ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated May 27, 1999, between and among Vision Legwear,
LLC, a North Carolina limited liability company ("Buyer"), Hampshire Designers,
Inc., a Delaware corporation ("Seller"), and VL HOLDINGS, LLC, a North Carolina
limited liability corporation ("LLC").
WHEREAS, Hampshire Group Limited ("Hampshire Group") is the sole
stockholder of Seller; and
WHEREAS, Seller is the owner of substantially all of the assets of the
Hampshire Hosiery Division having it principal operations at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (hereinafter referred to as "Company" or "Hosiery
Division"); and
WHEREAS, Buyer desires to purchase and Seller desires to sell certain of
the assets of the Company upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, LLC owns a majority interest in Buyer, whose members include ▇▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), former President and
Chief Financial Officer, respectively, of Hosiery Division
NOW, THEREFORE, in consideration of the premises, representations,
warranties and mutual agreements herein set forth, Buyer, Seller and LLC hereby
agree as follows:
1. DEFINITIONS
As used herein, the following terms shall, unless the context clearly
indicates otherwise, have the following meanings:
(a) "Accounts Payable" shall mean trade accounts payable for the purchase
of Products, raw material, utilities or supplies delivered to Company or
services rendered to Company as more particularly described in Schedule 1(a)
annexed hereto and made a part hereof.
(b) "Accounts Receivable" shall mean receivables of Company, including, but
not limited to, all trade accounts receivable, balances due from factors and
other receivables.
(c) "Accrued Employee Benefits" shall mean accrued employee benefits and
liabilities of Company including, but not limited to, accrued payroll, vacation
and commission and severance benefits of Transferred Employees and employee
benefits listed on Schedule 1(c) annexed hereto and made a part hereof. Accrued
Employee Benefits are defined as including a maximum liability to Seller of One
Hundred and Five Thousand Dollars ($105,000) of severance benefits for
terminations by Company prior to the Purchase Date and up to and including
executive terminations through January 15, 1999, but excluding any other
severance benefit granted to or claimed by a Transferred Employee or a former
employee of Company, all of which shall be the liability and expense of Buyer.
(d) "Affiliate" shall mean with respect to Seller, Hampshire Group or any
entity in which Hampshire Group maintains at least 51% ownership interest; and
with respect to Buyer, the term shall mean LLC, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇.
(e) "Assumed Contracts" shall mean all contracts assumed by Buyer,
including the Premises Lease, Equipment and Other Leases, Accounts Payable,
Accrued Employee Benefits, Purchase Orders, Sales Commitments, Other Contracts
and Licenses and Permits related to the operation of Company.
(f) "Closing" shall have the meaning set forth in Section 5 hereof.
(g) "Closing Date" shall mean May 20, 1999, 10:00 A.M., or such other dates
and time, as the parties shall mutually agree upon in writing, but in any event
not later than June 15, 1999.
(h) "Equipment" shall mean all machinery, equipment, vehicles owed by
Seller and used by Company, furniture and fixtures owned by Seller and used by
Company and all non-inventoried or uninventoried supplies, tools, repair parts
or other assets used in the ordinary business of the Company and which Buyer
deems to be of use. "Equipment" does not include furnaces, heating systems,
exterior fuel storage, plumbing, air conditioners, air wash, humidity system,
electrical systems, wiring, conduit, feedrails and lighting fixtures or other
fixtures attached to the Premises on the Purchase Date, or other Excluded
Assets, or Equipment leased pursuant to the Machinery Lease.
(i) "Equipment and Other Leases" shall mean any lease of Company as of
January 1, 1999 including, but not limited to, machinery, computer equipment,
communication equipment, reproduction equipment, etc. and the service agreements
thereon, used by Company at the Premises or at any other locations or real
estate lease other than for the Premises; copies of which have been delivered to
Buyer.
(j) "Excluded Assets" shall mean Seller's cash on hand or in any bank
account, accounts receivable of Company generated prior to January 1, 1999, the
name "Hampshire Hosiery" and any other assets of the Company which are
specifically excluded herein from the definition of Purchased Assets.
(k) "Intangible Property" shall mean all intellectual and intangible
property and rights of the Company including, without limitation, all patents,
trademarks, service marks, copyrights (whether registered or unregistered),
designs, patterns, computer programs, other than licensed programs, program
products, inventions, know-how, trade secrets, customer lists and other similar
rights owned and held by Seller for use by Company on the Purchase Date (for
which Seller makes no representation as to registration, ownership, or conflict
of ownership thereof) all rights of Seller under all service contracts,
licenses, leases or other agreements including any rights, title or interest in
all information, patents, drawings, manuals and data relating to operation of
Company equipment and the manufacturer of Products and any rights of Company in
and unto the warranties and licenses received from manufacturers and vendors of
the aforesaid items, and any claims, credits, rights of recovery and setoff with
respect to the Purchased Assets.
(l) "Inventory" shall mean all inventory of the Company as of the Purchase
Date including, but not limited to Product Inventory, Other inventory, inventory
advances to IFSA and Inventory in transit from IFSA.
(m) "Machinery Lease" shall mean that lease between Buyer and Seller
covering the use of Machinery by Seller in the operations of the Hosiery
Division not purchased by Buyer as set forth in Section 3(c)(v) hereof, annexed
hereto as Schedule 1(m) and made a part hereof.
(n) "Other Contracts" shall mean all employment agreements, service
contracts and other agreements of Company other than the Premises Lease,
Equipment and Other Leases, Purchase Orders, Sales Commitments or licenses and
permits to the extent that any of such contracts remain executory after the
Purchase Date.
(o) "Other Inventory" shall mean all samples, work-in-process and raw
materials relating to the design, manufacture and distribution of Products, and
packaging and empty cartons, located on the Premises held at contractors on the
Purchase Date, for use in connection with Company operations, in which Company
had or shall have any rights, title or interest, together with any rights of
Company to the warranties received from vendors with respect to such inventory
and any related claims, credits, rights of recovery and set-off with respect
thereto.
(p) "Other Property" shall mean all Purchased Assets described in Section
2(a) hereof other than Equipment, Finished Inventory, Other Inventory and
Intangible Property.
(q) "Premises" shall mean the real property of the Company consisting of
two manufacturing plants located in the township of Spruce Pine, in the county
of ▇▇▇▇▇▇▇▇, in the State of North Carolina, known as Hampshire Hosiery ▇▇▇▇▇,
as more fully described on Schedule l(q) annexed hereto and made a part hereof.
(r) "Premises Lease" shall mean that certain lease agreement between Buyer
and Seller, or its Affiliate, annexed hereto as Schedule 1(r) and made a part
hereof.
