice
has been received from any insurance carrier that Sellers are, or
will prior to the Closing will be, liable, for any material,
retroactive premium adjustments. All policies are valid and
enforceable and in full force and effect and Sellers have not,
since January 1, 1997, received any notice of premium increases
or cancellations with respect to any of its insurance policies
and bonds.
4.17 PRODUCT WARRANTIES, PRODUCT RETURN POLICIES AND
SERVICE WARRANTIES. Except as set forth on Schedule 4.17,
Sellers do not utilize any product warranty, guarantee, product
return policy, service warranty or service policy.
4.18 OPERATING LICENSES AND PERMITS. The lawful
conduct of the Business as presently conducted does not require
any approval, license, consent, permit, franchise or
authorization from any Person material to Sellers or its business
which has not been obtained. Set forth on Schedule 4.18 are all
such approvals, licenses, consents, permits, franchises and
authorizations. The Business as presently conducted in any
jurisdiction meets all applicable legal requirements of each such
jurisdiction, and, to the best of Sellers' and Stockholders'
knowledge, there is no basis for any governmental body to deny or
rescind any approval, license, consent, permit or authorization
appropriate for the conduct of the Business.
4.19 ASSETS IN GOOD REPAIR. Except as set forth on
Schedule 4.19, the Assets are sufficient in all respects to carry
on the Business as it is now conducted.
4.20 ENVIRONMENTAL MATTERS.
(a) With respect to USA Skate:
(i) Except as set forth on Schedule 4.20,
the properties (including leased properties), assets and
operations of Sellers are in compliance with all applicable
United States federal, state or local and foreign laws,
rules and regulations, orders, decrees, judgments, permits
and licenses relating to public and worker health and safety
and to the protection and clean-up of the natural
environment and activities or conditions related thereto,
including, without limitation, those relating to the
generation, handling, disposal, transportation or release of
hazardous materials (collectively, "Environmental Laws").
With respect to such properties, assets and operations,
including any previously owned, leased or operated
properties, assets or operations, to the best knowledge of
Sellers and Stockholders after due inquiry, there are no
past, present or reasonably anticipated future events,
conditions, circumstances, activities, practices, incidents,
actions or plans of Sellers that may interfere with or
prevent compliance or continued compliance in all respects
with applicable Environmental Laws. The term "hazardous
materials" as used in this Section 4.20(a) shall mean those
substances that are regulated by or form the basis for
liability under any applicable Environmental Laws; and
(ii) Except as set forth on Schedule 4.20,
Sellers are not the subject of any United States federal,
state or local or foreign (including Canadian) investigation
and have not received any notice or claim (and Sellers and
the Stockholders are not aware of any facts that would form
a reasonable basis for any such claim), nor entered into any
negotiations or agreements with any third party, relating to
any material liability or remedial action or potential
material liability or remedial action under Environmental
Laws, nor are there any pending, reasonably anticipated or,
to the best knowledge of Sellers and Stockholders,
threatened actions, suits or proceedings against or
affecting Sellers or its properties, assets or operations in
connection with any such Environmental Laws. Except as set
forth on Schedule 4.20, no underground storage tanks are
located at the New York Facility or the Canadian Facilities.
(b) Sellers are in compliance with, and have not
violated, all Canadian Environmental Laws (as hereinafter
defined) and all judgments, injunctions, notices or demand
letters issued pursuant thereto.
Except as set forth in Schedule 4.20, without
restriction as to the generality of the foregoing, Sellers and
any Person whose liability for Environmental Liabilities (as
hereinafter defined) Sellers have or may have retained or assumed
either contractually or by operation of law:
(i) Have not caused or allowed the
generation, use, treatment, storage, or disposal of any
Hazardous Substance (as hereinafter defined) at, or
transportation from, any site or facility owned, leased
or operated by Sellers except in accordance with all
applicable Canadian Environmental Laws;
(ii) Have not caused or allowed the
release of any Hazardous Substance onto, at, near or
from any site or facility owned, leased or operated by
Sellers, including, without limitation, the Canadian
Facilities;
(iii) Have secured all Environmental
Permits (as hereinafter defined) necessary to the
conduct of the Business and such Environmental Permits
are currently in effect and are listed in Schedule
4.20, and Sellers are in compliance with all terms and
conditions of such Environmental Permits and have not
previously violated any of same;
(iv) Have not received any notice, nor
are aware of any proposal to amend, revoke or replace
any Environmental Permit, or requiring the issuance of
any additional Environmental Permit;
(v) Have not received, nor has there
been issued to or against Sellers, any claim, notice,
citation, summons or order, and no investigation or
review is pending or, to the best of Sellers' and
Stockholders' knowledge, threatened by any authority
with respect to:
(A) any alleged violation by
Sellers of any Canadian Environmental Law;
(B) any alleged failure by Sellers
to hold any Environmental Permit; or
(C) any alleged violation by
Sellers to comply with any such Environmental Permit.
(vi) Have not received any request for
information, notice of claim, demand or other
notification that it is or may be potentially
responsible with respect to any investigation or clean-
up of any threatened or actual release of any Hazardous
Substance and has not received inquiry or notice nor do
they have any reason to suspect or believe they will
receive inquiry or notice of any actual or potential
proceedings, claims, lawsuits or losses related to or
arising under any Environmental Laws;
(vii) Do not own, operate or lease
and did not at any previous time own, operate or lease
any real property, improvements or related assets which
have been subject to the release of any Hazardous
Substance;
(viii) Do not own, operate or lease
and did not at any previous time own, operate or lease
any real property, improvements or related assets
wherein PCB's, asbestos or urea formaldehyde insulation
is or has been present whether above ground,
underground or within any structure thereon or
contained in any equipment owned, operated or leased by
Sellers; nor are there any underground storage tanks,
active or abandoned, at any property now or previously
owned, operated or leased by Sellers;
(ix) Are not currently operating or
required to be operating under any compliance order,
schedule, decree or agreement, any consent decree,
order or agreement and/or corrective action decree,
order or agreement issued or entered into under any
Canadian federal, provincial, state or municipal
statute, regulation or ordinance regarding the
environment and/or health or safety in the work place;
(x) Have not transported any Hazardous
Substance or arranged for the transportation of any
such substance to any location which is not listed and
duly authorized pursuant to the Environmental Laws or
which is the subject of Canadian federal, provincial,
state or municipal enforcement actions or other
investigations which may lead to claims against Sellers
for clean-up cost, remedial work, damages to natural
resources or for personal injury claims under any
applicable Environmental Law and all Hazardous
Substances transported by or on behalf of Sellers have
been transported in compliance with all applicable
laws, and no Hazardous Substance has been released,
spilled, leaked, discharged, disposed of, pumped,
poured, ignited, emptied, injected, leached, dumped or
allowed to escape at, under or from any property now or
formerly owned, operated or leased by Sellers;
(xi) Are in compliance with all
applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations
established under Environmental Laws and are not
subject to any Environmental Liabilities (as
hereinafter defined);
(xii) Have not conducted or caused
to be conducted any environmental audit of any property
operated, leased or owned by it, nor is it aware of any
such environmental audit conducted by any Person
(including, without restriction, any lender or
potential purchaser) unless in each such case a copy of
every report, memorandum or summary prepared with
respect to such environmental audit has been delivered
to Buyers; and
(xiii) Have not failed to report to
the proper authorities the occurrence of each event
which is required to be so reported by the
Environmental Laws, and have provided Buyers with true
and complete copies of all such reports and all
correspondence relating thereto.
