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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
April 11, 1997 (March 28, 1997)
Sport Supply Group, Inc.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-10704 75-2241783
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
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1901 Diplomat Drive, Farmers Branch, Texas 75234
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(972) 484-9484
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(A) GENERAL.
On March 28, 1997, Sport Supply Group, Inc., a Delaware corporation
("SSG" or the "Company") disposed of substantially all of the remaining
assets (inventory, accounts receivable, intellectual property,
equipment, etc.) and certain liabilities of its discontinued
golf-related operations pursuant to the terms and provisions of an
Asset Acquisition Agreement (the "Asset Acquisition Agreement") dated
March 28, 1997, by and among Nitro Leisure Products, Inc. (f/k/a GB
Acquisition, Inc.), a Delaware corporation ("Nitro") and SSG.
(B) DESCRIPTION OF PURCHASE PRICE.
Pursuant to the Asset Acquisition Agreement, the total consideration
paid to SSG was (i) $8,160,826 in cash paid at closing and (ii)
$429,517 in cash payable thirty (30) days from the date of closing
subject to certain adjustments as provided in the Asset Acquisition
Agreement. In addition, Nitro assumed certain specified liabilities.
The consideration paid to SSG was determined by arms-length
negotiations between officers of SSG and the officers of Nitro based
upon factors such as current value of trade receivables, inventory and
fixed assets as well as other financial and operational considerations.
Pursuant to the Asset Acquisition Agreement, the Company retained
certain assets of the golf operations consisting principally of cash
and certain trade accounts receivable.
(C) INCORPORATION BY REFERENCE
Set forth above is a brief description of certain terms of the Asset
Acquisition Agreement. Any description or disclosure made in this
Current Report on Form 8-K with respect to the Asset Acquisition
Agreement is qualified in its entirety by reference to the Asset
Acquisition Agreement attached hereto as Exhibit 2.1. SSG will furnish
supplemental copies of the exhibits and schedules to the Securities and
Exchange Commission upon request.
On March 31, 1997, the Company issued a press release through media
sources describing, among other things, the consummation of the Asset
Acquisition Agreement. Any disclosure made in the press release with
respect to the Asset Acquisition Agreement is qualified in its entirety
by reference to the Asset Acquisition Agreement attached hereto as
Exhibit 2.1. A copy of the press release is attached hereto as Exhibit
5.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
None
(b) Pro Forma Financial Information
Pro forma financial statements filed as part of this report are
listed on the "Index to Pro Forma Financial Information", which
index is incorporated in this Item 7(b) by reference.
2
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SIGNATURE
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 thereunto duly authorized.
Sport Supply Group, Inc.
Date: April 11, 1997 By: /s/ John P. Walker
------------------
John P. Walker
Executive Vice President and
Chief Financial Officer
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
INDEX TO PRO FORMA FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION
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Page
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Summary Information Related to the Unaudited Pro Forma Consolidated Financial Statements 5
Unaudited Pro Forma Consolidated Balance Sheet of Sport Supply Group, Inc. and
Subsidiary as of January 31, 1997 6
Notes to Unaudited Pro Forma Consolidated Balance Sheet of Sport Supply Group, Inc.
and Subsidiary as of January 31, 1997 7
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
SUMMARY INFORMATION RELATED TO THE UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statement consists of
the Unaudited Pro Forma Consolidated Balance Sheet of Sport Supply Group, Inc.
and Subsidiary ("SSG" or "Company") as of January 31, 1997 (collectively, the
"Pro Forma Statements"). The Pro Forma Balance Sheet gives effect to the sale
of substantially all the assets and disposition of certain liabilities of the
remaining discontinued golf-related operations (the "Golf Division") on March
28, 1997. The Unaudited Pro Forma Consolidated Balance Sheet also gives effect
to such transaction as if the transaction had occurred on January 31, 1997.
No Pro Forma Statements of Operations are presented because the operations have
been reflected as discontinued operations.
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31, 1997
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<CAPTION>
Sport Supply Golf Pro Forma Pro Forrma
Group, Inc. Division Adjustments Consolidated
------------ ----------- ----------- ------------
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CURRENT ASSETS :
Cash $ 501,327 $ -- $ -- $ 501,327
Accounts receivable, net 8,628,243 -- -- 8,628,243
Income taxes receivable 4,137,807 -- -- 4,137,807
Inventories, net 19,678,763 -- -- 19,678,763
Other current assets 1,020,180 -- -- 1,020,180
Deferred tax assets 5,883,341 -- -- 5,883,341
------------ ----------- ----------- ------------
Total current assets 39,849,661 -- -- 39,849,661
------------ ----------- ----------- ------------
DEFERRED CATALOG EXPENSES 2,822,142 -- -- 2,822,142
PROPERTY, PLANT AND EQUIPMENT, net 5,901,315 -- -- 5,901,315
DEFERRED TAX ASSETS 4,492,847 -- -- 4,492,847
OTHER ASSETS:
Goodwill, net 3,027,961 -- -- 3,027,961
Trademarks, net 3,499,821 -- -- 3,499,821
Other, net 733,697 -- -- 733,697
NET NONCURRENT ASSETS OF DISCONTINUED OPERATIONS 16,270,654 16,270,654 -- --
------------ ----------- ----------- ------------
Total assets $ 76,598,098 $16,270,654 $ -- $ 60,327,444
============ =========== =========== ============
CURRENT LIABILITIES :
Accounts payable $ 8,887,297 $ -- $ -- $ 8,887,297
Accrued property taxes 139,197 -- -- 139,197
Other accrued liabilities 1,532,711 -- 1,947,543 (b) 3,480,254
Notes payable and capital lease obligations, current portion 18,523,616 -- (8,290,342)(a) 10,233,274
Net current liabilities of discontinued operations 9,927,855 9,927,855 -- --
------------ ----------- ----------- ------------
Total current liabilities 39,010,676 9,927,855 (6,342,799) 22,740,022
------------ ----------- ----------- ------------
DEFERRED GAIN 30,124 -- -- 30,124
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS, net of
current portion 324,097 -- -- 324,097
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Preferred stock -- -- -- --
Common stock 91,519 -- -- 91,519
Paid-in capital 58,527,193 -- -- 58,527,193
Retained deficit (13,641,125) -- -- (13,641,125)
Treasury stock (7,744,386) -- -- (7,744,386)
------------ ----------- ----------- ------------
Total stockholders' equity 37,233,201 -- -- 37,233,201
------------ ----------- ----------- ------------
Total liabilities and stockholders' equity $ 76,598,098 $ 9,927,855 $(6,342,799) $ 60,327,444
============ =========== =========== ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONSOLIDATED BALANCE SHEET
As of January 31, 1997
The unaudited pro forma consolidated balance sheet as of January 31, 1997,
consists of the following information:
1. The unaudited historical consolidated balance sheet of Sport Supply Group
Inc. and Subsidiary as of January 31, 1997;
2. Elimination of the unaudited balance sheet of the Golf Division as of
January 31, 1997; and
3. Pro forma adjustments.
PRO FORMA ADJUSTMENTS:
(a) The pro forma adjustment to notes payable and capital lease obligation
reflects the reduction of borrowings under the Company's revolving credit
facility from the total cash proceeds of the sale of the Golf Division,
net of related transaction costs.
(b) The pro forma adjustment to other accrued liabilities reflects certain
liabilities retained by the Company. These liabilities consist of golf
related contractual consulting and separation agreements.
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INDEX TO EXHIBITS
ITEM
Exhibit 2.1 -- Asset Acquisition Agreement (without exhibits or schedules)
Exhibit 5.1 -- Press Release dated March 31, 1997
8
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EXHIBIT 2.1
ASSET ACQUISITION AGREEMENT
DATED AS OF MARCH 28, 1997
AMONG
SPORT SUPPLY GROUP, INC.
AS SELLER,
AND
NITRO LEISURE PRODUCTS, INC.
(FORMERLY KNOWN AS
GB ACQUISITION, INC.)
AS BUYER
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TABLE OF CONTENTS
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1. PURCHASE AND SALE OF THE PURCHASED ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Assets Being Sold to Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . 4
1.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.6. Post-Closing Inventory Adjustment. . . . . . . . . . . . . . . . . . . . . . 8
1.7. Post-Closing Accounts Receivable Adjustment. . . . . . . . . . . . . . . . . 9
1.8. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 10
1.9. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. REPRESENTATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Due Incorporation, Authorization and Good Standing . . . . . . . . . . . . 11
3.2. No Violation or Approval . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 12
3.4. Absence of Changes; Operations in Ordinary Course . . . . . . . . . . . . 12
3.5. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6. Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7. Good Operating Condition and Repair, etc . . . . . . . . . . . . . . . . . 13
3.8. Licenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9. Operations in Conformity With Law, etc. . . . . . . . . . . . . . . . . . 14
3.10. Employee Matters; Benefit Plans . . . . . . . . . . . . . . . . . . . . . 14
3.11. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12. [Reserved.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.13. Tradenames, Marks, Patents, etc. . . . . . . . . . . . . . . . . . . . . 14
3.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.15. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.16. Contractual Obligations, etc . . . . . . . . . . . . . . . . . . . . . . 15
4. REPRESENTATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1. Due Incorporation, Authorization and Good Standing . . . . . . . . . . . . 17
4.2. No Violation or Approval . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3. Brokers, Finders, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . 17
5.1. Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2. Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 18
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5.3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.4. Bill of Sale, Assignment and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5. Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7. Assignment of Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8. Charter Documents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9. Release of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Injunctions, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4. Bill of Sale, Assignment and Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5. Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8. Charter Documents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9. Injunctions, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.12. Resale Exemption Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1. Access to Premises and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2. Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3. No Solicitation of Other Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4. Preparation for Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5. Non-Disclosure, Announcements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6. Agreement Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7. Agreement Not to Solicit or Hire Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8. Acknowledgments of Reasonableness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2. Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3. Time Limits on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.4. Monetary Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.5. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.6. Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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8.7. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9. POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. EXPENSES OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15. GOVERNING LAW; ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.1. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.2. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16. SELLER'S KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19. NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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LIST OF SCHEDULES
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Schedule 1.1.2 Intellectual Property
Schedule 1.1.7 Farmer's Branch, Texas Equipment, Furniture, Etc.
Schedule 1.1.9 Leases
Schedule 1.3.4 Deductions, off-sets, chargebacks, etc.
Schedule 3.2 Consents, Approvals, Etc.
Schedule 3.3 Transactions with Affiliates
Schedule 3.4 Departures from Operation in Ordinary Course
Schedule 3.5(a) Permitted Liens
Schedule 3.5(b) Restrictions on Right to Transfer Purchased Assets
Schedule 3.5(c) Challenges to Use or Ownership of Purchased Assets
Schedule 3.5(d) Limitations on Assignability of Contracts
Schedule 3.9 Claims, Lawsuits, etc.
