STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of July 31, 1999, by
Signal Apparel Company, Inc., an Indiana corporation ("Seller"), ▇▇▇▇ ▇▇▇▇▇▇, an
individual resident in Palatine, Illinois ("Buyer"), and GIDI Holdings, Inc., an
Illinois corporation (the "Acquired Company").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of the
issued and outstanding shares of common stock of the Acquired Company (the
"Shares"), for the consideration and on the terms set forth in this Agreement.
Seller will retain all issued and outstanding shares of Series A Preferred Stock
of GIDI Holdings, Inc., and Buyer will not purchase any shares of preferred
stock at Closing.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1. SALE AND TRANSFER OF SHARES; CLOSING
1.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Seller
will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares
from Seller.
1.2 PURCHASE PRICE
The consideration for the Shares will be Buyer's assumption of the indebtedness
of the Acquired Company, as provided herein (the "Purchase Price").
1.3 CLOSING
The purchase and sale and related transactions (the "Closing") provided for in
this Agreement will take place at the offices of Seller's counsel, ▇▇▇▇, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, P.C., located at Suite 1100 SunTrust Bank Building, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at 10:00 a.m. (local time) on August 5, 1999
(the "Closing Date"), or at such other time, date and place as the parties may
agree.
1.4 CLOSING OBLIGATIONS
At the Closing:
(a) Seller will deliver or cause to be delivered to Buyer:
(i) certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock
powers), for transfer to Buyer;
(ii) stock records and minute books of the Acquired Company, and other books,
records and property of the Acquired Company in the possession or under the
control of the Seller; and
(iii) a certificate executed by Seller to the effect that, except as otherwise
stated in such certificate, each of Seller's representations and warranties in
this Agreement was accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made on the Closing
Date.
(b) Buyer will deliver or cause to be delivered to Seller:
(i) a certificate executed by Buyer to the effect that, except as otherwise
stated in such certificate, each of Buyer's representations and warranties in
this Agreement was accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made on the Closing
Date.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING
(a) The Acquired Company is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform all
its obligations under its material contracts.
(b) Seller has delivered to Buyer true and correct copies of the organizational
documents of the Acquired Company, as currently in effect.
2.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms. Seller has the
right, power, and authority to execute and deliver this Agreement and Seller's
closing documents;
(b) Except as set forth in Schedule 2.2 , neither the execution and delivery of
this Agreement nor the consummation or performance of any of the transactions
contemplated by this Agreement by Seller (the "Contemplated Transactions") will,
to Seller's best knowledge, give any person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to: (i)
any legal requirement to which Seller may be subject; or (ii) any contract to
which Seller is a party or by which Seller may be bound.
(c) Seller is not and will not be required to obtain any consent from any person
in connection
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with the execution and delivery of this Agreement as the consummation or
performance of any of the Contemplated Transactions.
2.3 CAPITALIZATION
(a) The authorized equity securities of the Acquired Company consists of 10,000
shares of common stock, no par value per share, of which 2,000 shares are issued
and outstanding and constitute the Shares, and 35 shares of Series A Preferred
Stock, having a stated value of $10,000 per share, of which 35 shares are issued
and outstanding and owned legally and beneficially by Seller. The resolution of
the Board of Directors of GIDI Holdings, Inc. fixing the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations, or restrictions thereof, of the Series
A Preferred Stock is attached hereto as ANNEX A (the "Resolution"). Pursuant to
a recapitalization of the Acquired Company, Seller acquired such shares of
Series A Preferred Stock in consideration for its contribution to capital of the
Acquired Company of Seller's right to payment of $350,000 of the outstanding
indebtedness owing by the Acquired Company to Seller (the "Intercompany Debt")
and Seller then contributed its right to payment of the outstanding balance of
the Intercompany Debt to the Acquired Company as additional paid-in capital, all
of which is so reflected as of the date hereof on the respective books and
records of the Acquired Company and Seller. Except for the Intercompany Debt so
contributed, no Intercompany Debt has been incurred or is outstanding. All of
the outstanding equity securities of the Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable and free of
preemptive and similar rights. There are no contracts, commitments, agreements,
obligations, options, or other rights relating to the issuance, sale, or
transfer of any equity securities or other securities of the Acquired Company,
except as set forth in this Agreement. The Acquired Company does not own, or
have any contract, commitments, agreements, obligations, options, or other
rights to acquire, any equity securities or other securities of any person or
any direct or indirect equity or ownership interest in any other business.
(b) At the Closing, Seller will duly and validly sell, assign and deliver to
Buyer, whereupon Buyer will be vested with good and marketable title to, all of
the Shares, free and clear of all liens, claims, encumbrances, restrictions and
third party rights.
2.4 BROKERS OR FINDERS
Seller and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement. Seller will indemnify and
hold Buyer harmless from any such payment alleged to be due by or through seller
as a result of the action of seller or his agents.
