Exhibit 99.1
SPORTS DIRECT INTERNATIONAL PLC
UNIT A, BROOK PARK, ▇▇▇▇ ▇▇▇▇
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(INCORPORATED UNDER THE COMPANIES ▇▇▇ ▇▇▇▇ AND
REGISTERED IN ENGLAND AND WALES WITH REGISTERED NUMBER 06035106)
June 28, 2007
Everlast Worldwide Inc.
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▇▇▇▇▇▇ ▇▇▇▇▇▇ OF AMERICA
Re: GUARANTEE
Ladies and Gentlemen:
1. Reference is hereby made to that certain Agreement and Plan of Merger,
dated as of the date hereof, by and among Everlast Worldwide Inc., Brand
Holdings Limited and EWI Acquisition, Inc. (the "Merger Agreement"; any term
used in this letter (this "Letter") without definition shall have the meaning
set forth therein).
2. In consideration of the Company entering into the Merger Agreement, Sports
Direct International plc (the "Guarantor") hereby absolutely, unconditionally
and irrevocably guarantees to the Company, the due and punctual performance and
discharge of the payment obligations of Parent and Merger Sub under (a) Sections
3.01(a), 3.02(a) and 3.04(b) of the Merger Agreement (it being agreed and
understood that any reference in this Letter to amounts to be paid to the
Company (or like phrases), when referring to the amounts underlying the payment
obligations in this clause (a), shall be automatically replaced with a
corresponding reference to payment to (x) the Paying Agent in accordance with
Article 3 of the Merger Agreement (in the case of Sections 3.01(a) and 3.02(a)
of the Merger Agreement), it being further agreed and understood that in
connection with the entering into of the paying agent agreement contemplated by
Article 3 of the Merger Agreement, the Paying Agent shall acknowledge the terms
of this Letter insofar as such terms relate to, or impose obligations on, it and
(y) a holder of a Company Stock Award (in the case of Section 3.04(a) of the
Merger Agreement)) and (b) Section 9.03(f) of the Merger Agreement (together,
the "Obligations").
3. The Company shall not be obligated to file any claim relating to the
Obligations in the event that Parent or Merger Sub becomes subject to a
bankruptcy, reorganization or similar proceeding, and the failure of the Company
to so file shall not affect the Guarantor's obligations hereunder. In the event
that any payment to the Company in respect of the Obligations is rescinded or
must otherwise be returned for any reason whatsoever, the Guarantor shall remain
liable hereunder with respect to the Obligations as if such payment had not been
made. This is an unconditional guarantee of payment and not of collectibility.
4. The Guarantor agrees that the Company may at any time and from time to
time, without notice to or further consent of the Guarantor, extend the time of
payment of any of the Obligations, and may also make any agreement with Parent
or Merger Sub, for the extension, renewal, payment, compromise, discharge or
release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between the Company and Parent or Merger Sub without
in any way impairing or affecting the Guarantor's obligations under this Letter.
The Guarantor agrees that its obligations hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (a) the failure of the
Company to assert any claim or demand or to enforce any right or remedy against
Parent or Merger Sub; (b) any change in the time, place or manner of payment of
any of the Obligations or any rescission, waiver, compromise, consolidation or
other amendment or modification of any of the terms or provisions of the Merger
Agreement or any other agreement evidencing, securing or otherwise executed in
connection with any of the Obligations; (c) any change in the corporate
existence, structure or ownership of Parent or Merger Sub; (d) any insolvency,
bankruptcy, reorganization or other similar proceeding affecting Parent or
Merger Sub; (e) the existence of any claim, set-off or other right which the
Guarantor may have at any time against Parent, Merger Sub or the Company,
whether in connection with the Obligations or otherwise; or (f) the adequacy of
any other means the Company may have of obtaining repayment of any of the
Obligations. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of any law
which would otherwise require any election of remedies by the Company. The
Guarantor waives promptness, diligence, notice of the acceptance hereof and of
the Obligations, presentment, demand for payment, notice of non-performance,
default, dishonor and protest, notice of any Obligations incurred and all other
notices of any kind (except for notices to be provided to Parent, Merger Sub and
Freshfields Bruckhaus ▇▇▇▇▇▇▇▇ in accordance with Section 10.02 of the Merger
Agreement), all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right
to require the marshalling of assets of Parent or Merger Sub, and all suretyship
defenses generally (other than fraud or willful misconduct by the Company or any
of its Subsidiaries, defenses to the payment of the Obligations that are
available to Parent or Merger Sub under the Merger Agreement or breach by the
Company of this Letter). The Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the transactions contemplated by
the Merger Agreement and that the waivers set forth herein are knowingly made in
contemplation of such benefits.
