==============================================================================
AMENDED AND RESTATED
ACQUISITION AGREEMENT
by and among
M.T.G.I. - TEXTILE MANUFACTURERS GROUP (ISRAEL) LTD.,
MBS (CYGNE) COMPANY,
A.C. SERVICES, INC.
and
JORDACHE LIMITED
Dated as of August 1, 1999
==============================================================================
AMENDED AND RESTATED ACQUISITION AGREEMENT, dated as of August 1, 1999, by
and among M.T.G.I. - Textile Manufacturers Group (Israel) Ltd., an Israeli
corporation ("SELLER"), MBS (Cygne) Company, a Delaware corporation ("MBS"),
A.C. Services, Inc., a Delaware corporation ("ACS" and, together with MBS, the
"STOCK SELLERS"), and Jordache Limited, a Delaware corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller and Wear & Co. S.r.l., an Italian corporation wholly-owned
by the Stock Sellers ("WEAR"), are engaged in the business of manufacturing
women's knit clothing (the "BUSINESS");
WHEREAS, Purchaser, Seller and the Stock Sellers were party to an
Acquisition Agreement, dated as of March 25, 1999 (the "ORIGINAL AGREEMENT"),
pursuant to which (i) Purchaser agreed to purchase, and Seller agreed to sell,
the Assets (as defined below) and (ii) Purchaser agreed to purchase, and the
Stock Sellers agreed to sell, all the outstanding stock of Wear (the "WEAR
STOCK"); and
WHEREAS, Purchaser, Seller and the Stock Sellers desire to amend and
restate the terms and conditions of the purchase and sale of the Assets and the
Wear Stock.
NOW, THEREFORE, in reliance upon the covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. DEFINITIONS
The following terms shall have the following respective meanings for all
purposes of this Agreement:
"Agreement" means this Amended and Restated Acquisition Agreement, as it
may be from time to time amended.
"Assets" has the meaning set forth in Section 2.2.
"Assumed Contracts" shall mean the contracts, agreements and arrangements
listed on Schedules 2.2(c) and 2.2(d) hereto and all purchase orders.
"Assumed Liabilities" has the meaning set forth in Section 2.4.
"Business" has the meaning set forth in the preamble.
-1-
"Closing" means the completion of the acquisition of the Assets and the
Wear Stock pursuant to this Agreement.
"Closing Date" means the date the Closing takes place.
"Continued Employees" has the meaning set forth in Section 2.9.
"Discount" has the meaning set forth in Section 2.7(a).
"Escrow Agent" has the meaning set forth in Section 2.7(c).
"Escrowed Amount" has the meaning set forth in Section 2.7(c).
"Estimated Amount" has the meaning set forth in Section 2.7(b).
"Excluded Assets" has the meaning set forth in Section 2.3.
"Excluded Liabilities" means all liabilities and obligations of Seller
(other than the Assumed Liabilities) of any kind or nature whatsoever, whether
accrued, absolute, fixed, contingent, known or unknown, arising out of the
conduct of the Business by Seller prior to the Closing Date.
"Governmental Entity" means any court, administrative agency or commission
or other governmental authority or instrumentality.
"Indemnified Party" has the meaning set forth in Section 10.3.
"Indemnifying Party" has the meaning set forth in Section 10.3.
"Initial Payment Amount" has the meaning set forth in Section 2.7(b).
"Inventory" has the meaning set forth in Section 2.2(b).
"Liens" has the meaning set forth in Section 2.1.
"Management Agreement" means that certain Management Agreement, dated as of
the date hereof, between T.S. Wear Me & Co., an affiliate of Purchaser and
Seller, pursuant to which Purchaser is managing the Business on behalf of
Seller.
"Original Agreement" has the meaning set forth in the preamble.
"Person" means an individual, partnership, corporation, joint venture,
unincorporated organization, cooperative or a governmental entity or agency
thereof.
-2-
"Seller's IBT" has the meaning set forth in Section 2.7(a).
"Stock Purchase Price" has the meaning set forth in Section 2.7.
"Wear Operating Expenses" has the meaning set forth in Section 2.7(a).
"Wear Stock" has the meaning set forth in the preamble.
II. PURCHASE AND SALE OF STOCK AND ASSETS
Section 2.1 The Wear Stock. Upon the terms and subject to the conditions of
this Agreement, at the Closing, the Stock Sellers shall sell and transfer to the
Purchaser and Purchaser shall purchase and acquire good and valid title to the
Wear Stock, free and clear of any mortgage, pledge, security interest,
encumbrance, claim, lien, option, charge or agreement (collectively, "LIENS").
Section 2.2 Purchase and Sale of Assets. At the Closing, upon the terms and
subject to the conditions contained herein, Seller shall sell, transfer, convey
and assign to Purchaser, effective as of the Closing, and Purchaser shall
purchase and accept from Seller, all of the assets of Seller related to the
Business, free and clear of all Liens, except the Excluded Assets (collectively,
the "ASSETS"), as follows:
(a) all machinery, equipment, fixtures, leasehold improvements,
computers, computer hardware and software, tools, supplies, furniture and
other tangible personal property and assets of Seller related to the
Business, including without limitation those described in Schedule 2.2(a);
(b) all Seller's inventories of raw materials, work in progress,
finished products and supplies used in the conduct of the Business
("INVENTORY");
(c) subject to the second sentence of Section 3.5, all the interest of
and the rights and benefits accruing to Seller as lessee under all leases
or rental agreements covering real property, machinery, equipment,
computers, computer hardware and software, tools, supplies, furniture and
fixtures, automobiles and other tangible personal property and assets used
in the Business, all of which agreements are listed in Schedule 2.2(c);
(d) subject to the second sentence of Section 3.5, all of the rights
and benefits accruing to Seller under all customer and vendor purchase
orders, contracts, agreements and arrangements, written or oral, entered
into in connection with the conduct of the Business, all of which currently
effective written contracts, agreements and arrangements (other than
customer and vendor purchase orders) are listed in Schedule 2.2(d),
-3-
provided that Purchaser is only acquiring oral customer and vendor purchase
orders outstanding on the Closing Date;
(e) all currently existing operating data and records of Seller
relating to the Business, including without limitation lists of all
currently existing clients and all client records, production reports and
records, standard operating procedures, equipment logs, operating guides
and manuals, part lists and specifications, vendor lists, copies of
personnel records of the Continued Employees, correspondence and other
similar documents and records relating to the foregoing;
(f) all advance payments to, and credits from, suppliers and all
deposits;
(g) Seller's 22.5% interest in DyeCo Textile Holdings Ltd., which owns
approximately 66% of the Zion Dyeing and Finishing Technologies Limited
Partnership; and
(h) all goodwill of the Business.
Section 2.3 Excluded Assets. Anything to the contrary in Section 2.2
notwithstanding, the Assets shall exclude and Purchaser shall not purchase (a)
any cash or equivalents in transit, in hand or in bank accounts and (b) all of
Seller's accounts and notes receivable arising from the conduct of the Business
(collectively, the "EXCLUDED ASSETS").
Section 2.4 Assumption of Liabilities. At the Closing, upon the terms and
subject to the conditions contained herein, and simultaneous with the transfer,
conveyance and assignment to Purchaser of the Assets, Purchaser shall assume,
effective as of the Closing, and discharge in accordance with their terms, only
the obligations and liabilities of Seller under the Assumed Contracts to the
extent that they shall remain uncompleted and outstanding at the Closing Date,
including without limitation all amounts owed to outside contractors for cutting
and sewing corresponding to work-in-progress Inventory not yet billed and paid,
which amounts are therefore not included in the calculation of the value of
Inventory in accordance with Section 2.7(g) (collectively, the "ASSUMED
LIABILITIES").