(s) "Products" shall mean women and children's legwear including, but not
limited to, hose, pantyhose, knee-hi, footies, tights, trouser socks and socks,
manufactured from various fibers.
(t) "Product Inventory" shall mean all inventories of finished Products of
Company on the Purchase Date, including such finished Products held at
contractors.
(u) "Purchased Assets" shall mean all tangible and intangible assets of the
Company, either owned, leased or otherwise held by Seller as of the Closing Date
other than the Excluded Assets.
(v) "Purchase Date" shall mean as of 12:00 A.M. Eastern Standard Time,
January 1, 1999.
(w) "Purchase Orders" shall mean all open purchase orders of Company,
including but not limited to, those purchase orders listed on Schedule 1(w),
annexed hereto and made a part hereof, copies of which have been delivered to
Buyer.
(x) "Sales Commitments" shall mean all open sales orders, commitments and
agreements of Company to sell Products, including but not limited to, those
sales commitments listed on Schedule 1(x), annexed hereto and made a part
hereof, copies of which have been delivered to Buyer.
(y) "Transferred Employees" shall mean all employees of the Hosiery
Division on December 31, 1998, whose employment by Seller is terminated as of
the Closing Date and whose employment by Buyer is hereinafter provided in
Section 8(e).
2. PURCHASE AND SALE OF PURCHASED ASSETS
(a) Purchased Assets. Subject to the terms and conditions herein set forth,
on the Closing Date, Seller shall sell, transfer and assign to Buyer, and Buyer
shall purchase from Seller, all of Seller's rights, title and interest in and to
the Purchased Assets described below, free and clear of all mortgages, liens,
charges, encumbrances or security interests of any nature whatsoever other than
those expressly described herein including, without limitation:
(i) All Equipment other than the equipment included in Excluded
Assets.
(ii) All Inventory.
(iii) All non-inventoried supplies, tooling, repair parts, spare
parts, packaging and other assets located on the Premises, held at
contractors or used in the operations of Company on the Purchase Date
excluding items consumed, abandoned or disposed of in the normal course of
operations as obsolete or worn out.
(iv) All Intangible Property of Seller used in the operations of the
Company as specifically described in Schedule 2(a)(iv).
(v) All rights of the Company under all Assumed Contracts and all
other agreements specifically described on Schedule 2(a)(v) annexed hereto
and made a part hereof.
(vi) All Accounts Receivable of Company generated on or after January
1, 1999 as more specifically described in Schedule 2(a)(vi). All Accounts
Receivable collected, whether generated before or after December 31, 1998,
shall be held by Seller until all net cash advances owed Seller by Buyer
are accounted for and paid.
(vii) A complete list of all customers, suppliers, sources of raw
materials, and all historical records of Company.
(viii)All government permits, authorizations and licenses which are
transferable and owned or held by Seller and used in the operations of
Company, including, without limitation, those described on Schedule
2(a)(viii) annexed hereto and made a part hereof,
(ix) The Company's assembled work force as of the Closing Date,
including all Transferred Employees identified on Schedule 2(a)(ix) annexed
hereto and made a part hereof.
(x) All software of Seller used in conjunction with the operation of
the Hosiery Division, but not limited to accounts receivables, general
ledger and payroll software, but excluding any outside licensed software.
Seller conveys all software "as is", without warranty.
(b) Liabilities Assumed. Buyer shall assume all liabilities of the Company
accruing on or after January 1, 1999, all liabilities under all Assumed
Contracts, all customer deductions other than as provided in Section 4(b) and
any other liabilities specifically listed on Schedule 2(b) annexed hereto and
made a part hereof and all unrecorded liabilities of the Company which were
known to ▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, as officers of the Hosiery Division (or the
salaried exempt employees of Company employed after December 1, 1998)
immediately prior to the Purchase Date and through the Closing Date (hereinafter
collectively referred to as "Assumed Liabilities"). Except as otherwise provided
herein, Buyer shall have no obligation, direct or indirect, and shall not assume
or agree to pay, perform or discharge, nor shall Buyer be directly or indirectly
responsible or obligated for, any debts, obligations, contracts or liabilities
of Seller wherever or however incurred, other than the Assumed Liabilities; it
being understood that Seller shall remain responsible for all such other debts,
obligations, contracts, claims and liabilities of Company. Buyer shall have
executed and delivered to Seller such instrument of assumption, as may be
necessary to duly effectuate the assumption by Buyer of Assumed Liabilities.
(c) Sale at Closing Date. The sale, transfer, assignment and delivery by
Seller of the Purchased Assets to Buyer, as herein provided, shall be effected
on the Closing Date by bills of sale, endorsements, assignments and such other
instruments of transfer and conveyance sufficient to convey full and clear
title.
(d) Subsequent Documentation. The parties shall, at any time and from time
to time after the Closing Date, upon the reasonable request of either party and
at the expense of the requesting party, execute, acknowledge and deliver or will
cause to be executed, 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
Buyer, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession any or all of the Purchased Assets to be
purchased by Buyer as provided herein or documents for the benefit of Seller.
(e) Assignment and Transfer of Contracts and Warranties. On the Closing
Date, Seller shall assign and transfer to Buyer and Buyer shall acquire all of
Seller's rights, 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 Assets. 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 will use its commercially reasonable efforts to obtain the consent of the
other parties to such contracts for the assignment thereof to Buyer. If such
consent is not obtained in respect of any such Assumed Contract, Seller will
cooperate with Buyer in any reasonable arrangement requested by Buyer to provide
to Buyer the benefits under any such Assumed Contract, including enforcement,
for the benefit of Buyer, of any and all rights of Seller against the other
party thereto with respect to such Assumed Contracts and Buyer shall hold Seller
harmless against any claims for non-performance thereunder. Failure on the part
of Seller to obtain such consents shall not constitute a breach under the
Agreement.
(f) Interim Period Conduct of Business. All operations of Company conducted
between the Purchase Date and the Closing Date (including, without limitation,
all related accounts receivable and cash sales) shall be for the account and
benefit of and at the expense of Buyer as if this Agreement had been consummated
on the Purchase Date, provided that if the Closing does not occur hereunder all
such operations shall be for the account of and at the expense of Seller.
Promptly after the Closing Date, representatives of Buyer and Seller shall
prepare schedules reflecting the transactions entered into by Seller during such
period and the expenses allocable thereto, and on the date the adjustments
described herein are settled between the parties, the appropriate party shall
make whatever cash adjustment is necessary to place the parties in the position
they would have been in had the closing actually occurred on the Purchase Date.
