EXHIBIT 2.1 LOCK UP AGREEMENT
December 14, 1994
VIA FACSIMILE TRANSMISSION
Mr. and Mrs. Icaro Olivieri
Norcim Holdings B.V.
161709 Canada Inc.
101028 Canada Ltee
161578 Canada Inc.
Siminvest S.A.
Dear Sirs:
Re: Canstar Sports Inc.
We understand that:
(i) Mr. and Mrs. Icaro Olivieri (the "Principal Shareholders")
own, or exercise control or direction over, all of the shares
of 161709 Canada Inc. ("1617") and, through 1617, own or
exercise control or direction over, 80% of the shares of
161578 Canada Inc. ("1615");
(ii) Norcim Holdings B.V. ("NBV") owns directly all of the shares
of 101028 Canada Ltee ("1010") other than a class of voting
preferred shares of 1010 (the "O Prefs") owned by Mr.
Olivieri; and
(iii) 1617, 1615 and 1010 (collectively, the "Holding Companies")
own, respectively, the following common shares of Canstar
Sports Inc. ("Canstar"):
Name of Shareholder Number of Canstar Common Shares
1617 2,276,300
1010 2,114,999
1615 2,447,623
The common shares of Canstar owned by the Holding Companies
are referred to herein as the "Shares".
We further understand that Siminvest S.A. ("Siminvest") owns
1,832,998 common shares of Canstar (the "Siminvest Shares").
1. Reorganization
1.1 (a) In order to give effect to the transactions
contemplated herein, the Principal Shareholders, 1617 and
1615 hereby covenant with us that promptly after the date
hereof 1617 and 1615 will form new, wholly-owned subsidiary
corporations under the Canada Business Corporations Act
(respectively, "1617 Subco" and "1615 Subco") with authorized
share capital consisting of an unlimited number of common
shares and an unlimited number of voting preference shares.
The rights, privileges, restrictions and conditions attaching
to these shares shall be satisfactory to each of 1617, 1615
and us, acting reasonably. 1617 and 1615 will transfer their
respective holdings of common shares of Canstar to such new
subsidiaries in exchange for common shares of each of 1617
Subco and 1615 Subco. 1617 and 1617 Subco and 1615 and 1615
Subco shall make the following elections under subsection
85(1) of the Income Tax Act and under section 518 of the
Quebec Taxation Act in respect of the transfer by 1617 and
1615 to their respective subsidiaries of their common shares
of Canstar,
(i) 1617 and 1617 Subco shall elect a transfer price
equal to the adjusted cost base (as defined for purposes of
those legislative provisions) to 1617 of the Common Shares so
transferred by it; and
(ii) 1615 and 1615 Subco shall elect a transfer price equal to the
adjusted cost base (as defined for purposes of those legislative
provisions) to 1615 of the Common Shares so transferred by it.
(b) Prior to the "Closing Date" (defined in
paragraph 7), each of 1615 and 1615 Subco and 1617 and 1617
Subco may undertake transactions so that each of 1615's and
1617's share of "safe income" attributable to the common
shares of Canstar transferred to 1615 Subco and 1617 Subco,
as the case may be, may be capitalized or may be distributed
to 1615 and 1617, as the case may be (provided that any such
distribution shall not have the effect of creating any
liability that remains outstanding on the Closing Date or
affects the ownership of any Shares), and be added to the
adjusted cost base of such corporation's "Transferred
Subsidiary Shares" (defined in paragraph 2.1).
_
1.2 (a) Not later than the day prior to the date of our
making the "Offer (as defined in paragraph 2.2), NBV will
cause 1010 to create a new class of voting preferred shares
having rights, privileges, restrictions and conditions
satisfactory to NBV, 1010 and us, acting reasonably.
Promptly thereafter and prior to the date of the Offer, NBV
will subscribe for voting preferred shares of 1010 for
aggregate consideration equal to Cdn.$10.
(b) Prior to the date of the Offer 1617 will
subscribe for voting preferred shares of 1617 Subco and 1615
will subscribe for voting preferred shares of 1615 Subco, in
each case for aggregate consideration equal to Cdn. $10.
(c) Prior to the date of the Offer, NBV, 1617 and
1615 will, respectively, sell to us, and we will purchase,
the voting preferred shares of 1010, 1617 Subco and 1615
Subco issued in accordance with paragraphs 1.2(a) or (b), as
applicable, in each case for aggregate consideration of
Cdn.$10, it being understood that following such sale and
purchase we will hold a sufficient number of voting preferred
shares of each such company to constitute each such company
an "associate" of ours within the meaning of the Canada
Business Corporations Act.
(d) On or prior to the Closing Date 1010 will redeem
the O Prefs for nominal consideration.
1.3 If the obligations of the Principal Shareholders,
NBV and the Holding Companies under this Agreement are
terminated in accordance with paragraph 8, NBV, 1617 and 1615
shall thereupon be obligated to purchase from us, and we
shall be obligated to sell to them, respectively, all of the
outstanding voting preferred shares of 1010, 1617 Subco and
1615 Subco owned by us for an aggregate purchase price equal
to the purchase price paid by us for such shares. The
closings of the purchases and sales of such voting preferred
shares shall take place at the time and place designated by
NBV, 1617 and 1615 by written notice given to us at least 5
business days prior to the date of closing. Each of NBV,
1617 and 1615 shall pay the purchase price for the voting
preferred shares by cheque to us against delivery of share
certificates representing such shares duly endorsed in blank
for transfer, with signatures guaranteed by a bank or trust
company.
1.4 The expression, "Transferred Subsidiaries" means,
collectively, 1010, 1617 Subco and 1615 Subco and the
expression "Vendors" means:
(i) NBV in relation to 1010;
(ii) 1617 in relation to each of 1617 Subco; and
(iii) 1615 in relation to 1615 Subco.