Section 2.5 Excluded Liabilities. Purchaser and Seller agree that Purchaser
shall not assume, pay, discharge, become liable for or perform when due, and
Seller shall not cause Purchaser so to assume, pay, discharge, become liable for
or perform, any liabilities (contingent or otherwise), debts, contracts,
commitments and other obligations of Seller of any nature whatsoever arising out
of the conduct of the Business prior to the Closing Date other than the Assumed
Liabilities, including without limitation all severance obligations to all
employees of Seller whose employment is terminated by Seller in connection with
the Closing hereunder.
Section 2.6 Closing. The Closing shall take place at the offices of Cygne
Designs, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at the opening of business,
as soon as practicable after all conditions to the respective obligations of the
parties have been satisfied or waived, or at such other
-4-
date, time and place as the parties may agree. Each party hereto agrees to use
its reasonable efforts to satisfy promptly the conditions to the obligations of
the respective parties hereto in order to expedite the Closing.
Section 2.7 Purchase Price. (a) The purchase price for the Assets shall be
the net tangible book value of the Assets at the Closing Date, determined as set
forth below, less an amount (the "DISCOUNT") equal to the difference between (i)
the sum of (a) $80,000 and (b) the income before tax of Seller for the period
commencing August 1, 1999 and ending on the Closing Date ("SELLER'S IBT"), and
(ii) the sum of the operating expenses of Wear and Wear & Co International, Inc.
for the period commencing August 1, 1999 and ending on the Closing Date ("WEAR
OPERATING EXPENSES") (the "ASSET PURCHASE PRICE"). The purchase price for the
Wear Stock shall be $100,000 (the "STOCK PURCHASE PRICE").
(b) At least five (5) business days prior to the Closing Date, Seller shall
prepare and deliver to Purchaser (i) a good faith estimate, prepared in U.S.
Dollars in accordance with Israeli generally accepted accounting principles
("GAAP"), applied in a manner consistent with the past practice, except as
otherwise expressly provided below, and accompanied by a certificate of the
chief financial officer of Seller to that effect, of (A) the aggregate amount of
the net tangible book value of the Assets determined in accordance with clause
(g) below, except that work-in-progress Inventory shall be valued at 75% of the
selling price of the garment in progress rather than as specified in Section
2.7(g)(ii) (the "ESTIMATED AMOUNT") as of the Closing Date, and (B) the
Discount, and (ii) a schedule of all open purchase orders of Seller relating to
the Business.
(c) At Closing, Purchaser shall (i) place in escrow with Republic Bank (the
"ESCROW AGENT"), pursuant to a mutually agreeable escrow agreement, an amount
equal to ten percent (10%) of the Inventory as shown on the estimate delivered
to Seller pursuant to Section 2.7(b) (the "ESCROWED AMOUNT") and (ii) deliver to
Seller an amount (the "INITIAL PAYMENT AMOUNT") equal to the difference between
(A) the Estimated Amount less the Discount and (B) the Escrowed Amount in
accordance with Section 2.8.
(d) As promptly as practicable, but in no event more than thirty (30) days,
following the Closing Date, Seller shall prepare or cause to be prepared and
shall deliver to Purchaser a reasonably detailed statement setting forth (i) the
net tangible book value of the Assets at the Closing Date, determined in
accordance with clause (g) below, (ii) the Seller's IBT and (iii) the Wear
Operating Expenses (the "SELLER STATEMENT"), together with all work papers
prepared in connection with the preparation of the Seller Statement. Unless
within thirty (30) days after its receipt of the Seller Statement Purchaser
shall deliver to Seller a reasonably detailed statement describing its
objections to the Seller Statement (a "STATEMENT OF OBJECTION"), the amount of
the net tangible book value of the Assets, (ii) the Seller's IBT and (iii) the
Wear Operating Expenses determined in accordance with this clause (d) shall be
final and binding on the parties hereto and the Seller Statement shall be the
final statement hereunder (the "CLOSING DATE STATEMENT").
-5-
(e) If Purchaser shall deliver to Seller a timely Statement of Objection,
Purchaser and Seller and their respective independent accountants shall
negotiate in good faith and use reasonable best efforts to resolve any disputes.
If a resolution is reached, such resolution shall be final and binding on the
parties and Purchaser and Seller shall set forth the net tangible book value of
the Assets, the Seller's IBT and the Wear Operating Expenses on a mutually
acceptable statement and such statement shall be the Closing Date Statement. If
a final resolution is not reached within fifteen (15) days after Purchaser has
submitted its Statement of Objection, any remaining disputes shall be resolved
by a third firm of independent accountants (the "REVIEWING ACCOUNTANTS")
selected jointly by the parties' independent accounting firms. The Reviewing
Accountants shall be instructed to resolve any matters in dispute as promptly as
practicable, but in no event more than thirty (30) days, and set forth their
resolution in a statement setting forth the net tangible book value of the
Assets (the "ACCOUNTANT STATEMENT"). In such event, the determination of the
Reviewing Accountants shall be final and binding on the parties hereto and the
Accountant Statement shall be the Closing Date Statement.
(f) Seller and Purchaser each shall pay one-half of the fees and expenses
of the Reviewing Accountants. Seller and the Purchaser shall cooperate with each
other and the Reviewing Accountants in connection with the matters contemplated
by this Section 2.7, including Seller's preparation of and Purchaser's review of
the Closing Date Statement, including by furnishing such information and access
to books, records (including accountants' work papers), personnel and properties
as may be reasonably requested.
(g) The Closing Date Statement shall be prepared in U.S. Dollars in
accordance with GAAP applied in a manner consistent with past practice, except
that (i) Seller's interest in DyeCo Textile Holdings Ltd. shall be valued at the
amount of Seller's investment rather than book value and (ii) the leasehold
improvements shall be valued at 33.33% of the net book value of the leasehold
improvements. Accordingly, the Inventory shall be valued as follows:
(i) Raw materials and accessories shall be valued at cost, including
without limitation, FOB or CIF purchase price, as the case may be, plus (A)
5% of such purchase price representing the estimated cost of freight,
brokerage, insurance and storage charges, provided, however, that Purchaser
may elect to pay only actual cost of freight, brokerage, insurance and
storage charges for all raw materials and accessories, in which event
Purchaser shall compute the actual cost in connection with its review of
the Seller Statement pursuant to Section 2.7(d) hereof, which computation
Seller shall have the right to review and dispute in accordance with
Section 2.7(e) hereof, and any such dispute shall be resolved in accordance
with Section 2.7(e), and (B) any fabric commission for fabric from Korea,
inspection costs owed to SGS, dyeing and finishing charges, to the extent
actually incurred; provided however, that the portion of such raw materials
and accessories for which no corresponding customer liability exists
(either in the form of finished garment purchase order or other customer
commitment) shall be valued at the lower of cost or market.
-6-
(ii) Work-in-progress, which includes finished garments to be shipped
to customers and finished goods in transit but not yet billed to customers,
shall include (A) raw materials and accessories as determined above; (B)
cutting costs valued at the greater of (1) $.10 per unit or (2) the cost
paid to or billed by outside contractors; (C) sewing costs paid to or
billed by outside contractors; and (D) a manufacturing overhead charge of
3% of the selling price of the finished garments.
(iii) Finished garments, excluding finished garments included in
work-in-progress above, shall be valued at the lower of cost or market.
(h) If the Asset Purchase Price as finally determined based on the Closing
Date Statement exceeds the Initial Payment Amount, Purchaser shall immediately
pay to Seller in cash out of the Escrowed Amount the amount of such excess.
Purchaser shall retain the remainder, if any, of the Escrowed Amount. Purchaser
shall distribute interest earned on the Escrowed Amount to Seller, or shall
retain such interest, in proportion to the amount of the Escrowed Amount
distributed or retained, as the case may be, by each. If the Asset Purchase
Price as finally determined based on the Closing Date Statement exceeds the
Initial Payment Amount plus the Escrowed Amount, then, in addition to
distribution of the Escrowed Amount pursuant to preceding sentence, Purchaser
shall pay the difference to Seller in immediately available funds.
