Exhibit II
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated the 26th day of June 2000, between and among VINTAGE
III, INC., a Delaware corporation having its principal executive offices at 000
Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Vintage" or "Purchaser");
ITEM-EYES, INC., a New York corporation having its principal executive offices
at 00-X Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Company" or "Seller"); and
XXXXXX XXXXX ("Xxxxx"), XXXX XXXXXXXX ("Xxxxxxxx"), and XXXXX XXXXXX ("Xxxxxx")
(collectively, the "Stockholders" or "Stockholder Executives").
WHEREAS, Hampshire Group, Limited ("Hampshire Group"), a Delaware
corporation having its principal executive offices at 000 Xxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxx Xxxxxxxx 00000, is the sole stockholder of Vintage;
WHEREAS, the Company designs fashion apparel, including, but not limited
to, blouses, skirts, sweaters, jackets, suits, dresses and related apparel, in
its operations center; sources the products from independent contractors;
markets such apparel from its sales offices and showroom, utilizing the
Requirements label and private labels; and has the merchandise distributed by
Precise Pick and Pack of New Jersey, Ltd. ("Precise Pick and Pack"), a
third-party distribution center;
WHEREAS, Xxxxx is President, Chief Executive Officer and majority
stockholder of the Company;
WHEREAS, Xxxxxxxx and Xxxxxx are key executives and minority stockholders
of the Company;
WHEREAS, Xxxxx, Xxxxxxxx and Xxxxxx together own all the capital stock of
the Company; and
WHEREAS, Seller and the Stockholders desire to sell and Purchaser desires
to purchase certain assets of the Company (the "Purchased Property" as
hereinafter defined), which property constitutes substantially all of the assets
of the Company as of the Purchase Date, all upon the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises, representations,
warranties and mutual agreements herein set forth, Vintage, the Company and the
Stockholders hereby agree as follows:
1. DEFINITIONS As used herein the following terms shall, unless the context
clearly indicates otherwise, have the following meanings:
"Accounts Payable" shall mean the unpaid invoices of vendors and suppliers
of the Company incurred in the ordinary course of business, consistent with past
practices, through the Closing Date. Accounts Payable as June 14, 2000 are set
forth in Exhibit 1(A) hereof and shall be updated as of the Closing Date.
"Accounts Receivable" shall mean all accounts receivable of the Company
generated in the ordinary course of business, consistent with past practices,
through the Closing Date, including balances due from factor, properly valued
for discounts, collectibility, allowances for returns, advertisements, rebates
and customer chargebacks for markdowns, margin adjustment, etc. Accounts
Receivable and Open Allowances as of June 14, 2000 are set forth in Exhibit 1(B)
hereof and shall be updated as of the Closing Date.
"Accrued Expenses" shall mean the expenses of the Company accrued in the
ordinary course of business, consistent with past practices, through the Closing
Date (excluding the expenses incurred in connection with the negotiation,
implementation and closing of this Agreement), whether or not an invoice has
been received. Accrued Expenses as of May 31, 2000 are set forth in Exhibit 1(C)
hereof and shall be updated as of the Closing Date.
"Affiliate" shall mean, with respect to any given Person, any other Person
that directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Apartment" shall mean the condominium apartment located at 00 Xxxx 00xx
Xxxxxx, Xxx. 0X, Xxx Xxxx, Xxx Xxxx.
"Assumed Contracts" shall mean collectively the Premise Leases, Equipment
and Other Leases, Purchase Orders, Sales Commitments and Other Contracts related
to the operations of the Company.
"Assumed Liabilities" shall have the meaning set forth in Paragraph 2(F)(i)
hereof.
"Bank Credit Facility" shall mean that certain revolving credit facility,
including Letters of Credit, provided to the Company by CIT Group, Inc. in the
aggregate amount of $40,000,000 (Forty Million Dollars) for which the Purchased
Property is partially pledged (copy is attached as Exhibit 1(D) hereof).
"Closing" shall have the meaning set forth in Paragraph 5 hereof.
"Closing Date" shall mean 2:00 P.M. Eastern Standard Time on or before
August 17, 2000, or such other date and at such other time as the parties shall
mutually agree upon in writing, but no later than September 5, 2000, and
strictly in accordance with Paragraph 17.
"Common Stock" shall mean the Hampshire Group Limited Common Stock, Par
Value Ten Cents ($0.10) per share, to be delivered pursuant to Paragraph 3(D)
hereof.
"Deemed Value" shall mean the average closing price of the Shares for the
five (5) trading days immediately preceding the public announcement of the
transactions contemplated herein and the five (5) trading days immediately
following such public announcement.
"Equipment and Other Leases" shall mean any leases covering Machinery and
Equipment or office equipment used at or in the operations of the Premises, as
listed on Exhibit 1(E), copies of which have been delivered to Purchaser.
"Excluded Assets" shall mean the Apartment listed on Exhibit 1(F).
"Excluded Liabilities" shall have the meaning set forth in Paragraph
2(F)(ii) hereof.
"Financial Statements" shall have the meaning set forth in Paragraph 6(T)
hereof.
"GAAP" shall mean United States generally accepted accounting principles
consistently applied.
"Intangible Property" shall have the meaning set forth in Paragraph
2(A)(xii) hereof.
"Liabilities" shall mean any direct or indirect liability, indebtedness,
claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, known or unknown, contingent or otherwise.
"Letters of Credit" shall mean all of the letters of credit issued in the
ordinary course of business, consistent with past practices, and outstanding
through the Closing Date. Letters of Credit as of June 14, 2000 are set forth in
Exhibit 1(G) hereof and shall be updated as of the Closing Date.
"Licenses and Permits" shall have the meaning set forth in Paragraph
2(A)(xi) hereof.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, assets, properties, condition (financial or otherwise) or
prospects of Seller, taken as a whole, provided that any "chargebacks" or other
allowances granted by Seller to its customers in the ordinary course of
business, consistent with past practices, shall not be deemed to result in a
Material Adverse Effect.
"Machinery and Equipment" shall mean all of the machinery and equipment of
the Company, including, but not limited to, sewing machines, joining and other
machines, cutting and marking equipment, dryers, winders, pressing tables,
boilers, forklifts, fixtures, conveyors, maintenance equipment, hand tools, fire
equipment, climate changes, fans and blowers, air compressors, furniture and
fixtures, office equipment, computers, tooling, pallets, spare parts and
supplies owned or used by the Company in the design, development sourcing and
marketing of Products, or located at or on the Premises, including, without
limitation, those items listed on Exhibit 1(H), and in which the Company had any
right, title or interest as of the Purchase Date, plus additions thereto through
the Closing Date, and all of the replacement parts for any of the foregoing in
which the Company had or shall have as of such dates any right, title or
interest, together with all information, patents, drawings, manuals and data
relating to the operation of the Machinery and Equipment, any rights of Seller
in and to the warranties and licenses, if any, received from manufacturers and
sellers of the aforesaid items and any related claims, credits, rights of
recovery and setoff with respect to the Machinery and Equipment, with no
machinery and equipment having been removed from the Company by the Stockholders
since September 30, 1999, except in the ordinary course of business.
"Net Apartment Cost" shall mean the difference between (x) all payments
made by Seller for the Apartment after December 31, 1999 (including mortgage,
taxes and maintenance fees), and (y) all rental payments received by Seller for
the Apartment after December 31, 1999.
"Other Contracts" shall mean those employment agreements, union agreements,
license agreements, service contracts and other similar agreements not
constituting Premise Leases, Equipment Leases, Purchase Orders, Sales
Commitments or Licenses and Permits, as listed on Exhibit 1(I), copies of which
have been delivered to Purchaser, to the extent that any such contract remains
executory after the Closing Date.
"Other Inventory" shall mean all labels, hangtags, packaging, empty cartons
and other supplies for use in connection with the design, development, sourcing
and marketing of Products, located at or on the Premises, at contractors or in
transit, held in the ordinary course of business, through the Closing Date, in
which Seller had or shall have any right, title or interest, together with any
rights of Seller to the warranties received from its suppliers with respect to
such inventory and any related claims, credits, rights of recovery and setoff,
as listed in Exhibit 1(J) hereof.
"Other Property" shall mean all Purchased Property described in Paragraph
2(A) hereof, other than the Machinery and Equipment, Product Inventory and Other
Inventory.
"Person" shall include an individual, a partnership, a corporation, a
limited liability company, a trust, an unincorporated organization, a government
or any department or agency thereof and any other entity or a division or
business unit thereof.
"Premises" shall mean the physical facilities from which the Company
operates its business, including the operations center at 000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx; the administrative offices at 00-X Xxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx; the warehouse at 00 Xxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx;
Precise Pick and Pack at 000 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxx; and the
sales offices and showroom at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx.
"Premises Leases" shall mean the leases for the Premises on the date hereof
as attached as Exhibit 1(K) hereto.
"Prepaid Expenses and Other Assets" shall have the meaning set forth in
Paragraph 2(A)(v) hereof.
"Products" shall mean women's apparel, including, but not limited to,
blouses, skirts, sweaters, shirts, pants, jackets, dresses and related apparel.
"Product Inventory" shall mean the entire inventory of Seller located on
the Premises, at contractors and in transit, including, but not limited to,
finished products, production and showroom samples, work in process, raw
materials, trimmings and findings, and other inventory related to Products, held
in the ordinary course of business through the Closing Date, valued at the lower
of cost or market price. Product Inventory as of June 14, 2000 is listed in
Exhibit 1(L) hereof and shall be updated as of the Closing Date.
"Promissory Notes" shall mean the nonnegotiable notes issued by Purchaser
to the Stockholders pursuant to Paragraph 3(C) hereof.
"Purchase Date" shall mean the Closing Date.
"Purchase Orders" shall mean those open purchase orders of the Company
issued by the Company in the ordinary course of business through the Closing
Date. Purchase Orders as of the date of this Agreement are listed in Exhibit
1(M) hereto.
"Purchase Price" shall have the meaning set forth in Paragraph 3 hereof.
"Purchased Property" shall mean the tangible and intangible assets to be
transferred pursuant to Paragraph 2(A) hereof.
"Xxxxx Xxxxxxxx Note" shall mean that certain promissory note payable to
Xxxxx Xxxxxxxx, a former stockholder, pursuant to a stock redemption agreement
of 24.48% interest in the Company, such note and stock redemption agreement set
forth in Exhibit 1(N) hereof.