2. Purchase of Shares and the Offer
2.1 On and subject to the terms and conditions set
forth herein, we hereby agree to purchase from the Vendors,
and the Vendors hereby, severally, agree to sell to us, for
cash, on the Closing Date all of the outstanding shares (the
"Transferred Subsidiary Shares") of each of the Transferred
Subsidiaries which are not owned by us. The following shall
be the cash consideration for the Transferred Subsidiary
Shares:
(i) in respect of the shares of 1010 - Cdn.$58,162,472;
(ii) in respect of the shares of 1617 Subco -
Cdn.$62,598,250; and
(iii) in respect of the shares of 1615 Subco -
Cdn.$67,309,632.
2.2 On and subject to the terms and conditions set
forth herein, we further agree to make, as soon as
practicable, and in any event not later than December 23,
1994 (subject to the provisions of paragraph 3.1), a cash
offer, the acceptance of which has been recommended by the
board of directors of Canstar contemporaneously with the
making of the offer (the "Offer") to acquire all of the
outstanding common shares (the "Common Shares") of Canstar at
a price of Cdn.$27.50 per Common Share.
2.3 For greater certainty, the cash consideration
payable to the Vendors pursuant to paragraph 2.1 is equal to
the cash consideration that would have been received by each
of the Transferred Subsidiaries had they tendered their
Common Shares pursuant to the Offer. We hereby covenant with
you that we will agree pursuant to the Offer to acquire the
Common Shares of any other shareholder of Canstar pursuant to
a transaction similar to the transaction described in
paragraphs 1 and 2 subject to any such other shareholder
entering into an agreement with us on substantially the same
terms as the terms contained herein (subject only to such
modifications as are appropriate in our sole judgment, acting
reasonably, having regard to such other shareholders being
public shareholders of Canstar).
3. Conditions
_3.1 (a) Our obligation to purchase the Transferred
Subsidiary Shares and to make the Offer shall be subject to:
(i) our having received, on terms satisfactory
to us, waivers of any requirement of law or of a securities
regulatory authority that a valuation of Canstar be prepared
in connection with the Offer;
(ii) our having received, on terms satisfactory
to us, confirmation (whether by way of exemption order, "no
action" letter or other form reasonably acceptable to us)
from relevant securities regulatory authorities that our
completing the purchase of the Transferred Subsidiary Shares
in conjunction with the completion of the Offer does not
constitute the conferral of a collateral benefit as
contemplated in section 97(2) of the Securities Act (Ontario)
and similar provisions in other applicable securities laws;
and
(iii) the "Business Combination Agreement"
(referred to in clause 10 of Schedule A) shall have been
entered into between us and Canstar and shall be in full
force and effect.
(b) We hereby undertake to use our best efforts to
obtain the waivers and confirmations referred to in paragraph
3.1(a) as soon as practicable following the date hereof. In
the event that, by December 23, 1994:
(i) such waivers and confirmations have not
been obtained;
(ii) Canstar is not in a position to enter into
the Business Combination Agreement as a result of its
inability to finalize by that date the Exhibits contemplated
therein; or
(iii) the board of directors of Canstar is not in
a position to make the acceptance recommendation contemplated
in paragraph 2.2 as a result of its inability to obtain a
fairness opinion from a recognized investment dealer to be
retained by it to provide financial advice to that board of
directors in connection with the Offer,
then the Offer shall be made by us within five business days
following the latest to occur of: (A) our obtaining the
waivers and confirmations contemplated in (i) above, (B)
Canstar being ready, willing and able to enter into the
Business Combination Agreement, having finalized all Exhibits
contemplated therein and provided the Exhibits to us, and (C)
the board of directors of Canstar being ready, willing and
able to make the acceptance recommendation contemplated in
paragraph 2.2 and having advised us of that in writing.
(c) Notwithstanding paragraph 3.1(b):
(i) in the event that we have not received the
valuation waivers contemplated in paragraph 3.1(a)(i) by
January 13, 1995, we will undertake promptly thereafter, and
the Principal Shareholders covenant and agree to cause
Canstar to provide all required assistance to enable us to
undertake, a formal valuation of Canstar as required by
applicable securities laws. As soon as practicable following
completion of such formal valuation, and subject to paragraph
3.1 (c)(ii), we will make the Offer contemplated by paragraph
2.2; and
(ii) in the event that, by January 13, 1995, (A)
Canstar is not ready, willing and able to enter into the
Business Combination Agreement as contemplated above, (B) the
board of directors of Canstar is not in a position to make
the acceptance recommendation contemplated in paragraph 2.2,
or (C) we have not been able to obtain the confirmations
referred to in paragraph 3.1(a)(ii), we may, at our option,
terminate our obligations under this Agreement.
(d) Notwithstanding the foregoing provisions of
this paragraph 3.1, in the event that, at the time at which
we and Canstar propose to enter into the Business Combination
Agreement, the Exhibits thereto prepared by Canstar disclose
any matter, thing or event or combination of matters, things
or events which had not been disclosed in writing by Canstar
to us prior to the time of execution of this Agreement and
which is, or which in the aggregate is, materially adverse to
Canstar and its subsidiaries, taken as a whole, we may, at
our option, elect not to enter into the Business Combination
Agreement and to terminate our obligations hereunder.
Otherwise, we shall, within five business days following
receipt by us of the Exhibits, enter into that Agreement in
substantially the form of the draft of same provided to
Canstar at the time of execution of this Agreement at or
prior to the time at which the Offer is required to be made
by us as contemplated above, provided Canstar is ready,
willing and able to do so.
(e) In any circumstance where the Offer has not
been made until after December 23, 1994, the dates and times
for the occurrence of certain events contemplated in
paragraphs 7.2, 8.2(i) and (ii) and 8.4(ii) shall be extended
to such times and dates as are nearly equivalent after having
been recalculated based upon the date that the Offer is
actually made rather than December 23, 1994.
3.2 Our obligation to take up and pay for the Common
Shares deposited under the Offer and our obligation to
purchase the Transferred Subsidiary Shares will not be
subject to any condition other than those set out in Schedule
A attached hereto.
