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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
SLM INTERNATIONAL, INC.
SPORT MASKA INC.
SLM ACQUISITION CORP. AND
SPORTS HOLDINGS CORP.
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AGREEMENT AND PLAN OF REORGANIZATION dated as of October 6, 1998 and
executed October 7, 1998, among SLM INTERNATIONAL, INC., a Delaware corporation
("Parent"), SPORT MASKA INC., a corporation continued under the laws of the
province of New Brunswick and a wholly-owned subsidiary of Parent ("Maska"), SLM
ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and SPORTS HOLDINGS CORP., a Delaware corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Maska and the
Company have approved the acquisition (the "Tropsport Share Purchase") by Maska
of all of the issued and outstanding equity of Tropsport Acquisitions Inc., a
corporation organized under the Canada Business Corporations Act and a
wholly-owned subsidiary of the Company ("Tropsport"), pursuant and subject to
the terms and conditions of this Agreement; and
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub with and into the Company (the "Merger"),
pursuant and subject to the terms and conditions of this Agreement (the
Tropsport Share Purchase and the Merger, collectively, the "Reorganization");
and
WHEREAS, Parent, Sub, Maska and the Company desire to make certain
representations, warranties and agreements in connection with the Reorganization
and to prescribe various conditions to the Reorganization; and
WHEREAS, as a condition and inducement to Parent's, Maska's and Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, certain
stockholders of the Company are entering into Voting Agreements with Parent,
pursuant to which agreements such stockholders agree, among other things, to
vote their Company Stock in favor of the Reorganization;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows
(with capitalized terms used herein without textual definition being defined in
Appendix I hereto):
1. THE REORGANIZATION
1.1. Tropsport Share Purchase. Subject to the provisions of this Agreement,
at the Closing, the Company shall sell, convey, assign, transfer and deliver to
Maska, and Maska will purchase, acquire and accept from the Company, (a)
14,194,100 Common Shares of Tropsport, (b) 22,162,370 Class A Preferred Shares
of Tropsport, and (c) 7,512,280 Class B Preferred Shares of Tropsport
(collectively, the "Tropsport Shares") for a purchase price of $40,000,000 (the
"Tropsport Share Purchase Price"). Such sale, conveyance, assignment, transfer
and
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delivery shall be effected by delivery by the Company of stock certificates
representing the Tropsport Shares to Maska endorsed in blank or accompanied by
duly executed stock powers.
1.2. Application of the Tropsport Share Purchase Price. Subject to the
provisions of this Agreement, at the Closing, the Company and Parent shall cause
the proceeds of the Tropsport Share Purchase Price to be applied, as follows:
(a) First, to the satisfaction of obligations in respect of Funded Debt to
be satisfied pursuant to the provisions of Sections 1.6(a), (b) and (d),
provided, however, that in connection with the satisfaction (or partial
satisfaction) of any such Funded Debt in respect of which one or more of the
Subsidiaries of the Company is an obligor, the Company shall be deemed,
immediately prior to such application, to have made a loan or capital
contribution, as applicable, to each such Subsidiary in an amount equal to the
respective amount of proceeds of the Tropsport Share Purchase Price applied to
the satisfaction (or partial satisfaction) of the obligation of such Subsidiary,
and
(b) Next, to the redemption, at a price per share equal to the redemption
price provided for in Section 5 of the Certificate of Designation filed by the
Company with the Secretary of State of the State of Delaware on May 12, 1994
which forms a part of the Company's Certificate of Incorporation which
redemption price shall be equivalent as of the Closing Date to the Preferred
Cash Share Price, of as many shares of Company Preferred Stock as can be
redeemed by payment of the balance, if any, remaining of the Tropsport Share
Purchase Price after application thereof in accordance with clause (a) hereof
(the dollar amount so applied, the "Preferred Stock Redemption Amount").
1.3. Effective Time of the Merger. Subject to the provisions of this
Agreement, and immediately following the consummation of the Tropsport Share
Purchase and the application of the Tropsport Share Purchase Price in accordance
with Section 1.2, a certificate of merger (the "Certificate of Merger") shall be
duly prepared, executed and acknowledged by the Surviving Corporation and
thereafter delivered to the Secretary of State of the State of Delaware, for
filing, as provided in the General Corporation Law of the State of Delaware (the
"DGCL"), on the Closing Date. The Merger shall become effective upon the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware (the "Effective Time").
1.4. Closing. The closing of the Reorganization (the "Closing") will take
place at the offices of Xxxxxx Xxxxxxxxx & Xxxxxx, 00 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 9:00 a.m. on October 28, 1998, or such other date or time as
the parties may mutually determine (the "Closing Date") provided that the
closing conditions set forth in Article 7 have been met or waived as provided in
Article 7 at or prior to the Closing, and if any of such conditions shall not
have been met or waived, then the Closing shall be adjourned until the third
Business Day following the date on which the last of such conditions has been
met or waived; provided, however, that the Closing Date shall in no event be
later than 11:59 p.m., November 30, 1998 (the "Termination Date").
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1.5. Effects of the Merger.
(a) At the Effective Time,
(i) the separate existence of Sub shall cease and Sub shall be merged
with and into the Company (Sub and the Company are sometimes referred to
herein as the "Constituent Corporations" and the Company is sometimes
referred to herein as the "Surviving Corporation"),
(ii) the Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL,
(iii) the By-laws of the Company as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL,
(iv) the directors of Sub at and as of the Effective Time shall become
the initial directors of the Surviving Corporation, and
(v) the officers of the Company at and as of the Effective Time, shall be
the initial officers of the Surviving Corporation.
(b) At and after the Effective Time, the Merger shall have the effects
specified under the DGCL, and the Surviving Corporation shall possess all the
rights, privileges, powers and franchises as well of a public as of a private
nature, and be subject to all the restrictions, disabilities and duties of each
of the Constituent Corporations; and all and singular the rights, privileges,
powers and franchises of each of the Constituent Corporations, and all property,
real, personal and mixed, and all debts due to either of the Constituent
Corporations on whatever account, as well as for stock subscriptions as all
other things in action or belonging to each of the Constituent Corporations
shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Constituent Corporations, and the title to any real estate vested by deed
or otherwise, under the laws of Delaware, in either of the Constituent
Corporations shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by it.
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1.6 Certain Concurrent Transactions.
(a) On the Closing Date, concurrent with and as a condition to the Closing,
all outstanding loans, principal, interest, penalties, premiums, fees and other
indebtedness (collectively, the "Funded Debt") then owing by any Acquired
Company under any of the following shall, subject to the provisions of Section
1.6(c), be paid in full on behalf of such Acquired Company:
(i) (A) the working capital facility of Tropsport under that certain
facility letter dated August 5, 1998 between Hongkong Bank of Canada and
Tropsport; (B) the working capital facility of Jofa AB under those certain
credit facilities dated February 16, 1998 and June 25, 1998 between
Nordbanken AB and Jofa AB; (C) the working capital facility of Jofa Norge
A/S under that certain credit facility dated September 14, 1994 between
Landsbanken A/S and Jofa Norge A/S; (D) the working capital facility of KHF
Sports Oy under that certain credit facility dated June 25, 1997 between
Xxxxxx Nordbanken (formerly Xxxxxx Pankki Oy) and KHF Sports Oy; (E) the
working capital facility of KHF Sports Oy under that certain credit
facility dated November 29, 1996 between Leonia Bank plc (formerly
Postipankki Oy ja) and KHF Sports Oy; and (F) the aggregate amount of all
overdrafts, if any, on any bank accounts maintained by any Acquired Company
(collectively and net of the aggregate amount of all cash or cash
equivalents in any bank accounts maintained by any Acquired Company, the
"Working Capital Borrowings");
(ii) the Company's 12.00% Subordinated Notes due 2000 in the aggregate
original principal amount of $24,000,000 (the "Subordinated Notes") and the
related Note and Stock Purchase Agreements dated as of December 29, 1992,
as amended, between the Company and Equitable Capital Private Income and
Equity Partnership II, L.P. and National Union Fire Insurance Company of
Pittsburgh, PA; and
(iii) (A) Master Lease Agreement No. 995113 PQ with Hongkong Bank
Leasing, Division of Hongkong Bank of Canada in the name of Tropsport
Acquisitions Inc.; (B) demand loan of KHF Sports Oy with Bank of Finland,
Valtionkonttori Account No. 800019-3337; (C) pension fund liability of Jofa
AB under the FPG/PRI-System established pursuant to Swedish law; (D)
pension liabilities of Jofa AB to former employees listed on Schedule
1.6(a)(iii)(D); (E) STP loan of Jofa AB to AMF Pension; (F) educational
fund liability of Jofa AB established in connection with the sale of the
share capital of Jofa AB by XX Xxxxxx; and (G) any other Funded Debt (not
included in clause (i) or (ii) above) of the Company in respect of
indebtedness for borrowed money or the deferred purchase price of assets or
other property (including all notes payable and drafts accepted
representing extensions of credit and all obligations evidenced by bonds,
debentures, notes or other similar instruments but excluding indebtedness
of any Acquired Company to any other Acquired Company and payables incurred
in the
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ordinary course of business payable and outstanding as of the Closing Date
(collectively, the "Other Debt").
(b) Subject to the provisions of Sections 1.2(a) and 1.6(c), Parent agrees
to provide or cause to be provided to the Company at Closing funds or substitute
financing and other undertakings and assurances sufficient for, and the Company
agrees to use such funds or substitute financing only for:
(i) the payment in full as aforesaid of all Funded Debt by wire
transfers of immediately available funds, in the currencies called for in
the applicable agreements, instruments or other documents evidencing or
providing therefor (the "Applicable Credit Documents"), and
(ii) the discharge or release of any liability or obligation of any
Acquired Company in respect of outstanding letters of credit (or similar
undertakings) issued under any Applicable Credit Documents,
in each case, against delivery to Parent of any agreement, instrument,
certification, statement or other document as Parent may reasonably request to
evidence or provide for the termination of the Applicable Credit Documents,
release or discharge of each Acquired Company's liabilities and obligations
thereunder (other than residual liabilities, such as indemnities and liabilities
for post-termination balance reconciliations, which customarily survive
termination) and the termination, release or discharge of all Liens securing any
Funded Debt.
(c) The provisions of Sections 1.6(a) and 1.6(b) to the contrary
notwithstanding, Parent shall have the right to elect to cause or permit any
obligation constituting Funded Debt, other than the Subordinated Notes, to
remain outstanding and in effect from and after the Effective Time by
designating such obligation in a notice given to the Company no later than ten
Business Days prior to the Closing Date (the obligations so designated, the
"Designated Funded Debt"). In the event Parent shall elect to give the Company a
notice pursuant to this Section 1.6(c), then any provision of this Agreement to
the contrary notwithstanding with respect to the Designated Fund Debt:
(i) no Acquired Company shall have any obligation (other than to
provide reasonable assistance, without cost or expense to any Acquired
Company) to obtain from the obligee any Consent required to permit the
Designated Funded Debt to remain so outstanding and in effect without
Violation; and
(ii) the absence of any such Consent or the existence of any such
Violation shall not relieve Parent, Maska or Sub from their obligations to
effect the Reorganization.
(d) Parent may at Closing (or may cause Maska to) (i) pay directly to the
holder(s) of any Funded Debt for the benefit of the Company any amount required
to be paid pursuant to this
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Section 1.6; any amounts so paid shall be deemed to have been paid at Closing to
the Company and simultaneously paid by the Company to the applicable holders,
and (ii) deposit or cause to be deposited with the Paying Agent for the benefit
of the holders of Company Stock, the amount, if any, by which the Tropsport
Share Purchase Price exceeds the aggregate amount of payments required to be
made pursuant to Section 1.2.
2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; CONVERSION OF CERTIFICATES.
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of capital
stock of the Company, or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the capital
stock of Sub shall be converted into and become one (1) fully paid and
nonassessable share of Class A Common Stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock. All shares of capital stock of the
Company that are owned by the Company as treasury stock shall be canceled and
retired and shall cease to exist and no other consideration shall be delivered
in exchange therefor.
(c) Conversion of Company Preferred Stock. At the Effective Time, each
share of 6.5% Cumulative Redeemable Convertible Preferred Stock, par value $.01
per share, of the Company ("Company Preferred Stock") outstanding immediately
prior to the Effective Time and after giving effect to any redemption of Company
Preferred Stock required to be made pursuant to Section 1.2 (except Dissenting
Shares) shall be converted into the right to receive from Parent an amount in
cash equal to the sum of (i) $100 plus (ii) the Accrued Dividend Amount (the
"Preferred Cash Share Price") in accordance with the terms set forth in this
Agreement, the Letter of Transmittal and the Paying Agent Services Agreement.
The product of (x) the Preferred Cash Share Price, multiplied by (y) the total
number of shares (including Dissenting Shares) of Company Preferred Stock
outstanding immediately prior to the Effective Time (and after giving effect to
any redemption of Company Preferred Stock required to be made pursuant to
Section 1.2), is referred to in the Agreement as the "Preferred Stock Merger
Consideration". All such shares of Company Preferred Stock, other than
Dissenting Shares, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Preferred Stock shall cease to have any
rights with respect thereto, except the right to receive the Preferred Cash
Share Price per full and fractional share evidenced by such certificate (without
any interest payable thereon), upon the surrender of such certificate and
delivery of an executed Letter of Transmittal (the "Letter of Transmittal") in
the form of Exhibit 2.1(c) hereto.
(d) Conversion of Company Common Stock. At the Effective Time, each share
of Class A Common Stock, par value $.01 per share ("Class A Common"), or Class B
Common
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Stock, par value $.01 per share ("Class B Common" and together with the Class A
Common, collectively, "Company Common Stock"), of the Company outstanding
immediately prior to the Effective Time (except Dissenting Shares) shall be
converted into the right to receive from Parent (and, in the circumstances
described in Section 1.6(d)(ii), from the Company) an amount in cash, payable at
or about the Effective Time, equal to the quotient of (x) the Common Stock
Merger Consideration, divided by (y) the total number of shares (including
Dissenting Shares) of Company Common Stock outstanding immediately prior to the
Effective Time (the "Common Cash Share Price"), in accordance with the terms set
forth in this Agreement, the Letter of Transmittal and the Paying Agent Services
Agreement. All such shares of Company Common Stock, other than Dissenting
Shares, shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Common Cash Share Price per
full and fractional share evidenced by such certificate (without any interest
payable thereon), upon the surrender of such certificate and delivery of an
executed Letter of Transmittal. The Company Common Stock and Company Preferred
Stock are sometimes referred to herein collectively as the "Company Stock" and
the respective consideration payable in the Merger to the respective holders
(other than Dissenting Holders) of the Company Preferred Stock and Company
Common Stock, as set forth in Section 2.1(c) and this Section 2.1(d), is
sometimes referred to herein as the "Merger Consideration".
(e) Dissenting Shares. Any shares of Company Preferred Stock or Company
Common Stock held by a Person who validly objects, with respect to the shares of
Company Preferred Stock and/or Company Common Stock so held, to the Merger and
otherwise complies with all provisions of Section 262 of the DGCL concerning
appraisal rights with respect to such shares are referred to herein as
"Dissenting Shares" and such holder thereof is referred to herein as a
"Dissenting Holder". Dissenting Shares shall not be converted as described in
Section 2.1(c) or Section 2.1(d) but shall from and after the Effective Time
represent only the right to receive such consideration as may be determined to
be due to the Dissenting Holder in respect thereof pursuant to the DGCL;
provided, however, that Dissenting Shares as to which the Dissenting Holder
shall, after the Effective Time, withdraw his demand for appraisal or lose his
right of appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted, as of the Effective Time, into the right to receive the Merger
Consideration applicable to such shares (without any interest payable thereon).
2.2 Schedules of Indebtedness; Preferred Cash Share Price; Reserve Amount.
(a) The Company will prepare and deliver to the Parent:
(i) five days prior to the Closing Date, a schedule, certified as true
and correct by the Chief Financial Officer of the Company, setting forth
estimates as of the Closing Date of the Subordinated Notes Discharge
Amount, the Working Capital Borrowings Discharge Amount, the Other Debt
Discharge Amount, and the Preferred Cash Share Price, and
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(ii) on the day prior to the Closing Date, a schedule, certified as
true and correct by the Chief Financial Officer of the Company, setting
forth estimates as of the Closing Date of the Subordinated Notes Discharge
Amount, the Working Capital Borrowings Discharge Amount, the Other Debt
Discharge Amount, and the Preferred Cash Share Price and in the case of any
estimates in respect of "Discharge Amounts" copies of supporting
documentation received from the holders thereof.
