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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A 5
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 26, 1998
ESCALADE, INCORPORATED
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(Exact name of Registrant as specified in its charter)
Indiana 0-6966 13-2739290
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
817 Maxwell Avenue Evansville, IN 47717
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812)467-1200
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
Escalade, Incorporated (the "Company") announced on June 26, 1998 that
it had entered into an Asset Purchase Agreement dated June 26, 1998 (the
"Purchase Agreement") by and among the Company, Indian Industries, Inc., a
wholly-owned subsidiary of the Company ("Indian"), Harvard Sports, Inc., a
wholly-owned subsidiary of the Company ("Harvard"), JEN Sports, Inc., a
wholly-owned subsidiary of Sportcraft, Ltd. ("JEN Sports") and Sportcraft, Ltd.
("Sportcraft"). Pursuant to the Purchase Agreement, the Company, Indian and
Harvard agreed to sell substantially all of the assets of their sporting goods
business operated under the name "Escalade Sports" to JEN Sports for a purchase
price of $74.5 million, subject to upward or downward adjustment based on
Escalade Sports' closing net working capital as provided in the Purchase
Agreement and subject to the satisfaction of certain contingencies set forth in
the Purchase Agreement.
On August 21, 1998, the Company publicly announced that Sportcraft had
informed Escalade of three conditions that Sportcraft believed constituted
potential impediments to the closing of the asset sale under the terms of the
Purchase Agreement. These conditions were: (1) uncertainty regarding
Sportcraft's ability to obtain the necessary financing to pay the agreed upon
$74.5 million purchase price for the assets of Escalade Sports; (2) whether
Escalade will be able to obtain third party consent to the assignment of a
material contract to Sportcraft; and (3) Sportcraft's concern that Escalade
Sports' 1998 sales prospects will not be at desired levels, which Sportcraft
asserted would constitute a material adverse effect. Sportcraft further informed
Escalade that Sportcraft intended to terminate the Purchase Agreement when
permitted to do so under the terms of the Purchase Agreement based on one or
more of the reasons described above.
The Purchase Agreement contemplated that the closing of the asset sale
would occur on September 15, 1998. In addition, Escalade's special meeting of
stockholders to approve the asset sale was also scheduled for September 15,
1998.
On September 16, 1998, the Company publicly announced that it had
adjourned its special meeting until September 29, 1998 at 5:00 p.m., Central
Time, at Escalade's principal executive offices in Evansville, Indiana. The
Company's management informed its stockholders at the special meeting that it
did not believe that the asset sale would be completed on the terms set forth
in the Purchase Agreement, and as described in the proxy statement for the
special meeting, even if the vote approving the sale was taken. The Company's
management further informed stockholders that Escalade would try to engage in
additional discussions with Sportcraft to determine whether the sale could be
completed on revised terms and conditions mutually acceptable to all parties.
The Company and Sportcraft subsequently commenced discussions on
possible revised terms. On September 29, 1998, the Company informed its
stockholders at the reconvened special meeting that such discussions were
continuing, that the parties agreed that neither party would terminate the
Purchase Agreement prior to November 2, 1998 and that the parties would waive
their potential claims against each other under the Purchase Agreement in the
event the Purchase Agreement is terminated. Pending the outcome of such
discussions, the Escalade stockholders approved adjourning the special meeting
until December 18, 1998 at 9:00 a.m., Central Time, at Escalade's principal
executive offices in Evansville, Indiana.
On October 30, the Company and Sportcraft agreed to extend their
agreement that neither party would terminate the Purchase Agreement, until
December 2, 1998. Subsequently, however, the Company and Sportcraft concluded
that, due to uncertainties in the financing markets, they would not be able to
agree on financial terms that would be satisfactory to both parties. Therefore,
on November 25, 1998, the Company, Indian, Harvard, JEN Sports and Sportcraft
executed an Amendment, Termination and Release Agreement (the "Termination
Agreement"), which terminated the Purchase Agreement on a "no fault" basis and
waived potential claims against each party. The Company also canceled the
special meeting of its stockholders which was scheduled to be reconvened on
December 18, 1998.
The descriptions of the Purchase Agreement and the Termination
Agreement above are not complete and are qualified in their entirety by
reference to the full text of those agreements, which are included as exhibits
to this report.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
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(c) Exhibits.