3.3 The foregoing conditions are for our sole benefit
and may be waived by us in whole or in part at any time.
4. Covenants of the Principal Shareholders, NBV, the
Holding Companies and Siminvest
4.1 Unless (i) subject to paragraph 8.3, we fail to
make the Offer as required hereunder on or before December
23, 1994 (or by such date as may be applicable pursuant to
paragraph 3.1), (ii) we are in default of any of our material
obligations hereunder or any of our representations and
warranties contained herein is untrue in any material
respect, or (iii) we terminate the Offer as permitted
thereunder:
(a) the Principal Shareholders, 1617 and 1615
unconditionally and irrevocably agree that they will, and
that they will cause 1617 Subco and 1615 Subco to:
(i) not sell, assign, convey or otherwise
dispose of any of the outstanding shares of any of 1617,
1615, 1617 Subco or 1615 Subco except in the case of the
transactions referred to in paragraph 1.1(b) or as otherwise
provided in this Agreement;
(ii) not permit the issuance by any of 1617,
1615, 1617 Subco or 1615 Subco of any securities of such
companies or any rights to acquire securities of such
companies, except in the case of the transactions referred to
in paragraph 1.1(b) or as otherwise provided in this
Agreement;
(iii) not sell, assign, convey or otherwise
dispose of any of the Shares or any right or privilege
capable of becoming an agreement or option to purchase from
any of 1617, 1615, 1617 Subco or 1615 Subco any of the
Shares, except as provided in this Agreement;
(b) NBV unconditionally and irrevocably agrees
that it will, and it will cause 1010 to:
(i) not sell, assign, convey or otherwise
dispose of any of the outstanding shares of 1010, except as
provided in this Agreement;
(ii) not permit the issuance by 1010 of any
securities of it or any right to acquire securities of it,
except to NBV or as provided in this Agreement;
(iii) not sell, assign, convey or otherwise
dispose of any of the Shares or any right or privilege
capable of becoming an agreement or option to purchase from
1010 any of the Shares, except as provided in this Agreement;
(c) Siminvest unconditionally and irrevocably
agrees that it will:
(i) not sell, assign, convey or otherwise
dispose of any Siminvest Shares other than pursuant to the
Offer, provided that the Common Shares are taken up and paid
for when required under the terms and conditions of the
Offer;
(ii) accept the Offer by depositing the Siminvest
Shares under the Offer in the manner and at the time
reasonably directed by us in accordance with the terms and
conditions of the Offer;
(iii) not withdraw any of the Siminvest Shares
deposited pursuant to the Offer unless they are not taken up
and paid for in accordance with the terms and conditions of
the Offer;
(d) except as otherwise contemplated in the
Business Combination Agreement, each of the Principal
Shareholders, NBV, Siminvest and the Holding Companies,
severally, unconditionally and irrevocably agrees that they
will:
_
(i) not , and cause their respective affiliates,
associates, directors, officers and agents not to, directly
or indirectly, solicit, initiate or knowingly encourage
proposals or offers from, or provide information relating to
Canstar or any of its subsidiaries or the Common Shares to,
any person, entity or group in connection with the
acquisition or disposition of all or a substantial part of
the issued and outstanding Common Shares, or any
amalgamation, merger, arrangement, sale of all or any
substantial part of the assets of Canstar or any subsidiary
thereof, take-over bid, reorganization, recapitalization,
liquidation or winding up of, or other business combination
or similar transaction involving Canstar or any of its
subsidiaries, and to promptly notify us of any such proposal
or offer or the possibility of any such proposal or offer by
any person, entity or group of which they become aware;
_
(ii) in the event that you and we mutually agree
to proceed with a "Transaction" (as defined in paragraph 8.3)
which is not the take-over bid contemplated herein, entitle
us to exercise all voting power over any Common Shares owned
or controlled by each of them, with effect as of the date
that they and we agree to so proceed, hereby appoint, with
full power of substitution, as their proxy and attorney-in-
fact and each of them respectively hereby directs us and any
designee of ours to vote, and we hereby agree to vote, at any
meeting or meetings of shareholders of Canstar, and at any
adjournments thereof, all of such shares on a basis which is
consistent with the completion of the Transaction, and
against any proposal which is inconsistent therewith. With
respect to such proxy, upon it becoming effective, each of
them hereby revokes any and all proxies previously granted to
any other person. The foregoing appointment shall be deemed
to be coupled with an interest, shall be irrevocable and
shall only terminate upon the termination of this Agreement,
and each of them agrees to execute any further form of proxy
required in order to give effect to the foregoing; and
(iii) take all reasonable measures to support the
Transaction.