For the purposes of this Section 4.20(b):
The expression "Canadian Environmental Laws" includes
any Canadian federal, provincial or municipal law, by-law, rule,
regulation, decree, code, guideline, standard, order or ordinance
of any country or political subdivision relating to the
environment including those relating to (i) the control of any
potential pollutant or the protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and (iii)
exposure to hazardous, toxic or other substances considered to be
harmful, or (iv) the release of any Hazardous Substance into the
environment;
The expression "Environmental Conditions" includes any
pollution, contamination, degradation, damage or injury caused
by, related to, or arising from or in connection with the
generation, use, ownership, possession, handling, treatment,
storage, transportation, disposal, discharge, release or emission
of any pollutant, contaminant, or toxic or hazardous substance,
material, or waste, including mixtures thereof with other
materials, and any toxic or hazardous building materials,
including, but not limited to, asbestos and urea formaldehyde
foam insulation;
The expression "Environmental Permit" includes any
permit, license, approval or other authorization with respect to
Sellers or their operations or businesses under any applicable
law, regulation or other requirement of Canada or any other
country or of any province, state, municipality or other
subdivision thereof relating to the control of any pollutant or
protection of health or the environment, including laws,
regulations or other requirements relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into
ambient air, surface water, groundwater or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants or hazardous or toxic
materials or wastes;
The expression "Environmental Liabilities" includes any
and all liabilities, responsibilities, claims, suits, losses,
costs (including remedial, removal, response, abatement, clean-
up, investigative and/or monitoring costs and any other related
costs and expenses), other causes of action recognized now,
damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, legal
fees and costs of court which are incurred by, asserted against,
or imposed upon Sellers or Buyers arising out of or in connection
with Sellers or their business operations pursuant to any
agreement, order, notice of responsibility, directive (including
directives and requirements embodied in Environmental Laws),
injunction, judgment or similar document (including settlements)
issued by a court of competent jurisdiction or any Canadian
federal, provincial or local governmental entity or agency, or
pursuant to any claim by a governmental agency or any person for
personal injury, property damage, damage to natural resources,
remediation, or payment or reimbursement of response costs
required to be incurred or expended by said governmental agency
or person pursuant to common law or statute, arising out of or in
connection with: (i) any violation of or non-compliance with
Environmental Laws (including but not limited to failure to
procure or violation of Environmental Permits), and (ii) any
actual or alleged Environmental Condition (regardless of when
discovered) existing on the Closing Date; and
The expression "Hazardous Substance" includes any
substance, waste, solid, liquid or gaseous matter, petroleum or
petroleum derived substance, micro-organism, sound, vibration,
ray, heat, odor, radiation, energy vector, plasma, organic or
inorganic matter, whether animate or inanimate, transient
reaction intermediate or any combination of the above deemed
hazardous, hazardous waste, solid waste, toxic or pollutant, a
deleterious substance, a contaminant or source of pollution or
contamination under any Environmental Law, or by official act of
any Canadian federal, provincial, state or municipal government,
governmental agency, minister, deputy-minister, governor-in-council,
lieutenant governor-in-council, or any tribunal or board
with proper jurisdiction over the subject in question.
4.21 LABOR DISPUTES. There is not pending or, to the
best knowledge of Sellers and the Stockholders, threatened any
labor dispute, strike or work stoppage with respect to Sellers or
the Business.
4.22 CUSTOMERS AND SUPPLIERS. The ten largest
customers of each Seller in the last fiscal year and the
percentage of the gross revenue of each Seller contributed by
each is set forth on Schedule 4.22 attached hereto (the "Material
Customers"). Except as set forth on Schedule 4.22, no single
supplier (singularly a "Supplier" and collectively "Suppliers")
of raw materials to Sellers is of material importance to Sellers.
The relationships of Seller with the Material Customers and the
Suppliers are good commercial working relationships. Except as
set forth on Schedule 4.22, no Material Customer or Supplier (i)
has canceled or threatened in writing to cancel or otherwise
modify its relationship with Sellers, or (ii) to the best
knowledge of Sellers and Stockholders intends to cancel or
otherwise modify its relationship with Sellers. The acquisition
of the Business by Buyers will not, to the best knowledge of
Sellers and Stockholders, adversely affect the relationship of
Buyers (as successor to the operation of the Business) with any
such Suppliers or Material Customers. Buyers acknowledge that
each customer of Sellers retains the independent right to replace
any vendor, including Sellers, at any time (subject to
contractual commitments).
4.23 WORKERS' COMPENSATION. There are no notices of
assessment, provisional assessment, reassessment, supplementary
assessment, penalty assessment or increased assessment
(collectively, "Assessments") or any other communications related
thereto which Davtec, in respect of the Business, has received
from any workers' compensation board or similar authorities in
any jurisdictions where the Business is carried on, and there are
no Assessments which are due and unpaid on the date hereof or
which will be unpaid at the Closing, and, to the best of Sellers'
and Stockholders' knowledge, there are no facts or circumstances
which may result in a material increase in liability or
Assessments to Davtec relating to the Business from any
applicable workers' compensation legislation, regulations or
rules after the Closing.
4.24 EMPLOYMENT MATTERS. As used in this Agreement,
"Employee" shall mean those individuals who are employed by
Sellers in the Business at the time of Closing on a full-time or
part-time basis (including any such individuals who are absent
from work due to short-term disability, pregnancy, maternity or
parental leave, sick leave, vacation, or any other reasonable
cause). Schedule 4.24 contains:
(a) the names and titles of all existing
Employees of the Business together with the location of their
employment;
(b) the date of hiring of each existing Employee;
(c) a list of all written employment contracts
between Sellers and their respective Employees in respect of the
Business;
(d) the rate of annual remuneration or of hourly
pay of each existing Employee at the date hereof that is a full-
time or part-time employee, as the case may be, any bonuses paid
since the end of the last completed financial year and all other
bonuses, incentive schemes and benefits to which such employee is
entitled;
(e) the vacation policy of Sellers relating to
the Business and the vacation entitlements of Employees if at
variance to the policy;
(f) the names of any Employees who are absent
from work due to long-term or short-term disability, pregnancy,
maternity or parental leave, vacation, sick leave, workers'
compensation leave, or any other reasonable cause, whether they
are expected to return to work and if so when they are expected
by Sellers to return to work and the nature of the benefits to
which such Employees are entitled from Sellers;
(g) particulars of all other material terms and
conditions of employment or engagement of the Employees and the
positions held by them; and
(h) consulting agreements, confidentiality
agreements and restricted covenants, non-competition and non-
solicitation agreements.
Except for Xxx Xxxxxxx, each of the Employees of Sellers is
employed under a contract of indeterminate term that can be
terminated by Sellers with such notice as is required by
applicable law. Sellers are in compliance in all material
respects with all legislation, including without limitation pay
equity, employment standards, human rights, workers compensation,
occupational health and safety and labor relations legislation,
applicable to the Business and its Employees.
4.25 UNIONS AND LABOR PRACTICES. Except as set forth
on Schedule 4.25, no trade union, counsel of trade unions,
employee bargaining agency or affiliated bargaining agent:
(a) holds bargaining rights with respect to any
of the Employees by way of certification, interim certification,
voluntary recognition, designation or successor rights;
(b) has applied to be certified as the bargaining
agent of any of the Employees; or
(c) has applied to have either Seller declared a
related employer pursuant to the provisions of applicable law.
There is no unfair labor practice charge or complaint with
respect to Employees pending before any agency or board, there is
no labor strike, picketing, slowdown or work stoppage or lockout
actually pending or, to the best knowledge of Sellers or
Stockholders, threatened against or affecting Sellers or any of
their operations, and Sellers have not experienced at any time
during the last five years any strike, slowdown or work stoppage,
lockout or other collective labor action by or with respect to
its Employees. There are no charges with respect to or relating
to Sellers before any commission, agency or body responsible for
the prevention of unlawful employment practices. Sellers have
not received any notice from any United States or Canadian
federal, state, provincial, local or other agency responsible for
the enforcement of labor or employment laws of an intention to
conduct an investigation of either Seller or any of their
business or employment practices and no such investigation is in
progress.
4.26 BROKER FOR SELLERS. No Person has acted in the
capacity of broker or finder on behalf of Sellers or Stockholders
to bring about the negotiation or consummation of this Agreement.
4.27 ORGANIZATION AND QUALIFICATION OF GUARANTORS.
Each of the Guarantors is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it was organized.
