<PAGE i>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DSSI CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
DSSI CORPORATION
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form
or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- ----------------------
1 Set forth the amount on which the filing fee is calculated and how it
was determined.
<PAGE i>
DSSI Corporation
P.O. Box 1570
West Chester, PA 19380
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
December 3, 1997
To the shareholders of DSSI Corporation
Notice is hereby given that a Special Meeting of
Shareholders of DSSI Corporation (the "Company") will be held at
the offices of Wachtel & Masyr, LLP, 110 East 59th Street, New
York, New York, on Wednesday, December 3, 1997, at 2:00 o'clock
in the afternoon for the following purposes:
(1) To authorize the Company to enter the business of
distributing sports equipment, which action will be effected
through: (a) the sale of 10,000,000 shares of the Company's
Common Stock, $0.01 par value (the "Common Stock"), which shares
will constitute a controlling interest in the Company, to
Michael J. Blumenfeld at $.20 per share or an aggregate purchase
price of $2,000,000 and (b) the sale by Mr. Blumenfeld to the
Company, at cost, of the assets (including corporate name) of
Collegiate Pacific Inc. f/k/a Nitro Sports Inc., which company
is commencing engagement in the business of distributing sports
equipment to the institutional markets.
(2) To authorize the change of name of the Company from
DSSI Corporation to Collegiate Pacific Inc., but only if the
prior proposal is approved and the sale to Mr. Blumenfeld is
consummated.
Each shareholder of record at the close of business on
Wednesday, November 12, 1997, is entitled to cast, in person by
proxy, one vote for each share of the Common Stock held by such
shareholder on such date.
By order of the Board of Directors
Patrick J. Brennan, CPA
Secretary
Dated: November 14, 1997
_______________________________________________________________________
YOUR PROXY IS IMPORTANT NO MATTER NOW MANY SHARES YOU OWN.
PLEASE FILL-IN, DATE, SIGN AND MAIL IT TODAY IN THE ACCOMPANYING
SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
________________________________________________________________________
<PAGE 1>
DSSI Corporation
P.O. Box 1570
West Chester, PA 19380
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
To be held on December 3, 1997
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of DSSI
Corporation (the "Company"), a Pennsylvania corporation which,
pending the acquisition of a new business, uses the residence of
its Chief Financial Officer as its principal office, the mailing
address of which is P.O. Box 1570, West Chester, Pennsylvania
19380, for use at a Special Meeting of Shareholders to be held on
Wednesday, December 3, 1997, or at any adjournment or adjournments
thereof. Only shareholders of record at the close of business on
Wednesday, November 12, 1997 (the "Record Date"), are entitled to
vote at the meeting. Proxy material is first being mailed on or
about Friday, November 14, 1997, to the Company's shareholders of
record on the Record Date.
VOTING SECURITIES
The voting securities at the meeting will consist of
4,446,017 shares of Common Stock $0.01 par value (the "Common
Stock"). Each shareholder of record is entitled to cast, in
person or by proxy, one vote for each share of the Common Stock
held by such shareholder at the close of business on the Record
Date.
Shareholders who execute proxies retain the right to revoke
them by notifying the Company at any time before they are voted.
Such revocation may be effected by execution of a subsequently
dated proxy or by a letter to the Company, sent to the attention
of the Secretary at the address of the Company's principal office
set forth above in the introductory paragraph of this Proxy
Statement or delivered at the Meeting, revoking the proxy. Unless
so revoked, the shares represented by proxies solicited by the
Board of Directors of the Company will be voted at the Meeting in
accordance with the direction given therein. If no direction is
given, a properly executed proxy will be voted in favor of the two
proposals set forth in the Notice of Special Meeting to authorize
the Company (1) to enter the new business of distributing sports
equipment and (2) to change its name from DSSI Corporation to
Collegiate Pacific Inc. The latter proposal, if approved by the
shareholders, will be implemented only if the first proposal is
approved and the sale of shares to Michael J. Blumenfeld as
described in the succeeding paragraph is consummated and will be
effected by the filing of a Certificate of Amendment to the
Company's Articles of Incorporation.
A majority of the votes cast at the Meeting shall be
necessary to approve each of the proposals set forth in the Notice
of Special Meeting to authorize (1) the Company to enter the
business of distributing sports equipment, which action will be
effected through (a) the sale of 10,000,000 shares of the Common
Stock to Michael J. Blumenfeld at $.20 per share or an aggregate
purchase price of $2,000,000, which shares will constitute a
controlling interest in the Company, and (b) the sale by Mr.
Blumenfeld to the
<PAGE 2>
Company, at his cost (estimated to be $400,000),
of the assets (including cash advances and the corporate name) of
Collegiate Pacific Inc. f/k/a Nitro Sports Inc.; and (2) the
change of the name of the Corporation from DSSI Corporation to
Collegiate Pacific Inc. Abstentions and broker non-votes will be
counted for the purpose of determining a quorum at the Meeting
and will not be counted as a vote for or against the proposal.
Simultaneously with the closing of the sale to Mr. Blumenfeld,
two current directors of the Company (Jeff Davidowitz and
John Pappajohn, their affiliates and designees and a non-affiliated 5%
beneficial shareholder (James A. Gordon) will purchase an
aggregate of 1,500,000 shares also at $.20 per share or an
aggregate purchase price of $300,000. If the sale to Mr.
Blumenfeld is consummated, he will have the right to designate a
majority of the directors. See "Proposal One: To Enter a New
Business - Sale to Michael J. Blumenfeld." There is no
affiliation between Mr. Blumenfeld and his affiliates, on the one
hand, and the Company, its management and affiliates of both, on
the other hand. As of the Record Date, he owned 49,100 shares of
the Common Stock, all purchased subsequent to his entering into an
agreement with the Company. See "Proposal One: To Enter A New
Business-Sale to Michael J. Blumenfeld."
A shareholder shall not have the right to receive payment for
his, her or its shares of the Common Stock as a result of
shareholder approval of either of the proposals. As indicated
under "Securities Ownership of Certain Beneficial Owners and
Management," the two directors of the Company, the father of one
such director, a former director and a non-affiliated beneficial
owner therein named may vote an aggregate of 2,722,820 shares of
the Common Stock or 61.2% of the outstanding shares of the Common
Stock as of the Record Date (without giving effect to any stock
options or Common Stock purchase warrants held by them) and have
committed themselves to vote for the two proposals. Assuming that
these commitments are kept, the two proposals will be approved
even if all of the other shareholders vote against such proposals.
Under the Business Corporation Law of the Commonwealth of
Pennsylvania (the "BCL"), no shareholders' approval is required as
to either proposal. In addition, in the Company's Proxy Statement
dated May 23, 1997 (the "Prior Proxy Statement") for the Annual
Meeting of the Shareholders held on June 16, 1997, the Board
committed itself that "any proposal for entering into new
operations will be presented to the shareholders for approval at
either an annual or special shareholders' meeting" and that, at
the time the Company commences new operations, the "directors will
consider a more desirable name relating to the type of business
and submit the same to the shareholders for their approval."
Section 5.01(g) of the Stock Purchase Agreement with Mr.
Blumenfeld (see "Proposal One: To Enter A New Business - Sale to
Michael J. Blumenfeld") requires shareholder approval. Even
though their votes may not change the outcome of the vote, the
Board urges all shareholders to vote on the two proposals which
are important to the future of the Company and recommends a vote
in favor of both proposals for the reasons set forth in this Proxy
Statement. Assuming that the two proposals submitted herewith are
approved, all future proposals regarding the operations of the
Company will be submitted for vote by the shareholders only as
required by the BCL or other applicable law.
The two current directors, the father of one such director
and the non-affiliated beneficial owner referred to in the
second preceding paragraph have an interest in the two proposals
only to the extent that, if Mr. Blumenfeld consummates his
purchase of the 10,000,000 shares of the Common Stock, each
director and such beneficial owner, or the affiliates or
designees thereof, will have the right, at the closing with
respect to the sale to Mr. Blumenfeld, to purchase 500,000
<PAGE 3>
shares of the Common Stock at $.20 per share. See "Proposal
One: To Enter A New Business-Sale to Others."
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of the
Record Date with respect to (1) all persons who are known to the
Company to own beneficially, or exercise voting or dispositive
control over, 5% or more of the outstanding shares of the Common
Stock, (2) each current director, (3) the former acting chief
executive officer of the Company and the other executive officer
of the Company whose compensation exceeded $100,000 during the
fiscal year ended June 30, 1997 ("Fiscal 1997") and (4) all
directors and officers as a group. Each beneficial owner, except
James A. Gordon and William Davidowitz, has advised the Company
that he has sole voting and investment power with respect to his
shares except as to those shares still subject to exercise of a
stock option or a Common Stock purchase warrant as to which there
are no voting rights until the option or warrant is exercised.
The information in the table as to each of Mr. Gordon and Mr.
William Davidowitz was derived from a Schedule 13D filed by him
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner Beneficially Owned Class (1)
- ------------------- ------------------ ----------
James A. Gordon 785,093 17.7%
Edgewater Private Equity
Fund L.P.
666 Grand Avenue, Suite 200
De Moines, IA 50309
John Pappajohn (2) 1,436,408(3) 31.3%
c/o Pappajohn Capital Resources
2116 Financial Center
Des Moines, IA 50309
Jeff Davidowitz (2) 410,000(4) 9.2%
c/o JIBS Equities
Line and Grove Streets
P.O. Box 87
Nanticoke, PA 18634
William Davidowitz 260,000 5.8%
c/o JIBS Equities
Line and Grove Streets
P.O. Box 87
Nanticoke, PA 18634
<PAGE 4>
Stephen C. Turner (5) 26,000(4) nil
c/o Oncor, Inc.
209 Perry Parkway
Gaithersburg, MD 20877
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner Beneficially Owned Class (1)
- ------------------- ------------------ ----------
Joseph R. Shaya (6) 150,000(7) 3.3%
1951 Sage Drive
Golden, CO 80401
Patrick J. Brennan (8) 50,000(9) 1.1%
1341 Greenhill Road
Westchester, PA 19380
All Executive Officers and 1,922,408(109) 41.20%
Directors as a Group (4
Persons)
__________________________
(1) The percentages are based upon 4,446,017 shares of the Common
Stock being outstanding on the Record Date and, where
appropriate, effect is given to the exercise of stock options
or Common Stock purchase warrants as required by Rule 13d-
3(d)(1)(i) under the Exchange Act.