(i) If the Asset Purchase Price as finally determined based on the Closing
Date Statement is less than the Initial Payment Amount, Seller shall immediately
pay the difference to Purchaser in immediately available funds. In such event,
Purchaser shall retain the Escrowed Amount and all interest earned thereon.
Section 2.8 Delivery of Purchase Price and Transfer of Assets. (a) At the
Closing, Purchaser shall deliver the Initial Payment Amount and the Stock
Purchase Price by wire transfer of immediately available federal funds to an
account specified by Seller and the Stock Sellers, respectively, at least two
business days prior to the Closing Date, and shall deliver the Escrowed Amount
by wire transfer of immediately available federal funds to an account specified
by the Escrow Agent. Purchaser shall pay all costs of such escrow. The escrow
agreement shall provide that the Escrowed Amount shall be released in accordance
with Section 2.7(h) or (i), as the case may be.
(b) At the Closing, Seller shall deliver to Purchaser such bills of sale,
endorsements, assignments and other instruments of sale, conveyance, transfer
and assignment, reasonably satisfactory in form and substance to Purchaser and
its counsel, as may be reasonably requested by Purchaser, in order to convey to
Purchaser good and marketable title to the Assets, free and clear of all Liens
except as permitted by this Agreement. Purchaser shall pay all sales, transfer
and value added taxes or similar charges payable by reason of the sale
hereunder.
(c) At the Closing, Seller shall deliver to Purchaser all written consents
which are required under any Assumed Contract being assigned to Purchaser
hereunder; provided, however,
-7-
that as to any Assumed Contract the assignment of which by its terms requires
prior consent of the parties thereto, if such consent is not obtained prior to
or on the Closing Date, Seller shall cooperate with Purchaser to establish
arrangements which will provide for the transfer of the economic benefit of such
Assumed Contracts to Purchaser as of the Closing Date under terms and conditions
reasonably acceptable to all the parties hereto.
(d) At the Closing, the Stock Sellers and Purchaser will enter into a
customary sale contract in front of a notary public in Xxxxxxxx, Italy for the
purpose of causing the sale of the Wear Stock. As soon as technically possible
after the Closing, the Stock Sellers will cause the ownership of Wear Stock, as
reflected in the shareholders' registry, to be recorded in the Purchaser's name
on the shareholders' registry.
(e) Prior to the Closing, all intercompany accounts between Wear and Cygne
Designs, Inc. or any affiliates shall be settled in cash.
(f) At the Closing, Purchaser shall deliver any bank guarantees required by
the Assumed Contracts, as specified in Schedule 2.8(f), in order to allow Seller
to have its bank guarantees released.
Section 2.9 Employees. (a) Purchaser shall not have any obligation to
assume or honor any employment agreement between Seller and any current or
former employee of Seller. As of the Closing Date, Seller shall terminate the
employment of, and Purchaser shall offer employment to, employees of Seller who
are actively employed immediately prior to the Closing Date, whose primary
employment is with the Business and who have been identified to Seller in
writing by Purchaser as employees to whom Purchaser shall offer employment
("AFFECTED EMPLOYEES"). Wear employees who are employed by Wear immediately
prior to the Closing Date shall remain employees of Wear following the Closing
Date ("WEAR EMPLOYEES"). All Affected Employees who accept employment with
Purchaser and Wear Employees who continue employment by Wear immediately
following the Closing Date, shall be referred to, collectively, as "CONTINUED
EMPLOYEES". Purchaser acknowledges that Seller intends to give to each of its
employees notice of termination of employment, effective immediately prior to
the Closing Date, at least thirty (30) days prior to the Closing Date, except
that Seller gave the individuals listed on Schedule 2.9 hereto notice of
termination as of the date of the Original Agreement. Purchaser acknowledges and
agrees that there can be no assurance that such employees will be available to
Purchaser, and Purchaser shall have no recourse against Seller if such employees
are not available to Purchaser following the Closing.
(b) Purchaser shall pay or cause to be paid when due to the Continued
Employees the amount of all wages, salary, bonuses, commissions, incentive
payments and other compensation (including, without limitation, any vacation and
sick pay) or any other benefit, perquisite, cost, expense, liability or
obligation attributable to services provided on and after the Closing Date.
Seller shall pay or cause to be paid all amounts due to employees of Seller
engaged in the Business, including Affected Employees, for wages, salary,
bonuses, commissions, incentive payments and
-8-
other compensation (including, without limitation, any vacation and sick pay) or
any other benefit, perquisite, cost, expense, liability or obligation
attributable to services provided prior to the Closing Date.
(c) Nothing in this Section 2.9 is intended, or shall be construed, to
confer upon any person, other than the parties hereto and their successors and
permitted assigns, any rights or remedies by reason of this Section 2.9.
III. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser under this Agreement to consummate the purchase
of the Assets and the Wear Stock at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions, to
the reasonable satisfaction of Purchaser (any of which may be waived in writing
in whole or in part by Purchaser):
Section 3.1 Representations and Warranties Accurate. All representations
and warranties of Seller and the Stock Sellers contained in this Agreement shall
be true in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties were made on and
as of the Closing Date.
Section 3.2 Performance by Seller and the Stock Sellers. Seller and the
Stock Sellers shall have performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed and complied with by Seller and the Stock Sellers prior to or on the
Closing Date.
Section 3.3 Certificate. Purchaser shall have received a certificate, dated
the Closing Date, signed by an authorized officer of each of Seller and the
Stock Sellers, to the effect that the conditions set forth in Sections 3.1 and
3.2 have been satisfied.
Section 3.4 Legal Prohibition. On the Closing Date, no injunction or order
shall be in effect prohibiting consummation of the transactions contemplated
hereby or which would make the consummation of such transactions unlawful and no
action or proceeding shall have been instituted and remain pending before a
court, governmental body or regulatory authority, nor shall any action or
proceeding be threatened, to restrain or prohibit the transactions contemplated
by this Agreement.
Section 3.5 Consents, Approvals, Permits, Licenses, etc. All
authorizations, consents, waivers, approvals, orders, registrations,
qualifications, designations, declarations, filings or other action required
with or from any Governmental Entity or third party (including without
limitation all parties to each of the Assumed Contracts) in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated thereby shall have been duly obtained and shall be
reasonably satisfactory to Purchaser and its counsel, and copies thereof shall
be delivered to the Purchaser prior to the Closing. With respect to any Assumed
-9-
Contract, the assignment of which by its terms requires prior consent of the
parties thereto, if such consent is not obtained prior to the Closing Date,
Seller shall cooperate with Purchaser to establish arrangements which will
provide for the transfer of the economic benefits of such Assumed Contracts to
Purchaser as of the Closing Date under terms and conditions reasonably
acceptable to all the parties hereto.
Section 3.6 Closing Matters. All proceedings to be taken by the Seller and
the Stock Sellers in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments and other documents
required to effect the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Purchaser and its counsel.
Section 3.7 Non-Competition Agreement. Cygne Designs, Inc. and Purchaser
shall have entered into a Non-Competition Agreement, substantially in the form
of Exhibit 3.7 hereto.
Section 3.8 Guaranty. Cygne Designs, Inc. shall have delivered to Purchaser
a guaranty, substantially in the form of Exhibit 3.8 hereto.
IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND STOCK SELLERS
The obligation of Seller and the Stock Sellers under this Agreement to
consummate the sale of the Assets and the Wear Stock, respectively, at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of all
of the following conditions, to the reasonable satisfaction of Seller and the
Stock Sellers:
Section 4.1 Representations and Warranties Accurate. All representations
and warranties of Purchaser contained in this Agreement shall be true in all
material respects on and as of the Closing Date, with the same force and effect
as though such representations and warranties were made on and as of the Closing
Date.
Section 4.2 Performance by Purchaser. Purchaser shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by Purchaser prior
to or on the Closing Date.