"Real Property Leases" shall have the meaning set forth in Paragraph
2(A)(viii) hereof. Real Property Leases, excluding Premises Leases, are set
forth in Exhibit 1(O).
"Reserves" shall mean all reserves for accounts receivables and inventory
created in the ordinary course of business and maintained in accordance with
past practices of the Company, consistent with GAAP, through the Purchase Date.
"Sales Commitments" shall mean those unfulfilled sales orders, commitments
by the Company to customers and other agreements of the Company, whether written
or oral, made in the ordinary course of business, to sell Products through the
Closing Date. Sales Commitments as of June 14, 2000 are set forth in Exhibit
1(P) hereof and shall be updated as of the Closing Date.
"Securityholder" shall have the meaning set forth in Paragraph 3(F) hereof.
"Shares" shall have the meaning set forth in Paragraph 3(D) hereof.
"Transferred Employees" shall mean all employees of the Company as listed
on Exhibit 1(Q), whose employment by the Company is terminated as of the Closing
Date and whose employment by Vintage, as hereinafter provided in Paragraph 8(E),
begins on the Closing Date.
2.PURCHASE AND SALE OF THE PURCHASED PROPERTY
A. Purchase. Subject to the terms and conditions herein set forth, on the
Closing Date, Seller shall sell, transfer and assign to Purchaser and Purchaser
shall purchase all of Seller's right, title and interest in and to the Purchased
Property described below, free and clear of all mortgages, liens, charges,
encumbrances or security interests of any nature whatsoever, other than those
expressly described on Exhibit 2(A). As used in this Agreement, the "Purchased
Property" means all tangible and intangible assets of the Company, either owned,
leased or otherwise held by Seller on the Closing Date (except for the Excluded
Assets set forth on Exhibit 1(F)), including without limitation, all of the
items described below:
(i) All Machinery and Equipment;
(ii) All Product Inventory and Other Inventory;
(iii) All non-inventoried supplies, tooling, repair parts and other
assets located in or used in the operations of the Premises on the Purchase
Date, plus additions thereto through the Closing Date, excluding items
consumed, abandoned or disposed of in the ordinary course of operations as
obsolete or worn out;
(iv) All cash on hand and in bank accounts;
(v) All prepaid expenses and other assets including, but not limited
to, items set forth in Exhibit 2(A)(v) hereto and updated as of the Closing
Date.
(vi) All Accounts Receivable;
(vii) All Assumed Contracts;
(viii) All Sales Commitments;
(ix) All leases of real property, including without limitation, the
Premises and any private and public warehouses, under which the Company is
lessee, used in the operations of the Company;
(x) All Equipment and other Leases;
(xi) All government permits, authorizations and licenses transferable,
owned or held by Seller and used in the operations of the Company
(collectively, "Licenses and Permits") including, without limitation, those
set forth in Exhibit 2(A)(xi); and
(xii) All intangible personal property and rights of Seller, including
without limitation, all customer lists, trademarks, service marks, trade
names, copyrights, patterns, designs, patents, inventions, knowhow, trade
secrets, other similar rights, computer programs and program products,
claims against third parties and all other rights owned, held or leased by
the Company through the Closing Date, the trade names "Item-Eyes,"
"Requirements," "Nouveau" and "Xxxxxx Xxxxxxx," and all goodwill of Seller
relating to the business and operations of the Company (collectively the
"Intangible Property") including, without limitation, those listed on
Exhibit 2(A)(xii). The parties agree that the Purchased Property includes
all assets located on the Premises, at contractors, or in transit through
the Closing Date.
B. Sale at Closing Date. The sale, transfer, assignment and delivery by
Seller of the Purchased Property to Purchaser, as herein provided, shall be
effected on the Closing Date by a xxxx of sale, endorsements, assignments and
such other instruments of transfer and conveyance substantially similar to those
attached hereto as Exhibits 2(B)(i) and 2(B)(ii).
C. Subsequent Documentation. The parties shall, at any time and from time
to time after the Closing Date, upon the reasonable request of either party, but
at the expense of the requesting party, execute, acknowledge and deliver, or
will cause to be acknowledged and delivered, all such further acts, assignments,
transfers, conveyances and assurances as may be required for the better
assigning, transferring, granting, conveying, assuring and confirming to
Purchaser, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession any or all of the Purchased Property to be
purchased by Purchaser as provided herein, or documents for the benefit of
Seller.
D. Assignment and Transfer of Contracts and Rights. On the Closing Date,
Seller shall assign and transfer to Purchaser and Purchaser shall acquire, all
of Seller's right, title and interest in and to the Assumed Contracts and all
other warranties and other contractual rights as to third parties held by or in
favor of Seller with respect to the Purchased Property and the Premises. To the
extent that the assignment of any Assumed Contract shall require the consent of
any other party thereto, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment, without consent, would constitute a
breach thereof. Seller and the Stockholders shall use their best efforts to
obtain the consent of the other parties to such contracts for the assignment
thereof to Purchaser. If such consent is not obtained in respect of any such
Assumed Contract, Seller and the Stockholders shall cooperate with Purchaser in
making any reasonable arrangements requested by Purchaser to provide for
Purchaser the benefits which would have been obtained under such Assumed
Contract. In the event any consent required for any Premises Lease is not
obtained by the Closing, Seller, the Stockholders and Purchaser will negotiate
in good faith with the landlord under such Lease to obtain such consent, or
Seller and the Stockholders will obtain comparable space for the benefit of
Purchaser. Seller and the Stockholders shall hold Purchaser harmless for any
increased cost under any Premises Lease in connection with any consent or any
increased costs relating to any comparable lease.
E. Stockholders' Interest. Except for the Excluded Assets, Xxxxx, Xxxxxxxx
and Xxxxxx hereby disclaim any interest or claims that they may have to (i) any
assets of the Company; (ii) any proceeds from the sale of such assets other than
which may result from their equity interest in the Company; and (iii) any
proceeds other than those set forth in Paragraph 3 of this Agreement and any
amendment thereto.
F. Assumption of Certain Obligations: Excluded Liabilities.
(i) Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Purchaser shall assume, pay, perform and discharge the
Accounts Payable listed in Exhibit 1(A) and the Accrued Expenses listed in
Exhibit 1(C) plus the balance outstanding on the Bank Credit Facility and
any Letters of Credit, Assumed Contracts, Other Contracts, Real Property
Leases, Equipment and Other Leases, the Xxxxx Xxxxxxxx Note and the
promissory note of Seller payable to Hampshire Group issued concurrent
herewith in respect of the $5,000,000 Deposit, as well as all Liabilities
incurred in the ordinary course of business after December 31, 1999 through
the Closing Date (the "Assumed Liabilities"), including liabilities founded
upon negligence, breach of warranty, strict liability in tort and/or other
legal theory, seeking compensation or recovery for or relating to damage to
property, notwithstanding that the date on which the damages, claim or
demand was or is either before or after the Closing Date, provided that
such liabilities are not covered by the Company's insurance policy and the
aggregate payments for such liability do not exceed the sum of $100,000
through the Closing Date. Notwithstanding the foregoing, Purchaser shall
not assume, pay, perform or discharge any Liabilities incurred in the
ordinary course of business after December 31, 1999 through the Closing
Date if such Liabilities are known to Seller or the Stockholders as of the
date hereof and/or such Liabilities have not been disclosed in Exhibits
1(A) and 1(C) hereof or in the Exhibits to Paragraph 6 hereof.
(ii) Except for the Assumed Liabilities specifically assumed by
Purchaser as aforesaid and as otherwise specifically provided for in this
Agreement, including but not limited to Paragraph 2(F)(i) hereof, Purchaser
is not assuming the following (the "Excluded Liabilities"):
(a) Any Liabilities arising from Seller's or the Stockholders'
ownership of the Apartment, including the one million dollars
($1,000,000) mortgage on the Apartment payable to Fleet Bank and any
mortgage, interest, taxes and maintenance fees paid since January 1,
2000.
(b) Any accounts and notes payable owed by Seller to any officer,
director, stockholder or employee of Seller or any family member or
other Affiliate of such officers, directors, stockholders or employees
or to any third party not specifically included herein as an Assumed
Liability.
(c) Any Liabilities of Seller or the Stockholders for taxes of
any kind for any period prior to the Closing Date and any liabilities
for taxes of any kind in connection with the transfer of the Purchased
Property.
(d) Any Liabilities of Seller or the Stockholders for the unpaid
taxes of any Person under Reg.1.1502-6 promulgated under the
Internal Revenue Code as amended (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or
otherwise.
(e) Any Liabilities relating to any litigation, claim, demand or
governmental proceeding including, but not limited to, any claim that
any asset infringes on the rights of any third parties, in each case
to the extent that any such liability arises out of or relates to an
occurrence, condition, fact or circumstance existing prior to January
1, 2000, or, if after January 1, 2000 but prior to the Closing Date,
in excess of the $100,000 amount referred to in the penultimate
sentence of Paragraph 2(f)(i) (which amount will be an Assumed
Liability hereunder), except for those matters set forth on Exhibit
2(F)(ii)(e) hereof.
(f) Any Liabilities of the Company incurred for periods prior to
January 1, 2000;
(g) Any Liabilities imposed by law or arising out of or resulting
from Seller's or the Stockholders' noncompliance with any federal,
state, local or foreign law, regulation, order or administrative or
judicial determination, including, without limitation, those relating
to any Environmental, Health and Safety Requirements applicable to
employees of Seller, which arise out of or relate to an occurrence,
condition, fact or circumstance existing prior to the Closing Date.
(h) Any contract between Seller and any Affiliate of Seller
relating to any aspect of the business, including, without limitation,
any contract requiring payments to any such Person, any member of the
family of any such Person or any Person in which any such Person has
an interest or is an officer, director, member, trustee, partner or
consultant.
(i) Any liability of Seller or the Stockholders to indemnify any
Person by reason of the fact that such Person is or was a director,
officer, employee, or agent of Seller of any Affiliate of Seller or
was serving at the request of any Person as a partner, trustee,
director, officer, employee, or agent of another Person (whether such
indemnification is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether
such indemnification is pursuant to any statute, charter document,
bylaw, agreement, or otherwise, except for continuing obligations of
Purchaser).
(j) Except as provided in Paragraph 27, any Liabilities of Seller
or the Stockholders for costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, including
attorneys' fees and accountants' fees.
(k) Any Liabilities of Seller or the Stockholders under this
Agreement or under any other agreement between Seller or the
Stockholders on the one hand and Purchaser on the other hand executed
in connection with the transactions contemplated by this Agreement.