(2) A director of the Company.
(3) The shares reported in the table include an aggregate of
144,681 shares, after giving effect to anti-dilution
provisions, issuable upon the exercise of Common Stock
purchase warrants expiring February 17, 1998, March 11, 1998
and March 30, 1998 granted to Mr. Pappajohn in connection
with a loan guaranty and pledge.
(4) The shares reported in the table reflect or include 25,000
shares issuable upon exercise of a stock option expiring
August 9, 1999.
<PAGE 5>
(5) Mr. Turner resigned as a director effective October 17, 1997
for personal reasons.
(6) M. Shaya served as a consultant to the Company from June 1,
1994 to June 27, 1997, during which period he served as the
Acting President and Chief Executive Officer of the Company.
(7) The shares reported in the table reflect 125,000 shares
issuable upon exercise of a stock option expiring August 9,
1999 and 25,000 shares issuable upon the exercise of an
option expiring June 16, 2002.
(8) Mr. Brennan is the Vice President, Finance, the Secretary,
the Chief Financial Officer and the Chief Accounting Officer
of the Company.
(9) The shares reported in the table reflect 25,000 shares
issuable upon the exercise of each of two stock options, one
expiring August 9, 1999 and the other expiring June 16, 2002.
(10) The shares reported in the table reflect those reported for
a director elsewhere in the table (see the text relating to
Notes (3) and (4)) and for the sole executive officer (see
the text relating to Note (9) for Mr. Brennan). The shares
reported in the table do not include those for Mr. Shaya
because he was not an executive officer on the Record Date.
<PAGE 6>
PROPOSAL ONE: TO ENTER A NEW BUSINESS
Background
From August 1989 to June 16, 1997, the Company was engaged in
the business of developing and marketing tests for cocaine,
opiates (heroin, morphine and codeine), methamphetamine, THC
(marijuana), barbiturates, PCP (phencyclidine), amphetamines and
benzodiazepines using urine samples. As a result of the Company's
net losses and negative cash flow from these operations and the
Board's recognition that the Company had not been able to become a
competitive force in the on-site drug testing industry because it
is an emerging market requiring a significant amount of on-going
resources, which the Company was unable to raise, while all of the
industry competition were substantially better funded than the
Company and thus able to invest more money and people in the
process of getting products to market, the Company's Board of
Directors initiated a search for a suitable strategic partner or a
purchaser, which search, after a two-year period, culminated in a
purchase and sale agreement dated March 17, 1997 (the "Sales
Agreement") with Casco Standards, Inc. ("Casco"), a Wisconsin
corporation with its principal offices at 500 Riverside Industrial
Parkway, Portland, ME 04103-1418. Casco is a subsidiary of Erie
Scientific, which is a subsidiary of Sybron International
Corporation, a publicly traded company (NYSE: SYB). On June 16,
1997, after receiving shareholder approval at the Annual Meeting
of Shareholders held on the same day, the Company sold the
business and substantially all of its assets (other than cash and
accounts receivable) to Casco for $1,950,000. In addition, the
Company agreed to furnish to Casco a six-month supply of products
for which Casco agreed to pay the Company's standard charges.
Pursuant to the Sales Agreement, the Company paid $600,000 to
AccuScreen Labs, Inc. ("AccuScreen") to terminate the Company's
exclusive license and distributorship agreement with AccuScreen,
which agreement Casco did not want to assume and for which
termination Casco had increased the purchase price from $1,600,000
to $1,950,000.
As a result of the sale to Casco, the Company became a shell
corporation and, after the payment to AccuScreen, the payment of
closing costs and the payment of some of the then existing
liabilities, became a publicly held company with $305,559 in
liabilities, a cash reserve of $801,979, subject to collection of
accounts receivable (which, as indicated above, were not part of
the assets sold to Casco and which were $53,073 as of June 30,
1997), the collection of the holdback of $160,000 as part of the
Casco purchase and the incurrence of expenses relating to a
company registered under Section12(g) of the Exchange Act,
including completion of the audit for Fiscal 1997. From July 1,
1997 to August 31, 1997, the Company had collected $51,629 of the
accounts receivable with $1,414 still to be collected. After the
sale, the Board of Directors initiated a search for strategic
opportunities so that the Company could enter a new business not
related to drug testing. As previously reported in the Prior
Proxy Statement, the directors were of the opinion that the
shareholders would have a better opportunity to realize more
though the Company entering a new business than by liquidating the
Company (estimated then that the shareholders would receive $.23
per share on liquidation). The principal action which the
directors took to ascertain the availability of possible new
businesses, in addition to speaking to persons in the investment
banking
<PAGE 6>
industry with whom they were previously familiar, was to
place an advertisement in The Wall Street Journal, to which they
received ten inquiries of interest. The Board next sent out
written material to several of these inquirors and subsequently
reviewed business plans received from three of the respondants.
Among
<PAGE 7>
those responding to the advertisement and who was active in
making available information as to his business plans was Michael
J. Blumenfeld (see the succeeding section "Sale to Michael J.
Blumenfeld").
After the sale to Casco, Patrick J. Brennan, Vice President,
Chief Financial Officer and Secretary of the Company, and John G.
Connolly were employed full time until the audit for Fiscal 1997
was completed. All other employees were terminated. Mr. Brennan
has continued to serve the Company on a part-time basis, with
responsibility for all necessary filings under the federal
securities laws and federal, state and local tax laws. The
monthly costs for these services are approximately $3,500, which
outlay is largely offset by interest income from the sale
proceeds. In addition, the Company continues to incur stock
transfer agent fees and expenses and has continued its directors'
and officers' liability insurance, all other insurance coverages
being terminated as a result of the sale of assets to Casco.
Sale to Michael J. Blumenfeld
As a result of its search, the Board received an offer from
Michael J. Blumenfeld to purchase 10,000,000 shares of the Common
Stock at $.20 per share or an aggregate purchase price of
$2,000,000. Mr. Blumenfeld was the founder, chief executive
officer (serving as such for 25 years) and largest individual
shareholder of Sport Supply Group, Inc. ("Sport Supply") (NYSE:
GYM) until December 1996, at which time control of Support Supply
was sold to Emerson Radio Corp. ("Emerson") (ASE: MSN). Sport
Supply is recognized as the nation's largest supplier of sports
equipment to the institutional markets. Subsequently, Mr.
Blumenfeld incorporated a corporation named Collegiate Pacific
Inc. ("CPI"), a Delaware corporation in which he owns 100% of the
stock, engaged a staff, prepared sales brochures and entered the
business of distributing sports equipment to the institutional
markets. He has advised the Company that he has no non-compete
arrangements with either Sport Supply or Emerson, so that there
are no restrictions on him operating CPI or, after consummation of
the proposed sale by the Company to him of the controlling shares,
for the Company to enter the same business.
After the initial response from Mr. Blumenfeld to the
Company's advertisement in The Wall Street Journal, Jeff
Davidowitz and John Pappajohn, both directors, met with Mr.
Blumenfeld to review the proposed business plan for his sport
supply distribution business which was not as yet operational so
as to seek customers and to negotiate the terms of the
acquisition. This meeting in person was followed by a series of
telephone conversations exploring the subject further. Mr.
Blumenfeld gave these two directors a number of references in
investment banking, banking and other businesses, all of which
names were recognizable. The two directors then checked these
references, all of which were highly favorable as to Mr.
Blumenfeld's business record and business ethics. Mr. Davidowitz
then made a two-day trip to Dallas in August 1997 where he met
with the key members of the CPI management team, was shown the
then preliminary operations at the temporary office facility of
CPI and visited the current CPI facility which was then being
renovated. Both he and Mr. Pappajohn, as well as the latter's
staff, reviewed the initial sales catalog then being prepared by
CPI.
After completing its "due diligence" as described in the
preceding two paragraphs,
<PAGE 8>
the Board of Directors approved the sale
on August 12, 1997 and the Company entered into a Stock Purchase
Agreement dated as of August 18, 1997 (the "Stock Purchase
Agreement" ) with Mr. Blumenfeld. A copy of the Stock Purchase
Agreement is annexed to this Proxy Statement as Appendix A and is
incorporated herein by this reference. The directors unanimously
concluded that, in view of Mr. Blumenfeld's apparently substantial
experience on behalf of Sports Supply, a listed company, the
strong endorsements he had received from persons in the banking,
investment banking and other businesses and the opportunities in
the sport supply industry, combined with the capital infusion he
would make, this was the type of strategic opportunity for a new
business for the Company for which they had been searching. The
directors recognized that CPI represented only a start-up
operation with no guaranty of success, but concluded that Mr.
Blumenfeld's track record at Sport Supply, his experience at the
head of a listed company and his willingness to infuse $2,000,000
of his own money into the Company made such a risk worth taking
and different from the other expressions of interest in the
Company had received. Two of the directors (Messrs. Davidowitz
and Pappajohn) concluded that they, together with their affiliates
and designees, would show their support of Mr. Blumenfeld's
proposed operations by agreeing to invest (together with an
unaffiliated major shareholder) $300,000. See the section "Sale
to Others" under this caption "Proposal One: To Enter A New
Business." In making their decision to accept Mr. Blumenfeld's
offer, the directors considered that the business was
substantially different from the drug testing business the Company
had sold to Casco, so that there would be no violation of the
non-competition clause under the Sales Agreement with Casco. The
directors also noted that none of the other inquiries of interest
had actively pursued the issue as did Mr. Blumenfeld or offered
the same type of qualifications as described above in this
paragraph. In addition, the directors considered instituting a
new search, but concluded that delaying the decision gave no real
assurance that a better offer would be made by another party in
the future and, in the interim, if Mr. Blumenfeld succeeded, as to
which there can be no assurance, the Minority Shareholders could
benefit from this effort. See "Recommendation for Approval of
Both Proposals."