5. Covenants with Respect to the Operations of
Canstar
5.1 Each of the Principal Shareholders, NBV, the
Holding Companies and Siminvest, severally, agrees that,
except as otherwise provided in the Business Combination
Agreement or as otherwise consented to or approved by us in
writing, until the Transferred Subsidiary Shares have been
acquired by us pursuant to this Agreement and the Siminvest
Shares have been taken up and paid for under the Offer or
their obligations hereunder have been terminated in
accordance with paragraph 8, they shall each use,
respectively, their best efforts to ensure that the business
and affairs of Canstar and its subsidiaries shall be operated
in the ordinary course in substantially the same manner as
heretofore conducted and, in furtherance of the foregoing,
shall each use, respectively, their best efforts to ensure
that:
(a) Canstar will not, and Canstar will cause its
subsidiaries not to, split, combine or re-classify the Common
Shares or any other outstanding securities, declare or pay
any dividends on (other than regular quarterly dividends paid
in respect of the Common Shares) or make other distributions
or payments (whether in cash, stock, securities or property
or any combination thereof) in respect of the Common Shares
or any other outstanding securities or take or authorize any
action or implement any of the foregoing;
(b) Canstar will not, and Canstar will cause its
subsidiaries not to, amend or authorize any amendments to
their respective articles or by-laws or similar constituent
documents;
(c) Canstar will not, and Canstar will cause its
subsidiaries not to, reserve, set aside, issue, authorize or
propose or commit to the issuance (whether through the
allotment, reservation or issuance of or granting options,
warrants, commitments, subscriptions, rights to purchase or
otherwise) of any securities of Canstar (or the relevant
subsidiary, as the case may be) including any Common Shares
or securities convertible into or exchangeable for, or
rights, warrants or options to acquire, any Common Shares
(other than the issuance of Common Shares pursuant to the
conversion of convertible securities or the exercise of
options or other rights to purchase Common Shares outstanding
as of the date hereof);
(d) Canstar will not, and will cause its
subsidiaries not to, acquire or agree to acquire, by
amalgamating, merging, consolidating or entering into a
business combination with or purchasing or leasing
substantially all of the assets or otherwise of, any business
or undertaking or any corporation, partnership, association
or other business organization or division thereof except for
transactions which individually or in the aggregate are not
material to Canstar and its subsidiaries taken as a whole;
(e) Canstar will not, and will cause its
subsidiaries not to, sell, lease, transfer, mortgage or
otherwise dispose of or encumber any of its property or
assets, real or personal, that, individually or in the
aggregate, are material to Canstar and its subsidiaries taken
as a whole except in the ordinary course of business;
(f) other than short term borrowings in the
ordinary course of business not exceeding existing bank line
limits, Canstar will not, and will cause its subsidiaries not
to, incur indebtedness to third parties for any borrowed
money or assume, guarantee, endorse or otherwise become
liable or responsible for the obligations of any person
(other than a subsidiary) or issue or sell any debt security;
(g) Canstar will not, and will cause its
subsidiaries not to, grant to any executive officers of
Canstar or any of its subsidiaries any increase in
compensation or in severance or termination pay, or enter
into any employment agreement with any executive officer of
Canstar or any of its subsidiaries except (i) as may be
required under employment and termination agreements in
effect as of the date hereof, (ii) for compensation increases
in the ordinary course of business consistent with past
practice, or (iii) amendments to stock option, stock purchase
or similar plans to ensure that Common Shares issuable or
held pursuant to such plans may be deposited pursuant to the
Offer or the persons entitled to Common Shares under such
plans will otherwise receive the benefit of the Offer;
(h) except as otherwise contemplated hereby and in
the ordinary course of business, Canstar will not, and will
not permit any of its subsidiaries to, enter into, amend
(except for amendments which are not material) or terminate
any existing agreements, covenants or contracts which,
individually or in the aggregate, are material to Canstar and
its subsidiaries taken as a whole;
(i) Canstar advises us, as soon as practicable, of
any matter which comes to its attention which might
constitute a "material change" (within the meaning of the
Securities Act (Ontario)) in the affairs of Canstar and its
subsidiaries taken as a whole;
(j) Canstar and its subsidiaries participate and
co-operate in all reasonable respects with us and use all
reasonable efforts to assist us to obtain such consents,
permits and regulatory approvals as may be necessary or
desirable in connection with the completion of the
transactions contemplated by this Agreement and the Offer;
(k) Canstar will not, and will cause each of its
subsidiaries not to, resolve that it be wound up (except for
a transaction which is in the ordinary course of business for
Canstar and its subsidiaries, taken as a whole, to which we
have given our previous written consent, which consent will
not be unreasonably withheld) or appoint or agree to the
appointment of a liquidator, receiver or trustee in
bankruptcy for it or consent to an order by a court for its
winding up or dissolution; and
(l) Canstar will permit us and our authorized
representatives to have reasonable access to all of Canstar's
and its subsidiaries' personnel, assets, properties, books,
records, agreements and commitments and all material
information with respect to Canstar and its subsidiaries as
we or our authorized representatives may reasonably request.
6. Representations and Warranties
(a) the Principal Shareholders, 1615 and 1617
hereby jointly and severally represent and warrant to us
that:
(i) Incorporation, etc. - each of 1615 and 1617
is a corporation duly incorporated and validly existing under
the laws of Canada and has all requisite corporate power and
authority to own its assets and to carry on its business as
now being conducted and each of 1617 Subco and 1615 Subco
will be on the Closing Date a corporation duly incorporated
and validly existing under the laws of Canada and shall have
all requisite corporate power and authority to own their
respective assets and to carry on their respective business
as then being conducted.
(ii) Authority and Consents - each of the
Principal Shareholders, 1617 and 1615 has the requisite power
and authority to enter into this Agreement and to carry out
the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been consented to by
all necessary parties, have been duly and validly authorized
by all necessary corporate action on the part of 1617 and
1615 and no other corporate proceedings on the part of 1617
or 1615 are necessary to authorize this Agreement. Except as
has already been obtained, no consent of any court,
governmental authority, beneficiary, co-trustee, spouse or
other person is necessary for the execution, delivery and
performance of this Agreement by the Principal Shareholders,
1617 and 1615. This Agreement has been duly executed and
delivered by the Principal Shareholders, 1617 and 1615 and
constitutes a legal, valid and binding obligation of each of
them.
(iii) Title; No Liens, etc. - At the date hereof,
1617 and 1615 each own beneficially the Shares described at
the outset of this Agreement. At the Closing Date:
(A) all of the outstanding shares of each of
1617 Subco and 1615 Subco (other than the voting preferred
shares owned by us) will be legally and beneficially owned by
1617 and 1615, respectively, free and clear of all liens,
charges, encumbrances and any other rights of others
whatsoever (other than our rights under this Agreement) and
1617 and 1615 will each have good and sufficient power and
authority and right to transfer, or cause to be transferred,
the legal title and beneficial title to the Transferred
Subsidiary Shares owned by them, respectively, to us with
good and marketable title thereto;
(B) each of 1617 Subco and 1615 Subco will be
the legal and beneficial owner of the Shares described at the
outset of this Agreement, free and clear of all liens,
charges, encumbrances and any other rights of others
whatsoever (other than our rights under this Agreement) and
neither of 1617 Subco nor 1615 Subco shall have any assets
other than the Shares or any liabilities, absolute,
contingent or otherwise;
(C) no other person shall have any right to acquire any
interest in 1617 Subco or 1615 Subco; and
(D) 1617 and 1615 will not be "non-residents"
of Canada (within the meaning of the Income Tax Act
(Canada)).