(b) The Company will prepare and deliver to the Parent:
(i) five days prior to the Closing Date a schedule, certified as true
and correct by the Chief Financial Officer of the Company, setting forth an
estimate of the fees and expenses and other matters (including, without
limitation, Retention Payments) payable by the Company pursuant to Section
6.7 and any other provision of this Agreement.
(ii) on the day prior to the Closing Date, a schedule, certified as
true and correct by the Chief Financial Officer of the Company, setting
forth as of the Closing Date the fees and expenses and other matters
(including, without limitation, Retention Payments) payable by the Company
pursuant to Section 6.7 and any other provision of this Agreement, together
with invoices, receipts, and bills or other statements detailing the
amounts thereof (the total of such amounts, the "Reserve Amount").
(c) The Company will afford representatives of the Parent a reasonable
opportunity to meet with the individuals responsible for the preparation of the
schedules and certificates described in this Section 2.2 prior to and following
the delivery thereof and to ask questions of such individuals concerning the
contents of such schedules and certificates.
2.3 Paying Agent. Parent and the Company have designated United States
Trust Company of New York (the "Paying Agent"), pursuant to the terms of a
Paying Agent Services Agreement (the "Paying Agent Services Agreement") in the
form of Exhibit 2.3(a) hereto, to act as agent for the holders of Company Stock
to receive Merger Consideration pursuant to Section 2.1(c) or Section 2.1(d). At
or immediately prior to the Closing, Parent (and, in the circumstances described
in Section 1.6(d)(ii), the Company) shall deposit or cause to be deposited with
the Paying Agent in trust for the benefit of such holders of Company Stock the
cash necessary to allow the Paying Agent to pay the aggregate Merger
Consideration which is payable immediately after the Effective Time to such
holders. Thereafter, Parent shall make such additional cash deposits with the
Paying Agent as shall be necessary to make payment of the Merger Consideration
in respect of the Dissenting Shares of any Dissenting Holder who shall become
entitled to payment pursuant Section 2.1(e) as a result of the withdrawal of
demand for or loss of the right of appraisal.
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2.4 Procedure for Payment.
(a) Payment Procedures. As soon as reasonably practicable, the Secretary of
Parent shall cause to be mailed to each holder of record of a certificate or
certificates (the "Certificates") which represent outstanding shares of Company
Stock to be converted into the right to receive Merger Consideration, and to any
Person who becomes such a holder of record prior to the Effective Time,
(i) a Letter of Transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent), and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Paying Agent or to
such other agent or agents as may be mutually appointed by Parent and the
Company, together with the Letter of Transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration pursuant to the provisions of this Agreement, the Letter of
Transmittal and the Paying Agent Services Agreement; and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Stock which is not registered in the transfer records of the Company,
the Merger Consideration may be issued to a transferee if the Certificate
representing such Company Stock is presented to the Paying Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence that
any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration as contemplated by and subject to the
conditions of this Section 2.4.
(b) No Further Stock Transfers. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article 2.
(c) Distribution of Merger Consideration. Immediately after the Effective
Time, the Paying Agent shall make payment of the Merger Consideration in
accordance with the terms of this Agreement, the Letter of Transmittal and the
Paying Agent Services Agreement, to such holders of Company Stock who are
entitled to the same pursuant to Sections 2.1(c), 2.1(d) and 2.4.
(d) Release of Funds held by Paying Agent. Any portion of the Merger
Consideration that has not been duly claimed by the former stockholders of the
Company in accordance with
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the terms hereof prior to the expiration of the 12 month period following the
date such portion of the Merger Consideration was deposited with the Paying
Agent shall be delivered to Parent at the end of such period. Any former
stockholder of the Company shall, subject to the other provisions of this
Agreement and to applicable escheat and abandoned property laws, thereafter look
only to Parent for delivery of the Merger Consideration (without interest) in
respect of the Company Stock previously held by such stockholder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent, Maska and Sub as follows:
3.1 Organization, Standing and Power.
(a) Schedule 3.1(a) hereto contains a complete and accurate list for each
Acquired Company of its name, its jurisdiction of incorporation or organization,
identification of the type of entity it is, other jurisdictions in which it is
authorized to do business, the names of its directors and officers (or
comparable executives) and, in the case of each Subsidiary of the Company, its
capitalization (including the identity of each equity holder and the number of
shares or other ownership interest ("Subsidiary Equity") held by each such
equity holder).
(b) The Company is a corporation and each other Acquired Company is a
corporation or other entity described in Schedule 3.1(a) hereto duly
incorporated or organized, validly existing, and in good standing under the laws
of its jurisdiction of incorporation or organization, with full corporate or
other entity power and authority to conduct its business as it is now being
conducted and to own or use the properties and assets that it purports to own or
use. Each Acquired Company is duly qualified to do business as a foreign
corporation or other entity and is in good standing under the laws of each state
or other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification, except where the failure to be so qualified would not have a
Company Material Adverse Effect.
(c) The Company has delivered to Parent, Maska and Sub correct and complete
copies of the Organizational Documents of each Acquired Company, as currently in
effect.
3.2 Capital Structure.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 1,000,000 shares of Class A Common, 1,000,000 shares of Class B
Common and 125,000 shares of preferred stock, par value $.01 per share, all of
which preferred stock has been issued in one series constituting the Company
Preferred Stock.
(b) At the close of business on the last Business Day immediately preceding
the date hereof,
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(i) 125,000 shares of Company Preferred Stock were outstanding,
(ii) (A) 48,330 shares of Class B Common were outstanding, and (B)
354,219 shares of Class B Common were reserved for issuance upon conversion
of the outstanding shares of Class A Common,
(iii) (A) 354,219 shares of Class A Common were outstanding, (B)
48,330 shares of Class A Common were reserved for issuance upon conversion
of the outstanding shares of Class B Common, (C) 69,444 shares of Class A
Common were reserved for issuance upon conversion of the outstanding shares
of Company Preferred Stock, (D) 7,718 shares of Class A Common were
reserved for issuance upon exercise of outstanding stock options pursuant
to The Sports Holdings Corp. 1993 Management Equity Ownership Program and
The Sports Holdings Corp. 1994 Management Equity Ownership Program
(collectively, the "MEOP"), and (E) 1,590 shares of Class A Common were
held by the Company as treasury shares, and
(iv) no bonds, debentures, notes or other indebtedness having the
right to vote (or convertible into securities having the right to vote) on
any matters on which stockholders may vote ("Voting Debt") of or pertaining
to the Company, were issued or outstanding.
(c) All outstanding shares of Company Stock are validly issued, fully paid
and nonassessable and none of them is subject to preemptive rights. To the best
of the Company's Knowledge, except as set forth in Schedule 3.2(c) hereto, there
are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of the Company. Except for the
conversion features pertaining to the Company Preferred Stock and to the Class A
Common and Class B Common vis-a-vis each other, for and as contemplated by the
MEOP and outstanding options granted under the MEOP, and as set forth in
Schedule 3.2(c) hereto, as of the date hereof, there are no options, warrants,
calls, rights, agreements or other instruments or arrangements to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock, other equity, or any Voting Debt of the Company or obligating the
Company to grant, extend or enter into any such option, warrant, call, right,
agreement or other instrument or arrangement.
(d) All outstanding Subsidiary Equity of each Subsidiary of the Company is
validly issued, fully paid and nonassessable (or the fullest equivalent under
Applicable Laws of foreign jurisdictions) and none of it is subject to
preemptive rights. Except as set forth in Schedule 3.2(d) hereto, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of any Subsidiary Equity. There are no options, warrants, calls,
rights, agreements or other instruments or arrangements to which the Company or
any Subsidiary of the Company is a party or by which any of them is bound
obligating the Company or any Subsidiary
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of the Company to issue, deliver or sell, or cause to be issued, delivered or
sold, outstanding or additional Subsidiary Equity or any Voting Debt of or
pertaining to any Subsidiary of the Company or obligating the Company or any
Subsidiary of the Company to grant, extend or enter into any such option,
warrant, call, right, agreement or other instrument or arrangement. All of the
outstanding Subsidiary Equity of each Subsidiary of the Company is owned of
record and beneficially by one or more of the Acquired Companies free and clear
of all Liens other than Permitted Liens.
(e) Except as set forth on Schedule 3.2(e), none of the Acquired Companies
own, directly or indirectly, any capital stock or other ownership interests in
any corporation, partnership, business association, joint venture or other
entity (other than the Company's Subsidiaries) or is obligated to make any
capital contribution or advance to, or other investment in, any Person (other
than advances to employees, sales or other agents, made in the ordinary course
of business).
(f) The authorized capital stock of Tropsport consists of (i) an unlimited
number of Common Shares, (ii) an unlimited number of Class A Preferred Shares,
(iii) an unlimited number of Class B Preferred Shares, (iv) an unlimited number
of Class C Preferred Shares, and (v) an unlimited number of Class D Preferred
Shares. The Tropsport Shares constitute all of the issued and outstanding shares
in the capital of Tropsport. The delivery of certificates evidencing the
Tropsport Shares, endorsed in blank or accompanied by duly executed stock
powers, to Maska pursuant to the provisions of this Agreement, against delivery
of the Tropsport Share Purchase Price, will transfer to Maska the fullest
ownership interest therein provided for under Applicable Law, free and clear of
all Liens other than Permitted Liens.
3.3 Authority; No Conflict.
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to approval of this Agreement by the
stockholders of the Company, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and, subject to the
approval of this Agreement by the stockholders of the Company, the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company. The
Board of Directors of the Company has approved this Agreement and determined
that the transactions contemplated by this Agreement are in the best interest of
its stockholders and to recommend to such stockholders that they vote in favor
thereof. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms, except as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally, and (ii) general
equitable principles.
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(b) Except as set forth in Schedule 3.3(b) hereto, the execution and
delivery of this Agreement by the Company does not, and the consummation by the
Company of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of
a benefit under, or the creation of a Lien on assets (any such conflict,
violation, default, right of termination, cancellation or acceleration,
loss or creation, a "Violation"), pursuant to any provision of the
Organizational Documents of any Acquired Company, or
(ii) except as contemplated by Section 3.3(c), result in any Violation
of any loan or credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation or instrument, or of any Applicable Law, applicable
to any Acquired Company or its properties or assets which Violations in the
aggregate would have a Company Material Adverse Effect.
(c) Except as set forth in Schedule 3.3(c) hereto, no consent, approval,
waiver, order or authorization of, or registration, declaration, notification or
filing with or to, any Governmental Authority or other Person not a party to
this Agreement (other than as stockholders of the Company) (any such consent,
approval, waiver, order or authorization, a "Consent"; and any such
registration, declaration, notification or filing, a "Filing") is required by
any Acquired Company, or by any Affiliate of the Company with respect to any
Acquired Company, in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, except for,
(i) any required Filing of a pre-merger notification report by the
Company under the HSR Act, any required Filing of a pre-notification of the
proposed merger under the Competition Act, and any required Consent of or
Filing with any Governmental Authority under any other applicable Antitrust
Law, or under the Investment Canada Act, and
(ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states and jurisdictions in which the Company is
qualified to do business.
(d) The affirmative vote of the holders of a majority of the votes
entitled to be cast by the holders of all outstanding shares of Class A Common
and Company Preferred Stock voting together as a single class is the only
shareholder vote required to approve the Reorganization.
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3.4 Employee Benefit Plans.
(a) For purposes of this Agreement:
(i) "Benefit Plan" means each and every employee benefit plan,
contract, program, policy or arrangement, including, without limitation,
any pension, retirement or deferred compensation plan, incentive
compensation plan, stock or other equity based plan, unemployment
compensation plan, vacation pay, retention pay, severance pay, notice of
termination, bonus or benefit arrangement, insurance or hospitalization
program or any other fringe benefit arrangements for any current or former
employee, director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding under which or with respect
to which any Acquired Company (or any ERISA Affiliate of any Acquired
Company) has any direct or indirect, actual or contingent liability,
whether or not such arrangements constitute employee benefit plans as
defined in section 3(3) of ERISA;
(ii) "Business Benefit Plan" means any Benefit Plan which provides
benefits exclusively with respect to employees or former employees of the
Acquired Companies in the United States;
(iii) "Canadian Benefit Plan" means any Benefit Plan which provides
benefits exclusively with respect to employees or former employees of the
Acquired Companies in Canada;
(iv) "Group Benefit Plan" means any Benefit Plan, other than a
Business Benefit Plan, which provides benefits with respect to employees or
former employees of the Acquired Companies in the United States;
(v) "Welfare Plan" means any Benefit Plan which is a welfare plan
within the meaning of section 3(1) of ERISA and provides benefits with
respect to employees of the Acquired Companies in the United States;
(vi) "Retiree Welfare Plan" means any Welfare Plan which provides
benefits with respect to employees or former employees of the Acquired
Companies in the United States beyond their retirement or other termination
of service (other than coverage mandated by section 4980B of the Code, the
cost of which is fully paid by the former employee or his dependents); and
(vii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the regulations thereunder.
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(viii) "ERISA Affiliate" means, with respect to an Acquired Company,
any other Person that, together with the Company, would be treated as a
single employer under Section 414 of the Code.
All employees of the Acquired Companies are located in the United States,
Canada, Finland, Sweden or Norway. No employee of the Acquired Companies in any
of the foregoing countries other than the United States and Canada participates
in any Benefit Plan other than as listed pursuant to Section 3.4(i).
(b) Schedule 3.4 hereto sets forth a list of all Business Benefit Plans,
all Group Benefit Plans and all Canadian Benefit Plans. The Company has, with
respect to each such plan, delivered to Parent, Maska and Sub true and complete
copies of: (i) all plan texts and contracts and agreements relating thereto and
for each such plan that is not in writing a description thereof; (ii) all
existing summary plan descriptions; (iii) the most recent annual report
(including all schedules thereto); (iv) the most recent actuarial valuation; and
(v) if the plan is intended to qualify under section 401(a) or 403(a) of the
Code, the most recent determination letter received from the Internal Revenue
Service.
(c) Except as set forth in Schedule 3.4 hereto, with respect to each
Benefit Plan, no Acquired Company or ERISA Affiliate has any direct or indirect,
actual or contingent material liability for such plans, other than to make
payments for contributions, premiums or benefits when due, all of which payments
have been timely made. No assets of any Acquired Company or any ERISA Affiliate
are subject to any Lien under sections 302(f), 306(a), 307(a) or 4068 of ERISA,
or sections 401(a)(29) or 412(n) of the Code or any other Applicable Law
relating to employee benefit plans.
(d) Except as set forth in Schedule 3.4 hereto, with respect to each
Business Benefit Plan, Group Benefit Plan, or Canadian Benefit Plan: (i) each
such plan complies in all material respects in form and operation with
Applicable Law; (ii) each such plan which is intended to be qualified under
sections 401(a) or 403(a) of the Code is so qualified and each such plan which
is intended to be registered under Applicable Law, including the Income Tax Act
(Canada), is so registered; (iii) no payment is required under any such plan
that, by operation of section 280G of the Code, would not be deductible; (iv)
each such plan which is a "group health plan" (as defined in section 607(1) of
ERISA) has been operated in substantial compliance with the provisions of Part 6
of Title I of ERISA and section 4980B of the Code ("COBRA"); (v) there are no
material disputes, actions, suits or claims pending, nor to the Company's
Knowledge threatened, against any such plan; (vi) there have been no material
"prohibited transactions" (as described in section 406 of ERISA or section 4975
of the Code) with respect to any Benefit Plan and no Acquired Company has
engaged in any material prohibited transaction; and (vii) there have been no
acts or omissions by any Acquired Company which have given rise to or could
reasonably be expected to give rise to material fines, penalties, taxes or
related charges under section 502 of ERISA or Chapters 43, 47 or 68 of the Code
or any other Applicable Law relating to Benefit Plans for which any Acquired
Company would be liable (other than fines, penalties, taxes or related
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charges which have been paid or fully reserved against in the Financial
Statements or Interim Financials.)
(e) Schedule 3.4 hereto sets forth a list of all Retiree Welfare Plans.