Section 4.3 Certificate. Each of Seller and the Stock Sellers shall have
received a certificate, dated the Closing Date, signed by an authorized officer
of Purchaser, to the effect that the conditions set forth in Sections 4.1 and
4.2 have been satisfied.
Section 4.4 Legal Prohibition. On the Closing Date, no injunction or order
shall be in effect prohibiting consummation of the transactions contemplated
hereby or which would make the consummation of such transactions unlawful and no
action or proceeding shall have been instituted and remain pending before a
court, governmental body or regulatory authority to restrain or prohibit the
transactions contemplated by this Agreement.
-10-
Section 4.5 Closing Matters. All proceedings to be taken by Purchaser in
connection with the consummation of the transactions contemplated hereby and all
certificates, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Seller and the Stock Sellers and their counsel.
Section 4.6 Kafri Agreement. Xxxxxxxx Xxxxx shall have delivered to Seller
and Cygne Designs, Inc. an agreement releasing Cygne Designs, Inc. and its
Affiliates from all obligations they may have to Xxxxxxxx Xxxxx.
Section 4.7 Stockholder Approval. The stockholders of Cygne Designs, Inc.
shall have approved the transactions contemplated hereby.
Section 4.8 Release of Letters of Credit. Purchaser shall have made
arrangements reasonably satisfactory to Seller and the Stock Sellers such that
all letters of credit posted on behalf of Seller or the Stock Sellers in respect
of the Business will be released as of the Closing and Seller and the Stock
Sellers, nor any affiliate thereof, will have no further liability in respect
thereof.
Section 4.9 Non-Competition Agreement. Cygne Designs, Inc. and Purchaser
shall have entered into a Non-Competition Agreement, substantially in the form
of Exhibit 3.7 hereto.
V. REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents, warrants and agrees as of the Closing Date that:
Section 5.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Israel, with corporate power and authority necessary to enter into and perform
this Agreement and the transactions contemplated hereby.
Section 5.2 Due Authorization. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and to perform fully its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery by Seller of this Agreement and the other documents
contemplated hereby, the performance by Seller of its obligations hereunder and
thereunder, and the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Seller,
other than approval by the stockholders of Cygne Designs, Inc. This Agreement
has been duly executed and delivered by Seller, and is a legal, valid and
binding obligation of Seller, enforceable against it in accordance with its
terms (except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
-11-
Section 5.3 No Conflict. Except as set forth in Schedule 5.3, neither the
execution and delivery of this Agreement or any of the other documents
contemplated hereby by Seller nor the consummation of the transactions
contemplated hereby or thereby will (a) conflict with, result in a breach or
violation of or constitute (or with notice or lapse of time or both constitute)
a default under, (i) the Articles or Memorandum of Association of Seller or (ii)
any statute, regulation, order, judgment or decree or any instrument, contract
or other agreement to which Seller is a party or by which Seller (or any of the
Assets) or the Business is subject or bound; (b) result in the creation of, or
give any party the right to create, any Lien upon the Assets; (c) terminate or
modify, or give any third party the right to terminate or modify, the provisions
or terms of any Assumed Contract; or (d) require Seller to obtain any
authorization, consent, approval or waiver from, or to make any filing with, any
Governmental Entity or to obtain the approval or consent of any other Person.
Section 5.4 Title to and Condition of Assets. Seller has, and, except for
the assets sold by Seller in the ordinary course of the Business between the
date hereof and the Closing Date, upon payment therefor Purchaser will have,
good and marketable title to, or valid and subsisting leasehold interests in or
valid licenses to use, all of the Assets, free and clear, except for such
licensed or leased property and assets, of any Liens, except (i) those accepted
by Purchaser which are set forth on Schedule 5.4 hereto, (ii) liens which will
be removed at Closing and (iii) the lien of current taxes not yet due and
payable or of taxes the validity of which is being contested in good faith by
appropriate proceedings, so long as such contest does not involve any real
danger of the sale, foreclosure or loss of any Assets. All tangible personal
property included in the Assets is being acquired by Purchaser "as is" and
Seller makes no representation as to its condition.
Section 5.5 Contracts, Obligations and Commitments. In connection with the
operation of the Business, except as set forth on Schedule 5.5 hereto, Seller
has no existing contract, obligation or commitment (written or, to Seller's
knowledge, oral) of any nature other than the Assumed Contracts. Except as set
forth on Schedule 5.5, each Assumed Contract is a valid and binding obligation
of Seller and, to Seller's knowledge, the other parties thereto, enforceable in
accordance with its terms (except as the enforceability thereof may be limited
by any applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law), and is in full force and
effect (except for any Assumed Contracts which by their terms expire after the
date hereof or are terminated after the date hereof in accordance with the terms
thereof), and neither Seller nor, to Seller's knowledge, any other party thereto
has breached any material provision of, nor is in default in any material
respect under the terms of (and, to Seller's knowledge, no condition exists
which, with the passage of time, the giving of notice, or both, would result in
a default under the terms of), any of the Assumed Contracts.
Section 5.6 Litigation. There is no action, suit, proceeding or, to
Seller's knowledge, investigation, at law or in equity or otherwise in, before
or by any court or governmental board, commission, agency, department or office,
or private arbitration tribunal pending or, to Seller's knowledge, threatened by
or against Seller that relates to the Business or the Assets.
-12-
Section 5.7 Compliance with Law. The Business is being conducted in
compliance in all material respects with all applicable laws, rules, regulations
and court or administrative orders and processes.
Section 5.8 Licenses; Registrations; Permits; Etc. Seller possesses all
governmental registrations, certificates of need, consents, qualifications,
accreditations, licenses, permits, authorizations and approvals necessary to own
and operate the Business, except those the failure of which to have do not
materially adversely affect Seller's ability to conduct the Business, which
approvals are set forth on Schedule 5.8 hereto, and true, complete and correct
copies of which approvals have previously been delivered to Purchaser. All such
approvals are in full force and effect as of the date hereof and Seller is in
compliance therewith in all material respects.
Section 5.9 Personnel. Schedule 5.9 comprises a complete and correct list
of the names, titles, length of employment or service and current annual salary
rates and all other compensation and fringe benefits of each of the employees
engaged in the Business. Except as set forth on Schedule 5.9, none of such
personnel is a party or subject to any oral or written employment, bonus,
pension, profit-sharing, deferred compensation, percentage compensation,
employee benefit (including without limitation, medical disability, life
insurance and other welfare benefit plans), incentive, pension or retirement
plans, fringe benefit or termination or severance agreements, plans or
commitments other than those mandated by applicable law.
VI. REPRESENTATIONS AND WARRANTIES OF THE STOCK SELLERS
Section 6.1 Organization and Qualification. Each Stock Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with corporate power and authority necessary to enter
into and perform this Agreement and the transactions contemplated hereby.
Section 6.2 Due Authorization. Each Stock Seller has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform fully its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery by each Stock Seller of this
Agreement and the other documents contemplated hereby, the performance by each
Stock Seller of its obligations hereunder and thereunder, and the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of each Stock Seller, other than approval
by the stockholders of Cygne Designs, Inc.. This Agreement has been duly
executed and delivered by each Stock Seller, and is a legal, valid and binding
obligation of each Stock Seller, enforceable against it in accordance with its
terms (except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
-13-
Section 6.3 No Conflict. Except as set forth in Schedule 6.3, neither the
execution and delivery of this Agreement or any of the other documents
contemplated hereby by the Stock Sellers nor the consummation of the
transactions contemplated hereby or thereby will (a) conflict with, result in a
breach or violation of or constitute (or with notice or lapse of time or both
constitute) a default under, (i) the organizational documents of the Stock
Sellers or (ii) any statute, regulation, order, judgment or decree or any
instrument, contract or other agreement to which either Stock Seller is a party
or by which either Stock Seller is subject or bound; (b) result in the creation
of, or give any party the right to create, any Lien upon the Wear Stock; or (c)
require either Stock Seller to obtain any authorization, consent, approval or
waiver from, or to make any filing with, any Governmental Entity or to obtain
the approval or consent of any other Person, other than the stockholders of
Cygne Designs, Inc.
