EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
between
SPORT SUPPLY GROUP, INC.
and
AMER SPORTS COMPANY
NOVEMBER 18, 2003
TABLE OF CONTENTS
ARTICLE 1. PURCHASE AND SALE OF ATEC STOCK..................... 1
1.1. Purchase and Sale of ATEC Stock ...................... 1
1.2. Closing .............................................. 1
1.3. Purchase Price ....................................... 1
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER............ 1
2.1. Authority of Seller .................................. 1
2.2. Capitalization; Seller's Ownership of ATEC ........... 2
2.3. Organization ......................................... 2
2.4. Personal Property .................................... 3
2.5. Real Property ........................................ 3
2.6. Leases ............................................... 3
2.7. Intellectual Property ................................ 3
2.8. Financial Statements ................................. 4
2.9. No Material Adverse Change ........................... 4
2.10. Tax Matters .......................................... 4
2.11. Litigation ........................................... 6
2.12. ERISA and Related Matters ............................ 6
2.13. Material Contracts ................................... 7
2.14. Brokers, Etc. ........................................ 7
2.15. Insurance ............................................ 7
2.16. Employees ............................................ 8
2.17. Environmental ........................................ 8
2.18. Permits .............................................. 9
2.19. Compliance with Applicable Law ....................... 9
2.20. Undisclosed Liabilities .............................. 9
2.21. Product Liability .................................... 9
2.22. Related Party Transactions ........................... 9
2.23. Change in Control Payments ........................... 9
2.24. Sufficiency of Assets ................................ 10
2.25. Customers and Suppliers .............................. 10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER......... 10
3.1. Authority of Purchaser ............................... 10
3.2. Brokers, Etc. ........................................ 11
ARTICLE 4. COVENANTS OF SELLER................................. 11
4.1. Commercially Reasonable Efforts ...................... 11
4.2. Access ............................................... 11
4.3. Ordinary Course of Business .......................... 11
4.4. No Solicitation ...................................... 12
4.5. Confidentiality ...................................... 12
4.6. Certain Insurance Matters ............................ 12
4.7. Claim Resolution Support ............................. 13
4.8. Post-Closing Payments. ............................... 13
ARTICLE 5. COVENANTS OF PURCHASER.............................. 13
5.1. Commercially Reasonable Efforts ...................... 13
5.2. Employees and Benefit Plans .......................... 14
5.3. Access ............................................... 15
5.4. Disclaimer of Projections ............................ 15
5.5. Claim Resolution Support ............................. 15
5.6. Post-Closing Payments. ............................... 15
5.7. Confidentiality. ..................................... 16
ARTICLE 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.... 16
6.1. Warranties True ...................................... 16
6.2. Compliance with Agreements and Covenants ............. 16
6.3. Consents and Approvals ............................... 16
6.4. Injunctions .......................................... 16
6.5. No Material Adverse Effect ........................... 16
6.6. Supply Agreement ..................................... 17
6.7. Releases and Resignations ............................ 17
6.8. Interests in Seller .................................. 17
6.9. Intercompany Indebtedness ............................ 17
6.10. Release of Liens ..................................... 17
6.11. Deliveries by Seller ................................. 17
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER....... 17
7.1. Warranties True ...................................... 17
7.2. Compliance with Agreements and Covenants ............. 17
7.3. Injunctions .......................................... 17
7.4. Deliveries by Purchaser .............................. 17
ARTICLE 8. CLOSING............................................. 18
8.1. Closing .............................................. 18
8.2. Seller's Deliveries .................................. 18
8.3. Purchaser's Deliveries ............................... 18
8.4. Termination .......................................... 19
ARTICLE 9. SURVIVAL AND INDEMNIFICATION........................ 19
9.1. Survival ............................................. 19
9.2. Indemnification by Seller ............................ 19
9.3. Indemnification by Purchaser ......................... 20
9.4. Limitations .......................................... 20
9.5. Procedures ........................................... 20
9.6. Insurance Proceeds ................................... 21
9.7. Exclusive Remedy ..................................... 21
ARTICLE 10. DISPUTE RESOLUTION................................. 21
10.1. Dispute Resolution ................................... 21
10.2. Negotiation Between Executives ....................... 21
10.3. Mediation ............................................ 22
10.4. Litigation ........................................... 22
10.5. Provisional Remedies ................................. 22
10.6. Tolling Statute of Limitations ....................... 22
10.7. Performance to Continue .............................. 22
ARTICLE 11. TAX MATTERS........................................ 22
11.1. Filing Tax Returns and Payment of Taxes .............. 22
11.2. Cooperation on Tax Matters ........................... 23
11.3. Section 338(h)(10) Election .......................... 23
11.4. Allocation of Total Share Consideration .............. 24
ARTICLE 12. NONSOLICITATION.................................... 24
12.1. Restrictions ......................................... 24
12.2. Blue-Pencil Provision ................................ 24
12.3. Equitable Relief ..................................... 24
ARTICLE 13. MISCELLANEOUS...................................... 25
13.1. Expenses ............................................. 25
13.2. Amendment ............................................ 25
13.3. Notices .............................................. 25
13.4. Waivers .............................................. 26
13.5. Counterparts ......................................... 26
13.6. Headings ............................................. 26
13.7. Applicable Law ....................................... 26
13.8. Assignment ........................................... 26
13.9. No Third Party Beneficiaries ......................... 26
13.10. Incorporation ........................................ 26
13.11. Complete Agreement ................................... 26
13.12. Public Announcements ................................. 27
13.13. Defined Terms ........................................ 27
13.14. Currency ............................................. 27
SCHEDULES
---------
2.1 Authority of Seller
2.2 Capitalization
2.3 Organization
2.4 Liens on Personal Property
2.6(a) Real Property Leases
2.6(b) Personal Property Leases
2.7 Intellectual Property
2.8 Financial Statements
2.9 No Material Adverse Change
2.10 Tax Matters
2.11 Litigation
2.12 ERISA Matters
2.13 Material Contracts
2.15 Insurance
2.16 Employee Matters
2.17 Environmental Matters
2.20 Undisclosed Liabilities
2.21 Product Liability
2.22 Related Party Transactions
2.23 Change in Control Payments
2.24 Sufficiency of Assets
2.25(a) Customers
2.25(b) Suppliers
4.3(e) Ordinary Course of Business
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is entered into on the 14th day of
November, 2003, between Sport Supply Group, Inc., a corporation organized
under the laws of the State of Delaware ("Seller") and Amer Sports Company,
a corporation organized under the laws of the State of Delaware
("Purchaser").
WHEREAS, Athletic Training Equipment Company, Inc., a Delaware
corporation ("ATEC"), is engaged in the business of designing, developing,
manufacturing and selling pitching machines and other baseball, softball and
other sport training equipment and accessories worldwide. Such business, as
conducted by ATEC on the date hereof, is hereinafter referred to as the
"Business."
WHEREAS, Seller owns all of the issued and outstanding capital stock of
ATEC and desires to sell to Purchaser, and Purchaser desires to purchase,
upon the terms and conditions hereinafter set forth, all of the issued and
outstanding capital stock of ATEC (the "ATEC Stock").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and promises herein contained, it is hereby
agreed as follows:
ARTICLE 1.
PURCHASE AND SALE OF ATEC STOCK
1.1. Purchase and Sale of ATEC Stock. At the Closing, and on the terms
and subject to the conditions set forth in this Agreement, Seller will sell,
transfer, convey, assign and deliver to Purchaser and Purchaser will
purchase, acquire and accept from Seller, all of the ATEC Stock, free and
clear of all Liens other than Permitted Encumbrances. At the Closing,
subject to the payments provided for in Sections 4.8 and 5.6, ATEC will not
have any ATEC Debt, deferred Income Taxes or intercompany liabilities. At
the Closing, Seller will deliver to Purchaser certificates evidencing the
ATEC Stock duly endorsed for transfer in blank or accompanied by duly
executed assignments separate from the certificates evidencing the ATEC
Stock.
1.2. Closing. The closing of the purchase and sale of the ATEC Stock
(the "Closing") shall take place in accordance with Section 8.1 hereof.
1.3. Purchase Price. The purchase price for the ATEC Stock shall be
$10,500,000 (the "Purchase Price"). The Purchase Price shall be paid to
Seller by wire transfer of same-day funds at the Closing to such account as
Seller may direct in writing in advance of the Closing.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.1. Authority of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution, delivery and performance of this Agreement by Seller has been
duly authorized by all necessary corporate action. This Agreement has been
duly and validly executed and delivered by Seller and constitutes the legal,
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as may be limited by (a) applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws from time
to time in effect that affect creditors' rights generally, or (b) legal and
equitable limitations on the availability of specific remedies. The
execution and delivery of this Agreement by Seller does not, and the
consummation of the transactions contemplated hereby and performance by
Seller of its obligations hereunder, assuming the receipt of the Required
Consents (as hereinafter defined), will not: (i) violate or conflict with
any term, condition or provision of the charter, by-laws or other
organizational documents of Seller or ATEC; (ii) conflict with or violate
any Laws applicable to Seller; (iii) result in any material breach of or
constitute a material default (or an event that with notice or lapse of time
or both would become a material default) under, or materially impair any of
ATEC's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration,
cancellation or first refusal of or under, any material agreement, lease,
instrument, mortgage, license or franchise to which Seller or ATEC is a
party or by which any of their respective properties are bound; or (iv)
result in the creation of any Lien upon any of ATEC's properties or give to
others any interest or right in any of ATEC's properties, including, but not
limited to, a right to purchase any of such properties. Except as set forth
on Schedule 2.1, the failure of any Person not a party hereto to authorize,
approve or consent to this Agreement or the transactions contemplated hereby
will not give any Person the right to enjoin, rescind or otherwise prevent
or impede the consummation of the transactions contemplated hereby in
accordance with the terms of this Agreement or to reach in any fashion the
ATEC Stock in the hands of the Purchaser following the Closing or to obtain
damages from, or any other judicial relief against, Purchaser as a result of
the transactions carried out in accordance with the provisions of this
Agreement. Except as set forth on Schedule 2.1, the execution and delivery
of this Agreement by the Seller does not, and the performance of this
Agreement by the Seller and consummation of the transactions contemplated by
this Agreement will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority or
any other Person (the "Required Consents").
2.2. Capitalization; Seller's Ownership of ATEC.
(a) The authorized, issued and outstanding capital stock of ATEC
is as set forth on Schedule 2.2 and the issued and outstanding capital
stock ATEC is duly authorized, fully paid and non-assessable and is
held, of record and beneficially by Seller, free and clear of all Liens
except Permitted Encumbrances and Liens set forth on Schedule 2.2.
(b) There are no outstanding preemptive rights, options, rights,
warrants, contracts or commitments for the issuance or sale by Seller
or ATEC of, or any securities of ATEC convertible into or exchangeable
for, any shares of capital stock or other equity securities of ATEC
(whether treasury or issued and outstanding), and there is no agreement
or arrangement not yet fully performed which would result in the
creation of any of the foregoing.
(c) All outstanding securities of ATEC were issued and sold by
ATEC in compliance with the registration requirements of the Securities
Act and all applicable state securities laws, or pursuant to an
exemption therefrom.