The Stock Purchase Agreement provides that, if the sale to
Mr. Blumenfeld is consummated, the Board of Directors shall
consist of one designee of the existing Board (which designee is
expected to be Jeff Davidowitz) and at least two designees of Mr.
Blumenfeld. Information with respect to his three proposed
nominees is given under "Proposed Nominees for Directorships."
The Stock Purchase Agreement also provides that Mr. Brennan's
services on behalf of the Company will be phased out during the
30-day period following the closing of the stock transaction. One
of the other conditions to closing is that shareholder approval be
obtained.
<PAGE 9>
As of the Record Date, there were 4,446,017 shares of the
Common Stock outstanding and there were reserved an aggregate of
916,029 shares of the Common Stock consisting of (1) an aggregate
of 345,000 shares reserved for issuance upon the exercise of stock
options (the "Options") granted under the Company's 1994 Stock
Option Plan (the "Option Plan"), (2) an aggregate of 155,000
shares reserved for issuance upon the exercise of the Options to
be granted under the Option Plan and (3) an aggregate of 416,029
shares reserved for issuance upon the exercise of outstanding
Common Stock purchase warrants (the "Warrants"). If the
10,000,000 shares are sold to Mr. Blumenfeld and the 1,500,000
shares are sold to the other prospective purchasers (see the
section "Sales to Others" under this caption "Proposal One: To
Enter A New Business"), Mr. Blumenfeld will own 62.7% of the
outstanding shares assuming that no Options and Warrants are
exercised and 59.3% assuming that the outstanding Options and
Warrants are exercised. The Stock Purchase Agreement provides
that the Board of Directors will reserve an
additional 400,000 shares of the Common Stock for issuance to members
of the Board of Directors designated by Mr. Blumenfeld at a price
not less than the fair market value of such shares.
The proposed purchase price represented approximately the
market price of the Common Stock at the time Mr. Blumenfeld's
offer was made and accepted by the Board of Directors on August
12, 1997. The following were the high and low bid prices of the
Common Stock as reported in the OTC Bulletin Board by the National
Association of Securities Dealers, Inc. on the dates indicated:
Bid Prices(1)
-------------------
Date High Low
- ---- ---- ---
8/7/97 $0.25 $0.25
8/8/97 0.203 0.203
8/11/97 0.25 0.203
8/12/97 0.203 0.203
8/13/97 0.250 0.203
8/14/97 0.250 0.203
8/15/97 0.328 0.250
8/18/97(2) 0.563 0.281
___________________
(1) The foregoing quotations reflect inter-dealer prices,
without mark-up, mark-down or commissions, and may not
represent actual transactions.
(2) The date of the Stock Purchase Agreement.
Sale to Others
At the closing for the sale to Mr. Blumenfeld, the Company
will sell an aggregate of 1,500,000 shares of the Common Stock to
persons other than Mr. Blumenfeld, also at $.20 per share or an
aggregate purchase price of $300,000. The prospective purchasers
are:
<PAGE 10>
1. John Pappajohn, a director of the Company and his
designees, as to 500,000 shares. As of the Record Date, Mr.
Pappajohn was the beneficial owner of 1,436,408 shares of the
Common Stock, which amount includes 144,681 shares issuable upon
the exercise of Warrants and constitutes 31.3% of the outstanding
shares (29.1% of the voting shares at this Meeting).
2. Jeff Davidowitz, a director of the Company, William
Davidowitz, his father, and
their designees, as to 500,000 shares. As of the Record Date,
Jeff Davidowitz was the beneficial owner of 410,000 shares of the
Common Stock, which amount includes 25,000 shares issuable upon
the exercise of an Option and constitutes 9.2% of the outstanding
shares (8.7% of the voting shares at this Meeting), and William
Davidowitz was the beneficial owner of 260,000 shares of the
Common Stock or 5.8% of the outstanding shares.
3. James A. Gordon, a beneficial owner of 5% or more of the
outstanding shares of the Common Stock as of the Record Date, and
his designees as to 500,000 shares. As of the Record
Date, Mr. Gordon through Edgewater Private Equity Fund L.P.,
owned 785,093 shares of the Common Stock or 17.7% of the outstanding shares.
Accordingly, the prospective purchasers include the persons
who own sufficient shares of the Common Stock to approve the two
proposals at this Meeting no matter how the other shareholders
vote with respect thereto and also constitute two of the three
current directors who approved the transaction. Only Stephen C.
Turner, who resigned as a director effective October 17, 1997,
is not participating in the purchase.
As a result of these prospective purchases of an aggregate of
1,500,000 shares of the Common Stock, Messrs. Pappajohn,
Davidowitz and Mr. Gordon and their affiliates and designees will
own beneficially (a) 4,221,820 shares or 26.5% of the outstanding
shares without giving effect to their outstanding Options and
Warrants and (b) 4,391,501 shares or 27.5% of the outstanding
shares when such effect is given.
The result of the sales to Mr. Blumenfeld and the persons
named in this section is to further dilute the stock ownership of
persons other than the current directors and their affiliates (the
"Minority Shareholders") as indicated in the following table which
does not give effect to the outstanding Options and Warrants:
Minority
Shareholders'
Date Outstanding Shares Number of Shares Percentages
- ---- ------------------ ---------------- -----------
Before sale 4,446,017 1,723,197 38.8%
After sales 15,946,017 1,723,197 10.8%
<PAGE 11>
Purchase of Collegiate Pacific, Inc.
If the sale of 10,000,000 shares of the Common Stock to Mr.
Blumenfeld is consummated, he will sell to the Company, at his
cost (currently estimated to approximate $400,000), the assets
(including cash advances and the corporate name) of Collegiate
Pacific, Inc. ("CPI") f/k/a Nitro Sports, Inc., a Delaware
corporation. The property to be acquired by the Company from CPI,
based on CPI's most recent balance sheet (i.e., as of September
26, 1997) used in the preparation of the pro forma balance sheet
included in this Proxy Statement under the caption "Unaudited Pro
Forma Balance Sheet," will be primarily inventory (72% of the
purchase) which will be used in the Company's business. Capital
equipment accounts for an additional 17% and the remaining 11%
consists of trademarks, deposits, organizational costs and other
immaterial assets. All of these percentages may, of course, vary
at the date of the actual closing. Because all of the assets of
CPI were purchased during recent months, the Company believes that
the costs incurred therefor represent fair consideration for the
assets. The Company will not also assume any the liabilities of
CPI except for unpaid invoices for inventory., CPI currently
occupies 30,000 square feet of warehouse and office space located
at 13950 Semlac Drive, Suite 200, Dallas, Texas 75234. CPI's
telephone number is (972) 243-8100. CPI's management believes
that these facilities will be adequate for the foreseeable future.
CPI employs five persons and intends to increase this employment
to approximately eight persons when and if business conditions
justify, as to which there can be no assurance. CPI, of which Mr.
Blumenfeld owns 100% of the outstanding shares of stock, was incorporated
on April 14, 1997 under the laws of the State of Delaware.
CPI intends to engage in the mail order marketing of sports
equipment primarily to institutional locations throughout the
United States. These accounts will include country clubs,
schools, YMCAs and YWCAs (or similar organizations), municipal
recreation departments and other governmental agencies. CPI has
created a master mailing list of some 200,000 potential customers
and intends to distribute approximately 500,000 catalogs and
fliers to this audience during 1998. CPI also intends to utilize
other forms of solicitations such as trade shows, telemarketing,
road salesmen and broadcast fax programs. While CPI management
believes that the vast majority of products to be distributed by
CPI will be purchased in finished form, a small percentage of the
items may require fabrication to complete. CPI anticipates
capital expenditures of no more than $50,000 to set up its
fabrication process. The raw material used in the proposed
fabrication process are in the form of shipping supplies, nuts and
bolts and other commercially available components. CPI believes
that there are multiple suppliers nationwide for these products.
For information as to contemplated products, see the section
"Change of Business" under this caption "Proposal One: To Enter A
New Business."
Between April and October 1997, CPI did market research as
to potential products to offer and prepared a limited product
sales catalog based on such research. CPI first commenced test
marketing product catalogs in early October 1997 and has
received approximately 200 orders which it has fulfilled. CPI
management intends to mail a catalog in November 1997 offering a
<PAGE 12>
greater variety of products and a master catalog will be
designed and mailed throughout 1998 which will offer some 300
products. CPI has installed several incoming toll free phone
and fax lines to support the anticipated level of revenues and
has purchased, installed and tested a multistation computer
system which will maintain inventory and financial record
keeping and controls. CPI has purchased and has in current
inventory a substantial percentage of the products it intends to
offer and sell during 1998. CPI has expended approximately
$160,770 through September 26, 1997 related to market research,
inventory acquisition, marketing brochures and engaging
personnel. CPI has fully expensed all items necessary to
operate its business and anticipates no additional costs to
generate revenues except the purchase of additional inventory to
fill specific product orders.
If the proposal for a change in business is approved at the
meeting and the sale to Mr. Blumenfeld subsequently consummated,
the products will be distributed by the Company and not by CPI.
CPI's management believes that, with the investment by Mr.
Blumenfeld of $2,000,000 ($2,300,000 if the sale to others is
consummated as well, see the section "Sale to Others" under this
caption "Proposal One: To Enter A New Business"), the Company
will be able to satisfy its cash requirements and will not
require additional financing during the 12 months following the
closing.
There can be no assurance that CPI and, after the sale, the
Company will be able to achieve the anticipated goals set forth
in the preceding four paragraphs.
Mr. Blumenfeld currently serves as the President and Chief
Executive Officer of CPI and will serve in such capacities with
the Company after his purchase of the controlling shares.
Certain information with respect to current executive officers
of CPI who will hold similar officerships in the Company after
the sale is as follows:
Arthur Coerver, age 55, is the Chief Operating Officer of
CPI. From 1981 until 1997, Mr. Coerver was Vice President, Sales
and Marketing, of Sports Supply. Mr. Coerver graduated from the
University of Texas at Austin in 1965 with a BS in Mechanical
Engineering.