(l) Any Liabilities of Seller or the Stockholders relating to or
arising under any agreement with union(s) or employee benefit plans or
arrangements, including union pension plans.
(m) Any Liabilities of Seller or the Stockholders to present or
former employees of Seller suffered as a result of claims asserted
against Seller or Purchaser as a consequence of the termination by
Seller of Transferred Employees, or any other employees, or any plans
or benefits applicable to any of them, or as a result of any other
claims of any such employees, as further described in Paragraph 8(E)
below.
(n) Any Liabilities of Seller or the Stockholders which may be
suffered as a result of any claims asserted against Seller, Purchaser
or Stockholders based on or arising out of any fraudulent conveyance
by Seller.
3. PURCHASE PRICE AND PAYMENT OF PURCHASE PRICE
Subject to adjustment as provided below, Seller, the Stockholders and
Purchaser hereby agree that the Purchase Price ("Purchase Price") for the
Purchased Property, all upon the terms and subject to the conditions set forth
in this Agreement, shall be the amounts deliverable by Purchaser pursuant to
Paragraphs 3(A), (B) and (C), as follows:
A. Payment on Account of Purchase Price. Simultaneously with the execution
of this Agreement, Purchaser shall deposit in good funds the sum of $5,000,000
(Five Million Dollars) (the "$5,000,000 Deposit") with Seller, which funds shall
be used by Seller for debt repayment only and shall be recorded as a note
payable to Hampshire Group.
B. Cash Payment. At Closing, the sum of $13,000,000 (Thirteen Million
Dollars) which Seller directs to be paid on Seller's behalf as follows:
(i) payable to the order of Xxxxxx Xxxxx in the sum of $7,370,000
(Seven Million, Three Hundred, Seventy Thousand Dollars);
(ii) payable to the order of Xxxx Xxxxxxxx in the sum of $1,854,600
(One Million, Eight Hundred, Fifty-Four Thousand, Six Hundred Dollars);
(iii) payable to the order of Xxxxx Xxxxxx in the sum of $1,775,400
(One Million, Seven Hundred, Seventy-Five Thousand, Four Hundred Dollars);
and
(iv) payable to the order of Xxxxx Xxxxxxxx in the sum of $2,000,000
(Two Million Dollars) (such amount, together with the shares issuable to
Xxxxx Xxxxxxxx pursuant to Paragraph 3(D)(iv) below, to be in full
satisfaction of the Xxxxx Xxxxxxxx Note).
In no event shall the total payments by Purchaser under Paragraphs 3(A) and
3(B) be either less than or exceed $13,000,000 (Thirteen Million Dollars).
C. Promissory Notes.
(i) At Closing, one (1) nonnegotiable Promissory Note of a four (4)
year term, bearing interest from the Closing Date at Eleven and a Half
(11.5%) Percent per annum, in the form annexed hereto as Exhibit
3(C)(i)(a), guaranteed by each of Hampshire Group and Xxxxxx Xxxxxxx in the
form annexed hereto as Exhibit 3(C)(i)(b), payable at the direction of
Seller to the order of Xxxxxx Xxxxx in the sum of $1,350,000 (One Million,
Three Hundred Fifty Thousand Dollars);
(ii) At Closing, three (3) nonnegotiable Promissory Notes of two and
one half (2 1/2) year terms each, in the form annexed hereto as Exhibit
3(C)(ii), guaranteed by each of Hampshire Group and Xxxxxx Xxxxxxx in the
form annexed hereto as Exhibit 3(C)(i)(b), payable at the direction of
Seller to the order of:
(a) Xxxxxx Xxxxx in the sum of $670,000 (Six Hundred Seventy
Thousand Dollars);
(b) Xxxx Xxxxxxxx in the sum of $168,600 (One Hundred,
Sixty-Eight Thousand, Six Hundred Dollars); and
(c) Xxxxx Xxxxxx in the sum of $161,400 (One Hundred, Sixty-One
Thousand, Four Hundred Dollars). The principal amount of said three
(3) Promissory Notes shall be reduced proportionately by the amount,
if any, of the Net Apartment Cost.
The Promissory Notes issued to Xxxx Xxxxxxxx and Xxxxx Xxxxxx shall bear
interest from the Closing Date at Nine and a Half (9.5%) Percent per annum and
the Promissory Notes issued to Xxxxxx Xxxxx shall bear interest from the Closing
Date at Eleven and a Half (11.5%) Percent per annum, with quarterly interest
payments only for the first year, and then fully amortized in equal quarterly
payments of principal plus accrued interest for the balance of the term, with
the first quarterly payment of interest due on November 30, 2000 and the first
quarterly payment of principal and interest due on November 30, 2001. Each of
the Promissory Notes shall be subordinated to Purchaser's and Hampshire Group's
obligations to banks and insurance companies. Seller and the Stockholders shall
agree to the terms of any subordination provisions requested by such banks and
insurance companies.
D. Stock Certificates. At Closing, five (5) stock certificates, each
representing shares of common stock of Hampshire Group (the "Shares") issued at
Seller's direction on the Closing Date as follows:
(i) in the name of Xxxxxx Xxxxx 190,000 (One Hundred, Ninety Thousand)
shares;
(ii) in the name of Xxxx Xxxxxxxx 84,320 (Eighty-Four Thousand, Three
Hundred, Twenty) shares;
(iii) in the name of Xxxxx Xxxxxx 80,700 (Eighty Thousand, Seven
Hundred) shares;
(iv) in the name of Xxxxx Xxxxxxxx 22,036 (Twenty-Two Thousand,
Thirty-Six) shares (as adjusted to reflect any payments made to Xxxxx
Xxxxxxxx after August 31, 2000 by reducing such number of shares by the
quotient obtained by dividing (1) the total of all payments made to Xxxxx
Xxxxxxxx after August 31, 2000 by (2) ten dollars ($10)); and
(v) in the name of Xxxxxxx Xxxxxxxx 10,000 (Ten Thousand) shares.
E. Endorsement. The certificates representing the shares of Common Stock
shall bear the following endorsements:
"The shares of stock represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the " Act"), and may
not be transferred unless a registration statement has been declared effective
with respect to such shares, except in a transaction which qualifies, in the
opinion of counsel to Hampshire Group, Limited, as an exempt transaction under
the Act and the rules and regulations promulgated thereunder. The shares of
stock represented by this Certificate are subject to setoff in an
indemnification agreement between Hampshire Group, Limited and the Person to
whom the stock was originally issued. "
F. Piggyback Registration Rights. The Shares of Common Stock ("Registrable
Securities") shall be entitled to piggyback registration rights in connection
with a registration by Hampshire Group of its equity securities. The piggyback
registration rights shall commence on the date of receipt of such security and
terminate on the date which is five (5) years from the date thereof. Vintage
will bear the costs of such registrations. Hampshire Group agrees to qualify or
register the Registrable Securities in such additional states as are reasonably
requested by the holder of such Registrable Securities (a "Securityholder") and
Vintage shall bear all costs and expenses, including reasonable counsel fees and
expenses, of the qualification or registration of the Registrable Securities in
such additional states as are reasonably requested by the Securityholder. In no
event, however, shall Hampshire Group be required to register the Registrable
Securities in a state in which such registration would cause Hampshire Group to
be obligated to register to do business in such state or consent generally to
the jurisdiction of such state's courts. Additionally, Hampshire Group shall not
be obligated to include the Registrable Securities in any registration statement
filed by Hampshire Group in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act of 1933, as amended (the "Act") or
pursuant to Form S-4 or S-8. Notwithstanding the foregoing, Hampshire Group
shall not be obligated to include the Registrable Securities in any registration
statement filed by Hampshire Group if, in the opinion of its counsel, all of the
Registrable Securities then owned by such Securityholder could be sold at such
time pursuant to Rule 144.
G. In the event the assets of Seller less the liabilities of Seller (the
"Tangible Net Worth") as of the Closing Date, as determined by Deloitte &
Touche, shall be less than $8,046,376 (Eight Million, Forty-Six Thousand, Three
Hundred, Seventy-Six Dollars) the Tangible Net Worth as of December 31, 1999,
the Stockholders shall pay to Purchaser, as an adjustment to the Purchase Price,
the difference between $8,046,376 (Eight Million, Forty-Six Thousand, Three
Hundred, Seventy-Six Dollars) and the Tangible Net Worth as of the Closing Date.
The payment will be made as follows: FIRST, by the Stockholders delivering to
Purchaser for cancellation, pro rata among them, Promissory Notes and
THEREAFTER, by delivering to Purchaser Shares. For purposes of the foregoing,
the Promissory Notes shall be deemed to have a value equal to the principal
amount thereof plus interest accrued thereon, and the Shares shall be deemed to
have a value equal to their Deemed Value.
4. INTEREST PAYMENTS.
Purchaser agrees to pay Seller interest on $8,000,000, the remaining
balance of cash payment to be made by Purchaser at closing, at 10% per annum
from July 20, 2000 through the Closing Date. At the direction of Seller, such
interest payment made by Purchaser shall be paid to the Stockholders in the same
proportions as the cash payment required pursuant to Paragraph 3(B) hereof.
5. CLOSING
The closing under this Agreement (the "Closing") shall take place at the
law offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
xx the Closing Date or at such other place and at such other time as may be
mutually agreed upon in writing by Purchaser, Seller and the Stockholders.
6. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE STOCKHOLDERS
Seller and the Stockholders jointly and severally represent and warrant to
Purchaser as follows:
A. Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and is qualified to do business as a foreign corporation in each state where the
nature of its business or character of its properties makes such qualification
necessary and is in good standing under the laws of each such state.
B. Corporate Authority. Seller has full authority to execute and to perform
in accordance with this Agreement, and this Agreement constitutes a valid and
binding obligation of Seller and the Stockholders enforceable against Seller and
the Stockholders in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws of general
application relating to or affecting creditors' rights generally and except for
the limitations imposed by general principles of equity. This Agreement and all
transactions contemplated hereby have been duly authorized by all requisite
corporate authority including, but not limited to, shareholder approval, and all
corporate proceedings required to be taken by Seller to authorize it to carry
out this Agreement and the transactions contemplated hereby have been duly and
properly taken. The execution and delivery of this Agreement and the performance
by Seller and the Stockholders of their obligations hereunder will not conflict
with or violate any provision of Seller's certificate of incorporation, bylaws
or any provisions of any mortgage, lease, contract, agreement, indenture or
other instrument or undertaking or any order, decree or judgment to which Seller
or the Stockholders are a party or by which any of them or their property is
bound, or result in a default or acceleration of any obligation thereunder.