(d) ATEC has no direct or indirect subsidiaries or any equity
interest in any other Person.
2.3. Organization. ATEC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
all requisite corporate power to own, lease and operate its properties and
to carry on its business as now being conducted. ATEC is duly qualified to
do business and is in good standing in each jurisdiction (each of which is
listed on Schedule 2.3) where the conduct of its business or ownership of
its properties requires such qualification, except where the failure to
qualify would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect. Set forth on Schedule 2.3 is a true and
complete list of the incumbent directors and officers of ATEC. Seller or
ATEC has heretofore furnished or made available to Purchaser a complete and
correct copy of ATEC's certificate of incorporation and by-laws or other
constitutional documents as amended to date. Such documents and instruments
are in full force and effect. ATEC is not in violation of any of the
provisions of such documents and instruments.
2.4. Personal Property. ATEC has good and valid title to its personal
properties or assets reflected in the Financial Statements or acquired after
the date thereof (except for properties or assets sold or otherwise disposed
of since the date thereof in the ordinary course of business and except for
defects in title that would not, individually or in the aggregate, have a
Material Adverse Effect) free and clear of all Liens except: (a) Liens
disclosed on Schedule 2.4 and (b) Permitted Encumbrances, all of which are
disclosed on Schedule 2.4.
2.5. Real Property. ATEC owns no real property.
2.6. Leases. Set forth on Schedule 2.6(a) is a list of all real
property leases to which ATEC is a party and of which any real property
leased by ATEC is the subject (the "Leased Real Property"), and set forth in
Schedule 2.6(b) is a list of all leases of personal property which call for
aggregate payments to or from ATEC equal to, or in excess of, $10,000 per
year (collectively, the "Leases"). Seller has delivered to Purchaser
correct and complete copies of all Leases. With respect to each Lease:
(i) the Lease constitutes a valid and binding obligation of
ATEC, and, to Seller's Knowledge, of the other parties thereto,
enforceable in accordance with its terms, and is in full force and
effect;
(ii) ATEC has not been declared to be in material breach or
default under the Lease and, to Seller's Knowledge, no other party
to the Lease is in material breach or default thereunder;
(iii) ATEC has performed all material obligations with
respect to the Lease required through the date hereof to be
performed by it and Seller has no Knowledge that ATEC is
reasonably likely to fail to perform such obligations after the
date hereof;
(iv) neither Seller nor ATEC has received written notice, nor
has it given notice, of an intention to cancel or terminate the
Lease; and
(v) all Leased Real Property is in good and serviceable
state of repair, the current use of such property is in accordance
in all material respects with relevant Laws and rights of access
to such property are sufficient for ATEC's current use.
2.7. Intellectual Property. Set forth on Schedule 2.7 is a list of all
foreign and domestic (a) registered trademarks and trade names (all of which
are valid and subsisting) and applications therefor owned or licensed by
ATEC and (b) patents (all of which are valid and subsisting) and patent
applications owned or licensed by ATEC. Except as set forth on Schedule
2.7, ATEC owns all right, title and interest in and to, or has a valid right
to use, all Intellectual Property, and no written notice has been received
that, and Seller has no Knowledge that, any Intellectual Property or
products manufactured, assembled or sold by ATEC interferes with, infringes
on, misappropriates or otherwise conflicts with the intellectual property
rights of any other Person. Except as set forth on Schedule 2.7, (a) no
claim adverse to the interests of ATEC in the Intellectual Property is
pending or, to Seller's Knowledge, has been threatened; (b) neither ATEC nor
Seller has received written notice, nor does Seller have any Knowledge, of
the invalidity of, or infringement or other violation of its right in any of
the Intellectual Property; and (c) no litigation is pending or, to Seller's
Knowledge, is threatened wherein the Intellectual Property or any product or
method of ATEC is alleged to infringe or violate the right of any third
party. The transactions contemplated by this Agreement will have no adverse
effect on ATEC's right, title and interest in and to any of the Intellectual
Property. Schedule 2.7 sets forth all licenses to or from other Persons
with respect to the Intellectual Property other than off-the-shelf software
products. Neither Seller nor ATEC has ever received any infringement or
non-infringement, or validity or invalidity opinions relating to the
Intellectual Property, or any product or method of ATEC.
2.8. Financial Statements. Seller or ATEC has heretofore delivered to
Purchaser the Financial Statements, which are attached hereto as
Schedule 2.8. The Financial Statements (a) are in accordance with the books
and records of ATEC, (b) have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") consistently
applied throughout the periods covered thereby, subject to the absence of
footnote disclosure and other presentation items and to changes resulting
from normal period-end adjustments for recurring accruals, none of which is
material, and (c) fairly present the financial position of ATEC as of the
respective dates thereof and the results of operations for the periods
covered thereby. At the date of the Interim Balance Sheet, there were no
material liabilities of ATEC which, in accordance with GAAP, should have
been shown or reflected in the Interim Balance Sheet or any notes thereto,
which are not shown or reflected in the Interim Balance Sheet or any notes
thereto.
2.9. No Material Adverse Change. Except as set forth on Schedule 2.9,
since the date of the Interim Balance Sheet, there has not occurred any
change, circumstance or event that has had or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. In
addition, except as set forth on Schedule 2.9, since the date of the Interim
Balance Sheet, neither ATEC, nor Seller on ATEC's behalf, has:
(i) increased the salaries, wages, or other compensation, or pensions,
fringe benefits or other perquisites payable to any director, officer or
employee of ATEC other than in the ordinary course of business consistent
with past practices; (ii) borrowed any amount or incurred or become subject
to any liabilities, except liabilities incurred in the ordinary course of
business consistent with past practice under Contracts and Leases;
(iii) sold, assigned or transferred any of its tangible assets, except in
the ordinary course of business consistent with past practice, or canceled
any debts or claims; (iv) sold, assigned or transferred any Intellectual
Property; (v) made capital expenditures or commitments therefor (or a series
of related capital expenditures or commitments therefor) that individually
exceed $10,000 or in the aggregate exceed $25,000; (vi) made any loans or
advances (other than advances for business expenses made to employees in the
ordinary course of business) to, guarantees for the benefit of, or
investments in, any Person; (vii) entered into any other transaction
involving more than $25,000 other than in the ordinary course of business
consistent with past practice; (viii) paid or committed to pay any
management or similar charge; or (ix) taken any action which, if taken
subsequent to the execution of this Agreement and on or prior to the Closing
Date, would constitute a breach of the terms of this Agreement by Seller.
2.10. Tax Matters. Except as set forth in Schedule 2.10:
(a) all Tax Returns required to have been filed by or on behalf
of ATEC have been filed and are true, correct and accurate in all
material respects and all Taxes due have been paid, except for the
portion of such Taxes being contested in good faith, adequate provision
for the payment of which has been made in the Financial Statements.
ATEC is a member of the affiliated group of corporations (as defined in
Section 1504 of the Code) of which the common parent corporation is
Seller and which files and will continue to file a consolidated federal
Income Tax Return for all periods ending on or before the Closing Date.
All Taxes for which ATEC is or may be liable and that are attributable
to the Seller Tax Period have been or will be timely paid by Seller or
ATEC;
(b) there have been no waivers or extensions of any statute of
limitations filed with any Governmental Authority responsible for
assessing or collecting Taxes in respect to any Tax Return of, or which
includes, ATEC;
(c) all material Taxes which ATEC has been required to collect or
withhold have been duly collected or withheld and, to the extent
required when due, have been or will be duly paid to the proper
Governmental Authority;
(d) there is no material action, suit, proceeding, investigation,
audit, claim, dispute or assessment pending or proposed in writing or,
to Seller's Knowledge, otherwise threatened, with respect to any
liability for Tax or with respect to any Tax Return for which ATEC
could be liable;
(e) ATEC is not a party to any Tax sharing agreement or similar
arrangement with any other party or has any current contractual
obligation to indemnify any other person or entity with respect to Tax.
ATEC has no liability for the Taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign Law), as a transferee or successor, by contract, or
otherwise;
(f) no withholding of Taxes is required on any amounts paid to
Seller under Section 1445 of the Code or any other provision of
federal, state, local or foreign Law;
(g) ATEC is not a party to any agreement, contract or arrangement
that would result, individually or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of
the Code by reason of the transactions contemplated hereby;
(h) Seller and ATEC are eligible to make an election under
Section 338(h)(10) of the Code with respect to the sale of the ATEC
Stock and ATEC and any gain recognized by reason of the election under
Section 338(h)(10) of the Code will be included in the consolidated
federal income tax return filed by the Affiliated Group for the period
which includes or ends on the Closing Date;
(i) no consent has been filed under Section 341(f) of the Code
with respect to Seller or ATEC;
(j) except as provided herein, no elections under Section 338(g)
of the Code, no protective carryover basis elections and no offset
prohibition elections are applicable to ATEC;
(k) ATEC is not required to include in income any adjustment
pursuant to Section 481(a) of the Code (or other similar provisions of
applicable law) by reason of a change in accounting method, nor does
Seller have any Knowledge that the Internal Revenue Service (or other
taxing authority) has proposed, or is considering, any such change in
accounting method;
(l) none of the assets of ATEC secures any indebtedness, the
interest on which is tax exempt under Section 103 of the Code.
(m) no indebtedness of ATEC consists of "corporate acquisition
indebtedness" within the meaning of Section 279 of the Code;
(n) as of the Closing Date, there will be no excess loss
accounts, deferred intercompany gains or losses, or other like items
pertaining to ATEC;
(o) except as set forth on Schedule 2.10, ATEC has not entered
into any transfer pricing agreements with the Internal Revenue Service
or other like arrangements with respect to any foreign jurisdiction;
(p) except as set forth on Schedule 2.10, ATEC has not either
distributed stock of a controlled corporation pursuant to Section 355
of the Code or had its stock distributed by another corporation
pursuant to Section 355 of the Code; and
(q) ATEC is not subject to any joint venture, partnership or
other agreement, contract or arrangement which would cause it to be
treated as a partner of a partnership for Tax purposes.
2.11. Litigation. Except as set forth on Schedule 2.11, there has
not been in the last five (5) years, nor is there pending, nor, to Seller's
Knowledge is there threatened, any demand, claim, suit, action, arbitration
or legal, administrative or other proceeding (i) against ATEC or any of its
officers, managers, employees (in each case, in such capacities), assets,
properties or businesses or against Seller or another Person and relating to
the businesses or properties of ATEC, or (ii) that seeks to delay, limit or
enjoin the transactions contemplated by this Agreement. Except as set forth
on Schedule 2.11, there is no litigation or proceeding in which ATEC is a
plaintiff or claimant, except for any of the foregoing with respect to which
ATEC is only seeking to recover monetary damages in an amount not in excess
of $10,000 and would not reasonably be expected to recover damages in an
amount in excess of $10,000. Adequate provision for all items disclosed on
Schedule 2.11 has been made in the Financial Statements and Seller or ATEC
has made available to Purchaser all information in its possession related
thereto.
2.12. ERISA and Related Matters.
(a) Set forth on Schedule 2.12 is a list of all Benefit Plans
that have been maintained, contributed to or participated in by ATEC
(the "Company Benefit Plans") during the three years ending on the date
hereof. No Company Benefit Plans are maintained solely by ATEC as of
the Closing Date.
