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EXHIBIT 2
SECURITIES PURCHASE AGREEMENT
Dated as of November 27, 1996
by and between
SPORT SUPPLY GROUP, INC.
and
▇▇▇▇▇▇▇ RADIO CORP.
2
TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE . . . . . . . . . . . . . 1
1.1 Purchase and Sale of Shares and Warrants . . . . . . . . 1
ARTICLE II
PURCHASE PRICE . . . . . . . . . . . . . 2
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . 2
2.2 Closing Payments . . . . . . . . . . . . . . . . . . . . 2
2.3 Deposit of Purchase Price . . . . . . . . . . . . . . . . 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SSG . . . . . . . . 2
3.1 Organization and Qualification; Subsidiaries . . . . . . 2
3.2 Capitalization; Minute Book . . . . . . . . . . . . . . . 3
3.3 Title to Shares . . . . . . . . . . . . . . . . . . . . . 4
3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 No Violations . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Reports . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 Absence of Certain Changes or Events . . . . . . . . . . 6
3.8 Condition of Tangible Assets . . . . . . . . . . . . . . 8
3.9 Taxes, Tax Returns and Other Reports . . . . . . . . . . 8
3.10 Employment Contracts and Compensation . . . . . . . . . . 9
3.11 Patents, Trademarks, Etc . . . . . . . . . . . . . . . . 9
3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Compliance with Laws; Permits . . . . . . . . . . . . . . 10
3.15 Hazardous and Toxic Substances; Hazardous Wastes
and Pollutants . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Debt Instruments . . . . . . . . . . . . . . . . . . . . 12
3.17 Employee Benefit Plans; Collective Bargaining
Agreements . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Customs . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ . . . . . . . 14
4.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 No Violations . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Investment Representations . . . . . . . . . . . . . . . 15
4.4. Reports . . . . . . . . . . . . . . . . . . . . . . . . . 16
3
4.5. Opinion of Counsel . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
CONDUCT OF BUSINESS BY SSG PENDING CLOSING . . . . . . 16
5.1 Preservation of Existence . . . . . . . . . . . . . . . . 17
5.2 Compliance with Laws . . . . . . . . . . . . . . . . . . 17
5.3 Accounting Methods; Inspections; Cooperation . . . . . . 17
5.4 Maintenance of Property . . . . . . . . . . . . . . . . . 17
5.5 Payment of Taxes and Claims . . . . . . . . . . . . . . . 18
5.6 Information Covenants . . . . . . . . . . . . . . . . . . 18
5.7 Action By Board of Directors . . . . . . . . . . . . . . 19
ARTICLE VI
ADDITIONAL AGREEMENTS OF SSG . . . . . . . . . . 19
6.1 Access to Information . . . . . . . . . . . . . . . . . . 19
6.2 Purchase or Sale of Assets . . . . . . . . . . . . . . . 19
6.3 Acquisition Proposals . . . . . . . . . . . . . . . . . . 19
6.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Agreements . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Issuance of Common Stock . . . . . . . . . . . . . . . . 20
6.8 Dividends . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Investments . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Merger, etc. . . . . . . . . . . . . . . . . . . . . . . 21
6.11 Charter Amendment . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII
POST-CLOSING COVENANTS OF SSG 22
ARTICLE VIII
CONDITIONS TO ▇▇▇▇▇▇▇'▇ OBLIGATION TO CLOSE . . . . . . 22
ARTICLE IX
CONDITIONS TO SSG'S OBLIGATIONS TO CLOSE . . . . . . . 24
ARTICLE X
CLOSING . . . . . . . . . . . . . . . 25
10.1 Time and Place of Closing . . . . . . . . . . . . . . . . 25
10.2 Delivery by SSG . . . . . . . . . . . . . . . . . . . . . 25
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10.3 Delivery by ▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . 26
10.4 Transaction Documents . . . . . . . . . . . . . . . . . . 27
ARTICLE XI
TERMINATION AND EXTENSION . . . . . . . . . . . 27
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . 28
11.3 Extension . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . 29
12.1 No Broker . . . . . . . . . . . . . . . . . . . . . . . . 29
12.2 Public Statements . . . . . . . . . . . . . . . . . . . . 30
12.3 Survival of Representations and Warranties . . . . . . . 30
12.4 Officers' and Directors' Indemnification and
Insurance . . . . . . . . . . . . . . . . . . . . . . . . 30
12.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 31
12.6 Entire Agreement; Written Modifications . . . . . . . . . 31
12.7 Assignment; Binding Effect . . . . . . . . . . . . . . . 31
12.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 32
12.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.10 Cooperation . . . . . . . . . . . . . . . . . . . . . . . 33
12.11 No Benefit to Others. . . . . . . . . . . . . . . . . . . 33
12.12 Headings, Gender, and "Person" . . . . . . . . . . . . . 33
12.13 Schedules . . . . . . . . . . . . . . . . . . . . . . . . 33
12.14 Severability . . . . . . . . . . . . . . . . . . . . . . 33
12.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . 34
12.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . 34
12.17 Construction . . . . . . . . . . . . . . . . . . . . . . 34
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SECURITIES PURCHASE AGREEMENT dated as of November 27, 1996,
by and between SPORT SUPPLY GROUP, INC., a Delaware corporation having an
address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("SSG") and
▇▇▇▇▇▇▇ RADIO CORP., a Delaware corporation having an address at Nine ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("▇▇▇▇▇▇▇").
W I T N E S S E T H:
WHEREAS, SSG has agreed to issue or grant, as the case may be,
and sell to ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ has agreed to subscribe for and purchase from
SSG, (i) 1,600,000 newly-issued shares (the "Shares") of Common Stock, $.01 par
value, of SSG (the "Common Stock") and (ii) five-year warrants to purchase up
to 1,000,000 newly-issued shares of the Common Stock at an exercise price of
$7.50 per share, subject to adjustment (the "Warrants"), subject to, and in
accordance with, the terms and provisions set forth herein.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Shares and Warrants. Subject to
the terms and provisions of this Agreement, and on the basis of and in reliance
upon the representations, warranties, covenants, and agreements set forth
herein and in the Transaction Documents (as hereinafter defined), on the
Closing Date (as defined in Section 10.1 hereof), SSG shall validly issue or
grant, as the case may be, and sell to ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ shall validly
subscribe for and purchase from SSG, the Shares and the Warrants.
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ARTICLE II
PURCHASE PRICE
2.1 Purchase Price.
(a) In consideration of the issuance and sale of the
Shares, ▇▇▇▇▇▇▇ shall pay to SSG the sum of ELEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS ($11,500,000) (the "Stock Purchase Price").
(b) In consideration of the issuance and sale of the
Warrants, ▇▇▇▇▇▇▇ shall pay to SSG the sum of FIVE HUNDRED THOUSAND DOLLARS
($500,000) (the "Warrants Purchase Price," and together with the Stock Purchase
Price, the "Purchase Price").
2.2 Closing Payments. On the Closing Date, ▇▇▇▇▇▇▇ shall
pay, in immediately available funds by wire transfer to SSG's bank account
designated not later than two business days prior to the Closing Date, the
Purchase Price to SSG.