Chad Edlein, age 26, is the Vice President of Corporate
Development of CPI. From 1994 until 1997, Mr. Edlein was
Marketing Manager at Sports Supply. Mr. Edlein graduated from the
University of North Texas in 1994.
Under the Stock Purchase Agreement, Mr. Blumenfeld is to
submit an itemized statement of his costs to the Board promptly
after the closing at which he purchases the 10,000,000 shares of
the Common Stock. The Board is obligated to meet within five
business days of the receipt of such statement and the Company is
obligated to make such purchase within three business days after
the Board approves the purchase price (including any resolutions
as to items in dispute). Based upon its current information, the
Company believes that the purchase of the assets of CPI will be
treated as a purchase for accounting purposes and that there will
be no federal income tax consequences to the Company or its
shareholders as a result thereof.
<PAGE 13>
Change of Business
If the first proposal set forth in the Notice of Special
Meeting is approved and, subsequently, the sale of the controlling
stock interest in the Company is purchased by Mr. Blumenfeld, the
Company will enter the business of distributing sports equipment,
including inflatable balls, nets for all sports, standards and
goals for sports requiring such, weight lifting equipment and
recreational products such as frisbees and horseshoes, to the
institutional markets. For additional information as to the
contemplated operations of the Company, see the section "Sale to
Michael J. Blumenfeld" under this caption "Proposal One: To Enter A
New Business." Mr. Blumenfeld has been engaged in the sports
equipment business for over 25 years. During his 25 years as a
Chief Executive Officer of Sports Supply or its predecessors, such
company completed 75 acquisitions and grew to have over 100,000
customers and to offer nearly 5,000 products. If the proposal is
approved and the sale of stock is consummated, Mr. Blumenfeld
intends to pursue a policy of strategic acquisitions, new licensing
programs and corporate joint ventures in an attempt to grow the
Company's business. He anticipates that the Company will
beinitially offering 300 products by 1998. There can be no
assurance that these acquisitions, licenses or joint ventures will
be effectuated or obtained or as to the number of products to be
offered by the Company. Furthermore, there can be no assurance
that the sports equipment business or any other business hereafter
entered into by the Company will be profitable or successful.
Except for compliance with Section 14(a) of the Exchange Act
and Regulation 14A promulgated thereunder relating to this Proxy
Statement and the accompanying proxy, there are no federal or
state regulatory requirements as to which the Company must comply
or any approvals obtained in order for the Company to enter into
the business of distributing sports equipment. Whenever the
Company will hereafter elect to commence fabricating manufacturing
sports equipment, compliance with certain federal and state
regulatory requirements may become applicable to the Company.
PROPOSAL TWO: CHANGE OF CORPORATE NAME
The Stock Purchase Agreement requires the Company to change
its name from DSSI Corporation to Collegiate Pacific, Inc. As
indicated in the Prior Proxy Statement, the name DSSI Corporation
was adopted only temporarily, because the name Drug Screening
Systems, Inc. was sold to Casco, until a more desirable name
relating to the new business could be adopted. Although the BCL
does not require shareholder approval of a change in corporate
name, the Board had agreed in the Prior Proxy Statement to seek
such approval.
RECOMMENDATION FOR APPROVAL OF BOTH PROPOSALS
<PAGE 14>
The Board of Directors unanimously recommends that
shareholders approve the proposals to enter the business of
distributing sports equipment (including the sale of a controlling
interest) and to change the corporate name to Collegiate Pacific
Inc. because they believe that this new business, under the
leadership of Mr. Blumenfeld, will afford the Minority S
hareholders an opportunity to recoup potentially their investment
in the Company and for the Company to realize future profits, as
to neither of which results there there can be any assurance. The
Board also believes that the Minority Shareholders will realize a
greater return on their investmentmore than if the Company were
liquidated rather than consummating the transaction with Mr.
Blumenfeld. As of June 30, 1997, the book value of the Company
was $761,628 or $.17 per share and the liquidation value (after
paying all liquidating expenses) was estimated by management to be
$.15 per share. While the Board does not make any recommendation
as to whether a Minority Shareholder should hold or sell his, her
or its shares of the Common Stock, it notes that, based on the
high and low bid prices of $____ and $____, respectively, on
November __, 1997, a Minority Shareholder would realize more by a
sale than the estimated liquidation value; however, there can be
no assurance as to what the market price of the Common Stock will
be when a Minority Shareholder chooses to sell. Reference is made
to the lower market prices at the time the Stock Purchase
Agreement was negotiated as set forth under "Proposal One: To
Enter A New Business-Sale to Michael J. Blumenfeld."
The Board is also of the opinion that, after the transactions
are consummated, so that the Company again has operations and if
these new operations result in profitability, there should be
greater interest in the Common Stock, thereby not only helping to
increase its market value but hopefully also increase its
liquidity. However, there can be no assurance that (1) the
Company will achieve profitability, either as to when or if at
all; (2) there will continue to be a rise in the market price of
the Common Stock; or (3) there will be an improvement in the
liquidity of the Common Stock.
The book value of the Common Stock assuming the occurrence of
all of the transactions described in this Proxy Statement to be
taken after shareholder approval is $0.19 per share and the
liquidation value would be approximately the same amount
(unrounded, the numbers would be $0.192 and $0.186, respectively).
Although directors reviewed these values prior to reaching their
decision, their primary focus was on the potential future earnings
of the new entity as a means of enhancing the market value of the
Common Stock rather than on the book value of the shares
immediately after consummation of the sale to Mr. Blumenfeld and
the subsequent purchase of CPI's assets. In addition, although
the directors did not believe that the future earnings were
quantifiable, they concluded that Mr. Blumenfeld's past results in
the intended market gave a good indication for the potential for
growth. There can be, of course, no assurance that the Company will
operate at a profit or achieve any significant amount of revenues or
that these results, if achieved, will result in a higher market value
for the Common Stock.
Although, as indicated under the section "Sales to Others"
under the caption "Proposal One: To Enter A New Business," the
percentage of ownership of the shareholders who are not affiliated
with the current directors and James A. Gordan (i.e., the Minority
Shareholders) would be reduced, the Board does not consider this
to be a material reason for the Minority Shareholders to vote
against either proposal. Because of its history of continuing
losses when the Company was engaged in the drug testing business,
no dividends were ever paid nor was there a likely chance of such
dividends because of the continuing cash requirements of the
Company. Although the directors
<PAGE 15>
believe that, as a result of the
Company's entry into the sports equipment business, the Company
will achieve profitability at an earlier date that the Company
would have (if at all) in the drug testing business, thereby
permitting legally the payment of dividends, Mr. Blumenfeld has
advised the directors that any earnings will be used to develop
the business and, accordingly, no dividends are currently
contemplated even if the Company achieves his expectations. In
addition, the prior percentage ownership did not permit the
Minority Shareholders to effect the vote on the election of
directors or on any other matters so long as the directors and the
5% beneficial owner voted together. Accordingly, the further
reduction in their percentage ownership caused by the transactions
contemplated by this Proxy Statement will not deprive the Minority
Stockholders of a voting right which they currently have. There
will be no other changes in the rights of the Minority
Shareholders.
PROPOSED NOMINEES FOR DIRECTORSHIPS
If the first proposal set forth in the Notice of Special
Meeting is approved and Mr. Blumenfeld subsequently purchases the
controlling stock interest in the Company, he intends to designate
to the current Board the three persons hereinafter named for
election as directors of the Company and, pursuant to the Stock
Purchase Agreement, the Board will elect them as permitted by the
BCL and the Company's By-Laws. In addition, one current director
(currently expected to be John Pappajohn) will resign and one
current director (expected to be Jeff Davidowitz) will continue to
serve.
Certain information with respect to Mr. Blumenfeld's
designees for election as directors is as follows:
Michael J. Blumenfeld, age 51, will serve as the President
and Chief Executive Officer of the Company, currently serving in
such capacities for CPI. From 1992 until November 1996, he was
the Chairman of the Board and Chief Executive Officer of Sports
Supply, from which public company he resigned in November 1996.
Robert W. Philip, age 62 was an Executive in Residence and
Lecturer in the Department of Accounting of the College of
Business Administration at the University of North Texas in
Denton, Texas from September 1989 until May 1994. Prior to that
time, Mr. Philip served as an audit partner with Arthur Andersen,
S.C. for approximately 18 years. Mr. Philip is also a director of
Medical Control, Inc. (Nasdaq: MDCL), a health care cost
management company. Mr. Philip is currently retired from the
University of North Texas and Arthur Andersen, S.C.
William A. Watkins, Jr., age 55, has been a partner of
Watkins, Watkins and Keenan, a certified public accounting firm,
since December 1971. He also serves as a director of Aurora
Electronics, Inc. (AMEX: AUR), a provider of specialized
distribution and materials support services to the electronics
industry.
<PAGE 16>
There are no family relationships between any of the
foregoing designees and the current directors or between the
foregoing designees and the officers named under "Proposal One: To
Enter A New Business-Purchase of Collegiate Pacific, Inc."
FINANCIAL STATEMENTS
The following audited financial statements appear in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1997 (the "Annual Report"), a copy of which Annual
Report accompanies the Proxy Statement, and are incorporated
herein by this reference.
Page in
Item Form 10-KSB
---- -----------
Independent Auditors' Report 10
Balance Sheets as of June 30, 1997 and 1996 11
Statements of Operations for the years ended June 30,
1997 and 1996 12
Statements of Changes in Stockholders' Equity for the
years ended June 30, 1997 and 1996 13
Statements of Cash Flows for the years ended
June 30, 1997 and 1996 14
Notes to Financial Statements 15
The following Items in the Annual Report are also
incorporated herein by this reference: 1 (Description of
Business), 2 (Description of Property), 3 (Legal Proceedings), 4
(Market for Common Equity and Related Stockholder Matters), 6
(Management's Discussion and Analysis or Plan of Operations) and
8 (Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures).