Except for filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR"), or as disclosed on Exhibit 6(B), the execution and
delivery by Seller and the Stockholders of this Agreement, the performance by
Seller and the Stockholders of their obligations hereunder and the consummation
by Seller and the Stockholders of the transactions contemplated hereby do not
require Seller or the Stockholders to obtain any consent, approval, clearance or
action of, or make any filing, submission or registration with, or give any
notice to, any Person or judicial authority.
C. Title to Purchased Property. Seller owns all of the right, title and
interest in and to all of the Purchased Property free and clear of restrictions
on or conditions to transfer or assignment and free and clear of all mortgages,
liens, charges, pledges, claims, encumbrances, restrictions and security
interest of any nature whatsoever, other than those listed on Exhibit 2(A). On
the Closing Date, the Purchased Property shall be free and clear of restrictions
on or conditions to transfer or assignment, and free and clear of all mortgages,
liens, charges, pledges, claims, encumbrances and security interests, except
only those liens listed on Exhibit 2(A) hereto, if any. On the Closing Date, the
Purchased Property shall constitute all of the assets used in the Company's
business or necessary for the continuance of the Company's business as currently
conducted.
D. Condition of Premises. Neither Seller nor the Stockholders have any
knowledge or information reasonably available to them of any material defect in
the Premises, including, without limitation, any material defects that would
render any part of the Premises unsuitable for use as presently used by Seller,
any restrictions as to floor loading, or any other material defects in the
Premises, including, but not limited to, fixtures and improvements thereon as of
the Closing Date.
E. Machinery and Equipment. The Machinery and Equipment are in working
condition wear and tear excluded, and are fit for the uses and purposes for
which Seller is currently using them as of the Closing Date. The operation by
Purchaser of the Machinery and Equipment and the manner in which Seller operates
the same through the Closing Date does not and shall not infringe any patent
rights. Neither Seller nor the Stockholders have removed, sold, transferred, or
otherwise disposed of, any Machinery and Equipment since September 30, 1999,
except in the ordinary course of business.
F. Inventory. All Products manufactured, sourced or sold by Seller from and
after January 1, 1998, including, without limitation, the Product Inventory,
have been manufactured in accordance with all applicable customer specifications
and standards and are fit for the end use for which they were or hereafter are
purchased. Seller had such Products manufactured in accordance with all
applicable federal, state and local laws, rules and regulations, including but
not limited to OSHA, the Federal Food, Drug & Cosmetic Act and the Federal Fair
Labor Standards Act, and the sale by Purchaser of any such Products manufactured
for Seller shall not result in the violation of such laws, rules or regulations
because of any act or omission of Seller in such manufacturing. The Other
Inventory is of a type and quality usable and sellable in the ordinary course of
Seller's business.
G. Compensation Due Transferred Employees. Exhibit 1(Q) includes a true and
complete list showing the names, job categories and increases in salary since
the past year of all Transferred Employees as of the Purchase and the Closing
Date, together with a statement as to (i) the full amount of compensation paid
or payable to, or on behalf of, each of the ten (10) highest paid officers or
employees of the Company for services rendered during the fiscal year ended
December 31, 1999 and in the fiscal year commencing January 1, 2000 to the
Closing Date; (ii) the current base compensation rate for each such officer or
employee; (iii) the vacation earned but not taken; and (iv) the number of
vacation days to which each such officer or employee is entitled in the calendar
year 2000. Seller does not have any outstanding liability with respect to the
Transferred Employees for payment of wages, vacation pay (whether accrued or
otherwise), salaries, bonuses, sick pay, severance pay, worker's compensation,
group medical benefits, reimbursable employee business expenses, pensions,
contributions under any employee benefit plans or any other compensation,
current or deferred, under any labor or employment contracts, whether oral or
written, based upon or accruing with respect to those services of such officers
or employees performed prior to the Closing Date, except as otherwise disclosed
in Exhibit 1(Q) and except for any payment due for the current payment or
contribution period which is included in Accrued Expenses. Seller has not,
because of past practices or previous commitments with respect to the
Transferred Employees, established any rights on the part of such employees to
receive additional compensation with respect to any period after the date here
of except as disclosed in Exhibit 1(Q).
H. Union and Employment Agreements. Seller is not and never has been a
party to a union agreement or collective bargaining agreement other than its
current effective agreement with Shirt & Leisurewear Division of the New York
Joint Board, Union of Needletrades, Industrial and Textile Employees ("UNITE
Union Agreement") covering approximately 18 employees, which is included in
Exhibit 1(H). Seller does not have any other agreements with any Transferred
Employees, which are not described in Exhibit 1(H).
I. Contracts and Agreements. The copies of the Assumed Contracts previously
furnished by Seller and the Stockholders to Purchaser constitute true, correct
and complete copies of all such agreements, reflecting all amendments as of the
Closing Date. Seller and the Stockholders have not received any notice of
default under any Assumed Contract. To Seller's and the Stockholders' knowledge,
there are no contracts necessary or material for the operations of Seller's
business as currently being conducted by Seller other than the Assumed
Contracts. Each Assumed Contract is valid, binding and enforceable against
Seller and, to Seller's and the Stockholders' knowledge, the other parties
thereto, in accordance with its terms, and in full force and effect on the date
hereof. Seller is not in material default or breach under any of the Assumed
Contracts, nor, to the knowledge of Seller or the Stockholders, is any other
party thereto in material default or breach thereunder, nor, to Seller's or the
Stockholders' knowledge, are there facts or circumstances which have occurred
which, with or without the giving of notice or the passage of time or both,
would constitute a material default or breach by Seller under any of the Assumed
Contracts.
J. Insurance. All insurance policies now in force with respect to the
Premises, the Purchased Property and the Transferred Employees are listed in
Exhibit 6(J). Seller will continue in full force and effect all such policies of
insurance through the Closing Date and, at Purchaser's expense, until Purchaser
has obtained a certificate of insurance covering the Premises, the Purchased
Property and the Transferred Employees. Seller has maintained product liability
insurance in force without interruption during the last two (2) years, and, at
Purchaser's expense, will continue in full force and effect such insurance or
obtain similar insurance for one (1) year from the Closing Date. Any insurance
carriers to which it has applied for insurance with respect to the Premises, the
Purchased Property or the Transferred Employees during the last two (2) years
have not refused Seller any insurance.
K. Licenses and Permits. The licenses and permits listed on Exhibit
2(A)(xi) are the only licenses and permits currently required by the Company for
the distribution of Products and the operations of its business at the Premises,
and all such licenses and permits are in effect as of the date hereof. Neither
Seller nor the Stockholders have knowledge of any facts that would preclude
Purchaser from obtaining any such licenses and permits upon proper submission by
Purchaser of applications therefore. Neither Seller nor the Stockholders have
knowledge of any facts relating to Purchaser's use of the Machinery and
Equipment as previously used by the Company that would require Purchaser to
obtain any licenses or permits in addition to those described in Exhibit
2(A)(xi). Seller has complied with all conditions or requirements imposed by
such Licenses and Permits. Seller and the Stockholders have not received any
notice and have no knowledge that any appropriate authority intends to cancel or
terminate any of such Licenses or Permits or that valid grounds for such
cancellation or termination currently exit.
L. Litigation and Labor Disputes. Except as described in Exhibit
2(F)(ii)(e), there are no actions, suits, proceedings or investigations pending
or, to the knowledge of Seller or the Stockholders, threatened against Seller or
the Stockholders involving or relating to any of the Purchased Property, the
distribution of Products and the operations of its business at the Premises, or
employment by Seller of any Transferred Employee, at law or in equity or before
or by any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or foreign. Except as
described in Exhibit 2(F)(ii)(e), Seller is not operating its business at the
Premises under, or subject to, or in default of any order, writ, injunction or
decree, to which Seller is a party or by which it or its property is bound, of
any court or federal, state, municipal or governmental department, commission,
board, agency or instrumentality, domestic or foreign. Except as described in
Exhibit 2(F)(ii)(e), there are no pending or, to the knowledge of Seller or the
Stockholders, threatened labor disputes, actions or grievances between the
Company and any labor union or any employee or former employee of the Company.
M. Compliance With Laws. Seller is in compliance with all laws, statutes,
ordinances and governmental requirements or orders, involving or affecting any
of the Purchased Property, or applicable to the distribution of Products and the
use of the Premises for such uses and purposes. Without limiting the foregoing,
Seller is in compliance with the provisions of the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6905 et seq. (the "Hazardous Waste Act"),
applicable to all inventory, work in process, raw materials, supplies and other
materials located at the Premises on the Purchase Date and as of the Closing
Date. None of the Purchased Property constitutes or, if deemed discarded, would
constitute "Hazardous Waste", as defined in Section 1004(5) of the Hazardous
Waste Act (all of such materials hereinafter referred to as "Hazardous Waste").
N. Accuracy of Information. Seller and the Stockholders state that they
have verified the accuracy of all information and documentation provided to
Purchaser regarding the operations of the company and the representations and
warranties, and that each of the representations and warranties is true and
correct as of the Purchase Date and, except as permitted by this Agreement, will
be true and correct at the Closing Date.
O. Information. The Stockholders have supervised the gathering of
information and documentation necessary to complete this Agreement and support
the representations and warranties.
P. Broker Fees. Seller and the Stockholders have no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Purchaser can become
liable or obligated.
Q. Material Adverse Effect. Except as disclosed herein, there is no
judicial or administrative action, suit, proceeding, arbitration, mediation or
investigation to Seller and the Stockholders' knowledge, which, individually or
in the aggregate, would reasonably be expected to have a material adverse effect
on the ability of Seller and the Stockholders to consummate the transaction
contemplated by this Agreement or which involve or could involve the validity of
this Agreement or any action taken or to be taken in connection therewith, or
would have a material adverse impact on the financial position of Seller and the
Stockholders.
R. Notification Period for Seller and the Stockholders. If Seller and the
Stockholders fail to provide Purchaser with written notification of any rights
or claims arising out of any inaccuracy in the representations and warranties of
Purchaser within two (2) years after the Closing, which notification must
describe with specificity the nature of the asserted breach and the amount of
the claim, Seller and the Stockholders are deemed to have waived any such rights
or claims.