Section 6.4 Organization of Wear. Wear is duly organized, validly existing
and in good standing under the laws of Italy. Wear has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Stock Sellers own of record and
beneficially all the outstanding Wear Stock. Other than pursuant to this
Agreement, there are no contracts, options, warrants, calls, rights,
subscriptions, convertible securities or other rights or agreements,
arrangements or commitments of any kind with respect to any security of Wear.
Section 6.5 Litigation. There is no action, suit, proceeding or, to the
Stock Sellers' knowledge, investigation, at law or in equity or otherwise in,
before or by any court or governmental board, commission, agency, department or
office, or private arbitration tribunal pending or, to the Stock Sellers'
knowledge, threatened by or against Wear.
Section 6.6 Compliance with Law. Wear is in compliance in all material
respects with all applicable laws, rules, regulations and court or
administrative orders and processes.
Section 6.7 Licenses; Registrations; Permits; Etc. Wear possesses all
governmental registrations, certificates of need, consents, qualifications,
accreditations, licenses, permits, authorizations and approvals necessary to own
and operate its business, except those approvals the failure of which to have do
not materially adversely affect Wear's ability to conduct the Business, which
approvals are set forth on Schedule 6.7 hereto, and true, complete and correct
copies of which approvals have previously been delivered to Purchaser. All such
approvals are in full force and effect as of the date hereof and Wear is in
compliance therewith in all material respects.
Section 6.8 Personnel. Schedule 6.8 comprises a complete and correct list
of the names, titles, length of employment or service and current annual salary
rates and all other compensation and fringe benefits of each of the employees of
Wear. Except as set forth on Schedule 6.8, none of such personnel is a party or
subject to any oral or written employment, bonus, pension, profit-sharing,
deferred compensation, percentage compensation, employee benefit (including
without limitation, medical disability, life insurance and other welfare benefit
plans), incentive,
-14-
pension or retirement plans, fringe benefit or termination or severance
agreements, plans or commitments.
VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and the Stock Sellers as
follows:
Section 7.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
Section 7.2 Due Authorization; No Conflict. (a) Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform fully its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser,
the performance by Purchaser of its obligations hereunder, and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser, and is a legal, valid and binding
obligation of Purchaser enforceable against it in accordance with its terms
(except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
(b) Neither the execution and delivery of this Agreement by Purchaser nor
the consummation by Purchaser of the transactions contemplated hereby will (i)
conflict with, result in a breach or violation of or constitute (or with notice
or lapse of time or both constitute) a default under, (A) the organizational
documents of Purchaser, or (B) any statute, regulation, order, judgment or
decree or any instrument, contract or other agreement to which Purchaser is a
party or by which it (or any of its properties or assets) is subject or bound;
or (ii) require Purchaser to obtain any authorization, consent, approval or
waiver from, or to make any filing with, any Governmental Entity, or to obtain
the approval or consent of any other Person, except as set forth in Schedule 7.2
hereto.
VIII. COVENANTS
Section 8.1 Conduct and Preservation of Assets. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the Closing
Date:
(a) Seller shall (i) maintain, preserve and protect the Assets, (ii)
comply in all material respects with all laws, ordinances, rules,
regulations and orders applicable to the Business or the Assets, (iii)
operate the Business in the ordinary course and consistent with past
practice and (iv) not take any action or omit to take any action which act
or omission would result in the inaccuracy of any of its representations
and warranties set forth herein if
-15-
such representations or warranties were to be made immediately after the
occurrence of such act or omission; and
(b) The Stock Sellers shall (i) cause Wear to maintain, preserve and
protect its business, operate its business in the ordinary course and
consistent with past practice and comply in all material respects with all
laws, ordinances, rules, regulations and orders applicable to it, and (ii)
not take any action or omit to take any action which act or omission would
result in the inaccuracy of any of its representations and warranties set
forth herein if such representations or warranties were to be made
immediately after the occurrence of such act or omission.
Section 8.2 Access to Information. Between the date of this Agreement and
the Closing Date, Seller and the Stock Sellers will (i) permit Purchaser's
authorized representatives and financing parties reasonable access to all of the
books, records, reports and other related materials, offices and other
facilities and properties of Seller related to the Assets and the Business and
of Wear; (ii) permit Purchaser to make such inspections thereof as Purchaser may
reasonably request; and (iii) furnish Purchaser with such financial and
operating data and other information with respect to the business, operations
and properties of the Business and Wear as Purchaser may from time to time
reasonably request.
Section 8.3 Filings and Authorizations. Each of Seller, the Stock Sellers
and Purchaser, as promptly as practicable, (i) will make, or cause to be made,
all filings and submissions required under laws, rules and regulations
applicable to it, or to its subsidiaries and affiliates, as may be required for
it to consummate the transactions contemplated hereby; (ii) will use its
reasonable efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all Persons and governmental or public
authorities or bodies necessary to be obtained by it, or any subsidiaries or
affiliates, in order for it so to consummate such transactions, including
without limitation Israeli government authorities; and (iii) will use its
reasonable efforts to take, or cause to be taken, all other actions necessary,
proper or advisable in order for it to fulfill its obligations hereunder.
Seller, the Stock Sellers and Purchaser will coordinate and cooperate with one
another in exchanging information and supplying such reasonable assistance as
may be reasonably requested by each in connection with the foregoing. Purchaser
shall use its reasonable efforts to assist Seller in obtaining all consents
required under the Assumed Contracts as a result of this Agreement and the
transactions contemplated hereby.
Section 8.4 Public Announcements. Unless and to the extent required by law,
each party hereto will agree in advance prior to the issuance by either of any
press release or the making of any public statement with respect to this
Agreement and the transactions contemplated hereby and shall not issue any such
press release or make any such public statement without the agreement of the
other party. In the event that either party is required to issue a press release
or make a public statement by law, it will notify the other party of the
contents thereof in advance of the issuance or making thereof. Notwithstanding
the foregoing, Purchaser understands, acknowledges and agrees that Cygne
Designs, Inc. is a publicly-traded company and, as such, may be required to
disclose this
-16-
transaction and the terms hereof by a filing with the Securities and Exchange
Commission and the issuance of a press release. To the extent possible, Seller
will give Purchaser prior notice of, and an opportunity to review, any such
disclosure.
Section 8.5 Hiring of Employees. Purchaser shall be permitted to interview
all employees of Seller engaged in the Business and discuss with, and offer
employment to, any of such employees. It is understood and agreed, however, that
Purchaser shall not be obligated to offer employment to any of Seller's
employees.
Section 8.6 Schedules. Seller and the Stock Sellers will have the
continuing obligation to promptly supplement or amend the Schedules being
delivered concurrently with the execution of this Agreement and attached hereto
with respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Schedules.
Section 8.7 Brokers. Each party shall pay all fees and commissions of any
broker, finder, investment banker or other similar intermediary to which it is
obligated to pay any fee or commission in connection with the transactions
contemplated by this Agreement and shall indemnify and hold harmless the other
party from and against any such fee or commission and any damage, loss, cost,
expense or liability (including reasonable attorneys' fees) resulting therefrom.
IX. CERTAIN ACTIONS AFTER THE CLOSING
Section 9.1 Payment of Liabilities. Following the Closing Date each of
Purchaser and Seller agrees to discharge (whether by payment or performance) in
accordance with their terms the Assumed Liabilities and the Excluded
Liabilities, respectively.