4.28 AUTHORIZATION OF GUARANTORS. Guarantors have the
full corporate power to enter into the Guaranty and to carry out
their obligations thereunder. The execution, delivery and
performance of the Guaranty by Guarantors have been duly and
effectively authorized and approved by all requisite corporate
action and no other corporate acts or proceedings are necessary
to authorize the Guaranty or the transactions contemplated
thereby. The Guaranty constitutes the legal, valid and binding
obligation of Guarantors, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to
creditors' rights and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or
in equity). Assuming the consents set forth on Schedule 4.2 have
been obtained, neither the execution and delivery of the Guaranty
nor the consummation of the transactions contemplated thereby
will (i) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the
Certificate or Articles of Incorporation, By-Laws or other
constating document of Guarantors, or any material note, bond,
mortgage, indenture, deed of trust, lease, license, contract,
agreement or other instrument of obligation by which Guarantors
or any of their other properties or assets are bound or affected,
(ii) violate any statute, rule or regulation or, to the best of
Sellers' and Stockholders' knowledge, any order, writ, injunction
or decree applicable to Guarantors or any of their properties or
assets, (iii) result in the creation of any lien, security
interest, hypothec, prior claim, charge or encumbrance upon the
Assets or (iv) result in the modification, termination or
revocation of any license, permit or right material to the
Business. Except as set forth on Schedule 4.2 hereto, no consent
or approval by, notice to or registration with any Person is
required on the part of Guarantors in connection with the
execution and delivery of the Guaranty or the consummation by
Guarantors of the transactions contemplated thereby.
4.29 ACCURACY OF STATEMENTS. No representation or
warranty of Sellers or Stockholders in this Agreement, any
Schedule hereto or any other agreement, document, instrument or
certificate delivered by Sellers and/or Stockholders pursuant to
this Agreement (including any agreement, document, or other
instrument the form of which is attached hereto as an Exhibit)
contains or will contain any untrue statement of a material fact
or omits or will omit a material fact necessary to make the
statements contained therein not misleading. To the best
knowledge of Sellers and Stockholders, there is no fact which
Sellers or Stockholders have not disclosed in writing to Buyers
which materially adversely affects, or may materially adversely
affect, the Business, its operations or prospects or the Assets.
4.30 SURVIVAL. The representations and warranties made
by the Sellers and Stockholders in this Agreement shall be true
and correct in all respects, and shall not have been violated in
any respect, as of the Closing, except for changes permitted or
contemplated by the terms of this Agreement, with the same effect
as though such representations, warranties and covenants had been
made or given on and as of the Closing. The representations and
warranties made by the Sellers and Stockholders in (i) Sections
4.1, 4.2, 4.6, 4.26, 4.27 and 4.28 shall survive the Closing in
perpetuity and (ii) Sections 4.10, 4.14 and 4.20 shall survive
the Closing until the thirtieth (30th) day following the
expiration of the applicable statute of limitations for each
matter referred to in such Sections. All other representations
and warranties made by the Sellers and Stockholders in this
Agreement shall survive the Closing until the second anniversary
of the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby jointly and severally represent and
warrant to Sellers and Stockholders as follows:
5.1 ORGANIZATION AND QUALIFICATION. Rawlings is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and Rawlings Canada is a
corporation duly organized, validly existing and in good standing
under the laws of the Province of Nova Scotia. Buyers have all
requisite corporate power and authority to own, lease and operate
their properties and to carry on their businesses as they are now
being conducted.
5.2 AUTHORIZATION. Buyers have the full corporate
power to enter into this Agreement and to carry out their
obligations hereunder. The execution, delivery and performance
of this Agreement by Buyers have been duly and effectively
authorized and approved by all requisite corporate action of
Buyers and no other corporate acts or proceedings on the part of
Buyers are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of Buyers enforceable in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally and by
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity). Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(i) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the
Certificate of Incorporation, By-Laws or other constating
document of Buyers or any note, bond, mortgage, indenture, deed
of trust, lease, license, contract, agreement or other instrument
or obligation to which Buyers are bound, or by which Buyers or
any of their properties or assets may be bound or affected or
(ii) violate any statute, rule or regulation or, to the best of
Buyers' knowledge, any order, writ, injunction or decree
applicable to Buyers or any of their properties or assets. No
consent or approval by, notice to or registration with any Person
is required on the part of Buyers in connection with the
execution and delivery of this Agreement or the consummation by
Buyers of the transactions contemplated hereby.
5.3 DUE DILIGENCE. Buyers have been afforded an
opportunity to and have asked questions, received answers to
their satisfaction and otherwise conducted their due diligence
review relative to this transaction and are sophisticated
investors with knowledge and experience in business and financial
matters and able to assess and evaluate the risks inherent in
this transaction.
5.4 BROKER FOR BUYERS. No Person other than Xxxxxx,
Read & Co. Inc. has acted in the capacity of broker or finder on
behalf of Buyers to bring about the negotiation or consummation
of this Agreement.
5.5 ACCURACY OF STATEMENTS. No representation or
warranty of Buyers in this Agreement or any other agreement,
document, instrument or certificate delivered by Buyers pursuant
to this Agreement (including any agreement, document or
instrument the form of which is attached hereto as an Exhibit)
contains or will contain any untrue statement of a material fact
or omits or will omit a material fact necessary to make the
statements contained therein not misleading.
5.6 SURVIVAL. The representations and warranties made
by Buyers in this Agreement shall be true and correct in all
respects, and shall not have been violated in any respect as of
the Closing, except for changes permitted or contemplated by the
terms of this Agreement, with the same effect as though such
representations, warranties and covenants had been made or given
on and as of the Closing. The representations and warranties
made by Buyers in Sections 5.1 and 5.2 of this Agreement shall
survive the Closing in perpetuity. All other representations and
warranties made by Buyers in the Agreement shall survive the
Closing until the second anniversary of the Closing Date.
ARTICLE VI
COVENANTS
6.1 BUYERS' RIGHT TO INSPECT ASSETS. During the
period from the execution of this Agreement to the Closing,
Buyers' officers, employees, consultants, accountants, attorneys,
prospective lenders and other designated agents shall have the
right to inspect all of the Assets, including but not limited to
the books, records, financial statements, contacts, tax returns,
customer and supplier lists and other documents and information
pertaining to the Business and the Assets.
6.2 CONDUCT OF SELLERS BEFORE THE CLOSING. Sellers
covenant, warrant and agree that from the date hereof to the
Closing, except for transactions expressly approved in writing by
Buyers or provided for herein, Sellers shall:
(a) Not mortgage, pledge, hypothecate or subject
to any lien, charge or encumbrance of any kind any of the assets
of Sellers relating to the Business, tangible or intangible,
exclusive of liens arising as a matter of law in the ordinary
course of business as to which there is no known default;
(b) Not sell or transfer any of the tangible
assets of Sellers relating to the Business other than inventory,
which may be sold in the ordinary course of business;
(c) Not cancel or discount any trade debt or
claim in favor of Sellers relating to the Business, except in the
ordinary course of business;
(d) Not sell, assign, transfer or otherwise
dispose of any patent, trademark, trade name, copyright, license,
customer list, trade secret, purchase option, right of first
refusal or any other similar intangible asset relating to the
Business;
(e) Not knowingly waive any right of value
relating to the Business;
(f) Not modify, amend, alter, or terminate (by
written or oral agreement, or any manner of action or inaction)
any of the executory agreements of Sellers relating to the
Business, except in the ordinary course of business;
(g) Not enter into or amend, renew or extend any
written collective bargaining agreement or union contract
relating to the Business;
(h) Not enter into any transaction material in
nature or amount relating to the Business;
(i) Not undertake any purchase commitment or sale
commitment extending beyond six months relating to the Business;
(j) Keep the properties and assets of Sellers
relating to the Business insured in amounts and with coverage at
least as great as the amounts and coverage in effect on the date
of this Agreement;
(k) Use their best efforts to preserve the
possession and control of all of Seller's assets relating to the
Business, keep in faithful service Seller's present officers and
key employees, preserve the goodwill of its suppliers, customers
and others having business relations with Seller, and do nothing
to impair Buyers' ability to keep and preserve after the Closing
the Business as existing on the date hereof;
(l) Maintain the books, accounts and records of
Sellers in a manner consistent with past practice;
(m) Not change their accounting practices;
(n) Not extend credit in the sale of any product
or services of Sellers relating to the Business other than in
accordance with credit practices in effect on the date hereof, or
discount any trade payable;
(o) Conduct the Business in such a manner so that
as of the Closing the representations and warranties contained in
this Agreement shall be true in all respects as though such
representations and warranties were made on and as of the
Closing, except for changes permitted or contemplated by the
terms of this Agreement;
(p) Provide Buyers with prompt written notice of
any change in the condition (financial or other), assets,
liabilities, earnings or prospects of the Business which is
material and adverse; and
(q) Cooperate fully, completely and promptly with
Buyers in connection with satisfying any condition precedent to
the sale and purchase of the Assets contemplated by this
Agreement.