(b) Seller has provided to Purchaser a true and correct copy of
each of the Company Benefit Plans and amendments thereto and the most
recent summary plan description and favorable determination, opinion or
notification letter, if applicable.
(c) All the Company Benefit Plans comply in form and operation in
all material respects with all applicable requirements of Law. All
contributions and payments with respect to Benefit Plans that are
required to be made by Seller or ATEC for periods ending on or before
the Closing Date (including periods from the first day of the then-
current plan or policy year to and including the Closing Date) have
been made or will be accrued before the Closing Date by Seller in
accordance with the appropriate actuarial valuation report or insurance
contracts or arrangements.
(d) All Company Benefit Plans that are employee pension benefit
plans as defined in Section 3(2) of ERISA and that are intended to
comply with Section 401(a) of the Code are the subject of a favorable
determination letter from the IRS or are entitled to rely on a
favorable opinion or notification letter from the IRS, and nothing has
occurred since the date of the last such determination, opinion or
notification letter that resulted or is likely to result in the
revocation of such determination.
(e) There have been no "prohibited transactions" (as described in
Section 406 of ERISA or Section 4975 of the Code) with respect to the
Company Plans.
(f) There are no actions, suits or claims pending or, to Seller's
Knowledge, threatened other than routine claims for benefits and
qualified domestic relations, medical or child support orders involving
ATEC's participation in any Company Benefit Plans.
(g) None of the Company Benefit Plans is a multi-employer plan
(as defined in section 3(37) of ERISA) and none of the Company Benefit
Plans is subject to Title IV of ERISA. Neither Seller, ATEC nor any
Affiliate has withdrawn from any multiemployer plan or taken any action
to do so, and the transactions contemplated by this Agreement will not
result in any withdrawal liability.
(h) ATEC has no liabilities (absolute, accrued, contingent or
otherwise) related to any Company Benefit Plans other than routine
claims for benefits and qualified domestic relations, medical or child
support orders, including any liabilities for post-retirement benefits,
except liabilities (a) reflected on the face of the Interim Balance
Sheet (rather than in the notes thereto) that have not been paid or
discharged since the date thereof or (b) incurred since the date of the
Interim Balance Sheet in the ordinary course of business consistent
with past practice, that are of the same general amount and nature as
those set forth on the face of the Interim Balance Sheet (other than
any liabilities resulting from, arising out of, relating to, in the
nature of, or caused by any breach of contract, breach of warranty,
tort, infringement or violation of Law).
2.13. Material Contracts. Set forth on Schedule 2.13 is a list of
Material Contracts to which ATEC is a party or by which any of its
properties or assets is bound.
(a) Each of the Material Contracts constitutes a valid and
binding obligation of ATEC, and, to Seller's Knowledge, of the other
parties thereto, enforceable in accordance with its terms, and is in
full force and effect.
(b) ATEC has not been declared to be in material breach or
default under any of the Material Contracts and, to Seller's Knowledge,
no other party to any of the Material Contracts is in material breach
or default thereunder.
(c) ATEC has performed all material obligations with respect to
each Material Contract required through the date hereof to be performed
by it and Seller has no Knowledge that ATEC is reasonably likely to
fail to perform such obligations after the date hereof.
(d) Neither Seller nor ATEC has received written notice, nor has
it given notice, of an intention to cancel or terminate a Material
Contract.
(e) Except as set forth on Schedule 2.13, true and complete
copies of all Material Contracts, including any amendments thereto,
have been provided or made available to Purchaser for its review.
2.14. Brokers, Etc. No broker or investment banker acting on
behalf of Seller or ATEC or under the authority of any of them is or will be
entitled to any broker's or finder's fee or any other commission or similar
fee directly or indirectly from ATEC in connection with any of the
transactions contemplated herein.
2.15. Insurance. Set forth on Schedule 2.15 is a list and summary
of the insurance policies currently in effect and at any time in effect
during the three (3)_year period (and, in the case of liability insurance,
during the six (6)-year period) preceding the date hereof covering ATEC and
its assets and operations (showing as to each policy or binder the carrier,
policy number, coverage limits, expiration dates and a general description
of the type of coverage provided). Such insurance provides, and during such
period provided, coverage to the extent and in the manner as may be required
by law and by any and all Contracts to which ATEC is a party. Neither
Seller nor ATEC is in material default under any of such policies or
binders. Schedule 2.15 also sets forth a list of Persons that issue
certificates of liability insurance to ATEC, all of which shall continue to
be for the benefit of ATEC after the consummation of the transactions
contemplated hereby.
2.16. Employees. Except as set forth on Schedule 2.16:
(a) ATEC is not a party to a collective bargaining agreement or
currently negotiating any such agreement nor is it otherwise bound by
the terms of any collective agreement;
(b) ATEC has not been involved in any strike, lock-out or other
industrial or trade dispute in the twelve months prior to the date of
this Agreement; and
(c) no complaint against ATEC is currently pending before the
National Labor Relations Board or the Equal Employment Opportunity
Commission. Seller or ATEC has provided or made available to Purchaser
true and correct copies of all employment contracts, severance
agreements, option agreements and any other written material relating
to terms and conditions of employment and/or the material personnel
policies of ATEC and ATEC has not agreed to and is not otherwise
obliged to make any change to these. Schedule 2.16 contains the name
and current annual rates of compensation paid by, or on behalf of, ATEC
to each employee. Except as set forth on Schedule 2.16, ATEC is not a
party to or bound by any oral or written employment agreement,
consulting, advisory or service agreement, deferred compensation
agreement, severance agreement, option agreement, confidentiality
agreement or covenant not to compete relating to an employee or agent.
To Seller's Knowledge, no key employee or group of employees (or
independent contractors) have any plans to terminate employment with
ATEC.
2.17. Environmental.
(a) Except as set forth on Schedule 2.17, as of the date of this
Agreement there is no material uncured violation and, to Seller's
Knowledge, no circumstances exist that are reasonably likely to result
in a material violation, of any Environmental Law at any site or
facility owned or operated by ATEC since December 1, 1997. Except as
set forth on Schedule 2.17, since December 1, 1997, there have been no
written notices or complaints received by Seller with respect to a
material violation of an Environmental Law at any current or former
site or facility that was at any time owned or operated by ATEC. ATEC
(i) has not released, deposited, leaked, spilled or disposed of (other
than in compliance in all material respects with applicable Laws) any
Contaminants at, in, on, under or from any real property leased, owned,
operated or otherwise used by ATEC, and Seller does not have Knowledge
of any such releases, deposits, leaks, spills or disposals by any third
party, including prior owners or occupants, of such real property;
(ii) has not disposed (other than in compliance in all material
respects with applicable Laws) of Contaminants or other waste at any
third party hazardous or solid waste sites; or (iii) has not failed to
take all actions necessary under applicable Environmental Laws to
register any products or materials required to be registered by ATEC
(or any of its agents) thereunder. To Seller's Knowledge, there
is not located at any of the real property used by ATEC any
underground storage tank, asbestos-containing material or equipment
containing polychlorinated biphenyls. For purposes of this Agreement,
"Contaminant" means any pollutant, hazardous or toxic substance or
petroleum, petroleum-based substance, or any constituent of any such
substance or waste and any material the exposure to, presence, use,
generation, treatment, storage, release, disposal, handling, clean-up
or remediation of which is regulated by any Environmental Law.
(b) ATEC has timely filed all reports and notifications, and has
generated and maintained all records and data concerning its business
as are required under applicable Environmental Laws, except where the
failure to so file, generate or maintain would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(c) Except as set forth on Schedule 2.17, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation or proceeding
pending or, to Seller's Knowledge, threatened against ATEC in
connection with the conduct of its business relating to or arising
under any Environmental Laws.
2.18. Permits. ATEC is in possession of all material permits,
licenses, registrations and government authorizations ("Permits") required
under Laws for the current operation of its business and its compliance with
the requirements and limitations included in such Permits.
2.19. Compliance with Applicable Law. ATEC has materially complied
with all material Laws applicable to ATEC and has not received any written
threat of enforcement of any Law.
2.20. Undisclosed Liabilities. Except as is disclosed on Schedule
2.20, ATEC does not have any material liabilities (absolute, accrued,
contingent or otherwise), except liabilities (a) reflected on the face of
the Interim Balance Sheet (rather than in the notes thereto) that have not
been paid or discharged since the date thereof, (b) incurred since the date
of the Interim Balance Sheet, in the ordinary course of business consistent
with past practice, that are of the same general amount and nature as those
set forth on the face of the Interim Balance Sheet (other than any
liabilities resulting from, arising out of, relating to, in the nature of,
or caused by any breach of contract, breach of warranty, tort, infringement
or violation of Law) or (c) incurred in the ordinary course of business
under Leases and Material Contracts, or under Contracts that are not
Material Contracts, in each case entered into in the ordinary course of
business, that are not required by GAAP to be reflected on the Interim
Balance Sheet, none of which is material.
2.21. Product Liability. Except as set forth on Schedule 2.21,
none of ATEC's products sold since December 1, 1997 (i) is or has been the
subject of any product liability claim, (ii) contains any defects or
otherwise fails to meet specifications or requirements related thereto, in
either case that could reasonably be expected to result in injury or other
product liability claims, (iii) is or has been the subject of a recall or
notice of recall, or (iv) other than general warranty returns and historic
guaranteed sales, in each case, in the ordinary course of business, is or
has been the subject of a "take-back" or similar agreement or arrangement
allowing the purchaser of the product to deliver the product back to ATEC or
its dealers. ATEC or Seller has provided or made available to Purchaser
copies of all written warranties with respect to its products. ATEC
currently has no pending or active guaranteed sales obligations.
2.22. Related Party Transactions. Schedule 2.22 sets forth all
arrangements in force currently or at any time in the last three years
between ATEC and any of its Affiliates, including Seller which, has in such
time resulted, or could reasonably be expected in the future to result, in
transfers of value to or from ATEC equal to, or in excess of, $10,000 on an
annual basis.
2.23. Change in Control Payments. Except as set forth on Schedule
2.23 and other than payments made to employees of ATEC of an aggregate
amount not in excess of $150,000, neither ATEC nor Seller has any plans,
programs, agreements or arrangements to which it is a party, or to which it
is subject, pursuant to which payments(or acceleration of benefits) may be
required upon, or may become payable directly or indirectly as a result of,
the transactions contemplated hereby or a change of control of ATEC.
2.24. Sufficiency of Assets. Except as set forth on Schedule 2.24,
no Person other than ATEC owns any material assets of any kind whatsoever,
including tangible and intangible property and Intellectual Property, used
in the Business, except for leased items disclosed in Schedule 2.6(a) or
Schedule 2.6(b).
2.25. Customers and Suppliers.
(a) Schedule 2.25(a) sets forth (a) the names of the ten
(10) largest customers of ATEC during the twelve-month periods ended
March 2001, 2002 and 2003 and (b) the amount for which each such
customer was invoiced during such period. Neither Seller nor ATEC has
received any written notice, and Seller has no Knowledge, that any such
customer (i) has ceased, or will cease, to use the products, goods or
services of ATEC, (ii) has reduced materially or will reduce materially
the use of products, goods or services of ATEC or (iii) has sought, or
is seeking, to reduce materially the price it will pay for products,
goods or services of ATEC, including in each case after the
consummation of the transactions contemplated hereby.