(iv) No Conflict or Violations - Neither the
execution and delivery of this Agreement by the Principal
Shareholders, 1617 and 1615 nor the consummation of the
transactions contemplated hereby will
(A) conflict with or result in any breach of
any of the provisions of the articles or by-laws of either
1617 or 1615;
(B) result in the violation or breach of or
constitute (with or without notice or lapse of time or both)
a default (or give rise to any right of termination,
cancellation or acceleration) under any licence, contract,
agreement or other instrument or obligation to which the
Principal Shareholders, 1617 or 1615 is a party or by which
any of them or any of their assets may be bound; or
(C) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the
Principal Shareholders, 1617 or 1615, or any of their assets,
except in the case of violations, breaches or defaults which
would not, in the aggregate materially and adversely effect
any of them.
(v) No Fee or Commission - No person is entitled
to any brokerage fee or commission or finder's fee from any
of Canstar or its subsidiaries or the Transferred
Subsidiaries in connection with the Offer or the completion
of the transactions as contemplated by this Agreement.
(b) NBV and 1010 hereby jointly and severally
represent and warrant to us that:
(i) Incorporation, etc. - 1010 is a corporation
duly incorporated and validly existing under the laws of
Canada and NBV is a corporation duly incorporated and validly
existing under the laws of The Netherlands and each of 1010
and NBV has all requisite corporate power and authority to
own its assets and to carry on its business as now being
conducted.
(ii) Authority and Consents - each of NBV and 1010
has the requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been consented to by all necessary parties, have been duly
and validly authorized by all necessary corporate action on
the part of NBV and 1010 and no other corporate proceedings
on the part of NBV and 1010 are necessary to authorize this
Agreement. Except as has already been obtained, no consent
of any court, governmental authority, beneficiary, co-
trustee, spouse or other person is necessary for the
execution, delivery and performance of this Agreement by NBV
and 1010. This Agreement has been duly executed and
delivered by NBV and 1010 and constitutes a legal, valid and
binding obligation of each of them.
(iii) Title; No Liens, etc. - At the date hereof,
1010 owns, legally and beneficially, the Shares described at
the outset of this Agreement. At the Closing Date:
(A) all of the outstanding shares of 1010
(other than the voting preferred shares owned by us and the O
Prefs which are to be redeemed as of that date) will be
legally and beneficially owned by NBV, free and clear of all
liens, charges, encumbrances and any other rights of others
whatsoever (other than our rights under this Agreement) and
NBV will have good and sufficient power and authority and
right to transfer, or caused to be transferred, the legal
title and beneficial title to the outstanding shares of 1010
owned by it, to us with good and marketable title thereto;
(B) 1010 will be the legal and beneficial
owner of the Shares described at the outset of this
Agreement, free and clear of all liens, charges, encumbrances
and any other rights of others whatsoever (other than our
rights under this Agreement) and 1010 shall not have any
assets other than the Shares or any liabilities, absolute,
contingent or otherwise;
(C) no other person shall have any right to
acquire any interest in 1010; and
_ (D) NBV shall provide to us a certificate
issued pursuant to the provisions of Section 116 of the
Income Tax Act (Canada) (and any corresponding certificate or
like document under applicable Canadian provincial taxation
laws, if any) with a certificate limit of not less than the
purchase price for the shares of 1010 referred to in
paragraph 2.1.
(iv) No Conflict or Violations - Neither the
execution and delivery of this Agreement by NBV and 1010 nor
the consummation of the transactions contemplated hereby will
(A) conflict with or result in any breach of
any of the provisions of the articles or by-laws or other
constituent documents of either NBV or 1010;
(B) result in the violation or breach of or
constitute (with or without notice or lapse of time or both)
a default (or give rise to any right of termination,
cancellation or acceleration) under any licence, contract,
agreement or other instrument or obligation to which NBV or
1010 is a party or by which either of them or any of their
assets may be bound; or
(C) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to NBV or
1010, or any of their assets, except in the case of
violations, breaches or defaults which would not, in the
aggregate materially and adversely effect either of them.
(v) No Fee or Commission - No person is entitled to
any brokerage fee or commission or finder's fee from any of
Canstar or its subsidiaries or the Transferred Subsidiaries
in connection with the Offer or the completion of the
transactions contemplated by this Agreement.
(c) Siminvest hereby represents and warrants to us
that:
(i) Incorporation, etc. - Siminvest is a
corporation duly incorporated and validly existing under the
laws of Switzerland and Siminvest has all requisite corporate
power and authority to own its assets and to carry on its
business as now being conducted.
(ii) Authority and Consents - Siminvest has the
requisite corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been consented to by all necessary parties, have been duly
and validly authorized by all necessary corporate action on
the part of Siminvest and no other corporate proceedings on
the part of Siminvest are necessary to authorize this
Agreement. Except as has already been obtained, no consent
of any court, governmental authority, beneficiary, co-
trustee, spouse or other person is necessary for the
execution, delivery and performance of this Agreement by
Siminvest. This Agreement has been duly executed and
delivered by Siminvest and constitutes a legal, valid and
binding obligation of Siminvest.
(iii) Title; No Liens, etc. - At the date hereof,
Siminvest beneficially owns, and at the Closing Date
Siminvest will beneficially own, the Siminvest Shares. At
the Closing Date:
(A) the Siminvest Shares will be free and
clear of all liens, charges, encumbrances and any other
rights of others whatsoever (other than our rights under this
Agreement); and
(B) no other person shall have any right to
acquire any interest in all or any part of the Siminvest
Shares.