2.5 DISCLAIMER OF WARRANTIES
Except as expressly set forth in this Article 2, Seller makes no representation
or warranty, express or implied, at law or in equity, in respect of the Acquired
Company, and any such other representations or warranties relating to the
Acquired Company is hereby expressly disclaimed.
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Buyer hereby acknowledges and agrees that, except to the extent set forth in
this Article 2, Buyer is acquiring the Acquired Company on an "as-is; where-is"
basis.
2.6 TAXES
All returns of the Acquired Company required by law to be filed have been
properly and accurately prepared and duly filed in a timely manner, and all
Taxes shown on such Returns to be due and payable have been paid or adequate
accruals therefor have been made by it. As used in this Agreement, the term
"Taxes" means all federal and state, income, gross receipts, sales, use, ad
valorem, transfer, franchise, withholding, payroll, employment, excise, stamp,
customs, duties or other taxes, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto, and the term
"Returns" means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes.
2.7 CONTRACTS
Except as disclosed in writing or provided to Buyer on or before the date of
this Agreement, the Acquired Company is not a party to, or bound by, or the
issuer or beneficiary of, any undisclosed written or oral: (i) agreement or
arrangement obligating or potentially obligating the Acquired Company to pay an
aggregate amount in excess of $50,000, including, without limitation, any
purchase, sale, supply or distribution or vending agreement or arrangement; (ii)
employment or consulting agreement or arrangement; (iii) plan, contract or
arrangement providing for bonuses, options, deferred compensation, retirement
payments, profit sharing, medical and dental benefits or the like covering
employees of the Acquired Company; (iv) agreement restricting in any manner the
Acquired Company's right to compete with, sell to or purchase from any other
person or entity or the ability of such person or entity to employ any of the
Acquired Company's employees; (v) guaranty, performance, bid or completion bond,
or surety or indemnification agreement; (vi) requirements contract; (vii) loan
or credit agreement, pledge agreement, note, security agreement, mortgage,
debenture, indenture, factoring agreement or letter of credit; (viii) power of
attorney; (ix) partnership or joint venture agreement; (x) insurance contracts;
or (xi) any other agreement not entered into in the ordinary course of business.
2.8 FALSE OR MISLEADING INFORMATION
No information of a factual nature set forth in this Agreement contains or will
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements or
information contained therein, in the light of the circumstances under which
such statements are made, not misleading.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
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3.1 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Buyer has the
right, power, and authority to execute and deliver this Agreement and the
Buyer's closing documents and to perform his obligations under this Agreement
and the Buyer's closing documents.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will to Buyer's best knowledge give any person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any legal requirement or order to which Buyer may be subject; or
(ii) any contract to which Buyer is a party or by which Buyer may be bound.
(c) Buyer is not and will not be required to obtain any consent from any person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the contemplated transactions.
3.2 CERTAIN PROCEEDINGS
There is no pending proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
knowledge, no such proceeding has been threatened.
3.3 BROKERS OR FINDERS
Buyer has incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement. Buyer will indemnify and hold Seller harmless
from any such payment alleged to be due by or through Buyer as a result of the
action of Buyer or his agents.
3.4 ACCOUNTS PAYABLE
Buyer represents and warrants that the accounts listed on Annex C are all of the
trade accounts payable by the Acquired Company as of the date hereof.
ARTICLE 4. COVENANTS OF SELLER PRIOR TO CLOSING DATE
4.1 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANY
Between the date of this Agreement and the Closing Date, Seller will, and will
cause the Acquired Company to:
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(a) confer with Buyer concerning operational matters of a material nature; and
(b) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Acquired Company.
4.2 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Seller will, and
will cause the Acquired Company to, make all filings required by legal
requirements to be made in order to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Seller will, and will
cause the Acquired Company to: (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by legal requirements to make
in connection with the contemplated transactions, and (b) cooperate with Buyer
in obtaining all required consents.
4.3 NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller will promptly
notify Buyer in writing if Seller or the Acquired Company becomes aware of any
fact or condition that causes or constitutes a breach of any of Seller's
representations and warranties as of the date of this Agreement, or if Seller or
the Acquired Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. No such notice shall relieve
Seller of any liability for any such breach, nor shall such notice or the
consummation of the Contemplated Transactions constitute a waiver by Buyer of
any rights or remedies with respect to such breach.
ARTICLE 5. COVENANTS OF BUYER AND ACQUIRED COMPANY
5.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, each party will
make all filings required of it by legal requirements to be made to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Buyer, Seller, and the Acquired Company will: (i) cooperate in all
reasonable respects requested by the other party with the other party with
respect to all filings that the other party is required by legal requirements to
make in connection with the Contemplated Transactions, and (ii) cooperate with
the other party in obtaining all required consents.