The following exhibits are filed with this Report on Form 8-K:
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<CAPTION>
Exhibit No. Exhibit
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<C> <S>
2.1 Asset Purchase Agreement dated June 26, 1998, among the
Company, Indian, Harvard, JEN Sports and Sportcraft.*
2.2 Amendment No. 1 to Asset Purchase Agreement dated June
26, 1998, among the Company, Indian, Harvard, JEN Sports
and Sportcraft.*
2.3 Form of Irrevocable Proxy.**
2.4 Amendment,Termination and Release Agreement dated
November 25, 1998, among the Company, Indian, Harvard,
JEN Sports and Sportcraft.
99.1 Press release dated June 26, 1998. ***
99.2 Press release dated August 21, 1998. ***
99.3 Press release dated September 16, 1998. ***
99.4 Press release dated September 30, 1998. ***
99.5 Press release dated October 30, 1998. ***
99.6 Press release dated November 25, 1998.
</TABLE>
* Incorporated by reference to Appendix A of the Registrant's preliminary
proxy materials filed with the Commission on July 2, 1998 relating to
the Registrant's special meeting of stockholders to be called in
connection with the asset sale and the transactions contemplated
thereby.
** Incorporated by reference to Exhibit B to Appendix A of the
Registrant's preliminary proxy materials filed with the Commission on
July 2, 1998 relating to the Registrant's special meeting of
stockholders to be called in connection with the asset sale and the
transactions contemplated thereby.
*** Previously filed as part of this Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 1, 1998 ESCALADE, INCORPORATED
/s/ JOHN R. WILSON
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John R. Wilson,
Vice President and Chief Financial Officer
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EXHIBIT 2.4
AMENDMENT, TERMINATION AND RELEASE AGREEMENT
THIS AMENDMENT, TERMINATION AND RELEASE AGREEMENT is entered into on
November 25, 1998 by and among ESCALADE, INCORPORATED, an Indiana corporation
("Escalade"), INDIAN INDUSTRIES, INC., an Indiana corporation ("Indian"),
Harvard Sports, Inc., a California corporation ("Harvard", and together with
Indian, collectively, the "Selling Parties"), SPORTCRAFT, LTD., a Delaware
corporation ("Parent") and JEN SPORTS, INC., a Delaware corporation ("Buyer ").
WHEREAS, Escalade, the Selling Parties, Parent and Buyer are the
Parties to that certain Asset Purchase Agreement dated as of June 26, 1996, as
amended on July 2, 1998 (the "Asset Purchase Agreement");
WHEREAS, the parties mutually agree that the sale by Escalade and the
Selling Parties of the assets of Escalade Sports and the related transactions
contemplated by the Asset Purchase Agreement will not be completed on the terms
set forth in the Asset Purchase Agreement;
WHEREAS, the Parties also mutually agree that they have not and will
not be able to agree on revised terms and conditions to the Asset Purchase
Agreement that would allow the sale of the Escalade Sports assets to proceed on
a mutually satisfactory basis; and
WHEREAS, the Parties mutually desire to enter into this Amendment,
Termination and Release Agreement to reflect their agreement on the terms and
conditions upon which the Asset Purchase Agreement is to be terminated;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and in consideration of the representations, warranties and covenants
herein contained, the Parties hereby agree as follows:
1. DEFINITIONS. (A) All capitalized terms used in this Amendment,
Termination and Release Agreement and not otherwise defined herein shall have
the meanings ascribed to such terms in the Asset Purchase Agreement.
(B) The term "Confidentiality Agreements" means those certain letter
agreements with respect to confidentiality (i) dated as of January 20, 1998
between Bain Capital, Inc. and Escalade's financial advisor, and (ii) dated as
of October 2, 1998 between Sportcraft and Escalade.
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2. AMENDMENT TO SECTION 10.2 OF THE ASSET PURCHASE AGREEMENT. Section
10.2 of the Asset Purchase Agreement is hereby deleted in its entirety and
replaced by the following new Section 10.2:
"10.2 EFFECT OF TERMINATION. Upon termination of this Agreement, all
rights and obligations of the Parties under this Agreement shall
terminate without any Liability of any Party to any other Party (other
than the obligation of the parties to bear their own costs and expenses
pursuant to Section 11.11(a)), and such termination shall relieve each
Party and each of their respective affiliates from any and all
Liability arising from or relating to any Party's breach of this
Agreement or the Confidentiality Agreements at or prior to such
termination, including liability for any claim by Escalade and the
Selling Parties for any consequential, incidental or special damages,
or for damages arising out of the termination of this Agreement, or
relating directly or indirectly to any sale of or the failure to sell
(or any other business combination, recapitalization or similar
fundamental transaction or proposal involving) the Business or the
Acquired Assets or any equity securities of Escalade or any of its
Subsidiaries.