(iv) No Conflict or Violations - Neither the
execution and delivery of this Agreement by Siminvest nor the
consummation of the transactions contemplated hereby will
(A) conflict with or result in any breach of
any of the provisions of the articles or by-laws or other
constituent documents of Siminvest,
(B) result in the violation or breach of or
constitute (with or without notice or lapse of time or both)
a default (or give rise to any right of termination,
cancellation or acceleration) under any licence, contract,
agreement or other instrument or obligation to which
Siminvest is a party or by which it or any of its assets may
be bound or
(C) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Siminvest,
or any of its assets, except in the case of violations,
breaches or defaults which would not, in the aggregate
materially and adversely effect either of them.
(v) No Fee or Commission - No person is entitled
to any brokerage fee or commission or finder's fee from any
of Canstar or its subsidiaries or the Transferred
Subsidiaries in connection with the Offer or the completion
of the transactions as contemplated by this Agreement.
6.2 We hereby represent and warrant to the Principal
Shareholders, the Holding Companies and Siminvest as follows:
(i) Incorporation - We are a corporation duly
incorporated and validly existing under the laws of the State
of Oregon;
(ii) Authority - We have the corporate power and
authority to enter into this Agreement, to make the Offer and
to carry out the transactions contemplated hereby and by the
Offer. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and by
the Offer have been duly and validly authorized by all
necessary corporate action on our part. This Agreement has
been duly executed and delivered by us and constitutes a
legal, valid and binding obligation of ours;
(iii) No Conflict or Violations - Neither the
execution and delivery of this Agreement by us nor the
consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of our
incorporating documents and by-laws, (ii) result in a
violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement
or other instrument or obligation to which we or any of our
subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to us or any of our subsidiaries or any of their
properties or assets, except in the case of violations,
breaches or defaults which would not in the aggregate
materially and adversely effect us or our subsidiaries, taken
as a whole.
(iv) Available Funds - We have available funds
necessary to satisfy our obligations to purchase the
Transferred Subsidiary Shares and the Common Shares pursuant
to the Offer.
6.3 The representations and warranties of each of the
parties shall be true and correct on the Closing Date and
each of the Principal Shareholders, NBV, 1617, 1615, 1010 and
Siminvest shall deliver to us a certificate (signed, in the
case of corporations, by either of the corporation's Chief
Executive Officer or the Chief Financial Officer) on the
Closing Date confirming the same. Your representations and
warranties shall survive until the earlier of the second
anniversary of the Closing Date or the date that this
Agreement is terminated in accordance with paragraph 8 and
any claim in respect of such representations and warranties
shall be made in such period. Our representations and
warranties shall terminate on the earlier of the Closing Date
or the date that this Agreement is terminated in accordance
with paragraph 8.
7. Completion of the Transactions
7.1 The purchase and sale of the Transferred Subsidiary
Shares shall be completed contemporaneously with the first
take up and payment by us of Common Shares pursuant to the
Offer (such time being hereinafter referred to as the
"Closing Date"). The closing shall take place at the Main
Boardroom of Tory Tory DesLauriers & Binnington, 32nd Floor,
Aetna Tower, Toronto-Dominion Centre, Toronto, Ontario, and
on such date we shall pay to the Vendors the purchase price
for the Transferred Subsidiary Shares by certified cheque or
bank draft against delivery to us of share certificates
representing the Transferred Subsidiary Shares duly endorsed
in blank for transfer, with signatures guaranteed by a
chartered bank or trust company.
7.2 Subject to our rights to terminate and abandon this
Agreement or do a Transaction other than the Offer in either
case as provided in paragraph 8, we hereby covenant with you
to take-up and pay for the Common Shares deposited under the
Offer within two business days after the later of January 23,
1995 and the date that each of the conditions of the Offer
set out in Schedule A have been satisfied.
8. Termination and Abandonment
8.1 This Agreement may be terminated and abandoned at
any time before the Closing Date by the mutual consent, in
writing, of each of the parties hereto.
_8.2 Any of the Principal Shareholders, NBV, the Holding
Companies or Siminvest may terminate their obligations under
this Agreement if (i) subject to paragraph 8.3, the Offer has
not been mailed by us to the holders of Common Shares on or
before 11:59 p.m. (Toronto time) on December 23, 1994, or
(ii) subject to paragraph 8.3, the first date of take up and
payment for Common Shares under the Offer shall not have
occurred by 4:30 p.m. (Pacific Standard Time) on February 2,
1995 (provided that if the take-up and payment for the Common
Shares has not occurred as a result of the conditions to the
Offer set forth in any one or more of clauses 6, 7 or 8 (but
only such clauses) of Schedule A not having been satisfied by
such time and date, this right may not be exercised unless
the Common Shares have not been taken up and paid for by the
earlier of the date which is two business days after the date
upon which all of the conditions to the Offer have been
satisfied and 4:30 p.m. (Pacific Standard Time) on March 10,
1995); or (iii) we have elected to terminate our obligations
pursuant to paragraph 8.4; or (iv) a "Competing Offer" (as
defined below) is made offering cash consideration in excess
of the price then offered by us under the Offer and we do not
increase the consideration offered under the Offer to a price
equal to or greater than such higher consideration offered
under the Competing Offer by the date that is six calendar
days after the date that the Competing Offer is made. For
the purposes of this Agreement, a "Competing Offer" shall
mean an offer made to purchase all of the outstanding Common
Shares for cash consideration (and only cash consideration),
which offer shall be made by a circular bid to all holders of
Common Shares and shall be prepared in accordance with the
Securities Act (Ontario) and the regulation thereunder and
other applicable securities laws and shall contain conditions
no more onerous to meet or stringent than those conditions
set out in Schedule A.