6.3 BULK SALES COMPLIANCE.
(a) Buyers hereby waive compliance by Sellers
with the provisions of Article 6 of the Uniform Commercial Code
as in effect in New York and South Carolina and the provisions of
any statute of any other state or jurisdiction regulating bulk
sales or transfers. Sellers and Stockholders jointly and
severally shall indemnify, defend and hold Buyers harmless from
and against any loss, liability, cost, expense or damage
resulting from the assertion of a claim made against the Assets
or Buyers by any creditor of Sellers pursuant to Article 6 of the
Uniform Commercial Code as in effect in New York and South
Carolina or any other applicable law relating to bulk sales or
transfers.
(b) Davtec shall use commercially reasonable
efforts to obtain an order under Section 3 of the Bulk Sales Act
(Ontario) exempting the purchase and sale of the Davtec Assets
from the application of such Act. Such order is herein called
"Bulk Sales Order." Should the Bulk Sales Order not be obtained
by the Closing and in the event Buyers decide in their sole
discretion to waive the relevant conditions precedent, Sellers
and Stockholders shall jointly and severally indemnify and save
Buyers harmless in accordance with Article XI from and against
any claim made by a creditor of Sellers or a governmental agency
against either Buyers or the Assets which is wholly or partially
based on the premise that the sale did not conform in any
particular to the requirements of the Bulk Sales Act (Ontario).
(c) In respect of the Canadian provinces other
than Ontario, Sellers and Stockholders shall jointly and
severally indemnify and save Buyers harmless in accordance with
Article XI from and against any claim made by a creditor of
Sellers or a governmental agency against either Buyers or the
Assets which is wholly or partially based on the premise that the
sale of the Assets did not conform in any particular to the
requirements of the Civil Code of Quebec governing the sale of an
enterprise or any similar legislation of any other province or
jurisdiction.
6.4 CONFIDENTIAL INFORMATION. Sellers and
Stockholders shall not communicate, divulge or use for the
benefit of any Person any of the trade secrets, business methods,
business records and files, customer lists, promotional
materials, product specifications, drawings and prototypes, price
lists, instruction manuals, reports, or any other confidential or
proprietary information of any type or description being acquired
by Buyers pursuant to this Agreement.
6.5 AGREEMENT NOT TO COMPETE. From the Closing Date
and for a period of two (2) years thereafter Sellers and
Stockholders shall not, directly or indirectly: (i) own or have
any interest in, or act as an employee, agent, representative or
consultant of, or assist in any way, any corporation,
partnership, firm or business enterprise which does business in
the United States or Canada and which is in direct or indirect
competition with Buyers' ice hockey equipment businesses; (ii)
divert or attempt to divert customers of Buyers' ice hockey
equipment businesses; or (iii) entice or induce or in any manner
influence Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxx Xxxxxxxx or Xxxxxx
Xxxxxxx to leave the employment of Buyers or any of their
affiliates for the purpose of engaging in a business which is
owned or controlled, directly or indirectly, by Sellers or
Stockholders or which is in competition with Buyers' ice hockey
equipment businesses.
6.6 REMEDY AT LAW INADEQUATE. Sellers and
Stockholders hereby acknowledge and agree that Buyers' remedy at
law for any breach by any of them of the provisions of Sections
6.4 and 6.5 hereof will be inadequate, and that Buyers, their
successors and assigns shall be entitled to injunctive or other
equitable relief in addition to any other remedy they may have
for a breach of such provisions. If a final judicial
determination is made that any provision of Sections 6.4 and 6.5
hereof constitutes an unreasonable or otherwise unenforceable
restriction against either Seller or Stockholders, such provision
shall be void only to the extent that such judicial determination
finds such provision to be unreasonable or otherwise
unenforceable.
6.7 NON-TRANSFERRED CONTRACTS. Notwithstanding
anything to the contrary in this Agreement, Sellers shall not
assign or transfer any interest in any Contract, and Buyers shall
not assume any liability, obligation or commitment arising
thereunder or resulting therefrom, if an assignment or transfer
or an attempt to make an assignment or transfer of such Contract
without the consent of a third party would constitute a breach or
violation thereof or a violation of law, or affect adversely the
rights of Buyers or Sellers thereunder, until such consent has
been obtained. If any consent necessary to effect the transfer
and assignment of any Contract is not obtained on or prior to the
Closing, each of the parties will, for a period of one year
following the Closing Date, (i) use its reasonable efforts and
take such reasonable actions and cooperate with the others as may
be necessary to effect the transfer and assignment by the
appropriate Seller to the appropriate Buyer of the Contract, and
(ii) cooperate with each other in any lawful and reasonable
arrangement to provide that the appropriate Buyer shall receive
the benefits under any Contract not assigned and transferred at
the Closing by reason of the failure to obtain such consent (a
"Non-Transferred Contract"), including, if necessary, at the
request and expense of the appropriate Buyer, enforcing
performance by any third party of its obligations in respect of
such Non-Transferred Contract. If the consent is received from
the third party within one year following the Closing Date, then
such Non-Transferred Contract shall immediately be assigned by
the appropriate Seller to the appropriate Buyer.
6.8 SELLERS' RIGHT TO SELL REMAINING ASSETS. Buyers
hereby waive all claims against Sellers for infringement of any
intellectual property right resulting from any sale by Sellers of
any assets owned by Sellers immediately before the Closing and
not sold to Buyers pursuant to this Agreement.
6.9 BUYERS' PERFORMANCE OF ASSUMED LIABILITIES.
After the Closing, Buyers shall pay and otherwise perform all of
the Assumed Liabilities in accordance with their terms, except
for those Assumed Liabilities for which the failure to pay or
otherwise perform is excused by law.
6.10 ACCESS TO BOOKS, RECORDS AND DOCUMENTS. After the
Closing, Sellers and Stockholders, upon reasonable notice and
during normal business hours, shall have the right to inspect and
copy the books, records and other documents (including designs,
catalogues, product descriptions, business records and
transactional documents) purchased by Buyers pursuant to this
Agreement for the purposes of preparing tax returns and defending
any third party claim. Buyers shall use reasonable efforts to
preserve all books, records and documents purchased from Sellers
and, prior to the destruction or disposal thereof, offer the
books, records and documents to Sellers, giving Sellers a
reasonable time to take possession thereof. If Sellers do not
take possession thereof within a reasonable time, Buyers may
destroy or dispose of such books, records and documents.
