Exhibit 2.3
February 10, 1995
VIA FACSIMILE TRANSMISSION
Mr. and Mrs. Icaro Olivieri
Norcim Holding B.V.
161709 Canada Inc.
101028 Canada Ltee
161578 Canada Inc.
(collectively, the "Original Parties")
- - and -
658425 Ontario Inc.
Dear Sirs:
Re: Canstar Sports Inc.
Reference is made to the letter agreement (the "Lock-up Agreement")
dated December 14, 1994 between NIKE, Inc. and the Original Parties
respecting our acquisition of shares of Canstar Sports Inc. ("Canstar")
both directly and through the purchase of various holding companies
which own shares of Canstar, all as more particularly set forth in that
agreement. All capitalized terms used in the Lock-up Agreement and not
otherwise defined in this letter agreement shall have the meanings
ascribed to them in the Lock-up Agreement.
We are advised by the Principal Shareholders, 1617, 1615 and 658425
Ontario Inc. ("Ontco") that:
(i) the Principal Shareholders exercise control or direction
over all of the outstanding shares of Ontco; and
(ii) it is the intention of the Principal Shareholders to cause
1617 and 1615 to transfer the outstanding shares of 1617 Subco and 1615
Subco, respectively, owned by them to Ontco, and to cause Ontco to
purchase such shares, with the result that prior to the Closing Date
Ontco will own all of the outstanding shares of 1617 Subco and 1615
Subco, other than the shares of such companies owned by NIKE
Acquisition Inc.;
and in reliance upon such advice we are entering into this letter
agreement.
We are writing to confirm certain amendments to the Lock-up
Agreement which have been requested by the Principal Shareholders,
1617, 1615 and Ontco. This letter agreement, although executed on the
date set forth above, reflects agreements made between the parties with
effect as of February 6, 1995.
1. Paragraph 1.1 of the Lock-up Agreement is hereby amended
by adding the following subparagraph (c):
"(c) Prior to the Closing Date but following the
transactions provided in paragraph 1.1(b), each of 1617 and 1615
will transfer their respective holdings of shares of 1617 Subco
and 1615 Subco to 658425 Ontario Inc., a company incorporated under
the Business Corporations Act (Ontario) ("Ontco"), for common shares
of Ontco having a fair market value equal to the fair market value
of the shares of 1617 Subco and 1615 Subco transferred to Ontco.
1617 and Ontco and 1615 and Ontco will, respectively, make the
following elections under the Income Tax Act (Canada) and the Quebec
Taxation Act in respect of such transfers:
(i) 1617 and Ontco shall make no election under the Income Tax
Act with the result that the proceeds of disposition to 1617 of the
transfer of the shares of 1617 Subco will be equal to the fair market
value of such shares and for the purposes of section 518 of the Quebec
Taxation Act 1617 and Ontco will jointly elect prior to the Closing
Date to have the shares of 1617 Subco transferred for proceeds of
disposition equal to the adjusted cost base to 1617 of such shares
(being, for greater certainty, the same transfer price provided in
paragraph 1.1(a)(i) plus the "safe income" amount capitalized pursuant
to the transactions contemplated in paragraph 1.1(b)); and
(ii) 1615 and Ontco shall make no election under the Income Tax
with the result that the proceeds of disposition to 1615 of the
transfer of the shares of 1615 Subco will be equal to the fair market
value of such shares and for the purposes of section 518 of the
Quebec Taxation Act 1615 and Ontco will jointly elect prior to the
Closing Date to have the shares of 1615 Subco transferred for proceeds
of disposition equal to the adjusted cost base to 1615 of such shares
(being, for greater certainty, the same transfer price provided in
paragraph 1.1(a)(ii) plus the "safe income" amount capitalized pursuant
to the transactions contemplated in paragraph 1.1(b))."
2. Paragraph 1.4 of the Lock-up Agreement is hereby deleted
and replaced with the following:
"The expression, "Transferred Subsidiaries" means, collectively,
1010, 1617 Subco and 1615 Subco and the expression "Vendors" means:
(i) NBV in relation to 1010; and (ii) Ontco in relation to each of
1617 Subco and 1615 Subco."
3. The heading of paragraph 4.1 is hereby amended by adding,
after the reference to "Principal Shareholders", a reference to "Ontco".
In addition, paragraph 4.1(a) of the Lock-up Agreement is hereby
deleted and replaced with the following:
(a) the Principal Shareholders, 1617, 1615 and Ontco
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, Ontco, 1617 Subco or 1
615 Subco except in the case of the transactions referred to in
paragraph 1.1 or as otherwise provided in this Agreement;
(ii) not permit the issuance by any of 1617, 1615, Ontco,
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 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, Ontco, 1617 Subco or
1615 Subco any of the Shares, except as provided in this Agreement".
4. Paragraph 4.1(d) of the Lock-up Agreement is hereby amended
by adding, after the reference to "Principal Shareholders" in the
second line thereof, a reference to "Ontco".
5. Paragraph 5.1 of the Agreement is hereby amended by adding,
after the reference to "Principal Shareholders" in the first line
thereof, a reference to "Ontco".
6. The representations and warranties contained in subparagraph
(a) of paragraph 6 of the Lock-up Agreement are hereby deleted and
replaced with the following:
(a) the Principal Shareholders, Ontco, 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 Ontco is a corporation duly incorporated and validly
existing under the laws of Ontario and each of such corporations 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,
Ontco, 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 Ontco,
1617 and 1615 and no other corporate proceedings on the part of Ontco,
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, Ontco, 1617 and 1615. This Agreement has been duly
executed and delivered by the Principal Shareholders, Ontco, 1617 and
1615 and constitutes a legal, valid and binding obligation of each of
them.