If there is any dispute between the parties as to the appropriate amount of the
foregoing adjustment, then either party will submit the disputed item to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, independent public accountants, who shall resolve the dispute in
the manner specified in Section 4(b) hereof. Notwithstanding the foregoing
provision, those adjustments which are not in dispute shall be settled
immediately in the manner specified in Section 4(b) hereof.
(g) Interim Period Interest on Advances. Buyer agrees to pay to Seller
interest on the net cash advanced from the Purchase Date to the settlement date
at a rate of eight and one-quarter percent (8.25%) for actual days outstanding
calculated on a 360 day year and shall be paid as an adjustment in the manner
specified in Section 4(b) hereof. Cash advances shall be defined to include cash
collection received in Company's lock box from Accounts Receivable excluded from
purchase provided herein and cash advances made to the Hosiery Division
subsequent to January 1, 1999.
3. PURCHASE PRICE AND PAYMENT
Buyer, in consideration for the transfer and delivery of the Purchased
Assets and in reliance on the representations and warranties contained herein,
agrees to pay Seller as follows:
(a) Purchase Price. The purchase price for the Purchased Assets shall be
Four Million Six Hundred Thousand Dollars ($4,600,000) ("Purchase Price"). (All
references to dollar amounts in this Agreement are understood to be legal
currency of the United States of America.) The Purchase Price shall be allocated
to the tangible assets of the Hosiery Division of Seller, as set forth on
Schedule 3(a).
(b) Payment of Purchase Price. On the Closing Date, Buyer shall deliver to
Seller the following:
(i) A bank check payable to the order of Seller in the amount of Five
Hundred Thousand Dollars ($500,000);
(ii) An acknowledgment from Buyer of the assumption of Assumed
Liabilities of Company in the amount of Eight Hundred and Fifty Thousand
Dollars ($850,000);
(iii) All of the Class A Member Membership Interests in Buyer, as
represented in Schedule I of Buyer's Operating Agreement, establishing a
capital account in the name of Hampshire Group for $175,000. The Class A
Member Membership Interest shall receive a cumulative preferred return
equal to 7% of the capital account balance, or as otherwise provided for in
the Operating Agreement. The Class A Member Membership Interest is
redeemable pursuant to the terms of the Operating Agreement;
(iv) A Class C Member Membership Interest in Buyer, as represented in
Schedule I of the Buyer's Operating Agreement, establishing capital account
in the name of Hampshire Group for $100,000 which represents 24.77% of the
Membership Interests in Buyer. The Class C Member Membership Interest shall
be a non-voting interest.
(v) A promissory note dated January 1, 1999 in the principal amount of
One Million, Eight Hundred and Eighty Three Thousand One Hundred Dollars
($1,883,100), bearing interest from the date thereof payable monthly
commencing on Closing Date, with first payment including interest from
January 1, 1999, at 8.25% per annum until the Note and interest thereon are
paid in full as more particularly set forth in the Promissory Note
("Promissory Note"), a draft thereof set forth on Schedule 3(b)(v), annexed
hereto and made a part hereof. The Promissory Note shall be secured by a
lien on the Purchased Assets which shall be filed with the Secretary of
State of North Carolina and local county officials with such expenses of
perfecting the lien being the expense of Buyer; and;
(vi) Assumption of payments under the GE Capital Note held by Seller
in the amount of One Million Ninety One Thousand and Nine Hundred Dollars
($1,091,900) as shown on Schedule 3(b)(vi) attached hereto and made a part
hereof.
(c) Other Consideration
In addition to the Purchase Price set forth above, Buyer further agrees:
(i) For so long as Seller or a Hampshire Group Affiliate has any
ownership interest in Buyer (ownership interest defined as Membership
Interest or debt of any kind) Hampshire Group shall have the irrevocable
right to:
(1) Attend and participate, on a non-voting basis, in all
meetings of the Members or Member-Managers of Buyer;
(2) Receive a copy of the unaudited monthly financial statement
within thirty (30) days after the end of the fiscal month and audited
annual financial statements of Buyer within ninety (90) day after the
end of the fiscal year; and
(3) Perform at any time during normal business hours such review,
and/or audit, at its own expense, of the financial affairs of Buyer as
it may deem advisable and necessary under the circumstances.
(ii) For a period of thirty six months commencing as of January 1,
1999, Buyer shall pay to Hampshire Group on the 20th day of each month a
consulting fee of Eight Thousand, Three Hundred and Thirty Three Dollars
($8,333), for its advice in management of Buyer's business Seller shall
provide to Buyer up to 20 hours of consulting per month and shall be
reimbursed from Buyer for reasonable travel expenses if travel is
specifically requested by buyer.
(iii) For a period of twelve months commencing as of January 1, 1999,
Hampshire Group, through Seller, shall provide Credit and Collection
services for Buyer for which it shall be paid service fees as follows:
January 1999 - $4,583; February 1999 - $4,583; March 1999 - $10,000; and
for each month thereafter a fee equal to 0.5% of the gross sales of Buyer
for the previous fiscal month, due and payable on the 20th day of the
month. Buyer shall have the right to cancel the services upon 90 days
advance written notice, but if canceled at any time prior to the end of a
calendar year, Buyer shall pay Seller for the prepaid credit reports
contracted on their behalf not previously utilized.
(iv) Buyer shall enter into a thirty six (36) month lease agreement
with Seller, or its assigns, for the Premises at an initial annual rate of
One Hundred, Twenty Six Thousand Dollars ($126,000), payable in equal
monthly installments of Ten Thousand, Five Hundred Dollars ($10,500) due on
the 1st day of each month commencing as of January 1999, plus Buyer agrees
to pay to Seller the cost of property and casualty insurance, property
taxes and repairs and maintenance on the Premises after January 1, 1999.
The Premises Lease will include an option to renew for an additional
three-year term at $146,000 for the first year, $166,000 for the second
year and $186,000 for the third year, each payable monthly, and an option
to purchase the Premises at the end of the first three-year term for
$840,000.
(v) Buyer shall enter into a forty eight (48) month lease agreement
with Seller, or its assigns, for the lease of the manufacturing machinery
used by Seller in the operations of the Hosiery Division which was not
purchased by Buyer ("Machinery Lease"), for payment of Twenty Six Thousand,
Nine Hundred and Eighty Four Dollars ($26,984) commencing on April 1, 1999
and a like amount on the fifteenth day of each month thereafter through
March 1, 2003.
(vi) Buyer shall enter into a one year lease agreement with Seller to
rent two offices consisting of 360 square feet, more or less, in the
Seller's showroom located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ at a
monthly service fee of One Thousand, Eight Hundred and Seventy Five Dollars
($1,875) payable on the 1st day of each month. The lease may be canceled by
either party upon ninety (90) days written notice. After the first year the
arrangement shall be renegotiated.