ARTICLE VII
TITLE AND SURVEYS
7.1 TITLE OPINION. Rawlings Canada shall obtain an
opinion of title from a notary acceptable to it in its
discretion, with respect to the condition of title to the
Daveluyville Property, which opinion shall later be updated to
the Closing Date (said opinion, as updated, is herein the "Title
Opinion"). The Title Opinion shall be in form and substance
reasonably satisfactory to Rawlings Canada and shall show, inter
alia, that title to the Daveluyville Property is held by Davtec,
free from all Encumbrances other than (i) the Permitted
Encumbrances and (ii) those Encumbrances in respect of which
Rawlings Canada has, on the Closing Date, received discharges or
undertakings to discharge (in form satisfactory to it) executed
by the creditors thereof. The parties agree that all documents
executed in connection with the Closing shall be held in escrow
and the Davtec Closing Consideration shall be paid in trust to
Rawlings' counsel until the notary or other legal counsel
providing the Title Opinion confirms, by updated Title Opinion,
that title to the Daveluyville Property has been transferred and
the deed of sale effecting such transfer has been registered in
all appropriate land registries without adverse or conflicting
entries from those set forth in the Title Opinion. No title
searches or opinions rendered, nor the failure of Rawlings Canada
to send any notice to Davtec of any defect, shall have the effect
of waiving, limiting, reducing or otherwise affecting, in any
manner whatsoever, any of Sellers' representations or warranties
given or made hereunder or in connection herewith.
7.2 SURVEY. At least two (2) days prior to Closing,
Davtec shall furnish to Rawlings Canada:
(a) an up-to-date surveyor's plan and technical
description of the Daveluyville Property. Any such survey shall
show the Daveluyville Property and its current condition, stating
that it is in conformity with all applicable laws and
regulations, that there are no physical encumbrances onto the
Daveluyville Property or from the Daveluyville Property or any
illegal views onto or from the Daveluyville Property and that the
Daveluyville Property is not charged with any servitudes. The
survey shall show the boundaries of the Daveluyville Property,
separate legal descriptions and boundaries for the tracts and the
location of all streets, highways, alleys and public ways
crossing or abutting said Daveluyville Property, all servitudes,
all building lines and all buildings and structures as are
situated thereon as of said date;
(b) all design, engineering or construction
drawings concerning the Daveluyville Property that Sellers have
in their possession;
(c) all title documents such as deeds of purchase
with all title searches and opinions or other information
relating to title to the Daveluyville Property that Sellers have
in their possession; and
(d) copies of all realty tax statements covering
the Daveluyville Property for the current year and the three (3)
prior years.
ARTICLE VIII
BUYERS' CONDITIONS TO CLOSING
The obligations of Buyers to consummate the
transactions contemplated by this Agreement shall be subject to
each of the following express conditions precedent:
8.1 CONTINUED TRUTH OF WARRANTIES. The
representations and warranties of the Sellers herein contained
shall be true in all respects as of the Closing with the same
force and effect as though made as of the Closing, except for any
variations permitted by this Agreement.
8.2 PERFORMANCE OF COVENANTS. Sellers shall have
performed, in all respects, all covenants and obligations and
complied with all conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
8.3 DAMAGES BY CASUALTY OR OTHERWISE. The Assets and
the financial condition, operations, properties, earnings and
prospects of the Business shall not have been adversely affected
on or prior to the Closing in any way as a result of any material
accident or other casualty (whether or not covered by insurance),
any labor disturbance, or any Act of God or the public enemy,
occurring after the date hereof.
8.4 NO ADVERSE CHANGE. There shall have been no
material adverse change in the condition (financial or
otherwise), operations, properties, earnings, or prospects of the
Business since December 31, 1996.
8.5 PERMITS. Any and all permits, consents, orders,
approvals, licenses and clearances from any Person appropriate to
the lawful consummation of the transactions contemplated hereby
and the use by Buyers of the Assets in substantially the same
manner as currently used by Sellers, including the consents of
The First National Bank of Chicago and the lessors under the
Leases, shall have been obtained in form and substance
satisfactory to Buyers.
8.6 LITIGATION. No suit, action, investigation,
inquiry or proceeding shall be pending or, to the best of
Sellers' and Stockholders' knowledge, threatened which (i) might
result in any material adverse change in the condition (financial
or otherwise), operations, properties, earnings or prospects of
the Business, or (ii) questions the validity of any action taken
or to be taken by Sellers or Stockholders in connection with the
provisions of this Agreement.
8.7 SECURITY INTERESTS RELEASED. The Assets shall not
be subject to any mortgage, pledge, lien, security interest,
claim, charge, encumbrance or other adverse interest of any kind
other than the Permitted Encumbrances.
8.8 TITLE TO NAMES. USA Skate shall have good and
marketable title to the trademarks "Victoriaville," "Vic" and
"XxXxxxxx," and Buyers shall have received from Xxxxxx Xxxxxxxx
an affidavit, reasonably satisfactory to Buyers, regarding first
use of the trademarks "Vic" and "Victoriaville."
8.9 INSIDER LOANS. Buyers shall have received
evidence satisfactory, to Buyers, full satisfaction of USA
Skate's loans to Cortina, Xxxxx Xxxxxx and Xxxxx Xxxxx.
8.10 NO LEGAL HYPOTHECS. All delays to register legal
hypothecs against the Daveluyville Property arising out of
construction or renovation shall have expired prior to the
Closing Date and on the Closing Date no such legal hypothecs
shall have been registered or remain unradiated.
8.11 RELEASE OF PAYABLES OWING TO STOCKHOLDERS.
Stockholders and their affiliates shall have released Sellers in
full from all trade payables owing by Sellers to Stockholders or
their affiliates.
8.12 TRANSFER OF ASSETS TO DAVTEC. 811300 Ontario Inc.
shall have transferred to Davtec, pursuant to such documents of
transfer as shall be satisfactory to Buyers, all of its right,
title and interest in and to (i) the name "XxXxxxxx Hockey
Protection" and (ii) the Indenture, dated November 16, 1994,
between it and Cinnamon Investments Ltd. All other assets and
properties owned by any Stockholder or Guarantor and used in the
Business shall have been transferred to Davtec or USA Skate,
pursuant to such documents of transfer as shall be satisfactory
to Buyers.
8.13 ANJOU SUBLEASE. Davtec shall have subleased its
facility in Anjou, Quebec to Rawlings Canada pursuant to a
sublease containing such terms and in such form as shall be
satisfactory to Buyers.
8.14 DUE DILIGENCE INVESTIGATION. The results of
Buyers' due diligence investigation, including the results of its
Phase I environmental audits of the Facilities, shall be
reasonably satisfactory to Buyers in their sole discretion.
8.15 TAX CLEARANCE CERTIFICATES. USA Skate shall have
delivered to Buyers tax clearance letters from the States of New
York and South Carolina (the "Tax Clearance Certificates")
stating that no taxes, penalties or interest are due from USA
Skate.
8.16 SECTION 116 AFFIDAVIT. Davtec shall have
delivered to Buyers an affidavit attesting that Davtec is not a
non-resident of Canada within the meaning of Section 116 of the
Income Tax Act (Canada) (the "Section 116 Certificate").
8.17 KEY EMPLOYEES. Rawlings shall have entered into
employment arrangements with Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxx
Xxxxxxxx and Xxxxxx Xxxxxxx satisfactory to Rawlings.
8.18 ESTOPPEL CERTIFICATES. Buyers shall have obtained
an estoppel certificate from each lessor of each Lease in form
and substance satisfactory to Buyers.
8.19 CANADIAN TITLE REQUIREMENTS. Buyers shall have
obtained (i) the survey in the form and within the time
contemplated by Section 7.2 hereof, and (ii) the Title Opinion in
form and substance satisfactory to Buyers, and (iii) the
discharges and undertakings to discharge contemplated by Section
7.2 hereof.
8.20 ESCROW AGREEMENT. Sellers and the Escrow Agent
shall have duly executed and delivered the Escrow Agreement.
8.21 LOCK BOX AGREEMENT. Buyers, Sellers and all of
Sellers' lenders who require or maintain a lock box for the
benefit of Sellers shall have entered into an agreement,
satisfactory to Buyers, providing for the prompt payment by such
lenders to Buyers of all Accounts Receivable collected by the
lock boxes.
8.22 LEGAL OPINION. Buyer shall have received the
favorable legal opinion of Xxxx & Xxxxxxx, counsel for Sellers
and Stockholders, dated as of the Closing Date and in the form of
Exhibit B attached hereto (the "Sellers' Opinion").