Periodic reports and proxy material relating to the Company
can be inspected and copies made at the public reference
facilities of the Commission at Room 104, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York,
New York, 10048 and Northwestern Atrium Center, 500West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. A copy of the
Company's periodic reports and proxy statements can also be
obtained at prescribed rates from the Public Reference Section of
the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web Site that
contains reports, proxy and information statements and information
regarding registrants like the Company that file electronically
with the Commission at the following Web site address:
http://www/sec.gov. A copy can also be obtained from the Company
by writing Mr. Brennan at the address shown in the introductory
heading to this Proxy Statement or by calling him at (610) 696-
3479.
<PAGE 17>
UNAUDITED PRO FORMA BALANCE SHEET
The following Unaudited Pro Forma Balance Sheet of the
Company is based on the historical financial statements of the
Company incorporated by reference into this Proxy Statement as
adjusted to give effect to (1) the proposed purchase of shares of
the Common Stock by Michael J. Blumenfeld and the others as set
forth in this Proxy Statement and (2) the proposed subsequent
acquisition of CPI even though it has conducted no marketing
activities and its sole operations have been to do market
research, acquire inventory, prepare marketing brochures and
engage personnel in anticipation of entering the business of
manufacturing and distributing sports equipment to the
institutional markets.
The Unaudited Pro Forma Balance Sheet gives effect to the
sale of such shares as if the sale had occurred as of June 30,
1997. The Unaudited Pro Forma Balance Sheet should be read in
conjunction with the historical financial statements of the
Company, including the notes thereto. The Unaudited Pro Forma
Balance sheet does not purport to represent what the Company's
actual financial position would have been if the sale of shares in
fact occurred on such date or to project the Company's financial
position at any future date. The Unaudited Pro Forma Balance
Sheet does not give effect to any transactions other than the sale
of an aggregate of 11,250,000 shares of the Common Stock for an
aggregate purchase price of $2,300,000 and the proposed subsequent
acquisition of CPI for an estimated cost of $400,000 ($327,323
based on the assets as of September 26, 1997 as shown in an
unaudited balance sheet of September 26, 1997).
No pro forma statement of operations is included because
CPI is a start-up operation, having realized no revenues until
October 1997 and incurring only expenses prior thereto related
to doing market research, acquiring inventory, preparing sales
catalogs and engaging personnel.
<PAGE 18>
DSSI CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
As of June 30, 1997
Pro Forma Pro Forma
Historical Adjustments As Adjusted
---------- ----------- -----------
Assets
Current Assets:
Cash $ 801,979 $2,225,000(1) $2,699,646
- (327,323)(2) -
Accounts receivable, not of
allowance of $60,000 at June
30, 1997 53,073 - 53,073
Receivable from purchase holdback 160,000 - 160,000
Inventory - 344,400(2) 344,400
Prepaid expenses and other 42,044 458(2) 42,502
--------- --------- ---------
Total Current Assets 1,057,096 2,242,525 3,299,357
Equipment and improvements, net 1,506 80,783(2) 82,289
<PAGE 19>
Pro Forma Pro Forma
Historical Adjustments As Adjusted
---------- ----------- -----------
Other Assets:
Deposits 8,585 - 8,585
Patents or Trademark - 42,382(2) 42,382
Miscellaneous - 8,918(2) 8,918
---------- ---------- ----------
Total Assets $1,067,187 $2,374,608 $3,441,795
========== ========== ==========
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
debt and capital leases $233,213 $149,608(2) $382,821
Accounts payable and accrued
expenses 72,346 - 72,346
-------- ------- -------
Total Current Liabilities 305,559 149,608 455,167
Stockholders' Equity
Class "A" preferred stock,
$0.01 par value; 2,000
Shares authorized; none issued
Common stock, $0.01 par value;
20,000,000
Shares authorized: 4,446,017
shares at June 30, 1997 issued
and outstanding 44,460 115,000 159,460
Additional paid-in-capital 15,118,555 2,110,000 17,228,555
Accumulated deficit (14,401,387) - (14,401,387)
----------- --------- -----------
Total Stockholders' Equity 761,628 2,225,000 2,986,628
----------- --------- ----------
Total Liabilities and
Stockholders' Equity $ 1,067,187 $2,374,608 $3,441,795
=========== ========== ==========
_______________________
<PAGE 20>
(1) This amount represents the gross purchase price for
11,500,000 shares of the Common Stock less a reduction of
$75,000 for the expenses relating to the proposed sales of
shares of the Common Stock.
(2) These amounts are derived from the unaudited balance sheet of
CPI as of September 26, 1997 and, of course, may vary from
those on the actual date of purchase of the CPI assets.
MISCELLANEOUS
Costs of Solicitation
The expenses in connection with the solicitation of proxies,
including the cost of preparing assembling and mailing this Proxy
Statement and the related material, will be borne by the Company.
The Company will pay brokers and other custodians, nominees and
fiduciaries their reasonable expenses for sending proxy materials
to principals and obtaining their proxies. In addition to
solicitations by mail, proxies may be solicited personally or by
telephone or telegraph by directors and the sole officer of the
Company, who will receive no additional compensation therefor.
<PAGE 21>
Annual Report to Shareholders
A copy of the Annual Report accompanies this Proxy
Statement and its financial statements and certain items are
incorporated herein by this reference under "Financial
Statements.". A copy of any exhibits to the Annual Report may be
obtained by written or oral request to Patrick J. Brennan, Vice
President, Chief Financial Officer and Secretary of the Company,
at the principal office of the Company, the address of which is
set forth in the introductory paragraph heading to this Proxy Statement.
A reasonable fee for duplicating and mailing will be charged if
a copy of any exhibit is requested.
Shareholder Proposals
Shareholder proposals for inclusion in the Company's Proxy
Statement for the next Annual Meeting of Shareholders must be
received not later than a reasonable time before the proxy
material for such meeting is mailed.
DSSI CORPORATION
Patrick J. Brennan, CPA
Secretary
Dated: November 14, 1997
<PAGE 22>
APPENDIX A-1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered
into as of August 18, 1997 by and between DSSI Corporation, a
Pennsylvania corporation (the "Company"), and Michael J.
Blumenfeld ("Purchaser").
Background
Purchaser, on the terms and subject to the conditions of
this Agreement, desires to purchase from the Company, and the
Company desires to issue and sell to Purchaser, 10,000,000
shares of the Company's common stock, $.01 par value per share
(the "Company Common Stock"), for an aggregate purchase price of
$2,000,000.
Therefore, in consideration of the foregoing and the
respective representations, warranties, covenants, and
agreements set forth in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which all
parties mutually acknowledge, the Company and Purchaser hereby
agree as follows:
Article I
The Purchase and Sale of the Shares
1.01 Purchase and Sale of the Shares. At the Closing (as
defined below), and subject to the terms and conditions set
forth in this Agreement, Purchaser will purchase from the
Company, and the Company will issue and sell to Purchaser,
10,000,000 shares of the Company Common Stock (the "Shares"),
free and clear of any liens, encumbrances, pledges, restrictive
agreements, or adverse claims of any nature.
1.02 Purchase Price. The aggregate purchase price for the
Shares will be $2,000,000 (the "Purchase Price") in immediately
available funds.
Article II
The Closing
2.01 Closing; Closing Date. Unless this Agreement has been
terminated pursuant to Section 7.01, and subject to the
satisfaction or waiver of the conditions set forth in Article V,
the issuance and sale of the Shares contemplated by this
Agreement (the "Closing") will take place at the offices of the
Company on September 2, 1997 (provided, that the conditions set
forth in Article V have been satisfied or waived at or prior to
such time) or as soon as practicable (but not later than five
business days) after satisfaction of the conditions set forth in
Article V, or at such time, date, and place as the Company and
Purchaser agree. The date on which the Closing takes place is
referred to as the "Closing Date".
<PAGE 23>
2.02 Deliveries by Purchaser. Purchaser will deliver or
cause to be delivered the following at Closing, and it will be a
condition to the Company's obligations under this Agreement that
all of the following be delivered at Closing:
(a) A wire transfer for the Purchase Price in immediately
available funds to the account established for the
benefit of the Company, titled "DSSI Corporation d/b/a
Collegiate Pacific Inc.", at BankOne Texas, N.A. in
Dallas, Texas.
(b) Such other documents and instruments as may be
necessary to carry out the transactions contemplated
by this Agreement.
2.03 Deliveries by the Company. The Company will deliver
or cause to be delivered the following at Closing, and it will
be a condition to Purchaser's obligations under this Agreement
that all of the following be delivered at Closing:
(a) A certificate or certificates representing the Shares,
in such denominations and registered in such names as
Purchaser shall request at least two days prior to the
Closing Date.
(b) Opinion of counsel for the Company, substantially in
the form of Exhibit A.
(c) A certificate of the secretary of the Company,
substantially in the form of Exhibit B.
(d) A closing certificate executed by an officer of the
Company, substantially in the form of Exhibit C.
(e) Such other documents and instruments as may be
necessary to carry out the transactions contemplated
by this Agreement.
Article III
Representations and Warranties of the Company
The Company hereby represents and warrants to Purchaser that
the statements in this Article III are true and correct as of
the date of this Agreement.
3.01 Organization, Good Standing, and Qualification. The
Company is a corporation duly organized, validly existing, and
in good standing under the laws of the Commonwealth of
Pennsylvania, has all requisite corporate power and authority to
own, lease, and operate its properties and to carry on its
business as presently conducted. The Company is qualified to do
business and is in good standing in each jurisdiction in which
the failure to so qualify would have a Material Adverse Effect.
As used in this Agreement, "Material Adverse Effect" means a
material adverse effect on, or a material adverse change in, or
a group of such effects on or changes in, the business,
operations, financial condition, results of operations, assets,
or liabilities of the Company.
<PAGE 24>
3.02 Authorization. The Company has all requisite power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized
by all necessary corporate action, and no other corporate
proceedings on the part of the Company are required to authorize
the transactions contemplated hereby. This Agreement
constitutes a legal, valid, and binding agreement of the
Company, enforceable against the Company in accordance with its
terms, except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization, or other laws of general application
relating to or affecting the enforcement of creditors' rights
generally and (b) the effect of rules of law governing the
availability of equitable remedies.