(vii) All payments set forth in this Agreement in respect to
arrangements commencing prior to the Settlement Date (as hereinafter
defined), shall bear interest at 8.25% per annum from the due date of the
payment until such date payment is made based on actual days elapsed over
360 days.
4. ADJUSTMENTS
(a) To the extent that Seller incurs any of the following costs, expenses
and liabilities pertaining to use of the Premises or the manufacture of Products
for Buyer between the Purchase Date and the Closing Date arising after January
1, 1999, the following adjustments shall be allowed as of the Purchase Date:
(i) Real and personal property taxes and sales and use taxes;
(ii) Electric, gas, telephone, water and sewer charges;
(iii) Reimbursable employee business expenses;
(iv) Payroll expenses including vacation pay and payroll taxes;
(v) Employee benefit expenses, including, but not limited to,
workmen's compensation claims for injuries sustained after Purchase Date
and for medical and dental claims for services rendered after Purchase
Date, group health, dental, life, short-term and long-term disability
benefits, employee severance benefits in excess of amounts accrued
therefor;
(vi) Charges under maintenance and service contracts and fees under
licenses included in Assumed Contracts; and
(vii) Rentals for leased property under leases included in Assumed
Contracts.
(b) The adjustments described in Section 4(a) hereof shall be made on the
Closing Date except with respect to any such adjustments which cannot be made on
the Closing Date or as to which the parties are not in agreement on such date.
As soon as possible after the Closing Date, but in any event not later than
twenty (20) days after the Closing Date ("Settlement Date"), representatives of
Buyer and Seller shall complete a schedule itemizing all amounts requiring
adjustment which were not adjusted and paid for on the Closing Date. Any amount
owed by Buyer or Seller to the other by reason of such adjustments shall be paid
by corporate check by the appropriate party to the other within three (3)
business days after the approval of the adjustment by Buyer and Seller. Any
dispute between Buyer and Seller as to the items described in this Section 4 or
in Section 2(f) hereof which does not exceed Fifty Thousand Dollars ($50,000)
shall be resolved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLC, independent certified public accounts,
who shall resolve any such dispute referred to them by Buyer and Seller within
twenty (20) days after such submission of the dispute, and determination of such
accountants shall be conclusive and binding upon the parties for purposes of
this Agreement. Buyer and Seller shall each pay fifty per (50%) of the fees of
such accountants for resolving any such dispute.
Customer deductions from collection of receivables retained by Seller, and
deductions from Buyer's receivables on credits issued to customers in January,
1999 pertaining to customer rebates accrued by Company at December 31, 1998 in
the amount of One Hundred Thirty-one Thousand Eight Hundred Seventy-eight
Dollars ($131,878) will be the responsibility of Seller. As a settlement for all
other customer deductions assumed by Buyer, Seller will credit Buyer by reducing
by $100,000 the cash advances owed to Seller at Closing.
5. CLOSING
(a) The Closing under this Agreement (the "Closing") shall be effected by
the delivery by Seller of the executed ▇▇▇▇ of Sale, endorsements, assignments
and such other instruments of transfer and conveyance sufficient to convey full
and clear title to the Purchased Assets and the delivery by Buyer of the
executed Assumption Agreement and Purchase Price set forth herein.
(b) The Closing shall take place at the law firm of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ on the Closing
Date or at such other place as may be mutually agreed upon in writing by Buyer,
Seller and Hampshire Group.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and LLC, to the best of its
knowledge and belief, as follows:
(a) Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business as a foreign corporation and is in good standing
under the laws of each state where the nature of its business or character of
its properties make such qualification necessary.
(b) Ownership of Seller. The Articles of Incorporation of Seller, a true
copy having been delivered to Buyer, authorizes One Thousand (1,000) shares of
capital stock of one class of which One Thousand (1,000) shares are issued and
outstanding, all of which are owned by Hampshire Group; and there are no
outstanding warrants or options, written or oral, to purchase shares of Seller.
(c) Corporate Authority. Seller has full power and authority to execute and
to perform in accordance with this Agreement, and this Agreement constitutes a
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms. 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 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 of its obligations hereunder will not conflict with or violate any
provision of Seller's Certificate of Incorporation or its Bylaws or conflict
with or violate any provisions of, or result in a default or acceleration of any
obligation under any material mortgage, lease, contract, agreement, indenture or
other instrument or undertaking or any order, decree or judgment to which Seller
is a party or by which its property is bound except that Seller will be required
to prepay all loans outstanding on the Machinery.
(d) Title to Purchased Property. Seller owns all of the rights, title and
interest in and to all of the Purchased Assets free and clear of restrictions
on, or conditions to transfer or assignment and free and clear of all material
mortgages, liens, charges, pledges, claims, encumbrances, restrictions and
security interest of any nature whatsoever other than the bank liens on certain
pieces of machinery which will be paid in full at, or prior to, the Closing. On
the Closing Date, all of the Purchased Assets shall be free and clear of
restrictions on, or conditions to transfer or assignment, and free and clear of
all material mortgages, liens, charges, pledges, claims, encumbrances and
security interests, except as otherwise agreed by the parties.
(e) Accredited Investors. The Membership Interest of Buyer is being
acquired by Seller for investment purposes only and not as a nominee or agent
for the benefit of any person other than Seller; and Seller has no intentions of
distributing, reselling, or reassigning, the Membership Interest or any part
thereof other than to Hampshire Group or an affiliate. Seller is an "accredited
investor" within the meaning of Rule 50 1 (a) of Regulation D promulgated under
the 1933 Act.
(f) SEC Registration. Seller acknowledges that the Membership Interest have
not been registered under the Securities Act of 1933, as amended ("▇▇▇ ▇▇▇▇
▇▇▇"), nor under the laws of any jurisdiction and that Buyer does not
contemplate and is under no obligation to so register Membership Interest.
(g) Capital Structure of Purchaser. Seller has been advised that Buyer is a
newly organized company capitalized with Three Hundred Thousand Dollars
($300,000) and that it has no operating history.
(h) Limited Representations and Warranties. ▇▇▇▇▇▇▇ has served as President
and Chief Executive Officer of Company for more than five years and ▇▇▇▇▇▇▇▇▇
has served as Vice President of Finance and Controller for Company for more than
eight years. The following representations are made in reliance on information
provided to Seller by ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, and the Buyer and LLC waive their
right to recovery under claim for breach of warranties and representations of
Seller to the extent that ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ or salaried exempt employees
under their direction and control had knowledge of any material errors in or
omissions from the following representations and warranties made herein:
(i) Condition of Premises and Equipment. Seller has no knowledge or
information available to it of any material defect in the Premises,
including without limitation, any material defects which would render any
part of the Premises unsuitable for the uses and purposes for which Seller
is currently using it, or any other material defects in the Premises,
including, but not limited to, the fixtures and improvements thereon as of
the Purchase Date or as of the Closing Date. The Equipment is in good
condition and is fit for the uses and purposes for which Seller is using
them as of the Purchase Date and the Closing Date, normal wear and tear
excepted.