8.23 GUARANTY. Guarantors shall have duly executed and
delivered a Guaranty in the form of Exhibit C attached hereto
(the "Guaranty").
8.24 CERTIFICATE. Unless Sellers shall have executed
and delivered to Buyers a certificate dated the Closing,
certifying that one or more of the conditions set forth in
Sections 8.1 through 8.12 of this Agreement has not been
fulfilled, the Closing shall constitute the joint and several
representation and warranty by Sellers and Stockholders that each
of such conditions has been fulfilled or satisfied.
Any of the foregoing conditions may be waived, in
writing, in whole or in part, by Buyers.
ARTICLE IX
SELLERS' AND STOCKHOLDERS' CONDITIONS TO CLOSING
The obligation of Sellers and Stockholders to
consummate the transactions contemplated by this Agreement shall
be subject to the following express conditions precedent:
9.1 CONTINUED TRUTH OF WARRANTIES. The
representations and warranties of Buyers herein contained shall
be true in all respects as of the Closing with the same force and
effect as though made as of the Closing, except for any
variations permitted by this Agreement.
9.2 PERFORMANCE OF COVENANTS. Buyers shall have
performed, in all respects, all covenants and obligations and
complied with all conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
9.3 PERMITS. Any and all permits, consents, orders,
approvals, licenses and clearances from any Person appropriate to
the lawful consummation of the transactions contemplated hereby
shall have been obtained in form and substance satisfactory to
Sellers and Stockholders.
9.4 LITIGATION. No suit, action, investigation,
inquiry or proceeding shall be pending or, to the best of Buyers'
knowledge, threatened which questions the validity of any action
taken or to be taken by Buyers in connection with the provisions
of this Agreement.
9.5 ESCROW AGREEMENT. Buyers and the Escrow Agent
named therein shall have duly executed and delivered the Escrow
Agreement.
9.6 LEGAL OPINION. Sellers shall have received the
favorable legal opinion of Xxxxxxx, Mag & Fizzell, P.C., counsel
for Buyers, dated as of the Closing Date and in the form of
Exhibit D attached hereto (the "Buyers' Opinion").
9.7 TERMINATION OF XXXXXXX EMPLOYMENT AGREEMENT. The
Employment Agreement, dated September 6, 1996, between Xxx
Xxxxxxx and USA Skate shall have been terminated upon such terms
as shall be satisfactory to Sellers and Stockholders.
9.8 CERTIFICATE. Unless the Buyers shall have
executed and delivered to Sellers a certificate dated the
Closing, certifying that one or more of the conditions set forth
in Sections 9.1 through 9.4 hereto has not been fulfilled, the
Closing shall constitute a representation and warranty by Buyers
that each of such conditions has been fulfilled or satisfied.
Any of the foregoing conditions may be waived, in whole
or in part, by Sellers and Stockholders.
ARTICLE X
ACTIONS TO BE TAKEN AT CLOSING; POST-CLOSING COVENANTS
10.1 ACTIONS TO BE TAKEN AT CLOSING BY SELLERS AND
STOCKHOLDERS.
(a) At Closing, each Seller and each Stockholder
shall:
(i) Deliver to Buyers a good standing
certificate or its equivalent issued by its
jurisdiction of incorporation, dated not less than ten
business days immediately preceding the Closing.
(ii) Deliver to Buyers copies of the
following documents, certified as to accuracy and
completeness as of the Closing by its Secretary or
Assistant Secretary:
(A) Its Articles or Certificate of
Incorporation or other constating document and all
amendments thereto;
(B) Its By-Laws and all amendments
thereto;
(C) The resolutions of its Board
of Directors and, in the case of USA Skate and Davtec,
stockholders authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein.
(iii) Deliver to Buyers a
certificate of its Secretary or Assistant Secretary,
dated as of the Closing, (i) setting forth the identity
of its directors and officers and the offices held by
such officers, and (ii) certifying the genuineness of
the signatures of its officers executing this Agreement
and all instruments and certificates delivered on its
behalf to Buyers pursuant hereto.
(iv) Deliver to Buyers the duly executed
Escrow Agreement.
(v) Cause to be delivered to Buyers the
Sellers' Opinion.
(b) At Closing:
(i) USA Skate shall deliver to Rawlings
a Xxxx of Sale and Assignment in the form of Exhibit E
attached hereto and such other documents and
instruments of sale, assignment, conveyance and
transfer as Rawlings or its counsel may deem
appropriate to sell, assign, convey and transfer to,
and to vest, perfect and confirm in Rawlings all right,
title and interest of USA Skate in and to the USA Skate
Assets.
(ii) Davtec shall deliver to Rawlings
Canada a Xxxx of Sale and Assignment in the form of
Exhibit E attached hereto and such other documents and
instruments of sale, assignment, conveyance and
transfer as Rawlings Canada or its counsel may deem
appropriate to sell, assign, convey and transfer to,
and to vest, perfect and confirm in Rawlings Canada all
right, title and interest of Davtec in and to the
Davtec Assets.
(iii) Davtec shall deliver to
Rawlings such documents and instruments of sale,
assignment, conveyance and transfer, as Rawlings or its
counsel may deem appropriate to sell, assign, convey
and transfer to, and to vest, perfect and confirm in
Rawlings all right, title and interest of Davtec in and
to the Davtec Intellectual Property.
(iv) USA Skate shall deliver to Buyers
the Tax Clearance Certificates.
(v) Davtec shall deliver to Buyers the
Section 116 Certificate.
(vi) Davtec shall deliver the Title
Opinion.
(vii) Davtec shall deliver to
Rawlings Canada a Deed of Transfer in respect of the
Daveluyville Property in the form of Exhibit F attached
hereto.
(viii) The Guarantors shall deliver
the Guaranty.
10.2 ACTIONS TO BE TAKEN AT CLOSING BY BUYERS.
(a) At the Closing, each Buyer shall:
(i) Deliver to Sellers and Stockholders
a good standing certificate or its equivalent issued by
its jurisdiction of incorporation, dated not less than
ten business days immediately preceding the Closing.
(ii) Deliver to Sellers and Stockholders
copies of the following documents, certified as to
accuracy and completeness as of the Closing by its
Secretary or Assistant Secretary:
(A) Its Certificate or Articles of
Incorporation or other constating document and all
amendments thereto;
(B) Its By-Laws and all amendments
thereto;
(C) The resolutions of its Board
of Directors authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein.
(iii) Deliver to Sellers a
certificate of its Secretary or Assistant Secretary,
dated as of the Closing (i) setting forth the identity
of its directors and officers, and the offices held by
such officers, and (ii) certifying the genuineness of
the signatures of its officers executing this Agreement
and all instruments and certificates delivered on its
behalf to Sellers or Stockholders pursuant hereto.
(iv) Cause to be delivered to Sellers
and Stockholders the Buyers' Opinion.
(b) At Closing,
(i) Rawlings shall pay the USA Skate
Closing Consideration and the Davtec Intellectual
Property Purchase Price in accordance with Article III.
(ii) Rawlings Canada shall pay the
Davtec Closing Consideration in accordance with Article
III.
(iii) Rawlings and Rawlings Canada
shall deliver to Sellers and Stockholders the duly
executed Escrow Agreement.
(iv) Rawlings shall deliver to USA Skate
an Assumption Agreement in the form of Exhibit G
attached hereto, pursuant to which Rawlings will assume
the USA Skate Accounts Payable and the USA Skate
Accrued Liabilities.
(v) Rawlings Canada shall deliver to
Davtec an Assumption Agreement in the form of Exhibit G
attached hereto, pursuant to which Rawlings Canada will
assume the Davtec Accounts Payable and the Davtec
Accrued Liabilities.
10.3 POST-CLOSING COOPERATION. The parties shall, on
request, at or after the Closing, cooperate with one another by
furnishing any additional information and executing and
delivering any additional documents as may be reasonably
requested by any party hereto (or their respective counsel) to
further perfect or evidence the consummation of, or otherwise
implement, any transaction contemplated by this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION.