Except as set forth in Schedule 3.4 hereto, no Business Benefit Plan, Group
Benefit Plan or Canadian Benefit Plan provides for severance pay, notice of
termination, unemployment compensation or any similar payment with respect to
any current or former employee, officer or director of or consultant to any
Acquired Company. Except as set forth in Schedule 3.4 hereto, the consummation
of the transactions contemplated by this Agreement, either separately or in
conjunction with a termination of employment, will not (i) entitle any current
or former employee of the Acquired Companies to severance pay, notice of
termination, unemployment compensation or any similar payment, (ii) accelerate
the time of payment or vesting of or increase the amount of compensation due to
any such current or former employee of the Acquired Companies, or (iii)
constitute or involve a "prohibited transaction" (as defined in section 406 of
ERISA or section 4975 of the Code).
(f) Schedule 3.4 hereto sets forth each Benefit Plan that is subject to
Title IV of ERISA. Except as set forth in Schedule 3.4 hereto, with respect to
such plans, (i) there has been no material reportable event (as described in
section 4043 of ERISA) which has not been waived; (ii) no steps have been taken
to terminate any such plan, (iii) there has been no withdrawal (within the
meaning of section 4063 of ERISA) of a "substantial employer" (as defined in
section 4001(a)(2) of ERISA); (iv) no event or condition has occurred which
could reasonably be expected to constitute grounds under section 4042 of ERISA
for the termination of or the appointment of a trustee to administer any such
plan; and (v) if each such plan were terminated immediately after the Effective
Time, there would be no material unfunded liabilities with respect to any such
plan, its participants or beneficiaries or the Pension Benefit Guaranty
Corporation.
(g) Except as set forth in Schedule 3.4 hereto, no Business Benefit Plan or
Group Benefit Plan is a "multiple employer plan" or a "multi-employer plan",
within the meaning of ERISA or the Code and none of the Acquired Companies has
any direct or indirect, actual or contingent liability with respect to any
partial or complete withdrawal (as such terms are defined in sections 4203 and
4205 of ERISA) from any such multi-employer plan. Except as set forth in
Schedule 3.4 hereto, with respect to any Business Benefit Plan or Group Benefit
Plan that is a multi-employer plan, (i) no such plan is, or to the Company's
Knowledge is expected to be, in the process of reorganization or termination,
(ii) none of the Acquired Companies has received any notice that (A) increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, (B) any such plan is or has been funded at a rate
less than required under section 412 of the Code, or (C) any such plan is or may
become insolvent, and (iii) the Acquired Companies have complied in all material
respects with their obligations to make contributions as required by the terms
of any such plan, the terms of any collective bargaining agreements, and
Applicable Law.
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(h) Except as set forth in Schedule 3.4 hereto, each Canadian Benefit Plan
which is a funded plan is fully funded.
(i) Schedule 3.4 hereto sets forth each pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation, bonus, group
insurance or other incentive or welfare contract, plan or arrangement relating
to or with respect to its business pursuant to which any Foreign Subsidiary is a
party, is bound or has any material liability.
3.5 Labor Relations. Except as set forth in Schedule 3.5 hereto, (a) there
is no pending or, to the Company's Knowledge, threatened strike, picketing, work
stoppage or work slowdown involving employees of the Acquired Companies and
during the past three years there has not been any such action, (b) no union is
certified by the National Labor Relations Board or other Governmental Authority
as collective bargaining agent for employees of any of the Acquired Companies,
(c) no written demand is pending for recognition, no election or campaign for
certification is pending, and, to the Company's Knowledge, no such demand,
election or campaign is scheduled, or was made or scheduled within the past
three years (d) none of the Acquired Companies is a member of an employers
association or a party to a collective bargaining agreement, (e) there is no
unfair labor practice charge or complaint against any of the Acquired Companies
pending or, to the Company's Knowledge, threatened before the National Labor
Relations Board or any similar state or foreign agency, (f) there are no written
grievances pending against any of the Acquired Companies arising out of any
collective bargaining agreement or other grievance procedure, (g) to the
Company's Knowledge, no charges with respect to or relating to any of the
Acquired Companies are pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices, (h) the Company has not received written notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of any Applicable Laws relating to labor or employment to conduct an
investigation with respect to or relating to any of the Acquired Companies and,
to the Company's Knowledge, no such investigation is in progress, (i) since the
enactment of the Worker Adjustment and Retraining Notification Act (the "WARN
Act"), none of the Acquired Companies has effectuated a "plant closing" or "mass
layoff" (as defined in the WARN Act or any similar state, local or foreign law
or regulation) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of the Acquired
Companies, without complying with the WARN Act or similar state, local or
foreign law or regulation, (j) none of the Acquired Companies' employees has
suffered an "employment loss" (as defined in the WARN Act) during the ninety day
period prior to the date of this Agreement, and (k) the Acquired Companies are
in material compliance with their respective obligations, if any, arising under
Applicable Laws relating to the termination of employees, employment practices,
terms and conditions of employment, wages, hours of work and occupational safety
and health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other Applicable Law.
-18-
3.6 Litigation. There are no judicial or administrative actions, claims,
suits, proceedings or investigations pending or, to the Company's Knowledge,
threatened against the Company that question the validity of this Agreement or
any action to be taken by the Company in connection with this Agreement. Except
as set forth in Schedule 3.6 hereto, there is no material litigation, action,
suit, arbitration, proceeding or governmental investigation pending or, to the
Company's Knowledge, threatened, or any order, injunction or decree outstanding,
against or relating to any of the Acquired Companies, or any of their respective
properties or assets.
3.7 Real Property.
(a) North American Owned Real Property.
(i) Schedule 3.7(a) hereto sets forth, by owner, a list of all of the
real or immoveable property located in the United States or Canada and
owned by any Acquired Company, including the legal descriptions and street
addresses thereof (the "North American Owned Real Property") and all
current leases or occupancy agreements pursuant to which any Person other
than an Acquired Company occupies any portion of the North American Owned
Real Property (the "North American Tenant Agreements").
(ii) Except as set forth on Schedule 3.7(a), no such Acquired Company
has received any notice of and the Company has no Knowledge of any material
violation, or claimed material violation, of any covenant, condition or
other restriction, mineral right, reservation or agreement, royalty
agreement, mortgage, security interest, right of way, license, easement, or
other agreement to which any of the North American Owned Real Property is
subject.
(iii) Except as set forth on Schedule 3.7(a), no such Acquired Company
has entered into any agreement with any Person relating to the North
American Owned Real Property, which imposes upon such Acquired Company an
obligation to make any contribution or dedication of money or land or to
construct, install or maintain any improvements of a public or private
nature, other than maintenance and like agreements entered into in the
ordinary course of business.
(iv) Except as set forth on Schedule 3.7(a), the Company has no
Knowledge of any special assessments or other assessments for public
improvements against any of the North American Owned Real Property the
current (or any prior) periodic payment of which is unpaid and for which
any such Acquired Company is liable, including without limitation, those
for construction of sewer, water, gas and electrical lines and mains,
streets, roads, sidewalks and curbs, and the Company has received no notice
that any such assessments are currently pending or proposed.
(v) Except as set forth on Schedule 3.7(a), each such Acquired Company
has, with respect to the North American Owned Real Property owned by it,
obtained all those
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certificates of occupancy, underwriters and building inspection
certificates relating to electrical, plumbing, HVAC or other licensed or
regulated work, zoning, building, housing, safety, health, fire,
environmental protection, and other permits, licenses and approvals which
such Acquired Company is required to obtain by Applicable Law, other than
those the absence of which would not materially adversely affect such
Acquired Company's ability to use and occupy such North American Owned Real
Property as currently used and occupied by such Acquired Company.
(vi) Except as set forth on Schedule 3.7(a), (A) none of the North
American Owned Real Property is located, in whole or in part, within an
area identified by any Governmental Authority as a flood hazard area, and
(B) there does not exist any encroachment, fence dispute, boundary dispute,
boundary line question, water dispute, or drainage dispute concerning or
affecting any of the North American Owned Real Property which would
materially adversely affect the ability of the Acquired Company owning the
same to use and occupy such North American owned Real Property as currently
used and occupied by such Acquired Company.
(vii) Except as set forth on Schedule 3.7(a), no Acquired Company has
received notice of the existence of any violation or default (or claimed
violation or default) of any applicable wetlands or coastal, inland or
navigable waterways laws, rules, regulations, permits or orders relating to
the North American Owned Real Property owned by such Acquired Company and
which, if uncured or unremedied, could reasonably be expected to materially
adversely affect the ability of such Acquired Company to use and occupy
such North American Owned Real Property as currently used and occupied by
such Acquired Company.
(viii) Except as set forth on Schedule 3.7(a), each Acquired Company
is in material compliance with all applicable building, zoning, land use or
other similar statutes, laws, ordinances, regulations, permits or other
requirements in respect of the North American Owned Real Property owned by
it and such Acquired Company has not received any notice of any violation
(or claimed violation) of any of the foregoing, which, if uncured or
unremedied, would result in the imposition of a material fine or would
materially adversely affect the ability of such Acquired Company to use and
occupy such North American Owned Real Property as currently used and
occupied by such Acquired Company.
(ix) None of the North American Owned Real Property is leased to any
Person or to the Company's Knowledge subject to any Lien other than
Permitted Liens, nor does any Person other than the Acquired Company owning
the same occupy any of the North American Owned Real Property, except
pursuant to the North American Tenant Agreements. Except as set forth on
Schedule 3.7(a), no Acquired Company owning any North American Owned Real
Property has received notice of any, and to the Company's Knowledge there
exists no, dispute, claim, event of default or other event which
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constitutes or would constitute (with notice or lapse of time or both) a
default by such Acquired Company under any North American Tenant Agreement,
which would give the other party thereto the right to terminate such North
American Tenant Agreement and by reason to which such other party could
reasonably be expected to exercise such right to terminate.
(x) Except as set forth on Schedule 3.7(a), the Company has no
Knowledge of any structural defect in the buildings and improvements
located on any North American Owned Real Property or the electrical,
plumbing, HVAC systems thereof which could reasonably be expected to
materially adversely affect the ability of the Acquired Company owning the
same to use and occupy such North American Owned Real Property as currently
used and occupied by such Acquired Company. Except as set forth in Schedule
3.7(a), all such buildings and improvements have been maintained by the
Acquired Companies in reasonably good operating condition and repair,
normal wear and tear excepted.
(b) North American Leased Real Property.
(i) Schedule 3.7(b) hereto sets forth, by tenant, a list of all of the
real property located in the United States or Canada and leased (as tenant)
by any Acquired Company (the "North American Leased Real Property") and
identifies each lease or other occupancy agreement pursuant to which the
tenant occupies any portion of the North American Leased Real Property
(collectively, the "North American Real Property Leases"). A true, correct
and complete copy of each written North American Real Property Lease and a
true and correct summary of the principal terms of each oral North American
Real Property Lease has been made available to Parent, Maska and Sub. Each
of the North American Real Property Leases is valid, binding and in full
force and effect. Except as set forth on Schedule 3.7(b), with respect to
each North American Real Property Lease, (A) all rent and other amounts due
and payable by the tenant thereunder on or prior to the Closing Date will
have been paid prior to the Closing Date; (B) no consent of any lessor to
the consummation of the transactions contemplated by this Agreement is
required thereunder; and (C) the Acquired Company which is the tenant
thereof has neither given nor received notice of any, and to the Company's
Knowledge there exists no, dispute, claim, event of default or other event
which constitutes or would constitute (with notice or lapse of time or
both) a default by such Acquired Company or any other party thereunder
which would give the other party thereto the right to terminate such North
American Real Property Lease and by reason of which such other party could
reasonably be expected to exercise such right to terminate.
(ii) Except as set forth on Schedule 3.7(b), each Acquired Company
has, with respect to each North American Leased Real Property leased by it,
obtained all those certificates of occupancy, underwriters and building
inspection certificates relating to electrical, plumbing, HVAC or other
licensed or regulated work, zoning, building,
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housing, safety, health, fire, environmental protection, and other permits,
licenses and approvals which such Acquired Company is required to obtain
pursuant to the applicable North American Real Property Lease or by
Applicable Law, other than those the absence of which would not materially
adversely affect the ability of such Acquired Company to use and occupy
such North American Leased Real Property as currently used and occupied by
such Acquired Company.
(iii) Except as set forth on Schedule 3.7(b), each Acquired Company is
in material compliance with all applicable building, zoning, land use or
other similar statutes, laws, ordinances, regulations, permits or other
requirements in respect of each North American Leased Real Property leased
by it and such Acquired Company has not received any notice of any
violation (or claimed violation) of any of the foregoing, which, if uncured
or unremedied, would result in the imposition of a material fine or would
materially adversely affect the ability of such Acquired Company to use and
occupy such North American Leased Real Property as currently used and
occupied by such Acquired Company.
(c) Overseas Owned Real Property; Overseas Real Property Leases. Schedule
3.7(c) hereto sets forth a list of all of the real or immoveable property
located outside the United States and Canada and owned by any Acquired Company
(the "Overseas Owned Real Property"). Other than month to month tenancies,
leases, subleases or other leasehold interests which shall expire on or before
the Closing Date, Schedule 3.7(c) hereto sets forth a true, correct and complete
list of all leases, subleases or other leasehold interests with respect to real
property located outside the United States or Canada held by any Acquired
Company (collectively, the "Overseas Real Property Leases"). True, correct and
complete copies of the Overseas Real Property Leases have been made available to
Parent, Maska and Sub. Each Overseas Real Property Lease is valid, binding and
in full force and effect. All rent and other sums payable by tenants are
current, in all material respects, and to the Company's Knowledge, there is no
condition which, with the giving of notice or passage of time or both, would
constitute a material default under any Overseas Real Property Lease.
(d) As Is, Where Is. Except as otherwise specifically set forth in this
Agreement, Parent, Maska and Sub accept the condition of the North American
Owned Real Property and the Overseas Owned Real Property and all interests in
the North American Real Property Leases and the Overseas Real Property Leases
"AS IS, WHERE IS", without any warranty whatsoever legal or otherwise, as of the
Closing Date and the Company makes no representations, warranties or guarantees
as to the condition, size, extent, quantity, type or value of the North American
Owned Real Property or the Overseas Owned Real Property or any real or
immoveable property subject to any North American Real Property Lease or
Overseas Real Property Lease.
(e) No Other Real Property or Real Property Interests. Except for the North
American Owned Real Property, the Overseas Owned Real Property and the real or
immoveable property leased pursuant to the North American Real Property Leases
or the Overseas Real
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Property Leases, none of the Acquired Companies owns, leases, operates or
otherwise has any interest in any real or immoveable property.
3.8 Tangible Personal Property. All of the fixtures, machinery and
equipment material to the operation of the Business are owned, leased or
licensed by one or more of the Acquired Companies. Except as set forth in
Schedule 3.8 hereto and subject to routine maintenance and scheduled
replacement, such fixtures, machinery and equipment of the Acquired Companies
are in reasonably good operating condition and repair, normal wear and tear
excepted. All leases and licenses for such material fixtures, machinery and
equipment are identified in Schedule 3.8 hereto. Except as set forth in Schedule
3.8 hereto, the interests of the Acquired Companies in such property are free
and clear of all Liens other than Permitted Liens. Except as set forth in
Schedule 3.8 hereto, all of the material leases and licenses identified in
Schedule 3.8 hereto are in full force and effect and none of the Acquired
Companies is in material default thereunder.