S. Use of Name. Purchaser and any of its present or future Affiliates shall
have the right to use the Item-Eyes(R), Requirements(R) and Nouveau(R) name and
any combination or similar name as of the Closing Date. Neither Seller nor any
of its present or future Affiliates nor the Stockholders shall have that right
as of the Closing Date, and Seller shall immediately change its company name
upon Closing. Purchaser shall have the right to represent that it is carrying on
business in succession to the Company. If Purchaser requests, Seller shall, at
Purchaser's expense, give notices to that effect to such of Seller's customers,
suppliers and others with whom Seller has had business relations. The notices
shall be in a form satisfactory to Seller and Purchaser.
T. Financial Statements. The audited financial statements of the Company as
of the years ended December 31, 1997, December 31, 1998 and December 31, 1999
and the reviewed financial statements of the Company as of the quarter ended
March 31, 2000 are set forth in Exhibit 6(T) (collectively, the "Financial
Statements"). The balance sheets included in the Financial Statements fairly
present the financial position of Seller as of the date thereof, and the related
statements of income and cash flows for the fiscal periods ended on such dates
fairly present the results of operations of Seller for the respective periods
indicated. The Financial Statements have been prepared in accordance with GAAP.
Seller shall also submit to Purchaser the unaudited financial statements of the
Company as of the Closing Date.
U. Accounts Receivable. All Accounts Receivable reflected in the Financial
Statements, or acquired by Seller after the date thereof and before the Closing
Date have been collected or are (or will be) current and collectible in amounts
not less than the aggregate amount thereof (net of reserves established in
accordance with GAAP, which reserves include reserves for chargebacks and
similar items granted to customers in the ordinary course of business consistent
with past practices) carried (or to be carried) on the books of Seller, and are
not subject to any counterclaims or set-offs other than counterclaims or
set-offs in the ordinary course and consistent with GAAP.
V. Absence of Liabilities. Seller does not have any Liabilities, other than
those set forth in the Financial Statements or Exhibits hereto and those
incurred after the date hereof in the ordinary course of business consistent
with past practice. Except as shown in the Financial Statements, Seller is not
directly or indirectly liable upon or with respect to (by discount, repurchase
agreements or otherwise), or obliged in any other way to provide funds in
respect of, or to guarantee or assume, any debt, obligation or dividend of any
person, except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items for
collection.
W. Intangible Property. Seller owns, free and clear of all encumbrances,
restrictions, liens, security interests and charges, and has good and marketable
title to, or holds adequate licenses or otherwise possesses all such material
rights as are necessary to use all material Intangible Property. Seller and/or
the Stockholders have not received notice of and have no knowledge of any
conflict or alleged conflict with the rights of others pertaining to the
Intangible Property. To Seller's and the Stockholders' best knowledge, Seller's
business, as presently conducted, and as proposed to be conducted, does not
infringe upon or violate any patent rights, copyrights, marks, names, trade
names or trade secrets of others.
X. No Adverse Changes. Since December 31, 1999, there has been no (i)
change or event which could reasonably be expected to have a Material Adverse
Effect, (ii) declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of Seller, or (iii) material
loss, destruction or damage to the Purchased Property, whether or not insured.
Y. Private Placement. Each of the Stockholders severally represents and
warrants to Hampshire Group that (i) he/she is acquiring the Shares for his/her
own account for investment and not with a view towards the resale, transfer or
distribution thereof, nor with any present intention of distributing the Shares
in violation of the Securities Act of 1933, as amended, (ii) he/she has such
knowledge and experience in financial and business matters that he/she is
capable of evaluating the merits and risks of his/her investment in the
Hampshire Group as contemplated by this Agreement, and is able to bear the
economic risk of such investment for an indefinite period of time, and (iii)
he/she has been furnished access to such information and documents as he/she has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of Hampshire Group concerning the terms and
conditions of this Agreement and the acquisition of the Shares contemplated
hereby.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
A. Organization and Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and, as of the Closing Date, will be duly qualified to transact business in the
state of New York, or shall have filed for and reasonably expect to receive such
qualification and good standing.
B. Corporate Authority. Purchaser has full corporate authority to execute
and perform in accordance with this Agreement, and this Agreement constitutes a
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights generally and except for the limitations imposed by
general principles of equity. This Agreement and all transactions contemplated
hereby have been duly authorized by all requisite corporate authority and all
corporate proceedings required to be taken by Purchaser to authorize it to carry
out this Agreement and the transactions contemplated hereby have been duly and
properly taken. Except as disclosed on Exhibit 7(B), the execution and delivery
of this Agreement and the performance by Purchaser of its obligations hereunder
will not conflict with or violate any provision of Purchaser's certificate of
incorporation, bylaws or any provisions of any mortgage, lease, contract,
agreement, indenture, or other instrument which has not been waived, or
undertaking or any order, decree or judgment to which Purchaser is a party or by
which it or its property is bound, or result in a default or acceleration of any
obligation thereunder.
C. Notification. Except for filings under HSR or as set forth on Exhibit
7(B), the execution and delivery by Purchaser of this Agreement, the performance
by Purchaser of its obligations hereunder and the consummation by Purchaser of
the transactions contemplated hereby do not require Purchaser to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any Person or judicial authority.
D. Broker Fees. Purchaser has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller can become liable or obligated.
E. Material Adverse Effect. Except as disclosed herein, there is no
judicial or administrative action, suit, proceeding, arbitration, mediation or
investigation to Purchaser's knowledge, which, individually or in the aggregate,
would reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transaction contemplated by this Agreement or which
involve or could involve the validity of this Agreement or any action taken or
to be taken in connection therewith, or would have a material adverse impact on
the financial position of Purchaser or which would normally be disclosed in any
filings with the Securities and Exchange Commission.
F. Compliance with Securities Laws. Purchaser will comply with all
Securities Laws Requirements and Filings required in connection with this
Agreement and will file the same as may be necessary after the Closing.
G. Notification Period for Purchaser. If Purchaser fails to provide Seller
and the Stockholders with written notification of any rights or claims arising
out of any inaccuracy in the representations and warranties of Seller and the
Stockholders within two (2) years after the Closing, which notification must
describe with specificity the nature of the asserted breach and the amount of
the claim, Purchaser is deemed to have waived any such rights or claims.
H. Due Diligence. Without limiting or qualifying any of the representations
or warranties herein, Purchaser represents that it will have fully performed its
due diligence in connection with this transaction by the Closing Date and will
accept at Closing all assets transferred herein as represented.
8. COVENANTS
A. Bulk Sales Compliance. Purchaser and Seller hereby waive compliance with
any applicable bulk sale laws in connection with the transaction contemplated
hereby, and Seller shall hold Purchaser harmless from Seller's failure to have
complied with any applicable bulk sales laws.
B. Records. Seller and the Stockholders shall preserve the books and
records of the Company relating to the Transferred Employees and former
employees of the Company, the manufacture and sourcing of Products and other
matters for a period of at least three (3) years after the Closing Date. During
the three (3) year period, Seller and the Stockholders shall, upon reasonable
notice, grant Purchaser access to such records during normal business hours for
the purpose of allowing Purchaser to verify information which Purchaser may
require in connection with the transfer from Seller to Purchaser of the
operations and employees of the Company and will permit Purchaser to copy any
books and records at Purchaser's expense.
C. License and Permits. From and after the date hereof, Seller shall
cooperate with Purchaser in arranging the transfer from Seller to Purchaser, or
the issuance directly to Purchaser, of the Licenses and Permits described in
Exhibit 2(A)(xi) hereto.
D. Operations of Business. During the period between the date hereof and
the Closing Date, Seller and the Stockholders shall conduct the Company's
business, including the manufacture and sourcing of Products, in a manner
consistent with its prior business practices. During such period, Seller and the
Stockholders shall not, without the prior written consent of Purchaser, (i) sell
or encumber any item of the Purchased Property, except with respect to the
Credit Facility, and in the regular course of sale of products, (ii) sell,
dispose of or discontinue any portion of the Purchased Property, or (iii) pay
any dividend or distribution to the Stockholders; provided, however, that Seller
shall be permitted to distribute to the Stockholders immediately prior to the
Closing (or otherwise withhold from the cash included in the Purchased Property)
an amount of cash equal to twenty-four percent (24%) of the pre-tax earnings of
Seller since January 1, 2000. Seller shall also be permitted to withhold from
the cash included in the Purchased Property an amount equal to four percent (4%)
of Seller's pre-tax earnings for the period of January 1, 2000 through the
Closing Date for the purpose of paying any corporate level taxes owed by Seller
for such period. Seller and the Stockholders shall use commercially reasonable
efforts through the Closing Date to preserve the business and suppliers of the
Company with respect to the manufacture and sourcing of Products.
E. Employees. During the period between the date hereof and the Closing
Date, Seller and the Stockholders shall use their commercially reasonable
efforts to ensure that all employees currently employed by the Company will be
available for transfer to and employment by Purchaser. On and as of the Closing
Date, Purchaser shall offer employment to, and become the employer of, all
employees of the Company listed on Exhibit 1(Q) who accept such offer of
employment. Seller shall, at the time and in the manner requested by Purchaser,
inform all Transferred Employees of the termination of their employment by the
Company. Purchaser and Seller shall then promptly notify the Transferred
Employees of Purchaser's offer of employment as of the Closing Date. Nothing in
this Agreement shall be construed so as to entitle any employee to severance or
other similar pay under any agreement or understanding with Seller.
Any and all present or former employees of the Company not hired by
Purchaser, either as of the Closing or subsequent thereto, shall remain the sole
responsibility of the Company. Seller shall indemnify and hold Purchaser
harmless from all liabilities, obligations and expenses, which may be suffered
by Purchaser as the result of any claim against Purchaser by any such employee.
Seller and the Stockholders shall be solely responsible for any
liabilities, obligations and expenses, which may be suffered by Seller, the
Stockholders or Purchaser as the result of claims arising out of or relating to
the termination by Seller of Transferred Employees or any other employees, or
the termination of any plans or benefits applicable to any of them.