5. The Company hereby covenants and agrees that it shall not institute, and
shall cause its Affiliates not to institute, any proceeding or bring any other
claim arising under, or in connection with, the Merger Agreement or the
transactions contemplated thereby, against any Guarantor or any of its former,
current or future directors, officers, agents, Affiliates (other than Parent or
Merger Sub) or employees, or against any of the former, current or future
general or limited partners, members, managers or stockholders of the Guarantor
or any Affiliate thereof (other than Parent or Merger Sub) or against directors,
officers, agents, Affiliates, general or limited partners, members, managers or
stockholders of any of the foregoing (other than Parent or Merger Sub), except
for claims against the Guarantor under this Letter, and the Guarantor hereby
covenants and agrees that it shall not institute, and shall cause its respective
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Affiliates not to institute, any proceedings asserting that this Letter is
illegal, invalid or unenforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally, and
general equitable principles (whether considered in a proceeding in equity or at
law). The Guarantor hereby unconditionally and irrevocably agrees not to
exercise any rights that it may now have or hereafter acquire against Parent or
Merger Sub that arise from the existence, payment, performance, or enforcement
of the Guarantor's obligations under or in respect of this Letter or any other
agreement entered into in connection herewith, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Company against Parent or Merger Sub, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from Parent or Merger Sub, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations and all other amounts payable under this Letter shall
have been paid in full in cash. If any amount shall be paid to the Guarantor in
violation of the immediately preceding sentence at any time prior to the payment
in full in cash of the Obligations and all other amounts payable under this
Letter, such amount shall be received and held in trust for the benefit of the
Company, shall be segregated from other property and funds of the Guarantor and
shall forthwith be paid or delivered to the Company in the same form as so
received (with any necessary endorsement or assignment) to be credited and
applied to the Obligations and all other amounts payable under this Letter, in
accordance with the terms of the Merger Agreement, whether matured or unmatured,
or to be held as collateral for any Obligations or other amounts payable
hereunder thereafter arising. Notwithstanding anything to the contrary contained
herein, the Company hereby agrees that to the extent Parent and Merger Sub are
relieved of their payment obligations under (a) Sections 3.01(a), 3.02(a) or
3.04(a) of the Merger Agreement or (b) Section 9.03(f) of the Merger Agreement,
the Guarantor shall be similarly relieved of its obligations hereunder.
6. No failure on the part of the Company to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Company of any, right,
remedy or power hereunder preclude any other or future exercise of any right,
remedy or power hereunder. Each and every right, remedy and power hereby granted
to the Company or allowed it by law or other agreement shall be cumulative and
not exclusive of any other, and may be exercised by the Company at any time or
from time to time.
7 The Guarantor hereby represents and warrants that:
(a) the execution, delivery and performance of this Letter have been duly
authorized by all necessary action and do not contravene any provision of the
Guarantor's memorandum and articles of association or any Law, Order or
contractual restriction binding on the Guarantor or its assets;
(b) all consents, approvals, authorizations, permits of, filings with and
notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Letter by the Guarantor have been obtained or
made and all conditions thereof have been duly complied with, and no other
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action by, and no notice to or filing with, any governmental authority or
regulatory body is required in connection with the execution, delivery or
performance of this Letter by the Guarantor;
(c) this Letter constitutes a legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws, affecting creditors' rights
generally, and (ii) general equitable principles (whether considered in a
proceeding in equity or at law); and
(d) the Guarantor has the financial capacity to pay and perform its
obligations hereunder, and all funds necessary for the Guarantor to fulfill its
obligations hereunder shall be available to the Guarantor (or its assignee
pursuant to Section 8) for so long as this instrument shall remain in effect in
accordance with Section 10.