3.03 Capitalization.
(a) The authorized capital stock of the Company consists
of (i) 20,000,000 shares of the Company Common Stock,
of which 4,446,017 are issued and outstanding, and
(ii) 2,000 shares of Class "A" Preferred Stock, $.01
par value per share, none of which are issued and
outstanding. At Closing, in addition to the issuance
and sale of the Shares to Purchaser, the Company will
issue and sell 1,500,000 shares of the Company Common
Stock, at a purchase price of $.20 per share, to
persons other than Purchaser.
The Company has reserved 500,000 shares of the Company
Common Stock for issuance under the Company's 1994
Stock Option Plan under which options to purchase
345,000 shares are outstanding. The Company has
issued and outstanding warrants to purchase an
aggregate of 408,998 shares of the Company Common
Stock. Except for shares reserved for issuance under
the 1994 Stock Option Plan and for the outstanding
warrants, no other shares of capital stock of the
Company are reserved for any purpose. Each of the
outstanding shares of capital stock of the Company is
duly authorized, validly issued, and fully paid and
nonassessable, and has not been issued in violation of
(nor are any of the authorized shares of capital stock
subject to) any preemptive or similar rights.
(b) Except as provided in this Agreement or as set forth
in Schedule 3.03(b), there are no options, warrants,
or other rights, agreements, or commitments of any
nature to which the Company is a party or by which it
is bound relating to the issued or unissued capital
stock or other securities of the Company or obligating
the Company to grant, issue, or sell any shares of its
capital stock or other securities. Except as set
forth in Schedule 3.03(b), there are no agreements,
arrangements, or commitments of any nature pursuant to
which any person or entity is or may be entitled to
receive any payment based on the revenues or earnings,
or calculated in accordance therewith, of the Company.
(c) There are no obligations, contingent or otherwise, of
the Company to (i) repurchase, redeem, or otherwise
acquire any shares of the Company Common Stock or
other capital stock or securities of the Company; or
(ii) provide material
<PAGE 25>
funds to, or make any material investment in
(in the form of a loan, capital contribution, or
otherwise), or provide any guarantee with respect
to the obligations of any person or entity.
3.04 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, association, or
other entity.
3.05 No Conflict. The execution, delivery, and performance
of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, do not and will not (i)
contravene or conflict with the Articles of Incorporation or
Bylaws of the Company; (ii) constitute a violation of any
provision of any federal, state, local, or foreign law binding
upon or applicable to the Company; or (iii) constitute a default
or require any consent under, give rise to any right of
termination, cancellation or acceleration of, or to a loss of
any benefit to which the Company is entitled under, or result in
the creation or imposition of any lien, claim, or encumbrance on
any assets of the Company under, any contract to which the
Company is a party or any permit, license, or similar right
relating to the Company or by which the Company may be bound or
affected.
3.06 Valid Issuance of Stock. The Shares, when issued,
sold, and delivered in accordance with the terms of this
Agreement for the consideration provided for herein, will be
duly and validly issued, fully paid and nonassessable.
3.07 Governmental Consents. Except as provided in Section
5.01(f) and Section 5.01(g), no consent, approval, order, or
authorization of, or registration, qualification, designation,
declaration, or filing with, any federal, state, or local
governmental authority on the part of the Company is required in
connection with the consummation of the transactions
contemplated by this Agreement.
3.08 Litigation. There is no claim, action, suit,
litigation, proceeding, arbitration, or investigation of any
kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of the
Company, threatened against the Company or any properties or
rights of the Company, or relating to this Agreement or the
transactions contemplated by this Agreement, including, without
limitation, any claims for indemnification raised by Casco
Standards, Inc. against the Company pursuant to the Purchase and
Sale Agreement dated March 14, 1997. The Company is not subject
to any continuing order of, consent decree, settlement
agreement, or other similar written agreement with, or
continuing investigation by, any governmental entity, or any
judgment, order, writ, injunction, decree, or award of any
governmental entity or arbitrator.
3.09 Permits; Compliance. The Company is in possession of
all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates,
approvals, and orders necessary to own, lease, and operate its
properties and to carry on its business as it is now being
conducted (collectively, the "Company Permits"), and there is no
action, proceeding, or investigation pending or threatened
regarding suspension or cancellation of any of the Company
Permits.
<PAGE 26>
3.10 Compliance with Law and Charter Documents. The
Company is not in violation or default of any provisions of its
Articles of Incorporation or Bylaws, both as amended to date.
The Company has complied and is in compliance in all material
respects with all applicable statutes, laws, regulations, and
executive orders of the United States of America and all states,
foreign counties, and over governmental bodies and agencies
having jurisdiction over the Company's business or properties.
3.11 Registration Rights. The Company is not currently
subject to any grant or agreement to grant to any person or
entity any rights (including piggyback registration rights) to
have any securities of the Company registered with the United
States Securities and Exchange Commission ("SEC") or any other
governmental authority.
3.12 Title to Property and Assets. Except as set forth on
Schedule 3.12, the Company does not own any real property and
does not have any assets. With respect to the property and
assets it leases, the Company is, except as set forth in
Schedule 3.12, in compliance with such leases in all material
respects.
3.13 Material Contracts. The Company has no (a) agreement,
contract, or other arrangement, whether written or oral,
providing for the payment by the Company of $25,000 or more or
(b) other agreement, contract, or other arrangement that is
material to the business of the Company.
3.14 SEC Documents.
(a) The Company has furnished to Purchaser copies of the
Company's Annual Report on Form 10-KSB for the year
ended June 30, 1996, the Company's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 1997, and
the Company's Proxy Statement for the Annual Meeting
of the Shareholders dated May 23, 1997 (collectively,
the "SEC Documents"). Each of the SEC Documents, as
of the respective date thereof, did not, and each of
the registration statements, reports, and proxy
statements filed by the Company with the SEC after the
date thereof and prior to the Closing will not, as of
the date thereof, contain any untrue statement of a
material fact or omit to state a material fact
necessary in order to make the statements made
therein, in light of the circumstances under which
they are made, not misleading. The Company is not a
party to any material contract, agreement, or other
arrangement which was required to have been filed as
an exhibit to the SEC Documents that is not so filed.
(b) The SEC Documents include the Company's audited
financial statements (the "Audited Financial
Statements") for the year ended June 30, 1996 and its
unaudited financial statements as of and for the nine-
month period ended March 31, 1997 (the "Balance Sheet
Date"). Since the Balance Sheet Date, the Company has
duly filed with the SEC all registration statements,
reports, and proxy statements required to be filed by
it under the Securities Exchange Act of 1934, as
<PAGE 27>
amended (the "Exchange Act"), and the Securities Act
of 1933, as amended (the "Securities Act"). The
audited and unaudited financial statements of the
Company included in the SEC Documents filed prior to
the date hereof fairly present, in conformity with
generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be
indicated in the notes thereto), the financial
position of the Company as at the date thereof and the
results of their operations and cash flows for the
periods then ended (subject to normal year and audit
adjustments in the case of unaudited interim financial
statements).
(c) Except as and to the extent reflected or reserved
against in the Company's unaudited financial
statements for the nine-month period ending March 31,
1997 (including the notes thereto), the Company has no
liabilities (whether accrued or unaccrued, liquidated
or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested,
executory, determined or determinable) other than: (i)
liabilities incurred in the ordinary course of
business since the Balance Sheet Date, and (ii)
liabilities with respect to agreements listed in
Schedule 3.14(c).
3.15 Employees; Employee Benefits.
(a) The Company has no employees other than those listed
on Schedule 3.15(a). The Company has not received any
notice, and has no knowledge of any threatened labor
or civil rights dispute, controversy, or grievance or
any other unfair labor practice proceeding or breach
of contract claim or action with respect to claims of,
or obligations to, any present or former employee or
group of employees of the Company.
(b) Except as set forth on Schedule 3.15(b), the Company
does not maintain, sponsor, contribute to, or provide
any benefits under (i) any "employee benefit plan" (as
defined in the Employee Retirement Income Security Act
of 1974, as amended); (ii) any plan or policy
providing for any "fringe benefits"; (iii) any bonus,
incentive, compensation, deferred compensation, profit
sharing, stock, severance, retirement, health, life,
disability, group insurance, employment, stock option,
stock purchase, stock appreciation right, supplemental
unemployment, layoff, consulting, or other similar
plan; or (iv) any agreement, policy, or understanding
(whether written or oral, qualified or nonqualified,
currently effective or terminated) ((i) through (iv)
are collectively referred to as "Employee Plans").
There is no claim pending arising out of or related to
any Employee Plan by any person or entity (including
any governmental entity) against the Company nor is
any such claim threatened. The Company has no
continuing liability or other obligations arising
under any previously terminated or transferred
Employee Plans.
<PAGE 28>
3.16 Tax Matters.
(a) The Company has filed on a timely basis all Tax
Returns required to have been filed by it and has paid
on a timely basis all Taxes required to be shown
thereon as due. All such Tax Returns are true,
complete, and correct in all material respects. No
director, officer, or employee of the Company having
responsibility for Tax matters has reason to believe
that any Taxing authority has valid grounds to claim
or assess any additional Tax with respect to the
Company in excess of the amounts shown in the
financial statements delivered to Purchaser for the
periods covered thereby. As used in this Agreement,
(l) "Taxes" means (x) all federal, state, local,
foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, transfer,
franchise, profits, license, lease, service, service
use, withholding, backup withholding, payroll,
employment, estimated, excise, severance, stamp,
occupation, premium, property, prohibited
transactions, windfall or excess profits, customs,
duties or other taxes, fees, assessments or charges of
any kind whatsoever together with any interest and any
penalties, additions to tax or additional amounts with
respect thereto, (y) any liability for payment of
amounts described in clause (x) whether as a result of
transferee liability, of being a member of an
affiliated, consolidated, combined, or unitary group
for any period, or otherwise through operation of law,
and (z) any liability for the payment of amounts
described in clauses (x) or (y) as a result of any tax
sharing, tax indemnity or tax allocation agreement or
any other express or implied agreement to indemnify
any other person for Taxes; and the term "Tax" means
any one of the foregoing Taxes; and (2) "Tax Returns"
means all returns, reports, forms, or other
information required to be filed with respect to any
Tax.