Without limiting the foregoing, Purchaser will not assume, and Seller and
the Stockholders shall indemnify and hold Purchaser harmless against:
(i) Disability, health and medical, life, safety and workers'
compensation claims of present or former employees of Seller arising from
acts or occurrences prior to the Closing Date;
(ii) NLRB or employment discrimination or grievance charges of present
or former employees arising during employment by Seller or from the
Company's acts or omissions prior to the Closing Date;
(iii) Savings, profit sharing, deferred compensation, incentive, bonus
and termination pay payable to the Company's employees for service with the
Company prior to the Closing Date; and
(iv) Any Liabilities or obligations to present or former employees of
Company based on act or omissions of the Company or the Stockholders prior
to the Closing Date. Seller and the Stockholders shall be responsible for
the items listed in clauses (i) through (iv) above, whether or not claims
or charges with respect thereto were asserted before the Closing Date, or
the employees of the Company to which the item relates became employees of
Purchaser.
Purchaser shall indemnify and hold Seller and the Stockholders harmless
from all Liabilities, obligations and expenses which may be suffered by Seller
and the Stockholders in connection with any claim by Transferred Employees as a
result of actions of Purchaser after the Closing Date.
F. Covenant Not to Compete. Provided that Purchaser is not in material
violation of this Agreement, from and after the Closing Date, for a period
expiring three (3) years after the Closing Date, neither Seller nor anyone of
the Stockholders shall (a) directly or indirectly own, manage, operate, join,
control, participate in, invest in, or otherwise be connected with, in any
manner, whether as principal, agent, distributor, representative, consultant,
employee, owner, partner, joint venturer, officer, director, salesperson,
advisor, stockholder, limited partner, investor or otherwise (other than
investment of not more than two (2%) percent of the stock or equity of any
corporation the capital stock of which is publicly traded) in any activity or
business venture which is engaged in the manufacture, production, distribution
or marketing of women's apparel or women's apparel related items in which
Purchaser is engaged during such three year period in all locations in which
Purchaser is doing business, including China; (b) solicit or entice or endeavor
to solicit or entice away from Purchaser either directly or indirectly, any
person who was an officer, employee or consultant of Purchaser, either for his
own account or for any individual, firm or corporation, whether or not such
person would commit any breach of his contract of employment by reason of
leaving the service of Purchaser, and Seller and each Stockholder agree not to
employ, directly or indirectly, any person who was an officer or employee or
consultant of Purchaser; (c) solicit or entice or endeavor to solicit or entice
away from Purchaser any customer or prospective customer Purchaser, either for
its own account or for any individual, firm or corporation, or any business
which is in competition with women's apparel or women's apparel related business
then conducted by Purchaser; or (d) for itself or on behalf of any other person,
partnership, corporation or entity, call on any customer of Purchaser for the
purpose of soliciting, diverting or taking away any customer from Purchaser in
all locations in which Purchaser is doing business. The parties acknowledge that
the provisions of this paragraph are reasonable and necessary for the protection
of Purchaser, and that each provision, and the period or periods of time,
geographic areas and types and scope of restrictions on the activities specified
herein are, and are intended to be, divisible.
It is the desired intent of the parties that the provisions of this
Paragraph 8(F) shall be enforced to the full extent permissible under the law
and public policies applied in each jurisdiction in which enforcement is sought,
including the enforcement of injunctive relief. Accordingly, if any particular
subparagraph or portion of this Paragraph 8(F) shall be adjudicated to be
invalid or unenforceable, this Paragraph 8(F) shall be deemed amended to delete
the portion thus adjudicated to be invalid or unenforceable.
G. Removal of Hazardous Waste. Prior to the Closing Date, Seller shall have
removed from the Premises any of its inventory, raw materials, work in process,
supplies and any other materials constituting Hazardous Waste.
H. Life Insurance. The Company shall transfer to Purchaser all life
insurance policies in place on the lives of the Stockholders. Purchaser may, at
its election and for its benefit, insure the Stockholders against accidental
loss or death. In such event, the Stockholders shall agree to submit to such
physical examinations, supply such information and take such other steps as may
be required in connection therewith. Failure to obtain any such life insurance
or transfer of any such life insurance as described above shall not be
acknowledged or affect any rights of Seller and/or the Stockholders, provided
the Stockholders cooperate with all reasonably requested examinations which may
be required in connection therewith.
I. Leases. From and after the date hereof, Seller shall use its
commercially reasonable efforts to arrange the assignment or subletting to
Purchaser of, or execution of new leases in the name of Purchaser on
substantially as favorable terms as those contained in, those real property and
other leases under which Seller conducted its business prior to the Closing,
which are identified by Purchaser after the date hereof as leases which it
desires to assume or otherwise operate under. Seller has entered into a lease
for premises at Happauge, New York which commenced on May 1, 2000.
9. CONDITIONS PRECEDENT OF PURCHASER
The obligations of Purchaser hereunder are subject to the conditions that
on or prior to the Closing Date:
A. Representations and Warranties True at Closing. The representations and
warranties of Seller and the Stockholders contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby shall be true in all
material respects on and as of the Closing Date as though such representations
and warranties were made at and as of such date, except as otherwise
contemplated herein; provided, however, that this provision shall be deemed
satisfied if the breach of any representation or warranty which is susceptible
to cure has been cured by Seller or the Stockholders or may be cured, at the
option of Seller or the Stockholders, by a reduction in the Purchase Price
payable by Purchaser pursuant to Paragraph 3(C) or 3(D) or by otherwise making
Purchaser whole.
B. Seller's and the Stockholders' Compliance with Agreement. Seller and the
Stockholders shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or at the Closing.
C. Opinion of Seller's Counsel. Seller shall have delivered to Purchaser at
the Closing an opinion of Xxxxxx & Xxxxxx LLP, Attorneys at Law, dated the
Closing Date, to the effect that:
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York.
(ii) The Company has full corporate power and authority to sell the
Purchased Property to Purchaser.
(iii) All corporate proceedings required to be taken by the Company to
authorize it to carry out this Agreement and the transactions contemplated
herein have been duly and properly taken, and this Agreement has been duly
and validly executed, and the Agreement constitutes valid and binding
obligations of Purchaser in accordance with its terms.
(iv) The instruments of conveyance delivered by the Company to
Purchaser at the Closing have been duly authorized and validly executed and
constitute valid and binding instruments of conveyance of the Company in
accordance with their respective terms.
(v) The execution and delivery of this Agreement, and the performance
of Seller and the Stockholders of their obligations hereunder will not
conflict with or violate any provision of the Company's certificate of
incorporation or bylaws.
D. Resolutions and Seller's Certificate. Seller shall have delivered to
Purchaser copies of the resolutions of the Board of Directors and the
Stockholders of Item-Eyes, Inc., authorizing the transactions contemplated
herein, with such resolutions to be certified to be true and correct by its
Secretary, together with a certificate of the President and the Secretary of
Item-Eyes, Inc., dated the Closing Date, certifying the fulfillment of the
conditions specified in Paragraphs 9(A) and 9(B) above.
E. Employment Agreement. The Stockholders shall have executed Employment
Agreements with Purchaser substantially in the form of the Employment Agreements
annexed hereto as Exhibit 9(E), and Xxxxxxx Xxxxxxxx shall have executed an
Employment Agreement with Purchaser (not as a required condition hereunder).
F. No Material Adverse Effect since December 31, 1999. There shall have
been no developments or changes in the business of the Company since December
31, 1999, which, individually or in the aggregate, would have a Material Adverse
Effect.
G. Consents and Waivers. All consents, waivers, authorizations and
approvals set forth on Exhibit 6(B), but only to the extent the failure to
obtain any of the foregoing is material to the Company, or 7(B) shall have been
duly obtained and shall be in full force and effect on the Closing Date.
H. Financing. The Purchaser shall have received aggregate proceeds of
$97,000,000 (Ninety-Seven Million Dollars) in financing on terms consistent with
the terms specified and described in the Term Sheet, dated June 19, 2000, from
The Chase Manhattan Bank or a substitute bank acceptable to Purchaser.
10. CONDITIONS PRECEDENT OF SELLER AND THE STOCKHOLDERS
The obligations of Seller and the Stockholders hereunder are subject to the
conditions that on or prior to the Closing Date:
A. Representations and Warranties True at Closing. The representations and
warranties of Purchaser contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby shall be true in all material respects on and
as of the Closing Date as though such representations and warranties were made
at and as of such date, except as otherwise contemplated herein.
B. Purchaser's Compliance with Agreement. Purchaser shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
C. Resolutions and Certificate of Purchaser. Purchaser shall have delivered
to Seller copies of the resolutions of the Board of Directors of Purchaser
authorizing the transactions contemplated herein, with such resolutions to be
certified to be true and correct by its Secretary or Assistant Secretary,
together with a certificate of the President and the Secretary or Assistant
Secretary of Purchaser, dated the Closing Date, certifying in such detail as
Seller may request to the fulfillment of the conditions specified in Paragraphs
10(A) and 10(B) above.
D. Opinion of Purchaser's Counsel. Purchaser shall have delivered to Seller
at the Closing an opinion of Xxxxxxx Xxxx & Xxxxxxxxx, Attorneys at Law, dated
the Closing Date, to the effect that:
(i) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is authorized and
duly qualified to transact business and in good standing under the laws of
the State of New York.
(ii) Purchaser has full corporate power and authority to purchase the
Purchased Property from Seller.
(iii) All corporate proceedings required to be taken by Purchaser to
authorize it to carry out this Agreement, the Assignment and Assumption
Agreement and the Promissory Notes and the transactions contemplated herein
and therein have been duly and properly taken, and the Agreement, the
Assignment and Assumption Agreement and the Promissory Notes constitute
valid and binding obligations of Purchaser in accordance with their
respective terms, and the Guarantees constitute valid and binding
obligations of Hampshire Group.
(iv) The execution and delivery of this Agreement and the Assignment
and Assumption Agreement, and the performance by Purchaser of its
obligations hereunder and thereunder, do not conflict with or violate
Purchaser's certificate of incorporation or bylaws.
E. Promissory Notes and Guarantees. The delivery of the Promissory Notes
and the of the Guarantees to each of the appropriate Stockholders.
F. Bank Credit Facility. On or prior to the Closing Date, Purchaser shall
have replaced the Bank Credit Facility.
11. INDEMNIFICATION
A. Indemnification by Seller and the Stockholders. Other than
indemnifications relating to Seller's liabilities for taxes or liabilities
pursuant to Paragraph 2(F)(ii), 3(G) or 14, all indemnifications hereunder by
Seller and the Stockholders shall be limited to the Promissory Notes and the
Deemed Value of the Shares issued to the Stockholders hereunder, to be deducted
pro-rata from each in proportions to the value of each as of the Closing Date.