8. Neither the Guarantor nor the Company may assign its rights, interests or
obligations hereunder to any other person (except by operation of law) without
the prior written consent of the Company (in the case of an assignment by the
Guarantor) or the Guarantor (in the case of an assignment by the Company) and
any assignment without such consent shall be null and void.
9. All notices and other communications hereunder shall be in writing and
shall be deemed given (a) in person, (b) by an internationally recognized
next-day courier service (specifying the soonest practicable delivery time and
date), (c) by registered or certified mail (postage prepaid, return receipt
requested) or (d) by facsimile transmission, when transmitted and receipt of
transmittal is confirmed. All notices hereunder shall be delivered to the
locations set forth below or to such other person or address or facsimile number
as a party shall specify by notice in writing to the other party. All such
notices shall only be duly given and effective upon receipt (or refusal of
receipt).
(i) if to the Company, to it at:
Everlast Worldwide Inc.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: + 1 212 239 4261
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome
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Park Avenue Tower
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
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(ii) if to the Guarantor, to it at:
Sports Direct International plc
Unit A, Brook Park, ▇▇▇▇ ▇▇▇▇
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Attention: Company Secretary
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Freshfields Bruckhaus ▇▇▇▇▇▇▇▇ Freshfields Bruckhaus ▇▇▇▇▇▇▇▇ LLP
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London, EC4Y 1HS ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
UNITED KINGDOM UNITED STATES OF AMERICA
Attention: ▇▇▇▇▇ ▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Fax:+ ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
10. This Letter shall remain in full force and effect and shall be binding on
the Guarantor, its successors and assigns until the Obligations are satisfied in
full. Notwithstanding the foregoing, this Letter shall terminate and the
Guarantor shall have no further obligations hereunder as of the earliest of (i)
the Effective Time, (ii) the termination of the Merger Agreement in accordance
with its terms by mutual consent of the parties or under circumstances in which
Parent and Merger Sub would not be obligated to make any payments under Section
9.03(f) of the Merger Agreement and (iii) the first anniversary of any
termination of the Merger Agreement in accordance with its terms under
circumstances in which Parent and Merger Sub would be obligated to make any
payments under Section 9.03(f) of the Merger Agreement if the Company has not
presented a claim for payment of any Obligation of Parent and Merger Sub or the
Guarantor by such first anniversary (it being agreed and understood that
Obligations contemplated by clause (a) of the definition thereof shall terminate
upon any termination of the Merger Agreement). Notwithstanding the foregoing, in
the event that the Company or any of its Affiliates asserts in any litigation or
other proceeding that the provisions of this Section 10 or Section 11 are
illegal, invalid or unenforceable in whole or in part, or asserting any theory
of liability against the Guarantor or any Affiliates of the Guarantor with
respect to the transactions contemplated by the Merger Agreement other than
liability of the Guarantor hereunder, then (i) the obligations of the Guarantor
hereunder shall terminate AB INITIO and be null and void, (ii) if the Guarantor
has previously made any payments hereunder, the Company shall pay to the
Guarantor on demand, and the Guarantor shall be entitled to recover such
payments, and (iii) neither the Guarantor nor any Affiliate of any Guarantor
shall have any liability to the Company with respect to the transactions
contemplated by the Merger Agreement or under this Letter; PROVIDED THAT if the
Guarantor asserts in any litigation or other proceeding that this Letter is
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illegal, invalid or unenforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights generally, and
general equitable principles (whether considered in a proceeding in equity or at
law), then, to the extent the Company prevails in such litigation or proceeding,
the Guarantor shall pay on demand all reasonable fees and out of pocket expenses
of the Company in connection with such litigation or proceeding.