(b) With respect to all amounts in respect of Taxes
imposed upon the Company or for which the Company is
or could be liable, whether to Taxing authorities (as,
for example, under law) or to other persons or
entities (as, for example, under tax allocation
agreements), and with respect to all taxable periods
or portions of periods ending on or before the Closing
Date, all applicable Tax laws and agreements have been
fully complied with, and all such amounts required to
be paid by the Company to taxing authorities or others
have been paid.
(c) The Company has not received notice that the Internal
Revenue Service or any other Taxing authority has
asserted against the Company any deficiency or claim
for additional Taxes in connection with any Tax
Return, and no issues have been raised (and are
currently pending) by any taxing authority in
connection with any Tax Return. The Company has not
received notice that it is or may be subject to Tax in
a jurisdiction in which it has not filed or does not
currently file Tax Returns.
3.17 Indebtedness. The Company has no outstanding
indebtedness that the Company has directly or indirectly
created, incurred, assumed, or guaranteed.
<PAGE 29>
3.18 Environmental Matters.
(a) During the period that the Company has leased or owned
its properties or owned or operated any facilities,
there have been no disposals, releases, or threatened
releases of Hazardous Materials (as defined below) on,
from, or under such properties or facilities in
violation of applicable law. The Company has no
knowledge of any presence, disposals, releases, or
threatened releases of Hazardous Materials on, from,
or under any of such properties or facilities, which
may have occurred prior to the Company having taken
possession of any of such properties or facilities in
violation of applicable law. For purposes of this
Agreement, the terms "disposal", "release", and
"threatened release" shall have the definitions
assigned thereto by the Comprehensive Environmental
Response, compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA").
For the purposes of this Section 3.17, "Hazardous
Materials" shall mean any hazardous or toxic
substance, material, or waste which is or becomes
prior to the Closing regulated under, or defined as a
"hazardous substance", "pollutant", "contaminant",
"toxic chemical", "hazardous material", "toxic
substance", or "hazardous chemical" under (1) CERCLA;
(2) the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. Section 11001 et seq.; (3) the
Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; (4) the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; (5) the
Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq.; or (6) regulations promulgated
under any of the above statutes.
(b) None of the Company's properties or facilities is in
violation of any federal, state, or local law,
ordinance, regulation, or order relating to industrial
hygiene or to the environmental conditions on, under,
or about such properties or facilities, including, but
not limited to, soil and ground water conditions.
During the time that the Company has owned or leased
its properties and facilities, neither the Company
nor, to the Company's knowledge, any third party, has
used, generated, manufactured, or stored on, under, or
about such properties or facilities or transported to
or from such properties or facilities any Hazardous
Materials in violation of applicable law.
(c) During the time that the Company has owned or leased
its properties and facilities, there has been no
litigation brought or threatened against the Company,
or any settlement reached by the Company with, any
party or parties alleging the presence, disposal,
release, or threatened release of any Hazardous
Materials on, from, or under any of such properties or
facilities.
(d) During the period that the Company has owned or leased
its properties and facilities, no Hazardous Materials
have been transported from such properties or
facilities to any site or facility now listed on the
National Priorities List, at 40 C.F.R. Part 300, or
any list with a similar scope or purpose published by
any state authority in violation of applicable law.
<PAGE 30>
3.19 Full Disclosure. The representations and warranties
contained in this Agreement, as modified or qualified by the
Schedules, are true and complete in all material respects and do
not omit to state any materiel fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
Article IV
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the Company
that the statements in this Article IV are true and correct as
of the date of this Agreement.
4.01 Investment Intent. Purchaser is acquiring the Shares
for his own account for investment purposes and not with a view to
the distribution thereof within the meaning of the Securities Act.
4.02 Restricted Securities. Purchaser understands that the
Shares constitute "restricted securities" within the meaning of
Rule 144 under the Securities Act and may not be sold, pledged,
or otherwise disposed of unless they are subsequently registered
under the Securities Act and applicable state securities laws or
unless an exemption from registration is available.
4.03 Accredited Investor. Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities
Act.
4.04 Restrictive Legend. Purchaser understands that each
certificate representing the Shares shall be stamped or
otherwise imprinted with a legend substantially in the following
form (in addition to any legend that may now or hereafter be
required by applicable state law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
4.05 No Non-Competition Obligation. Purchaser is not a
party to any agreement, whether with Sports Supply Group, Inc.
or any other entity, pursuant to which he has agreed not to
compete with such entity or pursuant to which the transactions
contemplated by this Agreement would be prohibited or limited in
any material manner.
<PAGE 31>
Article V
Closing Conditions
5.01 Conditions to Purchaser 's Obligations at Closing.
The obligations of Purchaser to purchase the Shares and the
other transactions contemplated by this Agreement are subject to
the fulfillment or waiver, on or before the Closing, of each of
the following conditions:
(a) Each of the representations and warranties of the
Company contained in this Agreement must be true and
correct in all material respects on and as of the
Closing Date as though made on and as of the Closing
Date.
(b) The Company must have performed and complied in all
material respects with all agreements, obligations,
and conditions contained in this Agreement that are
required to be performed or complied with by it on or
before the Closing and will have obtained all
approvals, consents, and qualifications necessary to
complete the purchase and sale of the Shares.
(c) Each of the required items set forth in Section 2.03
must have been executed and delivered.
(d) The Company's Board of Directors shall have taken such
actions so that, immediately after the Closing, the
Board of Directors shall consist of one designee of
the existing Board of Directors with the remaining
members to consist of persons designated by Purchaser
(which shall in any event never be less than two
members of the Company's Board of Directors).
(e) The Company's Board of Directors must have taken all
steps required by the Pennsylvania Business
Corporation Law to propose and adopt an amendment to
the Company's Articles of Incorporation changing the
name of the Company from "DSSI Corporation" to
"Collegiate Pacific Inc.", which shall be conditioned
upon and effective at Closing.
(f) The Company shall have complied with its obligations
under Section 14(f) of the Exchange Act.
(g) The Company must have taken all steps required by
applicable law, including the filing of a proxy
statement with the SEC, to seek shareholder approval
of this Agreement and the transactions contemplated
hereby.
(h) The Company must have delivered to Purchaser audited
financial statements for the fiscal year ended June
30, 1997, including balance sheets and statements of
income, cash flow, and changes in stockholders' equity
for such period, prepared in accordance with GAAP
applied on a consistent basis throughout such period,
the results of which are not materially adverse as
compared with the results reported in the Audited
Financial Statements and the unaudited financial
<PAGE 32>
statements of the Company as of and for the nine-month
period ended March 31, 1997.
(i) The Company must have terminated all consulting,
employment, or other agreements, contracts, or
understandings between the Company and any person,
including any agreement, whether written or oral,
between the Company and Patrick J. Brennan, except
that payments to, or on behalf of, Mr. Brennan may be
phased out during the thirty (30) day period following
the Closing Date as also provided in Section 6.06.
5.02 Conditions to the Company's Obligations at Closing.
The obligations of the Company to issue and sell the Shares and
the other transactions contemplated by this Agreement are
subject to the fulfillment or waiver, on or before the Closing,
of each of the following conditions:
(a) Each of the representations and warranties of
Purchaser contained in this Agreement must be true and
correct in all material respects on and as of the
Closing Date as though made on and as of the Closing
Date.
(b) Purchaser must have performed and complied in all
material respects with all agreements, obligations,
and conditions contained in this Agreement that are
required to be performed or complied with by it on or
before the Closing and will have obtained all
approvals, consents, and qualifications necessary to
complete the purchase and sale of the Shares.
(c) Each of the required items set forth in Section 2.02
must have been executed and delivered.
Article VI
Covenants
6.01 Affirmative Covenants of the Company. The Company
hereby covenants and agrees that, prior to the Closing, the
Company, except as otherwise contemplated by this Agreement,
will (a) not purchase any assets in excess of $10,000 or incur
any liabilities in excess of $2,000 per month, except as
provided in Schedule 6.01(a); (b) not take or permit any action
that would cause the conditions on the obligations of the
parties to effect the transactions contemplated by this
Agreement not to be fulfilled, including, without limitation, by
taking or causing to be taken any action that would cause the
representations and warranties made by the Company in this
Agreement not to be true and correct; (c) not increase the
compensation payable to or to become payable to any stockholder,
director, or officer of the Company; (d) not declare or pay any
dividend on, or make any other distribution in respect of,
outstanding shares of capital stock; (e) effect any
reorganization or recapitalization; (f) split, combine, or
reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock; (g)
not issue, deliver, award, grant, or sell, or authorize or
propose the issuance, delivery, award, grant, or sale (including
the grant of any security interests, liens, claims, pledges,
limitations in voting rights, charges, or other
<PAGE 33>
encumbrances) of, any shares of any class of its capital stock or
other securities (including shares held in treasury), any securities
convertible into or exercisable or exchangeable for any such
shares or other securities, or any rights, warrants, or options
to acquire any such shares or other securities; (h) not acquire
or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of,
or by any other manner, any business or any division thereof, or
otherwise acquire or agree to acquire any assets of any other
entity; (i) not adopt or propose to adopt any amendments to its
Articles of Incorporation or bylaws or similar organizational
documents; (j) incur any obligation for borrowed money
indebtedness, whether or not evidenced by a note, bond,
debenture, or similar instrument; and (k) take all reasonable
steps to cause to be fulfilled the conditions precedent to
Purchaser's obligations to consummate the transactions
contemplated by this Agreement that are dependent on the actions
of the Company.
6.02 Access and Information. The Company has caused and
will, until the Closing Date, continue to cause Purchaser to
have reasonable access to the Company's directors, officers,
employees, agents, assets, and properties and all relevant
books, records, and documents of or relating to the business and
assets of the Company during normal business hours and will
furnish to Purchaser such information, financial records, and
other documents relating to the Company and its operations and
business as Purchaser may reasonably request.