2.3 Deposit of Purchase Price. Concurrently herewith,
▇▇▇▇▇▇▇ shall provide SSG with an irrevocable standby letter of credit in the
amount of $3,000,000 from a financial institution located in the United States
and reasonably satisfactory to SSG, on terms and conditions reasonably
satisfactory to ▇▇▇▇▇▇▇ and SSG, for purposes of satisfying ▇▇▇▇▇▇▇'▇
obligations under Section 11.2 of this Agreement. ▇▇▇▇▇▇▇ shall also provide
evidence reasonably satisfactory to SSG of ▇▇▇▇▇▇▇'▇ availability of funds in
or from a financial institution located in the United States for purposes of
paying the Purchase Price at Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SSG
As a material inducement to ▇▇▇▇▇▇▇ to purchase the Shares and
the Warrants, SSG hereby represents and warrants to ▇▇▇▇▇▇▇ as follows:
3.1 Organization and Qualification; Subsidiaries.
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(a) Each of SSG and its sole subsidiary, Sport Supply
Group International Holdings, Inc. ("SSGI"), is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its respective properties and to
carry on its respective businesses as now conducted. Each of SSG and SSGI is
duly qualified or licensed and has all permits necessary to transact business,
and is in good standing as a foreign corporation, in each of the jurisdictions
set forth in Schedule 3.1 hereto, which are the only jurisdictions wherein the
nature of the respective businesses conducted by SSG or SSGI or their
respective leases of real property require them to be so qualified or licensed
or to hold such permits, except where the failure to be so qualified or
licensed or to hold such permits would not have a material adverse effect on
the financial condition, results of operation, assets, liabilities, business,
or prospects of SSG and SSGI, taken as a whole (hereinafter, a "Material
Adverse Effect").
(b) SSG has no other direct or indirect subsidiaries and
has no ownership or equity interest, or right to acquire any ownership or
equity interest, whether by conversion, option exercise, or otherwise, in any
corporation, partnership, association, business trust, limited liability
company, or any other entity except for SSGI. The total authorized capital
stock of SSGI consists of 10,000 shares of its common stock, $.01 par value per
share, of which 1,000 shares are outstanding, all of which are owned by SSG,
free and clear of any adverse claims. There are no outstanding subscriptions,
options, warrants, rights, calls, contracts, commitments, understandings, or
agreements to purchase or otherwise acquire, or relating to the issuance of
(collectively, the "Rights"), any shares of capital stock or other securities
of SSGI, including without limitation, any Rights of conversion or exchange
under any outstanding securities or instruments.
3.2 Capitalization; Minute Book. The total authorized
capital stock of SSG consists of 20,000,000 shares of Common Stock, having a
par value of $0.01 per share, of which 6,764,834 shares are outstanding, and
100,000 shares of Preferred Stock, having a par value of $0.01 per share, none
of which are
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outstanding. Except as disclosed in the Reports (as hereinafter defined) or in
Schedule 3.2 attached thereto, there are no outstanding Rights to acquire any
shares of Common Stock or other securities of SSG, including, without
limitation, any rights of conversion or exchange under any outstanding
securities or instruments. The minute books of SSG and SSGI to be made
available to ▇▇▇▇▇▇▇ are true and complete in all material respects.
3.3 Title to Shares. The Shares upon issuance, and the
shares of Common Stock to be issued on exercise of the Warrants in accordance
with their terms, will be, and all other outstanding shares of Common Stock
have been, duly authorized and validly issued in full compliance with
applicable federal, state, and other securities and other laws, and without any
violation of any pre-emptive rights, and will be or are, as the case may be,
fully paid and non-assessable. Upon delivery by SSG to ▇▇▇▇▇▇▇ of the Stock
Certificates (as defined in Section 10.2) and upon exercise of the Warrants in
accordance with their terms, ▇▇▇▇▇▇▇ shall acquire the legal and valid title to
the Shares and shares of Common Stock underlying the Warrants, free and clear
of all adverse claims whatsoever not created by ▇▇▇▇▇▇▇, and shall become the
lawful record and beneficial owner thereof.
3.4 Authority. SSG has all requisite corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents (as defined in Section 10.4) to which it may be a party and
consummate the transactions contemplated herein and therein. Except as may be
required by the rules of the New York Stock Exchange, Inc. ("NYSE"), SSG's
execution, delivery, and performance of this Agreement and the other
Transaction Documents to which SSG may be a party, and the consummation of the
transactions contemplated herein and therein, have been duly authorized by its
Board of Directors and no other action is required by law, the Certificate of
Incorporation or Bylaws of SSG, or otherwise, for such authorization. This
Agreement and each of the other Transaction Documents to which SSG may be a
party constitute the legal, valid, and binding obligations of, and are
enforceable against, SSG in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
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3.5 No Violations. Except as set forth in Schedule 3.5
and except for matters which would not have a Material Adverse Effect and which
could not prevent or delay the Closing, the authorization, execution, and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated herein and therein by SSG do not
and will not, with or without the giving of notice or passage of time or both
(a) violate, conflict with, or result in the breach of any term or provision
of, or require any notice, filing or consent under (i) the Certificate of
Incorporation or Bylaws of SSG or SSGI, (ii) any statutes, laws, rules,
regulations, ordinances, or Permits (as defined in Section 3.14 below) of any
governmental body, authority, or agency applicable to SSG or SSGI, or (iii) any
judgment, decree, writ, injunction, order, or award of any arbitrator, court,
or governmental body, authority, or agency binding upon SSG or SSGI or any of
their respective properties or assets; (b) conflict with or result in the
breach of any term or provision of, require any notice or consent under, give
rise to a right of termination of, constitute a default under, result in the
acceleration of, or give rise to a right to accelerate any obligation under any
loan agreement, mortgage, indenture, financing agreement, lease, or any
agreement or instrument of any kind to which SSG or SSGI may be a party or by
which any of their respective properties or assets are bound; or (c) result in
any lien, claim, encumbrance, or restriction on any of the properties or assets
of SSG or SSGI.
3.6 Reports. Since December 31, 1994, SSG has filed all
required forms, reports, statements, and documents (the "Reports") with the
Securities and Exchange Commission ("SEC") required to be filed by it pursuant
to the Federal securities laws and the SEC rules and regulations promulgated
thereunder, all of which have complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder. None of
such Reports, including without limitation any financial statements or
schedules included therein, at the time filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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The consolidated balance sheets and the related consolidated
statements of operations and cash flows (including the related notes thereto)
(the "Financial Statements") of SSG included in the Financial Statements
contained in SSG's Annual Report on Form 10-K for the fiscal year ended October
31, 1995 (the "1995 10-K") and SSG's Quarterly Reports on Form 10-Q for the
fiscal quarters ended February 2, 1996, May 3, 1996, and August 2, 1996 (the
"Interim 10-Q's"), present fairly in all material respects the consolidated
financial position of SSG as of their respective dates, and the results of
consolidated operations and cash flows for the periods presented therein, all
in conformity with generally accepted accounting principles applied on a
consistent basis ("GAAP"), except as otherwise noted therein and except that
the Financial Statements included in the Interim 10-Q's may not contain all
footnotes required by GAAP and are subject to year-end audit adjustments.
3.7 Absence of Certain Changes or Events. Except as
specifically provided for herein or as set forth in Schedule 3.7, since August
2, 1996 (the "Balance Sheet Date"), neither SSG nor SSGI has:
(a) incurred any material obligation or liability except
trade or business obligations or liabilities incurred in the ordinary course of
business;
(b) other than pursuant to its existing lines of credit,
created, incurred, assumed, or guaranteed any indebtedness for money borrowed,
or mortgaged, pledged, or subjected to any lien, pledge, mortgage, charge,
security interest, conditional sales contract, or other encumbrance of any
nature whatsoever any of its assets or properties, except in the ordinary
course of business consistent with past practices;
(c) sold or committed to sell or assigned, transferred,
or leased or subleased any of its material assets or properties, other than in
the ordinary course of business;
(d) canceled, compromised, modified, or waived any
material debt or claim owing to it, except for adjustments made in the ordinary
course of business consistent with past practices;
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(e) declared, set aside, or paid any dividend or made or
agreed to make any other distribution or payment in respect of its capital
stock; or redeemed, purchased, or otherwise acquired or agreed to redeem,
purchase, or otherwise acquire any of its capital stock;
(f) transferred or granted any material rights under or
with respect to any Intellectual Property (as defined in Section 3.11 below);
(g) except as disclosed in Schedule 3.2 hereto, issued or
sold any of its capital stock or any other securities or granted any options,
warrants, or other rights to subscribe therefor or entered into any other
commitments for the sale or purchase of any of its capital stock or other
securities;
(h) made, committed to make, or initiated any material
capital expenditure or capital addition or betterment or programs with respect
thereto, except such as may be involved in the replacement of its assets in the
ordinary course of business;
(i) made or granted any promotion in title or
responsibility or increase with respect to any wages, salaries, or other
compensation (other than increases in the ordinary course of its business
consistent with past practices) of any director or officer of SSG or SSGI;
entered into any employment contract or other compensation arrangement with any
stockholder, director, or officer of SSG or SSGI; made any advance (excluding
advances for ordinary and necessary business expenses) or loan to any
stockholder, director, or officer of SSG or SSGI; or made any increase in, or
any addition to, other benefits to which any stockholder, director, or officer
may be entitled;
(j) changed in any material respect any of the accounting
principles followed by it or the methods of applying such principles;
(k) entered into any transaction other than in the
ordinary course of business consistent with past practices; or
(l) experienced any Material Adverse Effect.