Section 9.2 Further Assurances. Seller and the Stock Sellers from time to
time after the Closing, at Purchaser's request, will execute, acknowledge and
deliver to Purchaser such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications and further assurances as Purchaser may reasonably require in
order to vest more effectively in Purchaser, or to put Purchaser more fully in
possession of, any of the Assets and the Wear Stock, respectively. Each of the
parties hereto will cooperate with the other and execute and deliver to the
other such other instruments and documents and take such other actions as may be
reasonably requested from time to time by the other party hereto as necessary to
carry out, evidence and confirm the intended purposes of this Agreement.
Section 9.3 Sharing of Data. Purchaser shall have the right following the
Closing Date to have reasonable access to those corporate minute books, stock
books, tax returns and other corporate records and files of Seller which remain
with Seller pursuant to the terms of this Agreement to the extent any of the
foregoing relates to the Business or is otherwise needed by Purchaser in order
to comply with its obligations under applicable laws and regulations. Seller
shall have the right
-17-
following the Closing Date to have reasonable access to those documents and
records included in the Assets to the extent any such documents or records are
needed by Seller in order to comply with its obligations under applicable laws
and regulations.
Section 9.4 Collection Assistance. Purchaser will, if so requested by
Seller, assist Seller in collecting all accounts receivable arising from
Seller's conduct of the Business prior to the Closing Date; provided that
Purchaser shall not be required to take any actions which Purchaser reasonably
determines would adversely affect its relationship with such customer.
Section 9.5 Non-Competition. Seller agrees that it will not, for a period
of six (6) months from the Closing Date (the "NON-COMPETE PERIOD"), source knit
products in Israel, Jordan or the Palestinian territory. Seller acknowledges and
agrees that a substantial and legally sufficient portion of the Asset Purchase
Price is attributable to the non-competition provisions of this Section 9.5 and
Seller expressly waives any right to assert inadequacy of consideration as a
defense to enforcement of the non-competition provisions of this Section 9.5
should such enforcement ever become necessary. Seller acknowledges that a remedy
at law for any breach or attempted breach of this Section 9.5 will be inadequate
and further agrees that any breach of this Section 9.5 will result in
irreparable harm to the Business; and Seller covenants and agrees not to oppose
any demand for specific performance and injunctive and other equitable relief in
case of any such breach or attempted breach. Whenever possible, each provision
of this Section 9.5 shall be interpreted in such manner as to be effective and
valid under applicable law but if any provision of this Section 9.5 shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Section 9.5. If any provision of this Section 9.5 shall, for any reason, be
judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 9.5 but shall be confined in its operation to the provision of this
Section 9.5 directly involved in the controversy in which such judgment shall
have been rendered. In the event that the provisions of this Section 9.5 should
ever be deemed to exceed the time or geographic limitations permitted by the
applicable laws, then such provision shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
X. INDEMNIFICATION
Section 10.1 By Seller and the Stock Sellers. (a) Seller hereby agrees to
indemnify and hold harmless Purchaser from any and all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) reasonably incurred by Purchaser in connection
with each and all of the following:
(i) any misrepresentation, breach of warranty or non-fulfillment of
any agreement or covenant on the part of Seller under this Agreement or any
other agreement executed by Seller in connection herewith;
-18-
(ii) any and all liabilities and obligations of Seller arising out of
the conduct of the Business of prior to the Closing (including without
limitation the termination by Seller of its employees in accordance with
Section 2.9 hereof) other than the Assumed Liabilities and liabilities and
obligations resulting from Purchaser's conduct of the Business in violation
of the Management Agreement; and
(iii) any and all liabilities of Seller for taxes arising from the
conduct of the Business prior to the Closing Date.
(b) Stock Sellers hereby agree to indemnify and hold harmless Purchaser
from any and all claims, damages, losses, liabilities, costs and expenses
(including, without limitation, settlement costs and any legal, accounting or
other expenses for investigating or defending any actions or threatened actions)
reasonably incurred by Purchaser in connection with any misrepresentation,
breach of warranty or non-fulfillment of any agreement or covenant on the part
of the Stock Sellers under this Agreement or any other agreement executed by the
Stock Sellers in connection herewith.
Section 10.2 By Purchaser. Purchaser hereby agrees to indemnify and hold
harmless Seller and the Stock Sellers from any and all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) reasonably incurred by Seller in connection with
each and all of the following:
(a) any misrepresentation, breach of warranty or non-fulfillment of
any agreement or covenant on the part of Purchaser under this Agreement or
any other agreement executed by Purchaser in connection herewith; and
(b) the Assumed Liabilities.
Section 10.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the "INDEMNIFIED
PARTY") shall promptly notify the party from whom indemnification is sought (the
"INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the
basis for such claim. In the event any such claim for indemnification hereunder
results from or in connection with any claim or legal proceedings by a third
party, the notice to the Indemnifying Party shall specify, if known, the amount
or an estimate of the amount of the liability arising therefrom. The Indemnified
Party shall not settle or compromise any claim by a third party for which it is
entitled to indemnification hereunder without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
Section 10.4 Defense by Indemnifying Party. In connection with any claim
giving rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon
-19-
written notice to the Indemnified Party, assume the defense of any such claim or
legal proceeding. The Indemnified Party shall be entitled to participate in (but
not control) the defense of any such action, but the fees and expenses of its
counsel shall be at its own expense unless the employment of such counsel shall
have been authorized by the Indemnifying Party in connection with the defense of
such action, suit or proceeding. If the Indemnifying Party does not assume the
defense of any such claim or litigation resulting therefrom within 30 days after
the date such claim is made, (a) the Indemnified Party may defend against such
claim or litigation, in such manner as it may deem appropriate, (b) the
Indemnified Party may settle such claim in accordance with the last sentence of
Section 10.3 hereof, and (c) the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such action, with its counsel
and at its own expense. If the Indemnifying Party thereafter seeks to question
the manner in which the Indemnified Party defended such third party claim, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend such third party claim in a
reasonably prudent manner.
Section 10.5 Limitation of Liability. Indemnification pursuant to this
Article X is the sole and exclusive remedy for claims by Purchaser or Seller and
the Stock Sellers under or in respect of this Agreement. Notwithstanding
anything to the contrary contained herein, an Indemnified Party shall not be
entitled to indemnification and an Indemnified Party shall have no liability to
an Indemnified Party under Section 10.1(a)(i) and 10.1(b) or 10.2(a), as the
case may be, until the aggregate losses for which there is indemnification
pursuant to Section 10.1 or 10.2 equals $25,000, whereupon the Indemnified Party
shall be entitled to receive any such indemnification in excess of $25,000;
provided, however, that an Indemnified Party's maximum cumulative liability
under or in respect of this Agreement shall not exceed $500,000 in the aggregate
($100,000 in the case of the indemnification to or from the Stock Sellers) and
provided further that the maximum cumulative liability of Seller and the Stock
Sellers shall not exceed $500,000. Notwithstanding anything to the contrary
contained herein, to the extent Purchaser, Seller or the Stock Sellers should
obtain at or prior to the Closing actual knowledge of any facts which it
reasonably should have known would constitute a breach or violation by the other
party hereto of any representation, warranty, covenant or agreement under this
Agreement, the Purchaser, Seller or the Stock Sellers, as the case may be, shall
be deemed to have waived said breach to the extent it proceeds to close under
this Agreement and shall have no right to indemnification for such breach.
Section 10.6 Survival of Representations and Warranties. All
representations and warranties made by the parties herein shall survive the
Closing and any investigation at any time made by or on behalf of the parties
hereto until December 31, 1999, except as to any matters with respect to which a
bona fide written claim shall have been made or an action at law or in equity
shall have commenced before such date, in which event survival shall continue
(but only with respect to and to the extent of, such claim) until the final
resolution of such claim or action, including all applicable periods for appeal.