3.9 Proprietary Rights. Schedule 3.9 hereto contains a complete and
accurate list of (a) all patents, patent applications, trademark registrations
and applications therefor, service xxxx registrations and applications therefor,
and copyright registrations and applications therefor (the "Intellectual
Property"), Internet domain names, trade names and material common law
trademarks and service marks owned or used under license by the Acquired
Companies in connection with the Business, and (b) all licenses or other
agreements giving to third parties rights to use any Intellectual Property
listed in Schedule 3.9. Except as set forth in Schedule 3.9 hereto, the Acquired
Companies (i) own all right and interest in and to all Intellectual Property,
free and clear of any Liens other than Permitted Liens, or possess licenses or
other rights to use all Intellectual Property, and the Company has no Knowledge
of any invalidity or breach in respect of such licenses or other rights, and
(ii) own or possess licenses or other rights to use all common law trademarks,
trade names, service marks, and copyrights, and all mainframe computer software,
inventions, drawings, designs, customer lists or proprietary know-how material
to the conduct of the Business as it is currently conducted (collectively, the
"Proprietary Rights"). Each item of Intellectual Property owned by the Acquired
Companies and listed in Schedule 3.9 hereto has been, to the extent indicated in
such Schedule 3.9, registered with, filed in or issued by the United States
Patent and Trademark Office, the United States Copyright Office or such other
domestic or foreign Governmental Authority for the territory indicated in such
Schedule 3.9, and, to the Company's Knowledge, such registrations, filings and
issuances are listed in the records of such United States or foreign
Governmental Authority as solely owned by the applicable Acquired Company, as
set forth in Schedule 3.9 hereto, and, to the Company's Knowledge, except to the
extent set forth in Schedule 3.9 hereto, such registrations, filings and
issuances remain in good standing. Except as set forth in Schedule 3.9 hereto,
no item of Intellectual Property owned by the Acquired Companies and listed in
Schedule 3.9 is the subject of any pending, or, to the Company's Knowledge,
threatened, opposition, interference, cancellation proceeding or other adverse
proceeding before any Governmental Authority. Except as set forth in Schedule
3.9 hereto, to the Company's Knowledge, there are no conflicts with or
infringements upon any proprietary rights of third parties caused by the current
operations of the
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Business, including but not limited to the use of trademarks, trade names,
service marks, patents, and copyrighted materials, that could, if adversely
determined, be reasonably expected to result in a material liability or a
material impairment of the Business as currently conducted. Schedule 3.9 hereto
contains a complete and accurate list of all licenses or other agreements giving
any of the Acquired Companies rights to intellectual property of third parties
included in the Intellectual Property or the Proprietary Rights in connection
with the current operations of the Business other than (i) implied licenses
arising from or in connection with the sale or lease of a product, (ii) licenses
for off-the-shelf software, or (iii) licenses granted in connection with the
sale or lease of business equipment. Except as set forth in Schedule 3.9 hereto,
all of the agreements set forth in Schedule 3.9 are in full force and effect and
none of the Acquired Companies is in material default under any of them and, to
the Company's Knowledge, no other party to any such agreement is in material
default thereunder and no royalties or other fees in lieu of royalties are
payable by the Acquired Companies for the use of or right to use any
intellectual property of third parties included in the Intellectual Property or
Proprietary Rights, except pursuant to the agreements set forth on Schedule 3.9.
Except as set forth in Schedule 3.9 hereto, to the Company's Knowledge, there is
no infringement by or claim of infringement against any third party of any
Intellectual Property or Proprietary Rights of the Acquired Companies that
could, if adversely determined, be reasonably expected to result in a material
liability or a material impairment of the Business as currently conducted.
3.10 Absence of Certain Changes or Events. Except as contemplated in this
Agreement or as set forth in Schedule 3.10 hereto, since December 31, 1997, (i)
the Acquired Companies have conducted the Business only in the ordinary course
and in a manner consistent with past practice, (ii) the Acquired Companies have
not taken any action which would be prohibited pursuant to Sections 5.1(b), (c),
(d), (f), (g), (h) or (o) if taken after the date hereof, and (iii) there has
not been any change in the results of operations, condition (financial or
otherwise), properties, assets or business of the Acquired Companies, which,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect.
3.11 Environmental Matters.
(a) Except as set forth in Schedule 3.11:
(i) the Acquired Companies are, and have been at all times since
December 29, 1992, in compliance with all applicable Environmental Laws
(which compliance includes the possession by the Acquired Companies of all
Permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
(ii) the Acquired Companies have not received any written
communication, whether from a Governmental Authority, citizens group,
employee or other Person, alleging that the Acquired Companies are, or were
at any time since December 29, 1992,
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not in such compliance, nor, to the Company's Knowledge, has any such oral
communication been received from a Governmental Authority, and
(iii) there are no present, and since December 29, 1992 there have
been no, and, to the Company's Knowledge, prior to December 29, 1992 there
were no, actions, activities, circumstances, conditions, events or
incidents that may prevent or interfere with such compliance in the future,
except, in each case, where failure to be in compliance would not have a Company
Material Adverse Effect. All Permits currently held by the Acquired Companies
pursuant to applicable Environmental Laws are identified in Schedule 3.11.
(b) Except as set forth in Schedule 3.11, there is no Environmental Claim
pending or to the Company's Knowledge threatened against the Acquired Companies
or, to the Company's Knowledge pending or threatened against any Person whose
liability for any Environmental Claim the Acquired Companies have or may have
retained or assumed either contractually or by operation of law, which in each
case, would have a Company Material Adverse Effect.
(c) Except as set forth in Schedule 3.11, since December 29, 1992 there
have been, and prior to December 29, 1992 to the Company's Knowledge, there were
no actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the Release or presence of any Hazardous
Material, which could form the basis of any Environmental Claim against the
Acquired Companies, or to the Company's Knowledge, against any Person whose
liability for any Environmental Claim the Acquired Companies have or may have
retained or assumed either contractually or by operation of law, which, in each
case, would have a Company Material Adverse Effect.
(d) The Company has delivered or otherwise made available for inspection to
Parent true, complete and correct copies and results of any reports, studies,
analyses, tests or monitoring, copies of which are currently maintained by the
Company, it agents, or representatives pertaining to Hazardous Materials in, on,
beneath or adjacent to any property currently or formerly owned, operated or
leased by the Acquired Companies, or regarding the Acquired Companies'
compliance with applicable Environmental Laws.
3.12 Financial Statements. The audited consolidated balance sheets and the
audited consolidated statements of operations and cash flows for the Company and
its Subsidiaries as of and for the years ended December 31, 1997 and 1996
(collectively, the "Financial Statements"), and the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of June 27, 1998 and as of
August 28, 1998 and unaudited consolidated statement of operations and cash
flows of the Company and its Subsidiaries for the periods then ended
(collectively, the "Interim Financials"), copies of which are attached as an
Appendix to hereto, have, except as described in Schedule 3.12 hereto, been
prepared in accordance with generally accepted accounting principles
consistently applied with past practice and present fairly the consolidated
financial positions of
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the Company and its Subsidiaries as of the dates indicated, and the consolidated
related results of operations and cash flows of the Company and its
Subsidiaries, for the periods indicated, subject, in the case of the Interim
Financials, to normal year end adjustments. The Financial Statements and the
Interim Financials are or were in accordance with the books and records of the
Company and its Subsidiaries (it being understood that certain Subsidiaries and
business divisions were disposed of subsequent to the dates as of which certain
of the financial statements were presented) and such books and records in
reasonable detail accurately and fairly reflect or reflected the financial
transactions of the Company and its Subsidiaries. Since June 27, 1998, there has
been no change in any of the significant accounting policies, practices, or
procedures of any Acquired Company.
3.13 No Undisclosed Liabilities. Except as set forth in Schedule 3.13
hereto, as of the date of this Agreement there are no material liabilities or
obligations of any nature (whether absolute, accrued, contingent, unasserted,
determined, determinable, or otherwise) of the Acquired Companies which (a) are
not shown on the Financial Statements or the notes thereto, or in the Interim
Financials, or (b) which have not been incurred in the ordinary course of
business since December 31, 1997.
3.14 Taxes. Except as set forth in Schedule 3.14 hereto:
(a) Each of the Acquired Companies has timely filed, or been included in,
all federal, state, local and foreign Tax Returns required to be filed by them
and all such Tax Returns are true, complete and correct in all material
respects.
(b) Except to the extent adequately reserved for in accordance with
generally accepted accounting principles, all income and franchise Taxes and
other Taxes due and payable by each of the Acquired Companies have been timely
paid in full. The Financial Statements and the balance sheet included in the
Interim Financials reflect an adequate accrual or reserve for all Taxes payable
by the Acquired Companies for all taxable periods and portions thereof through
the date of such Financial Statements or Interim Financials, as the case may be.
(c) No deficiencies for any Taxes have been proposed, asserted or assessed
by any Governmental Authority against any of the Acquired Companies that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Acquired Companies. No issues relating to Taxes have been
raised by any Governmental Authority during any presently pending audit or
examination.
(d) Each of the Acquired Companies have withheld all Taxes required to have
been withheld and paid by them or on their behalf in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party, and such withheld Taxes have either been duly paid to the
proper Governmental Authority or set aside in accounts for such purpose.
-26-
(e) There are no Liens for Taxes upon the assets or properties of any of
the Acquired Companies except for statutory Liens for current Taxes not yet
delinquent.
(f) None of the Acquired Companies has requested any extension of time
within which to file any Tax Return in respect of any taxable year which has not
since been filed and no outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns has been given by or on behalf of any of the Acquired Companies.
(g) No power of attorney has been granted by or with respect to any of the
Acquired Companies with respect to any matter relating to Taxes.
(h) None of the Acquired Companies has filed a consent under Section 341(f)
of the Code concerning collapsible corporations.
(i) None of the Acquired Companies is or has been a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(ii) of the Code.
(j) None of the Acquired Companies has made any payments, nor is any of
them obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payments that will not be deductible under Section
280G of the Code or would constitute compensation in excess of the limitation
set forth in Section 162(m) of the Code.
(k) None of the Acquired Companies is a party to any Tax allocation or
sharing agreement or arrangement (whether or not in writing) that includes any
party other than an Acquired Company.
(l) None of the Acquired Companies has executed or entered into a closing
agreement that could affect its Tax liability for any period after the Closing
Date pursuant to Section 7121 of the Code or any similar provision of state,
local or foreign law.
(m) None of the Acquired Companies has agreed to or is making adjustments
pursuant to Section 481(a) of the Code or any other Applicable Laws relating to
Tax matters that could affect its Tax liability for any period after the Closing
Date by reason of change in accounting method initiated by any of the Acquired
Companies nor has the Internal Revenue Service or any equivalent Government
Authority proposed any such adjustment or change in accounting method, or has
any application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of any
of the Acquired Companies.
(n) Any provision of this Agreement to the contrary notwithstanding, the
Company makes no representation or warranty whatsoever concerning the Tax
consequences to Parent,
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Sub, Maska, or any Acquired Company of the Tropsport Share Purchase (the "Tax
Consequences"), and Parent shall and shall cause Maska and the Surviving
Corporation to indemnify and hold harmless the holders of Company Stock
outstanding immediately prior to the Closing from and against any and all Taxes
arising from or in connection with such Tax Consequences ("Tax Costs"). Parent
(i) shall have the sole right to represent the holders of the Company Stock
outstanding immediately prior to the Closing with respect to any notice of
deficiency, proposed adjustment, assessment, audit, examination or other
administrative or court proceeding, suit, dispute or other claim in respect of
which Parent, Maska or the Surviving Corporation would be liable for any
resulting Tax Costs pursuant to the preceding sentence, and (ii) may, in
connection therewith, employ counsel of its choice, at its expense.
3.15 Material Contracts. Schedule 3.15 hereto contains a list of the
following contracts (the "Material Contracts"), in effect as of the date hereof,
of the Acquired Companies:
(a) all commitments and agreements for the purchase or sale of any
equipment, materials or supplies that involve in excess of $50,000 for any one
contract, other than purchase orders (whether issued or received) in the
ordinary course of business;
(b) all agreements with customers that involve a payment to any of the
Acquired Companies of more than $50,000 for any one contract, other than
purchase orders (whether issued or received) in the ordinary course of business;
(c) all contracts for the employment or compensation of any employee of any
of the Acquired Companies individually in excess of $100,000 per year or which
contain a provision relating to a change of control of any of the Acquired
Companies;
(d) all partnership, joint venture contracts, or other agreements involving
a sharing of profits;
(e) all contracts (other than of the type described in clause (c) of this
Section 3.15) with sales representatives, manufacturer's representatives,
distributors, dealers, brokers, sales agents, advertising agencies or other
Persons engaged in sales, distribution or promotional activities, which
obligates any Acquired Company to pay an amount in the aggregate of $50,000 or
more, other than purchase orders (whether or issued or received) in the ordinary
course of business;
(f) all contracts pursuant to which the geographical area in which any of
the Acquired Companies or any other Person may conduct business or the type or
scope of business which may be conducted by any of them is restricted;
(g) all powers of attorney or agency agreements (other than of the type
described in clause (e) of this Section 3.15, without regard to the materiality
thereof) with any Persons (excepting employees of any of the Acquired Companies)
pursuant to which such Persons are
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granted the authority to act, in any material respect, for or on behalf of any
of the Acquired Companies, or any of the Acquired Companies is granted the
authority to act, in any material respect, for or on behalf of any other
Persons;
(h) all contracts between any of the Acquired Companies and any of their
Affiliates;
(i) all Tax sharing agreements or Tax assumption agreements;
(j) all contracts containing a right of first refusal with respect to any
assets with a fair market value in excess of $50,000;
(k) all agreements involving the acquisition or disposition, whether by
merger, consolidation, purchase of assets or otherwise, of a substantial equity
interest in or substantial portion of the assets of any business or any Person
or division thereof, pursuant to which there are executory obligations owing to
or by any Acquired Company;
(l) all agreements providing for the indemnification by any Acquired
Company of any officer, director, or employee of any Acquired Company or of
Xxxxxxx/Equity Partnership No. 4, L.P. or any Affiliate thereof; and
(m) all other leases, commitments, agreements and instruments (including,
but not limited to, mortgages, indentures and other agreements and instruments
relating to indebtedness for borrowed money or guarantees or undertakings to
answer for the debts or defaults of another, but excluding purchase orders and
sales orders in the ordinary course of business not otherwise referred to
herein), that individually are material to the Acquired Companies as a whole or
involve an anticipated receipt or expenditure of $50,000 or more, to which any
of the Acquired Companies is a party or by which any of their respective
properties are bound that are not otherwise disclosed in this Agreement or in a
Schedule hereto.
The Company has made available to Parent, Maska and Sub true and complete
copies of all written contracts and summaries of all oral contracts set forth in
Schedule 3.15 hereto. Except as set forth in Schedule 3.15 hereto, all of the
contracts so set forth are in full force and effect and there has not occurred
under any of the Material Contracts any alleged or actual breach or default, or
event which would (with the passage of time, notice or both) constitute a breach
or default or would result in the termination of or acceleration of any
performance under, or the right to terminate or accelerate performance (with the
passage of time, notice or both) by the Acquired Companies, or to the Company's
Knowledge, by any other party to any Material Contract, which remains unremedied
as of the date of this Agreement, except for those which in the aggregate, would
not reasonably be expected to result in a Company Material Adverse Effect.
Except as set forth in Schedule 3.15 hereto, to the Company's Knowledge, as of
the date of this Agreement, no Significant Vendor or Significant Customer of any
Acquired Company has threatened to terminate or modify (in an manner adverse to
such Acquired Company) its business relationship for reasons not directly
related to the impending announcement of this Agreement.
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3.16 Compliance with Laws; Permits. The Acquired Companies are in
compliance in all material respects with Applicable Laws. To the Company's
Knowledge, Schedule 3.16 hereto identifies all licenses, permits, orders or
approvals or certifications of all Governmental Authorities, the Hockey
Equipment Certification Counsel, the Canadian Standards Association and the
European Community held by or in effect with respect to the Acquired Companies
(collectively, the "Permits") and the Permits constitute all licenses, permits,
orders or approvals or certifications of all Governmental Authorities, the
Hockey Equipment Certification Counsel, the Canadian Standards Association and
the European Community required to be held by or in effect with respect to the
Acquired Companies for the conduct of the Business, as presently conducted,
except such the absence of which could not reasonably be expected to result in a
Company Material Adverse Effect. Except as set forth on Schedule 3.16, to the
Company's Knowledge, no proceeding for the challenge, revocation, suspension,
cancellation or termination of any of the Permits is pending or threatened. Each
product model currently being manufactured and sold by the Acquired Companies
which requires certification by the Hockey Equipment Certification Counsel,
Canadian Standards Association or European Community in order for such model to
be sold in compliance with Applicable Laws in the jurisdictions in which the
Acquired Companies are currently selling such model has been so certified.
3.17 Insurance. Schedule 3.17 hereto sets forth a list of all policies or
binders of insurance held by or on behalf of any of the Acquired Companies
(specifying the insurer, the policy number or covering note number with respect
to binders, and describing each pending claim thereunder of more than $100,000).