Purchaser shall use reasonable endeavors to pursue any claims it may have
against each of the Stockholders in proportion to the Shares received by such
Stockholder. Subject to the foregoing and subject to Paragraph 2(F)(i) hereof,
Seller and the Stockholders shall indemnify and hold Purchaser harmless from and
against and in respect of any and all Liabilities, losses, damages, claims,
costs and expenses, including but not limited to reasonable attorneys' fees,
arising out of or due to:
(i) A breach of any representations, warranties or covenants of Seller
and the Stockholders contained in this Agreement;
(ii) Any and all claims, other than Liabilities of the Company assumed
by Purchaser under this Agreement, asserted by Persons who are not parties
to this Agreement against Purchaser or the Purchased Property arising out
of any claim or alleged claim against Seller, to the extent if the facts
including such claim arose prior to the Closing Date;
(iii) Any Excluded Liability;
(iv) Any Liabilities of Seller not expressly assumed by Purchaser
under the terms of this Agreement including Excluded Liabilities;
(v) Any claim asserted by present or former Employees of Seller
arising out of or relating to any acts or omissions of Seller or the
Stockholders before the Closing Date.
B. Indemnification by Purchaser. Purchaser shall indemnify and hold Seller
harmless from and against and in respect of any and all Liabilities, losses,
damages, claims, costs and expenses, including, but not limited to reasonable
attorneys' fees, arising out of or due to:
(i) A breach of any representations, warranties or covenants of
Purchaser contained in this Agreement;
(ii) Purchaser's failure to satisfy the Assumed Liabilities and any
and all actions, suits, proceedings, demands, assessments or judgments,
costs and expenses related to any of the foregoing and only to the exact of
such relation; or
(iii) Any and all claims asserted by Persons who are not parties to
this Agreement, against Seller or the Shareholders arising out of any claim
to the extent that the facts underlying such claim arose on or after the
Closing Date.
C. Procedure.
(i) If a claim shall be made or threatened, or an action or proceeding
shall be commenced or threatened against a party hereto (the "Aggrieved
Party") which could result in liability of the other party (the
"Indemnifying Party") under its indemnification obligations hereunder, the
Aggrieved Party shall promptly provide written notice of such claim, action
or proceeding to the Indemnifying Party. Such notice shall state the basis
for the claim, action or proceeding and the amount thereof (to the extent
such amount is determinable at the time when such notice is given) and
shall permit the Indemnifying Party to assume the defense of any such claim
or litigation. Notwithstanding the foregoing, failure to provide such
notice shall not release the Indemnifying Party of any obligations
hereunder unless such failure materially prejudices the Aggrieved Party.
(ii) If the Indemnifying Party assumes the defense of any such claim
or litigation, the obligations of the Indemnifying Party as to such claim
or litigation shall be limited to taking all steps necessary in the defense
or settlement thereof and to holding the Aggrieved Party harmless from and
against any and all losses, damages and Liabilities caused by or arising
out of any settlement approved by the Indemnifying Party or any judgment in
connection with such claim or litigation. The Aggrieved Party may
participate, at its expense, in the defense of such claim or litigation
provided that the Indemnifying Party shall direct and control the defense
of such claim or litigation. The Aggrieved Party agrees to cooperate and
make available to the Indemnifying Party all books and records reasonably
necessary and useful in connection with the defense. The Indemnifying Party
shall not, in the defense of such claim or litigation, consent to the entry
of any judgment, or enter into any settlement, except in either event with
the prior written consent (not to be unreasonably withheld) of the
Aggrieved Party, which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Aggrieved Party of a
release from all liability in respect of such claim or litigation.
(iii) If the Indemnifying Party does not assume the defense of any
such claim or litigation, the Aggrieved Party may defend against such claim
or litigation in such manner as it may deem appropriate. The Indemnifying
Party agrees to cooperate and make available to the Aggrieved Party all
books and records and such officers, employees and agents as are reasonably
necessary and useful in connection with the defense. Unless the
Indemnifying Party shall deposit with the Aggrieved Party a sum equivalent
to the total amount demanded in such claim or litigation, or shall deliver
to the Aggrieved Party a surety bond or an irrevocable letter of credit in
form and substance reasonably satisfactory to the Aggrieved Party, the
Aggrieved Party may settle such claim or litigation on such terms as it may
deem appropriate, and the Indemnifying Party shall promptly reimburse the
Aggrieved Party for the amount of all payments made in settlement of an
indefinable claim or litigation and all expenses, legal or otherwise,
incurred by the Aggrieved Party in connection with the defense against or
settlement of such claims or litigation. If no settlement of such claim or
litigation is made, the Indemnifying Party shall promptly reimburse the
Aggrieved Party for the amount of any judgment rendered with respect to
such claim or in such litigation and of all expenses, legal or otherwise,
incurred by the Aggrieved Party in the defense against such claim or
litigation.
12. ACCESS TO INFORMATION; CONFIDENTIALITY
A. Access to Information. Between the date of this Agreement and the
Closing Date, Seller shall give Purchaser, its managing members, financial
advisors, counsel and other agents access to all offices of the Company and to
all of its respective books and records, permit them to make such inspections as
they may require and shall cause Seller's officers, directors and employees to
furnish Purchaser, its managing members, financial advisors, counsel and other
agents with such financial and operating data and other information with respect
to the business and properties of Seller as Purchaser, its managing members,
financial advisors, counsel, lenders and other agents may from time to time
reasonably request, and as may be necessary to establish the performance by
Seller of its covenants under this Agreement and the accuracy of its
representations and warranties herein, and in connection with its preparation of
any filing or submission to any governmental entity or regulatory body.
B. Confidentiality. Purchaser shall hold, and shall use its best efforts to
cause its managing members, financial advisors, counsel and other agents to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process, or, in the opinion of its counsel, by other requirements
of law, all documents and information concerning Purchaser or Seller, as the
case may be, furnished to the other in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (i) in the public domain through no fault of Purchaser and
Seller, or any of their respective Affiliates; or (ii) later lawfully acquired
without the breach of any other agreement by Purchaser and Seller, or their
respective officers, directors, managing members, financial advisors, counsel
and other agents from other sources) and will not release or disclose such
information to any other Person, except its officers, directors, managing
members, financial advisors, counsel and other agents in connection with this
Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained as hereinbefore provided, and,
if requested by Seller or Purchaser, as the case may be, the other party will
cause its officers, directors, managing members, financial advisors, counsel and
other agents to, return to the requesting party, all copies of written
information furnished by or on behalf of the requesting party.
13. PURCHASER'S RIGHT OF SETOFF
Subject to Paragraph 2(F)(i), in the event that Purchaser has one or more
claims under this Agreement against Seller and the Stockholders, reasonably
alleging a breach of or claim under one or more of the provisions hereof and
notifies Seller and the Stockholders in writing of the amount of and reasonable
basis for such claims on or prior to the second anniversary of the Closing,
Seller and the Stockholders are required to indemnify Purchaser pursuant to
Paragraph 11(A) hereof, the Promissory Notes and/or Shares outstanding in the
amount claimed in such notice and the amount of such reduction shall thereafter
become due and payable to Purchaser.
For purposes of this Paragraph 13, the value of each Share shall be equal
to Deemed Value of the Shares. In the event that any Stockholder shall have sold
or otherwise disposed of any or all of its Shares, such Stockholder shall be
obligated to pay the amount claimed first in Shares (valued in accordance with
this Paragraph 13) to the extent of any Shares then held by such Stockholder,
and thereafter in cash; provided that, in no event shall the Stockholders be
required to pay any amount (in cash or in Shares) in excess of the maximum
amount required pursuant to Paragraph 11(A). Purchaser's rights set forth in
Paragraph 11(A) and this Paragraph 13 shall be Purchaser's sole rights and shall
strictly limit and restrict Purchaser's other rights and remedies arising under
this Agreement or by law or otherwise.
Without limiting the foregoing, Seller and the Stockholders agree that, if
Purchaser is required to pay debts or other Liabilities of Seller, Purchaser may
deduct the amount of all such payments made by it from the value of the Stock
outstanding and the applicable amount of Stock shall thereupon be reduced by the
full amount of all such payments made by Purchaser.
14. BROKERAGE
Seller, the Stockholders and Purchaser shall each hold the other harmless
from any claim by any broker, finder or other third party not retained by such
person. This Article shall survive the Closing.
15. ENTIRE AGREEMENT; MODIFICATION
This Agreement, together with all the Exhibits, constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understanding, both written and oral,
among the parties or between any of them with respect to the subject matter
hereof, all of which are merged herein. There are no representations made by
either party not specifically contained in this Agreement and neither party is
relying on any statements or understanding not specifically contained in the
Agreement including those whose may be agreed to have induced either party
together into this Agreement or even those claimed to be of a fraudulent nature.
All references to Paragraphs and Exhibits shall be deemed references to such
parts of this Agreement unless the text requires otherwise. This Agreement shall
not be modified or amended except by an instrument in writing signed by or on
behalf of the parties hereto.
16. ASSIGNMENT
This Agreement shall not be assigned by operation of law or otherwise,
provided that Purchaser may assign its rights and obligations to any
wholly-owned direct or indirect subsidiary of Hampshire Group, but no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
17. TERMINATION
A. This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:
(i) By mutual written agreement of Purchaser, Seller and the
Stockholders;
(ii) By Seller and the Stockholders if Purchaser does not close by
September 5, 2000;
(iii) By Purchaser if Seller and/or the Stockholders do not close by
September 5, 2000;
(iv) By Seller and the Stockholders if Xxxxxx Xxxxxxx, the Chairman of
Hampshire Group, should die on or before the Closing Date;
(v) By Purchaser if Xxxxx, Xxxxxxxx or Xxxxxx should die on or before
the Closing Date;
B. In the event this Agreement is terminated as provided in Paragraphs
17(A)(ii) through 17(A)(v) above, the terminating party shall send notice of
termination in writing to the non-terminating party(ies) (the "Termination
Notice").
C. In the event this Agreement is terminated as provided in Paragraphs
17(A)(i) through 17(A)(v) above, this Agreement shall become void and of no
further force and effect and no party hereto shall have any further liability to
any other party hereto, except as provided in Paragraphs 17(D) through 17(G) and
Paragraphs 12, 14, 20, 25 and 26, which shall survive and continue in full force
and effect notwithstanding termination.