(ii) Inventory. Inventories are stated at standard cost. All Products
manufactured by or for Seller or sold by Seller from and after January 1,
1998, 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 manufactured such Products 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. The Other Inventory
is of a type and quality useable and sellable in the ordinary course of
business.
(iii) Compensation Due Transferred Employees. Seller has delivered to
Buyer Schedule 2(a)(ix), which includes a true and complete list showing
the names and job descriptions of all Transferred Employees as of the
Purchase Date, together with their rate of compensation. Except for any
such benefits that may have accrued after the Purchase Date, Seller does
not have any outstanding liability with respect to the Transferred
Employees for payment of wages, vacation pay, salaries, bonuses, sick pay,
severance pay, workmen's compensation, group benefits, 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 employees performed
prior to the Purchase Date, except for any payment due for the current
payment or contribution period, such payment being in the ordinary course
of business and consistent with past practices, such amounts being included
in the Accrued Employee Benefits and/or Assumed Liabilities. 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 or anything of value, including any
claim to equity in Seller or its assets, with respect to any period after
the date hereof.
(iv) Union Agreements. Company is not now and never has been a party
to any union agreement or similar agreement.
(v) Contracts and Agreements. The copies of the Assumed Contracts
previously provided by Seller to Buyer constitute true, correct and
complete copies of all such agreements, reflecting all amendments to the
Closing Date. Seller has performed all of its obligations under the Assumed
Contracts required to have been performed by it on or prior to the Closing
Date hereunder, and Seller has not received any notice of default, nor is
Seller in material default, nor does any condition exist which with notice
or lapse of time, or both, would render Seller in material default under
any Assumed Contract. Seller has continuously maintained product liability
insurance on a "per occurrence basis".
(vi) Licenses and Permits. The licenses and permits listed on Schedule
2(a)(viii) annexed hereto and made a part hereof, are the only material
licenses and permits currently required by Company for the operations at
the Premises and all such licenses and permits are in effect as of the date
hereof. Seller has no knowledge of any facts which would preclude Buyer
from obtaining any such licenses and permits upon proper submission by
Buyer of applications therefor, nor does Seller have knowledge of any facts
relating to Buyer's use of the Equipment for the continued use of the
Premises which would require Buyer to obtain any licenses or permits in
addition to those described in Schedule 2(a)(viii). Seller has complied
with all conditions or requirements imposed by such Licenses and Permits,
and Seller has not received any notice, nor does Seller have 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 exits.
(vii) Insurance. Schedule 6(h)(vii), annexed hereto and made a part
hereof, lists and describes all insurance policies now in force with
respect to the Premises, the Purchased Assets and the Transferred
Employees. Seller will continue in full force and effect through the
Closing Date all such policies of insurance, at the expense of Buyer, from
the Purchase Date through the Closing Date. Seller has not been refused any
insurance by any insurance carriers to which it has applied for insurance
with respect to the Premises, the Purchased Assets, or the Transferred
Employees during the last two years.
(viii)Litigation and Labor Disputes. Except as described in Schedule
6(h)(viii), annexed hereto and made a part hereof, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of
Seller, threatened against Seller at law or in equity or admiralty or
before or by any federal, state, municipal or other governmental
department, commission, board, agency or instrumentality, domestic or
foreign, nor has any such action, suit, proceeding or investigation been
pending during the two year period preceding the date hereof, and except as
described in Schedule 6(h)(viii) Seller is not in default with respect to
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; and except as described in Schedule
6(h)(viii), there are no pending or, to the knowledge of Seller, threatened
labor disputes actions or grievances between Seller and any labor union or
any employee or former employee of Seller.
(ix) Compliance with Laws. To the best of the knowledge of Seller, it
is in compliance in all material respects with all laws, statutes and
ordinances and governmental requirements, relations and orders involving or
affecting any of the Purchased Assets or applicable to the manufacture of
Products and the use of the Premises for such uses and purposes.
(x) Information. Subject to the foregoing limitations, Seller has
taken all reasonable steps to verify the accuracy of all information and
documentation provided to Buyer regarding the operation of Company and the
representations and warranties, and that each of the representations and
warranties are true and correct to the best of its knowledge, as of the
Closing Date. (xi) Insignificant and Nonsubstantial Errors. Buyer
understands that, even though Seller has exerted reasonable effort to
ensure that the Agreement and these representations and warranties are
accurate, there could be insignificant or nonsubstantial errors, for any
particular item or in the aggregate less than $10,000. Such errors shall
not be considered a breach of this Agreement, but Seller shall make a
reasonable effort to promptly correct such errors when discovered or called
to its attention and shall promptly reimburse Buyer to the extent the error
or errors, individually or in the aggregate, exceed $ 10,000 and Buyer
incurs said expense.
(xii) Business Succession. As of the Closing Date, Buyer shall have
the right to represent that it is carrying on business in succession to the
Hampshire Hosiery Division of Seller. Seller will, on request of Buyer, and
at Buyer'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 Buyer. Seller
shall allow Buyer, for a one (1) year period after the Closing Date, to
continue to use remaining stocks of packaging and sample packs using the
Hampshire name.
(xiii) Financial Statements. The financial condition of Company is set
forth in the unaudited financial statements for the year ended December 31,
1998, as prepared by ▇▇▇▇▇▇▇▇▇ (the "Financial Statements"), a copy of
which is a attached as Schedule 6(h)(xiii).
7. REPRESENTATIONS AND WARRANTIES OF BUYER AND LLC
Buyer and LLC represent and warrant to Seller as follows:
(a) Organization and Standing. Buyer is a limited liability company duly
organized and validly existing and in good standing under the laws of the State
of North Carolina and, as of the Closing Date, will be duly qualified to
transact business in the State of North Carolina and New York or shall have
filed for and reasonably expect to receive such qualification and good standing.
(b) Corporate Authority. Buyer has full power and authority to execute and
perform in accordance with this Agreement, and this Agreement constitutes a
valid and binding obligation of Buyer. This Agreement and all transactions
contemplated hereby have been duly authorized by all requisite authority by
Buyer 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 Buyer of its obligations
hereunder will not conflict with or violate any material provision of Buyer's
Articles of Organization or its Operating Agreement or conflict with or violate
any material provision of, or results in a default or acceleration of any
obligation under, any mortgage, lease, contract, agreement, indenture, or other
instrument or undertaking or any material order, decree or judgment to which
Buyer is a party or by which it or its property is bound.
