Exhibit 2
RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT is made this 25th day of June, 1997
by and between GLENGATE APPAREL, INC., a New Jersey corporation (the "Company")
and AMERICAN MARKETING INDUSTRIES INC., a Delaware corporation ("AMI").
WITNESSETH:
WHEREAS, AMI has agreed to purchase 2,500,000 shares of common stock in the
Company (the "Shares") on the condition, among others, that the Company grant to
AMI a right of first refusal to purchase shares of capital stock in the Company
in future offerings made by the Company as provided herein; and
WHEREAS, in order to induce AMI to subscribe for the Shares, the Company is
willing to grant to AMI a right of first refusal as provided for herein.
NOW THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
1. Term. This Agreement shall be effective as of the Closing Date, as
that term is defined in Section 4 hereof, and shall remain in effect until
the date that is five (5) years from the Closing Date, unless earlier
terminated as provided herein (the "Term").
2. Right of First Refusal.
(a) In the event the Company shall offer for sale at any time
during the Term shares of capital stock in the Company (except for (i)
such shares of capital stock in the Company which have been available
to any stock option plan or program of the Company or which are
subject to a valid option (ii) such shares of capital stock being
offered through a public offering or (iii) such shares of capital
stock being offered to The Xxxxxxx Group, Inc. pursuant to its rights
under a certain Capitalization Agreement between the Company and The
Xxxxxxx Group, Inc.) (the "Offered Shares") by any means whatsoever
pursuant to an offer to or from a bona fide third party to purchase
such shares, the Company shall serve written notice upon AMI of the
Company's desire to sell the Offered Shares, and identifying therein
the name and address of the bona fide third party purchaser desiring
to purchase the Offered Shares, the number of Offered Shares, the
sales price and the terms and conditions of such sale, including the
payment terms (the "Notice").
(b) Upon its receipt of the Notice, AMI shall have the right but
not the obligation to purchase all, but not less than all, of the
Offered Shares on the same terms and conditions as offered to the bona
fide third party purchaser. AMI's right to purchase the Offered Shares
must be exercised within thirty (30)
days of its receipt of the Notice. In the event AMI fails to
exercise its right to purchase the Offered Shares within said thirty
(30) day period, the Company may complete the sale of the Offered
Shares to the third party bona fide purchaser, provided such sale is
completed in accordance with the terms set forth in the Notice or on
terms and conditions that are no less favorable then as set forth in
the original offer disclosed to AMI in the Notice.
(c) In the event AMI timely exercises its right to purchase the
Offered Shares as provided in Section 2(b) above, but fails to tender
to the Company the purchase price for the Offered Shares within ten
(10) days of the date for closing specified in the Notice, or
otherwise fails to purchase the Offered Shares, then AMI's right to
purchase the Offered Shares shall terminate.
3. Certificates for Offered Shares. Upon the timely exercise by AMI of its
right to purchase the Offered Shares and the receipt by the Company of the
purchase price therefor, the Company shall cause to be issued and delivered to
AMI a certificate representing the Offered Shares on the form of certificate
approved by the Company.
4. Closing Date. This Agreement shall be effective as of the date AMI has
purchased the Shares from the Company pursuant to the terms of that certain
Stock Purchase and Option Agreement of even date herewith by and between the
Company and AMI (the "Closing Date").
5. Notices. Any notice required or permitted to be given hereunder shall be
in writing, addressed as follows, and given by prepaid private courier or
delivered or sent prepaid or by overnight express mail delivery, or sent by
facsimile or other similar means of electronic communications and confirmed on
the same or following day by prepaid First Class mail:
If to the Company: GlenGate Apparel, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, President
With a copy to: Xxxxxx, Xxxxxx & Xxxxxxxx
A Professional Association
0 Xxxxxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
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If to AMI: American Marketing Industries Inc.
00000 Xxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: X.X. Xxxxx
With a copy to: Xxxxx Xxxx, XXX
0000 Xxx Xxxxxx Xxxx Place
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
6. Entire Agreement. This Agreement, constitutes the entire Agreement of
the parties and supersedes any and all prior agreements and undertakings between
the parties, whether written or oral, relating to the subject matter of this
Agreement.
7. Severability. This Agreement shall be deemed severable and the validity
or unenforceability of any term or provision hereof shall not affect the
validity or unenforceability of this Agreement as a whole or of any other term
or provision hereof.
8. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New Jersey without giving
effect to the choice of law provisions thereof.
9. Restriction on Assignment. AMI may not assign, sell or transfer this
Agreement or any of its rights, duties or obligations hereunder, by operation of
law or otherwise, without the prior written consent of Company, which consent
shall not be unreasonably withheld by Company, except that AMI shall have the
right, upon written notice to Company, to assign this Agreement to a corporation
or affiliate under the same direction or control as AMI pursuant to an event
described in Section 10 below; provided, however, that in such event AMI agrees
to guarantee the performance and obligations of such corporation or affiliate
under this Agreement.
10. Change of Ownership. The assignment permitted pursuant to Section 9
above may only occur upon: (i) an assignment to an entity owned or controlled by
AMI which was formed to own the Swingster business, (ii) the assignment is to a
successor of all or substantially all of the Swingster or AMI business provided
that Swingster or AMI as the case may be remains in substantially the same
business it is as of the date hereof, (iii) the assignment is to an entity
formed by the merger with or sale of Swingster or AMI to another party, provided
that Swingster or AMI as the case may be remains in substantially the same
business it is as of the date hereof, or (iv) the assignment is to a subsidiary
or affiliate of a party described in (i), (ii), or (iii) above.
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11. Captions. The section headings contained in this Agreement are solely
for convenience of reference and shall not affect the meaning or interpretation
of this Agreement or of any term or provision hereof.
12. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date and year first above written.
GLENGATE APPAREL, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
AMERICAN MARKETING INDUSTRIES INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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