-20-
XI. TERMINATION
Section 11.1 Termination Events. Subject to the provisions of Section 11.2,
this Agreement may, by written notice given at or prior to the Closing in the
manner hereinafter provided, be terminated and abandoned:
(a) By either Seller and the Stock Sellers or Purchaser if a material
default or breach shall be made by the other party with respect to the due
and timely performance of any of its covenants and agreements contained
herein, or with respect to the due compliance with any of the
representations and warranties contained in Article V, VI and VII, as the
case may be, and such default cannot be cured and has not been waived;
(b) By written mutual consent of Seller, the Stock Sellers and
Purchaser;
(c) By either Seller and the Stock Sellers or Purchaser if the Closing
shall not have occurred, other than through failure of such party to
fulfill its obligations hereunder, on or before October 15, 1999 or such
later date as may be agreed upon by the parties; or
(d) By Seller and the Stock Sellers if the stockholders of Cygne
Designs, Inc. do not approve the transactions contemplated hereby.
Section 11.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 11.2, all further obligations of the parties
hereunder shall terminate, no party shall have any right against the other party
hereto, except as set forth in this Section 11.2, and each party shall bear its
own costs and expenses, except that if this Agreement is so terminated by one
party because one or more of the conditions to such party's obligations
hereunder is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement (other than a failure by Seller, after
the good faith exercise of reasonable best efforts, to obtain any consent,
approval or other permission required pursuant to Section 3.5 hereof or the
failure by Cygne Designs, Inc. to obtain the approval of its stockholders), it
is expressly agreed and understood that the terminating party's right to pursue
all legal remedies for breach of contract or otherwise, including, without
limitation, damages relating thereto, shall survive such termination unimpaired.
XII. MISCELLANEOUS
Section 12.1 Expenses. Each party to this Agreement shall pay its own costs
and expenses (including all legal and accounting fees incurred by it) relating
to this Agreement, the negotiations leading up to this Agreement and the
transactions contemplated by this Agreement.
Section 12.2 Amendment. This Agreement shall not be amended or modified
except by a writing duly executed by Seller, the Stock Sellers and Purchaser
indicating an intention to amend this Agreement.
-21-
Section 12.3 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto and the other instruments, agreements and documents delivered
pursuant to this Agreement or in connection with the Closing, contains all of
the terms, conditions and representations and warranties agreed upon by the
parties relating to the subject matter of this Agreement and supersedes all
prior agreements, negotiations, correspondence, undertakings and communications
of the parties, oral or written, respecting such subject matter, including
without limitation the Original Agreement.
Section 12.4 Headings. The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the parties
to this Agreement.
Section 12.5 Notices. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given (a) on the date of delivery, if
delivered to the persons identified below, (b) seven calendar days after mailing
if mailed, with proper postage, by certified or registered mail, air mail
postage prepaid, return receipt requested, addressed as follows:
IF TO PURCHASER:
Jordache Limited
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
WITH A COPY TO:
Xxxxxx Xxxxxxxxxx, Esq.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
IF TO THE STOCK SELLERS:
c/o Cygne Designs, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
-22-
IF TO SELLER:
M.T.G.I. - Textile Manufacturers Group
(Israel) Ltd.
c/o Cygne Designs, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
WITH COPIES OF ANY NOTICES TO SELLER OR THE STOCK SELLERS TO:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Cygne Designs, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
or (c) on the date of receipt if sent by telex or telecopy, and confirmed in
writing in the manner set forth in (b) on or before the next day after the
sending of the telex or telecopy. Such addresses and numbers may be changed,
from time to time, by means of a notice given in the manner provided in this
Section.
Section 12.6 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible.
Section 12.7 Waiver. Waiver of any term or condition of this Agreement by
any party shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or failure of the same term or condition, or a
waiver of any other term or condition of this Agreement.
Section 12.8 Counterparts. This Agreement may be signed in two or more
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
Section 12.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Israel.
-23-
Section 12.10 Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person other than the parties hereto and their
successors or assigns any rights or remedies under or by reason of this
Agreement.
Section 12.11 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, successors and permitted assigns,
but except as contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or indirectly, by
Purchaser, Seller or the Stock Sellers without the prior written consent of the
other parties hereto; provided, however, that Purchaser may assign any or all of
its rights, interest or obligations hereunder to any one or more direct or
indirect wholly owned subsidiaries of Purchaser, provided, however, that no such
assignment by Purchaser shall limit or affect Purchaser's obligations hereunder.
Section 12.12 Arbitration. Any dispute, controversy or claim arising out of
or in connection with or relating to this Agreement, any breach or alleged
breach hereof, or the transaction contemplated hereby, shall be resolved and
settled by arbitration by three arbitrators; provided, however, that in the
event the dispute is pursuant to Section 2.7 of this Agreement, the dispute
shall be resolved in accordance with that section. Within fifteen (15) days
after written demand for arbitration is sent by one party to the other,
Purchaser and Seller and the Stock Sellers shall each select one arbitrator, and
the two arbitrators so selected shall select a third arbitrator. The parties
shall endeavor to complete arbitration within 60 days after delivery of written
notice demanding arbitration. The decision of the arbitrators shall be binding
and conclusive upon the parties. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in New York County, State of New York under the
commercial rules then in effect of the American Arbitration Association. The
expense of arbitration shall be borne equally by the parties to the arbitration
and each party shall bear and pay for the cost of its own experts, witnesses,
evidence, counsel and other costs in connection with the preparation and
presentation of its case; provided, however, in the event either party alleges
fraud or that the position of the other party is not supportable in good faith,
and the arbiters find that such fraud or bad faith exists, the arbiters shall be
free to award costs in such arbiters' discretion.
[Remainder of Page Intentionally Left Blank]
-24-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date set forth above.
PURCHASER:
JORDACHE LIMITED
By:/s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Authorized Signatory
SELLER:
M.T.G.I. - TEXTILE MANUFACTURERS
GROUP (ISRAEL) LTD.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
STOCK SELLERS:
MBS (CYGNE) COMPANY
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
A.C. SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
-25-
EXHIBIT 3.7
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of ______ ___, 1999, by and between
Cygne Designs, Inc., a Delaware corporation having its chief executive office at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Cygne"), and Jordache Limited, a Delaware
corporation having its chief executive office at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx ("Jordache").
W I T N E S S E T H :
WHEREAS, Cygne indirectly owns all the outstanding capital stock of
M.T.G.I. - Textile Manufacturers Group (Israel) Ltd., an Israeli corporation
"(MTGI"); and
WHEREAS, MTGI is engaged in the business of manufacturing women's knit
clothing (the "Business"); and
WHEREAS, on the date hereof Jordache is purchasing substantially all the
assets used by MTGI in the conduct of the Business pursuant to the terms of an
Acquisition Agreement, dated as of March 25, 1999, by and among MTGI, MBS
Company, Inc., a Delaware corporation and a subsidiary of Cygne, A.C. Services,
Inc., a Delaware corporation and a subsidiary of Cygne, and Jordache; and
WHEREAS, in order to protect the goodwill of the Business, Jordache has
agreed to make a payment to Cygne in exchange for Cygne's agreement not to
compete with the Business, the observance and enforcement of which Cygne
acknowledges are essential to Jordache protecting such goodwill;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and in order to
induce Jordache to consummate the transactions contemplated by the Acquisition
Agreement, the parties hereby agree as follows:
(a) Definitions. All capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to them in the Acquisition Agreement.
(b) Acknowledgments. Cygne acknowledges that (i) the agreements and
covenants contained in Section 3 hereof are essential to protect the assets,
business and goodwill purchased by Jordache and (ii) Jordache would not purchase
the assets used in the Business but for such agreements and covenants.