(c) Capital Structure of Buyer. The Seller has been advised that Vision
Legwear, LLC will have an initial capitalization of Three Hundred Thousand
Dollars ($300,000).
(d) Authority of LLC. The LLC has full power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby without the
consent of any individual, agency, or governmental authority.
(e) Note. The Promissory Note has been duly authorized and, when issued
pursuant to this Agreement, will be the legal, valid and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms.
(f) Notification Period for Buyer and LLC. Buyer and LLC further waive any
rights or claims arising out of any inaccuracy in the representations and
warranties of Seller as to which Buyer or LLC has not given written notification
to Seller of an asserted breach within one year after the Closing Date, which
notification must describe with specificity the nature of the asserted breach
and the amount of the claim.
(g) Buyer's and LLC's Effort to Remove Conditions. Buyer and LLC will use
their commercially reasonable efforts to satisfy and remove any condition to
Buyer's performance at Closing under this Agreement.
(h) Products Liability Claims. To the extent there are any product
liability claims respecting any products pursuant to a sale made by Seller
subsequent to the Purchase Date, or made by Buyer subsequent to the Closing
Date, such claims shall be the responsibility of Buyer to the extent not covered
by insurance. To the extent there are any product liability claims against
Seller respecting any products pursuant to a sale made by Seller prior to the
Purchase Date, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and Buyer will provide technical assistance to
assist Seller in defending such claims.
(i) Business Succession. As of the Closing Date, Buyer shall have the right
to represent that it is carrying on business in succession to the Hampshire
Hosiery Division of Seller, but neither Buyer nor any of its affiliates will use
"Hampshire" as part of its name. With the assistance of Seller, Buyer, at
Buyer's expense, shall give notices of the change in ownership to all businesses
and individuals whom it desires to do business with, if the business or
individual was a former customer, supplier or others with whom Seller had done
business.
(j) Insignificant and Nonsubstantial Errors. Seller understands that, even
though Buyer has exerted reasonable effort to ensure that the Agreement and
these representations and warranties are accurate, there could be insignificant
or nonsubstantial errors, for any particular item or in the aggregate less than
$10,000. Such errors shall not be considered a breach of this Agreement, but
Buyer shall make a reasonable effort to promptly correct such errors when
discovered or called to its attention and shall promptly reimburse Seller to the
extent the error or errors, individually or in the aggregate, exceed $ 10,000
and Seller incurs said expense.
8. COVENANTS
(a) Bulk Sales compliance. Buyer agrees to waive the requirement that
Seller comply with the sections of the North Carolina State Uniform Commercial
Code relating to bulk transfers (the "Bulk Sales Law").
(b) Records. Buyer shall preserve the material books and records relating
to the Transferred Employees and former employees of Company, the manufacture of
Products, financial records and other matters relating to the Company's
activities prior to the Closing Date for a period of four years after the
Closing Date and shall, during such period and upon reasonable notice, grant
Seller access to such records during normal business hours for the purpose of
allowing Seller to verify information which Seller may require in connection
with the transfer from Seller to Buyer of the operations and employees or upon
request of Seller, release any such records to Seller.
(c) Licenses and Permits. From and after the date hereof, Seller shall use
its commercially reasonable efforts in arranging the transfer from Seller to
Buyer, or the issuance directly to Buyer, of the licenses and permits described
in herein.
(d) Operation of Business. During the period between the date hereof and
the Closing Date, Seller shall conduct the operations with respect to the
manufacture of Products in the ordinary course of business consistent with its
prior business practices and shall not sell or encumber any item of the
Purchased Assets without the prior written consent of Buyer. Seller shall use
its commercially reasonable efforts through the Closing Date to preserve the
business and suppliers other than sale of inventory in the ordinary course of
business of Seller with respect to the manufacture of the Products.
(e) Employees. During the period between the date hereof and the Closing
Date, Seller will use its commercially reasonable efforts to keep available
Seller's present employees now employed in the business for transfer to and
employment by Buyer, without making any increase after the date hereof in the
compensation or benefits, current or deferred, provided to such employees,
without the prior written consent of Buyer.
On and as of the Closing Date, Buyer shall offer employment and become the
employer of all Transferred Employees who accept such offer and are then engaged
in the operation. Seller shall, at the time and in the manner requested by
Buyer, inform all Transferred Employees of the termination of their employment
by Company as of the Closing Date and Buyer and Seller shall simultaneously
notify the Transferred Employees of Purchaser's offer of employment as of the
Closing Date. To the extent there exists, prior to the Closing Date, any Accrued
Employee Benefits, Buyer shall be responsible for payment thereof. Nothing in
this Agreement shall be construed so as to entitle any employee of Company to
severance or other similar pay under any agreement or understanding with Seller.
Buyer shall be solely responsible for any liabilities, obligations and
expenses which may be suffered by Seller or Buyer except the One Hundred and
Five Thousand Dollars ($105,000) severance reserve which will be included as
part of the Accrued Employee Benefits assumed by Buyer hereunder, as the result
of claims asserted against Seller or Buyer as a consequence of the termination
by Seller of Transferred Employees or any other employees or former employees or
any plans or benefits applicable to any of them or as the result of any other
claims of any such employees or former employees.
Effective as of the Closing Date, Buyer will cause a qualified defined
contribution plan which provides for employee elective deferral contributions to
be maintained by Buyer or its affiliates (the "Buyer Savings Plan") for the
benefit of the Transferred Employees. The Buyer Savings Plan will expressly
provide that Transferred Employees who were participants in the Hampshire Group
Plan (the "Seller Savings Plan") immediately prior to the Closing become
participants in the Buyer Savings Plan as of the Closing Date, and all periods
of prior employment with Seller and its affiliates which is recognized under the
Seller Savings Plan for eligibility, vesting and other purposes for which
service is taken into account shall be credited under the Buyer Savings Plan in
respect of the Transferred Employees. As soon as practicable after the Closing
Date, Seller shall cause the assets of the trust under the Seller Savings Plan
in respect of the aggregate vested and unvested accrued benefits accrued by the
Transferred Employees who are employed by Buyer on the Closing Date to be valued
and transferred to the trust under the Buyer Savings Plan; provided, however, no
such transfer shall be made until (i) Buyer shall first have provided Seller
with an IRS determination letter or an opinion of counsel reasonably
satisfactory to Seller that the Buyer Savings Plan is qualified in form under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
including all benefits and benefit options required to be preserved under
Section 411(d)(6) of the Code, and (ii) Seller shall first have provided Buyer
with an IRS determination letter or an opinion of counsel reasonably
satisfactory to Buyer that the Seller Savings Plan is qualified in form under
Section 401(a) of the Code. The assets to be transferred from the trust under
the Seller Savings Plan pursuant to this Section 8(e) shall be in cash and kind;
provided, however, any outstanding loans attributable to the accounts of
Transferred Employees shall be transferred in kind. The actual amount
transferred from the trust under the Seller Savings Plan shall be adjusted to
reflect any normal expenses or distributions properly attributable to
Transferred Employees under the Seller Savings Plan during the period following
the Closing Date. At the time the assets that are held in the trust with respect
to the Seller Savings Plan are paid to the trust under the Buyer Savings Plan
pursuant to this Section 8(e), the Buyer Savings Plan shall assume all
liabilities of the Seller Savings Plan for the payment of benefits transferred
to the trust under the Buyer Savings Plan, and such transfer shall be in full
discharge of all obligations of the Seller Savings Plan in respect thereof.