(b) Schedule 2.25(b) sets forth (a) the names of the ten
(10) largest suppliers from which ATEC ordered raw materials, supplies,
merchandise and other goods and services during the twelve-month period
ended on October 24, 2003 and (b) the amount for which each supplier
invoiced ATEC during such period. Neither Seller nor ATEC has received
any written notice, and Seller has no Knowledge, that there has been
any material adverse change in the price of such raw materials,
supplies, merchandise or other goods or services, or that any such
supplier will not sell raw materials, supplies, merchandise and other
goods to Purchaser at any time after the Closing on terms and
conditions similar to those used in its current sales to ATEC.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
3.1. Authority of Purchaser. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, with all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by all necessary corporate action. This Agreement has been
duly and validly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, except as may be limited by: (a)
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws from time to time in effect that affect creditors' rights generally; or
(b) legal and equitable limitations on the availability of specific
remedies. The execution and delivery of this Agreement by Purchaser does
not, and the consummation of the transactions contemplated hereby and
performance by Purchaser of its obligations hereunder will not violate or
conflict with any provision of: (i) the charter, by-laws or other
organizational documents of Purchaser; (ii) any material agreement, lease,
instrument, mortgage, license or franchise to which Purchaser is a party or
by which any of its properties is bound; or (iii) any Law applicable to
Purchaser, which violation or conflict would reasonably be expected to have
a material adverse effect on the financial condition of Purchaser. The
failure of any Person not a party hereto to authorize or approve Purchaser's
execution or performance of this Agreement or the transactions contemplated
hereby will not give any Person the right to enjoin, rescind or otherwise
prevent or impede the consummation of the transactions contemplated hereby
by Purchaser in accordance with the terms of this Agreement or to obtain
damages from, or any other judicial relief against, Seller or Purchaser as a
result of any transactions carried out in accordance with the provisions of
this Agreement.
3.2. Brokers, Etc. No broker or investment banker acting on behalf of
Purchaser is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with
any of the transactions contemplated hereby.
ARTICLE 4.
COVENANTS OF SELLER
Seller hereby covenants to and agrees with Purchaser as follows:
4.1. Commercially Reasonable Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, Seller shall use its
commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement and the transfer of the Business
to Purchaser, including (a) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Authorities
and the making of all necessary registrations and filings and the taking of
all reasonable steps as may be necessary to obtain any necessary approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Authorities; provided, however, that Seller shall not be required to make
any material monetary expenditure, commence or be a plaintiff in any
litigation, or offer or grant any material accommodation (financial or
otherwise) to any third Person, including, without limitation, the offer for
sale of any business or assets to any Person, (b) the obtaining of all
Required Consents, (c) the obtaining of the release of all Liens on the
assets of ATEC, other than Permitted Encumbrances, (d) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transaction
contemplated by this Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Authority vacated or reversed and (e) the execution and delivery of any
additional instruments necessary to consummate the transaction contemplated
by this Agreement and to fully carry out the purposes of this Agreement.
4.2. Access. From the date hereof until the Closing or the earlier
termination of this Agreement, Seller shall cause ATEC to afford Purchaser
and its counsel, accountants and other authorized representatives, with
reasonable prior notice, reasonable access during normal business hours to
the premises, properties, personnel, books and records of ATEC.
4.3. Ordinary Course of Business. From the date hereof until the
Closing or the earlier termination of this Agreement, Seller shall cause
ATEC to operate only in the ordinary course of business. In addition, from
the date hereof until the Closing or the earlier termination of this
Agreement, except as set forth on Schedule 4.3, Seller shall not, and shall
cause ATEC to not, do any of the following without the prior written consent
of Purchaser: (a) make any change in the authorized equity interests or
organizational documents of ATEC; (b) issue any equity options; (c) issue or
sell any equity interests or securities convertible into or exchangeable for
equity interests of ATEC; (d) purchase or otherwise acquire for
consideration any outstanding equity interests of ATEC; (e) (i) increase the
compensation of any officer or key employee, (ii) adopt any new employee
benefit plan or materially amend any existing employee benefit plan other
than to reflect changes in Law and plan administration or other than in the
ordinary course of business and consistent with past practices, or
(iii) enter into any new employment or consulting agreement for which the
aggregate consideration to be paid is greater than $50,000; (f) make
unbudgeted capital expenditures in excess of $25,000 in the aggregate;
(g) sell, lease, assign, transfer, pledge, dispose of or encumber any
assets, except for (i) sales of inventory in the ordinary course of business
and in a manner consistent with past practice, and (ii) dispositions of
obsolete or worthless assets not exceeding $10,000 in the aggregate;
(h) except for the distribution of cash and cash equivalents to the Seller
immediately prior to the Closing, declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property, or any
combination thereof) in respect of, or redeem, any of its capital stock;
(i) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof or any capital stock or debt instruments thereof; (j) create any
subsidiary or joint venture entity; (k) incur any indebtedness for borrowed
money, except for any long-term debt existing on the date hereof and short-
term, working capital borrowings incurred under existing contracts in the
ordinary course of business and consistent with past practice; (l) assume,
guarantee or endorse or otherwise as an accommodation become responsible
for, the obligations of any person or make any loans or advances, other than
recourse leases entered into in the ordinary course of business; (m) enter
into or amend any Material Contract or Lease outside the ordinary course of
business; (n) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 4.3;
(o) fail to maintain the material assets of ATEC in substantially their
current state of repair, excepting normal wear and tear; (p) settle any
pending claims, suits or actions; or (q) take, or agree in writing or
otherwise to take, any of the actions described in Sections 4.3(a) through
(p) above, or intentionally take any action that would make any of the
representations or warranties relating to ATEC contained in this Agreement
untrue or incorrect or prevent Seller from performing its covenants
hereunder.
4.4. No Solicitation. From the date hereof until the Closing or
the earlier termination of this Agreement, Seller shall not directly
or indirectly, through any officer, manager, director, employee,
representative, Affiliate or agent of Seller, (a) solicit, initiate or
encourage the initiation of any inquiries or proposals regarding any merger,
recapitalization, sale of substantial assets, sale or exchange of equity
interests or similar transactions involving ATEC other than the transactions
set forth in this Agreement (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"), (b) engage in
negotiations or discussions concerning, or provide any nonpublic information
to any person relating to, any Acquisition Proposal or (c) agree to, approve
or recommend any Acquisition Proposal.
4.5. Confidentiality. At all times from and after the Closing Date,
Seller shall maintain in confidence, and shall not use for its benefit or
for the benefit of others (other than for the benefit of ATEC, pursuant to
the terms and conditions of the Supply Agreement), any confidential or
proprietary information relating to ATEC's financial or other affairs,
including, without limitation, all Intellectual Property and files and
records, other than any of such information that is in the public domain or
if the use of such information by Seller (a) is required by Law, (b) is
necessary to prepare Tax Returns (including Tax Returns of Seller or of any
of its Affiliates) or other required filings with Governmental Authorities
or to defend or object to any reassessment of Taxes, (c) is necessary for
Seller or Seller's representatives to prepare and disclose, as may be
required, accounting statements, or (d) is necessary to assert or protect
any rights of Seller hereunder or under any applicable Law. In the event
of any of (a) through (d) above, Seller will notify Purchaser promptly and
will, unless Purchaser is able to obtain a protective order or other
appropriate remedy, furnish only that portion of the information that is
legally required and will, unless otherwise required by Law and except with
respect to information required to be filed with the Securities and Exchange
Commission, exercise all reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded such information. Seller shall
consult with Purchaser before issuing any press release or otherwise making
any public statement with respect to this Agreement and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by Law or applicable stock exchange
or association rules and regulations.
4.6. Certain Insurance Matters. Seller shall maintain, and shall not
take any steps to prospectively or retrospectively cancel, buy-out or remove
ATEC as an additional named insured from, any and all liability insurance
policies providing coverage for all periods prior to the Closing with
respect to any events, occurrences or matters occurring prior to the Closing
(the "Occurrence-Based Insurance Policies") (subject in each case to the
deductibles, limits and other terms and conditions of such policies).
Subject to Section 9.6, Purchaser shall be entitled to the benefit of, and
Seller shall pay to Purchaser, any amounts and/or recoveries received by
Seller under any Occurrence-Based Insurance Policies in respect of any
liabilities of ATEC covered by such policies (subject to the deductibles,
limits and other terms and conditions of such policies). If Purchaser
becomes aware of any such liabilities, Purchaser shall promptly notify
Seller thereof in writing. Seller shall have the right, but not the
obligation, to file and administer all claims under the Occurrence Based
Policies with respect to any such liabilities. If Seller (i) does not
provide Purchaser with written notice of its intent to exercise this option
within ten (10) days after receipt of notice of such claim from Purchaser or
(ii) fails to file a claim in respect thereof within twenty (20) days of
receipt of notice of such claim from Purchaser, then Purchaser shall have
the right, but not the obligation, to file and administer the claim under
the Occurrence-Based Insurance Policies with respect to such liability, and,
in connection therewith, Seller hereby covenants and agrees to issue or
cause to be issued powers of attorney and any other necessary document to
Purchaser to enable Purchaser to file and/or administer such claim.
Notwithstanding the foregoing, Purchaser shall not have the right to settle
any claim under the Occurrence-Based Insurance Policies without the prior
written consent of Seller, which consent shall not unreasonably be withheld
or delayed.
4.7. Claim Resolution Support. In the event and for so long as
Purchaser or any of its Affiliates actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act, or transaction on or prior to the
Closing Date involving the Business, or after the Closing Date as to which
Seller is in custody of relevant books and records, Seller will, and will
cause its Affiliates to, at Purchaser's expense, provide commercially
reasonable cooperation to Purchaser, its Affiliates and their respective
counsel in the contest or defense and make available its personnel at
reasonable times and upon reasonable notice, and provide such testimony and
access to its books and records as shall reasonably be necessary in
connection with the contest or defense.
4.8. Post-Closing Payments.
(a) All payments from any sources whatsoever received by Seller
after the Closing, whether directly or indirectly and whether as
collections of accounts receivable or otherwise, relating to any goods
or services provided by, or otherwise for the account of, ATEC, shall
be paid over to ATEC within three (3) business days of receipt thereof
by Seller.
(b) Not later than January 15, 2004, Seller shall pay to
Purchaser an amount equal to any overpayments made by Purchaser to
Seller pursuant to Section 5.2 of this Agreement, whether as a result
of the termination of any Continuing Employee's employment or
otherwise.
(c) Seller shall pay to ATEC, in accordance with the terms
thereof, all arms'-length, ordinary course trade payables due from
Seller to ATEC in existence as of the Closing, unless such amount is,
in good faith, subject to dispute.
ARTICLE 5.