-1-
(c) Cygne Covenant Against Competition. In order to induce Jordache to
purchase the assets used in the Business pursuant to the Acquisition Agreement,
Cygne agrees that it will not, for a period of six (6) months from the Closing
Date (the "Non-Compete Period"), source knit products in Israel, Jordan or the
Palestinian territory. Cygne expressly waives any right to assert inadequacy of
consideration as a defense to enforcement of this Agreement should such
enforcement ever become necessary. Cygne acknowledges that a remedy at law for
any breach or attempted breach of this Agreement will be inadequate and further
agrees that any breach of this Agreement will result in irreparable harm to the
Business; and Cygne covenants and agrees not to oppose any demand for specific
performance and injunctive and other equitable relief in case of any such breach
or attempted breach. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. If any provision of this
Agreement shall, for any reason, be judged by any court of competent
jurisdiction to be invalid or unenforceable, such judgment shall not affect,
impair or invalidate the remainder of this Agreement but shall be confined in
its operation to the provision of this Agreement directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this Agreement should ever be deemed to exceed the time or
geographic limitations permitted by the applicable laws, then such provision
shall be reformed to the maximum time or geographic limitations permitted by
applicable law. Notwithstanding anything herein to the contrary, the covenants
and agreement set forth herein are applicable only to Cygne and its successors
and assigns, but are not applicable to its affiliates.
(d) Compensation. As full compensation for Cygne entering into this
Agreement, Jordache is paying to Cygne, simultaneously with the delivery hereof,
an aggregate of $400,000 in immediately available funds by wire transfer to an
account specified by Cygne. Cygne acknowledges and agrees that it will be
responsible for, and shall pay, as and when due, any and all United States,
state, local or foreign taxes in respect of the payment made pursuant to this
Section 4 and, in consideration thereof, Jordache and Cygne agree that Jordache
will not withhold any amounts in respect of such payment.
(e) Assignment. This Agreement shall not be assigned by any party hereto
(except by operation of law).
(f) Notices. All notices, demands and other communications hereunder must
be in writing and shall be deemed to have duly been given (a) on the date of
delivery, if delivered to the persons identified below, (b) seven calendar days
after mailing if mailed, with proper postage, by certified or registered
first-class mail, postage prepaid, return receipt requested, addressed as set
forth in the preamble, (c) on the date of receipt if sent by telecopy, and
confirmed in writing in the manner set forth in (b) on or before the next day
after the sending of the telecopy or (d) one business day after delivery to a
nationally recognized overnight courier service marked for overnight delivery.
-2-
IF TO JORDACHE:
Jordache Limited
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
WITH A COPY TO:
Xxxxxx Xxxxxxxxxx, Esq.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
IF TO CYGNE:
Cygne Designs, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
WITH A COPY TO:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Such addresses and numbers may be changed, from time to time, by means of a
notice given in the manner provided in this Section.
(g) Consent to Jurisdiction. Each of Cygne and Jordache hereby irrevocably
submits and consents to the jurisdiction of any New York state or federal court
over any action or proceeding arising out of or relating to this Agreement and
hereby irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York state or federal court.
Each of Cygne and Jordache irrevocably consents to the service of any and all
process in any such action or proceeding by the hand delivery or mailing of
copies of such process to it at its address specified herein. Nothing in this
Section 7 shall affect the right of Jordache or Cygne to serve legal process in
any other manner permitted by law or affect the right to bring any action or
proceeding against the other or its property in the courts of any other
jurisdiction in which any violation of this Agreement occurs. Each of Cygne and
Jordache intends to and does hereby confer upon such court the power to exercise
personal jurisdiction over it to enforce the covenants contained herein upon the
courts of any jurisdiction within the geographical scope of such covenants.
-3-
(h) Miscellaneous. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York without
regard to the conflict of laws provisions thereof. This Agreement may not be
modified or amended or any term or provision hereof waived or discharged except
in writing signed by the party against whom such amendment, modification, waiver
or discharge is sought to be enforced. Any failure or delay on the part of any
party in exercising any power or right hereunder shall not operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder. This Agreement sets forth the entire agreement and
understanding of the parties in respect of the subject matter contained herein,
and supersedes all prior agreements, whether written or oral, between the
parties. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. This Agreement may be
executed in several counterparts, each of which shall be deemed an original, but
all or which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first above written.
CYGNE DESIGNS, INC.
By: ______________________________
Name:
Title:
JORDACHE LIMITED
By: ______________________________
Name:
Title:
-4-
EXHIBIT 3.8
GUARANTEE
GUARANTEE, made as of the ___ day of _____, 1999, by Cygne Designs, Inc., a
Delaware corporation (the "GUARANTOR").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Amended and Restated Acquisition
Agreement, dated as of August 1, 1999 (the "ACQUISITION AGREEMENT"), by and
among M.T.G.I. - Textile Manufacturers Group (Israel) Ltd., an Israeli
corporation and a subsidiary of Guarantor ("MTGI"), MBS (Cygne) Company, a
Delaware corporation and a subsidiary of Guarantor ("MBS"), A.C. Services, Inc.,
a Delaware corporation and a subsidiary of Guarantor ("ACS" and, together with
MBS, the "STOCK SELLERS" and together with MTGI, the "SELLERS")), and Jordache
Limited, a Delaware corporation ("PURCHASER"), the Purchaser is purchasing the
Assets (as defined in the Acquisition Agreement) from MTGI and the Wear Stock
(as defined in the Acquisition Agreement from the Stock Sellers; and
WHEREAS, as a condition to purchasing the Assets and the Wear Stock, the
Purchaser has required that the Guarantor guarantee the Sellers' obligation to
indemnify the Purchaser set forth in Section 10.1 of the Acquisition Agreement;
and
WHEREAS, Guarantor will derive significant benefit from the sale and
purchase of the Assets and the Wear Stock pursuant to the Acquisition Agreement.
NOW, THEREFORE, Guarantor hereby covenants and agrees as follows:
1. Subject to Section 2 hereof, Guarantor guarantees to Purchaser the full
and timely performance of Sellers' obligation set forth in Section 10.1 of the
Acquisition Agreement. This Guarantee is a continuing, unconditional and
absolute guarantee.
2. In the event any person shall make a claim against Purchaser for which
Sellers are liable pursuant to Section 10.1 of the Acquisition Agreement,
Purchaser shall provide written notice of such claim to the Sellers and
Guarantor. In the event the Sellers do not pay such claim within 15 days of
receipt of the notice of claim, then Guarantor shall immediately make full
payment of such claim, and Purchaser shall be immediately entitled to pursue all
remedies against Guarantor for the full and timely payment of such claim.
3. Guarantor waives any notice or demand whatsoever (written or oral) of
acceptance, non-payment, non-performance, or non-observance by Seller.
4. This Guarantee may not be amended, modified, rescinded, discharged or
terminated orally or in any manner other than by a writing which refers to this
Guarantee and which is executed by the Purchaser and the Guarantor.
5. The validity of this Guarantee, all the provisions thereof, and the
obligations of the Guarantor hereunder shall in no way be terminated, affected
or impaired by reason of the assertion by the Purchaser against the Sellers of
any of the rights or remedies available to the Purchaser pursuant to the
Acquisition Agreement.
6. If any provision of this Guarantee shall be invalid or unenforceable to
any extent, the remainder of this Guarantee shall not be affected thereby, and
every provision of this Guarantee shall be valid and enforceable to the fullest
extent permitted by law.
7. Any notices, demands or other communications desired or required to be
given to Guarantor hereunder shall be in writing and shall be sent by registered
or certified mail, return receipt requested, or by a nationally recognized
overnight courier which obtains a written receipt of delivery, such as Federal
Express, and shall be sent to Guarantor at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attn: Xxxxxxx Xxxxxx, or to such other address as Guarantor may designate
by written notice to Purchaser. Notices given by Guarantor to Purchaser shall be
deemed sufficiently given if sent in the manner provided for the giving of
notice to Purchaser pursuant to the Acquisition Agreement.
8. This Guarantee shall be binding upon Guarantor, its successors and
assigns, and shall inure to the benefit of Purchaser, its successors and
assigns.
IN WITNESS WHEREOF, the undersigned has executed this Guarantee as of the
date first above written.
CYGNE DESIGNS, INC.
Guarantor
By:________________________
Name:
Title:
-2-