Notwithstanding the above, the amount transferred to the trust under the Seller
Savings Plan shall in no event be less than the amount necessary to satisfy the
requirements of Section 414(l) of the Code.
Without limiting the foregoing, Buyer will assume without any
indemnification from Seller:
(i) Disability, health and medical, dental, life, safety and worker
compensation claims of present or former employees of Company (including
former employees participating under the provisions of COBRA) arising from
acts or occurrences between the Purchase Date and Closing Date, to the
extent not covered by insurance and COBRA benefits going forward;
(ii) NLRB or employment discrimination or grievance charges of present
or former employees arising during employment by Company or from Company's
acts or omissions to the extent not covered by insurance;
(iii) Savings, profit sharing, deferred compensation, retirement
benefits, 401(k) plan, incentive, bonus and termination pay payable to
Company's present or former employees for service with Company;
(iv) Any liabilities or obligations to present or former employees of
Company which are based on acts or omissions of Company to the extent not
covered by insurance.
(f) Notwithstanding the provisions of Sections 9(d) and (e) above, Seller
shall not be responsible for any acts, or failure to act, of ▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇, or the actions of any employee reporting directly to them which
occurred after the Purchase Date.
(g) Covenant Not To Compete. Seller shall not, for a period of two (2)
years following the Purchase Date:
(i) Compete, either directly or indirectly, with Buyer in the
manufacture or sale of Products in any geographic area in which Seller
manufactured or sold Products during the two year period ended December 31,
1998, or in which Buyer or any successor thereto then manufactures or sells
Products; or
(ii) Interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between Buyer and any customer, supplier or
employee of Buyer. Seller's efforts to collect amounts due from customers
arising from shipments by Company to customers prior to the Purchase Date
shall not be construed as disruption of the relationship of Buyer with the
acquired customers.
(iii) If Seller breaches the provisions of this Section, damages alone
would be an insufficient remedy, and Seller agrees that Buyer should be
entitled to injunctive relief in addition to all other available remedies.
It is the desire and intent of the parties that the provisions of this
Section shall be enforced to the fullest extent permissible under the law and
public policies applied in each jurisdiction in which enforcement is sought. It
is specifically acknowledged by the parties hereto that this covenant is
reasonable and necessary to protect the legitimate business interest of Buyer,
and if any particular subsection or portion of this Section shall be adjudicated
to be invalid or unenforceable, this Section shall be deemed amended to delete
the portion thus adjudicated to be invalid or unenforceable; such deletion to
apply only with respect to the operation of this Section in the particular
jurisdiction in which such adjudication is made.
(h) Life Insurance. Seller may, at its election and expense and for its
benefit, insure ▇▇▇▇▇▇▇ against accidental loss or death for an amount not to
exceed One Million Dollars ($1,000,000) and ▇▇▇▇▇▇▇ agrees that he will submit
to such physical examinations, supply such information and take such other steps
as may be reasonably required in connection therewith.
(i) Leases. From and after the date hereof, Seller shall use its
commercially reasonable efforts in arranging the assignment or subletting to
Buyer, or execution of new leases in the name of Buyer on substantially as
favorable terms as those contained in those real estate and Other Leases under
which Seller conducted its business prior to the Closing Date and Buyer agrees
to assume the responsibility for and the liability of Seller's leases presently
in force for the Company and to indemnify and hold harmless Seller from any
future lease payments or claims which may arise thereunder.
(j) Licensing Agreements. From and after the date hereof, Seller shall use
its best efforts in arranging the assignment to Buyer, or execution of new
licensing agreements in the name of Buyer, on substantially as favorable terms
as those contained in, those licensing agreements under which Seller conducted
its business prior to the Closing Date and Purchaser agrees to assume the
licensing agreements of Seller presently in force for Company as set forth on
Schedule 8(j), annexed hereto and made a part hereof, and to indemnify and hold
harmless Seller from any future royalty payments or claims which may arise
thereunder.
(k) Compliance with Laws. If Seller is not in compliance with laws to the
extent set forth herein, Seller shall use its commercially reasonable efforts to
ensure such compliance and to correct any violations of such laws, statutes,
ordinances, governmental requirements, relations and orders.
(l) Operating Agreement. The parties shall have executed an Operating
Agreement for Buyer in a form agreeable to Seller.
9. CONDITIONS PRECEDENT OF BUYER
The obligations of Buyer hereunder are subject to the satisfaction of the
following conditions on or prior to the Closing Date, any of which may be waived
by Buyer, in its sole option:
(a) Representations and Warranties True at Closing. The representations and
warranties of Seller 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 on and as of the Closing Date and
such representations and warranties shall be deemed made at and as of such date,
except as otherwise expressly provided herein.
(b) Seller's Compliance with Agreement. Seller shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) Injunction. On the Closing Date, there shall be no effective
injunction, and no person has sought, an injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided, and the employees of Seller shall not be
on strike or threatening to strike or disrupt Seller's business.
(d) Casualty. Neither the Purchased Assets nor any substantial portion
thereof shall have been adversely affected in any material way as a result of
any fire, accident, flood or other casualty or act of God or the public enemy,
nor shall any substantial portion of the Purchased Assets have been stolen,
taken by eminent domain or subject to condemnation.
(e) Lease. The Premises Lease shall have been executed by all parties
thereto and delivered at the Closing.
(f) No Material Adverse Change in Business. There shall have been no
developments or changes in the business of Seller since December 31, 1998 which
would have a material adverse effect on the value of its business or on the
Purchased Assets of Seller.
(g) Consents. On or prior to the Closing Date, Seller shall have obtained
all consents and authorizations required from its lenders or any other third
parties to execute and deliver this Agreement and to carry out the transactions
contemplated hereby or otherwise required in order to permit Buyer to purchase
the assets, conduct business at the Premises and manufacture Products in
substantially the same manner as Seller conducted business and manufactured
Products prior to the Closing.