Schedule 3.13 Payments, Etc. for Use of Intellectual Property; Possible Infringements
Schedule 3.14 Environmental Matters
Schedule 3.15 Employees
Schedule 3.16 Contractual Obligations
Schedule 7.2 Compensation Increases: Departures From Ordinary Course
LIST OF EXHIBITS
Exhibit 2 Escrow Agreement
Exhibit 5.4 Bill of Sale, Assignment and Assumption Agreement
Exhibit 5.5 Transitional Services Agreement
Exhibit 5.6 Escrow Agreement
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ASSET ACQUISITION AGREEMENT
THIS AGREEMENT is made as of March 28, 1997, between Sport Supply
Group, Inc., a Delaware corporation ("Seller") and Nitro Leisure Products, Inc.
(formerly known as GB Acquisition, Inc.), a Delaware corporation ("Buyer").
WHEREAS, Seller is engaged in the business (the "Business") of the
manufacture and re-manufacture (through unaffiliated third party manufacturers)
and sale of golf balls and golf accessories; and
WHEREAS, Buyer desires to purchase from Seller substantially all the
assets pertaining to the Business and to assume certain specified liabilities
of Seller related thereto, all on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of these premises, the respective
covenants of Buyer and Seller set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. PURCHASE AND SALE OF THE PURCHASED ASSETS.
1.1. Assets Being Sold to Buyer. Seller agrees to sell and assign to
Buyer, and Buyer agrees to purchase at the Closing (as hereinafter defined),
all of Seller's right, title and interest in, to and under the following assets
other than Excluded Assets (collectively, the "Purchased Assets") as the same
exist on the Closing Date (as hereinafter defined):
1.1.1. All inventory (whether raw materials, work-in-process
or finished goods) related to the Business, together with related
packaging materials.
1.1.2. All rights to the tradenames, registered and
unregistered trademarks and service marks and all related
applications, patents, patent rights and all related applications,
copyrights, and other names, marks and proprietary rights
(collectively, "Intellectual Property"), and the goodwill associated
therewith, identifying or related to the Business or any of the
products of the Business, including without limitation all tradenames,
trademarks, service marks, copyrights, and other names as set forth on
Schedule 1.1.2. Notwithstanding the foregoing, Buyer will not acquire
Seller's name and will not be permitted to use Seller's name (or any
variation thereof) in any respect.
1.1.3. All accounts receivable outstanding at the close of
business on the Closing Date that are attributable to the Business,
excluding any Excluded Accounts (the "Closing Accounts"), subject to
reassignment to Seller as provided by Section 1.7.
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1.1.4. All prepaid concessions and other prepaid expenses
related to the Business.
1.1.5. All operating records and books of account ("Records")
that relate primarily to the Business and reflect the conduct or
operations of the Business, including without limitation all records
in respect of Closing Accounts.
1.1.6. Without limiting any other provision of this Section
1.1, all customer and supplier lists relating to the Business.
1.1.7. All property, plant, equipment, furniture,
furnishings, vehicles, supplies, spare and replacement parts, and
other tangible personal property used primarily in the Business,
including without limitation all such property located at the Offices
(as defined below), excluding the personal property listed on Schedule
1.2; it being understood that of the equipment, furniture,
furnishings, supplies, spare and replacement parts, and other tangible
personal property located at the Seller's office at 1901 Diplomat
Drive, Farmer's Branch, Texas, only such items thereof as are
primarily used by the employees of Seller who work in the Business as
of the date hereof and are offered employment by Buyer (which items
are described on Schedule 1.1.7) will be included in the Purchased
Assets.
1.1.8. All rights and other interest in all "off the shelf"
computer software and computer software licenses used primarily in the
Business (except as set forth in Section 1.2.3) to the extent the
licenses may be legally transferred without the consent of the
licensor.
1.1.9. All rights under the leases (the "Leases") pursuant to
which Seller leases the offices of the Business in Orlando, Florida,
Port St. Lucie, Florida and Fort Pierce, Florida (the "Offices"),
which leases are listed on Schedule 1.1.9.
1.1.10. All intangible rights of the Business, including
without limitation all claims, judgments, choses in action and rights
or actions against third parties (excluding claims for refunds and
claims against freight carriers to the extent they relate to events
prior to the Closing Date) that relate primarily to the Purchased
Assets or Assumed Liabilities or the Business, but excluding any
claims of Seller to the extent related to Excluded Assets, and further
excluding all claims, judgments, choses in action and rights or
actions Seller has or may have arising from or related to Seller's (i)
acquisition of International Golf, Inc. (now known as X-Outs), Prince
Golf International, Ltd., and Second Chance Golf Ball Recyclers, Inc.
(the seller of such assets now being known as Ball Bandit, Inc.), and
2814013 Canada, Inc., (ii) disposition of Seller's Gold Eagle Division
to Morris Rosenbloom & Co., Inc., (iii) lawsuit against BXL&Z Golf
Co., Wilbur Hansen and James Helm filed in the District Court of
Dallas County Texas, (iv) royalties due through the Closing Date
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<PAGE> 8
pursuant to the License Agreement with Graf Acquisition L.P. and (v)
Consulting and Separation Agreement with Jerry Gunderson.
1.1.11. All rights and other interests in all contracts,
personal property leases and other agreements that are primarily
related to the Business or the Purchased Assets and were entered into
in the ordinary course of business, but excluding rights and other
interests that are primarily related to Excluded Assets.
1.1.12. All rights in the telephone numbers 1-800-624-8337
(1-800-624-TEES), 1-800-624-8337 (1-800- DO-NITRO), 1-800-438-6707
and the other telephone numbers used primarily in connection with the
Business (it being agreed that such telephone numbers will not include
any number that includes the prefix 214 or 972; until the 90th day
after the Closing, Seller will cause any such telephone number that
includes the prefix 214 or 972 to be answered by a recorded
announcement provided by Buyer that directs callers to the telephone
numbers used by Buyer and any such telecopy number to be forwarded at
Buyer's cost, if reasonably possible, to a number designated by
Buyer).
1.1.13. All goodwill of the Business and its value as a going
concern.
1.2. Excluded Assets. The Purchased Assets shall not include the
following assets (collectively, the "Excluded Assets"):
1.2.1. All cash and cash equivalents on hand as of the Closing
related to the Business, wherever located, including, without
limitation, in accounts, lock boxes, and other similar accounts
(whether maintained at a bank, savings and loan or other financial
institution).
1.2.2. All accounts receivable of the Business in respect of
which the obligor is Gold Eagle, Gold Eagle Rochester (Morris
Rosenbloom & Co., Inc.), Genpro or Toppoint Trading Company
(collectively, "Excluded Accounts").
1.2.3. All computer hardware, computer software and computer
software licenses related to Seller's AS 400 computer (it being
understood that the rights described in Section 1.1.8 are not so
related).
1.2.4. All assets that are primarily related to Excluded
Liabilities, provided that inventory located in Orlando, Florida shall
not be an Excluded Asset.
1.2.5. All contracts, licenses, leases and other agreements
of the following types relating to the Business (unless Buyer shall at
its election otherwise expressly agree in writing to assume any of
such leases, licenses, contracts and agreements):
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<PAGE> 9
1.2.5.1. Those with any present or former employee or their
affiliates or members of their immediate families other than
(a) Sellers Agreements with James Leo Tillman and Charles
Karnolt, (b) employment agreements entered into by Buyer with
Marc Gunderson, Ronald Vanasdale, Bill Evanko, Lee Evanko and
Jim Hart (it being understood that each such person's contract
with Seller will terminate at Closing and not be assumed by
Buyer) and (c) the lease of the Office in Port St. Lucie,
Florida with J. Ron Enterprises, Inc.
1.2.5.2. Those in any manner restricting or conditioning the
right of Buyer or the Business to do business or compete
anywhere in the world in any product line or business.
1.2.5.3. Those involving any performance-based compensation,
royalty or similar arrangement (other than sales
representative, concession, driving range and diver
arrangements entered into in the ordinary course of business,
all of which are being assumed by Buyer).
1.3. Assumption of Certain Liabilities. At the Closing, Buyer will
assume only the following liabilities of Seller relating to the Business (the
"Assumed Liabilities"). Except as specifically described in this Section 1.3,
Buyer shall not assume any liability or obligation of Seller whatsoever,
whether or not any such liability or obligation pertains to the Business or the
Purchased Assets.
1.3.1. Buyer shall assume all payment or performance
obligations and related liabilities that arise after the Closing
(without giving effect to the consequences of any breach by Seller)
under all instruments, contracts and agreements assigned to Buyer
under Section 1.1 or Section 1.2.5.
1.3.2. Buyer shall assume only such expenses relating to
promoting and marketing the Business ("Promotional Expense") and such
prepayments relating to concession agreements ("Prepaid Concession
Expense") as are incurred in compliance with the following procedure.
Seller will not incur any Promotional Expense or Prepaid Concession
Expense without the consent of Amin Khoury ("Khoury") or David Lahar
("Lahar"), which consent shall not be unreasonably withheld. In the
event Khoury or Lahar consents to such Promotional Expense or Prepaid
Concession Expense, Buyer will assume the cost of such Promotional
Expense or Prepaid Concession Expense at the Closing and will pay all
such expenses (to the extent previously paid by Seller) as additional
Cash Purchase Price at the Closing. If Seller incurs a Promotional
Expense or Prepaid Concession Expense without the consent of Khoury or
Lahar, Seller will be responsible for paying such Promotional Expense
or Prepaid Concession Expense. Buyer will at the Closing assume the
cost of and pay (to the extent previously paid by Seller) as
additional Cash Purchase Price at the Closing all Promotional Expenses
and Prepaid Concession Expenses between March 4, 1997
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<PAGE> 10
and the Closing Date that are reasonably necessary to maintain the
value of the Business as a going concern, so long as Khoury or Lahar
consents to such Promotional Expenses or Prepaid Concession Expenses,
which consent shall not be unreasonably withheld. Liabilities for
accrued but unpaid Promotional Expenses and Prepaid Concession
Expenses so consented to by Khoury or Lahar will be included in the
Assumed Liabilities. In no event shall Seller's obligation to incur
Promotional Expenses from March 4, 1997 to the Closing Date exceed
$67,000 in the aggregate nor extend to matters other than the Disney
production film, ESPN local ad spot, Golf Channel spot, long drive
contest and Nitro express printing and mailing the details of which
have been provided by Seller to Buyer. In no event shall Seller's
obligation to incur Prepaid Concession Expenses (other than Prepaid
Concession Expenses in the amounts of $1,375 in favor of Arizona Golf
Resort, $1,466 in favor of Palm Brook Country Club, $7,791 in favor of
the Phoenician Resort, and $2,108 in favor of Lago Mar Country Club,
which are hereby consented to) from March 4, 1997 to the Closing Date
exceed $10,000 in the aggregate. In the event that the Closing shall
not have occurred on or before April 30, 1997, Buyer shall promptly
pay to Seller the amount of Prepaid Concession Expenses described in
the parenthetical clause in the previous sentence and the amount of
all Promotional Expenses and Prepaid Concession Expenses incurred
after March 4, 1997 and before April 30, 1997 (or, if earlier, the
date of termination of this Agreement) that Khoury or Lahar approved,
except where Seller has failed to fulfill its obligations hereunder
and the termination of this Agreement results solely from such
failure.
1.3.3. Buyer shall assume all payment or performance
obligations and related liabilities with respect to the operation of
the Nitro trade show booth.
1.3.4. Buyer shall assume all payment or performance
obligations and related liabilities that arise, occur or are dated
after the Closing Date with respect to deductions, off-sets,
chargebacks, price protection provisions, cooperative advertising
allowances or other reductions or dilutions that arise, occur or are
dated after the Closing Date or that pertain to returns of products of
a type constituting Purchased Assets to Buyer or Seller after the
Closing. Notwithstanding the foregoing, Buyer will not assume any
such obligation or liability resulting from a legal obligation of the
Business arising prior to the Closing that either is a verbal
obligation or liability that is disclosed in Schedule 1.3.4 or is
evidenced in writing (other than such obligations expressly assumed by
Buyer pursuant to Section 1.3 or Schedule 1.3.4). Seller hereby
represents and warrants that to Seller's knowledge, there are no such
obligations or liabilities except as set forth on Schedule 1.3.4 or as
set forth in writings copies of which have been delivered to Buyer.
To the extent assumed by Buyer hereunder, such obligations or
liabilities will not be deducted in determining the amount of
collections in respect of the Closing Accounts or otherwise.
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<PAGE> 11
1.3.5. Buyer shall assume, to the extent provided by Section
9, all accrued vacation, accrued vacation pay and accrued sick leave
of each Employee hired by Buyer.
1.3.6. Buyer shall assume all customer orders that have not
been fulfilled as of the Closing Date.
1.3.7. Buyer shall assume the account payable to High
Precision that relates to a mold base.
1.3.8. Buyer shall assume all warranty and product liability
and similar costs resulting from occurrences prior to, on or after the
Closing Date or products manufactured, remanufactured, sold or
distributed prior to, on or after the Closing Date.
1.3.9. Seller is expecting to receive a shipment of golf
balls and/or cores from Toppoint Trading Company after the Closing
Date, as described to Buyer before the Closing, for which Seller has
not made payment. If Seller buys such golf balls and/or cores, Buyer
will purchase such golf balls and/or cores from Seller, categorized in
the same manner as the Ball Inventory, at the assigned values per unit
set forth in Section 1.6; Buyer will not assume any liability to
Toppoint Trading Company for this shipment, which shall remain the
sole responsibility of Seller.
1.4. Excluded Liabilities. Notwithstanding any other provision of
this Agreement, all liabilities or obligations of Seller not constituting
Assumed Liabilities, including without limitation the following, shall be
retained, paid and performed by Seller (the "Excluded Liabilities"):
1.4.1. All accounts payable arising prior to the Closing,
other than those accounts payable expressly assumed by Buyer pursuant
to Section 1.3.
1.4.2. All liabilities or obligations for borrowed money,
deferred purchase price of goods or services (other than trade
payables or accruals incurred in the ordinary course of business), or
guarantees or other credit supports obligation in respect of any of
the foregoing, whether direct or in the form of guarantee or similar
contingent obligation, existing immediately prior to the Closing.
1.4.3. All liabilities or obligations to Seller or its
affiliates other than liabilities and obligations arising under this
Agreement or the Transitional Services Agreement.
1.4.4. All Promotional Expenses and Prepaid Concession
Expenses not incurred in compliance with the procedure set forth in
Section 1.3.2.
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<PAGE> 12
1.4.5. All liabilities, obligations, claims, actions or
proceedings, whether or not contingent and whether or not asserted on
or prior to the Closing, to the extent they relate to occurrences,
events or periods prior to the Closing (it being understood that Buyer
will be responsible for the same to the extent they relate to
occurrences, events or periods after the Closing).
1.4.6. All liabilities, obligations, claims, actions or
proceedings, whether or not contingent and whether or not asserted on
or prior to the Closing, that relate to any income Tax (as defined
below) of Seller or that relate to any other federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, profits, customs duties,
franchise, withholding, employment, real property, personal property,
sales, use, transfer, registration, estimated, or other taxes, fees,
levies, duties, imposts or charges of any kind, including any
interest, penalty, or addition thereto, whether disputed or not
("Tax"), in respect of occurrences, events or periods prior to the
Closing.
1.4.7. All liabilities relating to Excluded Assets.
1.4.8. All liabilities resulting from a legal obligation of
the Business arising prior to the Closing that relate to any account
receivable except for those deductions, off-sets, chargebacks, price
protection provisions, cooperative advertising allowances or other
reductions or dilutions for which Buyer is liable pursuant to Section
1.3.4.
1.4.9. All liabilities relating to the closing of the Orlando
operations of the Business that are incurred prior to the Closing.
1.4.10. All compensation, benefit and other employment
related claims, including severance, Comprehensive Omnibus Budget
Reconciliation Act ("COBRA") and Worker Adjustment and Retraining
Notification Act ("WARN Act") claims (other than sick leave and
vacation pay accrued in the ordinary course and assumed pursuant to
Section 1.3.5), and all medical, dental and similar claims and
disability claims incurred on or prior to the Closing. Seller will
not be responsible for the payment of any employee's COBRA premiums,
it being understood that any such premiums will be borne by the
employees and that Buyer has no liability whatsoever in respect of
COBRA for Seller's employees (it being understood that Buyer will
perform its own obligations under COBRA to any such person who becomes
an employee of Buyer).
1.4.11. All liabilities and obligations arising under any
intercompany or interdivisional account.
1.4.12. All liabilities and obligations arising under any
contract, lease or other agreement of Seller that is not expressly
assumed pursuant to this Agreement or the Bill of Sale, Assignment and
Assumption Agreement.
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<PAGE> 13
1.4.13. All liabilities and obligations of Seller arising as
a result of or in connection with any failure by Seller to comply with
any bulk sales or bulk transfers laws.
1.5. Purchase Price. Subject to adjustment as provided in Sections
1.6 and 1.7, the purchase price to be paid by Buyer to Seller for the Purchased
Assets to be purchased by it hereunder shall be the sum of Six Million Four
Hundred Thousand Dollars ($6,400,000) plus the amount of approved Promotional
Expenses and Prepaid Concession Expenses paid by Seller before the Closing
pursuant to Section 1.3.2 plus an amount (the "Accounts Payment") equal to the
amount of the Closing Accounts (the "Cash Purchase Price") plus assumption of
the liabilities assumed pursuant to Section 1.3 hereof.
1.6. Post-Closing Inventory Adjustment. On or immediately after the
Closing Date, Deloitte Touche will conduct a physical inventory of the
Purchased Assets constituting inventory (including without limitation any such
inventory in transit; inventory in transit shall be deemed to be as set forth
on the invoice/packing slip/bill of lading accompanying such shipment, provided
that for any shipment that includes inventory loaded before the Closing and
inventory loaded after the Closing, the invoice/packing slip/bill of lading
shall indicate which items of inventory were loaded before the Closing and only
such items shall constitute Purchased Assets it being understood that any items
loaded after the Closing are the property of Buyer; and such invoice/packing
slip/bill of lading shall be final and binding on the parties hereto absent
manifest error discovered within 60 days after Closing. Buyer will forward a
copy of each such invoice/packing slip/bill of lading to Seller promptly after
receipt thereof). As promptly as practicable after the Closing Date, and in
any event on or before the expiration of 30 days from the date of Closing,
Buyer shall cause Deloitte Touche to prepare, and shall furnish to Seller, a
statement of the physical inventory of the Purchased Assets constituting
inventory (the "Closing Inventory Statement"). Seller may have representatives
observe such inventory. The inventory of the Purchased Assets consisting of
golf balls and golf ball cores (the "Ball Inventory") and the inventory of the
Purchased Assets other than Ball Inventory (the "Non-Ball Inventory") will be
categorized in accordance with the past practices of the Business. The Ball
Inventory as of the Closing Date (the "Closing Ball Inventory") and the
Non-Ball Inventory as of the Closing Date (the "Closing Non-Ball Inventory")
will be valued for purposes of the post-closing adjustment as follows:
<TABLE>
<CAPTION>
Inventory Category Assigned Value Per Unit
------------------ -----------------------
BALL INVENTORY
<S> <C> <C>
Grind Balls 5c.
Low X-Out Balls 10c.
Cut Balls 5c.
Cores 8c.
Balata Balls 0c.
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C>
WIP Balls - Resale 32c.
WIP Balls - Range 28c.
WIP Balls - Pond Run 24c.
Used Balls - Finished Product 38c.
Nitro SGP Balls $4.00 per dozen balls
Nitro Balata Balls $7.10 per dozen balls
Nitro 440 Balls $5.35 per dozen balls
Nitro Plus 8 Balls $5.35 per dozen balls
NON-BALL INVENTORY
Non-Ball Inventory valued at book value in
accordance with generally
accepted accounting principles
applied on a consistent basis
</TABLE>
If the total value of the Closing Ball Inventory as set forth in the Closing
Inventory Statement is less than $5,200,000 or if the value of the Closing
Non-Ball Inventory as set forth in the Closing Inventory Statement is less than
$650,000, Seller will pay to Buyer, directly or from available Escrow Funds (as
defined below), on the 120th day following the closing (the "Settlement Date"),
an amount equal to the sum of such deficiencies (the "Inventory Shortfall")
without netting any excess in either the Closing Ball Inventory or the Closing
Non-Ball Inventory against a deficiency in the other category. There shall be
no adjustment in the Cash Purchase Price for any excess inventory in either or
both categories; provided, however, that if net purchases (i.e., purchases less
sales calculated at the above assigned values) of Ball Inventory are made
between the date hereof and the Closing and Khoury or Lahar has consented to
such purchases in writing, then Buyer will pay to Seller on the Settlement Date
(directly and not out of Escrow Funds) the amount of such net purchases to the
extent that Closing Ball Inventory exceeds $5,200,000. If the parties disagree
as to the value of the Closing Ball Inventory and/or Closing Non-Ball
Inventory, the parties shall attempt in good faith to resolve such disagreement
for a period of 20 days and, failing such resolution, either party may require
that such disagreement be resolved by binding arbitration pursuant to Section
15. Notwithstanding any such arbitration, any amounts not in disagreement
shall promptly be paid in accordance with the terms hereof. The fees of
Deloitte Touche relating to conducting the physical inventory will be paid by
Buyer. The fees of Seller's representatives observing the physical inventory
will be paid by Seller.
1.7. Post-Closing Accounts Receivable Adjustment. Buyer will use
commercially reasonable efforts to collect the Closing Accounts on or before
the Settlement Date, provided that Buyer is under no obligation to retain or
pay for collection agencies to collect any such Closing Accounts. Buyer will
not approve or authorize any settlement for less than the full face amount of a
Closing Account unless it agrees to pay to Seller the full face value
notwithstanding such settlement. Each week prior to the Settlement Date, Buyer
will provide
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<PAGE> 15
to Seller weekly reports with respect to collections received by Buyer on
Closing Accounts, together with copies of any instruments representing
payments. Buyer shall not have any liability to Seller as a result of its
collection efforts made pursuant to this Section 1.7 other than for actions not
taken in a commercially reasonable manner. If on the Settlement Date the net
collection by Buyer on the Closing Accounts is less than the Accounts Payment
("Accounts Shortfall"), Seller will within 10 business days after the
Settlement Date pay Buyer directly or from available Escrow Funds the amount of
the Accounts Shortfall, subject to satisfaction by Buyer of its obligations
under Section 1.6. If on the Settlement Date the net collection of the Closing
Accounts by Buyer exceeds the Accounts Payment, then subject to satisfaction by
Seller of Seller's obligations under this Section 1.7, Buyer will within 10
business days after the Settlement Date pay to Seller the amount of such
excess. Subject to satisfaction by Seller of Seller's obligations under this
Section 1.7, Buyer will on the Settlement Date reassign to Seller all Closing
Accounts then outstanding; such reassigned Closing Accounts will be free of any
lien or other encumbrance created by, or arising from action of, Buyer. In
addition, Buyer will return to Seller all books, records, notes and other
documentation that relates to the reassigned Closing Accounts. Seller shall
not have any liability to Buyer as a result of its collection efforts with
respect to the reassigned Closing Accounts other than for actions not taken in
a commercially reasonable manner. Buyer also agrees to provide any other
information reasonably requested that may assist Seller in the collection of
the reassigned Closing Accounts. If Seller collects or receives payment before
the Settlement Date on any of the Closing Accounts, then subject to
satisfaction by Buyer of Buyer's obligations under this Section 1.7, Seller
will promptly forward to Buyer all such sums collected or received on Buyer's
behalf and Seller will not set-off or hold-back any such sums collected unless
the set-off or holdback is directly related to the issue of whether such sum
collected was a Closing Account. If Buyer collects or receives payment on or
after the Settlement Date on any of the Closing Accounts reassigned to Seller,
then subject to satisfaction by Seller of Seller's obligations under this
Section 1.7, Buyer will promptly forward to Seller all such sums collected or
received on Seller's behalf and Buyer will not set-off or hold- back any such
sums collected unless the set-off or holdback is directly related to the issue
of whether such sum collected was a Closing Account. The parties will consult
with each other with respect to collection practices regarding both the
purchased Closing Accounts and any Closing Accounts reassigned to Seller.
1.8. Allocation of Purchase Price. The aggregate purchase price will
be allocated to the Purchased Assets as agreed by Buyer and Seller on or prior
to the Closing Date. Buyer and Seller shall, not later than ninety days after
the Closing, execute and cause to be filed Form 8594 under the Internal Revenue
Code of 1986, as amended, reflecting such allocation and upon the reasonable
request of Buyer, Seller shall execute and file such other documents as may be
necessary to document such allocation.
1.9. Further Assurances. Each of the parties hereto, before, at and
after the Closing, upon the request from time to time of any other party hereto
and without further consideration, will do each and every reasonable act and
thing as may be necessary or reasonably desirable to
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<PAGE> 16
consummate the transactions contemplated hereby and to effect an orderly
transfer to Buyer of the Purchased Assets and the Assumed Liabilities,
including without limitation: executing, acknowledging and delivering
assurances, assignments, powers of attorney and other documents and
instruments; furnishing information and copies of documents, books and records;
filing reports, returns, applications, filings and other documents and
instruments with governmental authorities; in the case of Seller, withdrawing
or transferring to Buyer the d/b/a's, foreign qualifications and the like held
by Seller that relate to the Intellectual Property; in the case of Buyer,
requesting that the lessors of the 2 leased fork lifts terminate their UCC
filings in the State of Texas and their UCC filings in the State of Florida to
reflect the change in ownership; turning over to the other all mail and
payments belonging to the other; and cooperating with the other party hereto
(at such other party's expense) in exercising any right or pursuing any claim,
whether by litigation or otherwise, other than rights and claims running
against the party from whom or which such cooperation is requested. If either
party shall receive any payment that pursuant to this Agreement is the property
of the other party, then the party receiving such payment shall promptly turn
such payment over to the other party and until such time shall hold it in trust
for the other party.
2. CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall be held at the offices of Ropes & Gray, One International
Place, Boston, Massachusetts, at 10:00 a.m. on March 28, 1997 or on such other
date as Buyer and Seller may agree upon in writing (the "Closing Date"), but in
no event later than April 30, 1997. At the Closing, Buyer shall (a) pay to
Seller, by wire transfer of immediately available funds in accordance with
written instructions furnished by Seller at least one business day prior to the
Closing, an amount equal to 95% of the Cash Purchase Price and (b) deposit into
escrow, pursuant to an escrow agreement in the form of Exhibit 2 hereto (the
"Escrow Agreement"), an amount (including any interest and other earnings
thereon, the "Escrow Funds") equal to 5% of the Cash Purchase Price; and Seller
shall deliver to Buyer the instruments of conveyance specified in Section 5.
As provided by the Escrow Agreement, the Escrow Funds will be applied to
satisfy any Inventory Shortfall and/or Accounts Shortfall, and after full
satisfaction thereof any remaining Escrow Funds will be released to Seller.
3. REPRESENTATIONS OF SELLER. Seller represents and warrants to Buyer
that:
3.1. Due Incorporation, Authorization and Good Standing. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, has the requisite corporate power and authority
to enter into, execute, deliver and perform this Agreement, any other
agreements relating to the transactions contemplated hereby, and any
instruments of transfer and conveyance (collectively, with this Agreement, the
"Transaction Documents") to which Seller is a party, and to consummate all
transactions contemplated hereby and thereby and has taken all corporate action
required by law and its Certificate of Incorporation and bylaws to authorize
such execution, delivery and performance. This Agreement is, and each of the
other Transaction Documents to which Seller is a party will upon execution by a
duly authorized officer of Seller at the Closing be, the valid and
11
<PAGE> 17
legally binding obligation of Seller, enforceable against Seller in accordance
with its terms, subject to bankruptcy, insolvency, moratorium, reorganization
and similar laws of general applicability affecting the rights and remedies of
creditors and to general principles of equity, regardless of whether
enforcement is sought in proceedings in equity or at law.
3.2. No Violation or Approval. [Except as set forth on Schedule
3.2,] the execution, delivery and performance of the Transaction Documents and
the consummation of the transactions contemplated hereby and thereby will not
result in a breach or violation of, or a default under, Seller's Certificate of
Incorporation, bylaws, any statute applicable to it, any agreement to which it
is a party or by which it or any of its properties are bound, or any order,
judgment, decree, rule or regulation of any court or any governmental agency or
body having jurisdiction over it or its properties except for such breaches,
violations or defaults as could not individually or in the aggregate reasonably
be expected to have a material adverse effect on the business, prospects,
operations, assets or financial condition of the Business or the ability of
Seller to consummate the transactions contemplated hereby (each, a "Material
Adverse Effect"). Except as set forth on Schedule 3.2, no consent, approval,
order or authorization of, or declaration or filing with, any governmental
authority or entity or, to Seller's knowledge, any other party is required of,
and has not been obtained or made by, Seller in connection with the execution
and delivery of the Transaction Documents or the consummation of any of the
transactions contemplated hereby or thereby, except where the failure to obtain
such consent, approval, order or authorization, or to make such declaration or
filing, could not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.
3.3. Transactions with Affiliates. Except as set forth in Schedule
3.3 hereto, no affiliate of Seller is a competitor, customer or supplier of the
Business, nor is any affiliate of Seller a party to any Contractual Obligation.
Seller is not a competitor of the Business; except for the purchase of golf
balls from the Business, Seller is not a customer of the Business; and Seller
does not supply golf balls to the Business.
3.4. Absence of Changes; Operations in Ordinary Course. Since March
4, 1997, the Purchased Assets have not undergone any material adverse change in
their condition or suffered any material damage, destruction or loss (whether
or not covered by insurance) that adversely affects their condition in the
aggregate, except for such changes, damages, destructions and losses as could
not reasonably be expected in the aggregate to have a Material Adverse Effect;
and since March 4, 1997, except as a result of changes in general economic
conditions or generally affecting the industry in which the Business operates,
there has been no change in the condition of the Business, whether as a result
of any change as to accounts receivable (other than Excluded Accounts) or other
Purchased Assets, any natural disaster, accident, strike, sabotage, or
confiscation of property, or to Seller's knowledge any other event or condition
directly affecting or relating to Seller or the Business, whether or not
related to any of the foregoing, except for such changes as could not
reasonably be expected in the aggregate to have a Material Adverse Effect.
Since March 4, 1997, except as set forth on
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<PAGE> 18
Schedule 3.4, Seller has operated the Business in the ordinary course,
consistent in all material respects with the practices followed during the
period beginning January 1, 1997, other than as contemplated in the first
sentence of Section 7.2 hereof. Without limiting the generality of the
foregoing, since March 4, 1997, Seller has not entered into any transaction
relating to the Business except in the ordinary course of business (other than
the proposed sale of the Purchased Assets to Buyer hereunder).
3.5. Title to Assets. Seller has good title to all the Purchased
Assets, free and clear of all liens, claims, encumbrances or other rights of
any other parties ("Liens"), other than liens set forth on Schedule 3.5(a)
("Permitted Liens") and on Schedule 3.5(b) and, with respect to Intellectual
Property, to the extent set forth in Section 3.13 and on Schedules 1.1.2 and
3.13. Except as set forth on Schedule 3.2 and Schedule 3.5(b), Seller has
complete and unrestricted power and right to transfer the Purchased Assets to
Buyer as contemplated by this Agreement. As of the date of this Agreement,
except as set forth on Schedule 3.5(c), to Seller's knowledge no claim has been
asserted by any person to prevent or in any way limit the use or exercise by
Seller of any of the Purchased Assets or challenging the validity or
effectiveness of Seller's ownership thereof. To Seller's knowledge, except as
set forth on Schedule 3.5(d), none of Seller's rights in the Purchased Assets
arise pursuant to contract rights (1) that by their terms are not assignable
without the consent of the other contracting party or parties, (2) that may be
terminated by the other party thereto as a result of the consummation of the
transactions contemplated hereby or (3) in respect of which the consummation of
the transactions contemplated hereby would create a default, except where the
termination of such contract rights could not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
3.6. Offices. To Seller's knowledge, each building in which is
located an Office is in compliance with all applicable laws, statutes,
standards, ordinances, codes, orders, rules, regulations, judgments and
decrees, federal, state and local (including without limitation applicable
zoning and other land use restrictions), except where the failure to so be in
compliance could not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.
3.7. Good Operating Condition and Repair, etc. Each of the tangible
Purchased Assets constituting machinery or equipment is in good operating
condition and repair, ordinary wear and tear excepted; and is suitable for the
particular purposes for which it is presently used, is performing
satisfactorily, and is available for immediate use in the conduct and
operations of the Business.
3.8. Licenses, etc. All material governmental or regulatory licenses
and permits with respect to the Purchased Assets or used in the Business are in
full force and effect, no material violations have been recorded in respect
thereof, and no proceeding or investigation is pending as of the date hereof
or, to Seller's knowledge, threatened that could have the effect, directly or
indirectly, of revoking or materially limiting any such material licenses or
permits.
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3.9. Operations in Conformity With Law, etc. Seller is not in
violation of, or in default under, any law, statute, standard, ordinance, code,
order, rule, regulation, judgment or decree relating in any manner to or
applicable to the Business or the Purchased Assets (other than the Offices),
except for such violations and defaults as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Except to
the extent set forth on Schedule 3.9 as of the date hereof, there are no
pending or, to Seller's knowledge, threatened claims, investigations, lawsuits,
administrative proceedings (including without limitation with respect to
harassment or discrimination with respect to an employee, or with respect to
personal injury) against Seller or any employee of Seller (in his capacity as
such or as a result of conduct during the course of employment) that pertain to
the Business or the Purchased Assets nor, to the Seller's knowledge, any basis
therefor.
3.10. Employee Matters; Benefit Plans. Seller has furnished Buyer
accurate summaries of all severance pay, bonus, retirement, vacation, sick
leave or other welfare or incentive plans, contracts, arrangements or practices
maintained or contributed to by it and in which any one or more of its
employees who is employed in the Business participates or is eligible to
participate.
3.11. Labor Relations. There presently is no existing dispute or
controversy between Seller and any of its employees that has had, or to
Seller's knowledge is reasonably likely to have, a Material Adverse Effect.
None of its employees employed in the Business is represented by a labor union
and, to Seller's knowledge, there is no labor union organizing activity by or
among such employees. There are no collective bargaining agreements or other
labor agreements relating to employees employed in the Business.
3.12. [Reserved.]
3.13. Tradenames, Marks, Patents, etc. Listed on Schedule 1.1.2 is
all Intellectual Property owned and/or used by Seller in connection with the
Business. Except as set forth on Schedule 3.13, to Seller's knowledge each
item of Intellectual Property shown as registered on Schedule 1.1.2 has been
properly registered, all pending applications have been properly made and
filed, and all fees relating to registrations and applications are current.
Seller owns or possesses adequate rights to use (without making any payment or
granting any right to any person in exchange, except as set forth on Schedule
3.13) all such Intellectual Property (to the extent of its registration, in the
case of Intellectual Property shown as registered on Schedule 1.1.2). Seller
does not hold any copyright registrations that relate to the Business. Except
as set forth on Schedule 3.13, Seller has not granted any license or made any
assignment of any Intellectual Property listed on Schedule 1.1.2. To Seller's
knowledge, except as set forth on Schedule 3.13, no other person has any right
to use any part of the Intellectual Property. To Seller's knowledge, except as
set forth on Schedule 3.13, there is no infringement of any such Intellectual
Property, Seller has not infringed on any Intellectual Property of any other
person, and no claim of infringement has been asserted or threatened, nor is
there any basis therefor.
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3.14. Environmental Matters. Seller has operated the Business in
compliance in all respects with all applicable environmental laws, except for
such noncompliance as does not and could not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect. There
has not been any and is no past or continuing release or to Seller's knowledge
threat of release of any hazardous or toxic substance, including without
limitation a "hazardous substance" as defined in 42 U.S.C. Section 9601(14)
and oil, gasoline and other petroleum-based substances (each, a "Hazardous
Substance"), into the environment at, on or from any property currently leased
or owned by Seller and used in the Business (including without limitation any
Office). There have been no Hazardous Substances of or generated by Seller
that have been disposed of or come to rest at any site that has been included
in any published federal, state or local "Superfund" site list or any other
list of hazardous or toxic waste sites. Except as set forth on Schedule 3.14
there never have been any and are no underground storage tanks located on, no
polychlorinated biphenyls ("PCBs") or PCB-containing equipment used or stored
on, and no hazardous waste, as defined by the federal Resource Conservation and
Recovery Act or comparable state or local laws, stored on, any real estate at
which is located an Office.
3.15. Employees. Schedule 3.15 contains a list, which list is true
and correct in all material respects, of the names, titles, hire dates,
full/part time/temporary status, annual salary and any bonus or commission
arrangements (whether oral or written), and accrued entitlements to vacation
time, vacation pay and sick leave of all of Seller's employees employed in the
Business as of the date of this Agreement. Except as indicated on Schedule
3.15, each of such employees is actively engaged in employment with Seller as
of the date hereof, and is not currently receiving, and does not have pending
any filings, claims or applications in connection with, disability benefits or
workers' compensation.
3.16. Contractual Obligations, etc. To Seller's knowledge, Schedule
3.16 contains a true and complete list of all contracts, agreements, deeds,
mortgages, leases, licenses, instruments, commitments, undertakings,
arrangements or understandings, written or oral, relating to the Business or
the Purchased Assets to which or by which Seller is a party or otherwise bound
or to which or by which any of the Purchased Assets is subject or bound
(collectively, "Contractual Obligations," whether or nor required to be listed
on Schedule 3.16) of the types described below and in effect on the date of
this Agreement:
3.16.1. All employment or consulting agreements, and all
outstanding offers of employment, other than outstanding offers of
employment pursuant to which the base compensation to be paid by
Seller to each offeree is less than $30,000 per year; and all other
plans, agreements or arrangements that constitute compensation or
benefits to any officer or employee;
3.16.2. All Contractual Obligations (including without
limitation options) to sell or lease (as lessor) any property or asset
used primarily in the Business except in the ordinary course of
business;
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3.16.3. All Contractual Obligations pursuant to which Seller
possesses or uses any real property in the Business;
3.16.4. All Contractual Obligations pursuant to which Seller
possesses or uses any other properties or assets used in the Business
pursuant to which Seller pays, accrues expenses of or incurs charges
of at least $50,000 over the life of any such Contractual Obligation;
3.16.5. All other Contractual Obligations (including
licenses) pursuant to which Seller possesses or uses any computer
software used in the Business, other than "off-the-shelf" personal
computer software that individually involve liabilities in excess of
$50,000 over the life of any such Contractual Obligation;
3.16.6. All Contractual Obligations with the 10 largest
customers of the Business (measured by total purchases in the period
from January 1, 1996 through December 31, 1996), other than individual
purchase orders;
3.16.7. All Contractual Obligations with suppliers or
providers of goods or services to the Business, including without
limitation purchase orders that will be assumed, which individually
involve liabilities in excess of $50,000 over the life of any such
Contractual Obligation;
3.16.8. All Contractual Obligations under which Buyer could
after the Closing be restricted from carrying on any business or other
activities anywhere in the world.
Seller has heretofore made available to Buyer a true and complete copy of each
of the written Contractual Obligations and a written description of each of the
oral Contractual Obligations in effect on the date hereof that is known to
Seller, including without limitation all amendments and supplements thereto
that are being assumed and all waivers thereunder. To Seller's knowledge, each
such Contractual Obligation is valid, binding and enforceable against the other
party thereto, except where the failure to be valid, binding and enforceable
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Neither Seller nor, to Seller's knowledge, any other
party is in default under or in breach or violation of, nor has an event
occurred that (with or without notice, lapse of time or both) would constitute
a default by Seller or, to Seller's knowledge, any other party under any
Contractual Obligation other than defaults, breaches or violations of such
Contractual Obligations that could not reasonably be expected to have a
Material Adverse Effect. Each of the Contractual Obligations has been entered
into in the ordinary course of Seller's business.
4. REPRESENTATIONS OF BUYER. Buyer represents and warrants to Seller
as follows:
4.1. Due Incorporation, Authorization and Good Standing. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of
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Delaware, has the requisite corporate power and authority to enter into,
execute, deliver and perform this Agreement and the other Transaction Documents
to which Buyer is a party and to consummate all transactions contemplated
hereby and thereby and has taken all action required by law and its Certificate
of Incorporation and bylaws to authorize such execution, delivery and
performance. This Agreement is, and each of the other Transaction Documents to
which Buyer is a party, will upon execution thereof by a duly authorized
officer of Buyer at the Closing be, the valid and legally binding obligation of
Buyer, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, moratorium, reorganization and similar laws of general
applicability affecting the rights and remedies of creditors and to general
principles of equity, regardless of whether enforcement is sought in
proceedings in equity or at law.
4.2. No Violation or Approval. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which it
will be a party and the consummation of the transactions contemplated hereby
and thereby will not result in a breach or violation of, or a default under,
Buyer's Certificate of Incorporation, bylaws, any statute applicable to it, any
agreement to which it is a party or by which it or any of its properties are
bound, or any order, judgment, decree, rule or regulation of any court or any
governmental agency or body having jurisdiction over it or its properties. No
consent, approval, order or authorization of, or declaration or filing with,
any governmental authority or other entity is required of, and has not been
obtained or made by, Buyer in connection with the execution and delivery of
this Agreement and the other Transaction Documents or the consummation of the
transactions contemplated hereby and thereby.
4.3. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any person acting on behalf of Buyer in such manner as to
give rise to any valid claim against Seller or Buyer for any brokerage or
finder's commission, fee or similar compensation.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The obligations
of Buyer to purchase the Purchased Assets and to consummate the other
transactions contemplated hereby and by the other Transaction Documents are
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, unless expressly waived by Buyer at the Closing:
5.1. Due Authorization. This Agreement and the other Transaction
Documents to which Seller is a party shall have been duly authorized, executed
and delivered by Seller.
5.2. Performance of Obligations. Seller shall have performed and
complied with all material agreements and conditions required by any
Transaction Document to be performed or complied with by it at or prior to the
Closing Date.
5.3. Representations and Warranties. The representations and
warranties made by Seller in this Agreement (including the Exhibits and
Schedules hereto), in the Certificate re
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Brokerage Fees dated the Closing Date or in the Certificate of the Secretary of
Seller dated the Closing Date furnished to Buyer, except for those specifically
made as of a particular date, shall be true and correct as of the Closing Date
as if made on and as of the Closing Date and Buyer shall have received a
certificate of an executive officer of Seller to the foregoing effect and
stating that Seller has met the conditions set forth in Section 5.2 above.
5.4. Bill of Sale, Assignment and Assumption Agreement. Seller shall
have executed and delivered a bill of sale, assignment and assumption agreement
in the form of Exhibit 5.4 (the "Bill of Sale, Assignment and Assumption
Agreement") conveying to Buyer all of the Purchased Assets, together with
certificates of title with respect to motor vehicles.
5.5. Services Agreement. A transitional services agreement
("Transitional Services Agreement") in the form of Exhibit 5.5 shall have been
duly authorized, executed and delivered by Seller.
5.6. Escrow Agreement. An escrow agreement ("Escrow Agreement") in
the form of Exhibit 5.6 shall have been duly authorized, executed and delivered
by Seller.
5.7. Assignment of Intangible Assets. Seller shall have executed and
delivered to Buyer specific assignments in the form requested by Buyer for
recordation of the assignment of Seller's interest in any intangible Purchased
Assets.
5.8. Charter Documents, etc. Seller shall have delivered such
certificates or other documents as may be reasonably requested by Buyer or
counsel to Buyer, including without limitation certificates of legal existence,
good standing and certified charter documents on file with the Secretary of
State of the State of Delaware, certificates of the Secretary or Assistant
Secretary of Seller with respect to directors' resolutions, bylaws and any
other relevant matters.
5.9. Release of Liens. Seller shall have delivered evidence
satisfactory to Buyer of the release and termination of all liens and
encumbrances on the Purchased Assets (other than Permitted Liens), including
without limitation the liens of LaSalle Business Credit, Inc. ("LaSalle")
existing prior to the Closing; provided, however, that Buyer acknowledges that
an agreement of LaSalle terminating the liens of LaSalle on the Purchased
Assets and approving the sale of the Business to Buyer, UCC-3 Termination
Statements signed by an authorized representative of LaSalle relating to the
Purchased Assets, terminations of LaSalle's security interests in and/or
assignments of Intellectual Property, and such other documentation as shall
reasonably be deemed necessary by LaSalle shall be sufficient to satisfy this
condition with respect to the liens LaSalle has on the Purchased Assets.
5.10. Injunctions, etc. No action or proceeding shall have been
instituted prior to or on the Closing Date before any court or governmental
body or authority pertaining to the transactions contemplated by this Agreement
or the other Transaction Documents, the result of
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which could reasonably be expected to prevent, curtail or make illegal the
consummation of such transactions.
5.11. Governmental Approvals. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent,
authorization or approval of which is necessary under any applicable law, rule,
order or regulation (excluding consents, authorizations and approvals relating
to use, occupancy, Tax liens and similar matters) for the consummation of the
transactions contemplated by this Agreement shall have consented to,
authorized, permitted or approved such transactions.
5.12. General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents shall be reasonably satisfactory in form and substance to
Buyer, and Buyer shall have received counterpart originals, or certified or
other copies, of all documents, including without limitation board resolutions
approving the transactions contemplated by this Agreement, that it may
reasonably request in connection therewith.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. Seller's
obligations to sell the Purchased Assets to Buyer and to consummate the other
transactions contemplated hereby and by the other Transaction Documents are
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, unless expressly waived by Seller at or prior to Closing:
6.1. Due Authorization. This Agreement shall have been duly
authorized, executed and delivered by Buyer and any Transaction Documents to
which Buyer is a party shall have been duly authorized, executed and delivered
by Buyer.
6.2. Performance of Obligations. Buyer shall have performed and
complied with all agreements and conditions required by any Transaction
Document to be performed or complied with by Buyer at or prior to the Closing
Date.
6.3. Representations and Warranties. The representations and
warranties made by Buyer in this Agreement (including the Exhibits and
Schedules hereto) or in the Certificate of the Secretary of Buyer dated the
Closing Date furnished to Seller, except for those specifically made as of a
particular date, shall be true and correct in all material respects as of the
Closing Date as if made on and as of the Closing Date and Seller shall have
received a certificate of Buyer signed by an executive officer of Buyer to the
foregoing effect and stating that Buyer has met the conditions set forth in
Section 6.2 above.
6.4. Bill of Sale, Assignment and Assumption Agreement. Buyer shall
have executed and delivered the Bill of Sale, Assignment and Assumption
Agreement.
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6.5. Services Agreement. The Transitional Services Agreement shall
have been duly authorized, executed and delivered by Buyer.
6.6. Escrow Agreement. The Escrow Agreement shall have been duly
authorized, executed and delivered by Buyer.
6.7. Purchase Price. Buyer shall have paid to Seller by wire
transfer (in accordance with instructions furnished by Seller at least one
business day prior to the Closing) an amount equal to 95% of the Cash Purchase
Price stipulated by Section 1.5 hereof and shall have deposited into escrow by
wire transfer, pursuant to the Escrow Agreement, an amount equal to 5% of such
Cash Purchase Price.
6.8. Charter Documents, etc. Buyer shall have delivered such
certificates or other documents as may be reasonably requested by Seller or its
counsel, including without limitation certificates of legal existence, good
standing and certified charter documents on file with the Secretary of State of
Delaware, certificates of the Secretary or Assistant Secretary of Buyer with
respect to directors' resolutions, bylaws and any other relevant matters.
6.9. Injunctions, etc. No action or proceedings shall have been
instituted prior to or at the Closing Date before any court or governmental
body or authority pertaining to the transactions contemplated by this Agreement
or the other Transaction Documents, the result of which could reasonably be
expected to prevent, in any way limit or make illegal the consummation of any
such transactions.
6.10. Governmental Approvals. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent,
authorization or approval of which is necessary under any applicable law, rule,
order or regulation (excluding consents, authorizations and approvals relating
to use, occupancy, Tax liens and similar matters) for the consummation of the
transactions contemplated by this Agreement shall have consented to,
authorized, permitted or approved such transactions.
6.11. General. All instruments and legal and corporate proceedings
in connection with the transactions contemplated by this Agreement and the
other Transaction Documents shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received counterpart originals, or
certified or other copies, of all documents, including without limitation
records of corporate proceedings, that it may reasonably request in connection
therewith.
6.12. Resale Exemption Certificates. Buyer shall have furnished
Seller with resale exemption certificates from the states of Florida, Arizona
and South Carolina which shall be reasonably satisfactory to Seller.
7. COVENANTS OF THE PARTIES.
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7.1. Access to Premises and Information. On, prior to and after the
Closing Date, each party hereto will permit any other party hereto and each of
its authorized representatives to have reasonable access during normal
operating hours to Records in possession of such party that reasonably relate
to the conduct or operations on or prior to the Closing Date of the Business,
including without limitation Records in respect of accounts payable and general
ledgers. Each party agrees that it may not dispose of or transfer to a third
party such Records unless it provides thirty days' written notice to the other
party and enters into a written agreement with the transferee that provides
that such transferee shall give Buyer and Seller access to such Records that is
equal in scope to the access provided to Seller and Buyer pursuant to the terms
of this Agreement. In addition, subject to receiving prior approval from John
P. Walker or Terrence M. Babilla (which approval will not be unreasonably
withheld), prior to the Closing Date Seller will permit the officers,
attorneys, accountants, prospective lenders and other authorized
representatives and professionals of Buyer access during normal operating hours
to all management personnel, offices, properties, books and records of Seller
relating to the Business, so that Buyer may have full opportunity to make such
investigation as it reasonably desires of the management, business, properties
and affairs of the Business, and Buyer shall (at its expense) be permitted to
make abstracts from, or copies of, all such books and records. Seller shall
allow access sufficient to allow Buyer or its representatives to conduct such
environmental site assessment (including subsurface investigation) as it deems
appropriate. Each party will maintain the Records received pursuant to this
Agreement (in the case of Buyer) or held by it (in the case of Seller) relating
to the Business for a period of five (5) years and will, during regular
business hours and upon reasonable notice, furnish reasonable access thereto to
the other party for audit, tax, accounting or legal purposes. Each party shall
be entitled to make copies at its own expense of any such records. If a party
proposes to destroy any such records within such 5-year period, such party will
notify the other party and deliver to such other party, at such other party's
expense, any such Records as such other party requests.
7.2. Conduct of Business Prior to Closing. Prior to the Closing,
Seller will conduct the Business in the ordinary course of business consistent
in all material respects with the practices followed during the period
beginning January 1, 1997 and will use commercially reasonable efforts to
maintain the value of the Business as a going concern; provided that the
incurrence of Promotional Expenses and Prepaid Concession Expenses is governed
by Section 1.3.2., and that this Section 7.2 shall not apply in respect of
Non-Ball Inventory. Without limiting the generality of the foregoing, without
the prior consent of Buyer, Seller will not (a) except as set forth on Schedule
7.2, increase the compensation payable or to become payable, or the benefits
provided or to be provided, to any employee of the Business or (b) enter into
any transaction except in the ordinary course of business; and Seller will
continue to purchase and distribute Ball Inventory in the ordinary course of
business consistent in all material respects with the practices followed during
the period beginning January 1, 1997 (including without limitation as to amount
and timing of purchases, subject to appropriate seasonal adjustments),
provided, however, that Seller need not incur purchase costs for Ball Inventory
in excess of $433,000 for March, 1997 or $433,000 for April, 1997.
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7.3. No Solicitation of Other Offers. In consideration of the time
and resources that Buyer will devote to the transactions contemplated hereby
and subject to the terms and conditions stated herein, Seller agrees that
through April 30, 1997 (or earlier date if this Agreement is terminated in
accordance with Section 13), Seller will not, and will cause the affiliates,
directors, officers, employees, representatives and agents of Seller or of the
Business, not to, directly or indirectly, solicit or initiate or enter into
discussions or transactions with, or encourage, or provide any information to,
any corporation, partnership or other entity or group (other than Buyer and its
designees) concerning any sale of the Business or any material assets of the
Business, or any similar transaction involving any material assets of the
Business. Seller will promptly inform Buyer if Seller receives any bid or
other expression of interest regarding any such transaction. Seller represents
and warrants that neither Seller nor any of its affiliates is party to or bound
by any agreement with respect to any such transaction other than as
contemplated by this Agreement.
7.4. Preparation for Closing. Each of the parties hereto agrees to
use all reasonable efforts to bring about the fulfillment of the conditions
precedent contained in this Agreement, including without limitation the
obtaining of all necessary consents, approvals and waivers for the consummation
of the transactions contemplated by this Agreement; provided, however, that
Seller's failure to obtain any consents, approvals or waivers, other than a
landlord's consent with respect to the Orlando, Florida Lease, the consent of
Titleist & Foot-Joy Worldwide Division of Acushnet Company ("Titleist") with
respect to the agreement between American Ball Manufacturing and Titleist and
the consent of LaSalle to the sale of the Business to Buyer will not be deemed
a breach of this Agreement.
7.5. Non-Disclosure, Announcements, etc. Before the Closing, neither
party will without the consent of the other party make any announcement
regarding the transactions contemplated hereby except in public releases that
do not identify Buyer or its stockholders, directors or officers. Unless this
Agreement shall have been terminated without the occurrence of a Closing,
Seller will not so disclose any information, including without limitation
historical and projected financial information, personnel information, sales
and marketing information, product information (except in connection with
ordinary course sales and marketing activity) and information regarding future
plans or strategies, including without limitation any such information that is
contained in any analyses, compilations, studies or other documents or records
("Confidential Information"), relating to the Purchased Assets or the Business
to any other person without the prior written consent of Buyer. If this
Agreement shall be so terminated, each party agrees to promptly return all
information that was provided by the other party in contemplation of the
transactions hereunder, to refrain from using such information and to keep such
information strictly confidential.
7.5.1. No provisions of this Section 7.5 shall be construed
as prohibiting the following disclosures: (i) disclosures to
appropriate persons of such information as may be legally required for
securities, Tax, accounting or other reporting purposes, (ii)
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disclosures with respect to the direction of communications to Seller
or Buyer, (iii) disclosures to employees or independent contractors,
(iv) confidential disclosures to legal counsel, creditors and
independent accountants, (v) disclosures to corporate parents and
other corporate affiliates, (vi) disclosures pursuant to the terms of
an order of a court or other governmental authority of competent
jurisdiction, (vii) disclosures required by law or regulation
(including regulations promulgated by a self-regulating organization
such as the New York Stock Exchange) or in connection with legal
proceedings or (viii) disclosures of matters of which there is public
knowledge other than as a result of disclosures made in breach hereof.
Buyer and Seller agree to cooperate with one another in good faith
with respect to any discussions Buyer may have with any customers,
vendors or others having business relationships with Seller relating
to the Business.
7.5.2. The Confidentiality Agreement made as of February 24,
1997 between The KAD Group, Inc. and Seller (the "Confidentiality
Agreement") is hereby incorporated herein and made a part hereof,
provided that Buyer's obligations thereunder shall terminate upon the
Closing and that Seller's obligations thereunder shall survive the
Closing.
7.6. Agreement Not to Compete. Effective from the date hereof, and
for a period of five years after the Closing Date, Seller shall not directly or
indirectly (including, without limitation, through any affiliate), alone or in
association with others, participate in the ownership, management, operation or
control of, or be connected as a partner, consultant, agent or otherwise with,
or have any financial interest (other than wholly passive ownership of less
than five percent of outstanding equity in a publicly held company), in
(through stock or other equity ownership, investing of capital, lending of
money or otherwise), or assist anyone else in the conduct of, any business (any
such business, a "competitive business") that (a) manufactures, re-manufactures
or sells golf balls anywhere in the world; provided, however, that (a) Seller
may engage in a business that purchases, manufactures, re-manufactures or sells
golf accessories and (b) Seller may sell golf balls that it purchases from
Buyer (but no other golf balls) to schools, colleges, universities, government
agencies, military facilities, athletic clubs, youth sports leagues and
recreational organizations (excluding golf clubs and golf associations). Buyer
hereby confirms that, subject to availability, it will sell golf balls to
Seller for such purpose at the same price as it charges at the relevant time to
other customers that purchase quantities and types of balls similar to the
quantities and types of balls purchased by Seller. Notwithstanding the
foregoing, Seller will not be deemed to be in violation of this Agreement by
reason of any attempt by Jerry Gunderson or any employee of the Business to
compete with the Business without the assistance or other involvement of
Seller.
7.7. Agreement Not to Solicit or Hire Employees. Effective from the
date hereof, and for a period of two years after the Closing Date, (a) Seller
will not directly or indirectly (including, without limitation, through any
affiliate) solicit the employment of any persons who, on the date hereof and/or
on the Closing Date, are employees of the Business (except for
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Raquel Rodriguez or any such employees located in the vicinity of Dallas, Texas
who do not accept employment with Buyer or whose employment is subsequently
terminated by Buyer), the value of the services of such employees being
acknowledged as valuable assets of the Business; and (b) Buyer will not
directly or indirectly (including, without limitation, through any affiliate)
solicit the employment of any persons who, on the Closing Date, are employees
of Seller not employed in the Business (except for any such employees whose
employment is terminated by Seller).
7.8. Acknowledgments of Reasonableness. Sellers acknowledges that
the restrictions contained in Sections 7.6 and 7.7 are reasonably necessary for
the protection of Buyer and realization by Buyer of the benefit of its bargain
under this Agreement and that a violation of such provisions will cause damage
that may be irreparable or impossible to ascertain and, accordingly, that Buyer
will be entitled to injunctive or other similar relief in equity from a court
of competent jurisdiction to enforce these restrictions or restrain a violation
of this Agreement. If at the time of enforcement of any provision of Section
7.6 or 7.7, a court (or arbitrator selected by the agreement of the parties)
holds that the restrictions stated herein are unreasonable under circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances will be substituted for
the stated period, scope or area.
8. INDEMNIFICATION.
8.1. Representations and Warranties. Each party hereto (in its
capacity as an indemnifying party, an "Indemnifying Party") hereby agrees to
indemnify each other party hereto (in its capacity as an indemnified party, an
"Indemnitee") and hold it harmless from, against and in respect of the
following: any and all damages (excluding punitive damages), deficiencies,
actions, suits, proceedings, demands, assessments, judgments, claims, losses ,
diminution in value, costs, expenses, obligations and liabilities (including
costs of investigation and collection and reasonable attorneys' fees and
expenses) (herein called a "Loss" or "Losses") arising from or related to any
breach of or inaccuracy in any representation or warranty made by or on behalf
of such Indemnifying Party (as such representation or warranty would read if
all qualifications as to materiality or Material Adverse Effect were deleted
therefrom). Notwithstanding anything to the contrary contained herein, (a) if
on or prior to the Closing Date Khoury or Lahar has actual knowledge that any
representation, warranty or covenant made by Seller 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, Buyer shall have as its sole
remedy hereunder the option (i) to terminate this Agreement and enforce its
remedies herein provided or (ii) to proceed with the Closing and upon the
Closing Buyer shall be conclusively deemed to have waived all claims hereunder
to the extent based upon such known misrepresentation, breach of warranty or
covenant; and (b) if on or prior to the Closing Date Seller has actual
knowledge that any representation, warranty or covenant made by Buyer 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, Seller
shall have as its
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sole remedy hereunder the option (i) to terminate this Agreement and enforce
its remedies herein provided or (ii) to proceed with the Closing and upon the
Closing Seller shall be conclusively deemed to have waived all claims hereunder
to the extent based upon such known misrepresentation, breach of warranty or
covenant .
8.2. Other Liabilities. Seller hereby agrees to indemnify Buyer and
hold Buyer harmless from, against and in respect of any Loss to the extent it
arises from or relates to (a) any liability of Seller (including without
limitation any such liability existing immediately prior to the Closing or
arising as a result of the ownership of the Purchased Assets or operation of
the Business or Seller prior to the Closing), other than liabilities
specifically assumed by Buyer under Section 1.3, (b) any Loss relating to a
failure by Seller to obtain a waiver of any Tax lien that is not a Permitted
Lien in respect of the Purchased Assets, or (c) any breach of covenant by
Seller. Buyer hereby agrees to indemnify Seller and hold it harmless from,
against and in respect of any Loss (a) resulting from any liability
specifically assumed by Buyer under Section 1.3, (b) to the extent it arises
from or relates to the ownership of the Purchased Assets after the Closing or
operation of the Business after the Closing, or (c) any breach of covenant by
Buyer.
8.3. Time Limits on Indemnification. Notwithstanding the foregoing,
no claim may be made or suit instituted by an Indemnitee under Section 8.1 or
otherwise for breach of representations and warranties made hereunder (other
than those contained in the first sentence of Section 3.5 or Section 3.14)
unless notice of such claim or suit is given to the Indemnifying Party against
whom such claim is made or suit instituted on or prior to July 1, 1998. No
claim may be made or suit instituted by an Indemnitee for breach of
representations and warranties made in Section 3.14 after the fourth
anniversary of the Closing Date.
8.4. Monetary Limitations on Indemnification. No Indemnifying Party
shall have any obligation under Section 8.1, or (subject to Section 8.2)
otherwise, for breach of representations and warranties made hereunder in
respect of any Loss incurred by an Indemnitee until the aggregate cumulative
total of all such Losses incurred by the Indemnitee exceeds $50,000, whereupon
the Indemnitee shall be entitled to indemnification under such Section 8.1 for
the entire cumulative amount of such Losses including such $50,000; provided,
however, that the Indemnifying Party shall have no obligation to indemnify the
Indemnitee under Section 8.1 for Losses in excess of an aggregate cumulative
liability in respect of such claims under Section 8.1 equal to the Cash
Purchase Price.
8.5. Notice of Claims. Promptly after the receipt by an Indemnitee
of notice of any claim against such Indemnitee or the commencement of any
action or proceeding against such Indemnitee, such Indemnitee shall, if a claim
with respect thereto is or may be made against an Indemnifying Party pursuant
to this Section 8, give such Indemnifying Party written notice thereof,
enclosing a copy of all papers served. The failure to give such notice shall
not relieve any Indemnifying Party of any obligations contained in this Section
8 except to the extent that the failure to give such notice prejudices the
rights of such Indemnifying Party.
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8.6. Defense of Third Party Claims. If any claim for indemnification
by the Indemnitee arises out of a claim solely for monetary damages by a person
or entity other than the Indemnitee, the Indemnifying Party may, by written
notice to the Indemnitee within thirty (30) days of receipt of notice of such
claim pursuant to Section 8.5, undertake to conduct any proceedings to settle
or defend any such claims or to employ counsel to defend any such claims;
provided that the Indemnifying Party will reasonably consider the advice of the
Indemnitee as to the defense or settlement of such claims, and the Indemnitee
will have the right to participate, at its own expense, in such defense or
settlement, but control of such defense and settlement will remain exclusively
with the Indemnifying Party. The Indemnitee will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such Indemnitee unless (1) the
employment of counsel by the Indemnitee has been authorized in writing by the
Indemnifying Party, or (2) the Indemnitee is advised in writing by its counsel
that there exists a conflict of interest between the Indemnifying Party and the
Indemnitee in regard to such claim that could reasonably be expected to
materially and adversely affect the Indemnitee, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the Indemnifying Party. In such event, unless the Indemnitee is
advised in writing by its counsel that there exists a conflict of interest
between the Indemnifying Party and Indemnitee in regard to such claim, in which
case the Indemnitee will retain the right to control such defense and
settlement at the cost and liability of the Indemnifying Party and shall be
entitled to indemnity with regard to such claim to the full extent provided in
this Section 8. After notice from the Indemnifying Party to the Indemnitee of
its election to assume the defense, the Indemnifying Party will not be liable
to the Indemnitee for any legal or other expenses except as provided below.
The Indemnitee will provide, at the Indemnifying Party's expense, all
reasonable cooperation in connection with any such defense by the Indemnifying
Party. Except as otherwise provided in this Section, all costs and expenses,
including without limitation counsel and auditor fees, filing fees, and court
fees of all proceedings, contests, or lawsuits with respect to any such claim
or asserted liability, will be borne by the Indemnifying Party. The
Indemnifying Party will not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees, disbursements and
other charges of more than one firm admitted to practice in such jurisdiction
at any one time for all Indemnitees. If any such claim is made under this
Section 8 and the Indemnifying Party does not elect to undertake defense by
written notice to the Indemnitee, the Indemnitee will be entitled to control
such defense and settlement and will be entitled to indemnity to the full
extent provided in this Section 8. Except for the settlement of a claim that
involves the payment of money only (in which case the Indemnifying Party shall
give the Indemnitee the opportunity to discuss with it such payment, which
opportunity shall not affect the right of the Indemnifying Party to effect such
settlement in its full discretion), the Indemnifying Party shall not settle or
compromise any claim without the prior written consent of the Indemnitee (which
consent will not be unreasonably withheld). If the Indemnitee is controlling
the defense, the Indemnitee shall not settle or compromise any claim without
the prior written consent of the Indemnifying Party (which consent will not be
unreasonably withheld).
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8.7. Remedies. In the absence of fraud, and except as set forth in
Sections 7.6, 7.7 and 7.8, indemnification pursuant to the provisions of this
Section 8 shall be the exclusive remedy of the parties for any
misrepresentation or breach of any warranty or covenant contained in this
Agreement or in any closing document executed and delivered pursuant to the
provisions of this Agreement; and the only legal action which may be asserted
by any party with respect to any matter which is the subject of this Agreement
shall be a contract action to enforce, or to recover damages under this Section
7. Without limiting the generality of the preceding sentence, no legal action
sounding in tort or strict liability may be maintained by any party.
9. POST-CLOSING MATTERS. Buyer will offer to hire for employment
after the Closing each of Seller's employees then employed in the Business in
their current jobs and at their current level of compensation, it being
understood, however, that (a) as more fully set forth in Section 1.2.5 Buyer is
not assuming any employment, severance or other agreement between Buyer and any
employee and (b) Buyer is under no obligation to retain any employee so hired.
Buyer shall honor all accrued vacation, accrued vacation pay and accrued sick
leave of each such employee hired by Buyer (each employee so hired, an
"Employee") as of the Closing. Buyer shall use commercially reasonable efforts
to provide to each Employee medical and dental coverage (which need not provide
benefits comparable to those provided by Seller, nor cover existing conditions,
nor be subject only to exclusions comparable to those contained in the
coverages offered by Seller) to the extent available at reasonable cost.
Seller shall be solely responsible for any severance payments due and owing by
Seller to any employee of Seller currently employed in the Business who
declines Buyer's offer of employment (but not for any severance payments to any
such employee who accepts, and later terminates, employment with Buyer).
Nothing in this Agreement shall be construed as creating any right of any
employee of Seller to continued employment by Buyer or to any particular terms
of employment, and nothing in this Section 9 shall limit in any way the right
of Buyer to modify at any time the terms of employment of any such employee of
Seller or any of the employment, benefits or severance benefits or policies of
Buyer.
10. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by hand delivery;
overnight courier or certified mail, return receipt requested, postage prepaid,
addressed as follows; or facsimile transmission to the facsimile number set
forth below (or to such other address or facsimile number of which the
respective party shall have notified the other party).
If to Seller, to it at:
Sport Supply Group, Inc.
1901 Diplomat Drive
Farmers Branch, TX 75234
Facsimile: 972-406-3409
Attn: Chief Executive Officer
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Copy to:
Sport Supply Group, Inc.
1901 Diplomat Drive
Farmers Branch, TX 75234
Facsimile: 972-406-3476
Attn: General Counsel
If to Buyer, to it at
Nitro Leisure Products, Inc.
c/o BE Aerospace
1400 Corporate Center Way
Wellington, FL 33414
Facsimile: 561-791-4402
Attn: Amin Khoury
Copy to:
Arthur G. Siler, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Facsimile: 617-951-7050
11. EXPENSES OF TRANSACTION. Whether or not the transactions
provided for herein are consummated, each of the parties hereto will assume and
bear all expenses, costs and fees incurred by such party in connection with the
preparation, negotiation and execution of this Agreement and the other
Transaction Documents.
12. ENTIRE AGREEMENT. The agreement of the parties that is comprised
of this Agreement, the Exhibits and Schedules hereto, the other Transaction
Documents, the Confidentiality Agreement and the other documents referred to
herein sets forth the entire agreement and understanding between the parties
and supersedes any prior written agreement or understanding and any prior or
contemporaneous oral agreement or understating relating to the subject matter
of this Agreement.
13. TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing, by Buyer or Seller by giving written notice to the other party (A) at
any time on or before April 30, 1997 in the event the other party has breached
any representation, warranty, or covenant contained in this Agreement in any
material respect, the non-breaching party has notified the breaching party in
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writing of the breach, and the breach has continued without cure for a period
of 10 days after the notice of breach is given or (B) at any time after April
30, 1997, if the Closing shall not have occurred on or before April 30, 1997
(other than as a result of a breach by the terminating party of its obligations
hereunder); provided, however, that such termination date may be extended by
the parties by mutual consent. If such termination results from such a breach
by any party to this Agreement, such breaching party will be liable for all
damages, costs and expenses sustained or incurred by the other party as a
result of such breach. Nothing herein shall relieve any party from liability
for failure to perform its obligations hereunder.
14. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and permissible assigns of
Seller and Buyer, provided that no assignment shall relieve the assignor of its
obligations hereunder. Prior to the Closing this Agreement and any rights
hereunder shall not be assigned, hypothecated or otherwise transferred by any
party hereto without the prior written consent of the other parties hereto,
which consent shall not unreasonably be withheld.
15. GOVERNING LAW; ARBITRATION. This Agreement shall be governed by
and construed in accordance with the law of the State of Delaware, without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the law of any other jurisdiction; provided, however,
that any dispute relating to the provisions of Section 15.1 hereof shall be
governed by the United States Arbitration Act as then in force.
15.1. Arbitration.
15.1.1. Generally. Except solely as set forth in Sections
7.6, 7.7, 7.8 and 15.1.4 hereof, each dispute, difference, controversy
or claim arising in connection with or related or incidental to, or
question occurring under, this Agreement or the subject matter hereof
brought by any party hereto shall be finally settled under the
Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") in effect at the time of the arbitration, including the
expedited procedures set forth therein, by an arbitral tribunal
composed of three arbitrators, at least two of whom shall be attorneys
experienced in corporate transactions, appointed by agreement of the
parties in accordance with said Rules. In the event the parties fail
to agree upon a panel of arbitrators from the first list of potential
arbitrators proposed by the AAA, the AAA will submit a second list in
accordance with said Rules. In the event the parties shall have
failed to agree upon a full panel of arbitrators from said second
list, any remaining arbitrators to be selected shall be appointed by
the AAA in accordance with said Rules. If, at the time of the
arbitration, the parties agree in writing to submit the dispute to a
single arbitrator, said single arbitrator shall be appointed by
agreement of the parties in accordance with the foregoing procedure,
or, failing such agreement, by the AAA in accordance with said Rules.
The foregoing arbitration proceedings may be
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commenced by any party by notice to the other parties. The decision
of the arbitrators shall be final and binding.
15.1.2. Certain Costs. As part of an award in any proceeding
hereunder, the arbitrator(s) shall have the power to award to any
party to such proceeding all or a portion of the reasonable costs of
such party in connection with the defense or prosecution of a claim
hereunder (including, without limitation, reasonable attorney's fees).
15.1.3. Place of Arbitration. The place of arbitration shall
be Wilmington, Delaware.
15.1.4. Recourse to Courts. The parties hereby exclude any
right of appeal to any court on the merits of the dispute. The
provisions of this Section 15.1 may be enforced in any court having
jurisdiction over the award or any of the parties or any of their
respective assets and judgment on the award (including, without
limitation, equitable remedies) granted in any arbitration hereunder
may be entered in any such court. Nothing contained in this Section
15 shall prevent any party from seeking interim measures of protection
in the form of pre-award attachment of assets or preliminary or
temporary equitable relief.
15.2. Reliance. Each of the parties hereto acknowledges that it has
been informed by the other party that the provisions of this Section 15
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
16. SELLER'S KNOWLEDGE. Whenever a statement regarding the existence
or absence of facts in this Agreement or any agreement or document executed in
connection herewith or contemplated hereby is qualified by a phrase such as
"Seller's knowledge" or "known to Seller" or a variation thereof, it is
intended by the parties that the only information to be attributed to Seller is
information actually known by Peter Blumenfeld or John P. Walker after making
inquiries of Ronald Vanasdale and Marc Gunderson.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes and
all of which together shall constitute one and the same instrument.
18. HEADINGS. The headings contained in this Agreement are inserted
only as a matter of convenience and for reference and in no way define, limit,
or describe the scope or intent of this Agreement.
19. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to give any person or entity, other than the
parties hereto, any legal or equitable
30
<PAGE> 36
right, remedy or claim under or in respect of this Agreement or any provision
contained herein or in any schedule or exhibit attached hereto.
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<PAGE> 37
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed under seal by their respective duly authorized officers as of the day
and year first written above.
NITRO LEISURE PRODUCTS, INC.
By:
------------------------------------
Name:
Title:
SPORT SUPPLY GROUP, INC.
By:
------------------------------------
Name:
Title:
Each of the undersigned hereby
jointly and severally guarantees to
Seller the performance by Buyer of
its obligations under this Agreement.
------------------------------------
Amin J. Khoury
------------------------------------
David A. Lahar
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EXHIBIT 5.1
CONTACT: Eugene I. Davis
(201) 428-2000
FOR IMMEDIATE RELEASE
SPORT SUPPLY GROUP, INC. ANNOUNCES SALE OF REMAINING
DISCONTINUED GOLF BUSINESS. PROCEEDS
TO BE USED TO SUBSTANTIALLY REDUCE DEBT
DALLAS, TEXAS, MARCH 31, 1997 -- Sport Supply Group, Inc. (NYSE-GYM) reported
that it completed the sale of the remaining assets of its discontinued golf-
related operations on March 28, 1997. The Company sold the assets to a group
consisting of the current management of the golf division and certain outside
investors. The proceeds from the sale were used to reduce the Company's senior
indebtedness by approximately 45%.
Geoffrey P. Jurick, the Company's Chairman of the Board and Chief
Executive Officer, stated, "The sale of the Company's golf-related business
will improve the Company's liquidity and allow management to refocus all of its
time and attention on the Company's core business. I believe that the sale of
the golf business will mark a significant turning point in the Company's future
and should enable investors to better measure the Company's performance and
progress in the coming fiscal periods."
SPORT SUPPLY GROUP, INC., a publicly-held company since 1991, is headquartered
in Dallas, Texas and is considered the leading direct mail marketer of sporting
goods and equipment to the institutional market. The Company serves primarily
schools, colleges, universities, government agencies, camps and youth
organizations. It markets its products through specifically targeted direct
mail catalogs.