(a) INDEMNITY BY SELLERS AND STOCKHOLDERS. In
addition to all other indemnification obligations of Sellers or
Stockholders set forth in this Agreement, Sellers and
Stockholders jointly and severally shall indemnify, defend and
hold harmless Buyers from and against:
(i) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from any misrepresentation, breach,
non-performance or inaccuracy of any representation,
indemnity, warranty, covenant or agreement by Sellers
or Stockholders made or contained in this Agreement or
in any Exhibit, Schedule, certificate or document
executed and delivered by or on behalf of Sellers or
Stockholders pursuant to or in connection with this
Agreement or the transactions contemplated herein;
(ii) all deficiencies, underpayments of
tax, penalties, additions to tax, interest payments,
payments of any taxes including, without limitation,
income, employment, payroll, F.I.C.A., F.U.T.A., sales,
use, goods and services, trust fund taxes and tax
payments to be withheld, and any and all other costs
and expenses relative to examinations, proposed or
final adjustments arising from such examinations and
any assessments relating thereto, contests, claims,
suits or proceedings respecting the determination of
loss, liability or damage resulting from deficiencies
in United States or Canadian federal, state, provincial
or local taxes, with respect to (A) the Assets, for any
period ended on or prior to the Closing, or (B) Sellers
or Stockholders;
(iii) any and all losses,
liabilities, costs, expenses or damages (including
judgments and settlement payments) incident to, arising
in connection with or resulting from (A) the
termination of any employee of Sellers, including but
not limited to any obligation or liability arising
under the Consolidated Omnibus Budget Reconciliation
Act of 1985, or (B) any qualified or nonqualified
pension, profit-sharing or other employee benefit plan
of Sellers, including but not limited to any
accumulated funding deficiency within the meaning of
Section 302 of the Employee Retirement Income Security
Act of 1974, any liability to the Pension Benefit
Guaranty Corporation, or any liability resulting from
the termination of such benefit plans;
(iv) to the extent not described in
clauses (i) through (iii) above, any liability or
obligation not included in the Accounts Payable or the
Accrued Liabilities;
(v) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from the litigation set forth on
Schedule 4.14; and
(vi) any and all costs, expenses and
other damages incurred by Buyers in claiming,
contesting or remedying any misrepresentation, breach,
non-performance, inaccuracy or other matter described
in clauses (i) through (iv) above or any other
indemnification obligation of Sellers or the
Stockholders set forth in this Agreement, including, by
way of illustration and not limitation, all legal and
accounting fees, other professional expenses and all
filing fees, and collection costs incident thereto and
all such fees, costs and expenses incurred in defending
claims which, if successfully prosecuted, would have
been indemnifiable hereunder.
(b) INDEMNITY BY BUYERS. In addition to all
other indemnification obligations of Buyers set forth in this
Agreement, Buyers jointly and severally shall indemnify, defend
and hold Sellers and Stockholders harmless from and against:
(i) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from any misrepresentation, breach,
non-performance or inaccuracy of any representation,
indemnity, warranty, or any covenant or agreement by
Buyers made or contained in this Agreement or in any
Exhibit, Schedule, certificate or document executed and
delivered by or on behalf of Buyers pursuant to or in
connection with this Agreement or the transactions
contemplated herein; and
(ii) any and all costs, expenses and
other damages incurred by Sellers or Stockholders in
claiming, contesting or remedying any
misrepresentation, breach, non-performance, inaccuracy
or other matter described in clause (i) above or any
other indemnification obligation of Buyers set forth in
this Agreement, including, by way of illustration and
not limitation, all legal and accounting fees, other
professional expenses and all filing fees, and
collection costs incident thereto and all such fees,
costs and expenses incurred in defending claims which,
if successfully prosecuted would have been
indemnifiable hereunder.
(c) DAMAGES. Any and all of the items for which
Buyers or Sellers may be entitled to indemnity pursuant to this
Agreement, including but not limited to subsections (a) or (b) of
this Section 11.1, hereinafter are called "Damages".
(D) LIMITATIONS ON OBLIGATION TO INDEMNIFY.
(i) TIME PERIOD. No party to this Agreement
shall have any claim for indemnification pursuant to
Sections 11.1(a)(i) or 11.1(b)(i) unless such party submits
its Initial Claim Notice (as hereinafter defined) for such
claim within the applicable survival period specified in
Sections 4.28 or 5.6.
(ii) AMOUNT OF INDEMNIFIED DAMAGES. The
maximum aggregate amount which Buyers shall be entitled to
receive as indemnity for Damages described in Section
11.1(a)(i) (the "Sellers' Capped Damages"), shall be the sum
of the USA Skate Purchase Price and the Davtec Purchase
Price (the "Indemnity Cap"); provided, however, that Cal Pro
shall not be obligated to indemnify Buyers for Sellers'
Capped Damages in excess of 62% of the Indemnity Cap.
Except for Damages resulting from a breach of the
representations and warranties set forth in Sections 4.1,
4.2, 4.6, 4.26, 4.27 and 4.28, Buyers shall not be entitled
to receive any indemnity for the Damages described in
Section 11.1(a) unless and to the extent the aggregate
amount of such Damages exceeds $50,000. The maximum
aggregate amount which Sellers and Stockholders shall be
entitled to receive as indemnity for Damages described in
Section 11.1(b)(i) (the "Buyers' Capped Damages"), shall be
the Indemnity Cap. Except for Damages resulting from a
breach of the representations and warranties set forth in
Sections 5.1, 5.2 and 5.4, Sellers and Stockholders shall
not be entitled to receive any indemnity for the Damages
described in Section 11.1(b)(i), unless and to the extent
the aggregate amount of such Damages exceeds $50,000.
(iii) INDEMNITY LIMITATIONS. Anything to
the contrary in this Agreement notwithstanding, Buyers shall
not be entitled to indemnification for any costs, claims and
expenses for which indemnification is available hereunder:
(A) To the extent it arises out of an
action by a Buyer in bad faith or the failure of a Buyer or
its successors or assigns to exercise its or their duty to
mitigate damages;
(B) For breach of any representation or
warranty only, if the fact, event or circumstances giving
rise to the breach or claim or otherwise relevant thereto is
reasonably disclosed in this Agreement (including the
Schedules and Exhibits hereto) or in the Financial
Statements or is otherwise within the actual knowledge of a
Buyer on the date hereof;
(C) To the extent a Buyer is entitled
to and actually receives indemnity for any loss or damage
suffered by it arising out of the breach or claim under the
terms of any insurance policy then in force; or
(D) Which would not have arisen but for
(or to the extent the same is increased by reason of) a
breach by a Buyer, or its successors or assigns, of its or
their obligations under this Agreement.
Buyers agree that, absent fraud on the part of Sellers or
Stockholders, indemnification pursuant to this Article XI shall
be their sole and exclusive monetary remedy for any claim by
Buyers against Sellers or Stockholders alleging any breach by
Sellers or Stockholders of their obligations, representations,
warranties and/or agreements set forth in, or contemplated by,
this Agreement or any document or instrument delivered pursuant
to this Agreement, and no party hereto shall be entitled to
duplicate monetary damages for the same occurrence.
11.2 NOTICE OF, AND PROCEDURES FOR, COLLECTING
INDEMNIFICATION.
(a) INITIAL CLAIM NOTICE. When a party becomes
aware of a situation which may result in Damages for which it
would be entitled to be indemnified hereunder, such party (the
"Indemnitee") shall submit a written notice (the "Initial Claim
Notice") to the other party (the "Indemnitor") to such effect
with reasonable promptness after it first becomes aware of such
matter and shall furnish the Indemnitor with such information as
it has available demonstrating its right or possible right to
receive indemnity. If the potential claim is predicated on the
filing by a third party of any action at law or in equity (a
"Third Party Claim"), the Indemnitee shall provide the Indemnitor
with an Initial Claim Notice not later than ten (10) days prior
to the date on which a responsive pleading must be filed, and
shall also furnish a copy of such claim (if made in writing) and
of all documents received from the third party in support of such
claim. Every Initial Claim Notice shall, if feasible, contain a
reasonable estimate by the Indemnitee of the losses, costs,
liabilities and expenses (including, but not limited to, costs
and expenses of litigation and attorneys' fees) which the
Indemnitee may incur. In addition, each Initial Claim Notice
shall name, when known, the Person or Persons making the
assertions which are the basis for such claim. Failure by the
Indemnitee to deliver an Initial Claim Notice or an update
thereof in a timely manner shall not relieve the Indemnitor of
any of its obligations under this Agreement except to the extent
that actual monetary prejudice to the Indemnitor can be
demonstrated.