8.3 If prior to December 23, 1994, the parties have
decided to proceed with a Transaction, other than the Offer,
and the purchase by us of the Transferred Subsidiary Shares,
the Principal Shareholders, NBV, the Holding Companies and
Siminvest may terminate their obligations under this
Agreement if the Transaction has not been completed by 11:59
p.m. (Pacific Standard Time) on June 30, 1995. As used in
this Agreement, "Transaction" means any transaction which is
acceptable to each of the parties hereto, acting reasonably,
provided that any transaction which is not materially
different to each of the parties from a tax and financial
perspective to that provided by the purchase of the
Transferred Subsidiary Shares and the Offer shall be deemed
to be a "Transaction" including, without limitation, an
amalgamation, arrangement or other business combination which
would result in our acquiring all of the outstanding
securities of Canstar and in the shareholders of Canstar
receiving, not later than June 30, 1995, for each Common
Share not less than Cdn.$27.50 in cash or securities which
are redeemable by the holder immediately for an equivalent
amount in cash.
8.4 We may terminate our obligations under this
Agreement (i) in the circumstances contemplated in paragraph
3.1; or (ii) if any of the conditions to the taking up and
payment for the Common Shares deposited under the Offer and
our obligation to purchase the Transferred Subsidiary Shares
which are referred to in paragraph 3.2 shall not have been
satisfied or waived by 4:30 p.m. (Pacific Standard Time) on
January 23, 1995 unless the Offer is extended in which case
the relevant time shall be the same time on the date to which
the Offer is extended (provided that we shall be obliged to
extend the Offer if by 4:30 p.m. (Pacific Standard Time) on
January 23, 1995 the only conditions to the Offer which
remain unsatisfied are any one or more of the conditions set
forth in clauses 6, 7 or 8 of Schedule A, in which event the
Offer shall be extended to the date which is the earlier of
two business days after the date upon which all of the
conditions to the Offer have been satisfied and 4:30 p.m.
(Pacific Standard Time) on March 10,1995); or (iii) any one
or more of the Principal Shareholders, NBV, the Holding
Companies or Siminvest have elected to terminate its
obligations under this Agreement pursuant to paragraph 8.2.
8.5 We, on the one hand, and the Principal
Shareholders, NBV, the Holding Companies and Siminvest, on
the other hand, may terminate our respective obligations
under this Agreement if the other of us is in default of any
material obligation under this Agreement or if any
representation or warranty of the other of us under this
Agreement is untrue in any material respect.
9. General Provisions
9.1 This Agreement may be modified and any of the
terms, covenants, representations, warranties or conditions
hereof may be waived, but only by written instrument executed
by each of the parties hereto; provided, however, that a
party may in its discretion waive a condition herein which is
solely for its benefit without the consent of the other. No
waiver in any one or more instances of rights pursuant hereto
shall be deemed to be a further or continuing waiver of any
condition or any breach of any other term, covenant,
representation or warranty in this Agreement.
9.2 This Agreement (including the schedules attached
hereto), together with the Confidentiality Agreement executed
between us and Canstar and dated November 10, 1994,
constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
agreements, arrangements or understandings with respect
thereto.
9.3 No public announcement concerning this Agreement
shall be made by a party hereto without the consent of the
other or except as may be required by law.
9.4 This Agreement shall be binding upon and shall
enure to the benefit of and be enforceable by the parties
hereto and the respective successors, permitted assigns,
heirs, executors and legal and personal representatives. We
may assign some or all of our rights or obligations under
this Agreement to a wholly-owned subsidiary but, if such
assignment takes place, we will continue to be liable to you
for any default in performance by the assignee of our
obligations hereunder. This Agreement shall not otherwise be
assignable by any party hereto.
9.5 Each party will pay its own expenses, including the
fees and disbursements of its legal counsel and financial
advisors, in connection with this Agreement and matters
relating to the Offer provided that, with the agreement of
Canstar, the expenses of NBV, 1617, 1615, 1010 and Siminvest
in respect thereof may be borne by Canstar subject to the
limitations that all of the expenses of such parties to be
borne by Canstar, together with all of Canstar's own expenses
in connection with the transactions contemplated hereby and
by the Business Combination Agreement shall not exceed Cdn.
$2.5 million. All such expenses paid by Canstar shall be
reasonable and shall be documented in a manner satisfactory
to us, acting reasonably.
9.6 Time shall be of the essence of this Agreement.
9.7 The Principal Shareholders, NBV, the Holding
Companies and Siminvest acknowledge that we will be
irreparably harmed and that there will be no adequate remedy
at law for a violation of any of the covenants or agreements
of the Principal Shareholders, NBV, the Holding Companies or
Siminvest that are contained in this Agreement. It is
accordingly agreed that, in addition to any other remedies
that may be available to us upon the breach by any Principal
Shareholder, NBV, any of the Holding Companies or Siminvest
of such covenants and agreements, we will have the right,
without the necessity of posting bond or security in
connection therewith, to obtain injunctive relief to restrain
any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any
of such covenants or agreements.
9.8 Any notice or other communication required or
permitted to be given hereunder shall be sufficiently given
if delivered or sent by telecopier or facsimile transmission:
(i) in the case of the Principal Shareholders, NBV,
the Holding Companies or Siminvest, to Canstar Sports Inc.:
5705 Ferrier St.
Suite 200
Montreal, Quebec
H4P 1N3
Attention: Mr. I. Olivieri
Fax: (514) 738-5178
with a copy to:
Sweibel, Novek
3449 avenue du Musee
Montreal, Quebec
Canada
H3G 2C8
Attention: Sydney Sweibel
Fax: (514) 849-1176
- - and -
Davies Ward & Beck
44th Floor
1 First Canadian Place
P.O. Box 63
Toronto, Ontario
Canada
M5X 1B1
Attention: Kevin Thomson
Fax: (416) 863-0871
if to us, to: NIKE, Inc.:
One Bowerman Drive
Beaverton, Oregon
Attention: Lindsay Stewart
Vice-President Law and Corporate Affairs
Fax: (503) 644-6655
with a copy to each of:
Tonkon Torp Galen Marmaduke & Booth
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, OR 97204
U.S.A.