Sportcraft and Buyer agree that each of them, and their
respective affiliates or Representatives (as defined in the
Confidentiality Agreements) shall, after the date of such termination,
be bound by the provisions of the Confidentiality Agreements for the
time period set forth therein, and that the termination of this
Agreement does not relieve any of them from any liability arising from
or relating to any breach of the Confidentiality Agreements after the
date of such termination, or with respect to any claims arising under
the Confidentiality Agreements with respect to lost sales by Escalade
and/or the Selling Parties in 1998 to The Sports Authority, Sears, or
Wal-Mart; PROVIDED, HOWEVER, that any such claims by Escalade and/or
the Selling Parties for lost sales shall not in any way include any
damages directly or indirectly resulting from the termination of this
Agreement, or from the sale of or the failure to sell Escalade, any of
its Subsidiaries, the Business, the Acquired Assets, or any equity
securities of Escalade or any of its Subsidiaries, or from any decline
in the value of Escalade, any of its Subsidiaries, the Business, or the
Acquired Assets relating to such termination, sale or the failure of
such sale.
Escalade and the Selling Parties hereby waive and release any
and all claims that any of them may have with respect to any breach or
alleged breach of the Confidentiality Agreements by Sportcraft, Buyer
or their respective affiliates or Representatives (as defined in the
Confidentiality Agreements) prior to the date of such termination;
PROVIDED, HOWEVER, that such waiver and release shall not be deemed to
relate to any claims arising under the Confidentiality Agreements with
respect to lost sales by Escalade and/or the Selling Parties in 1998 to
The Sports Authority, Sears, or Wal-Mart, or with respect to acts or
omissions occurring after the date of such termination; PROVIDED,
FURTHER, that any such claims by Escalade and/or the Selling Parties
for lost sales shall not in any way include any damages directly
resulting from the termination of
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this Agreement, or from the sale of or the failure to sell Escalade,
any of its Subsidiaries, the Business, the Acquired Assets, or any
equity securities of Escalade or any of its Subsidiaries, or from any
decline in the value of Escalade, any of its Subsidiaries, the
Business, or the Acquired Assets relating to such termination, sale or
the failure of such sale.
Nothing herein is intended or shall be construed to be an
admission of any breach of the Confidentiality Agreements."
3. TERMINATION OF ASSET PURCHASE AGREEMENT. The Asset Purchase
Agreement is hereby terminated by mutual agreement of the Parties pursuant to
Section 10.1(a) thereof.
4. AGREED CONSEQUENCES OF MUTUAL TERMINATION. In addition to the
provisions of Section 10.2 of the Asset Purchase Agreement, as amended by this
Amendment, Termination and Release Agreement ("Amended Section 10.2"), the
Parties agree that by virtue of their mutual agreement to terminate the Asset
Purchase Agreement pursuant to Section 10.1(a):
(A) each Party shall bear its own costs and expenses pursuant to
Section 11.11(a), it being understood and agreed that Escalade will
bear the expense set forth in Section 5.6 of the Asset Purchase
Agreement;
(B) the following provisions of the Asset Purchase Agreement will
not apply: the last sentence of Section 11.9; Sections 11.11 (b)
through (e); Section 11.14; and Section 11.15;
(C) except as permitted by Amended Section 10.2, no Party will make
any claim or bring any legal action of any type in any forum to seek
any remedies (whether set forth in those sections of the Asset
Purchase Agreement referred to in clause (B) above or otherwise)
with respect to the Asset Purchase Agreement, the termination
thereof, the Confidentiality Agreements, any sale of or the failure
to sell the Business or the Acquired Assets or any equity securities
of Escalade or any of its Subsidiaries, or any of the matters raised
in the correspondence that the Parties have heretofore exchanged;
(D) the Parties hereby forever release, acquit and discharge each
other, their respective subsidiaries, officers, agents, employees,
assigns and successors, from any and all past and present, now known
or hereafter discovered, causes of action, demands or liabilities,
both in law and in equity, with respect to any and all matters,
transactions, acts or events resulting from or in any way connected
with or related, directly or indirectly, to the Asset Purchase
Agreement, the termination thereof, the Confidentiality Agreements,
any sale of or the failure to sell the Business or the Acquired
Assets or any equity securities of Escalade or any of its
Subsidiaries, or any of the matters raised in the correspondence
that the Parties
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have heretofore exchanged; PROVIDED, HOWEVER, that such release and
waiver shall not be deemed to relate to such claims arising under
the Confidentiality Agreements as are preserved by the terms of
Amended Section 10.2; and
(E) Sportcraft and Buyer waive and release any and all rights,
powers and interests in the Irrevocable Proxies and such Irrevocable
Proxies are hereby terminated.