The Acquired Companies are not in default (including with respect to the payment
of premiums) in any material respect under any policy or binder so set forth.
Except as set forth in Schedule 3.17 hereto, none of the Acquired Companies has
received a notice of cancellation or non-renewal of any such policy or binder.
The coverage afforded by such policies is sufficient to place the Acquired
Companies in material compliance with insurance under Applicable Laws or
pursuant to Material Contracts. Except as set forth in Schedule 3.17 hereto,
none of the Acquired Companies has been refused any insurance, been denied
coverage on any claim, nor has any coverage been limited by any insurance
carrier to which any of the Acquired Companies have applied for any such
insurance or with which they have carried insurance during the last five years
or such lesser period as such Acquired Company has been a Subsidiary of the
Company.
3.18 Certain Employees. Schedule 3.18 hereto sets forth the names, title or
job descriptions, and total compensation of each individual currently a
consultant or employee of any Acquired Company whose annual rate of compensation
for 1997 (including bonuses and commissions) exceeded $100,000. Except as set
forth in Schedule 3.18 hereto, during the six months prior to the date hereof
each of the employees listed therein has devoted his principal time and efforts
to the Business. Except as set forth in Schedule 3.18 hereto, the salaries and
bonuses of all officers and employees of the Acquired Companies are paid by one
or more of the Acquired Companies.
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3.19 Products Liability Experience. Schedule 3.19 hereto sets forth, to the
Company's Knowledge, a true and complete list, in all material respects, of all
Products Liability Claims to which any of the Acquired Companies has been a
party which respect to the Business, since January 1, 1996. Except as set forth
on Schedule 3.19 hereto, since January 1, 1993, none of the Acquired Companies
has been subject to any proceedings before the Consumer Products Safety
Commission or any foreign equivalent body.
3.20 Liens and Encumbrances. Except as set forth in Schedule 3.20 hereto
and except as provided in Sections 3.2, 3.7, 3.8 and 3.9 with respect to the
categories of properties or assets covered thereby, the Acquired Companies have
good and valid title to (or in the case of immoveable and real property, good
and marketable title to), or valid and subsisting rights in, all of their
properties and assets, free and clear of any Lien other than Permitted Liens.
3.21 Inventory. The inventory of the Acquired Companies was produced or
acquired by the Acquired Companies in the ordinary course of business and
consists of raw materials and supplies, manufactured and processed parts, work
in process, and finished goods (including any of the foregoing in transit). Such
finished goods (including finished goods in transit) are merchantable and are
not obsolete and are valued in accordance with the past custom and practice of
the Acquired Companies, subject to customary year-end adjustment.
3.22 Receivables. All notes and accounts receivable of the Acquired
Companies are valid receivables subject to no setoffs or counterclaims, subject
to the reserves for (a) doubtful accounts, (b) customer credit claims, (c)
volume rebates, and (d) co-op credits, reflected in the balance sheet included
in the Interim Financials, as adjusted for operations and transactions through
the Closing Date in accordance with the past custom and practice of the Acquired
Companies.
3.23 Product Warranty. Substantially all of the products manufactured,
sold, leased, and delivered by the Acquired Companies in connection with the
Business have conformed in all material respects with all applicable contractual
commitments and all express and implied warranties, and the Acquired Companies
do not have any material liability for replacement or repair thereof or other
damages in connection therewith, subject to the reserve for product warranty
claims reflected in the balance sheet included in the Interim Financials, as
adjusted for operations and transactions through the Closing Date in accordance
with the past custom and practice of the Acquired Companies. Copies of the
standard terms and conditions of sale or lease for each of the Acquired
Companies (containing applicable guaranty, warranty, and indemnity provisions)
are attached as an Appendix to Schedule 3.23 hereto. Schedule 3.23 sets forth
the estimated aggregate annual cost to the Acquired Companies of warranty
obligations for customers for each of the three preceding fiscal years and the
current fiscal year to the date of the Interim Financials. Except as set forth
on Schedule 3.23, to the Company's Knowledge there are no defects in the design
or methods of manufacture of the products of the Business which would result in
a material adverse affect to the intended performance thereof or create an
unusual risk of injury to person or property, in each case, if used properly and
solely for the intended use thereof
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and strictly in accordance with appropriate safety precautions considering the
inherently dangerous nature of the activities in which such products are
employed.
3.24 Certain Payments. Except as set forth in Schedule 3.24 hereto, since
January 1, 1993, no Acquired Company or director, officer, agent, or employee of
any Acquired Company, or, to the Company's Knowledge, any other Person
associated with or acting for or on behalf of any Acquired Company, has directly
or indirectly (a) made any material contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired Company or any
Affiliate of an Acquired Company, or (iv) in violation of any Applicable Law,
the effect of which in each case specified in this clause (a) could reasonably
be expected to subject any Acquired Company to a material fine, penalty, or
other liability or disability or, (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Acquired
Companies.
3.25 Assets Complete. Except as set forth on Schedule 3.25 hereto, the
Acquired Companies own, hold, license, or otherwise possess such assets,
properties, licenses and rights necessary to the operation of the Business as
currently conducted.
3.26 Certain Interests. Except as set forth on Schedule 3.26, no Affiliate
of any Acquired Company or of Xxxxxxx/Equity Partnership No. 4, L.P. has any
interest (other than as a stockholder of the Company) in any property used in or
pertaining to the Business or any customer or supplier (other than as a passive
investor in any securities of a corporation, partnership, trust, or other
entity) doing business with the Acquired Companies. Except with respect to those
interests listed on Schedule 3.26 and transactions solely between the Acquired
Companies, none of the Acquired Companies is a party to any transaction with any
Affiliate of any of the Acquired Companies or of Xxxxxxx/Equity Partnership No.
4, L.P.
3.27 Full Disclosure. To the Company's Knowledge, there is no existing
event, occurrence, fact, condition, or anticipated change having specific
applicability to the Acquired Companies which has resulted in a Company Material
Adverse Effect since January 1, 1997, or could reasonably be expected to result
in a Company Material Adverse Effect and which is not disclosed in this
Agreement, the Schedules and the documents referred to herein and therein taken
as a whole. No representation or warranty of the Company in this Agreement, when
read in conjunction with the Schedule(s) applicable thereto and the documents
referred to in such Schedule(s), contains any untrue statement of material fact
or omits to state a material fact necessary to make such representations and
warranties, in light of the circumstances in which they were made, not
misleading.
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4. REPRESENTATIONS AND WARRANTIES OF PARENT, MASKA AND SUB.
Parent, Maska and Sub jointly and severally represent and warrant to the
Company as follows:
4.1 Organization, Standing and Power. Each of Parent, Maska and Sub is a
corporation duly incorporated, validly existing, and in good standing under the
laws of its jurisdiction of incorporation or organization, with full corporate
power and authority to conduct its business as it is now being conducted and to
own or use the properties and assets that it purports to own or use. Each of
Parent, Maska and Sub is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
where the failure to be so qualified would not have a Parent Material Adverse
Effect. Parent, Maska and Sub have delivered to the Company correct and complete
copies of the Organizational Documents of each of Parent, Maska and Sub, as
currently in effect.
4.2 Capital Structure of Sub. As of the date hereof, the authorized capital
stock of Sub consists of 1,000 shares of Common Stock, par value $.01 per share,
all of which are validly issued, fully paid and nonassessable and are owned of
record and beneficially by Parent.
4.3 Authority; No Conflict.
(a) Each of Parent, Maska and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent,
Maska and Sub and the consummation by Parent, Maska and Sub of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Parent, Maska and Sub. This Agreement has been duly executed and
delivered by Parent, Maska and Sub and constitutes a valid and binding
obligation of each of them enforceable in accordance with its terms, except as
such enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement of creditors'
rights generally, and (ii) general equitable principles.
(b) Except as set forth in Schedule 4.3(b) hereto, the execution and
delivery of this Agreement by Parent, Maska and Sub does not, and the
consummation by Parent, Maska and Sub of the transactions contemplated hereby
will not, (i) result in any Violation pursuant to any provision of the
Organization Documents of Parent, Maska or Sub or (ii) except as contemplated by
Section 4.3(c), result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, or other agreement, obligation or instrument, or of
any Applicable Law, applicable to Parent, Maska or Sub or their respective
properties or assets which Violations in the aggregate would have a Parent
Material Adverse Effect.
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(c) Except as set forth in Schedule 4.3(c) hereto, no Consent or Filing is
required by Parent, Maska or Sub, or by any Affiliate of Parent with respect to
Parent, Maska, Sub or any other Affiliate of Parent, in connection with the
execution and delivery of this Agreement by Parent, Maska and Sub or the
consummation by Parent, Maska and Sub of the transactions contemplated hereby,
except for (i) any required Filing of a pre-merger notification report by Parent
under the HSR Act, any required Filing of a pre-notification of the proposed
merger under the Competition Act, and any required Consent of or Filing with any
Governmental Authority under any other Antitrust Law, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, and (iii) any required filing under the
Investment Canada Act.
4.4 Litigation. There are no judicial or administrative actions, claims,
suits, proceedings or investigations pending or, to the Knowledge of Parent,
Maska or Sub, threatened against Parent, Maska or Sub that question the validity
of this Agreement or any action to be taken by Parent, Maska or Sub in
connection with this Agreement. There is no litigation, action, suit,
arbitration, proceeding or governmental investigation pending or, to the
Knowledge of Parent, Maska or Sub, threatened, or any order, injunction or
decree outstanding, against or relating to Parent, Maska or Sub that, if
adversely determined, could reasonably be expected, in the aggregate, to have a
Parent Material Adverse Effect.
4.5 Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
4.6 Financing. Parent has furnished to the Company correct and complete
copies of written commitments from third parties (the "Financing Commitments")
committing to provide Parent or Maska, as the case may be, on the terms and
conditions set forth therein, with all of the financing as Parent will require
in order to enable Parent or Maska, as the case may be, to satisfy its
obligations to fund Tropsport Share Purchase Price or the aggregate Merger
Consideration, as called for in Section 1.1 and its obligations under Section
1.6 relative to the Funded Debt and to fund the working capital needs of the
Surviving Corporation and its Subsidiaries after the Effective Time.
4.7 Investment Canada Act. Each of Parent and Sub is a "WTO Investor", as
such term is defined in the Investment Canada Act.
5. COVENANTS RELATING TO CONDUCT OF BUSINESS.
5.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees that,
except as expressly contemplated or permitted by this Agreement or as expressly
provided in Schedule 5.1 hereto or in any other Schedule hereto, or to the
extent that Parent shall otherwise consent in writing,
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which consent, in the case of Sections (k) (i), (l), (m), (n), (o), (p), (q) and
(s), will not, subject to the exercise of the reasonable business judgment of
Parent, be withheld or delayed:
(a) Ordinary Course. The Company shall cause the Acquired Companies to
carry on the Business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and use all reasonable efforts to
preserve intact their present business organizations, keep available the
services of their present officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them.
(b) Dividends; Changes in Stock. The Company shall not, nor shall the
Company propose to, (i) declare or pay any dividends or make other distributions
in respect of any of its capital stock (other than regular cash dividends
payable on the Company Preferred Stock), (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) except pursuant to Section 3.6 of that certain
Stockholders Agreement, dated as of December 29, 1992, among the Company, the
"Principal Stockholder" and the "Management Stockholders" (as such terms are
defined in said agreement) in connection with the termination of employment of
Management Stockholders, repurchase or otherwise acquire any shares of its
capital stock. The Company shall not permit Tropsport to (x) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (y) repurchase or otherwise acquire any
shares of its capital stock.
(c) Issuance of Securities. The Company shall not, and it shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
additional Subsidiary Equity, any Voting Debt or any options, warrants,
conversion rights or other convertible securities, except upon conversion of any
outstanding shares of Company Stock which are convertible securities or upon
exercise of presently outstanding options under the MEOP which were granted.
(d) Governing Documents. The Company shall not amend or propose to amend
its Certificate of Incorporation or By-laws, or permit any of its Subsidiaries
(including, Tropsport) to amend or propose to amend its Organizational
Documents, at or prior to the Effective Time.
(e) No Solicitations.
(i) The Company shall not, directly or indirectly, nor shall it
authorize or permit any of its Subsidiaries, or its or such Subsidiary's
officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or
such Subsidiary to solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any Takeover Proposal, or agree to
endorse any Takeover Proposal. The Company shall not
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withdraw or modify, or propose to withdraw or modify, its position with
respect to this Agreement or the Reorganization or approve or recommend, or
propose to approve or recommend any Takeover Proposal, or enter into any
letter of intent, agreement in principle, acquisition agreement or similar
agreement with respect to any Takeover Proposal (a "Takeover Agreement").
Upon the execution of this Agreement, the Company will immediately cease
any existing activities, discussions or negotiations with any parties
heretofore conducted with respect to any of the foregoing.
(ii) Neither the Board of Directors of the Company nor any committee
thereof shall (A) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent, the approval or recommendation by the Board of
Directors of the Company or any such committee of this Agreement or the
Reorganization, (B) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (C) enter into any Takeover Agreement.
(f) No Acquisitions. The Company shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any Person or division
thereof or otherwise acquire or agree to acquire any assets involving a total
consideration in excess of $50,000, other than in the ordinary course of
business and consistent with past practices.
(g) No Dispositions. Other than dispositions (i) as may be required by
Applicable Law to consummate the transactions contemplated hereby or (ii) in the
ordinary course of business consistent with prior practice, the Company shall
not, and shall not permit any of its Subsidiaries to, sell, lease, encumber, or
otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose of,
any of its assets, which are material, individually or in the aggregate, to the
Acquired Companies.
(h) Indebtedness. The Company shall not, and shall not permit any of it
Subsidiaries to, incur any indebtedness for borrowed money or leased equipment,
or guarantee any such indebtedness, or forgive any such indebtedness, or make
any loans, advances, or capital contributions to any other Person, or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
the Company or any of its Subsidiaries or guarantee any debt securities of
others, or indemnify or agree to indemnify any other Person, except for any such
action described in this Section 5.1(h) taken in the ordinary course of business
consistent with prior practices or permitted by any provision of this Agreement.
(i) Other Actions. Except as provided in this Agreement, the Company shall
not, and shall not permit any of its Subsidiaries to, take any action that would
or is reasonably likely to result in any of the conditions to the Reorganization
set forth in Article 7 not being satisfied.
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(j) Advice of Changes. The Company shall confer on a regular and frequent
basis with Parent, report on operational matters and promptly advise Parent in
writing of (i) any change or event having, or which, insofar as can reasonably
be foreseen, would probably have or result in, a Company Material Adverse
Effect, (ii) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any material respect, and (iii) the
failure by it to comply in any material respect with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the Company
(or remedies with respect thereto) or the conditions to the obligations of the
Company under this Agreement.
(k) Material Contracts; Benefit Plans; Employment. The Company shall not,
and shall not permit any of its Subsidiaries to (i) enter into, assume,
terminate, renegotiate or amend any Material Contract (other than contracts for
the purchase, sale or lease of inventory, supplies or services in the ordinary
course of business) or waive any material rights or claims thereunder, (ii)
adopt, or amend to increase compensation or benefits payable under, any Benefit
Plan, (iii) enter into any contract, agreement, commitment or arrangement to
increase in any manner, the compensation or fringe benefits, or otherwise to
extend, expand or enhance the engagement, employment or any related rights, of
any director, officer or other employee of the Acquired Companies, (iv) enter
into or amend any employment, severance or special pay arrangement with respect
to the termination of employment or other similar contract with any director or
officer or other employee other than in the ordinary course of business
consistent with past practice, (v) deposit into any trust (including any "rabbi
trust") amounts in respect of any nonqualified employee benefit obligations or
obligations to employees or directors of the Acquired Companies, or (vi) enter
into any contract, agreement, commitment or arrangement to indemnify any
director, officer or other employee of any Acquired Company; except with respect
to clauses (ii) and (iii), for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to the Acquired
Companies.
(l) Compromise of Appraisal Rights. The Company shall not settle or
compromise any claim for appraisal rights in respect of the Merger prior to the
Effective Time.
(m) Insurance Policies. The Company shall continue to carry, and cause its
Subsidiaries to carry, existing insurance insuring its and their assets,
business and properties, subject only to variations in amounts required by the
ordinary operations of business, until the Effective Time.