D. Seller's Right to Retain $1,000,000 Breakup Fee. Upon the termination of
this Agreement, Seller shall return to Purchaser the $4,000,000 of the
$5,000,000 Deposit, less attorney's fees of $75,000 incurred by Seller in
connection with the transactions contemplated hereby, plus interest on the
amount returned at the prime rate of interest of CIT Group, Inc. in effect on
the date of termination, calculated from the date of this Agreement until the
return of such Deposit, by certified check or confirmed wired transfer within
thirty (30) days of receipt of the Termination Notice and Seller shall be
entitled to retain the balance of such $5,000,000 Deposit as a break-up fee, if
the Closing did not occur as a result of any of the following:
(i) Seller and the Stockholders failed to perform and comply in all
material respects with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at the
Closing (other than the agreements noted in Paragraphs 17(E)(iii) and (iv)
below);
(ii) Seller failed to deliver at the Closing a certificate of the
President and the Secretary of Item-Eyes, Inc., dated the Closing Date,
certifying as to the matters referred to in clause (i) above;
(iii) A Material Adverse Effect occurred (other than by reason of
Seller or Stockholders conducting the Company's business in a manner
inconsistent with prior practice); or
(iv) Purchaser failed to receive the financing contemplated by
Paragraph 9(I).
E. Purchaser's Right to Full Refund of Deposit. Upon the termination of
this Agreement, Seller shall return to Purchaser the $5,000,000 Deposit, plus
interest on the amount returned at the prime rate of interest of CIT Group, Inc.
in effect on the date of termination, calculated from the date of this Agreement
until the return of such Deposit, by certified check or confirmed wired transfer
within thirty (30) days of receipt of the Termination Notice, if the Closing did
not occur as a result of any of the following:
(i) The representations and warranties of Seller and the Stockholders
contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated were not true in all material respects on and as of the
Closing Date as though such representations and warranties were made at and
as of such date and Seller or the Stockholders did not exercise their right
to cure such breach or otherwise make Purchaser whole in accordance with
Paragraph 9(A);
(ii) Seller failed to deliver at the Closing a certificate of the
President and the Secretary of Item-Eyes, Inc., dated the Closing Date,
certifying as to the matters referred to in clause (i) above;
(iii) Seller failed to deliver at the Closing the xxxx of sale,
endorsements, assignments and other instruments of transfer and conveyance
of the Purchased Assets substantially similar to those attached hereto as
Exhibits 2(B)(i) and 2(B)(ii);
(iv) Seller and Stockholders failed to agree to subordination
provisions requested by Purchaser's and Hampshire Group's bank and
insurance company lenders as contemplated by Paragraph 3(C);
(v) Seller failed to deliver at the Closing the opinion of Xxxxxx &
Xxxxxx contemplated by Paragraph 9(C);
(vi) Seller failed to deliver at the Closing certified copies of the
resolutions of the Board of Directors and the Stockholders of Item-Eyes,
Inc. authorizing the transactions contemplated herein;
(vii) Any Stockholder failed to deliver at the Closing executed
Employment Agreements with Purchaser substantially in the forms annexed
hereto as Exhibit 9(E)(i);
(viii) A Material Adverse Effect occurred as a result of Seller or the
Stockholders conducting the Company's business in a manner inconsistent
with prior practice;
(ix) Purchaser failed to receive any consent or approval required
under HSR;
(x) The death of Xxxxxx Xxxxxxx, the Chairman of Hampshire Group,
Xxxxx, Xxxxxxxx or Xxxxxx on or before the Closing Date;
(xi) The mutual agreement of Purchaser, Seller and the Stockholders as
contemplated by Paragraph 17(A)(i).
F. Purchaser Right to Keep Entire Deposit. Upon the termination of this
Agreement, if the Closing did not occur as a result of any event or circumstance
other than those described in Paragraphs 17(D) or 17(E), Seller shall be
entitled to retain the entire $5,000,000 Deposit as a break-up fee
18. VALIDITY; SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect unless such
enforceability causes this Agreement to fail in its essential purpose.
19. NOTICES
All notices, requirements, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given upon delivery , if
delivered in Person, or on the third business day after mailing, if mailed, by
registered mail, postage prepaid, return receipt requested, as follows:
If to Seller or the Stockholders: With copy to:
Xx. Xxxxxx Xxxxx Xxxxxx X. Xxxxxx, Esq.
Item-Eyes, Inc. Xxxxxx & Xxxxxx, LLP
0000 Xxxxxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
and
Xx. Xxxx Xxxxxxxx
and
Xx. Xxxxx Xxxxxx
If to Purchaser: With copy to:
Vintage III, Inc. Xxxxxx X. Xxxxxxx, Esq.
Attn: Secretary/Treasurer Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
and
Xx. Xxxxxx Xxxxxxx, Chairman
Hampshire Group, Limited
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
or to such other address or to such other Person as Seller, Stockholders or
Purchaser shall have last designated by notice to the other party.
20. ARBITRATION
The Parties agree that any controversy or claim arising out of or relating
to this Agreement or the breach thereof (including the arbitrability of any
controversy or claim), shall be settled by arbitration in the City of New York,
State of New York, by three arbitrators, one of whom shall be appointed by
Seller, one by Purchaser and the third by the first two arbitrators. If the
first two arbitrators cannot agree on the appointment of a third arbitrator, the
third arbitrator shall be appointed by the American Arbitration Association. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph. The cost of any arbitration
proceeding hereunder shall be borne equally by Seller and Purchaser. The award
of the arbitrators shall be binding upon the parties. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
21. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to applicable principles of
conflicts of laws thereof.
22. DESCRIPTIVE HEADINGS; TABLE OF CONTENTS
The descriptive headings herein are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. The Table of Contents preceding this Agreement
is not a part hereof.
23. PARTIES IN INTEREST
Nothing contained in this Agreement is intended or shall be construed to
give any Person or corporation, other than the parties hereto and their
respective successors, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement
shall be binding upon and inure solely to the sole and exclusive benefit of the
parties hereto and their respective successors and/or assigns and for the
benefit of no other Person or corporation.
24. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
25. SPECIFIC PERFORMANCE:
Irreparable damage will occur if any of the provisions of this Agreement
are not performed in accordance with the terms hereof, and Purchaser shall be
entitled to specific performance of the terms and conditions hereof in addition
to any other remedy at law or equity.
26. NATURE AND SURVIVAL REPRESENTATIONS
All statements contained in any certificate or other instrument delivered
by or on behalf of Purchaser or Seller and the Stockholders, pursuant to this
Agreement or in connection with the transactions contemplated hereby shall be
deemed representations and warranties by Purchaser and by Seller and the
Stockholders, respectively, hereunder. All representations and warranties and
agreements made by the parties hereto in this Agreement or pursuant hereto shall
survive the Closing hereunder for two (2) years only; provided however, that any
covenant or agreement relating to Assumed Liabilities or Excluded Liabilities
pursuant to Paragraph 2(F) shall survive indefinitely.
27. EXPENSES
The Stockholders (as for themselves and the Company) and Purchaser shall
bear their respective expenses in connection with the transactions herein
contemplated, including related attorneys' and accountants' fees, except that
Seller and Purchaser shall share equally, at the time of payment, the filing
fees associated with obtaining HSR approval, and, concurrent with the Closing,
Purchaser will reimburse the Stockholders for their reasonable accountants' fees
incurred in connection with the transactions herein contemplated up to a maximum
of $15,000.
28. CONSTRUCTION
The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. Nothing in the Exhibits shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
relates to the existence of the document or other item itself).
The parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
29. INCORPORATION OF EXHIBITS
The Exhibits to this Agreement are incorporated herein by reference and
made a part hereof. The disclosure of any matter by Seller and the Stockholders
in any Exhibit qualifying a representation or warranty contained in Paragraph 6
hereof shall serve as sufficient disclosure for purposes of all of the
representations and warranties contained in Paragraph 6 of this Agreement
provided that the descriptive nature of any such disclosure provides sufficient
notice with reasonable detail of the materials, facts or items described
therein.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, or
individually, as the case may be, all as of the day and year first above
written.
ITEM-EYES, INC., SELLER
Attest:
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx Xxxxxxxx
----------------------------------- -----------------------------------
Its President: Xxxxxx Xxxxx Its Secretary/Treasurer:
STOCKHOLDER
/s/ Xxxxxx Xxxxx
----------------------------------
Xxxxxx Xxxxx
000 Xxxxx Xxxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
STOCKHOLDER
/s/ Xxxx Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx
0 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
STOCKHOLDER
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
000 Xxx Xxxxx
Xxxxxx, XX 00000
VINTAGE III, INC., PURCHASER
Attest:
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------- -------------------------------
Its Chairman: Xxxxxx Xxxxxxx Its Secretary/Treasurer:
VINTAGE III, INC./ITEM-EYES, INC.
EXHIBIT LIST
Exhibit 1(A) Accounts Payable
Exhibit 1(B) Accounts Receivable
Exhibit 1(C) Accrued Expenses
Exhibit 1(D) Bank Credit Facility
Exhibit 1(E) Equipment and Other Leases
Exhibit 1(F) Excluded Assets
Exhibit 1(G) Letters of Credit
Exhibit 1(H) List of Machinery and Equipment
Exhibit 1(I) Other Contracts
Exhibit 1(J) Other Inventory
Exhibit 1(K) Premises Leases
Exhibit 1(L) Product Inventory
Exhibit 1(M) Purchase Orders
Exhibit 1(N) Xxxxx Xxxxxxxx Note
Exhibit 1(O) [Reserved]
Exhibit 1(P) Sales Commitments
Exhibit 1(Q) Transferred Employees
Exhibit 2(A) Liens and Encumbrances
Exhibit 2(A)(v) Prepaid Expenses and Other Assets
Exhibit 2(A)(xi) Licenses and Permits
Exhibit 2(A)(xii) Intangible Property
Exhibit 2(B)(i) Xxxx of Sales
Exhibit 2(B)(ii) Assignment and Assumption Agreement
Exhibit 2(F)(ii)(e) Litigation and Labor Disputes
Exhibit 3(C)(i)(a) Xxxxx Promissory Note
Exhibit 3(C)(i)(b) Guarantees
Exhibit 3(C)(ii) Stockholders' Promissory Notes
Exhibit 6(B) Seller's Required Consents
Exhibit 6(J) Insurance
Exhibit 6(T) Financial Statements
Exhibit 7(B) Purchaser's Required Consents
Exhibit 9(E) Stockholders' Employment Agreements
Exhibit 9(H) Terms of Union Agreement Amendment