(h) Operating Agreement. The parties shall have executed an Operating
Agreement for Buyer in a form acceptable to Buyer.
10. CONDITIONS PRECEDENT OF SELLER
The obligations of Seller hereunder are subject to the satisfaction of the
following conditions that on or prior to the Closing Date, any one of which may
be waived by Seller, in its sole option:
(a) Promissory Note. The Promissory Note shall be delivered simultaneously
with the Closing under this Agreement.
(b) Representations and Warranties True at Closing. The representations and
warranties of Buyer and LLC 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 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.
(c) Buyer's compliance with Agreement. Buyer shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
(d) Note. The Promissory Note has been duly authorized, executed and
delivered and is the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, subject to
bankruptcy, insolvency or similar laws affecting creditor rights generally.
(e) Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein provided.
(f) Consents. On or prior to the Closing Date, Buyer shall have obtained
all consents and authorizations required from its lenders or any other third
parties to execute and deliver this Agreement and to carry out the transactions
contemplated hereby or otherwise required in order to permit Buyer to purchase
the assets, conduct business at the Premises and manufactured Products in
substantially the same manner as Seller conducted business and manufactured
Products prior to the Closing.
11. INDEMNFICATION
(a) Except as otherwise provided herein, Buyer and LLC 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 Buyer
contained in this Agreement;
(ii) Any and all claims, other than liabilities of Company expressly
retained by Seller under this Agreement for acts or omissions of the
Company on or after January 1, 1999, including, but not limited to claims
arising out of Buyer's waiver of and the resulting failure of Seller to
comply with the Bulk Sales Law or any violation thereof, and without regard
to whether such claims exist on the Closing Date or arise at any time
thereafter;
(iii) Any claim by customers of Seller or the ultimate purchaser or
user of Products sold by Seller on or after January 1, 1999 based upon
defects or alleged defects therein to the extent not covered by insurance;
(iv) Assumed Liabilities, Assumed Contracts or any other claims
expressly assumed by Buyer under this Agreement.
(b) Except as otherwise provided herein, Seller shall indemnify and hold
Buyer 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
contained in this Agreement;
(ii) Any and all claims, other than liabilities of Company expressly
retained by Buyer under this Agreement and claims except for unrecorded
liabilities of the Company accruing prior to January 1, 1999 which ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ or salaried exempt employees employed on or after July 1, 1998
had knowledge but failed to disclose to Seller;
(c) 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 give
to the Indemnifying Party prompt notice of such claim, but in any event within
thirty (30) days action or proceeding. 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). The obligation to indemnify
under Sections 11(a)(i) or (b)(i) of this Agreement shall survive until the
first anniversary of the Closing Date; provided that any claims asserted under
such sections prior to the first anniversary of the Closing Date shall survive
until finally resolved, subject to all applicable statutes of limitation.
12. DEFAULT AND RIGHT OF SET-OFF
The parties hereto acknowledge that the sale of the Purchased Assets and
the business of Company was in consideration of all amounts to be paid by Buyer
to Seller, and its affiliates and assigns, set forth herein; therefore, the
parties agree that failure to make any payment provided herein within the grace
period shall constitute a default under this Agreement. If Buyer fails to make
payment within the grace period, interest shall accrue on the past due amount
from the original due date at the higher rate of prime plus 2%, or 12% per
annum. If Buyer is delinquent with payments, including accrued interest thereon,
in the amount greater than Fifty Thousand Dollars ($50,000) the delinquency
shall constitute a default and all amounts hereunder (including allotments due
under the Promissory Note) are due and payable upon demand. In the event that
Buyer does not make payment upon demand, the interest rate on all outstanding
balances shall be adjusted to the higher of prime plus 2%, or 12% per annum.
Further, Buyer agrees to reimburse Seller for all costs, including reasonable
attorney's fees, incurred to effect the collection thereof
In the event that Seller has one or more claims under this agreement,
Seller shall have the right of set-off against any amounts owed to Buyer,
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ and against any assets in the possession of Seller
belonging to either.
13. BROKERAGE
Seller and Buyer represent and warrant to each other that all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on between Seller and Buyer directly and without the intervention of any
broker, finder or other third party and that no party is entitled to any finder
or brokerage fee in respect to this transaction.
14. 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 Buyer: With copy to:
Vision Legwear, LLC ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to LLC: With copy to:
VL HOLDINGS, LLC ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Seller: With copy to:
Hampshire Designers, Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Attn.: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address or to such other person as Buyer, LLC or Seller shall
have last designated by written notice to the other party.
15. NATURE AND SURVIVAL OF REPRESENTATIONS
All statements contained in any certificate or other instrument delivered
by or on behalf of Buyer or Seller pursuant to this Agreement or in connection
with the transactions contemplated hereby shall be deemed representations and
warranties by Buyer and by Seller, respectively, hereunder. All representations
and warranties shall survive until the first anniversary of the Closing Date and
all agreements made by the parties hereto in this Agreement or pursuant hereto
shall survive the Closing hereunder.
16. EXPENSES
The parties hereto shall bear their respective expenses in connection with
the transactions herein contemplated except as set forth herein.
17. TERMINATION
If the Closing hereunder is not held, the parties shall nonetheless have
their other respective rights or remedies now or hereafter existing at law or in
equity or by statute; provided, however, that if an action, suit or proceeding
with respect to rights or remedies arising because the Closing hereunder does
not occur or is not commenced on or before June 15, 1999, the Agreement shall be
terminated as of that date and neither Purchaser nor Seller shall have any
further rights or obligation hereunder.
18. PARTIES
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
being intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective successors and for the benefit of no other person or
corporation.
19. APPLICABLE LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware.
20. SEVERABILITY
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid, or unenforceable provision or by its severance from
this Agreement. Furthermore, in lieu of each such illegal, invalid, or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid, and enforceable.
21. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
22. ARBITRATION
Except as provided herein all claims and disputes arising out of or related
to this Agreement shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association currently
in effect, and judgment thereon maybe entered in any court of competent
jurisdiction. Arbitration proceedings shall be held in Anderson, South Carolina.
23. ENTIRE AGREEMENT/MODIFICATION
This Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated herein and no representation,
promise, inducement or statement of intention relating to the transactions
contemplated by this Agreement has been made by any party which is not set forth
in this Agreement. This Agreement shall not be modified or amended except by an
instrument in writing signed by or on behalf of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
BUYER
VISION LEGWEAR, LLC
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
SELLER
HAMPSHIRE DESIGNERS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President & Secretary
VL HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Member Manager