(iii) Title; No Liens, etc. - At December 14, 1994, 1617 and 1615
each own beneficially the Shares described at the outset of this
Agreement and the Principal Shareholders own legally and beneficially
all of the outstanding shares of Ontco. 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 Ontco and all of the
outstanding shares of Ontco will be legally and beneficially owned
by the Principal Shareholders, 1617 and 1615, in each case free and
clear of all liens, charges, encumbrances and any other rights of
others whatsoever (other than our rights under this Agreement) and
Ontco will have good and sufficient power and authority and right to
transfer, or cause to be transferred, the legal title and beneficial
title to the shares of each Transferred Subsidiary owned by it 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) Ontco will not be a "non-resident" 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, Ontco,
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 any of Ontco, 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, Ontco, 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,
Ontco, 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.
(vi) Tax Matters - For the purposes of computing, under the
provisions of the Income Tax Act (Canada) as proposed to be amended
by draft legislation released by the Minister of Finance of Canada
on December 20, 1994, or any similar provision of applicable provincial
tax legislation, the adjusted cost base to each of 1615 Subco and 1617
Subco of the shares of Canstar respectively owned by them, as at the
time of closing on the Closing Date there will be no amount to be
deducted under the provisions of paragraph 53(2)(g.1) as proposed to
be added to the Income Tax Act by such draft legislation or any
provision of such provincial tax legislation."
7. The representations and warranties of NBV and 1010 contained
in subparagraph (b) of paragraph 6 of the Lock-up Agreement are hereby
amended by adding thereto a representation and warranty (vi) as follows:
"(vi) Tax Matters - For the purposes of computing, under
the provisions of the Income Tax Act (Canada) as proposed to be
amended by draft legislation released by the Minister of Finance
of Canada on December 20, 1994, or any similar provision of
applicable provincial tax legislation, the adjusted cost base to
1010 of the shares of Canstar owned by it, as at the time of
closing on the Closing Date there will be no amount to be deducted
under the provisions of paragraph 53(2)(g.1) as proposed to be added
to the Income Tax Act by such draft legislation or any similar provision
of such provincial tax legislation."
8. Paragraph 6.3 of the Lock-up Agreement is hereby amended
by adding after the reference to "Principal Shareholders" in the
second line thereof a reference to "Ontco". In addition, paragraph
6.3 is amended by deleting the second sentence thereof and replacing
it with the following:
"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, provided that
the representation and warranty contained in paragraph 6(a)(vi) and
paragraph 6(b)(vi) shall survive until the earlier of the sixth
anniversary of the Closing Date or the date that this Agreement is
terminated in accordance with paragraph 8. Any claim in respect of
the representations and warranties contained in this Agreement shall
be made during the relevant period that such representations and
warranties survive."
9. The Lock-up Agreement is hereby amended by adding the
following paragraph 6.4:
"The Principal Shareholders, 1617, 1615 and Ontco hereby jointly
and severally agree to indemnify and save NIKE, Inc. (and its
successors and any of its permitted assignees) harmless from and
against all actions, causes of action, suits, duties, debts, claims
and demands whatsoever (including all costs of legal counsel on a
solicitor and his own client basis) which NIKE, Inc., Canstar or
their respective affiliates may suffer or incur, arising out of or in
any way related to the transactions provided in paragraph 1.1(c) of
the Agreement provided that any claim pursuant to this indemnity must
be made by NIKE, Inc., Canstar or their respective affiliates not
later than the sixth anniversary of the Closing Date and no claim
or indemnification shall exceed the amount paid to Ontco in connection
with the purchase from it of the shares of 1617 Subco and 1615 Subco."
10. Paragraph 8.2 of the Lock-up Agreement is hereby amended
by adding, after the reference to "Principal Shareholders" in the
first line thereof, a reference to "Ontco".
11. Paragraph 8.4 of the Lock-up Agreement is hereby amended
by adding, after the reference to "Principal Shareholders" in the
third to last line thereof, a reference to "Ontco".
12. Paragraph 8.5 of the Lock-up Agreement is hereby amended
by adding, after the reference to "Principal Shareholders" in the
first line thereof, a reference to "Ontco".
13. Paragraph 9.2 of the Lock-up Agreement is hereby amended
by adding, after the reference, "This Agreement (including the
schedules attached hereto)" in the first line thereof, the following:
"as amended by a letter agreement between NIKE, Inc., Mr. and Mrs.
Icaro Olivieri, Norcim Holding B.V., 161709 Canada Inc., 101028 Canada
Ltee, 161578 Canada Inc., Siminvest S.A. and 658425 Ontario Inc. dated
February 10, 1995."
14. Paragraph 9.7 of the Lock-up Agreement is hereby amended
by adding, after each reference to "Principal Shareholders" or
"Principal Shareholder" therein, a reference to "Ontco".
15. Paragraph 9.8(i) of the Lock-up Agreement is hereby amended
by adding, after the reference to "Principal Shareholders" therein,
a reference to "Ontco".
16. Except as provided herein, the Lock-up Agreement remains
in full force and effect, unamended.
17. This letter 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.
18. This letter agreement may be signed in counterparts
which together shall be deemed to constituted 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:
We hereby accept the foregoing.
DATED this 10th day of February, 1995.
_________________________
Mr. Icaro Olivieri
__________________________
Mrs. Michela Olivieri
NORCIM HOLDING B.V.
By: ___________________________
161709 CANADA INC.
By: ___________________________
101028 CANADA LTEE
By: ___________________________
161578 CANADA INC.
By: ___________________________
SIMINVEST S.A.
By: ___________________________
658425 ONTARIO INC.
By: ____________________________