(n) Affiliates. The Company shall not declare, issue, make or pay,
discharge or satisfy any claim, liability or obligation owing to any Acquired
Company or any Affiliate thereof, or enter into an agreement with any Affiliate
of the Acquired Companies, any family member of any Affiliate of the Acquired
Companies or any stockholder, officer or director of the Company.
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(o) Accounting Changes. The Company shall not change any method or period
of accounting, change any significant accounting policy, practice or procedure.
(p) Tax Elections. The Company shall not make, revoke or amend any Tax
election or settle or compromise any Tax liability.
(q) Non-Compete. The Company shall not enter into any contract limiting the
ability of the Acquired Companies to engage in any line of business, to compete
with any Person or to conduct business in any particular geographic area.
(r) Disclosure Schedules. Until the Closing Date, the Company shall have
the continuing obligation to promptly supplement the information contained in
its disclosure schedules attached herewith with respect to any matter hereafter
discovered which was in existence on the date hereof and, if Known at the date
of this Agreement, would have been required to be set forth or described in such
disclosure schedules.
(s) Litigation. The Company shall not and it shall not permit any of its
subsidiaries to, settle or compromise any material litigation, action, suit,
arbitration, proceeding or governmental investigation against or relating to any
of the Acquired Companies, or any of their respective properties or assets.
(t) Covenants. The Company shall not agree, or make any commitment, to take
any action that is or would be prohibited by this Section 5.1.
5.2 Covenants of Parent, Maska and Sub. Except as provided in this
Agreement, none of Parent, Maska or Sub shall take any action that would or is
reasonably likely to result in any of the conditions to the Reorganization set
forth in Article 7 not being satisfied.
6. ADDITIONAL AGREEMENTS.
6.1 Notice of Appraisal Rights. The Company shall, as soon as practicable
after the execution of this Agreement, prepare and mail to each its stockholders
a notice with respect to the Merger in conformity with the provisions of Section
262 of DGCL.
6.2 Access to Information. Upon reasonable notice, the Company shall, and
shall cause it Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, access, during normal business
hours during the period prior to the Effective Time, to all of the properties,
books, contracts, commitments and records (including its accountant's work
papers) of the Acquired Companies and during such period, the Company shall, and
shall cause its Subsidiaries to, furnish promptly to Parent all information
concerning the Business, properties and personnel of the Acquired Companies as
Parent may reasonably request. Parent, Maska and Sub shall hold, and cause its
counsel, accountants and other agents
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and representatives to hold, all such information and documents in accordance
with and subject to the terms of the Confidentiality Agreement.
6.3 Stockholder Consent; Notice. The Company will, as promptly as
practicable after the execution of this Agreement, take all steps necessary to
obtain the approval and adoption of the Reorganization by the affirmative vote
of a majority of the votes entitled to be cast by the holders of all outstanding
shares of Class A Common and Company Preferred Stock voting together as a single
class by their written consent pursuant to Section 228 of the DGCL, and shall,
as promptly as practicable after obtaining such written consent, cause notice
thereof to be mailed to those of its stockholders who have not so consented in
writing in accordance with Subsection (d) of such Section 228 of the DGCL.
6.4 Reasonable Efforts. The Company, Parent, Maska and Sub shall each use
their reasonable efforts to (a) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under Applicable Laws or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (b) obtain from any Governmental
Authorities or third parties any Consents required to be obtained or made by
Parent, Maska, Sub or the Company or any of their Affiliates in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated herein, and (c) make all necessary Filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Reorganization, required under (i) any applicable securities laws, (ii)
the HSR Act, the Competition Act, if applicable, and any other applicable
Antitrust Laws and (iii) any other Applicable Laws; provided, however, that
Parent, Maska, Sub and the Company shall cooperate with each other in connection
with obtaining such Consents or making such Filings, including providing copies
of all such documents to the nonfiling party and its advisors prior to filing
and, if requested, accepting all reasonable additions, deletions or changes
suggested in connection therewith. The Company, Parent, Maska and Sub shall
furnish all information required for any Filing to be made pursuant to any
Applicable Law in connection with the transactions contemplated by this
Agreement.
6.5 Employee Benefit Plans. Parent, Maska, Sub and the Company agree that
the Benefit Plans of the Company or any of its Subsidiaries in effect at the
date of this Agreement (other than the MEOP and the outstanding employee stock
options granted under the MEOP contemplated to be purchased and canceled
pursuant to Section 6.6 of this Agreement) shall, to the extent reasonably
practicable, remain in effect until otherwise determined after the Effective
Time and, to the extent such Benefit Plans are not continued, it is the current
intent of Parent and the Constituent Corporations that benefit plans which are
not less favorable, in the aggregate, shall be provided to the employees
previously covered by such plans.
6.6 Stock Options. As soon as practicable after the execution of this
Agreement, the Company shall deliver a notice of a "Change of Control" (as such
term is defined in the MEOP) to each holder of an employee and/or director stock
option granted under the MEOP. The Company, at its sole cost and expense, shall
use its reasonable efforts to effect the cancellation
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and settlement, as of the Effective Time, of all options granted under the MEOP
(whether or not exerciseable) outstanding as of the date of this Agreement;
provided, however, that in no event shall the Company be required to pay to any
option holder a dollar amount for each share of Company Common Stock subject to
such holder's options greater than the amount by which the Common Cash Share
Price exceeds the applicable exercise price per share of such option.
6.7 Expenses.
(a) Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
counsel, and accountants.
(b) The Company shall be responsible for (i) the fees of the Paying Agent;
(ii) the payment of retention payments, payable by any of the Acquired
Companies, or any Affiliate thereof, including those due to any of (A) Xxxxxx
Xxxxxx pursuant to Memorandum dated Xxxxx 0, 0000, (X) Xxx Xxxx, Xxxxxxx
Xxxxxxx, Xxxx Xxxxxxx or Xxxxxxx Xxxxxxxxx pursuant to Memoranda dated May 28,
1997, (C) Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxx or
Xxxxx Xxxxxxxxx pursuant to Memoranda dated May 29, 1997, (D) Xxxxxx Xxxxxxxx
pursuant to Memorandum dated March 18, 1998, (E) Xxxxxx Xxxxxxxxxx or Xxxxx Xxxx
pursuant to Memoranda dated May 7, 1998, or (F) the individuals listed on
Schedule 6.7 (collectively, the "Retention Payments").
(c) Parent will be responsible for the payment of the HSR Act filing fee,
the Competition Act filing fee, as well as all other fees and expenses as may
become payable in connection with any and all Consents or Filings made or
obtained under all other Antitrust Laws irrespective of whose obligation it is
to make payment under any such Antitrust Law. The Surviving Corporation (or the
other applicable Acquired Company) shall be responsible for the payment of any
severance payments due to any employee of any Acquired Company which become
payable at or after the Closing.
(d) The Company and Parent shall bear equally any stock transfer Tax or
other similar Tax relative to the Company Stock and resulting from the Merger.
The Parent and Maska shall bear all stock transfer Tax or other similar Tax
relative to the Tropsport Shares and resulting from the Tropsport Share
Purchase.
6.8 Brokers or Finders. Parent, Maska and Sub, on the one hand, and the
Company, on the other, respectively agree to indemnify and hold the other
harmless from and against any and all claims, liabilities or obligations arising
through the indemnifying party or parties with respect to any investment
banking, broker or finder's fees, commissions or expenses asserted by any Person
employed or utilized as such by the indemnifying party or parties in connection
with any of the transactions contemplated by this Agreement.
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6.9 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation will, and
Parent will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
provisions under the Company's Certificate of Incorporation or By-laws as each
is in effect on the date hereof (the Persons to be indemnified pursuant to such
shall be referred to as, collectively, the "D/O Indemnified Parties"), in
respect of claims as to which the Surviving Corporation has received notice
prior to the expiration of 30 days following the sixth anniversary of the
Closing Date. The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Certificate of
Incorporation and By-laws on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of any D/O Indemnified Party. Without limiting the foregoing, after
the Effective Time the Surviving Corporation shall pay all reasonable
out-of-pocket fees and expenses, including reasonable legal fees, for the D/O
Indemnified Parties incurred with respect to the foregoing to the fullest extent
permitted under Applicable Law promptly after statements therefor are received
by the Surviving Corporation; provided, however, the Person on whose behalf the
expenses are paid provides an undertaking to repay such payments if it is
ultimately determined that such Person is not entitled to indemnification.
Parent will cause the Surviving Corporation to maintain for not less than six
years from the Effective Time, directors' and officers' liability insurance
covering the D/O Indemnified Parties who are presently covered by the Company's
directors' and officers' liability insurance or will be so covered at the
Effective Time with respect to actions and omissions occurring on or prior to
the Effective Time on terms no less favorable to the D/O Indemnified Parties
than such insurance maintained in effect by the Company on the date hereof. The
maximum of such coverage shall be $5,000,000 in the aggregate (including claims
and expenses) for the six-year notice period described in the first sentence of
this Section 6.9; provided, however, that to the extent such coverage is not
obtainable at less than per annum premiums in the amount of $180,000, Parent
shall cause the Surviving Corporation to purchase so much coverage as may then
be obtained for $180,000. The foregoing to the contrary notwithstanding, Parent
shall not be liable for any settlement effected without its prior written
consent, which consent shall not be unreasonably withheld or delayed. The D/O
Indemnified Parties as a group may retain only one law firm with respect to each
related matter except to the extent there is, in the opinion of counsel to a D/O
Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between positions of any two or more D/O
Indemnified Parties.
(b) This Section 6.9 shall survive the consummation of the Merger at the
Effective Time, is intended to be for the benefit of, and enforceable by, the
Company, Parent, the Surviving Corporation and each D/O Indemnified Party and
such D/O Indemnified Party's heirs and representatives, and shall be binding on
all successors and assigns of Parent and the Surviving Corporation.
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6.10 Financing. Parent, Maska and Sub will use their best efforts to enter
into definitive agreements (the "Definitive Financing Agreements") on terms and
conditions substantially in accordance with the Financing Commitments, as soon
as practicable following the date of this Agreement, and in no event later the
Closing Date. Parent, Maska and Sub will furnish correct and complete copies of
the Definitive Financing Agreements to the Company forthwith upon their
execution and delivery. The Acquired Companies agree to expeditiously provide,
and to cause their respective officers and employees to expeditiously provide,
to the Parent, Maska and Sub all cooperation reasonably necessary in connection
with the arrangement of the Definitive Financing Agreements and any other
financing to be consummated contemporaneous with or at or after the Closing Date
in respect of the transactions contemplated by this Agreement, including,
without limitation, the execution and delivery of any pledge or security
documents, underwriting or placement agreements, other definitive financing
documents, or other requested certificates, consents, documents or financial
information as may be reasonably requested by Parent, Maska or Sub, provided,
however, that in connection with the foregoing, no Acquired Company shall be
obligated to incur or suffer the imposition of any liability, obligation, Lien
or other burden, the imposition of which is not contingent upon the consummation
of the Reorganization and the transactions contemplated by the Definitive
Financing Agreements.
6.11 Public Announcements. Parent, Maska, Sub and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Reorganization and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Applicable Law.
6.12 Certain Notifications. Each party shall promptly notify the other
parties hereto in writing of the occurrence of any event which will or could
reasonably be expected to result in the failure to satisfy any of the conditions
specified in Article 7.
6.13 Voting Agreement. On or prior to the date hereof, Parent, Maska and
Sub have received from each Person listed on Schedule 6.13 hereto, an executed
copy of a Voting Agreement, substantially in the form of Exhibit 6.13
(collectively, the "Voting Agreements").
6.14 FIRPTA Affidavit. At the Closing, at the request of Parent and Sub
(which request Parent and Sub are deemed to have made hereby), the Company shall
provide to each of Parent, Sub and Paying Agent, an affidavit in compliance with
the provisions of Treasury Regulation Section 1.897-2(h), substantially in the
form of Exhibit 6.14, and Parent and Sub shall accept such affidavit in lieu of
requiring an individual affidavit from any Company shareholder setting forth
such shareholder's United States taxpayer identification number and that such
shareholder is not a foreign person within the meaning of Section 1445(b)(2) of
the Code, provided, however, that if the Company fails to provide such
affidavit, Parent may, at its option, withhold and pay over to the appropriate
Governmental Authority the amount required to be withheld under Section 1445 of
the Code.
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6.15 Canada Certificate; Quebec Certificate. As soon as practicable after
the execution of this Agreement, the Company shall, to the extent the following
have not theretofore been filed, make all necessary Filings, and thereafter make
any other required submissions, required in connection with the issuance of (a)
a certificate addressed to the Company, in the form contemplated by Section 116
of the Income Tax Act (Canada), referring to proceeds of disposition at least
equal to the Tropsport Share Purchase Price (the "Canada Certificate"), and (b)
a certificate addressed to the Company, in the form contemplated by Sections
1097 et seq. of the Taxation Act (Quebec), referring to proceeds of disposition
at least equal to the Tropsport Share Purchase Price (the "Quebec Certificate",
and collectively with the Canada Certificate, the "Clearance Certificates").
Parent, Maska and Sub shall cooperate with the Company in connection with
obtaining the Clearance Certificates and the making of any Filings in connection
therewith.
7. CONDITIONS PRECEDENT.
7.1 Conditions of Each Party's Obligation to Effect the Reorganization. The
respective obligation of each party to effect the Reorganization shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the votes
entitled to be cast by the holders of all outstanding shares of Class A Common
and Company Preferred Stock voting together as a single class.
(b) Antitrust Filings and Consents. In respect of the Filings of
notifications by Parent, the Company (or any of their respective Affiliates)
under the HSR Act and the Competition Act, if applicable, respectively, the
applicable waiting and review periods and any extensions thereof shall have
expired or been terminated and, in respect of all other Antitrust Laws, all
required or permissive Filings by Parent, the Company or any of their respective
Affiliates with applicable Governmental Authorities shall have been made, all
applicable waiting and review periods and any extensions thereof shall have
expired or been terminated and all required Consents of such Governmental
Authorities shall have been obtained, except for such Filings, waiting and
review periods and extensions thereof and Consents which if not made, expired or
terminated, or obtained, could not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect or Parent Material Adverse
Effect.
(c) Other Governmental Filings and Consents. In respect of all Applicable
Laws other than Antitrust Laws bearing upon the consummation of the transactions
contemplated by this Agreement and except as provided in Section 7.1(f), all
required or permissive Filings by Parent, the Company or any of their respective
Affiliates with applicable Governmental Authorities shall have been made, all
applicable waiting and review periods and any extensions thereof shall have
expired or been terminated and all required Consents of such Governmental
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Authorities shall have been obtained, except for such Filings, waiting and
review periods and extensions thereof and Consents, which if not made, expired
or terminated, or obtained could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or Parent
Material Adverse Effect.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Tropsport Share Purchase of the Merger shall
be in effect.
(e) Occurrence of Concurrent Transactions. The transactions respecting the
payment, discharge, release or termination of all Funded Debt (other than
Designated Funded Debt), Applicable Credit Documents, liabilities and
obligations and Liens specified in Section 1.6 shall have occurred to the
reasonable satisfaction of Parent and the Company, and there shall have been
delivered to Parent the termination, release and discharge documentation
referred to in Section 1.6(b).
(f) Delivery of Clearance Certificates. The Clearance Certificates shall
have been issued to the Company and true copies thereof shall have been
delivered to Maska.
7.2 Conditions of Obligations of Parent, Maska and Sub. The obligations of
Parent, Maska and Sub to effect the Reorganization are subject to the
satisfaction of the following conditions unless waived by Parent:
(a) Company Representations and Warranties. The representations and
warranties of the Company set forth in Article 3 shall be true in all respects
at and as of the Effective Time (except for those that speak as of a specific
date which shall be true at and as of such date) with the same effect as though
made as of the Effective Time, except for failures of such representations and
warranties to be true and correct which, when taken together, would not result
in a Company Material Adverse Effect.
(b) Performance of Company Obligations. The Company shall have performed
and complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by the Company prior
to or at the Closing.
(c) Company Compliance Certificate. Parent, Maska and Sub shall have been
furnished with a certificate dated the Closing Date executed by the Chairman of
the Board, President or any Vice President of the Company in his or her
representative capacity, and not individually, certifying to the fulfillment of
the conditions specified in Sections 7.2(a) and 7.2(b), except to the extent
such conditions have been waived by Parent in writing.
