Sport-Haley, Inc. has entered into an Agreement to purchase Explorer Gear USA, Inc.'s entire membership interest in Reserve Apparel Group, LLC and to settle all potential claims between, as applicable, Sport-Haley, Reserve Apparel, Explorer Gear and Explorer Headgear, Inc., and each of their respective affiliates. The Agreement requires Sport-Haley to make a lump sum payment to Explorer Gear of $375,000.
In November 2005, as the Company previously announced, Sport-Haley and Explorer Gear entered into a joint venture together to form Reserve Apparel, a Colorado limited liability company. Reserve Apparel was formed to market Top-Flite® branded apparel to Wal-Mart Stores in the United States, pursuant to a license granted by Callaway Golf Company to Sport-Haley to manufacture and market Top-Flite® branded apparel.
After Reserve Apparel began operations, certain disputes arose between the parties concerning, inter alia, the formation and operation of the business of Reserve Apparel. Sport-Haley, Reserve Apparel, Explorer Gear and Explorer Headgear have denied any liability to one another. As part of the Agreement entered into today, the parties have agreed to settle and resolve any asserted or potential claims against each other. The parties also have agreed to mutual releases of all claims asserted, or which could have been asserted, against each other, and each party has continued to deny the merits of those claims asserted against it by the other party(ies).
Prior to entering into the Agreement today, Sport-Haley owned a 51% membership interest and Explorer Gear, a 49% membership interest, in Reserve Apparel. After entering into the Agreement, Explorer Gear will no longer have any membership interest in Reserve Apparel and Sport-Haley will wholly own the company. Sport-Haley plans to continue marketing Top-Flite® apparel to Wal-Mart Stores in the United States through Reserve Apparel.