11. The Company, by its acceptance of the benefits hereof, covenants, agrees
and acknowledges that no person other than the Guarantor shall have any
obligation hereunder and that no recourse hereunder or under any documents or
instruments delivered in connection herewith shall be had against any former,
current or future director, officer, agent, Affiliate (other than Parent or
Merger Sub) or employee of the Guarantor, against any former, current or future
general or limited partner, member, manager or stockholder of the Guarantor or
any Affiliate thereof (other than Parent or Merger Sub) or against any former,
current or future director, officer, agent, Affiliate, employee, general or
limited partner, member, manager or stockholder of any of the foregoing (other
than Parent or Merger Sub), whether by the enforcement of any assessment or by
any legal or equitable proceeding, or by virtue of any statute, regulation or
other applicable Law. The Company acknowledges and agrees that Merger Sub has no
assets and that no funds are expected to be contributed to Merger Sub unless the
Closing occurs. The Company further agrees that neither it nor any of its
Affiliates have any right of recovery against the Guarantor or any of its
former, current or future directors, officers, agents, Affiliates (other than
Parent or Merger Sub), general or limited partners, members, managers or
stockholders through Parent or Merger Sub or otherwise, whether by piercing of
the corporate veil, by a claim on behalf of Parent or Merger Sub against the
Guarantor or Parent's stockholders or Affiliates, or otherwise, except for the
rights hereunder. Recourse against the Guarantor hereunder shall be the
exclusive remedy of the Company and its Affiliates against the Guarantor and any
of its former, current or future directors, officers, agents, Affiliates,
general or limited partners, members or stockholders in respect of any
liabilities or obligations arising under, or in connection with, the Merger
Agreement or the transactions contemplated thereby. The Company hereby covenants
and agrees that it shall not institute, and it shall cause its Affiliates not to
institute, any proceeding or bring any other claim arising under, or in
connection with, the Merger Agreement or the transactions contemplated thereby,
against the Guarantor or any of its former, current or future directors,
officers, agents, Affiliates (other than Parent or Merger Sub), general or
limited partners, members, managers or stockholders except for claims against
the Guarantor hereunder. Except as contemplated under Section 8, nothing set
forth in this Letter shall affect or be construed to confer or give any person
other than the Guarantor and the Company (including any person acting in a
representative capacity) any rights or remedies against any person.
12. Whenever the words "include", "includes" or "including" are used in this
Guarantee, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein", "hereby" and "hereunder" and words of
similar import when used in this Letter shall refer to this Letter as a whole
and not to any particular provision hereof.
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13. This Letter shall be construed in accordance with, and this Letter and all
matters arising out of or relating in any way whatsoever (whether in contract,
tort or otherwise) to this Letter shall be governed by, the law of the State of
New York. Each of the Guarantor and the Company hereby (a) consents to submit
itself to the personal jurisdiction of any state or federal court sitting in the
Borough of Manhattan of The City of New York in the event any dispute arises out
of this Letter or any of the transactions contemplated by this Letter, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction or
venue by motion or other request for leave from any such court and (c) agrees
that it will not bring any action relating to this Letter or any of the
transactions contemplated hereby in any court other than such courts sitting in
the Borough of Manhattan of The City of New York. Each party hereby irrevocably
consents to the service of process in the manner provided for notices in Section
9 of this Letter (PROVIDED THAT nothing in this Letter will affect the right of
any party to serve process in any other manner permitted by applicable law).
14. EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER
OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS LETTER BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.
15. This Letter may be executed and delivered (including by facsimile or PDF
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
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Very truly yours,
SPORTS DIRECT INTERNATIONAL PLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Group Financial Director
AGREED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE:
EVERLAST WORLDWIDE INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO