SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): August 9, 1996
STARTER CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11812 06-0872266
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
370 James Street, New Haven, Connecticut 06513
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 781-4000
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Item 2. Acquisition or Disposition of Assets.
On August 9, 1996, Starter Galt, Inc. (the "Buyer"), a wholly-owned
subsidiary of Starter Corporation (the "Registrant"), purchased substantially
all of the assets of Galt Sand Company and its wholly-owned subsidiaries, Galt
Shop Company, Danaggers Company and Galt Sand Canada, Inc. (collectively, the
"Sellers"). In consideration for the sale and delivery of the purchased assets,
the Buyer paid to the Sellers $8,000,000 in common stock of the Registrant, $.01
par value per share, and assumed approximately $18,000,000 of the Sellers'
liabilities. The assumption of a portion of the liabilities was funded by a
loan from First Union Bank of Connecticut in the amount of $13,000,000.
The Sellers conduct a wholesale apparel business and are engaged in
the operation of certain factory outlet stores. The Buyer intends to continue
the existing operations of the Sellers without any material changes.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
7(a) Financial Statements of Businesses Acquired.
It is impracticable to file the financial statements required by Item
7(a) with the initial filing of this Report on Form 8-K. Such
financial statements will be filed by amendment to this Report as soon
as practicable and within 60 days after the required filing date for
this Report.
7(b) Pro Forma Financial Information.
It is impracticable to file the pro forma financial information
required by Item 7(b) with the initial filing of this Report on Form
8-K. Such pro forma financial information will be filed by amendment
to this Report as soon as practicable and within 60 days after the
required filing date for this Report.
7(c) Exhibits.
The following exhibits are included as part of this Report:
2.1 Asset Purchase and Sale Agreement, dated July 31, 1996, by and
among Starter Galt, Inc., Galt Sand Company, Galt Shop Company,
Galt Sand Canada, Inc., Danaggers Company and the Shareholders
named therein.
2.2 Registration Rights Agreement, dated as of August 9, 1996, by and
among the Registrant, Galt Sand Company, Galt Shop Company, Galt
Sand Canada, Inc. and Danaggers Company.
99.1 Press release of the Registrant, dated August 19, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STARTER CORPORATION
Date: August 21, 1996 By:/s/ Lawrence C. Longo, Jr.
------------------------------------------
Lawrence C. Longo, Jr.
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Asset Purchase and Sale Agreement, dated July 31, 1996, by and
among Starter Galt, Inc., Galt Sand Company, Galt Shop Company,
Galt Sand Canada, Inc., Danaggers Company and the Shareholders
named therein.
2.2 Registration Rights Agreement, dated as of August 9, 1996, by and
among the Registrant, Galt Sand Company, Galt Shop Company, Galt
Sand Canada, Inc. and Danaggers Company.
99.1 Press Release of the Registrant, dated August 19, 1996.
EXHIBIT 2.1
[EXECUTION COPY]
ASSET PURCHASE AND SALE AGREEMENT
dated July 31, 1996
by and among
STARTER GALT, INC.,
as Buyer,
GALT SAND COMPANY,
GALT SHOP COMPANY,
GALT SAND CANADA, INC.
and
DANAGGERS COMPANY
as Sellers
and
THE SHAREHOLDERS NAMED HEREIN
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TABLE OF CONTENTS
Page
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RECITALS................................................................... 1
ARTICLE 1 -- PURCHASE AND SALE OF ASSETS; CLOSING; RELATED AGREEMENTS...... 1
1.1 Closing........................................................ 1
1.2 Sale and Purchase.............................................. 1
1.3 Excluded Assets................................................ 2
1.4 Consideration.................................................. 2
1.5 Payment in Shares.............................................. 3
1.6 Escrow......................................................... 3
1.8 Recording of Documents......................................... 3
1.9 Adjustments to Purchase Price.................................. 4
1.10 Contracts...................................................... 5
1.11 Passage of Title at Closing.................................... 5
ARTICLE 2-- REPRESENTATIONS AND WARRANTIES REGARDING BUYER................. 6
2.1 Organization................................................... 6
2.2 Authorization.................................................. 6
2.3 No Breach...................................................... 6
2.4 Starter Shares; Additional Shares.............................. 6
2.5 Brokers........................................................ 7
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES REGARDING SELLERS AND THE
BUSINESS............................................................. 7
3.1 Organization................................................... 7
3.2 Stock Ownership................................................ 7
3.3 Authorization.................................................. 7
3.4 No Breach...................................................... 8
3.5 Consents....................................................... 8
3.6 Financial Statements........................................... 8
3.7 Tax Matters.................................................... 9
3.8 Real Property.................................................. 9
3.9 Owned Personal Property........................................ 10
3.10 Title to Owned Properties...................................... 11
3.11 Bank Accounts; Powers of Attorney.............................. 11
3.12 Employees...................................................... 11
3.13 Contracts; Leases; Licenses.................................... 11
3.14 Permits; Licenses.............................................. 12
3.15 Proprietary Rights............................................. 12
3.16 Employee Benefit Plans; Labor Matters.......................... 13
3.17 Business Operations; Changes................................... 15
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3.18 Compliance with Laws........................................... 16
3.19 Litigation; Claims; Proceedings................................ 16
3.20 Environmental Conditions....................................... 16
3.21 Liabilities.................................................... 19
3.22 Insurance...................................................... 19
3.23 Customers and Suppliers........................................ 20
3.24 Sales; Accounts Receivable..................................... 20
3.25 Full Disclosure................................................ 20
3.26 Brokers........................................................ 20
3.27 Investment..................................................... 21
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SHAREHOLDERS.. 21
4.1 Investment..................................................... 21
4.2 Authorization.................................................. 22
4.3 No Breach...................................................... 22
4.4 Ownership of Galt Sand......................................... 22
ARTICLE 5 -- PRE-CLOSING COVENANTS......................................... 22
5.1 General........................................................ 22
5.2 Conduct of Business Prior to Closing........................... 22
5.3 Notice of Developments......................................... 23
5.4 Exclusivity.................................................... 23
5.5 Access, Information and Documents.............................. 24
5.6 Transactions in Starter's Common Stock......................... 24
ARTICLE 6 -- CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................. 24
ARTICLE 7 -- CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS................ 26
ARTICLE 8 -- OTHER CLOSING CONDITIONS...................................... 27
ARTICLE 9 -- POST-CLOSING COVENANTS; OTHER AGREEMENTS...................... 27
9.1 Transfer Taxes and Other Costs................................. 27
9.2 Accounts Receivable............................................ 28
9.3 Bulk Sales Compliance.......................................... 28
9.4 Corporate Name................................................. 28
9.5 Confidentiality................................................ 29
9.6 Remedies for Breach of Restrictive Covenants................... 30
9.7 Scheduled Licenses; Renewals................................... 30
9.8 Dissolution of Sellers......................................... 30
9.9 Consents....................................................... 30
9.10 Set-Off........................................................ 30
9.11 Continuity of Business Enterprise.............................. 30
9.12 Final Tax Return............................................... 31
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ARTICLE 10 -- SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION................. 31
10.1 Survival of Representations of Buyer........................... 31
10.2 Survival of Representations of Sellers and Shareholders........ 31
10.3 Indemnification by Buyer....................................... 31
10.4 Indemnification by Sellers and Shareholders.................... 32
10.5 Indemnification Procedure...................................... 32
10.6 Limitation on Indemnity........................................ 33
ARTICLE 11 -- TERMINATION.................................................. 34
11.1 Termination by Buyer........................................... 34
11.2 Termination by Sellers......................................... 34
11.3 Effect of Termination.......................................... 34
ARTICLE 12 -- PUBLICITY.................................................... 35
ARTICLE 13 -- NOTICES...................................................... 35
ARTICLE 14 -- BROKERAGE FEES; CERTAIN EXPENSES............................. 36
14.1 Brokerage Fee.................................................. 36
14.2 Certain Expenses............................................... 37
ARTICLE 15 -- GOVERNING LAW; FORUM......................................... 37
ARTICLE 16 -- BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES........ 37
ARTICLE 17 -- ENTIRE AGREEMENT............................................. 37
ARTICLE 18 -- FURTHER ASSURANCES........................................... 37
ARTICLE 19 -- AMENDMENTS................................................... 38
ARTICLE 20 -- WAIVERS...................................................... 38
ARTICLE 21 -- HEADINGS..................................................... 38
ARTICLE 22 -- SEVERABILITY................................................. 38
ARTICLE 23 -- RIGHTS AND REMEDIES.......................................... 39
ARTICLE 24 -- CERTAIN DEFINITIONS.......................................... 39
ARTICLE 25 -- COUNTERPARTS................................................. 39
ARTICLE 26 -- ATTORNEY-IN-FACT............................................. 39
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EXHIBITS:
Exhibit A -- Form of Bill of Sale
Exhibit B -- Form of Assignment and Assumption Agreement
Exhibit C -- Form of Secretary's Certificate (Sellers)
Exhibit D -- Form of Officer's Certificate (Sellers)
Exhibit E -- Form of Sellers' Counsel Opinion
Exhibit F -- Form of Lock Up Agreement
Exhibit G -- Form of Certificate of Shareholders
Exhibit H -- Form of Officer's Certificate (Buyer)
Exhibit I -- Form of Buyer's Counsel Opinion
Exhibit J -- Form of Secretary's Certificate (Buyer)
SCHEDULES:
Schedule 1 -- Shareholders
Schedule 1.2 -- Permitted Liens
Schedule 1.2(a) -- Real Property
Schedule 1.2(b) -- Proprietary Rights
Schedule 1.2(e) -- Personal Property
Schedule 1.2(f) -- Contracts
Schedule 1.2(g) -- Governmental Licenses, Permits and Authorizations
Schedule 1.2(h) -- Pending Contract Bids and Quotations
Schedule 1.2(j) -- Telephone Numbers, Website and/or Internet Address and
Accounts
Schedule 1.3 -- Excluded Assets
Schedule 1.5 -- Registration of Starter Shares
Schedule 1.7(a) -- Projected Closing Date Balance Sheet
Schedule 1.7(b) -- Retained Liabilities
Schedule 1.9 -- Projected Year End Stockholders Equity
Schedule 3.2 -- Stock Ownership of Galt Sand; Equity Investment of Sellers
Schedule 3.5 -- Third Party Consents
Schedule 3.6(a) -- Audited Financial Statements
Schedule 3.6(d) -- Uncollectible Accounts Receivable
Schedule 3.7 -- Certain Tax Matters
Schedule 3.8(b) -- Real Property -- Claims, Litigation and Proceedings since
January 1, 1996; Final Orders, Judgments and Stipulations;
Pending and Threatened Claims, Litigations and Proceedings
Schedule 3.9 -- Personal Property Not Reflected in Financial Statements
Schedule 3.11 -- Bank Accounts; Powers of Attorney
Schedule 3.12 -- New Hires and Wage Increases On or After May 1, 1996
Schedule 3.13(b) -- Certain Contract Matters
Schedule 3.14 -- Certain Governmental Licenses, Permits and Authorizations
Matters
Schedule 3.15 -- Certain Proprietary Rights Matters
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Schedule 3.16(a) -- Labor Agreements and Other Matters
Schedule 3.16(b) -- Employee Benefit Plans
Schedule 3.16(e) -- Taxes or Penalties Relating to Employee Benefit Plans
Schedule 3.16(h) -- Terminations or "Reportable Events" relating to Employee
Benefit Plans
Schedule 3.17 -- Changes in Business Operations since December 31, 1995
Schedule 3.18 -- Defaults Under or Violations of Law
Schedule 3.19 -- Litigation; Claims; Proceedings
Schedule 3.20 -- Certain Environmental Matters
Schedule 3.21 -- Liabilities Incurred After December 31, 1995
Schedule 3.22 -- Insurance
Schedule 3.23 -- Certain Matters Regarding Customers and Suppliers
Schedule 3.24(a) -- Certain Sales Matters
Schedule 6(n) -- Material Third Party Consents
Schedule 9.7 -- License Renewals
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ASSET PURCHASE AND SALE AGREEMENT dated July 31, 1996 by and among Starter
Galt, Inc., a Delaware corporation ("Buyer"), Galt Sand Company, an Iowa
corporation ("Galt Sand"), Galt Shop Company, an Iowa corporation ("Galt Shop"),
Galt Sand Canada, Inc. ("Galt Canada"), Danaggers Company, an Iowa corporation
("Danaggers", and together with Galt Sand, Galt Shop and Galt Canada, "Sellers,"
and each, individually, a "Seller"), and the shareholders listed on Schedule 1
attached hereto (collectively, "Shareholders," and each, individually, a
"Shareholder").
W I T N E S S E T H:
WHEREAS, Sellers conduct a wholesale apparel business and are engaged in
the operation of certain factory outlet stores (the "Business"); and
WHEREAS, Galt Shop, Galt Canada and Danaggers are wholly-owned subsidiaries
of Galt Sand; and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, substantially all the assets of Sellers on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer, Sellers and Shareholders (collectively, the "Parties" and,
sometimes individually, a "Party"), intending to be legally bound, hereby agree
as follows:
ARTICLE 1 -- PURCHASE AND SALE OF ASSETS; CLOSING; RELATED AGREEMENTS
1.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Sellers as soon as practicable
after fulfillment of all conditions to Closing set forth herein, including
without limitation, expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act")
(the "Closing Date").
1.2 Sale and Purchase. Subject to the terms and conditions set forth
herein, and except for the Excluded Assets (as defined herein), at the Closing,
Sellers shall sell, assign and deliver to Buyer, and Buyer shall purchase and
accept from Sellers, free and clear of all liens, claims and encumbrances,
except those liens, claims and encumbrances listed and described on Schedule 1.2
attached hereto (the "Permitted Liens"), all of Sellers' right, title and
interest in and to substantially all the assets, properties, rights and business
of Sellers as they shall exist on the date hereof of every kind and nature owned
or held by Sellers or in which Sellers have an interest on the Closing Date,
known or unknown, fixed or unfixed, choate or inchoate, accrued, absolute,
contingent or otherwise, whether or not specifically referred to in this
Agreement, including, but not limited to the following assets and rights
(collectively, the "Purchased Assets"):
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(a) all real property which is owned by or leased to Sellers and
listed on Schedule 1.2(a) attached hereto, including all buildings, improvements
and structures located thereon and all appurtenances belonging thereto;
(b) all trademarks, trade names, service marks, logos, styles, names,
copyrights, designs and illustrations owned, used or held for use by Sellers,
all derivations thereof, if any, and all registrations and registration
applications related thereto, a complete list of which is set forth on Schedule
1.2(b) attached hereto, together with any associated good will and any additions
thereto between the date hereof and the Closing Date (collectively, the
"Proprietary Rights");
(c) all accounts receivable, notes receivable, retainage receivables,
income tax refunds, if any, and other rights to payment of Sellers;
(d) all inventories of Sellers of any kind;
(e) all items of personal property including the transportation
vehicles listed on Schedule 1.2(e) attached hereto;
(f) all of the right, title and interest of Sellers in, to and under
all pending and executory contracts, agreements, commitments and understandings,
all of which are listed in Schedule 1.2(f) attached hereto (collectively, the
"Contracts");
(g) to the extent assignable, all governmental licenses, permits and
authorizations, if any, related to the Business, a complete list of which is set
forth on Schedule 1.2(g) attached hereto;
(h) all pending contract bids and quotations of Sellers made in the
ordinary course of Sellers' business, a complete list of which is included in
Schedule 1.2(h) attached hereto;
(i) all of Sellers' cash and short-term investments; and
(j) Sellers' telephone numbers, website and/or Internet addresses and
accounts, all of which are listed on Schedule 1.2(j) attached hereto.
1.3 Excluded Assets. The Purchased Assets shall not include the assets,
rights and contracts listed on Schedule 1.3 attached hereto (collectively, the
"Excluded Assets").
1.4 Consideration. In consideration for the sale, assignment and delivery
of the Purchased Assets under this Agreement, Buyer shall pay to Sellers a
purchase price, subject to adjustment as provided in Article 1.9 hereof, equal
to $8,000,000 which shall be payable as set forth in Article 1.5 (the "Purchase
Price"), and Buyer shall assume the Assumed Liabilities (as defined herein).
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1.5 Payment in Shares. Buyer shall pay Sellers the Purchase Price by
causing to be issued and delivered to the Sellers at the Closing, free and clear
of all liens, claims and encumbrances, 1,066,666.67 shares (subject to
adjustment as provided in Article 1.9 hereof) of the common stock, $.01 par
value per share ("Common Stock"), of Starter Corporation (the parent corporation
of the Buyer) ("Starter"), which shares had a market value of $8,000,000 as
determined based upon the closing price per share of Starter's Common Stock as
quoted on The New York Stock Exchange, Inc. on July 25, 1996 of $7.50 per share
(the "Market Price") (such shares, the "Starter Shares"). The Starter Shares
shall be registered in the names and in the denominations as instructed by
Sellers as set forth on Schedule 1.5 attached hereto.
1.6 Escrow. There shall be placed in escrow with Bank of Boston (the
"Escrow Agent"), 20% of the Starter Shares to be issued to Sellers at the
Closing as part of the consideration for the Purchased Assets (the "Escrow
Shares"). The Escrow Shares shall be delivered by Sellers to the Escrow Agent at
the Closing and shall be held and delivered by the Escrow Agent in accordance
with the terms and provisions of the Escrow Agreement in form and substance
mutually acceptable to Buyer and Sellers (the "Escrow Agreement") which Escrow
Agreement Buyer, Sellers and the Escrow Agent shall execute and deliver at the
Closing. The Escrow Shares shall be subject to Buyer's right of set-off pursuant
to Article 9.10.
1.7 Assignment of Certain Contractual Rights; Assumption of Certain
Liabilities.
(a) Unless included as Retained Liabilities (as defined herein), Buyer
hereby assumes and agrees to perform and discharge the following liabilities and
obligations of Sellers (collectively, the "Assumed Liabilities"):
(i) Sellers' liabilities which are included on Sellers' unaudited
projected consolidated balance sheet dated as of July 31, 1996,
previously delivered to Buyer, a copy of which is attached hereto as
Schedule 1.7(a) (the "Projected Closing Date Balance Sheet") and such
other liabilities which shall arise in the ordinary course of business
from August 1, 1996 through the Closing Date; and
(ii) all liabilities and obligations under the Contracts listed
on Schedule 1.2(f).
(b) Buyer shall not assume any other liabilities or obligations of
Sellers, whether known, unknown, contingent, disclosed or undisclosed, including
but not limited to those set forth in Schedule 1.7(b) attached hereto
(collectively, the "Retained Liabilities").
1.8 Recording of Documents. Buyer shall be responsible for the filing or
recording of such assignments, instruments or documents delivered by Sellers
hereunder as
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may be necessary to perfect Buyer's right, title or interest in or to any of the
Purchased Assets.
1.9 Adjustments to Purchase Price. (a) The Purchase Price payable hereunder
shall be subject to adjustment in accordance with this Article 1.9 and Articles
9.1(a) and 9.12.
(b) Sellers have delivered to Buyer the Projected Closing Date Balance
Sheet which sets forth the projected consolidated stockholders equity of Sellers
as of such date (the "Projected Stockholders Equity"). Promptly following the
Closing, Sellers shall conduct a final audit of Sellers' consolidated balance
sheet as of July 31, 1996 (the "Audited Closing Date Balance Sheet"). Within 60
days after the Closing, Sellers shall deliver to Buyer a copy of the Audited
Closing Date Balance Sheet (together with the auditors work papers with respect
to such audit) and a written statement which shall set forth (i) the audited
consolidated stockholders equity of Sellers as of July 31, 1996 (the "Audited
Stockholders Equity") and (ii) the difference between the Projected Stockholders
Equity and the Audited Stockholders Equity. In the event the Audited
Stockholders Equity exceeds the Projected Stockholders Equity, there shall be no
adjustment to the Purchase Price. In the event the Audited Stockholders Equity
is less than the Projected Stockholders Equity (the "Difference") and such
Difference is greater than 5% of the Projected Stockholders Equity (the
"Threshold"), the Purchase Price shall be reduced by an amount equal to the
total amount of such difference (the "Adjustment Amount"); provided, however,
any difference between the Projected Stockholders Equity and the Audited
Stockholders Equity related to the establishment of a valuation allowance on
deferred tax assets shall be added back to Audited Stockholders Equity in
determining the Adjustment Amount. Such adjustment to the Purchase Price shall
be made by cancellation of that number of Starter Shares held pursuant to the
Escrow Agreement as shall have a value (based upon the Market Price), equal to
the Adjustment Amount.
Sellers shall have the right to dispute in good faith the Adjustment Amount
so long as Sellers give written notice to such effect to Buyer within 20 days
after delivery of such statement to Buyer. If Sellers do not give such a notice
within such time period, the Adjustment Amount shall be final and binding. Upon
receipt of such a notice, Buyer and Sellers shall submit such dispute to Price
Waterhouse which shall review the Audited Closing Date Balance Sheet and resolve
such dispute, and make a final determination of the Sellers' consolidated
stockholders equity as of the Closing and any required adjustments to the
Purchase Price in accordance with this Article 1.9, which shall be final and
binding upon the Parties. The cost of such review shall be borne equally by
Sellers and Buyers.
The cost of the audit pursuant to this Article 1.9(b) and the cost of the
review of Price Waterhouse pursuant to this Article 1.9(b) shall be borne by
Buyer but only if and to the extent that the cost of the audit and one-half of
the cost of the review of Price Waterhouse, when taken together with the
Difference, the Excess Motor Vehicle Tax (as defined in Article 9.1(a)) and the
Excess Tax Return Cost (as defined in Article 9.12), does not exceed the
Threshold. If such cost, when taken together with the Difference, the Excess
Motor Vehicle Tax and the Excess Tax Return Cost, exceeds the Threshold, the
excess (the
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"Excess Audit Amount") shall be paid by the Seller by reducing the Purchase
Price by cancellation of that number of Starter Shares held pursuant to the
Escrow Agreement as shall have a value (based upon the Market Price) equal to
the Excess Audit Amount.
(c) Sellers have delivered to Buyer certain projections for the fiscal
year ending December 31, 1996, a copy of which is set forth in Schedule 1.9
attached hereto which sets forth the projected consolidated stockholders equity
of Sellers as of December 31, 1996 ("Projected Year End Stockholders Equity").
Promptly after the end of the fiscal year ending December 31, 1996, Von Elbert
or his designated agent or successor ("Elbert") shall deliver to the chief
financial officer of Starter ("Starter CFO"), the financial statements of Buyer
for the year ending December 31, 1996 which shall be prepared in accordance with
generally accepted accounting principles ("GAAP") (except that such financial
statements shall be prepared based upon the assumption that the Purchased Assets
were transferred to Buyer on July 31, 1996) and shall set forth the stockholders
equity of Buyer for that period ("Year End Financial Statements"). Starter CFO
shall review the Year End Financial Statements and shall make any adjustments
thereto as are deemed necessary or advisable and which shall be made in
accordance with GAAP. Such adjustments shall be presented by Starter CFO to
Elbert. To the extent Elbert disagrees with such adjustments and Starter CFO and
Elbert are unable to resolve such disagreements within five (5) days of receipt
by Elbert of such adjustments, such adjustments will be presented to Ernst &
Young LLP for resolution whose determination with respect thereto shall be final
and binding on the Parties.
If the stockholders equity as stated on the Year End Financial Statements
(as may be adjusted as hereinbefore provided) equals or exceeds the Projected
Year End Stockholders Equity, the Purchase Price shall be increased by an amount
equal to $500,000 which shall be paid to Sellers by causing to be issued and
delivered to Sellers, as soon as practicable thereafter, free and clear of all
liens, claims or encumbrances, that number of shares of Starter's Common Stock
as shall have a value of $500,000 (as determined based upon the Market Price)
(the "Additional Starter Shares").
1.10 Contracts. This Agreement shall not constitute an agreement to assign
or sublicense, as the case may be, any contracts, leases, licenses, agreements,
bids, quotations or arrangements (for purposes of this Article 1.10,
collectively referred to as the "contracts"), if such attempted assignment or
sublicense, without the consent of the other party thereto, is not permitted as
a matter of law or in accordance with the terms of the contracts or would
constitute a breach of the contracts or would in any way impair the rights of
Sellers or Buyer thereunder. Sellers will use their best efforts to obtain, and
will assist Buyer in obtaining, such consents as may be necessary or appropriate
to vest in Buyer all of Sellers' right, title and interest in all such contracts
in accordance with this Agreement. If such consent is not obtained or if an
assignment, attempted assignment or sublicense is not so permitted or would be
ineffective or would impair Buyer's rights thereunder, Sellers will, at no
material cost to Sellers, cooperate with Buyer in any arrangement reasonably
satisfactory to Buyer designed to provide for Buyer the benefits under any such
contracts.
1.11 Passage of Title at Closing. Upon delivery of the instruments of sale,
conveyance, assignment, transfer and delivery, title to the Purchased Assets
shall pass to
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Buyer at the Closing. At the Closing, Sellers will put Buyer in full, complete
and quiet possession and enjoyment of all of the Purchased Assets and from and
after the Closing the ownership and operation of the Purchased Assets and the
Business of Sellers to be sold to Buyer pursuant to this Agreement shall be for
the account and risk of Buyer. Buyer shall be under no liability for any debt,
liability or obligation of Sellers incurred after the Closing or arising out of
any transaction by Sellers or any event occurring with respect to Sellers after
the Closing.
ARTICLE 2 -- REPRESENTATIONS AND WARRANTIES REGARDING BUYER
Buyer hereby represents and warrants to Sellers as follows:
2.1 Organization. Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware. Buyer has all corporate power
and authority necessary to (i) execute, deliver and perform its obligations
under this Agreement and the other agreements contemplated hereby to which Buyer
will be a party (the "Related Buyer Agreements") and (ii) consummate the
transactions contemplated hereby and thereby.
2.2 Authorization. The execution and delivery by Buyer of this Agreement
and the Related Buyer Agreements, the performance by Buyer of its obligations
hereunder and thereunder and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate actions on the part of Buyer. This Agreement and the Related Buyer
Agreements constitute legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
2.3 No Breach. The execution and delivery by Buyer of this Agreement and
the Related Buyer Agreements, the performance by Buyer of its obligations
hereunder and thereunder and the consummation by Buyer of the transactions
contemplated hereby and thereby will not (a) conflict with, result in any
violation of or constitute a default under the Certificate of Incorporation of
Buyer or the By-Laws of Buyer, in each case as amended to date, or (b)
constitute a default under, result in a violation or breach of, result in the
cancellation or termination of, accelerate the performance required under or
result in the creation of any lien, claim or encumbrance upon any of the
material properties of Buyer pursuant to any material mortgage, guaranty, deed
of trust, note, indenture, bond, lease, agreement or other instrument to which
Buyer is a party or by which any of such properties is bound.
2.4 Starter Shares; Additional Shares. (a) Upon consummation of the
Closing, the Starter Shares shall have been duly authorized and validly issued,
shall be outstanding, fully paid and non-assessable and title thereto shall pass
to Sellers free and clear of all preemptive rights, liens, claims and
encumbrances, except as otherwise created by this Agreement or the Escrow
Agreement.
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(b) The Additional Starter Shares, if required to be issued pursuant
to Article 1.9, upon such issuance and delivery, shall be duly authorized and
validly issued, shall be outstanding, fully paid and non-assessable and title
thereto shall pass to Sellers free and clear of all preemptive rights, liens,
claims and encumbrances, except as otherwise created by this Agreement.
2.5 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Buyer directly with
Sellers and the Shareholders and without the intervention of any other person
and in such manner as not to give rise to any valid claim against any of the
Parties for any finder's fee, brokerage commission or like payment.
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES REGARDING SELLERS AND THE BUSINESS
Each Seller, jointly and severally, hereby represents and warrants to Buyer
as follows:
3.1 Organization. Each of Galt Sand, Galt Company and Danaggers is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Iowa. Galt Canada is a corporation duly organized, validly
existing and in good standing under the laws of the Province of Ontario, Canada.
Each Seller has all corporate power and authority necessary to (i) execute,
deliver and perform its obligations under this Agreement and the other
agreements contemplated hereby to which either Seller will be a party (the
"Related Seller Agreements); (ii) consummate the transactions contemplated
hereby and thereby; (iii) own, lease or use the Purchased Assets and properties
owned, leased or used by it; and (iv) conduct the Business as presently
conducted by it. As of the date hereof, except as set forth on Schedule 3.1
attached hereto, each Seller is duly qualified or licensed and in good standing
as a foreign corporation authorized to do business under the laws of all
jurisdictions in which the ownership of its assets or the conduct of its
Business require it to be so qualified or licensed. As of the Closing Date, each
Seller shall be duly qualified or licensed and in good standing as a foreign
corporation authorized to do business under the laws of all jurisdictions in
which the ownership of its assets or the conduct of its Business require it to
be so qualified or licensed.
3.2 Stock Ownership; Subsidiaries. The Shareholders own all of the issued
and outstanding shares of capital stock of Galt Sand as set forth on Schedule
3.2. Galt Sand owns all of the issued and outstanding shares of capital stock of
Galt Shop, Galt Canada and Danaggers. Galt Sand has no subsidiaries other than
Galt Shop, Galt Canada and Danaggers. Galt Shop, Galt Canada and Danaggers have
no subsidiaries. There exists no contract, agreement or arrangement for the
issue or sale of any additional shares of stock of Sellers and no option is
outstanding for the purchase of any stock of Sellers, except as set forth on
Schedule 3.2 attached hereto. Schedule 3.2 attached hereto sets forth details of
every equity or similar investment of Sellers, direct or indirect, in any
corporation, partnership, association, joint venture or other entity. Except as
described in Schedule 3.2, no such investment is
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subject to any restriction (contractual, statutory or otherwise) which would
impair Sellers' ability to dispose of any such investment at any time, and all
of such investments are owned free and clear of any lien, claim, charge, pledge,
security interest, option or other legal or equitable encumbrance.
3.3 Authorization. The execution and delivery by Sellers of this Agreement
and the Related Seller Agreements, the performance by Sellers of their
respective obligations hereunder and thereunder and the consummation by Sellers
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Sellers. This Agreement and the
Related Seller Agreements constitute the legal, valid and binding obligations of
Sellers, enforceable against them in accordance with their respective terms,
except insofar as enforceability may be limited by bankruptcy, moratorium or
other laws which may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
3.4 No Breach. The execution and delivery by Sellers of this Agreement and
the Related Seller Agreements, the performance by Sellers of their respective
obligations hereunder and thereunder and the consummation by Sellers of the
transactions contemplated hereby and thereby will not (a) conflict with, result
in any violation of or constitute a default under their respective Certificate
of Incorporation or the By-Laws, in each case as amended to date, (b) except as
set forth on Schedule 3.5 attached hereto (to the extent the consents disclosed
thereon have not been obtained on or before the Closing Date), constitute a
default under, result in a violation or breach of, result in the cancellation or
termination of, accelerate the performance required under or result in the
creation of any lien, claim or encumbrance upon any of the properties of
Sellers, pursuant to any Contract, mortgage, guaranty, deed of trust, note,
indenture, bond, lease, agreement or other instrument to which Sellers are a
party or by which any of their respective properties are bound or (c) result in
a violation of or conflict with any law, ordinance, rule, regulation, order,
writ, judgment, award, edict or decree applicable to Sellers, any of such
properties or the Business.
3.5 Consents. Except as set forth in Schedule 3.5 attached hereto, no
consent, approval, exemption or authorization is required to be obtained from,
no notice is required to be given to and no filing is required to be made with
any third party (including, without limitation, governmental and
quasi-governmental agencies, authorities and instrumentalities of competent
jurisdiction) by Sellers, (a) in order for this Agreement or the Related Seller
Agreements to constitute legal, valid and binding obligations of Sellers or to
authorize or permit the consummation by Sellers of the transactions contemplated
hereby and thereby or (b) under or pursuant to any governmental or
quasi-governmental permits, licenses, consents, authorizations or approvals held
by or issued to Sellers (including, without limitation, environmental, health,
safety and operating permits and licenses) by reason of this Agreement or the
consummation of the transactions contemplated hereby.
3.6 Financial Statements.
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(a) Schedule 3.6(a) attached hereto sets forth a complete and accurate
copy of the audited consolidated financial statements of Sellers for the fiscal
years ended December 31, 1994 and 1995, including the report of Deloitte &
Touche LLP, Sellers' certified public accountants, thereon and the notes thereto
(collectively, the "Audited Financial Statements"). The Audited Financial
Statements present fairly the consolidated financial position and stockholders
equity of Sellers at such dates and the consolidated results of operations and
cash flows of Sellers for the fiscal years then ended in accordance with GAAP.
(b) Schedule 1.7(a) attached hereto sets forth a complete and accurate
copy of the Projected Closing Date Balance Sheet for the seven-month period
ended July 31, 1996 (together with the Audited Financial Statements, the
"Financial Statements"). The Projected Closing Date Balance Sheet was prepared
in accordance with GAAP consistently applied with those in the Audited Financial
Statements and present fairly the projected consolidated financial position and
stockholders equity of Sellers as of July 31, 1996 and the projected
consolidated results of operations of Sellers for that period.
(c) All books and records of Sellers are accurate and complete, have
been maintained in the normal course of business and accurately reflect the
business, transactions and operations of Sellers.
(d) Except as set forth in Schedule 3.6(d) attached hereto, no
uncollectible accounts receivable are reflected in such Financial Statements
without adequate reserve for uncollectible amounts. Inventories reflected on
such Financial Statements represent only good and marketable items priced at the
lower of cost or market values with adequate provision for obsolescence,
shrinkage, excess quantities, defective materials and deterioration. The
Financial Statements set forth all material liabilities that should properly be
reflected or reserved for in a financial statement prepared in accordance with
GAAP.
3.7 Tax Matters. All foreign, federal, state and local income, sales, use,
property, franchise, privilege, employment (including, without limitation,
social security) and other tax returns, reports, estimates and information
statements for Sellers have been timely filed for all years and periods for
which such returns, reports, estimates and information statements were due
(taking into account all filing date extensions), all such returns, reports,
estimates and information statements are true, complete and correct and all
taxes shown thereon to be due and payable have been paid. Except as set forth on
Schedule 3.7 attached hereto, there are no tax obligations of Sellers which
constitute, or may in the future constitute, a lien on the Purchased Assets,
and, if any such lien exists or arises, it will be promptly discharged by
Sellers.
3.8 Real Property; Leased Property. (a) Sellers do not own any real
property.
(b) Schedule 1.2(a) accurately sets forth: (i) a description all of
the real property which is leased to Sellers (the "Leased Property"); (ii) all
of the leases and subleases pertaining to Leased Property; (iii) all of the
easements, rights of way, covenants,
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restrictions and other rights and interests which pertain to Leased Property and
any leasehold improvement located on a Leased Property ("Leasehold
Improvement"); and (iv) all suits, actions, proceedings, investigations and
written claims since January 1, 1996 and all final orders, judgments and
stipulations of any court of competent jurisdiction presently outstanding which
pertain to the Leased Property or Leasehold Improvement.
(c) Except as set forth in Schedule 3.8(b) attached hereto, with
respect to the leases for the Leased Property: (i) each lease has been validly
executed and delivered by the parties thereto and is in full force and effect;
(ii) neither the Sellers nor any other party to the lease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration under the lease; (iii) the lease will continue to be binding in
accordance with its terms following the Closing; (iv) no party to the lease has
repudiated any provision thereof; (v) there are no disputes, oral agreements or
delayed payment programs in effect as to the lease; and (vi) all facilities
leased thereunder have been approved by all necessary governmental authorities,
have been maintained in accordance with normal industry practice and are in good
condition and repair and suitable for the purposes for which they are being
used.
(d) To the knowledge of Sellers, there are no (i) pending or
threatened condemnation or eminent domain proceedings relating to the Leased
Property; (ii) pending or threatened litigation or administrative actions
relating to the Leased Property; or (ii) other matters affecting materially and
adversely the current use or occupancy thereof.
(e) The Leased Property complies, in all material respects, with
applicable laws, rules, regulations and ordinances to which the Leased Property
or its use is subject.
(f) All facilities used by Sellers and located on the Leased Property
and all Leasehold Improvements have received all material approvals of
governmental authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules and regulations.
(g) Except as set forth in Schedule 1.2(a) attached hereto, there are
no subleases, licenses, concessions or other agreements, written or oral,
granting to any party or parties the right of use or occupancy of any portion of
the Leased Property.
(h) Sellers enjoy peaceful and undisturbed possession of the Leased
Property.
(i) Except Sellers, there are no parties in possession of the Leased
Property.
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(j) All facilities located on the Leased Property are supplied with
utilities and other services necessary for Sellers' operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate.
(k) Each building or fixture used by Sellers and located on a Leased
Property is in good operating condition and repair (and with regard to each
building, is structurally sound, and with regard to mechanical systems, are in
good repair), subject to normal wear and tear, in compliance with zoning,
building and fire codes.
3.9 Owned Personal Property. Except as set forth in Schedule 3.9 attached
hereto and except for properties sold, transferred or otherwise disposed of by
Sellers in the ordinary course of business since December 31, 1995, all of
Sellers' tangible personal property (including, without limitation, plants,
leasehold improvements, furnishings, furniture, office equipment, vehicles,
inventories, tools, machinery, equipment, structures and movable fixtures) is
reflected in the Financial Statements. All items of Sellers' tangible personal
property are in good operating condition, reasonable wear and tear excepted, and
such tangible personal property, taken as a whole, is suitable for the conduct
of the Business.
3.10 Title to Owned Properties. Except for Permitted Liens, Sellers have
good and marketable title to or leasehold interests in all of the Purchased
Assets, free and clear of all pledges, security interests, liens, claims and
encumbrances other than:
(i) liens, claims and encumbrances reflected in the Financial
Statements which do not impair the current use, occupancy or value
thereof, or the marketability of title;
(ii) liens for taxes, charges and assessments imposed by any
taxing authority which are not yet due and payable; and
(iii) mechanics', suppliers', installment sales and similar liens
for services rendered or materials furnished, the charges for which
are not yet due and payable.
3.11 Bank Accounts; Powers of Attorney. Schedule 3.11 attached hereto lists
(i) the names of all banks in which Sellers have accounts and safe deposit boxes
and the names of all persons authorized to draw thereon or to have access
thereto; and (ii) the names of all persons, if any, holding powers of attorney
from Sellers and a summary statement of the terms thereof.
3.12 Employees. Schedule 3.12 attached hereto (i) lists the names of all
employees of Sellers hired on or after May 1, 1996 and which employees are
employed by Sellers as of a date that is two business days prior to the date
hereof (the "Employment Date") and the rate at which compensation is being paid
to each such person as of the Employment Date; and (ii) describes any increase
in the rates of compensation or bonuses paid to those
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employees who were employed by Sellers on May 1, 1996, and which employees are
employed by Sellers on the Employment Date.
3.13 Contracts; Leases; Licenses. (a) Schedule 1.2(f) constitutes a full
and complete list, as of the date hereof, of all written contracts, agreements
and commitments to which Sellers are a party or to which their respective assets
are bound. Sellers have delivered or made available to Buyer true and complete
copies of all such contracts, agreements and commitments.
(b) Except as set forth in Schedule 3.13(b), all of the contracts,
agreements and commitments set forth in Schedule 1.2(f) are legal, valid, and
binding upon the parties thereto in accordance with their terms and are in full
force and effect; (ii) Sellers are not in breach or default, and have not
received notice of any default or any event which, with the passage of time, the
giving of further notice or both, would constitute a breach or default by
Sellers under any such contract, agreement or commitment; (iii) none of the
other parties to any such contract, agreement or commitment is in breach or
default thereunder; (iv) there does not exist any condition nor has there
occurred any event which, with the passage of time, the giving of notice or both
would constitute a breach or default under any such contract, agreement or
commitment; and (v) to the best of Sellers' knowledge, there is no reasonable
basis for any party to such contracts, agreements or commitments to make any
claim against Sellers with respect to any such contract, agreement or commitment
which has been fully performed.
3.14 Permits; Licenses. Schedule 1.2(g) sets forth all of the governmental
and quasi-governmental consents, approvals, permits, licenses, franchises and
other authorizations which have been issued to or are held or used by Sellers,
or for which Sellers have applied, and which are material to the conduct of the
Business as presently conducted by Sellers. Except as set forth in Schedule 3.14
attached hereto, Sellers have obtained all of the governmental and
quasi-governmental consents, approvals, permits, licenses, franchises and other
authorizations which are necessary for the ownership of the Purchased Assets or
the conduct of the Business as presently conducted. Except as set forth in
Schedule 3.14, all such consents, approvals, permits, licenses, franchises and
other authorizations are in full force and effect, and no violations exist or
have been recorded in respect of any thereof, and no proceeding is pending or,
to the knowledge of Sellers, threatened to revoke or limit any thereof.
3.15 Proprietary Rights.
(a) Schedule 1.2(b) sets forth an accurate and complete list of all
Sellers' Proprietary Rights (including any registrations issued and any
applications pending for any of such Proprietary Rights), and except as set
forth in Schedule 3.15 Sellers are the sole and exclusive owners of all such
Proprietary Rights.
(b) Except as set forth on Schedule 3.15 attached hereto, all of the
Proprietary Rights have been duly registered or are the subject of pending
registration
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applications in the applicable jurisdiction. None of the Proprietary Rights is
subject to any pending or, to the best of Sellers' knowledge, threatened
challenge or reversion, and the consummation of the transactions contemplated by
this Agreement shall not result in any change in the terms or provisions thereof
or create any right of termination, cancellation or reversion with respect
thereto anywhere in the world. Except as set forth on Schedule 3.15, Sellers
have not licensed, sublicensed, assigned, transferred or otherwise conveyed any
of the Proprietary Rights, or any right, title or interest therein, to any
person or entity. Sellers have heretofore provided to Buyer complete and correct
copies of each license agreement relating to the Proprietary Rights. Sellers
have exercised quality control with respect to all Proprietary Rights licensed
by Sellers to the extent necessary to preserve the validity of such Proprietary
Rights. Sellers have not infringed on any proprietary right, trademark, trade
name, service mark or copyright of others, and there is no claim for damages or
any proceeding pending, or threatened against Sellers or the Business with
respect thereto. To the best of Sellers' knowledge, no person is infringing or
otherwise acting adversely with respect to Sellers' rights under or in respect
of any of the Proprietary Rights.
(c) Sellers own all proprietary rights necessary to manufacture their
products and to conduct their operations and Business, including without
limitation, those listed in Schedule 1.2(b), free and clear of all liens, claims
and encumbrances whatsoever except the Permitted Liens.
3.16 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.16(a) attached hereto sets forth a complete and
accurate list of all of the collective bargaining agreements and agreements with
labor unions or associations representing employees to which Sellers are a party
and, as of the dates set forth in Schedule 3.16(a) attached hereto, the total
number of employees of Sellers and the number of such employees represented by
each such agreement. Such numbers of employees have not changed since such dates
except in the ordinary course of business. Except as set forth in Schedule
3.16(a) attached hereto, there are no strikes, slowdowns, picketing, work
stoppages, labor troubles or other similar events in which employees of Sellers
are participating and which is having, or reasonably could have, a material
adverse effect on the Business as presently conducted by Sellers.
(b) Schedule 3.16(b) attached hereto identifies all of the employee
benefit plans, programs or arrangements maintained by Sellers, to which Sellers
contribute or has any obligation to contribute, or with respect to which Sellers
have any liability or potential liability, all of the compensation plans,
programs, policies and practices of Sellers and all of the severance,
termination and similar programs established or maintained by Sellers or to
which Sellers are subject, including, without limitation, all plans, programs,
policies and arrangements which constitute an "employee pension benefit plan,"
an "employee welfare benefit plan" or a "multiemployer plan," as such terms are
defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA Plans").
For the purposes of this Agreement, the term "Plans" shall
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mean the ERISA Plans and all other plans, programs, policies, and practices
listed on Schedule 3.16(b) attached hereto.
(c) Except as set forth in Schedules 3.16(a) or 3.16(b) attached
hereto, neither Seller (i) is a party to any written consulting or employment
contract; or (ii) has made any commitment to, or is a party to any written
agreement obligating it to, increase the wages, or to modify the material
conditions or terms of employment, of the employees of Sellers.
(d) The present value of all benefit liabilities under each of the
ERISA Plans which is a "defined benefit plan," as such term is defined in
Section 3(35) of ERISA, shall not, as of the Closing Date, exceed the market
value of assets of such ERISA Plan (computed on a Plan termination basis).
(e) Except as set forth in Schedule 3.16(e) attached hereto, there
have been no transactions with respect to any Plan which could subject Sellers,
or any trustee or administrator of the Plans, or any party dealing with any such
Plan to any tax or penalty arising under ERISA or the Internal Revenue Code of
1986, as amended (the "Code").
(f) Each of the ERISA Plans (and all related trusts, insurance
contracts and funds) has been maintained, administered and funded in compliance
in all material respects with the applicable provisions of ERISA, the Code and
other applicable laws. Each other Plan (and all related trusts, insurance
contracts and funds) has been maintained, administered and funded (if required
to be funded) in compliance in all material respects with all applicable laws.
Each of the ERISA Plans is in compliance with all material reporting, disclosure
and other applicable requirements of the Code and ERISA and, with respect to
each Plan, Sellers have performed all material obligations required to be
performed by them under the terms of such Plan and under all applicable laws and
regulations. No suits, actions or claims with respect to any Plan (other than
routine claims for benefits) is pending or threatened and Sellers have no
knowledge of any facts which could give rise to or be expected to give rise to
any such suits, actions or claims.
(g) Favorable determination letters have been received from the
Internal Revenue Service with respect to each of the ERISA Plans which is
intended to comply with Section 401(a) of the Code stating that such ERISA Plan
and the attendant trust are qualified thereunder and no fact or event has
occurred since the date of each such letter to adversely affect the qualified
status of any such ERISA Plan or the exempt status of any such trust.
(h) Except as set forth in Schedule 3.16(h) attached hereto, no Plan
that is subject to Title IV of ERISA has been terminated and there has been no
"reportable event," as such term is defined in Section 4043 of ERISA, with
respect to any such Plan.
(i) No Plan that is an employee pension benefit Plan (as such term is
defined in Section 3(2) of ERISA) has incurred any "accumulated funding
deficiency," as such
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term is defined in Section 302 of ERISA and Section 412 of the Code (whether or
not waived). With respect to each Plan, all required or recommended (in
accordance with historical practices) contributions, payments, premiums,
reimbursements or accruals for all periods ending prior to or as of the Closing
Date shall have been timely made or properly accrued as of such date. No Plan
which is required to be funded has any material unfunded liabilities. No
underfunded defined benefit plan has been, during the five years preceding the
Closing Date, transferred out of the controlled group of companies (within the
meaning of Sections 414(b) and (c) of the Code) of which either Seller is a
member or was a member during such five-year period. All assets of the Plans
under the control of Sellers shall be transferred to the control of Buyer as of
the Closing Date or as soon as practicable thereafter.
(j) No liability to the Pension Benefit Guaranty Corporation (the
"PBGC"), other than for premiums, has been incurred, or is expected to be
incurred, with respect to any Plan that is subject to Title IV of ERISA. No
proceeding has been commenced by the PBGC to terminate any such Plan and no
written notice has been received (or is expected to be received) by Sellers
stating that the PBGC intends to commence or seek the commencement of any such
proceeding.
(k) Sellers have no liability or potential liability with respect to
any "multiemployer plan," as such term is defined in Section 3(37) of ERISA or
with respect to any plan of the type described in Section 4063 and 4064 of
ERISA.
(l) Except as set forth in Schedule 3.16(b) attached hereto, Sellers
do not maintain, contribute to or have any liability or potential liability with
respect to any employee benefit plan (whether or not terminated) which provides
health, life insurance, accident or other "welfare-type" benefits to former
employees, their spouses or dependents (except for medical benefit continuation
coverage required in accordance with Section 4980B of the Code). Sellers have
complied with the requirements of Section 4980B of the Code.
(m) Except as set forth in Schedule 3.16(b) attached hereto, none of
the Plans obligates Sellers to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term is
defined in Section 280G of the Code.
(n) Buyer has been provided with true and complete copies of all
documents pursuant to which the Plans are maintained and administered, the two
most recent annual reports (Form 5500 and attachments) for each Plan with
respect to which such report is required to be filed, the most recent actuarial
valuation of each Plan that is a defined benefit pension plan (whether or not
such Plan is maintained for United States employees), the most recent financial
statement for each Plan that is a defined contribution plan (whether or not such
Plan is maintained for United States employees), the most recent valuation (but
in any case at least one that has been completed within the last two calendar
years) of each Plan that provides post-employment health, life insurance,
accident or other "welfare-type" benefits, and the most recent determination
letter from the Internal Revenue Service with respect to each Plan that is
intended to be qualified under Section 401(a) of the Code.
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3.17 Business Operations; Changes.
(a) Except as set forth in Schedule 3.17 attached hereto, since
December 31, 1995:
(i) Sellers have not, in connection with the conduct of the
Business, made any material change in practices, operations or
policies with respect to (A) the method for selling products, (B) the
standard terms and conditions of sale of products (including standard
terms regarding returns and discounts, but excluding price changes),
(C) the method for accounting for sale of products, (D) the
compensation of employees, (E) the policy regarding maintenance of
inventory levels or (F) the conduct of accounts receivable collection
and accounts payable payment activities, which change in practices,
operations or policies, individually or in the aggregate, could have a
material adverse effect on the Business as presently conducted;
(ii) Sellers have not (A) engaged in any material transaction,
(B) entered into any material agreement, (C) incurred, paid or
discharged any material obligation or liability, (D) sold or
transferred any material property, (E) waived or released any material
right or obligation or (F) incurred any indebtedness for borrowed
money;
(iii) there has been no material adverse change in the condition
(financial or otherwise), assets, properties, liabilities, business,
operations or prospects of the Business, and no event has occurred or
condition has arisen which can reasonably be expected to result in
such a material adverse change; and
(iv) there has been, no material damage to or loss of the assets
or properties owned, leased or used by Sellers which is material to
the Business (regardless of whether such damage or destruction is
covered by insurance).
(b) Except as set forth in Schedule 3.17 attached hereto, since
December 31, 1995, there has been, to the knowledge of Sellers, no technological
development or change in governmental or quasi-governmental law, rule or
regulation affecting the Business and/or the industry in which the Business
operates which has had or can reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), assets, properties,
liabilities, business, operations or prospects of the Business.
3.18 Compliance with Laws.
(a) Except as set forth in Schedule 3.18 attached hereto, to Sellers'
knowledge, Sellers are not in default under or in violation of any foreign,
federal, state or local law, ordinance, regulation or rule or any judgment,
writ, order, award, edict or decree of any court of competent jurisdiction or
any governmental or quasi-governmental agency,
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authority or instrumentality of competent jurisdiction pertaining to the
Business as presently conducted by Sellers or the properties owned, leased or
used by Sellers.
3.19 Litigation; Claims; Proceedings.
Except as described in Schedule 3.19 attached hereto, there are no
outstanding suits, actions, proceedings, investigations, audits, claims, orders,
judgments, writs or awards presently pending or, to the best of the knowledge of
Sellers, threatened against Sellers or with respect to the Business or any of
the Purchased Assets (collectively, "Litigation") and, to the best of the
knowledge of Sellers, there is no basis for any such Litigation. There are no
final orders, judgments, writs or decrees presently outstanding against the
Sellers, the Purchased Assets or with respect to the Business.
3.20 Environmental Conditions.
(a) For the purposes of this Agreement:
(i) "Environment" means air, land (including soil and any surface
or subsurface strata), and surface water or groundwater, or any
combination or part thereof;
(ii) "Environmental Claim" means any and every judgment, damages,
loss, penalty, fine, liability (including strict liability),
encumbrance, lien, costs, demand, claim, governmental notice or threat
of litigation or the actual institution of any action, suit or
proceeding at any time by a person other than the Parties, asserted or
holding that an Environmental Condition constitutes a violation of or
otherwise may give rise to any liability or obligation under any
Environmental Requirement.
(iii) "Environmental Condition" shall mean the presence on the
Closing Date, whether discovered or undiscovered on such date, in the
Environment of any Hazardous Material arising out of or otherwise
related to the operations or other activities of Sellers, or of any
predecessor in interest or line of business to Sellers, conducted or
undertaken prior to the Closing Date.
(iv) "Environmental Requirement" means any applicable statute,
regulation, rule, ordinance, common law, license, permit, order,
approval, authorization, and similar item of all governmental
agencies, departments, commissions, boards, bureaus, political
subdivisions, or instrumentalities of the United States or the State
of Iowa, and any applicable judicial, administrative, and regulatory
decree, judgment, consent agreement, and order regulating or otherwise
relating in any
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way to the protection of human health or the Environment or the
Release or threatened Release of Hazardous Material into the
Environment.
(v) "Hazardous Material" means any substance (a) the presence or
threatened presence of which in the Environment or at, on, in, or
beneath the surface of any real property in which Sellers have an
ownership interest or any leasehold interest requires investigation,
characterization, mitigation, removal, remediation or other response
pursuant to any Environmental Requirement; or (b) which is or becomes
defined as a "hazardous substance," "hazardous waste," "pollutant,"
"contaminant" or any other jurisdictional substance under any
Environmental Requirement including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. ss. 9601 et seq. ("CERCLA"), and the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., or
the regulations promulgated respectively thereunder; or (iii) without
limitation is or contains polychlorinated biphenyls, asbestos, urea
foam or formaldehyde-containing insulation, or petroleum hydrocarbons.
"Release" means any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, migrating dumping or disposing into the
Environment.
(vi) For purposes of subsection (b)(iii) hereof, "Outlet Store
real property" shall mean those real properties on which Galt Shop
operates a retail outlet store and identified as such on Schedule
1.2(a) attached hereto; "Non-Outlet Store real property" shall mean
any real property in which Sellers have an ownership interest or any
leasehold interest or otherwise control, other than any Outlet Store
real property.
(b) Except as set forth in Schedule 3.20 attached hereto:
(i) Sellers, any real property in which Sellers have an ownership
interest, or any leasehold interest or otherwise control, and the
current and prior uses thereof and activities thereon, comply and have
at all times complied with all Environmental Requirements;
(ii) Sellers have not transported, stored, treated, disposed, or
otherwise managed, or allowed or arranged for any third parties to
transport, store, treat, dispose, or otherwise manage, any Hazardous
Material to or at any location other than a facility lawfully
permitted to receive such Hazardous Material for such purposes, or
have performed, arranged for or allowed by any method or procedure
such transportation, storage, treatment, disposal or management in
contravention of any Environmental Requirement, nor have Sellers
stored, treated, disposed, or otherwise managed, or allowed or
arranged for any third parties to
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store, treat, dispose, or otherwise manage Hazardous Material at,
upon, in or beneath property owned, leased, or otherwise controlled by
it;
(iii) there has not occurred, there is not presently occurring,
and there does not currently exist any Release of any Hazardous
Material at, on, into, from or beneath the surface of any Non-Outlet
Store real property in which Sellers have an ownership interest or any
leasehold interest or otherwise control; and to the best of Sellers'
knowledge, there has not occurred, there is not presently occurring,
and there does not currently exist any Release of any Hazardous
Material at, on, into, from or beneath the surface of any Outlet Store
real property in which Sellers have an ownership interest or any
leasehold interest or otherwise control.
(iv) Sellers have not transported or disposed, or allowed or
arranged for any third parties to transport or dispose, any Hazardous
Material to or at a site or facility which, pursuant to CERCLA or any
other Environmental Requirement, (A) has been placed on the National
Priorities List or any state equivalent, (B) the Environmental
Protection Agency or the relevant state agency has proposed or is
proposing to place on the National Priorities List or any state
equivalent, or (C) has been placed on or entered into the CERCLA
Information System ("CERCLIS") data base or any state equivalent.
Sellers have not received notice, and have no knowledge of any facts
which could give rise to any notice, that Sellers are a potentially
responsible party, for response costs, damages or investigatory,
removal or remedial response obligations with respect to any site or
facility under CERCLA or any other Environmental Requirement or notice
of any other Environmental Claim. Sellers have not received any
written or oral request for information in connection with any Federal
or state environmental investigation, remediation or response
concerning any site or facility and have not undertaken (or been
requested to undertake) any investigatory, removal, remedial or other
response actions or cleanup actions of any kind at the request of any
Federal, state or local governmental entity, or at the request of any
other person or entity;
(v) to Sellers' best knowledge, there are no laws, regulations,
ordinances, licenses, permits or orders relating to environmental or
worker safety matters requiring any work, repairs, construction or
capital expenditures with respect to the assets or properties of
Sellers; and
(vi) Schedule 3.20 identifies (A) all environmental audits,
assessments or occupational health studies undertaken by Sellers or
their agents or by any governmental agencies with respect to the
operations or
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properties of Sellers; (B) the results of any surface water,
groundwater, soil, air, asbestos or other environmental monitoring,
sampling or testing undertaken with respect to any real property
owned, leased or otherwise controlled by Sellers; (C) all written
communications of Sellers with environmental agencies and (D) all
citations issued with respect to Sellers under the Occupational Safety
and Health Act (29 U.S.C. Sections 651 et seq.) exclusive of audits,
studies and assessment performed or prepared for customers.
3.21 Liabilities. Except as set forth in Schedule 3.21 attached hereto,
Sellers do not have any liabilities, debts or obligations, whether accrued,
absolute or contingent, due or to become due, direct or indirect, asserted or
unasserted, known or unknown, which are material to the conduct of the Business
as presently conducted by Sellers, other than liabilities incurred since
December 31, 1995 in the ordinary course of business none of which, individually
or in the aggregate, are material. Except as set forth in Schedule 3.21 attached
hereto, nothing has come to the attention of Sellers which would cause them to
believe that there exist any circumstances, conditions, events or arrangements
which are likely to hereafter give rise to any such material liabilities, debts
or obligations.
3.22 Insurance. All policies of insurance of any kind maintained, owned or
held by Sellers are set forth in Schedule 3.22 hereto and such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date hereof have been paid, and all premiums with respect
thereto covering all periods from the date hereof up to and including the
Closing Date will be paid on or before the Closing Date, and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancellation or termination. The insurance policies to which Sellers are a
party are sufficient for compliance with all requirements of applicable laws and
all agreements to which Sellers are a party or by which Sellers are bound and
the coverages provided by said policies are sufficient to cover all risks
insured against.
3.23 Customers and Suppliers. Except as set forth on Schedule 3.23 attached
hereto, Sellers do not know of any reason why Buyer will be unable to maintain
the same relationship with any of Sellers' current customers, licensors or
vendors, or others having business relations with Sellers, in connection with
the Business or the Purchased Assets that Sellers now maintain.
3.24 Sales; Accounts Receivable.
(a) Except as set forth in Schedule 3.24(a) attached hereto, all sales
by Sellers shown on or reflected in the Financial Statements were made to
independent third parties not affiliated with Sellers and arose in the ordinary
course of business and, except as disclosed on Schedule 3.24(a) attached hereto,
Sellers have not received any material claim that any product sold by Sellers
failed to meet any specification with respect thereto or were
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otherwise defective, and Sellers have no knowledge of any events or conditions
which could give rise to any such claim.
(b) The accounts receivable, loans and notes receivable and advances
of Sellers shown on or reflected in the Financial Statements, or acquired since
December 31, 1995, represent bona fide claims of Sellers against debtors for
sales or advances made or services performed in the ordinary course of business,
and have been collected or are current and collectible at the aggregate recorded
amounts thereof less applicable reserves (which have been established in
accordance with generally accepted accounting principles consistently applied
and which are adequate). Except as set forth in Schedule 3.6(d) attached hereto,
Sellers have no knowledge of any such accounts receivable, loans or notes
receivable or advances that are uncollectible or of doubtful collectibility or
in controversy or subject to offset or counterclaim.
3.25 Full Disclosure. Neither this Agreement nor any of the Related Seller
Agreements, or any agreement, document, instrument, certificate or statement
made or furnished to Buyer in connection with this Agreement and the
transactions contemplated hereby contains any untrue statement of a material
fact or omits the statement of a material fact required to be stated in order to
make the statements contained herein and therein not misleading.
3.26 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Sellers and the
Shareholders directly with Buyer and without the intervention of any other
person and in such manner as not to give rise to any valid claim against any of
the Parties for any finder's fee, brokerage commission or like payment.
3.27 Investment. Sellers acknowledge that the Starter Shares and the
Additional Shares have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering. Sellers are
acquiring the Starter Shares and the Additional Shares solely for their own
respective accounts for investment purposes, and not with a view to the
distribution thereof (except to the Shareholders). Sellers are accredited
investors as such term is defined in Rule 501(a) promulgated under Regulation D
under the Securities Act or are sophisticated investors with knowledge and
experience in business and financial affairs. Sellers have received certain
information concerning Starter and have had the opportunity to obtain additional
information as desired in order to evaluate the merits and risks inherent in
holding the Starter Shares and the Additional Shares and are able to bear the
economic risk and lack of liquidity inherent in holding the Starter Shares and
the Additional Shares.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SHAREHOLDERS
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Each Shareholder, severally, represents and warrants to, and covenants with
Buyer as follows.
4.1 Investment. (a) The Sellers and Shareholders have advised Buyer that,
within one year following the Closing, the Shareholders intend to cause Sellers
to liquidate and dissolve and in connection therewith, the Starter Shares and
the Additional Shares (if any), will be distributed by Sellers to the
Shareholders as a liquidating dividend. In connection therewith, each such
Shareholder covenants and agrees that the Starter Shares and the Additional
Shares distributed to such Shareholder will be held for such Shareholder's own
account for investment purposes only and not with a view toward, or for resale
in connection with, any distribution thereof.
(b) Such Shareholder understands that the Starter Shares and the
Additional Shares have not been, and will not be, registered under the
Securities Act or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering. Such Shareholder is acquiring the Starter Shares
and the Additional Shares solely for its own account for investment purposes,
and not with a view to the distribution thereof. Such Shareholder is an
accredited investor as such term is defined in Rule 501(a) promulgated under
Regulation D under the Securities Act or either alone or together with its
purchaser representative has such knowledge and experience in business and
financial matters that such Shareholder is capable of evaluating the merits and
risks of such Shareholder's investment in the Starter Shares and the Additional
Shares. Prior to the Closing Date, such Shareholder has received certain
information concerning Starter and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and risks inherent in
holding the Starter Shares and the Additional Shares and is able to bear the
economic risk and lack of liquidity inherent in holding the Starter Shares and
the Additional Shares.
(c) Such Shareholder agrees to execute and deliver on the Closing Date
and at the time of such transfer such agreements and documents, including, but
not limited to an "Investor Representation Letter," as may be reasonably
requested by Starter or Sellers in connection with the transfer of Starter
Shares and the Additional Shares from Sellers to such Shareholder.
4.2 Authorization. (a) Such Shareholder is competent, has the legal
capacity and is otherwise authorized to execute and deliver this Agreement and
the other agreements contemplated hereby to which such Shareholder will be a
party (the "Related Shareholder Agreements"), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
(b) This Agreement and the Related Shareholder Agreements constitute
legal, valid and binding agreements of such Shareholder, enforceable against
such Shareholder in accordance with their respective terms, except insofar as
enforceability may be limited by bankruptcy, moratorium or other laws which may
affect creditors rights and
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remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.3 No Breach. The execution and delivery of this Agreement and the Related
Shareholder Agreements to which such Shareholder is a party, the performance by
such Shareholder of its obligations hereunder and thereunder and the
consummation by such Shareholder of the transactions contemplated hereby and
thereby will not conflict with, result in a default under, result in a violation
or breach of, any agreement to which such Shareholder is a party or is otherwise
bound and will not require the consent, approval or authorization of any third
party.
4.4 Ownership of Galt Sand. Each Shareholder owns that number of shares of
the capital stock of Galt Sand (the "Galt Shares") as is set forth opposite such
Shareholder's name on Schedule 3.2 attached hereto. Such Shareholder owns its
Galt Shares free and clear of all liens, claims and encumbrances and such Galt
Shares are not subject to any option, warrant or agreement of any third party.
No party other than such Shareholder has any interest (direct or indirect,
beneficial or otherwise) in such Galt Shares.
ARTICLE 5 -- PRE-CLOSING COVENANTS
5.1 General. Each of the Parties will use its best efforts to take all
actions and do all things necessary in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Articles 6, 7 and 8 (as
applicable to a Party) of this Agreement).
5.2 Conduct of Business Prior to Closing. From the date hereof until the
Closing, except as consented to by Buyer in writing:
(a) Each Seller will maintain itself at all times as a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction under which it is incorporated;
(b) Each Seller will carry on its business and operations in a good
and diligent manner and will not engage in any transaction or make any
commitment to purchase or spend, other than in the ordinary course of its
business as heretofore conducted, involving an amount which exceeds $10,000:
(c) No Seller will declare, authorize or make any distribution or pay
any dividend to its shareholders and will not redeem, purchase or otherwise
acquire, or agree to redeem, purchase or otherwise acquire, any shares of its
capital stock;
(d) Sellers will not pay or obligate themselves to pay any
compensation, commission or bonus to any director, officer, employee or
independent contractor as such, except for the regular compensation and
commissions payable to any such
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director, officer, employee or independent contractor at the rate in effect on
the date of this Agreement;
(e) Each Seller will continue to carry all of its existing insurance;
(f) Each Seller will use its best efforts to preserve its business
organization intact, to keep available to Buyer the services of its employees
and independent contractors and to preserve for Buyer its relationships with
suppliers, licensees, distributors and customers and others having business
relationships with it;
(g) Sellers will not, and will not obligate themselves to sell or
otherwise dispose of or pledge or otherwise encumber any of their respective
properties or assets and each Seller will maintain its facilities, machinery and
equipment in good operating condition and repair, subject only to ordinary wear
and tear;
(h) No Seller will amend its Articles of Incorporation or Bylaws;
(i) Sellers will not engage in any activity or transaction other than
in the ordinary course of their respective businesses as heretofore conducted;
and
(j) Without limiting the foregoing, Sellers will consult with Buyer
regarding all significant developments, transactions and proposals relating to
their respective businesses and the Purchased Assets.
5.3 Notice of Developments. Each Party will give prompt written notice to
the other Parties of any material adverse development causing a breach of any of
its own representations and warranties made in this Agreement.
5.4 Exclusivity. Sellers will not (a) solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of Galt Sand, Galt Shop or Danaggers (including any acquisition
structured as a merger, consolidation or share exchange) or (b) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any person to do or seek any of the foregoing. Sellers will notify
the Buyer immediately if any person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
5.5 Access, Information and Documents. Pending the Closing, Sellers will
give to Buyer and to their agents and representatives (including, but not
limited to, accountants, lawyers and appraisers) full and complete access during
normal working hours to any and all of the properties, assets, inventory, books,
documents and records of Sellers to enable Buyer to make such examination of the
business, records, properties, assets and inventory of Sellers as Buyer may
determine, and will furnish to Buyer such information and copies of such
documents and records as Buyer shall reasonably request. As part of such
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examination Buyer may make such inquiries of such persons having business
relationships with Sellers (including, but not limited to, suppliers, licensees,
distributors and customers) as Buyer shall determine and Sellers shall cooperate
fully with Buyer in connection therewith.
5.6 Transactions in Starter's Common Stock. Pending the Closing, Sellers
and Shareholders shall not, directly or indirectly, effectuate or cause to be
effectuated, purchases or sales of Starter's Common Stock.
ARTICLE 6 -- CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, prior to or at Closing, of each
of the following conditions (any or all of which may be waived by Buyer in its
sole discretion):
(a) Each of the representations and warranties of Sellers set forth in
Article 3 hereof and of Shareholders set forth in Article 4 hereof shall be true
and correct as of the Closing;
(b) Sellers shall have performed and complied with all covenants,
obligations and undertakings required by this Agreement and the Related Seller
Agreements to be performed and complied with by Sellers on or prior to the
Closing;
(c) Each Shareholder shall have performed and complied with all
covenants, obligations and undertakings required by the Agreement and the
Related Shareholder Agreements to be performed and complied with by such
Shareholder on or prior to the Closing;
(d) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction which seeks to restrain, enjoin or
otherwise prevent consummation of the transactions contemplated by this
Agreement, and no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Agreement;
(e) Sellers shall have executed and delivered the Bill of Sale in the
form of Exhibit A attached hereto;
(f) Sellers shall have executed and delivered an Assignment and
Assumption Agreement in the form of Exhibit B attached hereto;
(g) Each Seller shall have executed and delivered a certificate, in
the form of Exhibit C attached hereto, executed by an authorized officer
relating to certain corporate matters;
(h) Sellers shall have executed and delivered the Escrow Agreement;
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(i) Sellers shall have executed and delivered to Buyer assignments, in
forms reasonably satisfactory to Buyer's counsel, of all of Sellers' right,
title and interest in and to the Proprietary Rights;
(j) Each Seller shall have executed and delivered a certificate in the
form of Exhibit D attached hereto, executed by an authorized officer of such
Seller, certifying as to the fulfillment of the conditions specified in Articles
6(a) and 6(b) hereof;
(k) Sellers shall have delivered an opinion of Bradley & Riley,
special counsel to Sellers, substantially in the form of Exhibit E attached
hereto;
(l) Sellers shall have caused each Shareholder to execute and deliver
a "lock up" letter substantially in the form of Exhibit F attached hereto
pursuant to which each such Shareholder agrees not to sell or otherwise transfer
the Starter Shares or the Additional Shares for a period of two years after the
Closing.
(m) Sellers shall have executed and delivered a Registration Rights
Agreement, in form and substance mutually acceptable to Sellers and Starter,
providing for the registration of the Starter Shares and Additional Shares (if
any) in the event Starter conducts a public offering of its Common Stock prior
to the end of the two-year holding period referenced in subparagraph (l) above;
(n) Sellers shall have procured those material third party consents
(identified by Buyer and listed on Schedule 6(n) attached hereto) required in
connection with the transfer of the Purchased Assets to Buyer;
(o) Sellers shall have delivered to Buyer all Sellers' contracts,
books, records and other data relating to the Purchased Assets and the Sellers'
Business (except Sellers' minute and stock books and all other records which
Sellers are required by law to keep in its possession, of which Sellers will
furnish copies to Buyer at Buyer's request);
(p) Sellers shall have delivered such other executed and acknowledged
instruments, certificates and documents as Buyer or its counsel shall reasonably
request;
(q) Shareholders will deliver to Buyer a certificate of Shareholders
in the form of Exhibit G attached hereto certifying as to the accuracy of
Shareholders' representations and warranties at and as of the Closing and that
the Shareholders have performed and complied with all of the terms, provisions
and conditions to be performed and complied by Shareholders at or before the
Closing; and
(r) There shall not have occurred any material adverse change in the
condition (financial or otherwise), prospects, business, assets, properties or
results of operations or prospects of the Sellers (taken as a whole) except for
those changes in connection with this Agreement and the transactions
contemplated hereby.
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ARTICLE 7 -- CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligation of Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, prior to or at the Closing,
of each of the following conditions (any or all of which may be waived by
Sellers in their sole discretion):
(a) Each of the representations and warranties of Buyer set forth in
Article 2 hereof shall be true and correct as of the Closing;
(b) Buyer shall have performed and complied with all covenants,
obligations and undertakings required by this Agreement to be performed and
complied with by Buyer prior to the Closing;
(c) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction which seeks to restrain, enjoin or
otherwise prevent consummation of the transactions contemplated by this
Agreement, and no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Agreement;
(d) Buyer shall have executed and delivered as appropriate, each
Assignment and Assumption Agreement, each Bill of Sale, the Escrow Agreement
(and shall cause Starter to execute and deliver the Registration Rights
Agreement) and each other instrument, certificate or document delivered by
Sellers which shall, by the terms thereof, provide for execution or
acknowledgment by Buyer;
(e) Buyer shall have paid the Purchase Price to Sellers by delivering
certificates representing the Starter Shares registered in the names and in the
denominations set forth on Schedule 1.5 attached hereto, which Sellers agree
shall contain a legend substantially in the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state. Such shares may not be sold or transferred in the
absence of such registration or an opinion of counsel satisfactory to
the issuer that such registration is not required by said act or state
laws.
(f) Buyer shall have executed and delivered a certificate in the form
of Exhibit H attached hereto, executed by an authorized officer of Buyer,
certifying as to the fulfillment of the conditions specified in Articles 7(a)
and 7(b) hereof;
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(g) Buyer shall have delivered an opinion of Kelley Drye & Warren LLP,
special counsel to Buyer, substantially in the form of Exhibit I attached
hereto;
(h) Buyer shall have executed and delivered a certificate in the form
of Exhibit J attached hereto, executed by an authorized officer relating to
certain corporate matters; and
(i) Buyer shall have delivered to Sellers such other executed and
acknowledged instruments, certificates and documents as Buyer or its counsel
shall reasonably request.
ARTICLE 8 -- OTHER CLOSING CONDITIONS
Buyer and Sellers shall have, at their own cost and expense, promptly filed
and thereafter diligently pursued any filing required on its part under the HSR
Act and all rules and regulations adopted thereunder in connection with the
transactions contemplated by this Agreement, and the applicable waiting period
under the HSR Act, including all extensions thereof, shall have expired.
ARTICLE 9 -- POST-CLOSING COVENANTS; OTHER AGREEMENTS
9.1 Transfer Taxes and Other Costs.
(a) Sellers shall be responsible for all income tax which relates to
the transfer of the Purchased Assets, or the consummation of the transactions
contemplated by this Agreement ("Income Tax") and any sales tax or other tax
which is imposed at any time by any taxing authority which relates to the
transfer of the motor vehicles of Sellers which are included in the Purchased
Assets (the "Motor Vehicle Tax"). The cost of such Motor Vehicle Tax shall be
borne by Buyer but only if and to the extent that such cost, when taken together
with the Difference, the Excess Audit Amount and the Excess Tax Return Cost (as
defined in Article 9.12), does not exceed the Threshold. If such cost, when
taken together with the Difference, the Excess Audit Amount and the Excess Tax
Return Cost exceeds the Threshold, the excess (the "Excess Motor Vehicle Tax")
shall be paid by Seller by reducing the Purchase Price by cancellation of that
number of Starter Shares held pursuant to the Escrow Agreement as shall have a
value (based upon the Market Price) equal to the Excess Motor Vehicle Tax.
(b) Except for the Motor Vehicle Tax, Buyer shall be responsible for
any sales, use, transfer, conveyance, excise, documentary and other governmental
taxes, duties, charges, fees, imposts and assessments, and all interest and
penalties thereon, imposed at any time by any taxing authority solely with
respect to this Agreement, the sale, assignment or delivery of the Business and
the Purchased Assets or the consummation of the transactions contemplated hereby
(the "Transactional Taxes").
(c) Buyer shall be responsible for all filing fees, recording fees,
notarial fees and other similar fees and costs arising out of this Agreement,
the purchase,
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assignment or delivery of the Business or the Purchased Assets or the
consummation of the transactions contemplated hereby (the "Transactional
Costs").
9.2 Accounts Receivable. (a) Sellers shall immediately endorse and forward
to Buyer all payments on Accounts Receivable (without deduction or set-off)
which are delivered to Sellers subsequent to the Closing. After the Closing,
Buyer is authorized and irrevocably appointed as attorney-in-fact for Sellers to
endorse any checks received in payment of Accounts Receivable and to take all
other actions (including use of either Company's or Subsidiary's corporate
names) as Buyer may reasonably deem necessary or prudent to collect such
amounts, to obtain possession of and title to the Purchased Assets and to effect
the transfer of the Purchased Assets as contemplated hereby.
(b) (i) Subject to the limitations set forth in this Article 9.2(b),
the Sellers and the Shareholders, jointly and severally, guarantee to Buyer
that, except to the extent of the reserve for doubtful accounts shown on the
Financial Statements, all accounts and notes receivable and other receivables
reflected on said balance sheet (the "Receivables") will be valid and legally
binding obligations of the persons owing said amounts to Sellers and that the
full amount of the Receivables will be paid to Buyer on or before February 28,
1997, provided that this guarantee shall not be applicable or effective if the
nonpayment of a Receivable results from any claim or offset asserted against
Buyer by the account debtor.
(ii) If any part of the Receivables has not been paid on or
before February 28, 1997 and such nonpayment does not result from any claim or
offset asserted against Buyer by the account debtor, then to the extent that
such unpaid part of the Receivables exceeds the reserve for doubtful accounts
shown on the Financial Statements, Buyer shall be entitled to recover such
amounts (A) first through set-off against the Escrow Shares pursuant to Article
9.10 of this Agreement in which event Buyer shall re-assign the corresponding
unpaid Receivables to Sellers, and (B) thereafter by reassignment on or before
March 31, 1997 to Sellers all or any part of the unpaid part of the Receivables,
free and clear of any security interest, lien or other encumbrance arising on or
after the Closing, in which event Sellers and Shareholders (pro rata in
accordance with their equity interests in Galt Sand) shall pay to Buyer in cash
or by certified check that amount equal to such reassigned part of the unpaid
part of the Receivables.
9.3 Bulk Sales Compliance. Buyer hereby waives compliance by Sellers with
any bulk sales or similar law applicable to the transactions contemplated by
this Agreement.
9.4 Corporate Name. Sellers shall, and Shareholders shall cause Sellers to,
immediately after the Closing, amend their respective certificates of
incorporation to change their respective corporate names to those which do not
contain the words "Galt," "Galt Sand" and/or "Danaggers."
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9.5 Confidentiality.
(a) All confidential or proprietary data, reports, records and other
information of any kind received by a Party or the shareholders, directors,
officers, employees, agents or representatives of a Party (such Party being
hereinafter referred to as the "Receiving Party") from the other Party or the
shareholders, directors, officers, employees, agents or representatives of the
other Party (such other Party being hereinafter referred to as the "Delivering
Party") under this Agreement or any Related Buyer Agreement or any Related
Seller Agreement or in connection with the transactions contemplated hereby or
thereby shall be treated as confidential (collectively, "Confidential
Information"). Except as otherwise provided herein, the Receiving Party shall
not use (and shall not permit its affiliates, shareholders, directors, officers,
partners, employees, agents, representatives or consultants to use) Confidential
Information for its own (or their own) benefit and shall use all reasonable
efforts (and shall cause its affiliates, shareholders, partners, directors,
officers, employees, agents, representatives and consultants to use all
reasonable efforts) to maintain the confidentiality of Confidential Information.
If the Receiving Party or any of its affiliates, shareholders, directors,
officers, partners, employees, agents, representatives or consultants is
required to disclose Confidential Information by or to any court, any government
or any governmental agency, authority or instrumentality, the Receiving Party
shall, prior to such disclosure, immediately notify the Delivering Party of such
requirement and all particulars related to such requirement. The Delivering
Party shall have the right, at its expense, to object to such disclosure and to
seek confidential treatment of any Confidential Information to be so disclosed
on such terms as it shall determine.
(b) The restrictions set forth in Article 9.5(a) hereof shall not
apply to the use or disclosure of Confidential Information to the extent, but
only to the extent, (i) permitted or required pursuant to any other agreement
between or among the Parties; (ii) necessary by a Party in connection with
exercising its rights or performing its duties or obligations under this
Agreement, the agreements, instruments and other documents contemplated hereby
or the other agreements described in clause (i) of this sentence; (iii)
contemplated by the last two (2) sentences of Article 9.5(a) hereof; (iv) such
disclosure is required pursuant to applicable securities or other law; or (v)
that the Receiving Party can demonstrate such Confidential Information (A) is or
becomes generally available to the public through no fault or neglect of the
Receiving Party, (B) is received in good faith on a non-confidential basis from
a third party who discloses such Confidential Information without violating any
obligations of secrecy or confidentiality, (C) is independently developed after
the time of receipt as shown by dated written records or (D) was already
possessed at the time of receipt as shown by prior dated written records. The
restrictions set forth in Article 9.5(a) hereof shall not apply to the use or
disclosure by Buyer of Confidential Information which relates to the Business or
the Purchased Assets and which is used or disclosed in connection with the
operation thereof or by Sellers of any Confidential Information which is owned
by it after the Closing.
9.6 Remedies for Breach of Restrictive Covenants. Sellers and Shareholders,
jointly and severally, agree that:
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(i) The remedy at law for breach of the covenants contained in
Articles 9.5 and 12 hereof would be inadequate and that, in the event of such
breach, Buyer shall be entitled to injunctive or other equitable relief.
(ii) Buyer shall, at its own expense and cost, have the right, in the
name of Sellers, to enforce any and all rights which Sellers may have against
other persons described in Article 9.5 hereof with respect to a breach of the
covenants contained in Article 9.5 to the same extent and in the same manner
which Sellers could enforce such rights and, upon exercise of such rights, Buyer
shall promptly give Sellers written notice to that effect. After receipt of such
notice by Sellers, Sellers shall not assert, prosecute, compromise, settle or
take any other action with respect to the rights described in such notice.
Sellers shall cooperate at all times, at its own cost and expense, in any
reasonable manner with Buyer in the exercise of such rights upon request of
Buyer.
9.7 Scheduled Licenses; Renewals. For 18 months after the date hereof,
Sellers shall, on behalf and for the benefit of Buyer, use all reasonable and
diligent efforts, at its own cost and expense (except that, in connection
therewith, Sellers shall not be obligated to make royalty advances), to renew in
writing all licenses set forth on Schedule 9.7 attached hereto that have terms
of less than 18 months remaining as of the date hereof for a term of at least 24
months. Such renewals shall be on terms and conditions acceptable to and
approved by Buyer. Sellers shall deliver complete and accurate copies of such
renewals to Buyer. Buyer will cooperate with Sellers in seeking such renewals.
9.8 Dissolution of Sellers. Sellers shall distribute the Starter Shares to
the Shareholders and the Sellers shall effectuate, and the Shareholders shall
cause the Sellers to effectuate, the dissolution of Sellers within one (1) year
of the Closing Date.
9.9 Consents. Sellers shall, at their own cost and expense, obtain the
consents identified in Schedule 3.5 which were not delivered pursuant to Article
6(n). Upon receipt thereof, Sellers shall deliver promptly such consents to
Buyers.
9.10 Set-Off. If from time to time and at any time Buyer shall be entitled
to be paid any amount under the provisions of either Articles 10 or 9.2(b),
Buyer shall set-off such amount by reducing the Escrow Shares to be delivered to
Sellers by that number of Escrow Shares as shall have a value (based upon the
Market Price) equal to the amount so owed to Buyer. To the extent no Escrow
Shares are available to satisfy such right of set-off, Buyer shall be entitled
to exercise any of its other rights and remedies under the provisions of this
Agreement or otherwise.
9.11 Continuity of Business Enterprise. Buyer represents to Seller and each
Shareholder that it is the present intention of the Buyer to continue at least
one significant historic business line of Sellers, or to use at least a
significant portion of the Sellers' historic business assets in a business, in
each case within the meaning of IRS Treas. Reg. ss.1.368-1(d).
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9.12 Final Tax Return. Sellers shall be responsible for preparation of
Sellers' final federal and state tax returns. Buyer shall bear the cost thereof
but only if and to the extent that, such cost, when taken together with the
Difference, the Excess Motor Vehicle Tax and the Excess Audit Amount, does not
exceed the Threshold. If such cost, when taken together with the Difference, the
Excess Motor Vehicle Tax and the Excess Audit Amount exceeds that Threshold, the
excess (the "Excess Tax Return Cost") shall be paid by the Seller by reducing
the Purchase Price by cancellation of that number of Starter Shares held
pursuant to the Escrow Agreement as shall have a value (based upon the Market
Price) equal to the Excess Tax Return Cost.
ARTICLE 10 -- SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1 Survival of Representations of Buyer. The representations and
warranties set forth in Article 2 hereof and in any Related Buyer Agreement or
certificate or instrument delivered by or on behalf of Buyer, shall survive the
Closing for a period of one (1) year. Notwithstanding anything contained herein
to the contrary, Sellers shall have the right to commence a suit, action or
proceeding after the expiration of such one-year period with respect to claims
arising out of or relating to such representations and warranties which shall
have been asserted in writing by Sellers before the expiration of such one-year
period.
10.2 Survival of Representations of Sellers and Shareholders. The
representations and warranties of Sellers set forth in Article 3 hereof and in
any Related Seller Agreement or certificate or instrument delivered by or on
behalf of Sellers, and of Shareholders set forth in Article 4 hereof and in any
Related Shareholder Agreement or certificate or instrument delivered by or on
behalf of a Shareholder, shall survive the Closing for a period of one (1) year;
provided, however, that (i) the representations and warranties of Sellers set
forth in Article 3.7 shall survive for a period of three (3) years from the
later of (A) the date of the filing of Sellers' final tax return and (b), if
such final tax return becomes the subject of an audit by the IRS or state taxing
authority, the date on which any such audit is completed; (ii) the
representation of Sellers set forth in Articles 3.10, 3.15(b), 3.19 and 3.20 and
3.27 shall survive for a period of three (3) years from the Closing Date; and
(iii) the representations and warranties of Shareholders set forth in Article
4.1 shall survive for a period of three (3) years from the Closing Date.
Notwithstanding anything contained herein to the contrary, Buyer shall have the
right to commence a suit, action or proceeding after the expiration of the
applicable time period with respect to claims arising out of or relating to such
representations and warranties which shall have been asserted in writing by
Buyer before the expiration of such applicable period.
10.3 Indemnification by Buyer. Subject to Articles 10.1 and 10.5 hereof,
Buyer shall indemnify each Seller, its officers and directors, and Shareholders
for, and shall hold them harmless from, any and all damages, losses,
obligations, liabilities, claims, costs and expenses, including, without
limitation, attorney's fees, court costs, interest and penalties (collectively,
"Liabilities"), asserted against or incurred or sustained by any of them
relating to or arising out of (i) any breach of any covenant or agreement
contained in this Agreement or the Related Buyer Agreements by Buyer; (ii) any
breach of any of the warranties or
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representations set forth in Article 2 hereof or the Related Buyer Agreements;
(iii) any of the Assumed Liabilities; and (iv) any of the Transactional Costs or
Transactional Taxes.
10.4 Indemnification by Sellers and Shareholders. Subject to Articles 10.2
and 10.5 hereof, each Seller, jointly and severally, and each Shareholder
(subject to Article 10.6 hereof) severally and not jointly, shall indemnify
Buyer, Starter and their respective shareholders, officers and directors
(collectively, "Buyer Indemnified Parties") for, and shall hold them harmless
from, any and all Liabilities asserted against or incurred or sustained by any
of them relating to or arising out of (i) any breach of any covenant or
agreement contained in this Agreement or the Related Seller Agreements or
Related Shareholder Agreements by Sellers or Shareholders; (ii) any breach of
any of the warranties or representations set forth in Article 3 or Article 4
hereof or the Related Seller Agreements or Related Shareholder Agreements; (iii)
any of the Income Tax or the Motor Vehicle Tax; (iv) any of the Excluded
Liabilities; (v) any obligation, liability, debt, tax responsibility, trade
payable, wage, salary, benefit or compensation for which Sellers or Shareholders
are responsible under Article 1.7(b) hereof, including Liabilities to third
parties arising out of or related to the Business or the Purchased Assets
because of events occurring or circumstances existing prior to the Closing or
any business or activity related to the Business or the Purchased Assets prior
to the Closing (other than the Assumed Liabilities); (vi) Liabilities arising
out of or related to any business or activity of Sellers other than the business
or activities related to the Business or the Purchased Assets; or (vii) failure
to comply with any bulk sales or similar law.
10.5 Indemnification Procedure.
(a) Upon obtaining knowledge thereof, a person who may be entitled to
indemnification hereunder (the "Indemnitee") shall promptly give the Party who
may be obligated to provide such indemnification (the "Indemnitor") written
notice of any Loss (as defined in Article 10.5(b) hereof) which the Indemnitee
has determined has given or could give rise to a claim for indemnification
hereunder (a "Notice of Claim"). A Notice of Claim shall specify in reasonable
detail the nature and all known particulars related to a Loss. The Indemnitor
shall perform its indemnification obligations in respect of a Loss described in
a Notice of Claim under Articles 10.3 or 10.4 hereof, as the case may be, within
30 days after the Indemnitor shall have received such Notice of Claim; provided,
however, such obligation shall be suspended so long as the Indemnitor is in good
faith performing its obligations under Article 10.5(c) hereof with respect to
such Loss.
(b) As used in this Article 10.5, the term "Loss" shall mean a
Liability described in Article 10.3 or 10.4 hereof or any fee, commission,
compensation or payment described in Article 14.1 hereof, as the case may be.
(c) Subject to Article 10.5(d) hereof, the Indemnitor shall have the
right and obligation, in good faith and at its own cost and expense, to cure,
remediate, mitigate, remedy or otherwise handle any event or circumstance which
gives rise to a Loss in respect of which a Notice of Claim has been given. Such
right and obligation shall include, without limitation, the sole and exclusive
right to defend, contest or otherwise oppose any
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third party claim, demand, suit, action or proceeding related to such event or
circumstance with legal counsel selected by it. The exercise of such right and
performance of such obligation shall not constitute an admission or agreement by
the Indemnitor that it has an indemnification obligation hereunder in respect of
such Loss. The Indemnitor shall (i) promptly inform the Indemnitee of all
material developments related to any such event or circumstance and (ii) inform
the Indemnitee promptly after the Indemnitor has made a good faith
determination, based on the facts alleged in such Notice of Claim or which have
otherwise become known to the Indemnitor, either that the Indemnitor
acknowledges that it has an indemnification obligation hereunder in respect of
such Loss or that the Indemnitor has made a good faith determination that it has
no indemnification obligation hereunder in respect of such Loss. Notwithstanding
anything contained herein to the contrary, the Indemnitee shall have the right,
but not the obligation, to participate, at its own cost and expense, in the
defense, contest or other opposition of any such third party claim, demand,
suit, action or proceeding through legal counsel selected by it and shall have
the right, but not the obligation, to assert any and all cross-claims or
counterclaims which it may have. So long as the Indemnitor is in good faith
performing its obligations under this Article 10.5(c), the Indemnitee shall (i)
at all times, at the Indemnitor's cost and expense, cooperate in all reasonable
ways with, make its relevant files and records available for inspection and
copying by and otherwise render reasonable assistance to the Indemnitor upon
request and (ii) not compromise or settle any such claim, demand, suit, action
or proceeding without the prior written consent of the Indemnitor. If the
Indemnitor fails to perform its obligations under this Article 10.5(c) or if the
Indemnitor shall have informed the Indemnitee in writing in accordance with the
fourth sentence of this Article 10.5(c) that the Indemnitor does not have an
indemnification obligation hereunder in respect of such Loss, then the
Indemnitee shall have the right, but not the obligation, to take the actions
which the Indemnitor would have had the right to take in connection with the
performance of such obligations and, if the Indemnitee is entitled to
indemnification hereunder in respect of the event or circumstance as to which
the Indemnitee takes such actions, then the Indemnitor shall, in addition to
indemnifying Indemnitee for the Loss, indemnify the Indemnitee for all of the
legal, accounting and other costs, fees and expenses reasonably and actually
incurred in connection therewith.
(d) Notwithstanding anything contained in Article 10.5(c) to the
contrary, if a Loss relates to an Excluded Asset, then Buyer shall have the
rights and obligations of the Indemnitor under Article 10.5(c) hereof and
Sellers shall have the rights and obligations of the Indemnitee under Article
10.5(c) hereof.
(e) Notwithstanding anything contained herein to the contrary, each
Party shall use all reasonable efforts to mitigate any and all damages, losses,
liabilities, costs and expenses in respect of which it may be entitled to
indemnification hereunder.
10.6 Limitation on Indemnity. Notwithstanding the foregoing, Buyer
Indemnified Parties shall have the right to recover Liabilities under Article
10.4 only in the event the total of such liabilities, taken together with the
Difference, the Excess Motor Vehicle Tax, the Excess Tax Return Cost and the
Excess Audit Amount exceeds the Threshold; provided, however, that in such
event, Buyer Indemnified Parties shall have the right to
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recover the entire amount of Liabilities under Article 10.4; and provided
further that the aggregate of all such amounts recovered from the Sellers and
Shareholders shall not exceed the lesser of $8,000,000 or the Purchase Price as
adjusted pursuant to Article 1.9(a), unless the Purchase Price has been
increased pursuant to Article 1.9(c) in which event the aggregate amount
recoverable from the Sellers and Shareholders under Article 10.4 shall not
exceed the lesser of $8,500,000 or the Purchase Price as adjusted pursuant to
Article 1.9(a). Any recoveries from Shareholders under Article 10.4 shall be
effected pro rata among the Shareholders in accordance with their respective
percentage ownership of the capital stock of Galt Sand. Any recoveries under
Article 10.4 shall be effected first through offset against the Escrow Shares
and next by recovery directly against Sellers and Shareholders.
ARTICLE 11 -- TERMINATION
This Agreement may be terminated as follows:
11.1 Termination by Buyer. Buyer may, without liability to Sellers and
Shareholders, terminate this Agreement by notice to Sellers (i) at any time
prior to the Closing if default shall be made by Sellers or any Shareholder in
the observance or in the due and timely performance of any of the terms hereof
to be performed by Sellers or any Shareholder that cannot be cured at or prior
to the Closing, or (ii) at the Closing if any of the conditions precedent to the
performance of Buyer's obligations at the Closing shall not have been fulfilled.
11.2 Termination by Sellers. Sellers may, without liability to Buyer,
terminate this Agreement by notice to Buyer (i) at any time prior to the Closing
if default shall be made by Buyer in the observance or in the due and timely
performance of any of the terms hereof to be performed by Buyer that cannot be
cured at or prior to the Closing, or (ii) at the Closing if any of the
conditions precedent to the performance of Seller's obligations at the Closing
shall not have been fulfilled.
11.3 Effect of Termination. If this Agreement is terminated, this Agreement
(except for this Article 11.3 and Articles 9.5, 9.6, 12 and 14), shall no longer
be of any force or effect and there shall be no liability on the part of any
party or its respective directors, officers or shareholders except, in the case
of termination because of a material default or material breach resulting from
the willful fault of another party, the aggrieved party or parties may recover
from the defaulting party the amount of expenses incurred by such aggrieved
party or parties in connection with this Agreement and the transactions
contemplated hereby which the aggrieved party or parties would otherwise have to
bear pursuant to Article 14.2 of this Agreement. Notwithstanding the foregoing,
in the event Sellers terminate this Agreement or are otherwise unwilling to
consummate the transactions contemplated hereunder and such failure to
consummate the Closing is the result of a breach of the covenant set forth in
Article 5.4 or the occurrence of the events set forth in Paragraph 6 of that
certain Letter Agreement dated July 25, 1996 by and between Sellers and Buyer
(the "Letter of Intent"), Sellers shall pay to Buyer, in cash, the sum of
$1,000,000 promptly after the occurrence of such event. If this Agreement shall
be terminated, each Party will (i) redeliver all documents, work papers
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and other materials of any other Party relating to the transactions contemplated
hereby, whether so obtained before or after the execution of this Agreement, to
the Party furnishing the same, and (ii) destroy all documents, work papers and
other materials developed by its accountants, agents and employees in connection
with the transactions contemplated hereby which embody proprietary information
or trade secrets furnished by any Party hereto or deliver such documents, work
papers and other materials to the party furnishing the same or exercise such
information or secrets therefrom and all information received by any Party
hereto with respect to the business of any other Party (other than information
which is a matter of public knowledge or which has heretofore been or is
hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall not at any time be
used for personal advantage or disclosed by such Party to any third person to
the detriment of the Party furnishing such information.
ARTICLE 12 -- PUBLICITY
No Party shall issue any press release or make any public announcement
relating to the subject matter of this Agreement or otherwise publicize the
execution and delivery of this Agreement, the provisions hereof or the
transactions contemplated hereby without the prior written approval of the form
and content of such press release or publicity by the Buyer or Sellers, as
applicable; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing Party will use its best efforts to advise the other Party prior to
making such disclosure); and provided, further, that Sellers may inform
licensors and such other parties to agreements with Sellers which comprise the
Purchased Assets whose consents are required to consummate the transactions
contemplated hereby, of the sale contemplated hereby.
ARTICLE 13 -- NOTICES
All notices required or permitted to be given pursuant to this Agreement
shall be given in writing, shall be transmitted by personal delivery, by
registered or certified mail, postage prepaid, or by telecopier and shall be
addressed as follows:
When Buyer is the intended recipient:
Starter Corporation
370 James Street
New Haven, Connecticut 06513
Attention: Mr. Lawrence C. Longo, Jr.
Chief Financial Officer
Telephone: (203) 781-5022
Telecopy No: (203) 773-3411
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with copies to each of:
Kelley Drye & Warren LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
Attention: M. Ridgway Barker, Esq.
Telephone: (203) 324-1400
Telecopy No.: (203) 327-2669
Mark G. Sklarz, Esq.
Cummings & Lockwood
700 State Street
P.O. Box 1960
New Haven, Connecticut 06509
When Sellers are the intended recipients:
Galt Sand Company
951 32nd Avenue, S.W.
Cedar Rapids, Iowa 52404
Attention: Michael Hubsmith, President
Telephone: (319) 368-0357
Telecopy No: (319) 368-0309
with a copy to:
Bradley & Riley, P.C.
First Corporate Place
100 First Street, S.W.
Cedar Rapids, Iowa 52404
Attention: Byron G. Riley, Esq.
Telephone: (319) 363-0101
Telecopy No.: (319) 363-1045
When any Shareholder is the intended recipient, to David Showalter, the
Shareholders' attorney-in-fact, at his address set forth beneath his signature
on the signature pages hereto.
A Party may designate a new address to which notices required or permitted
to be given pursuant to this Agreement shall thereafter be transmitted by giving
written notice to that effect to the other Parties. Each notice transmitted in
the manner described in this Article 13 shall be deemed to have been given,
received and become effective for all purposes at the time it shall have been
(i) delivered to the addressee as indicated by the return receipt (if
transmitted by mail), the affidavit of the messenger (if transmitted by personal
delivery) or the
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telecopier generated confirmation (if transmitted by telecopier) or (ii)
presented for delivery to the addressee as so indicated during normal business
hours, if such delivery shall have been refused for any reason.
ARTICLE 14 -- BROKERAGE FEES; CERTAIN EXPENSES
14.1 Brokerage Fee. Each of Sellers and Buyer agree to indemnify the other
for and to hold the other Party harmless from, any claim or liability for any
fee, commission, compensation or other payment by any broker, finder or similar
agent who claims to have been, or in fact was engaged by or on behalf of it in
connection with the transactions contemplated by the Agreement in accordance
with the provisions of Article 10 hereof.
14.2 Certain Expenses. Except as otherwise provided in this Agreement and
regardless of whether the transactions contemplated by this Agreement are
consummated, each Party agrees to pay all expenses, fees and costs (including,
without limitation, legal and accounting expenses) incurred by it in connection
with the transactions contemplated hereby.
ARTICLE 15 -- GOVERNING LAW; FORUM
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Connecticut (without giving effect
to the laws, rules or principles of the State of Connecticut regarding conflicts
of laws). Each Party agrees that any proceeding arising out of or relating to
this Agreement or the breach or threatened breach of this Agreement shall be
commenced and prosecuted in a state court in the State of Connecticut or a
federal court in the District of Connecticut. Each Party consents and submits to
the non-exclusive personal jurisdiction of any such court in respect of any such
proceeding. Each Party consents to service of process upon it with respect to
any such proceeding by registered mail, return receipt requested, and by any
other means permitted by applicable laws and rules. Each Party waives any
objection that it may now or hereafter have to the laying of venue of any such
proceeding in any such court and any claim that it may now or hereafter have
that any such proceeding in any such court has been brought in an inconvenient
forum.
ARTICLE 16 -- BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES
This Agreement shall be binding upon the Parties and their respective
successors and assigns and shall inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party shall assign any of its
rights or delegate any of its duties under this Agreement (by operation of law
or otherwise) without the prior written consent of the other Parties. Any
assignment of rights or delegation of duties under this Agreement by a Party
without the prior written consent of the other Parties shall be void. No person
(including, without limitation, any employee of a Party) shall be, or be deemed
to be, a third party beneficiary of this Agreement.
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ARTICLE 17 -- ENTIRE AGREEMENT
This Agreement together with the Exhibits and Schedules attached hereto and
the agreements, certificates and instruments delivered pursuant hereto
(including, without limitation, the provisions set forth in the Letter of Intent
which by their terms are binding upon the parties thereto) constitutes the
entire contract among the Parties with respect to the subject matter hereof and
cancels and supersedes all of the previous or contemporaneous contracts,
representations, warranties and understandings (whether oral or written) by,
between or among the Parties with respect to the subject matter hereof.
ARTICLE 18 -- FURTHER ASSURANCES
At any time and from time to time after the Closing, each Party shall, at
its own cost and expense, execute, deliver and acknowledge such other documents
and take such further actions as may be reasonably requested by the other Party
in order to fully consummate the transactions contemplated hereby.
ARTICLE 19 -- AMENDMENTS
No addition to, and no cancellation, renewal, extension, modification or
amendment of, this Agreement shall be binding upon a Party unless such addition,
cancellation, renewal, extension, modification or amendment is set forth in a
written instrument which states that it adds to, amends, cancels, renews,
extends or modifies this Agreement and which is executed and delivered by each
Party on behalf of each Party by an officer of such Party.
ARTICLE 20 -- WAIVERS
No waiver of any provision of this Agreement shall be binding upon a Party
unless such waiver is expressly set forth in a written instrument which is
executed and delivered by such Party on behalf of such Party by an officer of
such Party. Such waiver shall be effective only to the extent specifically set
forth in such written instrument. Neither the exercise (from time to time and at
any time) by a Party of, nor the delay or failure (at any time or for any period
of time) to exercise, any right, power or remedy shall constitute a waiver of
the right to exercise, or impair, limit or restrict the exercise of, such right,
power or remedy or any other right, power or remedy at any time and from time to
time thereafter. No waiver of any right, power or remedy of a Party shall be
deemed to be a waiver of any other right, power or remedy of such Party or
shall, except to the extent so waived, impair, limit or restrict the exercise of
such right, power or remedy.
ARTICLE 21 -- HEADINGS
The headings set forth in this Agreement have been inserted for convenience
of reference only, shall not be considered a part of this Agreement and shall
not limit, modify or affect in any way the meaning or interpretation of this
Agreement.
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ARTICLE 22 -- SEVERABILITY
If any provision of this Agreement shall be held to be invalid,
unenforceable or illegal, in whole or in part, in any jurisdiction under any
circumstances for any reason, (i) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the Parties as expressed in, and the
benefits to the Parties provided by, this Agreement or (ii) if such provision
cannot be so reformed, such provision shall be severed from this Agreement and
an equitable adjustment shall be made to this Agreement (including, without
limitation, addition of necessary further provisions to this Agreement) so as to
give effect to the intent as so expressed and the benefits so provided. Such
holding shall not affect or impair the validity, enforceability or legality of
such provision in any other jurisdiction or under any other circumstances.
Neither such holding nor such reformation or severance shall affect or impair
the legality, validity or enforceability of any other provision of this
Agreement.
ARTICLE 23 -- RIGHTS AND REMEDIES
All rights, powers and remedies afforded to a Party under this Agreement,
by law or otherwise, shall be cumulative (and not alternative) and shall not
preclude assertion or seeking by a Party of any other rights or remedies.
ARTICLE 24 -- CERTAIN DEFINITIONS
As used herein, the word "person" shall include an individual and an entity
of any kind.
ARTICLE 25 -- COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original but which together constitute one and the same instrument.
ARTICLE 26 -- ATTORNEY-IN-FACT
Each Shareholder hereby appoints David Showalter as such Shareholder's
attorney-in-fact and representative, to do any and all things and to execute any
and all documents, in such Shareholder's name, place and stead, in any way which
such Shareholder could do if personally present, in connection with this
Agreement and the transactions contemplated hereby, including but not limited
to, to amend, cancel, extend or waive any term of this Agreement, to bring
claims for and defend claims against Liabilities pursuant to Article 10 of this
Agreement and to enter into settlement negotiations for and to settle claims
thereunder, and to accept notices pursuant to Article 13 of this Agreement. Each
of the other Parties hereto shall be entitled to rely, as being binding upon
such Shareholder, upon any document reasonably believed by it to be genuine and
correct and to have been signed by the
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attorney-in-fact, and no other Party shall be liable to any Shareholder for any
action taken or omitted to be taken by it on such reliance.
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement as of the date first above written.
Buyer:
Starter Galt, Inc.
By: /s/ Lawrence C. Longo, Jr.
---------------------------------------
Name: Lawrence C. Longo, Jr.
-------------------------------------
Title: Treasurer
------------------------------------
Sellers:
Galt Sand Company
By: /s/ G. Michael Hubsmith
---------------------------------------
Name: G. Michael Hubsmith
-------------------------------------
Title: President
------------------------------------
Galt Shop Company
By: /s/ G. Michael Hubsmith
---------------------------------------
Name: G. Michael Hubsmith
-------------------------------------
Title: President
------------------------------------
Galt Sand Canada, Inc.
By: /s/ G. Michael Hubsmith
---------------------------------------
Name: G. Michael Hubsmith
-------------------------------------
-41-
<PAGE>
Title: President
------------------------------------
Danaggers Company
By: /s/ G. Michael Hubsmith
---------------------------------------
Name: G. Michael Hubsmith
-------------------------------------
Title: President
------------------------------------
Shareholders:
/s/ Von L. Elbert
------------------------------------------
Name: Von L. Elbert
Address: 315 Andover Lane SE
Cedar Rapids, IA 52403
/s/ D. Peter Mathison
------------------------------------------
Name: D. Peter Mathison
Address: 2075 Cottage Glen Road SE
Cedar Rapids, IA 52405
/s/ Steven R. Ehlert
------------------------------------------
Name: Steven R. Ehlert
Address: 7230 Sandhurst Drive NW
Cedar Rapids, IA 52405
/s/ David A. Showalter
------------------------------------------
Name: David A. Showalter
Address: 3109 Sue Lane NW
Cedar Rapids, IA 52405
/s/ Jeffrey B. Winter
------------------------------------------
Name: Jeffrey B. Winter
Address: 1244 19th Ave SW
Cedar Rapids, IA 52405
-42-
<PAGE>
/s/ William J. Schoeben
------------------------------------------
Name: William J. Schoeben
Address: 17 Cottage Grove Woods SE
Cedar Rapids, IA 52405
/s/ Timothy W. Rischer
------------------------------------------
Name: Timothy W. Rischer
Address: 1720 Morris Ave NW
Cedar Rapids, IA 52405
/s/ Ronald E. Schenck
------------------------------------------
Name: Ronald E. Schenck
Address: 8385 Green Island
Littleton, CO 80124
/s/ Lawrence Elbert
------------------------------------------
Name: Lawrence Elbert
Address:
/s/ Leslie Kummerfeldt
------------------------------------------
Name: Leslie Kummerfeldt
Address:
/s/ Mark Kummerfeldt
------------------------------------------
Name: Mark Kummerfeldt
Address:
/s/ Rick Seger, V.P.
------------------------------------------
Name: The Irrevocable Elbert Children
Trust, by Mercantile Bank, Trustee
Address:
/s/ Patricia J. McEnany
------------------------------------------
Name: Patricia J. McEnany
Address:
-43-
<PAGE>
/s/ David E. Hein
------------------------------------------
Name: David E. Hein
Address:
-44-
<PAGE>
EXHIBIT A
BILL OF SALE
KNOW ALL PERSONS BY THESE PRESENTS, that, pursuant to the Asset Purchase
and Sale Agreement dated July 31, 1996 (the "Purchase Agreement"), by and among
Starter Galt, Inc., a Delaware corporation ("Buyer"), Galt Sand Company, an Iowa
corporation ("Galt Sand"), Galt Shop Company, an Iowa corporation ("Galt Shop"),
Galt Sand Canada, Inc., a corporation organized under the laws of the province
of Ontario, Canada ("Galt Canada"), Danaggers Company, an Iowa corporation
("Danaggers," and together with Galt Sand, Galt Shop and Galt Canada, "Sellers",
and each, individually, a "Seller"), and the shareholders listed on Schedule 1
attached thereto, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sellers hereby sell, transfer,
assign and deliver to Buyer all of Sellers' right, title and interest in and to
all of the Purchased Assets (as defined in the Purchase Agreement) free and
clear of all liens, claims and encumbrances of any kind or nature whatsoever
(except the Permitted Liens (as defined in the Purchase Agreement)), TO HAVE AND
TO HOLD such Purchased Assets unto Buyer, its successors and assigns, forever.
Each Seller, jointly and severally, hereby represents and warrants that by
this Bill of Sale it sells, transfers, assigns and delivers to Buyer all right,
title and interest in and to such Purchased Assets and hereby, jointly and
severally, covenants and agrees to defend the transfer, sale, assignment and
delivery of such Purchased Assets to Buyer against each and every claim of
superior title, right or interest therein or thereto.
PROVIDED, HOWEVER, that this Bill of Sale shall not constitute an
assignment, sublicense or an attempt to assign or sublicense any contract,
agreement, bid, quotation or other arrangement to which Sellers are a party if
the attempted assignment or sublicense thereof without the consent of the other
party thereto, would constitute a breach thereof or would in any way impair the
rights of Sellers or Buyer thereunder. Sellers will use their best efforts and
cooperate with Buyer in any reasonable arrangement designed to provide for Buyer
the benefits under any such contract, agreement, quotation, bid or other
arrangement.
This Bill of Sale is delivered pursuant to the Purchase Agreement and is
subject to the conditions, representations, warranties and covenants provided
for therein.
THIS BILL OF SALE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF IOWA WITHOUT GIVING EFFECT TO ITS LAWS, RULES OR PRINCIPLES
REGARDING CONFLICTS OF LAWS.
<PAGE>
IN WITNESS WHEREOF, each Seller has duly executed and delivered this Bill
of Sale on the ____ day of August, 1996.
GALT SAND COMPANY
By:_______________________________________
Name:
Title:
-2-
<PAGE>
GALT SHOP COMPANY
By:_______________________________________
Name:
Title:
GALT SAND CANADA, INC.
By:_______________________________________
Name:
Title:
DANAGGERS COMPANY
By:_______________________________________
Name:
Title:
-3
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated August __, 1996, by and among
Galt Sand Company, an Iowa corporation ("Galt Sand"), Galt Shop Company, an Iowa
corporation ("Galt Shop"), Galt Sand Canada, Inc., a corporation organized under
the laws of the Province of Ontario, Canada ("Galt Canada"), Danaggers Company,
an Iowa corporation ("Danaggers," and together with Galt Sand, Galt Shop and
Galt Canada, "Assignors", and each, individually, an "Assignor"), and Starter
Galt, Inc., a Delaware corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to the Asset Purchase and Sale Agreement dated July 31,
1996 between Assignors, Assignee and the shareholders listed on Schedule 1
attached thereto (the "Purchase Agreement"), Sellers have sold to Buyer and
Buyer has acquired from Sellers, simultaneously herewith, certain assets of the
Sellers as more particularly described in the Purchase Agreement (as defined
therein, the "Purchased Assets"); and
WHEREAS, pursuant to the Purchase Agreement, Buyer is obligated to assume
certain obligations and liabilities relating to the Purchased Assets, as more
particularly described in the Purchase Agreement (as defined therein, the
"Assumed Liabilities");
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and other good, sufficient and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignors and Assignee, intending to be legally bound, hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
2. Assignors hereby assign and transfer to Assignee all of Assignors'
obligations, right, title and interest in and to the Assumed Liabilities.
3. Assignee hereby accepts such assignment and transfer, and assumes and
agrees to pay, perform or discharge, as the case may be, the Assumed
Liabilities.
4. This Agreement shall not constitute an assignment or a transfer by
Assignors or an acceptance by Assignee of the Retained Liabilities (as defined
in the Purchase Agreement).
<PAGE>
5. This Agreement may not be modified, amended or supplemented, and no
obligation hereunder may be waived or released, except pursuant to written
instrument signed by the parties.
6. This Agreement shall be binding upon, and shall inure to the benefit of,
the respective successors and assigns of the parties.
7. This Agreement is delivered pursuant to the Purchase Agreement and is
subject to the conditions, representations, warranties and covenants provided
for therein.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CONNECTICUT, WITHOUT GIVING EFFECT TO ITS LAWS, RULES OR
PRINCIPLES REGARDING CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement on the date and year first written above.
ASSIGNORS:
ATTEST: GALT SAND COMPANY
______________________ By:_______________________________________
Name: Name:
Title: Title:
ATTEST: GALT SHOP COMPANY
______________________ By:_______________________________________
Name: Name:
Title: Title:
ATTEST: GALT SAND CANADA, INC.
______________________ By:_______________________________________
Name: Name:
Title: Title:
-2-
<PAGE>
ATTEST: DANAGGERS COMPANY
______________________ By:_______________________________________
Name: Name:
Title: Title:
ASSIGNEE:
ATTEST: STARTER GALT, INC.
______________________ By:_______________________________________
Name: Name:
Title: Title:
-3-
<PAGE>
EXHIBIT C
FORM OF
[SELLER]
SECRETARY'S CERTIFICATE
I, Patricia J. McEnany, hereby certify that I am the duly elected,
qualified and acting Secretary of [SELLER], an Iowa corporation (the "Company"),
and that, as such, I have access to its corporate records and am familiar with
the matters herein certified, and I am authorized to execute and deliver this
Certificate in the name and on behalf of the Company, and that:
1. Attached hereto as Exhibit A is a true and complete copy of the
Company's Articles of Incorporation, as amended. No amendment or other
document relating to or affecting the Articles of Incorporation of the
Company has been filed in the office of the Secretary of State of the State
of Iowa since _________.
2. No proceeding for the amendment of the Company's Articles of
Incorporation has been taken or is pending.
3. No proceeding for the merger, consolidation or dissolution of the
Company has been taken or is pending.
4. Attached hereto as Exhibit B is a true and complete copy of the
By-laws of the Company, as amended, as in full force and effect on the date
hereof. No amendment to such By-laws has been approved or adopted by the
Company's Board of Directors or shareholders since ____________.
5. Attached hereto as Exhibit C are true and complete copies of (i)
resolutions duly adopted by the Board of Directors of the Company by
unanimous written consent dated July __, 1996, and (ii) resolutions duly
adopted by the shareholders of the Company by unanimous written consent
dated July __, 1996; such resolutions have not been amended, modified or
rescinded and remain in full force and effect; and such resolutions are the
only resolutions adopted by the shareholders of the Company and the Board
of Directors of the Company, a committee thereof or a committee designated
by the Board of Directors, relating to the execution and delivery of the
Asset Purchase and Sale Agreement,
<PAGE>
dated as of July 31, 1996 among the Company, Galt Sand Company, Galt Shop
Company, Galt Sand Canada, Inc., Danaggers Company, Starter Galt, Inc. and
the shareholders listed on Schedule 1 attached thereto, and the
transactions contemplated thereby;
6. Each of the persons listed below is a duly elected, qualified and
acting officer of the Company, holding the office or offices set forth
opposite such person's name, and the signature appearing opposite the name
of each such person is his genuine signature:
Name Title Signature
---- ----- ---------
Michael Hubsmith President ___________________________
Von L. Elbert Treasurer ___________________________
Patricia J. McEnany Secretary ___________________________
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of August
1996.
__________________________
[SEAL] Name: Patricia J. McEnany
Title: Secretary
I, Michael Hubsmith, the President of [SELLER], an Iowa corporation, hereby
certify that Von L. Elbert is the duly elected, qualified and acting Treasurer
and Pat McEnany is the duly elected, qualified and acting Secretary of [SELLER]
and that the signature appearing above opposite their respective names are their
genuine signatures.
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of August
1996.
-2-
<PAGE>
__________________________
Name: Michael Hubsmith
Title: President
-3-
<PAGE>
EXHIBIT A
ARTICLES OF INCORPORATION OF
[SELLER]
-4-
<PAGE>
EXHIBIT B
BY-LAWS OF
[SELLER]
-5-
<PAGE>
EXHIBIT C
CORPORATE RESOLUTIONS OF
THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF [SELLER]
-6-
<PAGE>
EXHIBIT D
GALT SAND COMPANY
GALT SHOP COMPANY
GALT SAND CANADA, INC.
DANAGGERS COMPANY
OFFICER'S CERTIFICATE
The undersigned, Michael Hubsmith, being the President of each of GALT SAND
COMPANY, an Iowa corporation ("Galt Sand"), GALT SHOP COMPANY, ("Galt Shop"), an
Iowa corporation, Galt Sand Canada, Inc., a corporation organized under the laws
of the Province of Ontario, Canada ("Galt Canada"), and Danaggers Company, an
Iowa corporation ("Danaggers", and together with Galt Sand, Galt Shop and Galt
Canada, "Sellers", and each, individually, a "Seller"), pursuant to Article 6(j)
of the Asset Purchase and Sale Agreement (the "Purchase Agreement") dated July
31, 1996, by and among Starter Galt, Inc., a Delaware corporation, Sellers and
the Shareholders listed on Schedule 1 thereto, does hereby certify in the name
of and on behalf of each Seller to the following:
1. All of the representations and warranties of Sellers contained in the
Purchase Agreement, the Related Seller Agreements (as defined in the Purchase
Agreement) and in any written statement delivered by Sellers to Buyer pursuant
to the Purchase Agreement and the Related Seller Agreements are true and correct
as of the date hereof as though such representations and warranties were made on
and as of the date hereof.
2. Sellers have performed and complied with all covenants, obligations and
undertakings required by the Purchase Agreement and the Related Seller
Agreements to be performed or complied with by Sellers on or prior to the date
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
____ day of August, 1996.
By:_________________________________
Name: Michael Hubsmith
Title: President
<PAGE>
EXHIBIT E
Form of Sellers' Counsel Opinion
August __,1996
Starter Galt, Inc.
c/o Starter Corporation
370 James Street
New Haven, CT 06513
RE: Asset Purchase and Sale Agreement dated as of July 31, 1996 between Starter
Galt, Inc., Galt Sand Company, Galt Shop Company, Danaggers Company, Galt
Sand Canada Inc. and the shareholders listed on Schedule 1 attached thereto
(the "Shareholders")
Ladies and Gentlemen:
We have acted as special counsel to (i) Galt Sand Company, an Iowa corporation
("Galt Sand"), (ii) Galt Shop Company, an Iowa corporation ("Galt Shop"), (iii)
Danaggers Company, an Iowa corporation ("Danaggers"), and (iv) Galt Sand Canada
Inc., a corporation organized under the laws of the province of Ontario, Canada
("Galt Canada," and together with Galt Sand, Galt Shop, and Danaggers,
"Sellers," and each individually a "Seller"), in connection with the
transactions contemplated by the Asset Purchase and Sale Agreement dated July
31, 1996, by and among Starter Galt, Inc., a Delaware corporation ("Buyer"),
Sellers and the Shareholders, including the exhibits and schedules thereto (the
"Purchase Agreement"). Capitalized terms used herein but not otherwise defined
herein have the meanings ascribed to them in the Purchase Agreement. We are
rendering this opinion pursuant to Article 6(l) of the Purchase Agreement.
In rendering this opinion, we have reviewed originals or copies of (i) the
Purchase Agreement; (ii) the Related Seller Agreements; (iii) the Related
Shareholder Agreements; (iv) the certificate of incorporation and bylaws of
Sellers as amended to date; (v) records of corporate proceedings and stock
records of Sellers relating to the matters discussed herein; (vi) certificates
from officials of the State of Iowa as to the good standing of each of Galt
Sand, Galt Shop and Danaggers, and a certificate from officials in the province
of Ontario, Canada as to the good standing of Galt Canada; (vii) originals or
copies certified or otherwise identified to our satisfaction of such other
records, agreements, instruments and certificates of public officials and such
information from officers of Sellers as we have deemed necessary and relevant as
the basis of the opinions herein.
<PAGE>
Starter Galt, Inc.
Page 2
August __, 1996
In our examination of such agreements, documents, certificates and instruments,
we have assumed the genuineness of all signatures (other than Sellers and
Shareholders signatures as set forth on the Purchase Agreement, Related Seller
Agreements and Related Shareholders Agreements (as applicable), the authenticity
of all documents submitted to us as certified, conformed or photostatic copies,
the authenticity of the originals of such documents and the legal capacity of
all natural persons. As to any facts material to the opinions herein, we have
relied on certificates of public officials and certificates, oaths and
declarations of the officers and other representatives of Sellers and on the
statements of fact contained in the Purchase Agreement, the Related Seller
Agreements and the Related Shareholder Agreements. Although we have relied on
the foregoing documents, statements and certificates, nothing has come to our
attention which would cause us to believe that such documents, statements and
certificates are inaccurate in any material respect. When, in this opinion, we
have used the phrase "to our knowledge," or other phrases of like import, we
have not made any independent investigation of the applicable facts, but have
relied on the representations made in the Purchase Agreement, the Related Seller
Agreements and the Related Shareholder Agreements and in the certificates of the
Sellers and its officers.
The opinions herein are subject to the following limitations and qualifications:
a. We express no opinion concerning any law other than the laws of the State
of Iowa and the federal laws of the United States.
b. We have assumed the due authorization, execution and delivery by all
parties of the Purchase Agreement, the Related Seller Agreements and the
Related Shareholder Agreements, except for Sellers and the Shareholders (as
applicable), and that all parties to the Purchase Agreement, the Related
Seller Agreements and the Related Shareholder Agreements shall act in a
commercially reasonable manner with respect to their rights and remedies
thereunder.
c. We have assumed that there was no misrepresentation, omission or deceit by
any person in connection with the execution, delivery or performance of the
Purchase Agreement, the Related Seller Agreements and the Related
Shareholder Agreements.
d. We express no opinion as to the enforceability of certain waivers, rights
and remedies set forth in the Purchase Agreement, the Related Seller
Agreements and the Related Shareholder Agreements to the extent such
waivers, rights or remedies may be limited by applicable state and federal
laws or public policy, but in our opinion, such laws will not materially
interfere with the practical realization of the benefits intended to be
provided by the Purchase Agreement, the Related Seller
<PAGE>
Starter Galt, Inc.
Page 3
August __, 1996
Agreements and the Related Shareholder Agreements and failure to enforce
such waivers, rights and remedies will not render any of the Purchase
Agreement, the Related Seller Agreements and the Related Shareholder
Agreements to be invalid as a whole.
e. We express no opinion with respect to the binding nature or enforceability
of any of the terms of the Purchase Agreement, the Related Seller
Agreements and the Related Shareholder Agreements to the extent that such
terms may be limited or otherwise affected by (i) general principles of
equity [regardless of whether considered in a proceeding in equity or at
law) which, inter alia, may include a requirement that a creditor act with
reasonableness and good faith, (ii) the unavailability of the remedies of
specific performance or injunctive relief, (iii) principles
of waiver and estoppel, (iv) judicial imposition of an implied covenant of
good faith and fair dealing or (v) public policy.
f. We express no opinion on any contractual choice of law provision or the
application of conflicts of laws, rules or principles.
g. We have assumed that all of the transactions contemplated by the Purchase
Agreement, the Related Seller Agreements and the Related Shareholder
Agreements to occur on or prior to, or at, the Closing will occur prior to,
or substantially simultaneously with, the delivery of this opinion.
Based upon and subject to the foregoing, we are of the opinion that:
1. Galt Sand, Galt Shop and Danaggers are each corporations duly organized,
validly existing and in good standing under the laws of the State of Iowa.
Galt Canada is a corporation duly organized, validly existing and in good
standing under the laws of the province of Ontario, Canada. Each Seller has
all corporate power and authority necessary to (i) execute and deliver, and
perform its obligations under, the Purchase Agreement and the Related
Seller Agreements; (ii) consummate the transactions contemplated thereby;
(iii) own, lease or use the properties owned, leased or used by it; and
(iv) conduct the Business as presently conducted by it. Each Seller is duly
qualified or licensed and in good standing as a foreign corporation
authorized to do business under the laws of all jurisdictions in which the
ownership of its assets or the conduct of its business require it to be so
qualified or licensed.
<PAGE>
Starter Galt, Inc.
Page 4
August __, 1996
2. The Shareholders own of record the outstanding shares of capital stock of
Galt Sand as set forth opposite such Shareholder's name on Schedule 3.2 of
the Purchase Agreement, in each case, to our knowledge, free and clear of
any options, liens, trusts, encumbrances, security interests or claims of
any kind. Galt Sand owns all of the issued and outstanding shares of
capital stock of each of Galt Shop, Danaggers and Galt Canada. Galt Sand
has no subsidiaries other than Galt Shop, Danaggers and Galt Canada and
Galt Shop, Danaggers and Galt Canada have no subsidiaries. There exists no
contract, agreement or arrangement for the issue or sale of any additional
shares of the capital stock of Sellers and no option is outstanding for the
purchase of any of the capital stock of Sellers, except as set forth on
Schedule 3.2 of the Purchase Agreement.
3. The execution and delivery by Sellers of the Purchase Agreement and the
Related Seller Agreements, the performance by Sellers of their respective
obligations thereunder and the consummation by Sellers of the transactions
contemplated thereby have been duly authorized by all necessary corporate
action on the part of Sellers. The Purchase Agreement and the Related
Seller Agreements constitute the legal, valid and binding obligations of
Sellers, enforceable against them in accordance with their respective
terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar federal or state laws affecting
the rights of creditors generally and except that we render no opinion with
respect to the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies (regardless of
whether any said remedy is considered in a proceeding at law or in equity).
4. All corporate proceedings required to be taken by Sellers at or before the
Closing in connection with the Purchase Agreement and the Related Seller
Agreements and the transactions contemplated thereby have been duly taken.
5. The execution and delivery by Sellers of the Purchase Agreement and the
Related Seller Agreements, the performance by Sellers of their respective
obligations thereunder and the consummation by Sellers of the transactions
contemplated thereby will not (a) conflict with, result in any violation of
or constitute a default under their respective Certificates of
Incorporation or Bylaws, in each case as amended to date, (b) to our
knowledge, constitute a default under, result in a violation or breach of,
result in the cancellation or termination of, accelerate the performance
required under or result in the creation of any lien, claim or encumbrance
upon any of the Purchased Assets or properties of Sellers, pursuant to any
contract, mortgage, guaranty, deed of trust, note, indenture, bond, lease,
<PAGE>
Starter Galt, Inc.
Page 5
August __, 1996
agreement or other instrument to which Sellers are a party or by which any
of their respective properties are bound, except as set forth on Schedule
3.5 of the Purchase Agreement, or (c) to our knowledge, result in a
violation of or conflict with any law, ordinance, rule, regulation, order,
writ, judgment, award, edict or decree applicable to Sellers, the
Purchased Assets or the respective Businesses of Sellers.
6. Except as set forth in Schedule 3.5 of the Purchase Agreement, no consent,
approval, exemption or authorization is required to be obtained from, no
notice is required to be given to and no filing is required to be made with
any third party (including, without limitation, federal, state, local or
other governmental or quasi-governmental authorities and instrumentalities
of competent jurisdiction) by Sellers, (i) in connection with the execution
and delivery of the Purchase Agreement and the Related Seller Agreements or
the sale of the Purchased Assets by Sellers; (ii) in order for the Purchase
Agreement and the Related Seller Agreements to constitute legal, valid and
binding obligations of Sellers or to authorize or permit the consummation
by Sellers of the transactions contemplated thereby; or (iii) to our
knowledge, under or pursuant to any governmental or quasi-governmental
permits, licenses, consents, authorizations or approvals held by or Issued
to Sellers (including, without limitation, environmental, health, safety
and operating permits and licenses) by reason of the Purchase Agreement and
the Related Seller Agreements or the consummation of the transactions
contemplated thereby.
7. Except as described In Schedule 3.19 of the Purchase Agreement, to our
knowledge, there are no outstanding suits, actions, proceedings,
investigations, audits, claims, orders, judgments, writs or awards
presently pending or threatened against Sellers or with respect to the
Business or any of the Purchased Assets or which question the validity of
the Purchase Agreement or any action taken or to be taken by Sellers or
Shareholders under the Purchase Agreement, the Related Seller Agreements or
the Related Shareholder Agreements. To our knowledge, there are no final
orders, judgments, writs or decrees presently outstanding against Sellers,
the Purchased Assets or with respect to the Business.
8. Each of Sellers has full corporate power and corporate authority to sell,
assign, transfer and deliver to Buyer the Purchased Assets. The transfer of
the Purchased Assets will transfer good and valid title thereto to Buyer,
free and clear of all liens, claims or encumbrances, except as provided in
the Purchase Agreement.
<PAGE>
Starter Galt, Inc.
Page 6
August __, 1996
9. To our knowledge, each of the Shareholders has the legal capacity and is
otherwise authorized to execute and deliver the Purchase Agreement and the
Related Shareholder Agreements.
10. To our knowledge, the Purchase Agreement and the Related Shareholder
Agreements constitute legal, valid and binding obligations of each
Shareholder enforceable against such Shareholder in accordance with their
respective terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state
laws affecting the rights of creditors generally and except that we render
no opinion with respect to the effect or availability of rules of law
governing a specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a
proceeding at law or in equity).
11. To our knowledge, the execution and delivery of the Purchase Agreement and
the Related Shareholder Agreements, the performance by each Shareholder of
his or her obligations thereunder and the consummation by each Shareholder
of the transactions contemplated thereby will not conflict with, result in
a default under, result in a violation or breach of, any agreement,
judgment or other instrument to which such Shareholder is a party or is
otherwise bound and will not require the consent, approval or authorization
of any third party.
Except as may be expressly stated herein, we express no opinion as to the
factual accuracy of any certificate or determination that may be furnished or
made by or on behalf of any party pursuant to the Purchase Agreement, the
Related Seller Agreements and the Related Shareholder Agreements.
For all purposes of this opinion we have relied upon (without independent
investigation) representations made to us by one or more officers or employees
of Sellers and by the Shareholders, and nothing has come to our attention
leading us to question the accuracy of such information. Without limiting the
foregoing, we have not, for purposes of our opinions above, searched
computerized data bases or the docket of any court, administrative agency or
regulatory body or any tribunal, other than a UCC, judgment, lien search by
National Code Corporation as of July 11, 1996. Any reference herein to "our
knowledge," "known to us," "to our attention," or any variation of the foregoing
shall mean the actual knowledge of the attorneys in this firm who have rendered
substantive attention to this transaction (including the preparation of the
Purchase Agreement), of the existence of any facts that would contradict our
opinions set forth above. We have not undertaken any independent investigation
to determine the existence or absence of such
<PAGE>
Starter Galt, Inc.
Page 7
August __, 1996
facts, and no inference as to our knowledge of the existence or absence of such
facts should be drawn from the fact of our representation of Sellers.
The opinions set forth above are given as of the date hereof and we disallow any
undertaking or obligation to advise you of any changes in law or any facts or
circumstances that may hereafter occur or come to our attention that could
effect such opinion. This opinion letter is delivered solely to you for your use
in conjunction with the transaction contemplated by the Purchase Agreement. This
opinion may not be relied upon by any other person or entity, or used,
circulated, quoted, or otherwise referred to for any other purpose, without our
prior written consent.
Sincerely,
BRADLEY & RILEY, P.C.
Bradley G. Hart
BGH/mjc
<PAGE>
EXHIBIT F
FORM OF LOCK UP AGREEMENT
Starter Corporation
Starter Galt, Inc.
c/o Starter Corporation
370 James Street
New Haven, Connecticut 06513
Re: Lock-up Agreement
Ladies and Gentlemen:
I am delivering this letter to you in connection with the proposed sale of
substantially all of the assets of Galt Sand Company, an Iowa corporation ("Galt
Sand"), Galt Shop Company, an Iowa corporation ("Galt Shop"), Galt Sand Canada,
Inc., a corporation organized under the laws of the Province of Ontario, Canada
("Galt Canada"), Danaggers Company, an Iowa corporation ("Danaggers" , and
together with Galt Sand, Galt Shop and Galt Canada, "Sellers", and each,
individually, a "Seller") to Starter Galt, Inc., a Delaware corporation
("Buyer") in exchange for shares of the common stock, $.01 par value per share
("Common Stock"), of Starter Corporation ("Starter"), the parent corporation of
Buyer, (such shares as defined in the Purchase Agreement as the Starter Shares
and the Additional Shares, and collectively herein, the "Shares").
In order to induce the Buyer to enter into the Asset Purchase and Sale
Agreement dated as of July 31, 1996 by and among Buyer, Sellers and the
shareholders listed on Schedule 1 attached thereto (the "Purchase Agreement"), I
hereby agree that for a period of two (2) years following the Closing Date (as
defined in the Purchase Agreement), I will not, without the prior written
consent of Buyer directly or indirectly, offer to sell, sell, grant an option or
other right for the purchase or sale of, assign, transfer, pledge, hypothecate
or otherwise encumber or dispose of (pursuant to Rule 144 or Rule 145 under the
Securities Act of 1933, as amended, or otherwise) (i) the Shares or any shares
of Common Stock of Starter or any securities or other instruments or rights
convertible into, exercisable or exchangeable for or evidencing any right to
purchase or
<PAGE>
subscribe for any shares of Common Stock of Starter issued in respect of the
Shares (collectively, the "Securities"), which are now or hereafter registered
in my name or beneficially owned by me, or (ii) any beneficial interest in any
Securities.
In order to ensure compliance with my covenants, I hereby consent to the
placing of legends on certificates and instruments representing the Securities
and the entry of stop-transfer orders with the transfer agent of Starter's
Common Stock with respect to any and all of the Securities now or hereafter
registered in my name or beneficially owned by me. My covenants shall be binding
upon my successors, assigns, and personal or legal representatives.
Date: August __, 1996
_________________________________________
Name:
_________________________________________
Print Social Security Number or
Taxpayer Identification Number
-2-
<PAGE>
EXHIBIT G
FORM OF
CERTIFICATE OF SHAREHOLDER OF
GALT SAND COMPANY
The undersigned, being a shareholder of GALT SAND COMPANY, an Iowa
corporation ("Galt Sand"), pursuant to Article 6(q) of the Asset Purchase and
Sale Agreement (the "Purchase Agreement") dated July 31, 1996, by and among the
undersigned, Starter Galt, Inc., a Delaware corporation ("Buyer"), Galt Sand
Company, an Iowa corporation ("Galt Sand"), Galt Shop Company, an Iowa
corporation, Galt Sand Canada, Inc., a corporation organized under the laws of
the Province of Ontario, Canada, Danaggers Company, an Iowa corporation, and the
other shareholders listed on Schedule 1 attached thereto, do hereby certify to
the following:
1. All of the representations and warranties of the undersigned contained
in the Purchase Agreement, the Related Shareholder Agreements (as defined in the
Purchase Agreement) and in any written statement delivered by the undersigned to
Buyer pursuant to the Purchase Agreement and the Related Shareholder Agreements
are true and correct as of the date hereof as though such representations and
warranties were made on and as of the date hereof.
2. The undersigned has performed and complied with all covenants,
obligations and undertakings required by the Purchase Agreement and the Related
Shareholder Agreements to be performed or complied with by the undersigned on or
prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
____ day of August, 1996.
_________________________________________
Name:
<PAGE>
KDW DRAFT 7/30/96
EXHIBIT H
STARTER GALT, INC.
FORM OF OFFICER'S CERTIFICATE
The undersigned, __________________, being the [Vice] President of STARTER
GALT, INC., a Delaware corporation ("Buyer"), pursuant to Article 7(f) of the
Asset Purchase and Sale Agreement (the "Purchase Agreement") dated July 31,
1996, by and among Buyer, Galt Sand Company, an Iowa corporation, Galt Shop
Company, an Iowa corporation, Galt Sand Canada, Inc., a corporation organized
under the laws of the Province of Ontario, Canada, Danaggers Company, an Iowa
corporation, and the shareholders listed on Schedule 1 thereto, does hereby
certify in the name of and on behalf of Buyer to the following:
1. All of the representations and warranties of Buyer contained in the
Purchase Agreement, the Related Buyer Agreements (as defined in the Purchase
Agreement) and in any written statement delivered by Buyer to Sellers pursuant
to the Purchase Agreement and the Related Buyer Agreements are true and correct
as of the date hereof as though such representations and warranties were made on
and as of the date hereof.
2. Buyer has performed and complied with all covenants, obligations and
undertakings required by the Purchase Agreement and the Related Buyer Agreements
to be performed or complied with by Buyer on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
____ day of August, 1996.
By:______________________________________
Name:
Title: [Vice] President
<PAGE>
EXHIBIT I
FORM OF BUYER'S COUNSEL OPINION
August __, 1996
Galt Sand Company
Galt Shop Company
Galt Sand of Canada, Inc.
Danaggers Company
c/o Galt Sand Company
951 32nd Street, S.W.
Cedar Rapids, Iowa 52404
Re: Asset Purchase and Sale Agreement dated July , 1996 by and among
Starter Galt, Inc., Galt Sand Company, Galt Shop Company, Galt Sand of
Canada, Inc., Danaggers Company and the shareholders listed on
Schedule 1 attached thereto
Ladies and Gentlemen:
We have acted as special counsel to Starter Galt, Inc., a Delaware
corporation ("Buyer"), in connection with the transactions contemplated by the
Asset Purchase and Sale Agreement dated July ___, 1996 (the "Purchase
Agreement"), by and among Buyer, Galt Sand Company, an Iowa corporation ("Galt
Sand"), Galt Shop Company, an Iowa corporation ("Galt Shop"), Galt Sand of
Canada, Inc., a corporation organized under the laws of the Province of
Ontario, Canada ("Galt Canada"), Danaggers Company, an Iowa Corporation
("Danaggers", and together with Galt Sand, Galt Canada and Galt Shop,
"Sellers", and each, individually, a "Seller"), and the shareholders listed on
Schedule 1 attached thereto (collectively, the "Shareholders", and each,
individually, a "Shareholder"). Capitalized terms used herein but not otherwise
defined herein have the meanings ascribed to them in the Purchase Agreement. We
are rendering this opinion pursuant to Article 6(g) of the Purchase Agreement.
In rendering this opinion, we have reviewed originals or copies of (i) the
Purchase Agreement; (ii) the Related Buyer Agreements; (iii) the Certificate of
Incorporation and By-Laws of Buyer as amended to date; (iv) records of corporate
proceedings of Buyer relating to the matters discussed herein, as made available
to us by Buyer; (iv) certificates from officials of the State of Delaware as to
the good standing of Buyer; and (v) originals or copies certified or otherwise
identified to our satisfaction of such other records, agreements,
<PAGE>
Galt Sand Company
August __, 1996
Page 2
instruments and certificates of public officials and such information from
officers of Buyer as we have deemed necessary and relevant as the basis of the
opinions herein.
In our examination of such agreements, documents, certificates and
instruments, we have assumed the genuineness of all signatures (other than the
signature of Buyer), the authenticity of all documents submitted to us as
certified, conformed or photostatic copies, the authenticity of the originals of
such documents and the legal capacity of all natural persons. As to any facts
material to the opinions herein, we have relied on certificates of public
officials and certificates, oaths and declarations of the officers and other
representatives of Buyer and on the statements of fact contained in the Purchase
Agreement and the Related Buyer Agreements. Although we have relied on the
foregoing documents, statements and certificates, nothing has come to our
attention which would cause us to believe that such documents, statements and
certificates are inaccurate in any material respect. When, in this opinion, we
have used the phrase "to our knowledge", or other phrases of like import, we
have not made any independent investigation of the applicable facts, but have
relied on the representations made in the Purchase Agreement and the Related
Buyer Agreements and in the certificates of the Buyer and its officers.
The opinions herein are subject to the following limitations and
qualifications:
(a) We express no opinion concerning any law other than the laws of
the State of Connecticut, the corporate laws of the State of Delaware and
the federal laws of the United States.
(b) We have assumed the due authorization, execution and delivery by
all parties of the Purchase Agreement and the Related Buyer Agreements,
except for Buyer and that all parties to the Purchase Agreement and the
Related Buyer Agreements shall act in a commercially reasonable manner with
respect to their rights and remedies thereunder.
(c) We have assumed that there was no misrepresentation, omission or
deceit by any person in connection with the execution, delivery or
performance of the Purchase Agreement and the Related Buyer Agreements.
(d) We express no opinion as to the enforceability of certain waivers,
rights and remedies set forth in the Purchase Agreement and the Related
Buyer
<PAGE>
Galt Sand Company
August __, 1996
Page 3
Agreements to the extent such waivers, rights or remedies may be limited by
applicable state and federal laws or public policy, but in our opinion,
such laws will not materially interfere with the practical realization of
the benefits or security intended to be provided by the Purchase Agreement
and the Related Buyer Agreements and failure to enforce such waivers,
rights and remedies will not render the Purchase Agreement or the Related
Buyer Agreements to be invalid as a whole.
(e) We express no opinion with respect to the binding nature or
enforceability of any of the terms of the Purchase Agreement and the
Related Buyer Agreements to the extent that such terms may be limited or
otherwise affected by (i) general principles of equity (regardless of
whether considered in a proceeding in equity or at law) which, inter alia,
may include a requirement that a creditor act with reasonableness and good
faith; (ii) the unavailability of the remedies of specific performance or
injunctive relief; (iii) principles of waiver and estoppel; (iv) judicial
imposition of an implied covenant of good faith and fair dealing; or (v)
public policy.