(b) RIGHTS OF INDEMNITOR. If, prior to the
expiration of thirty (30) days from the mailing of an Initial
Claim Notice (the "Claim Answer Period"), the Indemnitor shall
request in writing that such claim not be paid, the same shall
not be paid, and the Indemnitor shall settle, compromise or
litigate in good faith such claim, and employ attorneys of its
choice to do so; provided, however, that Indemnitee shall not be
required to refrain from paying any claim which has matured by
court judgment or decree, unless appeal is taken therefrom and
proper appeal bond posted by the Indemnitor, nor shall it be
required to refrain from paying any claim where such action would
result in the foreclosure of a lien upon any of its assets or a
default in a lease or other contract except a lease or other
contract which is the subject of the dispute. If the Indemnitor
elects to settle, compromise or litigate such claim, all
reasonable expenses, including but not limited to all amounts
paid in settlement or to satisfy judgments or awards and
reasonable attorney's fees and costs, incurred by the Indemnitor
in settling, compromising or litigating such claim shall be
secured to the reasonable satisfaction of Indemnitee. Indemnitee
shall cooperate fully to make available to the Indemnitor and its
attorneys, representatives and agents, all pertinent information
under its control. Indemnitee shall have the right to elect to
settle or compromise all other contested claims with respect to
which the Indemnitor has not, within the Claim Answer Period,
acknowledged in writing (i) liability therefor (should such claim
ultimately be resolved against Indemnitee), and (ii) its election
to assume full responsibility for the settlement, compromise,
litigation and payment of such claim. Indemnitor shall not
settle or compromise any claim for damages or remedies other than
money damages without the prior written consent of Indemnitee.
(c) FINAL CLAIMS STATEMENT. At such time as
Damages for which the Indemnitor is liable hereunder are incurred
by Indemnitee by actual payment thereof or by entry of a final
judgment, Indemnitee shall forward a Final Claims Statement to
the Indemnitor setting forth the amount of such Damages in
reasonable detail on an itemized basis. Indemnitee shall
supplement the Final Claims Statement with such supporting proof
of loss (e.g. vouchers, canceled checks, accounting summaries,
judgments, settlement agreements, etc.) as the Indemnitor may
reasonably request in writing within thirty (30) days after
receipt of a Final Claims Statement. All amounts reflected on
Final Claims Statements shall be paid promptly by Indemnitor to
Indemnitee.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. Any notice or other communication
required or permitted hereunder (including, by way of
illustration and not limitation, any notice permitted or required
under Article XI hereof) to Buyers, Sellers or Stockholders shall
be effective only if it is in writing and (i) delivered in
person, (ii) sent by registered or certified mail, return
receipt requested, postage prepaid, (iii) sent by a nationally
recognized overnight delivery service, with delivery confirmed,
or (iv) sent by facsimile, with receipt confirmed, addressed as
follows:
In the case of Buyers:
Rawlings Sporting Goods Company, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
and
Xxxxxxx, Mag & Fizzell, P.C.
000 Xxxxx Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Finger, Esq.
Fax: (000) 000-0000
In the case of the Sellers and the Stockholders:
California Pro Sports, Inc.
0000-X Xxxxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
and
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: C. Xxxxxxxxx XxXxxxx, Xx., Esq.
Fax: (000) 000-0000
or such substituted address as any party shall have given notice
to the other parties hereto in writing. Any such notice or
communication shall be deemed to have been given (i) as of the
date when delivered in person, (ii) three days after when so
deposited in the mail properly addressed, (iii) the next day when
delivered during business hours to such overnight delivery
service properly addressed, or (iv) when receipt of a facsimile
is confirmed, unless (in each case) the sending party has actual
knowledge that such notice was not received by the intended
recipient.
12.2 AMENDMENT. This Agreement may be amended or
modified in whole or in part by an agreement in writing executed
in the same manner as this Agreement and making specific
reference thereto.
12.3 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which taken together shall
constitute one and the same instrument.
12.4 BINDING ON SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon, inure to the benefit of and be enforceable
by and against the parties hereto and their successors and
assigns and shall be assignable only with the prior written
consent of the other parties hereto.
12.5 SEVERABILITY. In the event that any one or more
of the provisions contained in this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the
remaining provisions of this Agreement and any other application
thereof shall not in any way be affected or impaired thereby;
provided, however, that to the extent permitted by applicable
law, any invalid, illegal, or unenforceable provision may be
considered for the purpose of determining the intent of the
parties in connection with the other provisions of this
Agreement.
12.6 WAIVERS. The parties may, by written agreement,
(i) extend the time for the performance of any of the obligations
or other acts of the parties hereof, (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement,
(iii) waive compliance with or modify any of the covenants or
conditions contained in this Agreement and (iv) waive or modify
performance of any of the obligations of any of the parties
hereto; provided, that neither such an extension or waiver nor
any failure to insist upon strict compliance with any obligation,
covenant, agreement or condition herein shall operate as a waiver
of, or an estoppel with respect to, any subsequent insistence
upon strict compliance.
12.7 PUBLICITY. Except as may be required by law, no
party hereto shall issue any press release or make any public
statement regarding the transactions contemplated by this
Agreement or otherwise disclose any of the terms and conditions
of the transactions contemplated by this Agreement without the
prior written consent of the other parties.
12.8 HEADINGS. The headings in the sections of this
Agreement are inserted for convenience only and in no way alter,
amend, modify, limit or restrict the contractual obligations of
the parties.
12.9 EXPENSES.
(a) Sellers and Stockholders shall be responsible
for and pay all of the liabilities, obligations, costs, expenses
and fees (including, without limitation, any and all legal,
accounting and other professional fees and expenses) incurred by
them in connection with the negotiation, execution or performance
of this Agreement, and shall jointly and severally indemnify and
hold Buyers harmless from and against all such liabilities,
obligations, costs, expenses and fees.
(b) Buyers shall be responsible for and pay all
of the liabilities, obligations, costs, expenses and fees
(including, without limitation, any and all legal, accounting and
other professional fees and expenses) incurred by Buyers in
connection with the negotiation, execution or performance of this
Agreement, and shall jointly and severally indemnify and hold
Sellers and Stockholders harmless from and against all such
liabilities, obligations, costs, expenses and fees.
12.10 SELLERS SOLIDARILY LIABLE. Each of the
Sellers hereby covenant and agree that, for purposes of the law
of the Province of Quebec, each of them is solidarily liable with
the other for all obligations and liabilities of any of them
under this Agreement and the agreements contemplated hereby, each
of them hereby waiving the benefits of division of discussion.
12.11 ENTIRE AGREEMENT; LAW GOVERNING. All prior
negotiations and agreements between the parties hereto are
superseded by this Agreement, and there are no representations,
warranties, understandings or agreements other than those
expressly set forth herein or in an Exhibit, Schedule,
certificate, agreement or other instrument delivered pursuant
hereto, except as may be modified in writing concurrently
herewith or subsequent hereto. This Agreement shall be governed
and construed and interpreted according to the laws of the State
of Missouri.
LES EQUIPEMENTS SPORTIFS DAVTEC INC.
By /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Authorized Officer
USA SKATE CO., INC.
By /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
USA SKATE CORPORATION
By /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
CALIFORNIA PRO SPORTS, INC.
By /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
RAWLINGS CANADA INC.
By /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Treasurer
RAWLINGS SPORTING GOODS COMPANY, INC.
By /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