5. EFFECTIVE DATE OF TERMINATION. This Amendment, Termination and
Release Agreement takes effect immediately upon the date hereof and the Asset
Purchase Agreement is hereby terminated without additional notice or any further
action by the Parties.
6. COMPROMISE NEGOTIATIONS. Any and all communications between the
Parties during the period from September 10, 1998 through and including the date
of this Amendment, Termination and Release Agreement are hereby deemed to be
"Compromise Negotiations" within the meaning of Rule 408 of the Federal Rules of
Evidence.
7. RETURN OF INFORMATION. In connection with the termination of the
Asset Purchase Agreement and as provided for in the Confidentiality Agreements,
the parties further agree that Escalade has hereby requested that all
Information (as defined in the Confidentiality Agreements) be promptly returned
to Escalade, that no copies be retained by Sportcraft, JEN Sports, Bain Capital
or any of Sportcraft's Representatives, and that any portion of the Information
that consists of reports, analyses, compilations, studies or information
developed or prepared by or for Sportcraft, JEN Sports, Bain Capital or
Sportcraft's Representatives that include, incorporate, refer to, reflect or are
based upon (in whole or in part) the Information shall be promptly destroyed.
8. ENTIRE AGREEMENT. This Amendment, Termination and Release Agreement
sets forth the entire understanding between the parties related to the subject
matter hereof and supersedes all prior written or oral agreements or
understandings, other than the Asset Purchase Agreement as amended and modified
by the terms hereof. Each of the Parties is represented by its own counsel and
no Party nor its principals are relying on any statements or promises from any
other Party or its representatives other than those contained in this Amendment,
Termination and Release Agreement.
9. GOVERNING LAW. This Amendment, Termination and Release Agreement
will be governed by and interpreted in accordance with the internal laws of the
State of Delaware without regard to its principles of conflict of laws.
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IN WITNESS WHEREOF, the parties hereto set their hands to this
Amendment, Termination and Release Agreement as of the date set forth above.
ESCALADE, INCORPORATED SPORTCRAFT, LTD.
By: /s/ JOHN R. WILSON By: /s/ FRANK GINOLFI
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Print Name: John R. Wilson Print Name: Frank Ginolfi
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Title: V.P. & CFO Title: Sr. V.P - CFO
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INDIAN INDUSTRIES, INC. JEN SPORTS, INC.
By: /s/ JOHN R. WILSON By: /s/ FRANK GINOLFI
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Print Name: John R. Wilson Print Name: Frank Ginolfi
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Title: SECRETARY Title: Sr. V.P - CFO
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HARVARD SPORTS, INC.
By: /s/ JOHN R. WILSON
--------------------------
Print Name: John R. Wilson
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Title: SECRETARY
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EXHIBIT 99.6
PRESS RELEASE
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ESCALADE AND SPORTCRAFT TERMINATE AGREEMENT FOR SALE OF ESCALADE SPORTS;
SPECIAL STOCKHOLDERS MEETING CANCELED
EVANSVILLE, INDIANA, November 25, 1998 (Nasdaq: ESCA) - Escalade,
Incorporated ("Escalade") today announced that Escalade and Sportcraft, Ltd.
("Sportcraft") have mutually terminated the Asset Purchase Agreement relating to
Sportcraft's proposed acquisition of the assets of Escalade Sports. Escalade
also announced that the special meeting of Escalade's stockholders to consider
the asset sale, which was scheduled to be reconvened on December 18, 1998, has
been canceled.
Robert E. Griffin, Escalade's Chief Executive Officer, said: "Both
Escalade and Sportcraft have worked hard to reach agreement on revised terms
that would allow the sale of the Escalade Sports assets to proceed in a mutually
acceptable manner. Unfortunately, uncertainties in the financing markets have
caused both parties to conclude that we will not be able to agree on financial
terms that would be satisfactory to both parties and that we both believe would
result in a successful closing. Therefore, we have mutually terminated our Asset
Purchase Agreement on a "no fault" basis and have waived our potential claims
against each other."
Mr. Griffin went on to say: "The proposed sale of the Escalade Sports
assets was part of Escalade's strategic plan to enhance shareholder value. In
light of these developments, we anticipate that Escalade will reevaluate its
strategic options, and we will continue to search for ways to provide value to
our stockholders."
Escalade, Incorporated, based in Evansville, Indiana, produces and sells
sporting goods products through Escalade Sports. Escalade also produces and
sells office and graphic arts products through Martin Yale Industries, Inc.
Escalade and its predecessors have produced sporting goods for over 70 years and
have produced office machines for over 40 years.
Contact: Robert E. Griffin or John R. Wilson