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3.8 Condition of Tangible Assets. Neither SSG nor SSGI
has received notice that the Tangible Assets violate, and neither SSG nor SSGI
have any knowledge of any state of facts or the occurrence of any events which
might form a reasonable basis for a claim that the Tangible Assets violate, any
applicable laws, ordinances, codes, rules, or regulations relating to the use
and operation of the Tangible Assets, including, without limitation, any local
or municipal building, electrical, plumbing, safety, engineering,
environmental, or license or permit requirements in any manner which would
result in a Material Adverse Effect.
3.9 Taxes, Tax Returns and Other Reports. All federal,
state, and local tax returns, reports, and statements required to be filed by
SSG or SSGI (collectively, the "Tax Returns") have been filed with the
appropriate governmental agencies in all jurisdictions in which the Tax Returns
are required to be filed, and all of the Tax Returns are complete and correct
in all material respects and properly reflect the tax liabilities of SSG and
SSGI for the periods, properties, or events covered thereby. All federal,
state, and local taxes, assessments, interest, deficiencies, fees, and other
governmental charges or impositions which are called for by the Tax Returns
(collectively, the "Taxes") have been properly accrued or paid. The accruals
for Taxes, if any, contained in the Financial Statements are adequate in all
material respects to cover the tax liabilities of SSG and SSGI as of the dates
thereof. Except for a sales tax audit in the State of Florida, neither SSG nor
SSGI has received any notice of assessment or proposed assessment or been
advised as to any tax examination by any taxing authority in connection with
any Tax Returns and there are no pending tax examinations of, or tax claims
asserted against, SSG and SSGI or any of their respective assets or properties.
There are no tax liens on any of the assets or properties owned or used by SSG
and SSGI. Neither SSG nor SSGI is subject to any extension of a period for the
assessment of any Tax. Each of SSG and SSGI has made all deposits required by
law to be made by it with respect to employee withholding taxes. There are no
outstanding agreements or waivers extending the statute of limitations with
respect to, and neither SSG nor SSGI is now subject to any extension of a
period for the assessment of, any federal, state, or local income tax or other
tax.
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3.10 Employment Contracts and Compensation. Except as
disclosed in the Reports or on Schedule 3.10, neither SSG nor SSGI is a party
to any written employment contracts or agreements with any stockholders,
officers, directors, or employees of SSG or SSGI or any contracts or agreements
under which individuals acting as independent contractors perform analogous
services for SSG or SSGI on a regular basis.
3.11 Patents, Trademarks, Etc. Schedule 3.11 contains a
complete and correct list of all material patents, trademarks, trademark
rights, trade names, trade name rights, service marks, copyrights, and other
similar proprietary rights, and material applications for any of the foregoing,
of SSG and SSGI and other material agreements pertaining to any of the
foregoing or to the transfer of technical information, know-how, or technical
assistance to which either SSG or SSGI is a party or which relate to the
business of SSG or SSGI (collectively, the "Intellectual Property"). Except as
set forth in Schedule 3.11, and except for matters which would not have a
Material Adverse Effect, (a) SSG or SSGI, as the case may be, is the sole and
exclusive owner of the Intellectual Property and has the sole and exclusive
right to use the same; (b) no proceedings have been instituted or are pending
or threatened which challenge the rights of either SSG or SSGI in respect of
any of the Intellectual Property or the validity thereof; (c) to SSG's
knowledge, none of the Intellectual Property infringes upon or otherwise
violates the rights of others or is being infringed by others, and none is
subject to any outstanding order, decree, judgment, stipulation, or charge; (d)
no licenses, sublicenses, or agreements pertaining to any of the Intellectual
Property have been granted to or by either SSG or SSGI; (e) neither SSG nor
SSGI has received any charge of interference or infringement of any of the
Intellectual Property; (f) neither SSG nor SSGI has agreed to indemnify any
person or entity for or against any infringement of any patent, trademark, or
copyright; and (g) neither SSG nor SSGI has any knowledge of any trademarks or
applications therefor or similar property which infringe upon any of the
Intellectual Property or render obsolete or materially adversely affect the
distribution or sale of any of the products or services of the business of SSG
or SSGI.
3.12 Litigation. Except as described in the Reports or
Schedule 3.12 hereto, there are no actions, suits, or legal, administrative,
arbitration, or other proceedings or governmental
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investigations pending or, to SSG's knowledge, threatened against either SSG or
SSGI before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, which, if
adversely determined, would result in a Material Adverse Effect.
3.13 Insurance. SSG has in full force and effect the
insurance policies listed on Schedule 3.13 and all premiums due thereon have
been paid and SSG has complied in all material respects with the provisions of
such policies. SSG will use its best efforts to maintain or cause to be
maintained in full force and effect all such insurance policies or similar
insurance policies through the Closing Date.
3.14 Compliance with Laws; Permits.
(a) Neither SSG nor SSGI has received notice of any
violation by SSG or SSGI of any federal, state, or local law, statute, rule, or
regulation applicable to SSG or SSGI, their respective assets or properties or
businesses as now conducted or any of the Permits (as defined in Section
3.14(b) below), which violation would have a Material Adverse Effect. Each of
SSG and SSGI has complied with, and is not in violation of, any judgment,
order, writ, injunction, or decree of any governmental authority, court or
administrative authority having jurisdiction over SSG or SSGI, their respective
assets or properties or businesses as now or heretofore conducted, except where
failure to comply would not have a Material Adverse Effect.
(b) SSG has all licenses, permits, approvals,
certificates of occupancy, and other authorizations (collectively, the
"Permits") which are material to the conduct of its business as now conducted
and has not failed to adhere to the requirements thereof in any material
respect. Each of SSG and SSGI has taken all steps necessary to maintain all of
the Permits, all of which are valid, in good standing, and in full force and
effect.
(c) No notice to, filing with, or consent from any
governmental body, authority, or agency is required as a result of, or as a
condition to the legality or validity of, the issuance or grant, as the case
may be, and sale of the Shares and Warrants (and the shares of Common Stock
underlying the Warrants) and the consummation of the transactions contemplated
by this Agreement
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and the other Transaction Documents, nor will any Permit otherwise be
terminated, modified, or impaired or rendered invalid by reason thereof.
3.15 Hazardous and Toxic Substances; Hazardous Wastes and
Pollutants.
(a) SSG has complied in all material respects with, and
is not in material violation of, any material federal, state or local
ordinance, rule, regulation and statute governing the generation, transport,
storage, treatment, handling, release, emission, discharge, and disposal of
solid or hazardous wastes, hazardous substances, toxic substances or
pollutants.
(b) Except as set forth in Schedule 3.15, there are no
locations or premises currently or previously leased or operated by SSG or SSGI
where hazardous wastes, hazardous substances, toxic substances, or pollutants
have entered into the air, soil, surface water, groundwater, or other bodies of
water in violation of federal, state or local law, regulation or ordinance, and
neither SSG nor SSGI know of any on-site or off-site locations to which SSG or
SSGI has transported hazardous wastes, hazardous substances, toxic substances
or pollutants, which site is or may become the subject of any federal, state,
or local enforcement actions or other investigations that may lead to claims
against SSG or SSGI for remedial investigation costs, clean-up costs, remedial
work, damages to natural resources, or personal injury or property damage,
including, but not limited to, claims under the Comprehensive Environmental
Response Compensation and Liability Act, as amended, the Resource Conservation
and Recovery Act, as amended, or any other federal, state, or local law, rule,
or regulation concerning the clean-up of the environment or discharges of
hazardous wastes, hazardous substances, toxic substances, or pollutants.
(c) As used in this Agreement, (i) the term "hazardous
wastes" shall have the meaning given to such term in the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, and the
regulations promulgated thereunder or under any similar federal, state, or
local law, rule, or regulation dealing with the generation, transport, storage,
treatment, handling, release, emission, discharge, or disposal of hazardous
wastes; (ii) the term "hazardous substances" shall have
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the meaning given to such term in the Comprehensive Environmental Response,
Compensation, and Liability Act and the regulations promulgated thereunder or
under any similar federal, state, or local law, rule, or regulation dealing
with the generation, transport, storage, treatment, handling, release,
emission, discharge, or disposal of hazardous substances or the presence of
which requires investigation or remediation under any federal, state, or local
statute, rule, regulation, ordinance, order, action, policy, or under common
law, including all petroleum products; (iii) the term "toxic substances" shall
have the meaning given to such term in the Toxic Substances Control Act or the
regulations promulgated thereunder or under any similar federal, state, or
local law, rule, or regulation dealing with the generation, transport, storage,
treatment, handling, release, emission, discharge, or disposal of toxic
substances; (iv) the term "pollutants" shall mean all substances the emission
or discharge of which is regulated pursuant to the Federal Water Pollution
Control Act and the regulations promulgated thereunder, the Federal Clean Air
Act and the regulations promulgated thereunder, or under any similar federal,
state, or local law, rule, or regulation dealing with the generation,
transport, storage, treatment, handling, release, emission, discharge, or
disposal of pollutants; and (v) the terms "hazardous wastes," "hazardous
substances," "toxic substances," and "pollutants" shall also include all other
substances which are toxic, explosive, corrosive, flammable, infective,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and are or become
regulated by any federal, state, or local governmental authority, department,
commission, board, agency, or instrumentality, or the presence of which causes
or threatens to cause a nuisance or a hazard to health and safety.
3.16 Debt Instruments. The exhibit indexes to the 1995
10-K and the Interim 10-Q's contain a complete and correct list of all material
outstanding indentures, mortgages, chattel mortgages, deeds of trust,
conditional sales agreements, bank loans, credit agreements, and guarantees to
which either SSG or SSGI is a party or by which either SSG or SSGI or any of
their respective properties is bound.
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3.17 Employee Benefit Plans; Collective Bargaining
Agreements. Except as set forth in the Reports or in Schedule 3.17, neither
SSG nor SSGI maintains or offers any retirement or similar benefit plan for
their respective employees. Each of SSG and SSGI has performed all material
obligations required to be performed under, and is not in default under or in
violation of, any retirement or similar benefit plan for their respective
employees which it maintains or offers (each a "Plan"). Each of SSG and SSGI
is in compliance in all material respects with the requirements prescribed by
all statutes, orders, or governmental rules or regulations applicable to the
Plans, including, without limitation, the Employee Retirement Income Security
Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.
Neither SSG nor SSGI maintains or participates as an employer under any
collective bargaining agreement, nor has either been advised of any labor
organizational activity or proceedings which are pending or to their knowledge,
threatened.
3.18 Customs. SSG and SSGI have at all times been in
compliance with all requirements administered and enforced by the U.S. Customs
Service and any foreign government customs service which has authority over the
respective businesses of SSG and SSGI, including, but not limited to, the
classification, valuation, and marketing of articles imported into or exported
from the United States or any such other country, except where the failure to
comply would not have a Material Adverse Effect.
3.19 Full Disclosure. The representations and warranties
of SSG in this Agreement and the other Transaction Documents are on the date
hereof true, correct and complete in all material respects. Except as
otherwise noted in the Schedules, SSG has provided to ▇▇▇▇▇▇▇ true, correct and
complete copies of all documents referred to or described in the Schedules
hereto. No representation or warranty by SSG in this Agreement, any Schedule
hereto, any Transaction Document, or in any closing certificate furnished or to
be furnished pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state any fact necessary to make any
statement herein or therein not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ hereby represents and warrants to SSG as follows:
4.1 Authority. ▇▇▇▇▇▇▇ has all requisite power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and consummate the transactions contemplated
herein and therein. ▇▇▇▇▇▇▇'▇ execution, delivery, and performance of this
Agreement and the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated herein and therein, have been
duly authorized by its Board of Directors and no other action is required by
law, the Certificate of Incorporation, or Bylaws of ▇▇▇▇▇▇▇, or otherwise, for
such authorization. This Agreement and each of the other Transaction Documents
to which ▇▇▇▇▇▇▇ is a party constitute the legal, valid, and binding
obligations of, and are enforceable against, ▇▇▇▇▇▇▇ in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
4.2 No Violations. Except for matters which would not
have a material adverse effect on the financial condition, results of
operation, assets, liabilities, business, or prospects of ▇▇▇▇▇▇▇ and its
subsidiaries, taken as a whole and which would not prevent or delay the Closing
or the availability or providing of trade financing credit by ▇▇▇▇▇▇▇ to SSG,
the authorization, execution, and delivery of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
herein and therein by ▇▇▇▇▇▇▇ do not and will not, with or without the giving
of notice or passage of time or both, (a) violate, conflict with, or result in
the breach of any term or provision of, or require any notice, filing, or
consent under (i) any statutes, laws, rules, regulations, ordinances, licenses,
or permits of any governmental body, authority, or agency applicable to ▇▇▇▇▇▇▇
or (ii) any judgment, decree, writ, injunction, order, or award of any
arbitrator, court, or governmental body, authority, or agency binding upon
▇▇▇▇▇▇▇ or any of its properties or assets; (b) conflict with or result in the
breach of any term
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or provision of, require any notice or consent under, give rise to a right of
termination of, constitute a default under, result in the acceleration of, or
give rise to a right to accelerate any obligation under any loan agreement,
mortgage, indenture, financing agreement, lease, or any agreement or instrument
of any kind to which ▇▇▇▇▇▇▇ is a party or by which its properties or assets
are bound; or (c) result in any lien, claim, encumbrance, or restriction on any
of the properties or assets of ▇▇▇▇▇▇▇.
4.3 Investment Representations. ▇▇▇▇▇▇▇ is acquiring the
Shares and the Warrants for its own account, for investment, and not with a
view toward the resale or distribution thereof. ▇▇▇▇▇▇▇ understands that it
must bear the economic risk of such investment for an indefinite period of time
because the sale and issuance of the Shares and the Warrants are not registered
under the Securities Act or any applicable state securities laws, and may not
be resold unless subsequently registered under the Securities Act and such
other laws, or unless an exemption from such registration is available.
▇▇▇▇▇▇▇ also understands that, except as provided in the Registration Rights
Agreement, it is not contemplated that any registration will be made under the
Securities Act to permit resale of the Shares and Warrants. ▇▇▇▇▇▇▇ agrees not
to pledge, transfer, convey or otherwise dispose of any of the Shares and the
Warrants, except in a transaction that is the subject of either (i) an
effective Registration Statement under the Securities Act and any applicable
state securities laws, or (ii) an exemption under the Securities Act or such
state securities laws. ▇▇▇▇▇▇▇ agrees that each certificate representing
Shares or Warrants will contain a restrictive legend restricting the sale,
transfer or other disposition of the Shares or Warrants unless the Shares
and/or Warrants are registered under the Securities Act or laws or exemptions
from registration are available. ▇▇▇▇▇▇▇ acknowledges that stop transfer
instructions will be given to SSG's transfer agent for the Shares. ▇▇▇▇▇▇▇
further acknowledges that is has received copies of the Reports and has had the
opportunity to ask questions of, and receive answers from, officers of SSG with
respect to the business and financial condition of SSG and to obtain any
additional information necessary to verify such information or can acquire it
without unreasonable effort or expense. ▇▇▇▇▇▇▇ further represents that it is
an "accredited investor" as such term is defined in Rule 501 of Regulation D of
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the SEC under the Securities Act and that it has not been formed for the
purpose of purchasing the Shares and the Warrants.
4.4. Reports. Since December 31, 1994, ▇▇▇▇▇▇▇ has filed all
forms ▇▇-▇, ▇▇-▇, ▇-▇ and all proxy statements in connection with any annual or
special meeting of ▇▇▇▇▇▇▇'▇ stockholders (the "▇▇▇▇▇▇▇ Reports") with the SEC
required to be filed by it pursuant to the Federal securities laws and the SEC
rules and regulations promulgated thereunder, all of which have complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder. None of
such ▇▇▇▇▇▇▇ Reports, including without limitation any financial statements or
schedules included therein, at the time filed, nor any of the information
contained in the section entitled "Board of Directors and Executive Officers -
Designation of Directors; ▇▇▇▇▇▇▇'▇ Designees" and in the table, the first
heading of which is "Persons to be Designated Directors" and the information
with respect to ▇▇▇▇▇▇▇ in the table, the first heading of which is "Principal
Stockholders (in each case, including the footnotes thereto), in the section
entitled "Beneficial Ownership of Common Stock" (copies of which are attached
as Exhibit A) to be included in the Information Statement to be provided by SSG
to its shareholders pursuant to Section 14(f) of the Exchange Act contained (or
contains) any untrue statement of a material fact or omitted (or omits) to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.5. Opinion of Counsel. Concurrently herewith ▇▇▇▇▇▇▇
is providing to SSG an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇, in the
form attached as Exhibit B.
ARTICLE V
CONDUCT OF BUSINESS BY SSG PENDING CLOSING
As a material inducement to ▇▇▇▇▇▇▇ to purchase the Shares and
Warrants, SSG covenants and agrees that, until the Closing Date, SSG will
comply with the following covenants and agreements:
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5.1 Preservation of Existence. SSG will do or cause to
be done all things necessary to preserve and maintain in full force and effect
the corporate existence and all material contracts, rights, licenses, permits,
franchises, patents, trademarks, and trade names necessary to the proper
conduct of its business and shall qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in which the
character of the property owned or the nature of the business conducted by it
makes such qualification or authorization necessary, except such jurisdictions
in which the lack of qualification or authorization does not result in a
Material Adverse Effect.
5.2 Compliance with Laws. SSG will, and will cause SSGI
to, comply with all laws, ordinances, and governmental rules and regulations to
which it or its respective properties or assets is subject, the noncompliance
with which would materially interfere with the performance of SSG's obligations
under this Agreement or the Transaction Documents or would result in a Material
Adverse Effect.
5.3 Accounting Methods; Inspections; Cooperation. SSG
will, and will cause SSGI to, keep adequate records and books of account in
which complete entries will be made in all material respects. SSG will, and
will cause SSGI to, consult with ▇▇▇▇▇▇▇ and its representatives on their
respective accounting practices. SSG will, and will cause SSGI to, permit
▇▇▇▇▇▇▇ and its agents and representatives (including without limitation
▇▇▇▇▇▇▇'▇ lenders or potential lenders to SSG, and their agents and
representatives) to visit and inspect any of the properties or assets of SSG
and SSGI and to examine and make extracts of the books of account of SSG and
SSGI at all reasonable times and to such extent as ▇▇▇▇▇▇▇ or such lenders may
reasonably request. SSG will cooperate with ▇▇▇▇▇▇▇ and use its best efforts
to arrange access by ▇▇▇▇▇▇▇'▇ representatives to representatives of SSG's
primary lender to discuss SSG's current defaults and the nature of its current
and future relationship with SSG.
5.4 Maintenance of Property. SSG will, and will cause
SSGI to, keep all of their respective properties in good working order and
condition, subject to ordinary wear and tear and routine maintenance.
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5.5 Payment of Taxes and Claims. SSG will, and will
cause SSGI to, pay and discharge promptly all Taxes and all other claims,
demands, charges, or levies imposed by governmental authorities upon SSG or
SSGI or upon their respective income or profits or upon any of their respective
properties or assets before the same shall become delinquent; provided,
however, that none of the foregoing need be paid while being contested in good
faith and by appropriate proceedings, so long as adequate book reserves have
been established in accordance with GAAP with respect thereto and the title of
SSG or SSGI to, and the right to use, their respective properties are not
materially adversely affected thereby.
5.6 Information Covenants. SSG will furnish the
following information to ▇▇▇▇▇▇▇:
(a) Reports. Concurrently with their filing with the
SEC, all Reports of SSG filed from and after the date hereof.
(b) Notice of Litigation and Other Matters. Prompt
notice of:
(i) the commencement of any material proceeding
or investigation by or before any governmental body and any material action and
proceeding in any court or before any arbitrator against or in any other way
relating adversely to SSG or any of its properties, assets, or businesses;
(ii) any written notice received from any
administrative official or agency relating to any order or ruling which may
result in, or cause, a Material Adverse Effect;
(iii) any amendment of the Certificate of
Incorporation or Bylaws of SSG or SSGI;
(iv) any breach by SSG of any of its obligations
hereunder or under any of the Transaction Documents; and
(v) the receipt of any proposal for a merger,
consolidation, sale of all or substantially all of its assets, tender offer,
sale of an equity interest, or other business combination involving SSG, SSGI,
or any future direct or indirect
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subsidiary of SSG (an "Acquisition Proposal") and its position with respect
thereto.
(c) Other Information. From time to time, such other
information or documents as ▇▇▇▇▇▇▇ may reasonably request.
5.7. Action By Board of Directors. The Board of
Directors of SSG will not vote to approve or recommend or otherwise take any
action with respect to the matter which is the subject of the memorandum to the
Board of Directors referred to in item (h) of Schedule 3.7.
ARTICLE VI
ADDITIONAL AGREEMENTS OF SSG
As a material inducement to ▇▇▇▇▇▇▇ to purchase the Shares and
Warrants, SSG covenants and agrees that, until the Closing Date, SSG will not
take any of the following actions:
6.1 Access to Information. SSG shall afford to ▇▇▇▇▇▇▇
and its accountants, counsel, and other representatives reasonable access
during normal business hours throughout the period prior to the Closing Date to
all of its properties, books, contracts, commitments and records (including,
but not limited to, tax returns) and to its officers, consultants, and, subject
to any applicable privilege rules, professional advisors.
6.2 Purchase or Sale of Assets. SSG will not, and will
cause SSGI not to, purchase or acquire, or sell, lease, or otherwise dispose
of, any asset other than (i) in the ordinary course of their respective
businesses or (ii) assets having a price or value which does not exceed
$100,000 (the "Threshold Amount"). Notwithstanding any other provision of this
Agreement, SSG may proceed with its efforts to sell its golf business in the
manner previously disclosed to ▇▇▇▇▇▇▇ provided, further, that SSG shall obtain
the prior written consent of ▇▇▇▇▇▇▇ if such sale would be at a price less than
the book value of such business as reflected in SSG's balance sheet filed with
its Form 10-Q for the fiscal quarter ended August 2, 1996.
6.3 Acquisition Proposals. Except for the proposed sale
of its golf business, SSG shall not, and shall cause SSGI not
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to, directly or indirectly, through any officer, director, employee,
representative, agent, or otherwise, solicit, initiate, or encourage any
Acquisition Proposal, from any person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act) or entity other
than with respect to the transactions contemplated by this Agreement
(collectively, a "SSG Acquisition Transaction"); provided, however, that SSG or
SSGI may take any of the actions otherwise prohibited by this Section 6.3 if
counsel to SSG or its outside directors advises the Board of Directors of SSG
or SSGI that the failure to take such action or actions could subject the
directors to liability for breach of their fiduciary duties.
6.4 Indebtedness. Subject to fiduciary duties under
applicable law, SSG will not, and will cause SSGI not to, create, incur,
assume, guarantee, or in any way become liable or obligated in respect of any
indebtedness for borrowed money other than (i) in the ordinary course of the
business of SSG or SSGI or (ii) under its existing credit lines.
6.5 Compensation. Except as reflected in the Reports and
except for fees owing to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP described in Schedule 3.7, SSG
will not, and will cause SSGI not to, pay any salary or other compensation, or
enter into any agreement which obligates SSG or SSGI to pay any salary or other
compensation, to any officer, director, consultant, or independent contractor
in any amount which exceeds the Threshold Amount.
6.6 Agreements. Except as provided in Section 6.3, SSG
will not, and will cause SSGI not to, enter into any agreement, contract,
understanding, arrangement, or transaction other than (i) in the ordinary
course of business or (ii) which has a price or value, or imposes upon either
SSG or SSGI any obligation in an amount, which exceeds the Threshold Amount.
6.7 Issuance of Common Stock. Subject to fiduciary
duties under applicable law, SSG will not, and will cause SSGI not to,
authorize, issue, or enter into any agreement providing for the issuance
(contingent or otherwise) of (i) any notes or debt securities containing equity
features, including without limitation, any notes or debt securities
convertible into or exchangeable for equity securities or containing profit
participation features or (ii) any equity securities or capital
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stock, or any securities convertible into or exchangeable for equity securities
or capital stock, except for the issuance of shares of Common Stock upon
exercise of currently outstanding options or warrants, in each case upon the
terms and conditions in effect on the date of this Agreement.
6.8 Dividends. SSG will not, and will cause SSGI not to,
directly or indirectly (i) declare or pay any dividends or make any
distributions upon any of its equity securities or (ii) redeem, purchase or
otherwise acquire any of their respective equity securities (including without
limitation, warrants, options, and other rights to acquire equity securities).
6.9 Investments. SSG will not, and will cause SSGI not
to, make any loan or advance to, or purchase or acquire any equity interest in,
any corporation, partnership, association, business trust, limited liability
company, governmental agency, or any individual, except for (i) reasonable
advances to employees in the ordinary course of business, (ii) certificates of
deposit of U.S. commercial banks, or (iii) obligations of, or guaranteed by,
the U.S. government or any agency or instrumentality thereof.
6.10 Merger, etc. Subject to fiduciary duties under
applicable law, SSG will not, and will cause SSGI not to, enter into or
effectuate any merger, consolidation, or sale of all or substantially all of
the assets of SSG or SSGI, or liquidation, dissolution, reincorporation,
reorganization, or restructuring or assignment of all or substantially all of
its assets for the benefit of creditors, or file (or consent to the filing of)
any petition in bankruptcy.
6.11 Charter Amendment. SSG will not, and will cause
SSGI not to, amend, modify, or restate their respective Certificates of
Incorporation or Bylaws or take any action which would increase the number of
authorized shares of Common Stock or create any new class of capital stock or
adversely affect or otherwise impair the rights or relative priority of the
holders of the Common Stock.
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ARTICLE VII
POST-CLOSING COVENANTS OF SSG
The parties further agree as follows:For a period of at least
two (2) years after the Closing Date, the parties further agree that:
(a) for a period of at least two (2) years after the
Closing Date, unless approved by a majority of SSG's directors who do not have
a direct or indirect material financial interest in the agreement or
transaction (which shall include a majority of the Independent Directors, as
defined in clause (b) immediately below), SSG shall not, and shall not permit
any of its subsidiaries to, enter into or be a party to any agreement or
transaction with any Affiliate (as defined under the Exchange Act) of SSG or
▇▇▇▇▇▇▇, except in the ordinary course of SSG's or its subsidiaries' business
and on terms no less favorable to SSG or its subsidiaries than would be
obtained in a comparable arms' length transaction with a person not an
Affiliate of SSG or ▇▇▇▇▇▇▇;
(b) for a period of at least two (2) years after the
Closing Date, SSG's Board of Directors shall be comprised of at least two
persons who are not officers or employees of SSG or ▇▇▇▇▇▇▇ or directors of
▇▇▇▇▇▇▇ ("Independent Directors"); and
(c) for so long as they shall be applicable, SSG shall
comply with the rules of the NYSE with respect to related party transactions.
ARTICLE VIII
CONDITIONS TO ▇▇▇▇▇▇▇'▇ OBLIGATION TO CLOSE
The obligation of ▇▇▇▇▇▇▇ to consummate the purchase of the
Shares and the Warrants is subject to the satisfaction on or prior to the
Closing Date of all of the following conditions (any of which may be waived by
▇▇▇▇▇▇▇):
(a) The representations and warranties of SSG contained
in this Agreement shall be true in all material respects (to the extent any
such representation and warranty is not already
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qualified by materiality) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date.
(b) There shall not have been issued any order of any
court or tribunal of competent jurisdiction restraining or enjoining the
transactions contemplated by this Agreement and the Transaction Documents or
prohibiting ▇▇▇▇▇▇▇'▇ ownership or operation of all or any portion of the
business of ▇▇▇▇▇▇▇ or SSG and SSGI and there shall be no proceeding pending by
or brought by any governmental agency or authority seeking any of the
foregoing.
(c) There shall not be pending before any court or
tribunal of competent jurisdiction any action relating to the transactions
contemplated by this Agreement and the Transaction Documents which, might
reasonably be expected to result in a Material Adverse Effect to SSG.
(d) Effective as of the Closing Date, SSG shall cause its
Board of Directors to consist of such of ▇▇▇▇▇▇▇'▇ designees listed on Exhibit
A hereto as ▇▇▇▇▇▇▇ shall specify on or prior to the Closing.
(e) All consents and approvals of third parties to this
Agreement, the Transaction Documents, and the transactions contemplated hereby
and thereby, the failure to receive which could have a Material Adverse Effect,
shall have been obtained by SSG.
(f) An exception to the Shareholder Approval Policy
contained in Section 312.04 of the NYSE rules shall have been obtained by SSG,
and SSG shall have complied with the requirements for such an exception
contained in such Section. SSG also shall have complied with its obligations
under Section 14(f) of the Exchange Act, it being understood that SSG shall
rely upon the accuracy of the representation and warranty of ▇▇▇▇▇▇▇ set forth
in Section 4.4 hereof in so far as such representation and warranty relates to
information to be included by SSG in the filing to be made pursuant to such
Section of the Exchange Act.
(g) SSG shall secure the listing upon official notice of
issuance of (i) the Shares upon the NYSE on or prior to the
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Closing Date and (ii) the shares underlying the Warrants upon the NYSE as set
forth in the Warrant Agreement.
ARTICLE IX
CONDITIONS TO SSG'S OBLIGATIONS TO CLOSE
The obligation of SSG to consummate the sale of the Shares and
Warrants at the Closing is subject to the satisfaction on or prior to the
Closing Date of all of the following conditions (any of which may be waived by
SSG):
(a) The representations and warranties of ▇▇▇▇▇▇▇
contained in this Agreement shall be true in all material respects (to the
extent any such representation and warranty is not already qualified by
materiality) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
(b) There shall not have been issued under any order of
any court or tribunal of competent jurisdiction restraining or enjoining the
transactions contemplated by this Agreement and the Transaction Documents
(including, without limitation, the sale of the Shares or Warrants) and there
shall be no proceeding pending by any governmental agency or authority seeking
to restrain or enjoin such sale.
(c) There shall not be pending before any court or
tribunal of competent jurisdiction any action relating to the transactions
contemplated by this Agreement and the Transaction Documents which, if adversely
determined, might reasonably be expected to result in a Material Adverse Effect
to SSG.
(d) All consents and approvals of third parties to this
Agreement, the Transaction Documents, and the transactions contemplated hereby
and thereby, the failure to receive which could have a material adverse effect
to ▇▇▇▇▇▇▇, shall have been obtained by ▇▇▇▇▇▇▇.
(e) ▇▇▇▇▇▇▇ shall have provided evidence, reasonably
satisfactory to SSG, of its ability to provide $2 million of available trade
finance credit to SSG for the purchase of goods sourced in the Far East through
a foreign subsidiary of ▇▇▇▇▇▇▇.
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(f) As a result of the application by SSG to the NYSE for
(i) an exception to the Shareholder Approval Policy contained in Section 312.04
of the NYSE rules or (ii) the listing of the Shares upon the NYSE on or prior to
the Closing Date and the shares underlying the Warrants upon the NYSE as set
forth in the Warrant Agreement, SSG shall not have been notified by the NYSE of
its intention to delist other shares of common stock of SSG.
ARTICLE X
CLOSING
10.1 Time and Place of Closing. Subject to Section
11.1, the closing (the "Closing") of the issuance, sale or grant, and purchase
of the Shares and the Warrants shall take place at the corporate offices of SSG
at 10:00 a.m. on December 12, 1996, or at such other place or on such other
date as shall be agreed to by the parties hereto (the "Closing Date").
10.2 Delivery by SSG. On the Closing Date, SSG shall
deliver, or cause to be delivered, to ▇▇▇▇▇▇▇ the following:
(a) A Common Stock certificate or certificates evidencing
the Shares (the "Stock Certificates");
(b) A Warrant Agreement evidencing the Warrants (the
"Warrant Agreement"), to be executed substantially in the form attached hereto
as Exhibit C;
(c) A Registration Rights Agreement (the "Registration
Agreement") duly executed and delivered by SSG substantially in the form
attached hereto as Exhibit D; and
(d) A Certificate (the "SSG Secretary's Certificate") of
the Secretary of SSG dated the Closing Date to the effect that (i) the
Certificates of Incorporation of SSG and SSGI attached to the SSG Secretary's
Certificate are true, correct, and complete copies thereof and the same have
not been amended, restated, supplemented, or modified in any respect and are in
full force and effect on the Closing Date, (ii) the Bylaws of SSG and SSGI
attached to the SSG Secretary's Certificate are true, correct, and complete
copies thereof and the same have not been amended, restated, supplemented, or
modified in any respect and are in full force and effect on the Closing Date,
(iii) the resolutions of the Board of Directors of SSG authorizing the issuance
or grant, as the case may be, and sale of the Shares and the Warrants and the
consummation of the transactions contemplated by the Transaction Documents
attached to the SSG Secretary's Certificate are true, correct, and complete
copies thereof and the same have not been amended,
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restated, supplemented, or modified in any respect and are in full force and
effect on the Closing Date, and (iv) the specimen signatures of the officers of
SSG executing this Agreement and the other Transaction Documents are true and
correct specimens thereof and such officers are duly authorized to execute and
deliver this Agreement and the other Transaction Documents on behalf of SSG;
(e) A good standing certificate as of a recent date to
the Closing Date issued by the Secretary of State of Delaware that SSG is
validly existing and in good standing in such jurisdiction;
(f) All other Transaction Documents signed by authorized
officers of SSG; and
(g) All other documents, instruments, and writings
required to be delivered by SSG at or prior to the Closing pursuant to this
Agreement, including, without limitation, all other documents and agreements
set forth in Article VIII hereof.
10.3 Delivery by ▇▇▇▇▇▇▇. On the Closing Date, ▇▇▇▇▇▇▇
shall deliver, or cause to be delivered, to SSG the following:
(a) Payment of the Purchase Price by wire transfer to
SSG's designated account(s) as contemplated by Section 3.2;
(b) A Certificate (the "▇▇▇▇▇▇▇ Secretary's Certificate")
of the Secretary of ▇▇▇▇▇▇▇ dated the Closing Date to the effect that (i) the
Certificate of Incorporation of ▇▇▇▇▇▇▇ attached to the ▇▇▇▇▇▇▇ Secretary's
Certificate is true, correct, and complete copy thereof and the same has not
been amended, restated, supplemented, or modified in any respect and is in full
force and effect on the Closing Date, (ii) the Bylaws of ▇▇▇▇▇▇▇ attached to
the ▇▇▇▇▇▇▇ Secretary's Certificate are true, correct, and complete copies
thereof and the same have not been amended,
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restated, supplemented, or modified in any respect and are in full force and
effect on the Closing Date, (iii) the resolutions of the Board of Directors of
▇▇▇▇▇▇▇ authorizing the purchase of the Shares and the Warrants and the
consummation of the transactions contemplated by the Transaction Documents
attached to the ▇▇▇▇▇▇▇ Secretary's Certificate are true, correct, and complete
copies thereof and the same have not been amended, restated, supplemented, or
modified in any respect and are in full force and effect on the Closing Date,
and (iv) the specimen signatures of the officers of ▇▇▇▇▇▇▇ executing this
Agreement and the other Transaction Documents are true and correct specimens
thereof and such officers are duly authorized to execute and deliver this
Agreement and the other Transaction Documents on behalf of ▇▇▇▇▇▇▇;
(c) A good standing certificate as of a recent date to
the Closing Date issued by the Secretary of State of Delaware evidencing that
▇▇▇▇▇▇▇ is validly existing and in good standing in such jurisdiction;
(d) All other documents, instruments, and writings
required to be delivered by ▇▇▇▇▇▇▇ at or prior to the Closing pursuant to this
Agreement, including, without limitation, all other documents and agreements
set forth in Article IX hereof.
10.4 Transaction Documents. As used herein, the term
"Transaction Documents" shall mean collectively this Agreement, the Warrant
Agreement, and the Registration Agreement, as the same may be amended,
modified, supplemented, or waived from time to time.
ARTICLE XI
TERMINATION AND EXTENSION
11.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written consent of SSG and ▇▇▇▇▇▇▇;
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(b) By either SSG or ▇▇▇▇▇▇▇ if there has been a material
misrepresentation or breach of warranty not qualified by materiality, or a
misrepresentation or breach of warranty qualified by materiality, on the part
of the other party in the representations and warranties set forth in this
Agreement, which breach is incapable of cure on or prior to the Closing Date;
(c) By either ▇▇▇▇▇▇▇ or SSG if the purchase and sale of
the Shares and the Warrants shall not have been consummated on or before
December 16, 1996 (the "Termination Date");
(d) By SSG, if it accepts an Acquisition Proposal
relating to an SSG Acquisition Transaction, other than with ▇▇▇▇▇▇▇.