(d) Opinion of Company Counsel. Parent, Maska and Sub shall have been
furnished with opinions of (i) Xxxxxx Xxxxxxxxx & Xxxxxx, counsel to the
Company, (ii) Stikeman, Elliott,
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counsel to Tropsport, and (iii) Xxxxx Xxxxxxxx Xxxxxxxx & Xxxxx, counsel to SHC
Hockey, in substantially the forms of Exhibits 7.2(d)(i), (ii) and (iii) hereto.
(e) Consents Under Agreements. There shall have been obtained the Consent
of each Person (other than the Governmental Authorities referred to in Sections
7.1(b), 7.1(c), and 7.1(f)) whose Consent shall be required in order to permit
the succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company or any other Acquired Company under
any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument, except for such Consents (i) which, if not obtained,
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, or (ii) which are required in connection with
the consummation of the Tropsport Share Purchase and the Merger, but would not
be required in connection with the consummation of the Merger alone.
(f) Approval of Proceedings and Documentation. All proceedings to be taken
and all certificates, instruments, opinions and other documents to be delivered
to Parent, Maska and Sub in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory in form and substance to Parent
and its counsel.
(g) Resignation Letters. The Company and Sub shall have received letters of
resignation, effective as of the Closing Date, from each director of the
Company.
(h) Dissenting Stockholders. None of the holders of the Company Preferred
Stock shall have exercised their right to dissent to the Merger as provided by
the DGCL and the holders of no more than ten percent (10%) of the outstanding
Company Common Stock shall have exercised their rights to so dissent.
(i) Voting Agreements. The Voting Agreements shall remain in full force and
effect.
(j) Company Capital Structure Certificate. Parent, Maska and Sub shall have
been furnished with a certificate dated the Closing Date executed by the
Chairman of the Board, President or any Vice President of the Company in his or
her representative capacity, and not individually, certifying, as of the Closing
Date the capital structure of the Company with the same detail as set forth in
Sections 3.2(a), (b) and (c).
(k) Tropsport Capital Structure Certificate. Parent, Maska and Sub shall
have been furnished with a certificate dated the Closing Date executed by the
Chairman of the Board, President or any Vice President of Tropsport in his or
her representative capacity, and not individually, certifying, as of the Closing
Date the capital structure of the Tropsport with the same detail as set forth in
Section 3.2(f).
(l) Certificate of Xxxxxxx/Equity Partnership No. 4, L.P. Parent, Maska and
Sub shall have been furnished with a certificate dated the Closing Date executed
by Xxxxxxx/Equity
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Partnership No. 4, L.P. ("MEP No. 4") certifying, as of the Closing Date, that
(i) MEP No. 4 has no assets or properties other than the shares of capital stock
of the Company owned by it, (ii) no limited partner of MEP No. 4 holds a
proportionate ownership interest therein (whether according to profit
participation or voting rights, or any other means of measuring ownership
interest in MEP No. 4 in accordance with Applicable Law) of more than 50% and
(iii) no Person controls, directly or indirectly, two or more of the limited
partners of MEP No. 4 holding in the aggregate a proportionate ownership
interest therein (whether according to profit participation or voting rights, or
any other means of measuring ownership interest in MEP No. 4 in accordance with
Applicable Law) of more than 50%.
(m) GECC Financing Commitment. GECC shall not have terminated its
commitment or failed to fund such commitment under the GECC Commitment Letter as
a result of the failure to satisfy the one or more of the conditions set forth
(i) in paragraphs 1, 5(i) or (iv) set forth under the section entitled "Other
Terms and Conditions" in the GECC Commitment Letter or (ii) in paragraph 5(ii)
set forth under said Section insofar as such failure in respect of paragraph
5(ii) is attributable to the occurrence of any event, occurrence, fact,
condition, effect or change in the results of operations, condition (financial
or otherwise), properties, assets or business of Parent, Maska, Sub or any of
their respective Subsidiaries, which, individually or in the aggregate, has had
or could reasonably be expected to have a material adverse effect on Parent and
its Subsidiaries, taken as a whole, or a Parent Material Adverse Effect.
7.3 Conditions of Obligation of the Company. The obligation of the Company
to effect the Reorganization is subject to the satisfaction of the following
conditions unless waived by the Company:
(a) Parent, Maska and Sub Representations and Warranties. The
representations and warranties of Parent, Maska and/or Sub set forth in Article
4 shall be true in all respects at and as of the Effective Time (except for
those that speak as of a specific date which shall be true at and as of such
date) with the same effect as though made as of the Effective Time, except for
failures of such representations and warranties to be true and correct which,
when taken together, would not result in a Parent Material Adverse Effect.
(b) Performance of Parent, Maska and Sub Obligations. Parent, Maska and/or
Sub shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Parent, Maska and/or Sub prior to or at the Closing.
(c) Parent and Maska Compliance Certificates. The Company shall have been
furnished with a certificate dated the Closing Date executed by the Chairman of
the Board, President or any Vice President of each of Parent and Maska in his or
her representative capacity, and not individually, certifying to the fulfillment
of the conditions specified in Sections 7.3(a) and 7.3(b), except to the extent
such conditions have been waived by the Company in writing.
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(d) Opinions of Parent Counsel and Maska Counsel. The Company shall have
been furnished with opinions of (i) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
counsel to Parent and (ii) Xxxxxxx XxXxxxxx Sterling Scales, counsel to Maska,
in substantially the form of Exhibit 7.3(d) hereto.
(e) Consents Under Agreements. There shall have been obtained the Consent
of each Person (other than the Governmental Authorities referred to in Sections
7.1(b), 7.1(c), and 7.1(f)) whose Consent is listed in Schedule 4.3(c) as being
required in connection with the transactions contemplated hereby.
(f) Establishment of Paying Agent and Funding. The Paying Agent Services
Agreement shall be in the full force and effect and Parent shall have deposited
with the Paying Agent the aggregate funds necessary to pay the aggregate Merger
Consideration.
(g) Approval of Proceedings and Documentation. All proceedings to be taken
and all certificates, instruments, opinions and other documents to be delivered
to the Company in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Company
and its counsel.
8. TERMINATION AND AMENDMENT.
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Reorganization by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if
(i) there has been a material breach of any representation, warranty,
covenant or agreement on the part of the Company, on the one hand, or
Parent, Maska and/or Sub, on the other, set forth in this Agreement which
breach has not been cured within ten business days following receipt by the
breaching party of notice of such breach, or
(ii) any permanent injunction or other order of a court or other
competent authority preventing the consummation of Reorganization shall
have become final and non-appealable; provided, however, that prior to any
such termination pursuant to this clause (ii) Parent and the Company shall,
and shall cause their respective financial and legal advisors to, negotiate
in good faith and for a reasonable period of time to make such adjustments
in the terms and conditions of the Tropsport Share Purchase or the Merger
as would enable the party seeking termination to proceed with the
transaction;
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(c) by either Parent or the Company if, without fault of such terminating
party, the Reorganization shall not have been consummated on or before the
Termination Date; provided, however, that if the sole reason for the failure of
the Reorganization to be consummated is the failure of the condition set forth
in Section 7.2(m) the provisions of Section 8.1(d) shall govern the termination
of this Agreement; and
(d) by Parent, if at any time on or before the Termination Date GECC shall
have terminated its commitment under the GECC Commitment Letter, or by either
Parent or the Company effective as of the Termination Date, if as of the
Termination Date GECC shall have terminated such commitment or failed to fund
such commitment, in each case as a result of the failure of one or more of the
conditions specified in clauses (i) and (ii) of Section 7.2(m), and in each case
subject however to the joint and several obligation of Parent and Maska to
compensate the Company pursuant to Section 8.2(b).
8.2 Effect of Termination.
(a) In the event of termination of this Agreement as provided above, this
Agreement shall forthwith become void and there shall be no liability on the
part of any of Parent, Maska, Sub or the Company or their respective directors
and officers, except (a) as set forth in the last sentence of Section 6.2, in
Section 6.7, in Section 6.8 and in Section 8.2(b), and (b) for any breach of
this Agreement which allows for the termination of this Agreement under Section
8.1(b)(i). Parent's obligations under the Confidentiality Agreement shall
survive the termination of this Agreement.
(b) If after the date hereof and during the term of this Agreement, Parent
or the Company shall have terminated this Agreement pursuant to Section 8.1(d),
then Parent and Maska agree jointly and severally, if requested by the Company
to promptly, but in no event later than 30 days after the date of such request,
pay the Company a termination fee of $1,000,000, which amount shall be payable
in same day funds. The Company represents that without this agreement, it would
not enter into this Agreement. The agreement relating to the payment of such
termination fee is the sole and exclusive remedy of the Company for any
termination of this Agreement pursuant to Section 8.1(d).
8.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the
Reorganization by the stockholders of the Company, but, after any such approval,
no amendment shall be made which pursuant to the DGCL requires further approval
by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Notwithstanding the foregoing, Parent, Maska and Sub acknowledge
their understanding that the Company shall not agree to amend, in a manner
adverse to the holders of the Subordinated Notes, any provision of Section 1.6
dealing with the Subordinated Notes without the express concurrence of the
holders of the Subordinated Notes.
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8.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other actions of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. Notwithstanding the
foregoing, Parent, Maska and Sub acknowledge their understanding that the
Company shall not agree to waive, in a manner adverse to the holders of the
Subordinated Notes, any provision of Section 1.6 dealing with the Subordinated
Notes without the express concurrence of the holders of the Subordinated Notes.
9. GENERAL PROVISIONS.
9.1 Non-Survival of Representations and Warranties. None of the
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time and each of them
shall expire with, and be terminated and extinguished by, the Reorganization.
This Section 9.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time, including
Sections 3.14(n), 6.7, 6.8, and 6.9.
9.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery, or (d) sent by telecopy or telegram:
(i) if to Parent, Maska or Sub, to:
SLM International, Inc.
2, Place Alexis Nihon
0000, Xxxx. xx Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxx X0X 0X0
Fax No.: (000) 000-0000
with a copy to:
Wellspring Capital Management, LLC
000 Xxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000-0000
Att'n: Xxxx X. Xxxxxxx
Fax No.: (000) 000-0000
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with a further copy to
Skadden, Arps, Slate, Xxxxxxx
& Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
(ii) if to the Company, to:
Sports Holdings Corp.
c/x Xxxxxxx and Company
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xxxxxx X. Xxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxxx & Xxxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
with a further copy to:
Tropsport Acquisitions Inc.
0000 00xx Xxxxxx
Xxxxxxx, Xxxxxx X0X 0X0
Att'n: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
(iii) if to the Process Agent, to:
CT Corporation System
Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
-50-
with a copy to:
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxxx & Xxxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
with a further copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (A) if by personal delivery on the date of such
delivery, (B) if by certified or registered mail, on the seventh Business Day
after the mailing thereof, (C) if by next-day or overnight mail or delivery, on
the day delivered, or (D) if by telecopy or telegram, on the next day following
the day on which such telecopy or telegram was sent.
9.3 Interpretation. When a reference is made in this Agreement to an
Article, Section or Schedule, such reference shall be to an Article, Section or
Schedule of or to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. Whenever in this Agreement a
party is obligated to use "reasonable efforts" to achieve a result, such party
shall be deemed obligated to use the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use reasonable efforts under this Agreement shall not obligate any party
hereto to pay any costs or expenses or other consideration (except for customary
filing fees and other ordinary administrative charges) or incur any obligation
to any third party, in order to obtain any Consent from such third party.
Whenever from the context it appears appropriate, each term stated in either the
singular or the plural shall include the singular and the plural, and pronouns
stated in the masculine, the feminine or the neuter gender shall include the
masculine, the feminine and the neuter.
-51-
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
A facsimile, telecopy or other reproduction of this Agreement may be
executed by one or more parties hereto, and an executed copy of this Agreement
may be delivered by one or more parties hereto by facsimile or similar
instantaneous electronic transmission device pursuant to which the signature of
or on behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request of any
party hereto, all parties hereto agree to execute an original of this Agreement
as well as any facsimile, telecopy or other reproduction hereof.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and instruments referred to herein,
whether or not annexed hereto as an Exhibit, Schedule or Appendix), (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.9, is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that, except as otherwise
specifically provided in this Agreement or as hereinafter agreed to in writing,
no party shall have the right to acquire or shall be deemed to have acquired
shares of capital stock of the other party pursuant to the Merger until
consummation thereof.
9.6 SUBMISSION TO JURISDICTION. PARENT AND THE COMPANY EACH SUBMIT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AGREES THAT
ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT, AND AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. PARENT AND THE COMPANY EACH
WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR
PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT
BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. IN ANY SUCH ACTION OR
PROCEEDING, IF SERVICE OF PROCESS UPON ANY PARTY, BY DELIVERY IN PERSON OR BY
MAILING BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, HAS BEEN
ATTEMPTED WITHOUT SUCCESS ON AT LEAST TWO DIFFERENT OCCASIONS, AT LEAST SEVEN
DAYS APART, WITHIN A 20 DAY PERIOD, THEN SUCH PARTY MAY BE SERVED BY SENDING OR
DELIVERING A COPY OF THE PROCESS (A) TO THE PARTY TO BE SERVED AT THE ADDRESS
AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 9.2 ABOVE OR (B)
TO THE PARTY TO BE SERVED IN CARE OF THE PROCESS AGENT (AS DEFINED BELOW) AT THE
ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 9.2
ABOVE. IN THE EVENT THAT SUCH ALTERNATIVE METHODS OF SERVICE BECOME NECESSARY,
PARENT AND THE COMPANY HEREBY APPOINT CT CORPORATION SYSTEM, A DELAWARE
-52-
CORPORATION (THE "PROCESS AGENT"), AS ITS AGENT TO RECEIVE ON ITS BEHALF SUCH
SERVICE OF PROCESS. NOTHING IN THIS SECTION 9.6, HOWEVER, SHALL AFFECT THE RIGHT
OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. PARENT
AND THE COMPANY EACH AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO
BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN
ANY OTHER MANNER PROVIDED BY LAW.
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in New York without regard to the principles thereof
regarding the choice of law, except to the extent that the laws of the State of
Delaware shall specifically and mandatorily apply to the Merger.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that each of Maska and Sub may assign, in its sole discretion,
any or all of its rights, interests and obligations hereunder to Parent or to
any direct or indirect wholly-owned Subsidiary of Parent; provided, that the
assignee (a) is a corporation duly incorporated, organized and existing under
the DGCL and (b) is able to satisfy all representations, warranties, agreements
and covenants of or concerning Maska or Sub, as the case may be, set forth in
this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by and against the
parties and their respective successors and permitted assigns.
9.9 Currency; Foreign Exchange. Unless otherwise indicated, all dollars
($'s) specified in this Agreement shall mean United States dollars. Where
necessary, all foreign currency shall be converted to U.S. dollar equivalents
determined on the basis of the spot exchange rate published in the Wall Street
Journal on the Business Day last preceding the date of determination.
9.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Applicable Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
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IN WITNESS WHEREOF, Parent, Maska and Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
"PARENT"
SLM INTERNATIONAL, INC.
By:_________________________
Name:_______________________
Title:______________________
Attest:
----------------------------
Name:_______________________
Title: Secretary
"MASKA"
SPORT MASKA INC.
By:_________________________
Name:_______________________
Title:______________________
Attest:
----------------------------
Name:_______________________
Title: Secretary
"SUB"
SLM ACQUISITION CORP.
By:_________________________
Name:_______________________
Title:______________________
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Attest:
----------------------------
Name:_______________________
Title: Secretary
"COMPANY"
SPORTS HOLDINGS CORP.
By:_________________________
Name:_______________________
Title:______________________
Attest:
----------------------------
Name:_______________________
Title: Xxxxxxxxx
-00-
XXXXXXXX X TO
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as
of October 6, 1998, among SLM INTERNATIONAL, INC., SPORT MASKA
INC., SLM ACQUISITION CORP., and SPORTS HOLDINGS CORP.
------------------------------------------------------------------
The terms defined in this Appendix I, whenever used in the Agreement
(including in the Schedules thereto), shall have the respective meanings
indicated below for all purposes of the Agreement. All references herein to a
Section, Article or Schedule are to a Section, Article or Schedule of or to the
Agreement, unless otherwise indicated.