COVENANTS OF PURCHASER
Purchaser hereby covenants to and agrees with Seller as follows:
5.1. Commercially Reasonable Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, Purchaser shall use its
commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement and the transfer of the Business
to Purchaser, including (a) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Authorities
and the making of all necessary registrations and filings and the taking of
all reasonable steps as may be necessary to obtain any necessary approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Authorities; provided, however, that Purchaser shall not be required to make
any material monetary expenditure, commence or be a plaintiff in any
litigation, or offer or grant any material accommodation (financial or
otherwise) to any third Person, including, without limitation, the offer for
sale of any business or assets to any Person, (b) the obtaining of all
necessary consents, approvals or waivers from third parties, (c) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transaction contemplated by this Agreement, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed and (d) the execution and
delivery of any additional instruments necessary to consummate the
transaction contemplated by this Agreement and to fully carry out the
purposes of this Agreement.
5.2. Employees and Benefit Plans. At the Closing, all Persons then
employed by ATEC shall remain employees of ATEC or become employees of
Purchaser and there will be no loss of employment imposed by Purchaser in
connection with the transactions contemplated hereby (each referred to as a
"Continuing Employee"). From the date of the Closing and continuing
through December 31, 2003, Continuing Employees shall be eligible to
participate under Seller's welfare benefit plans to the extent such coverage
can be provided under the health care continuation coverage requirements of
Code Section 4980B. Purchaser shall pay Seller, at Closing, $17,604.06 as
the estimated premium for such coverage, which amount shall be adjusted
following Closing as provided for in Section 4.8. Effective as of Closing,
Continuing Employees will be offered the right to convert their coverage
under certain of Seller's welfare plans to an individual policy to the
extent such conversion privilege is available under the applicable plan or
program. Effective as of Closing, Continuing Employees will be covered
under Purchaser's short-term disability program maintained for similarly
situated employees of Purchaser and its Affiliates, to the same extent as
similarly situated employees of Purchaser, in accordance with the respective
terms of such program. Effective January 1, 2004, Purchaser will permit
Continuing Employees who are, at such time, employed by Purchaser or an
Affiliate of Purchaser, including ATEC, to participate in the employee
benefit plans and programs maintained for similarly situated employees of
Purchaser and its Affiliates, to the same extent as similarly situated
employees of Purchaser, in accordance with the respective terms of such
plans and programs. Purchaser shall give each Continuing Employee credit
for his or her prior service with ATEC and Seller for purposes of
determining his or her eligibility for, and vesting of benefits under, all
qualified defined contribution plans, or similar benefit plans maintained by
Purchaser, provided that, notwithstanding any other provision of this
Agreement, no Continuing Employee shall be eligible to participate in the
Xxxxxx Sporting Goods Co. Retirement Income Plan or the Xxxxxx Sporting
Goods Co. Hourly Pension Plan, which are defined benefit pension plans that
are not available to new hires of Purchaser or any of is Affiliates.
Effective January 1, 2004, Continuing Employees shall participate in
Purchaser's group health plan and other welfare benefit plans, without any
waiting period, exclusion, or limitation for preexisting conditions. On or
after January 1, 2004, Continuing Employees who are eligible to participate
in Xxxxxx Sporting Goods Co. 401(k) Savings Plan or Xxxxxx Sporting Goods
Co. 401(k) Savings Plan for Non-Union Hourly Employees. (each, a
"Purchaser's 401(k) Plan") shall be permitted to roll over their entire
account balances from the Seller's 401(k) plan to Purchaser's 401(k) Plan,
as applicable.
If, within twelve (12) months after Closing, Purchaser or any of its
successors or assigns, transfers all or substantially all of its properties
and assets to any Person or Persons (other than Purchaser or an Affiliate of
Purchaser), proper provision shall be made so that the transferee assumes
(and if more than one, the transferees assume, jointly and severally) the
obligations set forth in this Section 5.2.
The provisions of this Section 5.2 are solely for the purpose of
setting forth the understanding between Purchaser and Seller and shall not
create or modify any employee benefit plan of Purchaser or any of its
affiliates, and shall not be construed as creating any employment contract
or third party beneficiary right between Purchaser or Seller on one hand,
and any Continuing Employee, on the other hand. Purchaser and its
Affiliates may amend or terminate any of their benefit plans or arrangements
at any time in their sole discretion.
5.3. Access. From and after the Closing Date, Purchaser shall afford
Seller and its counsel, accountants and other authorized representatives,
with no less than two business days' prior notice, reasonable access during
normal business hours (when accompanied by an authorized representative of
Purchaser) to the premises, properties, personnel, books and records of
Purchaser and any other assets or information that Seller reasonably deems
necessary to prepare any report or Tax Return required to be filed by Seller
(but so as not to unduly disrupt the normal course of operations of
Purchaser), including, without limitation, preparing or defending any Tax
Return and any interim or annual report or other accounting statements.
5.4. Disclaimer of Projections. Purchaser acknowledges and agrees that
none of Seller, ATEC, nor any of their representatives, affiliates or agents
has made any representation with respect to the ATEC Stock or ATEC or the
accuracy or completeness of any information regarding the ATEC Stock or ATEC
furnished or made available to Purchaser or its representatives except as
specifically set forth in this Agreement. In particular, except for the
representations and warranties contained in Article 2 hereof, Seller makes
no representation or warranty to Purchaser with respect to any financial
projection or forecast of or relating to ATEC. With respect to any such
projection or forecast delivered by or on behalf of Seller to Purchaser,
Purchaser acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is familiar with
such uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and
forecasts so furnished to it, and (d) it will have no claim against Seller,
its representatives, affiliates or agents with respect thereto.
5.5. Claim Resolution Support. In the event and for so long as Seller
or any of its Affiliates actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand in connection with any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction following the Closing Date involving the
Business or prior to the Closing Date as to which Purchaser is in custody of
relevant books and records, Purchaser will, and will cause its Affiliates
to, at Seller's expense, provide commercially reasonable cooperation to
Seller, its Affiliates and their respective counsel in the contest or
defense and make available its personnel at reasonable times and upon
reasonable notice, and provide such testimony and access to its books and
records as shall reasonably be necessary in connection with the contest or
defense.
5.6. Post-Closing Payments. As soon as practicable following the
Closing, Purchaser shall pay to Seller, in cash, an amount equal to (i) the
aggregate amount of all cash balances in ATEC's bank accounts as of Closing,
(ii) $23,950, representing the aggregate of the cash security deposit made
by or on behalf of ATEC under the real property lease identified on Schedule
2.6(a), all other cash security deposits made by or on behalf of ATEC under
personal property leases and all other items shown on the Interim Balance
Sheet as "Other Assets" and (iii) the aggregate of all outstanding
commercially reasonable charges made by ATEC employees on any credit card
belonging to Seller, which charges are for expenses associated with events
that are for the benefit of ATEC. In addition to the foregoing, Purchaser
shall cause ATEC to pay to Seller, in accordance with the terms thereof, all
arms'-length, ordinary course trade payables due from ATEC to Seller in
existence as of the Closing, unless such amount is, in good faith, subject
to dispute.
5.7. Confidentiality. At all times from and after the Closing Date,
Purchaser shall maintain in confidence, and shall not use for its benefit or
for the benefit of others (other than for the benefit of Seller, pursuant to
the terms and conditions of the Supply Agreement), any confidential or
proprietary information relating to Seller's financial or other affairs,
including, without limitation, all Seller's intellectual property and files
and records, other than any of such information that is in the public domain
or if the use of such information by Purchaser (a) is required by Law,
(b) is necessary to prepare Tax Returns (including Tax Returns of Purchaser
or of any of its Affiliates) or other required filings with Governmental
Authorities or to defend or object to any reassessment of Taxes, (c) is
necessary for Purchaser or Purchaser's representatives to prepare and
disclose, as may be required, accounting statements, or (d) is necessary to
assert or protect any rights of Purchaser hereunder or under any applicable
Law. In the event of any of (a) through (d) above, Purchaser will notify
Seller promptly and will, unless Seller is able to obtain a protective order
or other appropriate remedy, furnish only that portion of the information
that is legally required and will, unless otherwise required by Law,
exercise all reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information. Purchaser shall
consult with Seller before issuing any press release or otherwise making any
public statement with respect to this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by Law or applicable stock exchange or association
rules and regulations.
ARTICLE 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated
hereby as provided herein is, at the option of Purchaser, subject to
satisfaction of each of the following conditions precedent on or before the
Closing Date:
6.1. Warranties True. The representations and warranties of Seller
contained herein shall have been true and correct in all material respects
(except those representations and warranties that are qualified by
materiality, which shall be true and correct in all respects) when made and
at and as of the Closing (except for those representations and warranties
that speak as of a specific date, which shall be true and correct as of such
date), and Purchaser shall have received a certificate to such effect signed
by Seller.
6.2. Compliance with Agreements and Covenants. Seller shall have
performed and complied with, in all material respects, its obligations and
agreements hereunder, and Purchaser shall have received a certificate to
such effect signed by Seller.
6.3. Consents and Approvals. All Required Consents other than the
consent of Major League Baseball but including the consent of Congress
Financial (Southwest) to the transactions contemplated by this Agreement,
shall have been received by Seller.
6.4. Injunctions. No court or Governmental Authority shall have issued
an order and no law shall have been enacted which shall then be in effect
restraining or prohibiting the completion of the transactions contemplated
hereby and no suit shall have been instituted seeking the same.
6.5. No Material Adverse Effect. From the date hereof until the
Closing, there shall not have occurred any event or change in circumstances
involving ATEC that, individually or when taken together with all other such
events or changes in circumstances has, will, or is reasonably likely to,
result in a Material Adverse Effect.
6.6. Supply Agreement. Seller shall have entered into a mutually
agreeable Supply Agreement with ATEC (the "Supply Agreement"), which shall
supersede in its entirety the existing supply agreement between Seller and
ATEC.
6.7. Releases and Resignations. Purchaser shall have received releases
in favor of ATEC to be effective at the Closing from Seller and each
director and officer of ATEC and each such director and officer (other than
Xxxxxx Xxxxx) shall have resigned from his position with ATEC effective at
the Closing.
6.8. Interests in Seller Xxxxxx Xxxxx shall have no ownership interest
of any kind in Seller and shall have resigned from any position with Seller
held by him.
6.9. Intercompany Indebtedness. Subject to payments due after Closing
under Section 5.6, all ATEC Debt, including all indebtedness of ATEC to
Seller, shall have been extinguished and ATEC shall have no further
obligations to Seller, other than pursuant to this Agreement and the Supply
Agreement.
6.10. Release of Liens. The release of all Liens, other than
Permitted Encumbrances, including the Lien in favor of Congress Financial
(Southwest) on the ATEC Stock and on the assets of ATEC, shall have been
obtained.
6.11. Deliveries by Seller. Seller shall have effected the
deliveries required pursuant to Section 8.2 below.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated
hereby as provided herein is, at the option of Seller, subject to the
satisfaction of each of the following conditions precedent on or before the
Closing Date:
7.1. Warranties True. The representations and warranties of Purchaser
contained herein shall have been true and correct in all material respects
(except those representations and warranties that are qualified by
materiality, which shall be true and correct in all respects) when made and
at and as of the Closing (except for those representations and warranties
that speak as of a specific date, which shall be true and correct as of such
date), and Seller shall have received a certificate to such effect signed by
Purchaser.