(f) We express no opinion on any contractual choice of law or venue
provision or the application of conflicts of laws rules or principles.
(g) We have assumed that all of the transactions contemplated by the
Purchase Agreement and the Related Buyer Agreements to occur on or prior
to, or at, the Closing will occur prior to, or substantially simultaneously
with, the delivery of this opinion.
Based upon and subject to the foregoing, we are of the opinion that:
1. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Buyer has all corporate power
and authority necessary to (i) execute and deliver, and perform its obligations
under, the Purchase Agreement and Related Buyer Agreements; and (ii) consummate
the transactions contemplated thereby.
2. The execution and delivery by Buyer of the Purchase Agreement and the
Related Buyer Agreements, the performance by Buyer of its obligations thereunder
and the consummation by Buyer of the transactions contemplated thereby have been
duly authorized by
<PAGE>
Galt Sand Company
August __, 1996
Page 4
all necessary corporate action on the part of Buyer. The Purchase Agreement and
the Related Buyer Agreements constitute the legal, valid and binding obligations
of Buyer, enforceable against Buyer in accordance with their respective terms.
3. The execution and delivery by Buyer of the Purchase Agreement and the
Related Buyer Agreements, the performance by Buyer of its obligations thereunder
and the consummation by Buyer of the transactions contemplated thereby will not
conflict with, result in any violation of or constitute a default under the
Certificate of Incorporation of Buyer or the By-Laws of Buyer, in each case as
amended to date, or to our knowledge, result in a violation or conflict with any
law, ordinance, rule, regulation, order, writ, judgment, award, edict or decree
applicable to Buyer.
4. To our knowledge, there are no legal or governmental actions,
proceedings or investigations pending against Buyer in respect of the Purchase
Agreement or the transactions contemplated thereby.
This opinion is rendered as of the date hereof. We have no obligation to
update this letter or otherwise advise you with respect to events or
circumstances arising after the date hereof.
This opinion is furnished to you solely for your benefit in connection with
the transactions contemplated by the Purchase Agreement. This opinion may not be
relied upon by any other person or entity, or used, circulated, quoted, or
otherwise referred to for any other purpose, without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT J
STARTER GALT, INC.
SECRETARY'S CERTIFICATE
I, Mark G. Sklarz, hereby certify that I am the duly elected, qualified and
acting Secretary of STARTER GALT, INC., a Delaware corporation (the "Company"),
and that, as such, I have access to its corporate records and am familiar with
the matters herein certified, and I am authorized to execute and deliver this
Certificate in the name and on behalf of the Company, and that:
1. Attached hereto as Exhibit A is a true and complete copy of the
Company's Certificate of Incorporation, as amended. No amendment or other
document relating to or affecting the Certificate of Incorporation of the
Company has been filed in the office of the Secretary of State of the State
of Delaware since _________.
2. No proceeding for the amendment of the Company's Articles of
Incorporation has been taken or is pending.
3. No proceeding for the merger, consolidation or dissolution of the
Company has been taken or is pending.
4. Attached hereto as Exhibit B is a true and complete copy of the
By-laws of the Company, as amended, as in full force and effect on the date
hereof. No amendment to such Bylaws has been approved or adopted by the
Company's Board of Directors or stockholders since ____________.
5. Attached hereto as Exhibit C are true and complete copies of
resolutions duly adopted by the Board of Directors of the Company by
unanimous written consent dated July __, 1996; such resolutions have not
been amended, modified or rescinded and remain in full force and effect;
and such resolutions are the only resolutions adopted by the Board of
Directors of the Company, a committee thereof or a committee designated by
the Board of Directors, relating to the execution and delivery of the Asset
Purchase and Sale Agreement, dated as of July 31, 1996 among the Company,
Galt Sand Company, Galt Shop Company, Galt Sand Canada, Inc., Danaggers
Company and the
<PAGE>
shareholders listed on Schedule 1 attached thereto, and the transactions
contemplated thereby;
6. Each of the persons listed below is a duly elected, qualified and
acting officer of the Company, holding the office or offices set forth
opposite such person's name, and the signature appearing opposite the name
of each such person is his genuine signature:
Name Title Signature
---- ----- ---------
President ______________________________
Vice President ______________________________
Mark G. Sklarz Secretary ______________________________
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of August
1996.
________________________________
[SEAL] Name: Mark G. Sklarz
Title: Secretary
I, __________________, the [Vice] President of STARTER GALT, INC., a
Delaware corporation, hereby certify that Mark G. Sklarz is the duly elected,
qualified and acting Secretary of STARTER GALT, INC. and that the signature
appearing above opposite his name is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of August
1996.
-2-
<PAGE>
________________________________
Name:
Title: [Vice] President
-3-
<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION OF
STARTER GALT, INC.
-4-
<PAGE>
EXHIBIT B
BY-LAWS OF
STARTER GALT, INC.
-5-
<PAGE>
EXHIBIT C
CORPORATE RESOLUTIONS OF
THE BOARD OF DIRECTORS OF
STARTER GALT, INC.
-6-
<PAGE>
SCHEDULE 1.2
PERMITTED LIENS
1. Liens in favor of Firstar Bank Milwaukee, N.A. and Firstar Bank Iowa, N.A. to
secure Galt Sand's obligations under the Revolving Loan and Security Agreement
dated May 1, 1996 between Firstar Bank Milwaukee, N.A. through its Financial
Services Division and Galt Sand.
2. Liens in favor of Firstar Bank Milwaukee, N.A. and Firstar Bank Iowa, N.A. to
secure Galt Shop's obligations under the Revolving Loan and Security Agreement
dated May 1, 1996 between Firstar Bank Milwaukee, N.A. through its Financial
Service Division and Galt Shop.
3. Lien in favor of SunTrust Bank, Atlanta, f.k.a., Trust Company Bank on the
accounts receivable of Galt Sand to secure Galt Sand's obligations under the
Factoring Agreement dated June 26, 1987 between Trust Company Bank and Galt
Sand.
4. Liens in favor of the lessors of the equipment described under Asset Class
"GCLA" or "CLA" on Schedule 1.2(e) of this Agreement to secure Galt Sand's
capital lease obligations.
5. Lien in favor of Olson Graphic Products, Inc. on the property listed on
Schedule A to the consignment Stock Agreement dated March 29, 1995 between Olson
Graphic Products, Inc. and Galt Sand.
6. Lien in favor of T.K. Gray, Inc. on certain consumable supplies owned by T.K.
Gray, Inc. and located on the premises of Galt Sand.
<PAGE>
SCHEDULE 1.3
EXCLUDED ASSETS
All of the capital stock of Galt Shop
All of the capital stock of Danaggers
All of the capital stock of Galt Canada
<PAGE>
SCHEDULE 1.7(b)
RETAINED LIABILITIES
Any tax liabilities which may arise subsequent to the Closing as a result
of an audit by any tax authority which relates to periods prior to or including
the Closing which are not disclosed on the Projected Closing Date Balance Sheet.
Any liabilities which relate to the matter set forth in paragraph 1 on
Schedule 3.20.
<PAGE>
SCHEDULE 6(N)
MATERIAL THIRD PARTY CONSENTS
1. Firstar Bank Milwaukee, N.A. and Firstar Bank Iowa, N.A. regarding the
Revolving Loan and Security Agreement dated May 1, 1996 between Firstar Bank
Milwaukee, N.A. through its Financial Services Division and Galt Sand.
2. Firstar Bank Milwaukee, N.A. and Firstar Bank Iowa, N.A. regarding the
Revolving Loan and Security Agreement dated May 1, 1996 between Firstar Bank
Milwaukee, N.A. through its Financial Services Division and Galt Shop.
3. SunTrust Bank, Atlanta, f.k.a., Trust Company Bank regarding the Factoring
Agreement dated June 26, 1987 between Trust Company Bank and Galt Sand.
4. Lessors or sublessors pursuant to all of Sellers' leases or subleases in
respect of Real Property.
5. National Football League Properties, Inc. regarding the Retail Licensing
Agreement dated August 25, 1995 between National Football League Properties,
Inc. and Galt Sand.
6. National Football League Properties, Inc. regarding the Retail Licensing
Agreement dated May 22, 1995 between National Football League Properties, Inc.
and Galt Sand.
7. Sam's Club regarding the Vendor Agreement between Sam's Club and Galt Sand.
8. Sears, Roebuck and Co. regarding the Vendor Agreement between Sears, Roebuck
and Co. and Galt Sand.
9. Shareholders of each Seller.
10. Directors of each Seller.
[11. Mercantile Bank of Cedar Rapids regarding the Continuing Guaranty (Limited)
by Galt Sand in favor of Mercantile Bank of Cedar Rapids.]
<PAGE>
SCHEDULE 9.7
LICENSE RENEWALS
NFL License
Significant College Licenses, listed on the attachment
EXHIBIT 2.2
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of August 9, 1996 by and among
Starter Corporation, a corporation organized under the laws of the state of
Delaware (the "Company"), with its principal place of business at 370 James
Street, New Haven Connecticut 06513 and Sellers (as hereinafter defined) each
with its principal place of business at 951 32nd Avenue, S.W., Cedar Rapids,
Iowa 52404. Reference is made to the Asset Purchase and Sale Agreement dated
July 31, 1996 (including all schedules and exhibits contained therein and any
amendments or supplements thereto, the "Purchase Agreement") by and among
Starter Galt, Inc., a Delaware corporation ("Buyer"), Galt Sand Company, an Iowa
corporation ("Galt Sand"), Galt Shop Company, an Iowa corporation ("Galt Shop"),
Galt Sand Canada, Inc., a corporation organized under the laws of the Province
of Ontario ("Galt Canada"), Danaggers Company, an Iowa corporation ("Danaggers",
and together with Galt Sand, Galt Shop and Galt Canada, "Sellers," and each
individually, a "Seller"), and the shareholders listed on Schedule 1 attached
thereto (collectively, "Shareholders," and each individually, a "Shareholder").
All capitalized terms used but not defined herein shall have the same meanings
given to them in the Purchase Agreement.
WHEREAS, pursuant to the Purchase Agreement, Buyer will purchase
substantially all the assets of Sellers.
WHEREAS, in exchange for the Purchased Assets, the Sellers will receive (a)
on the date hereof 1,066,666.67 shares of the Company's common stock, $.01 par
value per share ("Common Stock") (the "Starter Shares") and (b) if the
conditions as provided in Article 1.9(c) of the Purchase Agreement are
satisfied, then on the date provided thereunder, 66,666.67 shares of the
Company's Common Stock (the "Additional Shares").
WHEREAS, pursuant to the Purchase Agreement and pursuant to the Lock Up
Agreement, Sellers have agreed to not sell, transfer or otherwise dispose of the
Starter Shares or the Additional Shares for a period of two years from the
Closing Date (the "Holding Period").
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
grant certain registration rights to Sellers with respect to the Starter Shares
and the Additional Shares if the Company registers any of its shares of Common
Stock during the Holding Period.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions. For the purposes of this Registration Rights
Agreement,
(a) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), or any comparable law of any other jurisdiction, and the
declaration or ordering of effectiveness of such registration statement or
document.
(b) The term "Registrable Securities" means the Starter Shares, the
Additional Shares and any shares of the Company's Common Stock issued as a
dividend or other distribution with respect to the Starter Shares or the
Additional Shares, excluding, however, any Registrable Securities sold by a
person in a transaction in which its rights under this Registration Rights
Agreement are not assigned.
(c) The term "Holder" means the holder of record of the Registrable
Securities.
SECTION 2. Piggyback Registration. (a) If, any time during the Holding
Period (but without any obligation to do so), the Company proposes to register
any of its Common Stock under the Securities Act in
<PAGE>
connection with the public offering of such securities solely for cash (other
than in connection with a merger, an acquisition or an offering of securities
under any employee benefit plan or stock option plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give Holder
written notice of such registration at least 30 days prior to such registration.
Upon the written request of the Holder given within twenty (20) days after
mailing of such notice by the Company, the Company shall, subject to Section
2(b), use its best efforts to cause to be registered under the Securities Act as
part of such Company registration, all of the Registrable Securities that Holder
has requested to be registered.
(b) If the registration of which the Company gives notice pursuant to
Section 2(a) is for an underwritten offering, and if the underwriter determines
that marketing factors require exclusion or a limitation of the number of shares
to be underwritten, or determines that any other limitation is advisable, the
underwriter may exclude or otherwise limit the number of Registrable Securities
to be included in the registration and underwriting. The Company shall so advise
Holder, and the number of shares included in such registration and underwriting,
if any, shall be allocated among Holder and any other selling stockholders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities requested to be registered by Holder and any other selling
stockholders, or otherwise as the underwriter shall advise. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. If Holder
disapproves of any such underwriting, such person may elect to withdraw
therefrom by written notice to the Company and the underwriter. The Registrable
Securities so withdrawn from such underwriting shall also be withdrawn from such
registration.
(c) Notwithstanding the provisions of Section 2(a), the Company shall have
the right at any time after it shall have given written notice pursuant to
Section 2(a) (irrespective of whether a written request for inclusion of any
Registrable Securities shall have been made) to elect not to file any such
proposed registration statement or to withdraw the same after the filing but
prior to the effective date thereof.
(d) The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of Registrable Securities with respect
to the registration pursuant to this Section 2 for Holder, including (without
limitation) all registration, filing, qualification, attorneys', printers' and
accounting fees relating or apportionable thereto; provided, however, that the
following expenses shall be borne and paid by Holder: all out-of-pocket expenses
incurred by Holder, including all expenses, fees and disbursements of any
counsel retained by Holder, all underwriting discounts and commissions, all
transfer taxes and all expenses of any audits resulting from the Company's
inability to use in the registration statement any financial statements by
reason of such registration of the Registrable Securities held by Holder.
SECTION 3. Obligations of the Company. In connection with any registration
effected pursuant to Section 2, the Company shall, as expeditiously as
reasonably possible:
(a) Subject to Section 2(b), prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of the securities covered by such
registration statement.
(c) Furnish to Holder such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by it.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by Holder to enable Holder to
consummate the disposition in such jurisdictions of such securities, provided
that the Company
2
<PAGE>
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Holder, if participating
in such underwriting, shall also enter into and perform its obligations under
such an agreement.
(f) Notify Holder holding Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements made therein not misleading in the light of the circumstances then
existing.
SECTION 4. Obligations of Holder. (a) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Registration
Rights Agreement with respect to the Registrable Securities of the Holder that
Holder shall furnish to the Company in writing on a timely basis such
information with respect to Holder, the Registrable Securities held, and the
intended method of disposition of such securities as shall be required to effect
the registration of Holder's Registrable Securities. The Company shall have no
obligation with respect to this Registration Rights Agreement, if in the
reasonable opinion of counsel to the Company or the underwriters, the failure of
Holder to provide the information required by this Section 4 impairs or may
impair the viability of the offering or the legality of the registration
statement or the underlying offering.
(b) Holder holding Registrable Securities included in a registration
statement will not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a registration statement or prospectus.
(c) At the end of the period during which the Company keeps the
registration statement current and effective, Holder holding Registrable
Securities included in the registration statement shall discontinue sales of
Registrable Securities pursuant to such registration statement upon receipt of
notice from the Company of its intention to remove from registration the
Registrable Securities covered by such registration statement which remain
unsold, and Holder shall notify the Company of the number of Registrable
Securities registered which remain unsold immediately upon receipt of such
notice from the Company.
SECTION 5. Indemnification. In the event any of Holder's Registrable
Securities are included in a registration statement under this Registration
Rights Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless Holder requesting to join in such registration, any underwriter (as
defined in the Securities Act) for Holder and each person, if any, who controls
Holder or Holder's underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act or the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements made therein not misleading,
or (iii) any violation by the Company of the Securities Act, the 1934 Act or any
state securities law or any rule or regulation promulgated under the Securities
Act, the 1934 Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration; and the Company will reimburse Holder, Holder's underwriter
or controlling person, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 5(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage,
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liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with information
furnished expressly for use in connection with such registration by Holder,
underwriter or controlling person or a Violation which arises out of any untrue
statement or omission made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement becomes effective or in the amended prospectus filed with
the SEC pursuant to SEC Rule 424(b) if such prospectus was not furnished to the
person or entity asserting the Violation at or prior to the time such furnishing
is required by the Securities Act. This indemnification shall not be deemed to
relieve any underwriter of any of its due diligence obligations.
(b) To the extent permitted by law, Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter, any other selling shareholder
selling securities in such registration statement and any controlling person of
any such underwriter or selling shareholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with information furnished by Holder for use in connection
with such registration; and Holder will reimburse any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 5(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Company, which consent shall not
be unreasonably withheld; provided further that in no event shall any indemnity
under this Section 5(b) exceed the gross proceeds from the offering received by
Holder.
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 5, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5, but omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 5.
(d) The obligations of the Company and Holder under this Section 5 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Registration Rights Agreement.
SECTION 6. Lock-Up Period. Subsequent to any registration of Registrable
Securities pursuant to this Registration Rights Agreement or otherwise, such
shares of Common Stock shall not be sold or otherwise disposed of for such
period as is determined by the Company's underwriter for the public offering.
SECTION 7. Miscellaneous.
(a) Assignment. The rights of Sellers hereunder may be assigned to Sellers'
stockholders upon a distribution of all or any part of the Registrable
Securities to such stockholders as a dividend upon written notice to the
Company. No other assignment shall be effective without the prior written
consent of the Company.
(b) Grammatical References. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the antecedent may require.
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(c) Notices. Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered or upon receipt when sent by registered mail, return receipt
requested, addressed to the other party at the address of such party set forth
in this Registration Rights Agreement, or to such other address furnished by
notice given in accordance with this Section 7(c).
(d) No Waiver. Failure of the Company or Holder to exercise any right or
remedy under this Registration Rights Agreement or delay by the Company or
Holder in exercising same, will not operate as a waiver thereof. No waiver by
the Company or Holder will be effective unless and until it is in writing and
signed by the Company and Holder.
(e) Governing Law. This Registration Rights Agreement shall be enforced,
governed and construed in all respects in accordance with the laws of the State
of Delaware, without giving effect to its conflicts of law rules or principles.
This Registration Rights Agreement and the rights, powers and duties set forth
herein shall be binding upon and inure to the benefit of the parties hereto, and
their respective heirs, estates, legal representatives, successors and assigns.
In the event that any provision of this Registration Rights Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability or any other provision hereof.
(f) Complete Agreement. This Registration Rights Agreement and the
documents referred to herein shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
(g) Section Headings. The section titles and headings contained in this
Registration Rights Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not part of this Registration Rights
Agreement.
(h) Execution in Counterparts. This Registration Rights Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute the same Registration Rights Agreement.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
STARTER CORPORATION
By: /s/ Lawrence C. Longo, Jr.
------------------------------
Name: Lawrence C. Longo, Jr.
Title: Chief Financial Officer
GALT SAND COMPANY
By: /s/ G. Michael Hubsmith
------------------------------
Name: G. Michael Hubsmith
Title: President
GALT SHOP COMPANY
By: /s/ G. Michael Hubsmith
------------------------------
Name: G. Michael Hubsmith
Title: President
GALT SAND CANADA, INC.
By: /s/ G. Michael Hubsmith
------------------------------
Name: G. Michael Hubsmith
Title: President
DANAGGERS COMPANY
By: /s/ G. Michael Hubsmith
------------------------------
Name: G. Michael Hubsmith
Title: President
6
EXHIBIT 99.1
STARTER CORPORATION COMPLETES ACQUISITION
OF GALT SAND COMPANY
New Haven, CT, August 19, 1996 -- Starter Corporation (NYSE:STA) today
announced that it has completed the acquisition of substantially all the assets
of Galt Sand Company and its subsidiaries, located in Cedar Rapids, Iowa. Galt
Sand is a manufacturer of silk screened and embroidered fleece products and
t-shirts sold under the Galt Sand, Snowshoe Thompson, Dannagers and Sport One
labels, as well as under licenses from the National Football League and over 50
colleges and universities. The Company also operates 18 retail stores in outlet
malls.
The consideration for the transaction includes approximately $8 million in
newly issued shares of Starter common stock, and the assumption of liabilities
totaling approximately $18 million.
Starter is a leading designer and marketer of quality Outerwear,
Activewear, Printables and Accessories, and is a licensee of all the major North
American professional sports leagues and universities. The Company also designs
and markets its own Starter branded apparel.
###