Attention: Brian Booth
Fax: (503) 274-8779
- - and -
Tory Tory DesLauriers & Binnington
Suite 3000, Aetna Tower
P.O. Box 270
Toronto-Dominion Centre
Toronto, Ontario
Canada
M5K 1N2
Attention: Gordon Coleman
Fax: (416) 865-7380
or at such other address as the party to which such notice
or other communication is to be given has last notified the
party giving the same in the manner provided in this section
and if so given shall be deemed to have been received on the
date of such delivery or sending.
9.9 This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in
accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein.
9.10 We hereby covenant to use, and to cause the
Offeror to use, its best efforts to successfully complete the
transaction contemplated hereby, including the Offer,
including co-operating with the Principal Shareholders, the
Holding Companies, NBV, Siminvest and Canstar (the "Parties")
and their counsel in making all requisite regulatory filings,
and in mailing or otherwise making the Offer to holders of
the Common Shares and, except in respect of matters which we
would reasonably expect to maintain as confidential, to
provide copies of drafts of the Offer to the Parties and
their counsel and to inform the Parties and their counsel of
all steps taken in respect of applications for such
regulatory approvals and to provide copies of all written
documents and submissions and responses with respect thereto
in connection with regulatory proceedings and to allow the
Parties and their counsel to participate on a reasonable
basis in the process of seeking such approvals.
9.11 This Agreement may be signed in counterparts which
together shall be deemed to constitute one valid and binding
agreement and delivery of the counterparts may be effected by
means of facsimile transmission from us to you and from you
to us.
Yours very truly,
NIKE, INC.
By: Lindsay D. Stewart
We hereby accept the foregoing
DATED this day of December, 1994.
_
Mr. Icaro Olivieri
Mrs. Michela Olivieri
NORCIM HOLDINGS B.V.
By:
161709 CANADA INC.
By:
101028 CANADA LTEE
By:
161578 CANADA INC.
_
By:
SIMINVEST S.A.
By:
SCHEDULE A
CONDITIONS OF THE OFFER
1. Not less than:
(a) an aggregate of 80% of the outstanding Common
Shares (calculated on a diluted basis) shall (i) have been
validly deposited under the Offer and not withdrawn and (ii)
be subject to this Agreement; and
(b) 50.1% of the outstanding Common Shares
(calculated on a diluted basis) shall have been validly
deposited under the Offer and not withdrawn, excluding those
Common Shares which are held by or on behalf of the Principal
Shareholders, the Transferred Subsidiaries, Siminvest or
their respective affiliates;
(collectively, the "Minimum Conditions").
2. (i) No action, suit or proceeding shall have been
threatened or taken before or by any domestic or foreign
court or tribunal, governmental agency, stock exchange or
other regulatory authority or administrative agency or
commission or before or by any elected or appointed public
official or private person (including, without limitation,
any individual, corporation, firm, group or other entity) in
Canada or elsewhere, whether or not having the force of law,
and (ii) no law, regulation, policy or directive (whether or
not having the force of law) shall have been enacted,
promulgated or applied:
(A) to cease trade, enjoin, prohibit or impose
material limitations, changes or conditions on the purchase
by or the sale to the offeror under the Offer (the "Offeror")
of the Common Shares or the right of the Offeror to own or
exercise full rights of ownership with respect to the Common
Shares; or
(B) which has had or might reasonably have a
material adverse effect on Canstar and its subsidiaries,
taken as a whole.
3. Canstar shall have given the Offeror and its
authorized agents reasonable access to all of Canstar's and
its subsidiaries' personnel, assets, properties, books,
records, agreements and commitments and all material
information with respect to Canstar and its subsidiaries as
may be reasonably requested by the Offeror or its authorized
agents.
4. There shall not have occurred (or, if there shall
have previously occurred, there shall not have been disclosed
generally or to the Offeror in writing, prior to the
commencement of the Offer) any material change (or any
condition, event or development involving a prospective
material change) in the business, operations or financial
condition of Canstar or any of its subsidiaries which is
materially adverse to Canstar and its subsidiaries, taken as
a whole. For the purposes of the foregoing, "material
change" shall be as defined in the Securities Act (Ontario),
provided that material change shall not include any event or
fact relating to Canstar or any of its subsidiaries which is
directly attributable to the proposed purchase of Common
Shares of Canstar by the Offeror.
5. There shall not exist any prohibition at law against
the Offeror making the Offer or taking up and paying for any
or all of the Common Shares under the Offer.
6. The Director of Investigation and Research appointed
under the Competition Act (Canada) shall have issued an
Advanced Ruling Certificate with respect to the transaction,
or the applicable waiting period under Part IX of the
Competition Act (Canada) shall have expired and the Director
of Investigation and Research shall have indicated that he
does not intend to oppose the purchase of the Common Shares
under the Offer and shall not have required, or threatened to
require, an application under Part VIII of that Act in
respect of the purchase of the Common Shares.
7. All approvals or exemptions under the Investment
Canada Act (Canada) in connection with the Offer and the
acquisition of Common Shares pursuant to the Offer shall have
been obtained on terms reasonably satisfactory to the
Offeror.
8. The applicable waiting period under the Hart Scott
Rodino Act shall have expired or have been earlier
terminated.
9. Canstar and its subsidiaries shall have conducted
their respective businesses in the ordinary and usual course
of business in the manner contemplated in the Business
Combination Agreement.
10. Canstar's board of directors shall have approved and
Canstar shall have entered into the Business Combination
Agreement substantially in the form of the draft agreement
provided to Canstar at the time of execution of this
Agreement, Canstar shall not be in default, in any material
respect, of its obligations thereunder, the representations
and warranties of Canstar set forth in the Business
Combination Agreement shall be true and correct in all
material respects as of the date of the execution of the
Business Combination Agreement and the Business Combination
Agreement shall not have been otherwise terminated.
11. The Principal Shareholders, NBV, the Holding
Companies and Siminvest shall not be in default, in any
material respect, of any of their obligations under this
Agreement, the representations and warranties of such persons
shall be true and correct in all material respects as of the
first date of take-up and payment for Common Shares under the
Offer and the Agreement shall not have been otherwise
terminated.