7.2. Compliance with Agreements and Covenants. Purchaser shall have
performed and complied with, in all material respects, its obligations and
agreements hereunder, and Seller shall have received a certificate to such
effect signed by Purchaser.
7.3. Injunctions. No court or Governmental Authority shall have issued
an order and no law shall have been enacted which shall then be in effect
restraining or prohibiting the completion of the transactions contemplated
hereby and no suit shall have been instituted seeking the same.
7.4. Deliveries by Purchaser. Purchaser shall have effected the
deliveries required pursuant to Section 8.3 below.
ARTICLE 8.
CLOSING
8.1. Closing. The Closing shall take place at 10:00 A.M. on the
earliest practicable date after the satisfaction or waiver of the conditions
set forth in Article 5 and 6 hereof, or such other date as is mutually
agreeable to Seller and Purchaser (the "Closing Date"). If mutually agreed
to by the parties, the document deliveries required hereunder at Closing may
be made by portable document format (pdf), facsimile, or by hand delivery.
8.2. Seller's Deliveries. At the Closing, Seller shall deliver to
Purchaser:
(a) Certificates, duly endorsed for transfer in blank or
accompanied by duly executed assignments, representing the ATEC Stock;
(b) instruments evidencing the release of all Liens, other than
Permitted Encumbrances, on the ATEC Stock and on the assets of ATEC;
(c) copies of the resolutions and other requisite corporate
actions of Seller authorizing the execution and delivery of this
Agreement and the other documents and instruments to be executed and
delivered pursuant to this Agreement, and the consummation by Seller of
the transactions contemplated hereby and thereby, which copies have
been certified by the secretary of Seller and dated as of the Closing
Date;
(d) certificates of good standing for Seller and ATEC issued by
the Secretary of State of Delaware and dated within fifteen (15) days
prior to the Closing Date; and
(e) such other documents and instruments, including the
certificates referred to in Section 6.1 and Section 6.2, as Purchaser
or its counsel reasonably shall deem necessary to consummate the
transactions contemplated hereby, it being agreed that Purchaser shall
provide Seller with notice of any such other documents or instruments
to be delivered pursuant to this Section within a reasonable period of
time prior to Closing.
8.3. Purchaser's Deliveries. At the Closing, Purchaser shall deliver
to Seller:
(a) a wire transfer of immediately available funds in the amount
of the Purchase Price;
(b) copies of the resolutions and other requisite corporate
actions of Purchaser authorizing the execution and delivery of this
Agreement and the other documents and instruments to be executed and
delivered pursuant to this Agreement, and the consummation by Purchaser
of the transactions contemplated hereby and thereby, which copies have
been certified by the secretary of Purchaser and dated as of the
Closing Date;
(c) a certificate of good standing for Purchaser issued by the
Secretary of State of the State of Delaware and dated within fifteen
(15) days prior to the Closing Date; and
(d) such other documents and instruments, including the
certificates referred to in Section 7.1 and Section 7.2, as Seller or
its counsel reasonably shall deem necessary to consummate the
transactions contemplated hereby, it being agreed that Seller shall
provide Purchaser with notice of any such other documents or
instruments to be delivered pursuant to this Section within a
reasonable period of time prior to Closing.
8.4. Termination. This Agreement shall terminate:
(a) upon the mutual agreement of Seller and Purchaser;
(b) upon written notice from Purchaser to Seller on or after
November 18, 2003 if any of the conditions precedent set forth in
Article 6 has not been satisfied or has become impossible to satisfy on
or before November 18, 2003, unless such failure or impossibility to
satisfy any such condition is due to a breach of this Agreement by the
Purchaser;
(c) upon written notice from Seller to Purchaser on or after
November 18, 2003 if any of the conditions precedent set forth in
Article 7 has not been satisfied or has become impossible to satisfy on
or before November 18, 2003, unless such failure or impossibility to
satisfy any such condition is due to a breach of this Agreement by the
Seller; or
(d) by Seller or Purchaser if (i) the other party is in material
default of its obligations hereunder, in material breach of any of its
representations or warranties hereunder or in breach of any of its
representations or warranties hereunder that are qualified as to
materiality, and (ii) such material default or breach is not cured,
provided that such material default or breach is of a nature that it is
capable of being cured, by the other party by November 18, 2003,
following the other party's prior receipt of written notice thereof
describing same in reasonable detail and specifically referencing this
Section 8.4(d).
If this Agreement is terminated pursuant to this Section, all further
obligations of the parties under this Agreement will terminate, except that
(i) the obligations in Section 13.1 will survive and (ii) if this Agreement
is terminated by a party and the other party is in breach of this Agreement
at the time thereof, the terminating party's right to pursue all legal
remedies against the breaching party will survive such termination
unimpaired. The obligations of the parties under the Confidentiality
Agreement shall survive, and continue in full force and effect after, this
Agreement.
ARTICLE 9.
SURVIVAL AND INDEMNIFICATION
9.1. Survival. The representations and warranties of the parties
contained herein or in any certificate or writing delivered pursuant hereto
shall survive the Closing for a period of eighteen (18) months after the
Closing Date; provided, that the representations and warranties of Seller
set forth in Sections 2.1, 2.2, 2.3 and 2.4 hereof (collectively, the
"Excluded Representations") shall survive the Closing forever and the
representations and warranties of Seller set forth in Sections 2.10, 2.12
and 2.17 shall survive the Closing until thirty (30) days after the
expiration of the applicable statute of limitations under domestic or
foreign Law.
9.2. Indemnification by Seller. Subject to the terms of Section 9.4,
Seller agrees to indemnify, defend and hold harmless Purchaser, its
officers, directors, Affiliates (including ATEC), successors and assigns
(the "Purchaser Indemnified Parties") against any and all Losses suffered by
any Purchaser Indemnified Party to the extent that such Losses arise out of
or relate or are attributable to: (a) any breach of the representations or
warranties of Seller set forth in this Agreement or in any certificate
delivered pursuant to Section 8.2 (each representation and warranty being
read for this purpose without regard to any "materiality," "Material Adverse
Effect," "in any material respect" or similar exception or qualifier
contained in any such representation or warranty); (b) any breach of the
covenants or agreements of Seller set forth in this Agreement or in any
certificate delivered pursuant to Section 8.2; and (c) all Taxes relating to
the Seller Tax Period.
For purposes of Sections 9.2(c) and 11.1, in the case of any Taxes
that are imposed on a periodic basis and are payable for a period that
begins before the end of the Seller Tax Period and ends after the end of the
Seller Tax Period, Seller shall indemnify the Purchaser Indemnified Parties
for the portion of such Taxes payable for the period ending at the end of
the Seller Tax Period. For this purpose, the portion of such Tax payable
for the period ending at the end of the Seller Tax Period shall in the case
of any Taxes other than Taxes based upon or related to income or sales or
use Taxes, be deemed to be the amount of such Taxes for the entire period
multiplied by a fraction, the numerator of which is the number of days in
the period ending at the end of the Seller Tax Period, and the denominator
of which is the number of days in the entire period, taking into account
changes in the base on which such Taxes are imposed. In the case of Taxes
based upon or related to income or sales or use Taxes attributable to any
period that includes but does not end on the Closing Date, such Taxes shall
be allocated between the portion of the period ending on the Closing Date
and the portion of the period commencing on the day immediately following
the Closing Date based upon an interim closing of the books of the
applicable Tax payer and a separate computation of the Tax for each such
portion as if the portions were separate Tax Periods.
9.3. Indemnification by Purchaser. Subject to the terms of Section
9.4, Purchaser agrees to indemnify, defend and hold harmless Seller, its
officers, directors, Affiliates (but not including ATEC after the Closing),
successors and assigns (the "Seller Indemnified Parties") against any and
all Losses suffered by any Seller Indemnified Party to the extent that such
Losses are attributable to: (a) any breach of the representations or
warranties of Purchaser set forth in this Agreement or in any certificate
delivered pursuant to Section 8.3 (each representation and warranty being
read for this purpose without regard to any "materiality," "Material Adverse
Effect," "in any material respect" or similar exception or qualifier
contained in any such representation or warranty); or (b) any breach of the
covenants or agreements of Purchaser set forth in this Agreement or in any
certificate delivered pursuant to Section 8.3.
9.4. Limitations. The aggregate liability of Seller to the Purchaser
Indemnified Parties under Section 9.2(a) of this Agreement (excluding
Seller's liability for breaches of the Excluded Representations, for which
the aggregate liability of Seller to the Purchaser Indemnified Parties under
Section 9.2(a) of this Agreement shall not exceed the Purchase Price) shall
not exceed $2,625,000 (the "Cap"); and Losses suffered by any Purchaser
Indemnified Party under Section 9.2(a) of this Agreement shall only be
indemnified by Seller to the extent that such Losses (excluding any and all
individual Losses in amounts of less than $5,000) in the aggregate exceed
$100,000 (the "Deductible") (provided, that the Deductible shall not apply
to Losses suffered by any Purchaser Indemnified Party if no Closing shall
occur). For the avoidance of doubt, the Cap and Deductible described in the
previous sentence shall not apply to claims made by a Purchaser Indemnified
Party for Losses under Section 9.2(b) or (c). No claim for indemnification
may be made under Section 9.2 or Section 9.3 unless written notice of such
claim, in reasonable detail, is given to Seller or Purchaser, as the case
may be, on or prior to the expiration of the survival period set forth in
Section 9.1 with respect to the representation or warranty on which such
claim is based if such claim is made under Section 9.2(a) or 9.3(a) hereof.
9.5. Procedures. The indemnified party shall promptly notify the
indemnifying party in writing of all matters that may give rise to the right
to indemnification hereunder. The failure of any indemnified party to give
timely notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that the indemnifying party is prejudiced
thereby. After such notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be
obligated under the terms of its indemnity hereunder in connection with such
lawsuit or action, then the indemnifying party shall be entitled, if it so
elects, (i) to take control of the defense and investigation of such lawsuit
or action, (ii) to employ and engage attorneys of its own choice to handle
and defend the same (unless the named parties to such action or proceeding
include both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that there may be
one or more legal defenses available to such indemnified party that are
different from or additional to those available to the indemnifying party,
in which event the indemnified party shall be entitled at the indemnifying
party's cost, risk and expense, to separate counsel of its own choosing) and
(iii) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the indemnified party (such
consent not to be unreasonably withheld or delayed). If the indemnifying
party fails to assume the defense of such claim within thirty (30) calendar
days after receipt of the notice of such claim, the indemnified party
against which such claim has been asserted will (upon delivering notice to
such effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or settlement
of such claim on behalf of and for the account and risk of the indemnifying
party; provided, however, that such claim shall not be compromised or
settled without the written consent of the indemnifying party (such consent
not to be unreasonably withheld or delayed). The indemnified party and the
indemnifying party shall keep each other reasonably informed of the progress
of any litigation or settlement negotiations with third parties in
connection with a matter indemnified against hereunder. The indemnifying
party and the indemnified party shall permit each other reasonable access to
books and records and otherwise cooperate with all reasonable requests of
each other in connection with any indemnifiable matter resulting from a
claim by any third party.