6.03 Supplemental Disclosure. The Company will promptly
supplement or amend each of the Schedules with respect to any
matter that arises or is discovered after the date of this
Agreement that, if existing or known at the date of this
Agreement, would have been required to be set forth or listed in
the Disclosure Schedule; provided that, for purposes of
determining the rights and obligations of the parties under this
Agreement (other than the obligations of the Company under this
Section 6.03), any such supplemental or amended disclosure will
not be deemed to have been disclosed to Purchaser unless
Purchaser otherwise expressly consents in writing.
6.04 Publicity. Purchaser and the Company will cooperate
with each other in the development and distribution of all news
releases and other public disclosures relating to the
transactions contemplated by this Agreement.
6.05 Reservation of Common Stock. Prior to Closing, the
Company will take all actions required by the laws of the
Commonwealth of Pennsylvania and the Company's Articles of
Incorporation and Bylaws to reserve 400,000 shares of the
Company Common Stock to be issued at Purchaser's discretion to
members of the Company's Board of Directors designated by
Purchaser.
Section 6.06 Termination of COBRA Coverage with U.S.
Healthcare. Within thirty (30) days of Closing, the Company
will take all steps required by applicable law to terminate its
agreement with U.S. Healthcare for the provision of COBRA
benefits to Company employees.
Section 6.07 Delivery of Proxy. Simultaneous with the
execution of this Agreement, the Company shall deliver the proxy
from persons representing a majority of the issued and
outstanding shares of Company Common Stock approving this
Agreement and the transactions contemplated hereby, including
the proposed change in Company operations by Purchaser.
<PAGE 34>
Section 6.08 Delivery of Information. Purchaser hereby
covenants and agrees to provide such information as may be
reasonably requested by the Company and as required by
applicable law to enable the Company to fulfill its obligations
as set forth in Section 5.01(g).
Article VII
Miscellaneous
7.01. Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated and abandoned
(a) at any time prior to the Closing by mutual written consent
of the Company and Purchaser; or (b) by either Purchaser, on the
one hand, or the Company, on the other hand, if a condition to
performance by the terminating party or parties under this
Agreement has not been satisfied or waived prior to September
30, 1997. Notwithstanding the foregoing clause (b), (i)
Purchaser may not terminate this Agreement if the event giving
rise to its termination right results from Purchaser's willful
failure to perform or observe any of its covenants or agreements
set forth in this Agreement or if Purchaser is, at such time, in
breach of this Agreement, and (ii) the Company may not terminate
this Agreement if the event giving rise to its termination right
results from the willful failure of the Company to perform or
observe any of its covenants or agreements set forth in this
Agreement or if the Company is, at such time, in breach of this
Agreement. Upon termination of this Agreement pursuant to
Section 7.01, this Agreement (except for Section 7.02, Section
7.04, and Section 7.10) will become void, there will be no
liability on the part of the Purchaser, on the one hand, or the
Company, on the other hand, to the other and all rights and
obligations of each party to this Agreement will cease, except
that nothing in this Agreement will relieve any party of any
liability for any willful breach of such party's
representations, warranties, covenants, or agreements contained
in this Agreement.
7.02 Notices. All notices that are required or may be
given pursuant to this Agreement must be in writing and
delivered personally, by a recognized courier service, by a
recognized overnight delivery service, by telecopy, or by
registered or certified mail, postage prepaid, to the parties at
the following addresses (or to the attention of such other
person or such other address as any party may provide to the
other parties by notice in accordance with this Section 8.02):
If to Purchaser:
---------------
Michael J. Blumenfeld
13950 Semlac Drive
Farmers Branch, Texas 75234
Telecopy: (214) 739-1639
<PAGE 35>
with a copy to:
Alan J. Bogdanow
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Telecopy: (214) 939-5849
If to the Company:
-----------------
DSSI Corporation
P.O. Box 1570
West Chester, Pennsylvania 19380
Attention: Patrick Brennan
Telecopy: (610) 696-3479
with a copy to:
Robert W. Berend
Wachtel & Masyr, LLP
110 E. 59th Street
New York, NY 10022
Telecopy: (212) 909-9455
Any such notice or other communication will be deemed to have
been given and received (whether actually received or not) on
the day it is personally delivered or delivered by courier or
overnight delivery service or sent by telecopy or, if mailed,
when actually received.
7.03 Survival of Representations and Warranties. All
representations and warranties made in or pursuant to this
Agreement will survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby and continue for a period ending on the third anniversary
of this Agreement. All statements contained in any schedule,
certificate, or other writing delivered in connection with this
Agreement or the transactions contemplated by this Agreement
will constitute representations and warranties under this
Agreement. Each party agrees that no other party to this
Agreement will be under any duty, express or implied, to make
any investigation of any representation or warranty made by any
other party to this Agreement, and that no failure to so
investigate will be considered negligent or unreasonable.
7.04 Attorneys' Fees and Costs. If attorneys' fees or
other costs are incurred to secure performance of any
obligations under this Agreement, or to establish damages for
the breach thereof or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party
will be entitled to recover reasonable attorneys' fees and costs
incurred in connection therewith.
<PAGE 36>
7.05 Further Assurances. Each party agrees to execute any
and all documents and to perform such other acts as may be
reasonably necessary or expedient to further the purposes of
this Agreement and the transactions contemplated by this
Agreement.
7.06 No Brokers. Each party to this Agreement represents
to the other party that it has not incurred and will not incur
any liability for brokerage fees or agents' commissions in
connection with this Agreement or the transactions contemplated
by this Agreement, and agrees that it will indemnify and hold
harmless the other party against any claim for brokerage and
finders' fees or agents' commissions in connection with the
negotiation or consummation of the transactions contemplated by
this Agreement.
7.07 Counterparts. This Agreement may be executed in one
or more counterparts for the convenience of the parties to this
Agreement, all of which together will constitute one and the
same instrument.
7.08 Assignment. Neither this Agreement nor any of the
rights, interests, or obligations under this Agreement will be
assigned or delegated by the Company or Purchaser, without the
prior written consent of the other party; provided, however,
that Purchaser may assign its rights, but not the liabilities,
arising under this Agreement to an affiliate of Purchaser
without the prior written consent of the Company. This
Agreement is not intended to confer any rights or benefits to
any person or entity other than the parties to this Agreement.
7.09 Entire Agreement. This Agreement and the related
documents contained as Exhibits and Schedules to this Agreement
or expressly contemplated by this Agreement contain the entire
understanding of the parties relating to the subject matter
hereof and supersede all prior written or oral and all
contemporaneous oral agreements and understandings relating to
the subject matter hereof. This Agreement cannot be modified or
amended except in writing signed by the party against whom
enforcement is sought. The Exhibits and Schedules to this
Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes.
7.10 Governing Law. This Agreement will be governed by,
and construed in accordance with, the substantive laws of the
State of Texas, without giving effect to any conflicts-of-law,
rule, or principle that might require the application of the
laws of another jurisdiction.
<PAGE 37>
IN WITNESSES WHEREOF, the parties have entered into this
Agreement as of the date first set forth above.
DSSI CORPORATION,
a Pennsylvania corporation
By: ________________________
Name: ________________________
Title: ________________________
PURCHASER:
_____________________________
Michael J. Blumenfeld
<PAGE 38>
APPENDIX A-2
Addendum to
Stock Purchase Agreement
This Addendum is hereby incorporated into and made a part
of the Stock Purchase Agreement dated August 12, 1997 between
Michael J. Blumenfeld and DSSI Corporation. Capitalized terms
used herein and not otherwise defined shall have the meanings
assigned to such terms in the Stock Purchase Agreement.
The Company and Purchaser hereby agree that any and all
assets owned by Collegiate Pacific Inc. f/k/a Nitro Sports Inc.
("Collegiate Pacific") and acquired by Purchaser on behalf of
Collegiate Pacific after April 1, 1997 will be purchased by the
Company promptly after the Closing at cost. Promptly after
Closing, Purchaser shall submit an itemized statement (the
"Statement") of such assets detailing the cost of such items to
the Board of Directors of the Company who shall meet within five
(5) business days of the Company's receipt of the Statement for
the purpose of reviewing the assets and their value for
purchase. The Company and Purchaser shall use reasonable good
faith efforts to resolve any disputes regarding the value of any
such assets. If such costs are undisputed, the Board of
Directors shall approve the purchase and payment of such assets,
which shall occur within three (3) business days of such Board
approval. Payment for the assets as set forth in the Statement
shall be in immediately available funds to an account designated
in writing by Purchaser to the Company.
Agreed and accepted:
- -------------------
_____________________________
Michael J. Blumenfeld
DSSI CORPORATION
By: _________________________
Title: ________________________
<PAGE I>
PROXY
DSSI CORPORATION
P.O. Box 1570, West Chester, PA 19380
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS - DECEMBER 3OCTOBER 15, 1997
The undersigned hereby appoints Jeff Davidowitz and John
Pappajohn, or either of them, as Proxy or Proxies of the
undersigned with full power of substitution or revocation to
attend and to represent the undersigned at the Special Meeting of
Shareholders of DSSI Corporation (the "Company") to be held on
December 3October 15, 1997, and at any adjournments thereof, and
to vote thereat the number of shares of Common Stock, $0.01 par
value (the "Common Stock"), of the Company the undersigned would
be entitled to vote if personally present, in accordance with the
directions indicated below.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
Authorize the Company to enter the business of distributing
sports equipment, which action will be effected through: (1) the
sale of 10,000,000 shares of the Common Stock to Michael J.
Blumenfeld at $.20 per share or an aggregate purchase price of
$2,000,000 and (2) the sale by Mr. Blumenfeld to the Company, at
cost, of the assets (including corporate name) of College Pacific
Inc. f/k/a Nitro Sports Inc.:
[] FOR [] AGAINST [] ABSTAIN
Authorize the change of name of the Company from DSSI
Corporation to Collegiate Pacific Inc., but only if the prior
proposal is approved and the sale to Mr. Blumenfeld is
consummated.
[] FOR [] AGAINST [] ABSTAIN
If no specification is made, this proxy will be voted FOR the
Proposals listed above.
Dated:_________________, 1997
Name:________________________________________
_________________________________________
Please sign exactly
as name appears
above. For joint
accounts, each joint
owner must sign.
Please give full
title if signing in
a representative
capacity.
Please check if you
plan to attend this
Special Meeting []