"Accrued Dividend Amount" an amount per share equal to (a) $6.50,
multiplied by (b) a fraction having (i) as its numerator the number of days in
the period from the date through which a dividend was last paid to holders of
the Company Preferred Stock to the Closing Date (provided, however, that in
calculating the number of days in such period (A) each full calendar month in
such period shall be deemed to have 30 days, (B) the first day of the period
shall be included, and (C) the last day of the period shall be excluded), and
(ii) as its denominator 360.
"Acquired Companies" the Company and its Subsidiaries, collectively.
"Affiliate" of any Person, any partner, officer or director of such Person
or any Person that directly or indirectly controls, or is controlled by, or is
under common control with, such Person, including any Subsidiary of such Person.
"Antitrust Law" any Applicable Law respecting competition, monopolies or
restrictive trade practices pursuant to which one or more of the parties to the
Agreement, or one or more of their respective Affiliates, are required or
permitted to make one or more Filings with a Governmental Authority, required to
allow a waiting or review period to expire before proceeding or required to
Appendix I - 1
obtain a Consent from a Governmental Authority, in connection with the
Reorganization, including the HSR Act and the Competition Act.
"Applicable Credit Documents" as defined in Section 1.6(b).
"Applicable Laws" all applicable provisions of all (a) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (b) consents,
approvals or authorizations of, or designations, declarations or filings with,
or reports to, or permits, franchises or concessions from any Governmental
Authority and (c) orders, decisions, injunctions, judgments, awards and decrees
of or agreements with any Governmental Authority.
"Benefit Plan" as defined in Section 3.4(a).
"Business" the business conducted by the Acquired Companies with respect to
importing, sourcing, designing, manufacturing, marketing and distributing (a)
ice, in-line and street hockey equipment, including (i) sticks, (ii) protective
equipment, (iii) goalie equipment, (iv) ice and in-line skates, (v) helmets,
pants, bags, jerseys and other equipment used in or relating to ice, in-line or
street hockey, and (b) other incidental sporting goods.
"Business Benefit Plan" as defined in Section 3.4(a).
"Business Day" a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required to close.
"Canada Certificate", as defined in Section 6.15.
"Canadian Benefit Plan", as defined in Section 3.4(a).
"Certificate of Merger" as defined in Section 1.3.
"Certificates" as defined in Section 2.4.
Appendix I - 2
"Class A Common" and "Class B Common" as defined in Section 2.1(d).
"Clearance Certificates" as defined in Section 6.15.
"Closing" as defined in Section 1.4.
"Closing Date" as defined in Section 1.4.
"COBRA" as defined in Section 3.4(d).
"Code" the Internal Revenue Code of 1986, as amended.
"Common Cash Share Price" as defined in Section 2.1(d).
"Common Stock Merger Adjustment Amount" an amount equal to the sum of: (i)
the Preferred Stock Merger Consideration, plus (ii) the Preferred Stock
Redemption Amount, plus (iii) the Subordinated Notes Discharge Amount, plus (iv)
$7,235,000, plus (v) the Other Debt Discharge Amount, plus (vi) the Other Debt
Assumption Amount, plus (vii) the Reserve Amount, plus (viii) payments made by
the Company for the repurchase of shares of its capital stock as permitted under
Section 5.1(b)(iii) between the date of this Agreement and the Closing Date.
"Common Stock Merger Consideration" an amount equal to the sum of:
(a) Fifty-Eight Million, Seven Hundred Fifty Thousand Dollars
($58,750,000),
(b) (i) if the Common Stock Merger Adjustment Amount exceeds the Tropsport
Share Purchase Price, then minus the amount by which the Common Stock Merger
Adjustment Amount exceeds the Tropsport Share Purchase Price, or (ii) if the
Tropsport Share Purchase Price exceeds the Common Stock Merger Adjustment
Amount, then plus the amount by which the Tropsport Share Purchase Price exceeds
the Common Stock Merger Adjustment Amount.
Appendix I - 3
"Company" as defined in the first paragraph of the Agreement.
"Company Common Stock" as defined in Section 2.1(d).
"Company Material Adverse Effect" any event, occurrence, fact, condition,
change or effect that, individually or when taken together with all other such
events, occurrences, facts, conditions, changes or effects, is materially
adverse to (a) the business, operations, results of operations, condition
(financial or otherwise), properties, assets or liabilities of the Acquired
Companies as a whole (for the purposes of this clause (a), where it is indicated
in the Agreement that the determination is to be made with respect to any time
or period following the Effective Time, Surviving Corporation shall be
substituted for the Company), other than events, occurrences, facts, conditions,
changes or effects attributable to (i) occurrences in the economy in general or
the Acquired Companies' industry in general and not specifically relating to the
Acquired Companies or the Business or (ii) the delay or cancellation of orders
or business relationships by customers of or vendors to the Acquired Companies
directly attributable to the announcement of this Agreement, or (b) the
Company's ability to perform its obligations under the Agreement.
"Company Preferred Stock" as defined in Section 2.1(c).
"Company Stock" as defined in Section 2.1(d).
"Competition Act" the Competition Act (Canada), as amended, including the
regulations and rules issued pursuant thereto.
"Confidentiality Agreement" the confidentiality agreement dated February
12, 1998 between Wellspring Capital Management L.L.C. and Xxxxxxx Xxxxx Xxxxxx
Inc., as financial advisor to and on behalf of the Company.
"Consent" as defined in Section 3.3(c).
"Constituent Corporations" as defined in Section 1.5(a).
Appendix I - 4
"Definitive Financing Agreements" as defined in Section 6.10.
"Designated Funded Debt" as defined in Section 1.6(c).
"DGCL" as defined in Section 1.3.
"Dissenting Holder" as defined in Section 2.1(e).
"Dissenting Shares" as defined in Section 2.1(e).
"D/O Indemnified Parties" as defined in Section 6.9(a).
"Effective Time" as defined in Section 1.3.
"Environmental Claim" any claim action, cause of action, investigation or
written notice by any person or entity alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup or
remediation costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or Release of any Hazardous Materials at any
location, whether or not owned or operated by the Acquired Companies, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" all federal, state, provincial, local, and foreign
laws and regulations relating to pollution or protection of human health or the
environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"ERISA" as defined in Section 3.4(a).
Appendix I - 5
"ERISA Affiliate" as defined in Section 3.4(a)(viii).
"Filing" as defined in Section 3.3(c).
"Financial Statements" as defined in Section 3.12.
"Financing Commitments" as defined in Section 4.7.
"Foreign Subsidiary" any Subsidiary of the Company organized under the laws
of any jurisdiction other than the United States or any State or political
subdivision thereof, or Canada or any province or political subdivision thereof.
"Funded Debt" as defined in Section 1.6(a).
"GECC", collectively General Electric Capital Corporation and General
Electric Capital Canada Inc.
"GECC Commitment Letter", letter dated October 6, 1998 addressed from GECC
to Parent with respect to financing for the transactions contemplated by the
Agreement.
"Governmental Authority" any nation or government, any state or province or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States or Canada,
any State of the United States, any Province of Canada, any foreign country, or
any political subdivision of any of the foregoing, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
"Group Benefit Plan" as defined in Section 3.4(a).
Appendix I - 6
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants, or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss.300.5, or defined as such by, or
regulated as such under, any Environmental Law.
"HSR Act" the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, including the regulations and rules issued pursuant thereto.
"Injunction" as defined in Section 7.1(d).
"Intellectual Property" as defined in Section 3.9.
"Interim Financials" as defined in Section 3.12.
"Karhu U.S.A., Inc." a Vermont corporation now known as SHC Hockey Inc.
"Knowledge" an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. A Person other than an individual (a "Subject Entity")
will be deemed to have "Knowledge" of a particular fact or other matter if (a)
any individual who is serving as the chief executive officer, chief operating
officer, chief financial officer, or chief accounting officer of such Subject
Entity, and (b) in the case of the Company, in addition to the persons holding
the offices described in clause (a), any of the following: Xxxx Xxxxxxx, Xxxxxx
Xxxxxxxxxx, or Xxxxxxx Xxxxxxxxx (any of the foregoing officers or, in the case
of the Company, named individuals, a "Relevant Individual") has Knowledge of
such fact or other matter, or if any Relevant Individual could be expected to
have discovered or otherwise become aware of such fact or other matter upon
having made due inquiry of those employees of such Subject Entity who report to
such Relevant Individual and who could reasonably be expected, in the ordinary
course of their duties as employees of such Subject Entity, to have information
relating to the subject of the representation or warranty to which such fact or
other matter relates.
"Letter of Transmittal" as defined in Section 2.1(c).
Appendix I - 7
"Lien" any mortgage, pledge, hypothec, hypothecation, right of others,
claim, security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment, burden,
title defect, title retention agreement, voting trust agreement, interest,
equity, option, lien, right of first refusal, charge or other restriction or
limitation of any nature whatsoever.
"Maska" as defined in the first paragraph of the Agreement.
"Material Contracts" as defined in Section 3.15.
"MEOP" as defined in Section 3.2(b).
"MEP No. 4" as defined in Section 7.2(l).
"Merger" as defined in the second recital of the Agreement.
"Merger Consideration" as defined in Section 2.1(d).
"1997 Balance Sheet" the latest balance sheet included in the Financial
Statements.
"North American Leased Real Property" as defined in Section 3.7(b)(i).
"North American Owned Real Property" as defined in Section 3.7(a)(i).
"North American Real Property Leases" as defined in Section 3.7(b)(i).
"North American Tenant Agreements" as defined in Section 3.7(a)(i).
"Organizational Documents" (a) the articles or certificate of incorporation
and bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
certificate of limited partnership of a limited partnership;
Appendix I - 8
(d) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of any other Person; and (e) any amendment
to any of the foregoing.
"Other Debt" as defined in Section 1.6(a)(iii).
"Other Debt Assumption Amount" the total amount of Designated Funded Debt
(including accrued and unpaid interest, if any, through the Closing Date) in
respect of the Other Debt, excluding any penalties, fees or other amounts which
have or will become outstanding in connection with or as a result of Parent's
election pursuant to Section 1.6(c) to have such Other Debt continue to remain
outstanding after the Effective Time or any actions taken in connection with
obtaining any Consent pursuant to Section 1.6(c) in relation thereto.
"Other Debt Discharge Amount" the total amount required to pay in full
pursuant to Section 1.6(a)(iii) the Funded Debt in respect of the Other Debt not
included in the Designated Funded Debt.
"Overseas Owned Real Property" as defined in Section 3.7(c).
"Overseas Real Property Leases" as defined in Section 3.7(c).
"Parent" as defined in the first paragraph of the Agreement.
"Parent Material Adverse Effect" any event, occurrence, fact, condition,
change or effect that, individually or when taken together with all other such
events, occurrences, facts, conditions, changes or effects, is materially
adverse to the ability of Parent or Sub to perform its or their obligations
under the Agreement.
"Paying Agent" as defined in Section 2.3
"Paying Agent Services Agreement" as defined in Section 2.3.
"Permits" as defined in Section 3.16.
Appendix I - 9
"Permitted Liens" (a) Liens securing any of the Funded Debt but subject to
the provisions of Section 1.6 of the Agreement relating to the payment in full
of the Funded Debt and the provision for the termination, release or discharge
of such Liens, (b) Liens otherwise specifically disclosed in one or more
Sections of the Agreement or the Schedules hereto; (c) Liens reserved against in
the Financial Statements or the Interim Financials and identified in the
footnotes to the Financial Statements, to the extent so reserved, (d) Liens for
Taxes which are not delinquent as of the date of determination, or which can be
paid without material penalty, or which are being contested in good faith by
appropriate proceedings if adequate reserves with respect thereto are maintained
on an Acquired Company's books and records, or (e) Liens that, individually and
in the aggregate, do not and could not reasonably be expected to materially
detract from the value of any material item or portion of property or assets of
the Acquired Companies or materially interfere with the use thereof as used as
of the date of determination.
"Person" any natural person, firm, general or limited partnership,
association, corporation, company, trust, business trust, Governmental Authority
or other entity.
"Preferred Cash Share Price" as defined in Section 2.1(c).
"Preferred Stock Merger Consideration" as defined in Section 2.1(c).
"Preferred Stock Redemption Amount" as defined in Section 1.2(b).
"Process Agent" as defined in Section 10.6.
"Products Liability Claim" any claim for alleged damage or injury to person
or property (a) arising out of any express or implied representation, warranty,
agreement or guaranty made or claimed to have been made by or on behalf of an
Acquired Company, or (b) based upon any statute or common law theory of tort or
strict liability or civil law theory of delict, in each case in connection with
any products or services produced, prepared, created, sold or rendered by or on
behalf of such Acquired Company in connection with the Business.
Appendix I - 10
"Proprietary Rights" as defined in Section 3.9.
"Quebec Certificate" as defined in Section 6.15.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, dispersal, leaching or migration into the indoor
or outdoor environment (including, without limitation, ambient air, surface
water, groundwater and surface or subsurface strata) or into or out of any
property, including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or property.
"Reorganization" as defined in the second recital to the Agreement.
"Reserve Amount" as defined in Section 2.2(b)(ii).
"Retention Payments" as defined in Section 6.7.
"Retiree Welfare Plan" as defined in Section 3.4(a).
"SHC Hockey" SHC Hockey, Inc. (formerly known as Karhu U.S.A., Inc.) a
Vermont corporation and a wholly-owned Subsidiary of the Company.
"Significant Customer" any customer of an Acquired Company that ordered
products and related services from such Acquired Company with an aggregate
purchase price of $50,000 or more during the eight-month period ended August 31,
1998.
"Significant Vendor" any supplier to an Acquired Company from which such
Acquired Company ordered raw materials, supplies, merchandise or other goods
with an aggregate purchase price of $50,000 or more during the eight-month
period ended August 31, 1998.
"Sub" as defined in the first paragraph of the Agreement.
Appendix I - 11
"Subordinated Notes" as defined in Section 1.6(a)(ii).
"Subordinated Notes Discharge Amount" the total amount required to pay in
full the Funded Debt in respect of the Subordinated Notes pursuant to Section
1.6(a)(ii).
"Subsidiary" with respect to any Person (the "owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of such corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of such corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the owner or one or more of such owner's Subsidiaries.
"Subsidiary Equity" as defined in Section 3.1(a).
"Surviving Corporation" as defined in Section 1.5(a).
"Takeover Agreement" as defined in Section 5.1(e).
"Takeover Proposal" any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving any Acquired Company, or
any proposal or offer to acquire in any manner a substantial equity interest in,
or a substantial portion of the assets of any Acquired Company other than
pursuant to the transactions contemplated by this Agreement.
"Tax" or "Taxes" any federal, state, local or foreign net or gross income,
franchise, profits, gross receipts, license, payroll, employment, excise,
severance, stamp, capital stock, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax, governmental fee or assessment or charge of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not,
imposed by any governmental authority or arising under any tax law (including by
reason of several and/or transferee liability).
Appendix I - 12
"Tax Consequences" as defined in Section 3.14(n).
"Tax Costs" as defined in Section 3.14(n).
"Tax Return" any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.
"Termination Date" as defined in Section 1.4.
"Tropsport" as defined in the first recital of the Agreement.
"Tropsport Share Purchase" as defined in the first recital of the
Agreement.
"Tropsport Share Purchase Price" as defined in Section 1.1.
"Tropsport Shares" as defined in Section 1.1.
"Violation" as defined in Section 3.3(b).
"Voting Agreements" as defined in Section 6.13.
"Voting Debt" as defined in Section 3.2(b).
"WARN Act" as defined in Section 3.5.
"Welfare Plan" as defined in Section 3.4(a).
"Working Capital Borrowings" as defined in Section 1.6(a)(i).
"Working Capital Borrowings Assumption Amount" the total amount of
Designated Funded Debt (including accrued and unpaid interest, if any, through
the Closing Date) in respect of the
Appendix I - 13
Working Capital Borrowings, excluding any penalties, fees or other amounts which
have or will become outstanding in connection with or as a result of Parent's
election pursuant to Section 1.6(c) to have such Working Capital Borrowings
continue to remain outstanding after the Effective Time or any actions taken in
connection with obtaining any Consent pursuant to Section 1.6(c) in relation
thereto.
"Working Capital Borrowings Discharge Amount" the total amount required to
pay in full pursuant to Section 1.6(a)(i) the Funded Debt in respect of those
Working Capital Borrowings not included in the Designated Funded Debt.
Appendix I - 14