9.6. Insurance Proceeds. Notwithstanding anything to the contrary
contained herein:
(a) Seller's obligation to indemnify the Purchaser Indemnified
Parties and Purchaser's obligation to indemnify the Seller Indemnified
Parties for Losses that are covered by insurance shall apply solely to
Losses that exceed insurance recoveries actually received by the
Purchaser Indemnified Parties or the Seller Indemnified Parties, as the
case may be, in respect thereof; and
(b) Without negating the general application of Section 9.6(a), a
party's obligations with respect to indemnification described in this
Article 9 shall not apply to the extent that such application would
nullify any existing insurance coverage with respect thereto.
9.7. Exclusive Remedy. From and after the Closing, the indemnification
rights provided in this Agreement shall be the sole and exclusive remedy
available to the parties hereto with respect to any breach of the
representations, warranties, covenants or agreements of the parties in this
Agreement or any certificate delivered in connection with the consummation
of the transactions contemplated by this Agreement; provided, however, that
the foregoing will not limit the remedy of specific performance, obtaining
an injunction or other equitable remedy, which may be sought by an
indemnified party in connection with a breach of any covenant or agreement
contained herein.
ARTICLE 10.
DISPUTE RESOLUTION
10.1. Dispute Resolution. Subject to the provisions of Section
10.5, any dispute arising out of or relating to this Agreement, including,
but not limited to, claims for indemnification pursuant to Article 9 shall
be resolved in accordance with the procedures specified in this Article 10,
which shall be the sole and exclusive procedures for the resolution of any
such disputes.
10.2. Negotiation Between Executives. The parties shall attempt in
good faith to resolve any dispute arising out of or relating to this
Agreement promptly by negotiation between the appointed representatives of
the Seller and of the Purchaser. Any party may give the other party written
notice of any dispute not resolved in the normal course of business. Within
ten (10) days after delivery of the notice, the receiving party shall submit
to the other a written response. The notice and response shall include (a)
a statement of each party's position, and (b) the name and title of the
executive who will accompany the representative. Within twenty (20) days
after delivery of the disputing party's notice, the representatives of
Seller and the Purchaser shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary to attempt to
resolve the dispute. All reasonable requests for information made by one
party to the other will be honored.
(a) If the matter has not been resolved by these persons within
thirty (30) days of the disputing party's notice, or if the parties
fail to meet within twenty (20) days, either party may initiate
mediation as provided hereinafter.
(b) All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes
of the Federal Rules of Evidence and state rules of evidence.
10.3. Mediation. If the dispute has not been resolved by
negotiation as provided herein, the parties shall endeavor to settle the
dispute by mediation under the then current Center for Public Resources
("CPR") Model procedure for Mediation of Business Disputes. The neutral
third party will be selected from the CPR Panels of Neutrals, with the
assistance of CPR, unless the parties agree otherwise. If a party refuses
to mediate, then that party may not recover its attorneys' fees or costs in
any litigation brought to construe or enforce this Agreement. Otherwise, if
mediation is unsuccessful, then the prevailing party shall be entitled to
recover reasonable attorneys' fees and expenses, including the cost of the
unsuccessful mediation, but only if the prevailing party offered to settle
in mediation in an amount, in the case of the indemnified party, equal to or
less than the award in litigation and, in the case of the indemnifying
party, equal to or more than the award in litigation.
10.4. Litigation. If the dispute has not been resolved by non-
binding means as provided herein within 60 days of the initiation of such
mediation procedure, either party may initiate litigation (upon 5 days
written notice to the other party); provided, however, that if one party has
requested the other to participate in a non-binding procedure and the other
has failed to participate, the requesting party may initiate litigation
before expiration of the above period.
10.5. Provisional Remedies. The procedures specified in this
Section shall be the sole and exclusive procedures for the resolution of
disputes between the parties arising out of or relating to this Agreement;
provided, however, that either party, without prejudice to the above
procedures, may file a complaint (for statute of limitations or venue
reasons) or to seek preliminary injunction or other provisional judicial
relief, if in its sole judgment, such action is necessary to avoid
irreparable damage or to preserve the status quo. Despite such action the
parties will continue to participate in good faith in the procedures
specified in this Section.
10.6. Tolling Statute of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time, including all
survival periods set forth in Section 9.1 hereof, shall be tolled from the
date notice under Section 10.2 is first delivered while the mediation
procedures specified in this Article are pending. The parties will take
such action, if any required to effectuate such tolling.
10.7. Performance to Continue. Each party is required to continue
to perform its obligations under this Agreement pending final resolution of
any dispute arising out of or relating to this Agreement.
ARTICLE 11.
TAX MATTERS
11.1. Filing Tax Returns and Payment of Taxes. For any Tax Period
ending on or before or including the Closing Date, Seller shall prepare or
cause to be prepared all Tax Returns not previously filed for ATEC that are
due after the Closing Date (taking into account any extensions). Seller
shall be liable for, and shall promptly pay, all Taxes, assessments and
governmental charges (including unemployment insurance and workers
compensation payments) that are shown as owing on such Tax Returns or that
are otherwise finally determined to be due and owing with respect to all
such periods. Subject to the requirements of applicable law, each such Tax
Return shall be prepared in a manner consistent with past practices of ATEC.
Except if an election is made pursuant to Section 11.3, each such Tax Return
with respect to ATEC shall be submitted to Purchaser at least thirty (30)
days prior to the due date (including extensions thereof) for filing such
Tax Return. Seller shall make any changes in such proposed Tax Return as
are reasonably requested by Purchaser no less than five (5) days prior to
the due date (including extensions) for filing such Tax Returns, provided
that such changes will not materially and adversely affect the current or
future Tax liability of Seller. Purchaser shall cause ATEC to file timely
or cause to be filed timely such Tax Returns, as so modified.
11.2. Cooperation on Tax Matters.
(a) Purchaser, ATEC and Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the
provision of records and information that are reasonably relevant to
any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
Purchaser agrees (i) to retain all books and records with respect to
Tax matters pertinent to ATEC relating to any Taxable Period beginning
before the Closing Date until the expiration of the applicable statute
of limitations of the respective Taxable Periods, and to abide by all
record retention agreements entered into with any taxing authority, and
(ii) to give the Seller reasonable written notice prior to
transferring, destroying or discarding any such books and records.
(b) Purchaser and Seller further agree, upon reasonable request
by the other party, to use all reasonable commercial efforts to obtain
any certificate or other document from any Governmental Authority or
any other Person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
(c) No election or settlement of any examination, proceeding or
claim by any taxing authority with respect to ATEC shall be made
without consent of Purchaser if such action would materially adversely
affect the liability of the Purchaser or ATEC for Taxes. Further, no
amended Tax Return or claim for refund will be filed with respect to
ATEC for any Tax Period ending on or before the Closing Date without
the consent of the Purchaser, which consent shall not be unreasonably
withheld or delayed. ATEC and Purchaser shall pay over to Seller,
within10 business days after receipt thereof, any refunds of Taxes paid
by or on behalf of ATEC relating to the Seller Tax Period (including
any interest included in any such refund), except with respect to any
carryback of losses by ATEC or Purchaser to any Tax Period during which
ATEC was a member of the Affiliated Group, which refund shall be paid
by Seller to Purchaser.
11.3. Section 338(h)(10) Election. At Purchaser's sole option, a
valid election under Section 338(h)(10) of the Code (and any elections under
state and/or local tax law corresponding to Section 338, collectively, a
"338 Election") shall be made with respect to the Purchaser's acquisition of
the ATEC Stock in accordance with applicable statutes, rules and
regulations. Purchaser reserves the right to elect a 338 Election at any
time during the period allowed by law for such Election. If Purchaser
notifies Seller of its desire to make a 338 Election prior to the Closing,
Seller shall deliver or cause to be delivered to Purchaser at Closing,
Internal Revenue Service Form 8023 (and any forms required by state and
local law) properly and fully executed and completed with respect to the
acquisition of the ATEC Stock, and Purchaser and Seller shall file or cause
to be filed Form 8023 (and any forms required by state and local law) in the
time and manner required by applicable law, and shall otherwise cooperate
fully in making the 338 Election. If Purchaser notifies Seller of its
desire to make a 338 Election after the Closing, Seller shall timely execute
and file or shall cause to be timely executed and filed Form 8023 (and any
forms required by state and local law) in cooperation with Purchaser.
Notwithstanding anything contained herein to the contrary, Seller shall
promptly pay or cause to be paid by the Affiliated Group in full any and all
Taxes payable as a result of the 338 Election.
11.4. Allocation of Total Share Consideration. If Purchaser opts
to file a 338 Election pursuant to Section 11.3, Purchaser and Seller shall
use their reasonable best efforts to agree on the allocation of the
consideration for the ATEC Stock and the liabilities of ATEC among the
assets of ATEC and if they are unable to agree within 30 days of Purchaser's
notice to Seller of the 338 Election, the parties shall mutually appoint an
independent appraiser to determine the allocation. Purchaser and Seller
agree that such allocation shall be used for all reporting purposes
including financial reporting and that Purchaser and Seller shall file, or
cause to be filed, all of their respective Tax Returns and any required
forms in a manner consistent with such allocation.
ARTICLE 12.
NONSOLICITATION
12.1. Restrictions.
(a) Seller agrees that, without the prior written consent of
Purchaser, for a period of one (1) year following the Closing Date,
Seller will not, directly or indirectly, whether for itself or for any
other Person and whether as proprietor, principal, shareholder (other
than a less-than-5% shareholder of a publicly-traded corporation),
partner, member, agent, director, officer, employee, consultant,
independent contractor or in any other capacity, solicit the employment
of any of the employees of ATEC who were so employed on the Closing
Date or who were employed by ATEC at any time during the twelve-month
period ending on the Closing Date.
(b) Purchaser agrees that, without the prior written consent of
Seller, for a period of one (1) year following the Closing Date,
Purchaser will not, directly or indirectly, whether for itself or for
any other Person and whether as proprietor, principal, shareholder
(other than a less-than-5% shareholder of a publicly-traded
corporation), partner, member, agent, director, officer, employee,
consultant, independent contractor or in any other capacity, solicit
the employment of any of the employees of Seller who were so employed
on the Closing Date or who were employed by Seller at any time during
the twelve-month period ending on the Closing Date.
12.2. Blue-Pencil Provision. If, at the time of enforcement of any
of the provisions of this Article a court holds that the restrictions stated
herein are unreasonable under the circumstances then existing or are
otherwise illegal, invalid or unenforceable in any respect by reason of its
duration or any other reason, the parties hereto agree that the maximum
period reasonable or otherwise enforceable under such circumstances shall be
substituted for the stated period.
12.3. Equitable Relief. Each of the parties acknowledges that
(a) the covenants and the restrictions contained in this Article are
necessary, fundamental, and required for the protection of the Purchaser;
(b) such covenants relate to matters that are of a special, unique, and
extraordinary character that gives each of such covenants a special, unique,
and extraordinary value; and (c) a breach of any of such covenants will
result in irreparable harm and damages to Purchaser which cannot be
adequately compensated by a monetary award. Accordingly, it is expressly
agreed that in addition to all other remedies available at law or in equity,
Purchaser shall be entitled to the immediate remedy of a temporary
restraining order, preliminary injunction, or such other form of injunctive
or equitable relief as may be used by any court of competent jurisdiction to
restrain or enjoin any of the parties hereto from breaching any such
covenant or provision or to specifically enforce the provisions hereof.