11.2 Effect of Termination. In the event of termination
of this Agreement as provided above, this Agreement shall forthwith become void
and there shall be no liability under this Agreement on the part of SSG or
▇▇▇▇▇▇▇ (except for a breach of this Agreement) or their respective officers or
directors; provided, however, that in the event of termination of this
Agreement (x) under Section 11.1(d), or as a result of (y) the failure of SSG
to comply with its covenants contained in Article VI hereof or satisfy the
condition in clause (d) of Article VIII or (z) any other act or failure to act
on the part of SSG constituting the willful failure to close by SSG and ▇▇▇▇▇▇▇
has not in any way contributed to the failure to so close, SSG shall pay
▇▇▇▇▇▇▇, as its exclusive remedy, a termination fee of $750,000, to be paid on
the Termination Date by SSG to ▇▇▇▇▇▇▇ by wire transfer to a bank account
designated by ▇▇▇▇▇▇▇; provided, further, that in the event of termination of
this Agreement as a result of the failure of SSG to satisfy the conditions in
clauses (a), (f) and (g) of Article VIII and ▇▇▇▇▇▇▇ has not in any way
contributed to the failure to so close, SSG shall pay to ▇▇▇▇▇▇▇, as its
exclusive remedy, a termination fee equal to the actual out-of-pocket expenses
paid or incurred by ▇▇▇▇▇▇▇ in connection with the transactions contemplated by
this Agreement but, in any event, not in excess of $150,000, such amount to be
paid immediately by SSG to ▇▇▇▇▇▇▇, by wire transfer to a bank account
designated by ▇▇▇▇▇▇▇, upon presentation by ▇▇▇▇▇▇▇ to SSG of a certificate of
the chief financial officer of ▇▇▇▇▇▇▇ setting
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forth the amount of such out-of-pocket expenses; and provided, further, in the
event of the termination of this Agreement solely as a result of the financial
inability or willful failure to close by ▇▇▇▇▇▇▇ and SSG has not in any way
contributed to the failure to so close, ▇▇▇▇▇▇▇ shall pay to SSG, as its
exclusive remedy, a termination fee of $3,000,000 to be paid from the
irrevocable standby letter of credit provided to SSG by ▇▇▇▇▇▇▇ pursuant to
Section 2.3 of this Agreement; and provided, further, in the event of the
termination of this Agreement as a result of the failure of ▇▇▇▇▇▇▇ to satisfy
the conditions in clauses (a), (d) and/or (e) of Article IX and SSG has not in
any way contributed to the failure to so close, ▇▇▇▇▇▇▇ shall pay to SSG, as
its exclusive remedy, a termination fee equal to the actual out-of-pocket
expenses paid or incurred by SSG in connection with the transactions
contemplated by this Agreement, but, in any event, not in excess of $150,000,
such amount to be paid immediately by ▇▇▇▇▇▇▇ to SSG, by wire transfer to a
bank account designated by SSG, upon presentation to ▇▇▇▇▇▇▇ of a certificate
of the chief executive officer or President of SSG setting forth the amount of
such out-of-pocket expenses. Notwithstanding the foregoing, the failure of any
party to waive any condition or grant any extension or enter into any amendment
shall not be deemed contributory to the failure to close.
11.3 Extension. At any time prior to the Closing, the
parties hereto, by duly authorized action taken by their respective officers,
may extend the time for the performance of any of the obligations or other acts
of the other party hereto.
ARTICLE XII
MISCELLANEOUS
12.1 No Broker. Each party hereto represents and
warrants to the other that, except for the retention by SSG of Principal
Financial Securities, no broker or finder has been employed or retained in
connection with the transactions contemplated by this Agreement or is entitled
to any fee, commission or other compensation in connection herewith.
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12.2 Public Statements. The parties shall release a
press release in a form to be mutually agreed upon between ▇▇▇▇▇▇▇ and SSG.
Neither party hereto shall issue any press release or make any other public
statements, in each case relating to or connected with or arising out of this
Agreement or the matters contemplated herein, without obtaining the prior
written approval of the other parties to the contents and the manner of
presentation and publication thereof, provided, however, that nothing herein
shall prevent any party from making any disclosures required by applicable law
or regulation (including regulations of the SEC and the NYSE).
12.3 Survival of Representations and Warranties. All
representations, warranties, and agreements made by the parties in this
Agreement or in any agreement, document, statement, list, certificate, or
instrument furnished hereunder or in connection with the negotiation,
execution, and performance of this Agreement shall survive the Closing for a
period to and including January 31, 1998. Notwithstanding the foregoing, in
the event that, prior to the Closing, either party has knowledge that any
representation, warranty or covenant made by the other party is incorrect or is
breached in any material respect as of the date hereof or will be incorrect or
breached in any material respect as of the Closing Date, the party with such
knowledge shall have as its sole remedy hereunder the option (a) to terminate
this Agreement and enforce its remedies herein provided as a result thereof or
(b) to proceed with the Closing and, upon the Closing, such party shall be
conclusively deemed to have waived all claims hereunder relating to such
misrepresentation, breach of warranty or covenant.
12.4 Officers' and Directors' Indemnification and
Insurance. The parties to this Agreement agree that all rights to
indemnification now existing in favor of the directors or officers of SSG and
SSGI as provided in their respective Certificate of Incorporation or bylaws or
in any indemnification agreement, will survive the Closing and stay in effect
in accordance with their respective terms as presently in effect. For a period
of three years after the Closing Date, SSG will provide officers' and
directors' liability insurance from a sound and reputable insurer in respect of
acts or omissions occurring up to and including the
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Closing Date covering each such person currently covered by SSG's officers' and
directors' liability insurance policy on terms with respect to coverage and in
an amount (including deductibles) no less favorable than those of such policy
in effect on the date hereof. For purposes of this Section, the officers and
directors of SSG and SSGI shall be deemed to be third party beneficiaries of
this Agreement and each such person shall be entitled to enforce the terms of
this Section against SSG to its full extent and seek and obtain remedies from
SSG for non-performance of this Section as if such person was a named party to
this Agreement.
12.5 No Waiver. No failure on the part of any party
hereto at any time to require the performance by the other party of any term of
this Agreement shall be taken or held to be a waiver of such term or in any way
affect such party's right to enforce such term, and no waiver on the part of
any party hereto of any term of this Agreement shall be taken or held to be a
waiver of any other term hereof or the breach thereof.
12.6 Entire Agreement; Written Modifications. This
instrument (and the Confidentiality Agreement between ▇▇▇▇▇▇▇ and SSG, to the
extent the transactions contemplated by this Agreement are not consummated for
any reason) and any and all documents executed by the parties hereto on or as
of the date hereof contains the entire agreement among the parties hereto with
respect to the subject matter hereof; all representations, promises, and prior
or contemporaneous understandings among the parties with respect to the subject
matter hereof are merged into and expressed in this instrument and such
documents; and any and all prior agreements among the parties with respect to
the subject matter hereof (other than the Confidentiality Agreement as
described above) are hereby canceled. This Agreement shall not be amended,
modified, or supplemented without the written agreement of ▇▇▇▇▇▇▇ and SSG at
the time of such amendment, modification or supplement.
12.7 Assignment; Binding Effect.
(a) This Agreement and the rights and obligations of the
parties hereto may not be assigned or transferred by either party hereto.
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(b) All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and assigns of each of the parties thereto.
12.8 Expenses. Each of the parties hereto shall bear the
costs and expenses attributable to such party under this Agreement and the
transactions contemplated hereby.
12.9 Notices. Any notice, request, demand, waiver,
consent, approval, or other communication which is required or permitted
hereunder shall be in writing and shall be sent by hand delivery, overnight
courier, or by registered or certified mail, and shall be deemed given when
received at the address set forth below:
If to ▇▇▇▇▇▇▇: Nine ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: President
- with copy to -
▇▇▇▇▇ & Samson, P.A.
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to SSG ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
- with a copy to -
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or such other party or address as may be expressly designated by either party
by notice given in accordance with the foregoing provisions.
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12.10 Cooperation. Subject to the terms and conditions
herein provided, the parties hereto shall use their best efforts to take, or
cause to be taken, such action to execute and deliver, or cause to be executed
and delivered, such additional documents and instruments and to do, or cause to
be done, all things reasonably necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and make
effective the transactions contemplated by this Agreement.
12.11 No Benefit to Others. Except as provided in Section
12.4, the representations, warranties, covenants, and agreements contained in
this Agreement are for the sole benefit of the parties hereto, and their
permitted successors and assigns, and they shall not be construed as conferring
any rights on any other persons.
12.12 Headings, Gender, and "Person". All section
headings contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement, and shall not affect in any way the meaning
or interpretation of this Agreement. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine,
feminine, or neuter, as the context requires. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
governmental authority or body, association, unincorporated organization, or
other entity.
12.13 Schedules. All Schedules referred to herein are
intended to be and hereby are specifically made a part of this Agreement.
12.14 Severability. Any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall be ineffective to
the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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12.15 Counterparts. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
12.16 Governing Law. This Agreement shall be governed
by and interpreted and enforced in accordance with the laws of the State of
Delaware, without regard to the conflicts of law principles thereof.
12.17 Construction. The parties hereto agree that each
party and its counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
hereof or thereof or any amendments, exhibits, or schedules hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date above written.
▇▇▇▇▇▇▇ RADIO CORP.
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
SPORT SUPPLY GROUP, INC.
By:
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
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