ARTICLE 13.
MISCELLANEOUS
13.1. Expenses. Each party hereto shall bear its own expenses with
respect to the transaction contemplated by this Agreement. Notwithstanding
the foregoing, all fees or transfer taxes on the sale and transfer of the
ATEC Stock shall be borne equally by Seller and Purchaser.
13.2. Amendment. This Agreement may be amended, modified or
supplemented only in writing signed by each of the parties hereto.
13.3. Notices. Any written notice to be given hereunder shall be
deemed given: (a) when received if given in person or by courier; (b) on
the date of transmission if sent by telecopy, email or other wire
transmission (receipt confirmed); (c) five (5) days after being deposited in
the U.S. mail, certified or registered mail, postage prepaid; and (d) if
sent by an internationally recognized overnight delivery service, the second
day following the date given to such overnight delivery service (specified
for overnight delivery). All notices shall be addressed as follows:
If to Seller, addressed as follows:
Sport Supply Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Purchaser, addressed as follows:
Amer Sports Company
0000 Xxxx Xxxx Xxxx Xxx.
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
13.4. Waivers. The failure of a party to require performance of
any provision hereof shall not affect its right at a later time to enforce
the same. No waiver by a party of any term, covenant, representation or
warranty contained herein shall be effective unless in writing. No such
waiver in any one instance shall be deemed a further or continuing waiver of
any such term, covenant, representation or warranty in any other instance.
13.5. Counterparts. This Agreement may be executed in any number
of facsimile or original counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
13.6. Headings. The headings preceding the text of Articles and
Sections of this Agreement and the Schedules and Exhibits thereto are for
convenience only and shall not be deemed part of this Agreement.
13.7. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE
LAWS OF CONFLICTS, OF THE STATE OF DELAWARE.
13.8. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided, that no assignment of either party's rights or obligations may be
made without the written consent of the other party, which consent shall not
be unreasonably withheld or delayed.
13.9. No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and those Persons (or categories of
Persons) specifically described in Sections 9.2 and 9.3 hereof, and, except
as aforesaid, no provision of this Agreement shall be deemed to confer any
remedy, claim or right upon any third party.
13.10. Incorporation. The respective Schedules, Exhibits and
Appendices attached hereto and referred to herein are incorporated into and
form a part of this Agreement.
13.11. Complete Agreement. This Agreement constitutes the complete
agreement of the parties with respect to the subject matter hereof
and thereof and supersedes all prior discussions, negotiations and
understandings with respect hereto and thereto, including the
Confidentiality Agreement.
13.12. Public Announcements. Seller and Purchaser agree that they
and their Affiliates will not issue any press release or otherwise make any
public statement or respond to any media inquiry with respect to this
Agreement or the transactions contemplated hereby without the prior approval
of other party, which shall not be unreasonably withheld, except as may be
required by Law or by any stock exchanges having jurisdiction over Seller,
Purchaser or their Affiliates.
13.13. Defined Terms. Certain capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in Appendix
I.
13.14. Currency. All references to "dollars" or "$" in this
Agreement shall mean United States Dollars.
[Signature Page Follows]
[Signature Page to Stock Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed and delivered as of November 18, 2003.
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Chief Operation Officer and Secretary
AMER SPORTS COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: General Counsel and Assistant
Secretary and Attorney in Fact
APPENDIX I
DEFINITIONS
-----------
The following terms shall have the following meanings:
"Affiliate" means any Person controlling, controlled by, or under
common control with, another "Person"; for purposes of this definition (and
for such purposes only), "control" shall mean the ownership, directly or
indirectly, of 50% or more of the outstanding common stock of a Person.
"Affiliated Group" means the affiliated group of corporations (as
defined in Section 1504 of the Code) of which ATEC is a member and of which
Seller is the common parent (within the meaning of Section 1504 of the
Code).
"Agreement" means this Stock Purchase Agreement, including all
Appendices, Schedules and Exhibits hereto, as it may be amended from time to
time in accordance with its terms.
"ATEC Debt" means, with respect to ATEC, (i) obligations for borrowed
money, including any under ATEC's revolving lines of credit,
(ii) obligations pursuant to letters of credit, and (iii) obligations
arising under any agreement, undertaking or arrangement by which ATEC agrees
to purchase or provide funds for the payment of, or otherwise is
contingently liable upon, the obligation or liability of another person,
including, without limitation, guarantees.
"Benefit Plans" means all domestic and foreign employee benefit plans,
programs, policies and arrangements, including, but not limited to, employee
welfare benefit plans and employee pension benefit plans as defined in
Sections 3(1) and 3(2), respectively, of ERISA.
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Date" shall have the meaning set forth in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Letter Agreement dated
October 6, 2003 between Seller and Purchaser.
"Contract" shall mean any agreement, contract, note, loan, evidence of
indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant-not-to-compete, employment agreement, license,
instrument, obligation or commitment, excluding all Leases, (i) to which
ATEC, or Seller on ATEC's behalf, is a party, or (ii) by which ATEC or any
of the assets of ATEC is bound, whether oral or written.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (including the Superfund
Amendments and Reauthorization Act, as amended), the Resource Conservation
and Recovery Act, as amended, the Toxic Substances Control Act, as amended,
the Clean Water Act, as amended, the Clean Air Act, as amended, the Water
Pollution Control Act, the Safe Drinking Water Act, the Occupational Safety
and Health Act, the Lead Control and Contamination Act, and any applicable
foreign, state or local Law having a similar subject matter.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" means (i) the Interim Balance Sheet and the
related unaudited statement of income for the seven months ended October 24,
2003, and (ii) the unaudited balance sheet of ATEC as of March 28, 2003 and
the related unaudited statement of income for the twelve months ended March
28, 2003, all of which are attached hereto as Schedule 2.8.
"Governmental Authority" means any United States federal, state,
provincial or municipal entity, any foreign government, and any political
subdivision or other executive, legislative, administrative, judicial,
quasi-judicial or other governmental department, commission, court, board,
bureau, agency or instrumentality, domestic or foreign.
"Income Taxes" means federal, state, local or foreign income or
franchise taxes or other taxes measured in whole or in part by income and
any interest and penalties or additions thereon.
"Intellectual Property" means, all intellectual property rights
(including the right-to-xxx with respect to the enforcement thereof) used in
the Business as currently conducted, including, without limitation, all
domestic and foreign: (a) registered and unregistered trade names,
trademarks and service marks; (b) patent registrations and patent
applications; (c) copyright registrations and copyright applications;
(d) trade dress, trade secrets, confidential information, and know-how,
including, without limitation, all technical, manufacturing, and engineering
information, software, source code, data, new developments, designs, or
inventions, and all related documentation, whether in hard copy or
electronic format; and (e) Internet addresses, domain names and web sites.
"Interim Balance Sheet" shall mean the unaudited balance sheet of ATEC
as of October 24, 2003, together with any notes thereto, as included in
Schedule 2.8.
"IRS" means the Internal Revenue Service.
"Law" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed to or imposed by any
Governmental Authority.
"Leased Real Property" has the meaning set forth in Section 2.6.
"Lien" means any lien, security interest, charge, claim, mortgage, deed
of trust, option, lease or other encumbrance.
"Loss" or "Losses" mean any and all damages, losses, actions,
proceedings, causes of action, obligations, liabilities, claims,
encumbrances, penalties, demands, assessments, judgments, reasonable out-of-
pocket costs and expenses including, without limitation, court costs and
reasonable attorneys' and consultants' fees and costs of litigation. For
purposes of indemnification under Article 9 of the Agreement, Losses will
include Losses from the ordinary or contributory negligence of the
indemnified party, but will exclude Losses arising from the gross negligence
or willful misconduct of such indemnified party, as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
"Material Adverse Effect" means an effect that, individually or when
taken together with all other such effects, is materially adverse to the
business, assets, operations or financial condition of ATEC, or to the
ability of Seller to consummate the transactions contemplated hereby.
"Material Contracts" means all Contracts to which ATEC, or Seller on
ATEC's behalf, is a party or by which ATEC or its assets is bound, other
than Leases: (i) for the employment of any employee; (ii) under which ATEC
has made advances, loans or guarantees to any Person, other than advances
for business expenses made to employees in the ordinary course of business,
including, without limitation, recourse leases and guaranteed repurchase
agreements; (iii) for borrowed money; (iv) that is a sales, distribution,
dealer or manufacturer's representative or franchise contract;
(v) prohibiting or restricting ATEC from freely engaging in any business or
competing anywhere in the world; (vi) granting a right of first refusal or
first negotiation or containing most favored customer/nation or price
redetermination or change of control provisions; (vii) relating to joint
ventures or agreements involving a sharing of profits; (viii) relating to
cleanup, abatement or other actions in connection with environmental
liabilities; (ix) with a term of more than six months which (A) is not
terminable by ATEC upon 30 days' or less notice at any time without penalty
or (B) involves a consideration in excess of $25,000 per annum; and (x) the
consequences of a default, termination, non-renewal or acceleration would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
"Permits" shall have the meaning set forth in Section 2.18.
"Permitted Encumbrances" shall mean (i) materialmen's, mechanics',
carriers', workmen's, repairmen's, landlords' statutory or other like liens
arising in the ordinary course of the Business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and as to
which appropriate reserves have been established which are reflected on the
Interim Balance Sheet, (ii) liens for current Taxes not yet due or any Taxes
being contested in good faith by appropriate proceedings and as to which
appropriate reserves have been established which are reflected on the
Interim Balance Sheet and (iii) liens created by Purchaser.
"Person" means any individual, corporation, partnership, association,
limited liability company, trust, governmental or quasi-governmental
authority or body or other entity or organization.
"Purchase Price" shall have the meaning set forth in Section 1.3.
"Purchaser" shall have the meaning set forth in the preamble hereof.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" shall have the meaning set forth in the preamble hereof.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 9.3.
"Seller Tax Period" means any Tax Period or portion thereof ending on
or before the Closing Date.
"Seller's Knowledge," "Knowledge of Seller" and variations thereof
shall mean and be limited to the actual knowledge of Xxxxxxxx X. Xxxxxx,
Xxxxxx X. X. Xxxxx, Xxxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxx.
"Tax" or "Taxes" mean all taxes, charges, fees, duties, levies or other
assessments, including (without limitation) income, gross receipts, capital
stock, net proceeds, ad valorem, turnover, real, personal and other property
(tangible and intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits, occupational,
interest equalization, windfall profits, unitary, severance and employees'
income withholding, unemployment and Social Security taxes and
contributions, customs charges, duties, assessments and charges (including
the recapture of any tax items such as investment tax credits), which are
imposed by the United States, or any Governmental Authority, including,
without limitation, any interest, penalties or additions to tax related
thereto imposed by any Governmental Authority (including any interest or
penalties with respect to such Taxes).
"Tax Period" or "Taxable Period" means any period prescribed by any
Governmental Authority for which a Tax Return is required to be filed or a
Tax is required to be paid.
"Tax Return" means all returns and reports of or with respect to Taxes
required to be filed with any Governmental Authority or depository.