5.2 LIENS
The Acquired Company will not create nor allow any mortgage, encumbrance, or
lien, whether voluntary or involuntary (collectively "Liens"), on the real or
personal property, assets, effects, undertaking or goodwill of the Acquired
Company, other than liens securing indebtedness to
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Republic Finance or any lender substituted for Republic Finance, without the
consent of the holders of at least two-thirds (2/3) of the outstanding shares of
Series A Preferred.
Notwithstanding the foregoing, the Acquired Company shall be entitled to grant
or permit the following Liens, without any consent of its Series A preferred
shareholder: (i) Liens securing payment of indebtedness incurred in connection
with the acquisition of equipment or other assets and covering only those assets
acquired with the proceeds of such indebtedness, (ii) Liens for taxes,
assessments or other governmental charges or levies not yet due or thereafter
payable without penalty, or Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business for sums
not overdue, or any such Liens being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside on its books
(but only if such Liens do not in the aggregate materially adversely affect the
assets or business of the Acquired Company), (iii) Liens incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of statutory obligations, leases and contracts (other than
for borrowed money ) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds, and (iv) judgment Liens in
existence less than 30 days after the entry thereof or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance maintained with responsible insurance
companies.
ARTICLE 6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
in writing by Buyer, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS
All of Seller's representations and warranties in this Agreement must have been
accurate in all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
6.2 SELLER'S PERFORMANCE
(a) All of the covenants and obligations that Seller is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing, and each
of these covenants and obligations, must have been duly performed and complied
with in all material respects.
(b) Each document required to be delivered by this Agreement must have been
delivered, and each of the other covenants and obligations required by this
Agreement must have been performed and complied with in all respects.
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6.3 CONSENTS
Each of the consents required to be obtained must have been obtained and must be
in full force and effect.
6.4 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
threatened against any party, or against any person affiliated with any party,
any proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
6.5 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or threatened by any person any claim asserting
that such person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Acquired Company, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
6.6 ADDITIONAL DOCUMENTS
Seller shall have delivered to Buyer a Separation Agreement in the form of ANNEX
B (the "Separation Agreement") and the other documents contemplated under this
Agreement and the Separation Agreement, in each case, duly executed by the
parties thereto other than Buyer, the parties thereto other than Buyer shall
have complied in all material respects with their respective obligations
required to be performed at or before the time of the Closing, the transactions
contemplated thereunder to be consummated at or before the time of the Closing
shall have been consummated, and no party (other than Buyer) shall have breached
in any material respect any of its representations, warranties or obligations
thereunder.
ARTICLE 7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions required to
be taken by Seller at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
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7.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(b) Buyer must have delivered each of the documents required to be delivered by
Buyer pursuant to this Agreement and must have made the cash payments required
to be made by Buyer.
7.3 CONSENTS
Each of the consents required to have been obtained must have been obtained and
must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Buyer must have caused the Seller the certificate required by Article 1 of this
Agreement to be delivered to
7.5 NO INJUNCTION
There must not be in effect any legal requirement or any injunction or other
order that (a) prohibits the sale of the Shares by Seller to Buyer, and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
ARTICLE 8. TERMINATION
8.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by Buyer or Seller if a material breach of any provision of this Agreement
has been committed by the other party and such breach has not been waived (or
cured within five (5) business days of the occurrence of the breach);
(b) (i) by Buyer if any of the conditions in Article 6 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller, if any of the conditions in Article
7 has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date;
(c) by mutual written consent of Buyer and Seller; or
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(d) by either Buyer or Seller if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before August 30, 1999,
or such later date as the parties may agree upon.
8.2 EFFECT OF TERMINATION
Each party's right of termination under Section 8.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the parties under
this Agreement will terminate (subject to the preceding sentence), except that
the obligations in Section 9.3 will survive; provided, however, that if this
Agreement is terminated by a party because of the Breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE 9. GENERAL PROVISIONS
9.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants.
9.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Seller and Buyer shall mutually determine (except as required by
legal requirements). Seller and Buyer will consult with each other concerning
the means by which the Acquired Company's employees, customers, and suppliers
and others having dealings with the Acquired Company will be informed of the
contemplated transactions, and Seller will have the right to be present for any
such communication.
9.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, the parties will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of the parties and the Acquired Company to maintain in
confidence, any written information originally furnished by a party in
connection with this Agreement or the contemplated transactions relating to the
Acquired Company or the business of Seller or Buyer, unless (a) such information
is already known to the parties or to others not bound by a duty of
confidentiality or such
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information becomes publicly available through no fault of the parties, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, the recipient party
(unless the disclosing party has breached this Agreement) will return or destroy
as much of such written information as the disclosing party may reasonably
request.
9.4 NOTICES
All notices, consents, approvals, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Buyer:
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇)▇▇▇-▇▇▇▇
Seller:
Signal Apparel Company, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
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▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
1100 SunTrust Bank ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.5 ADDITIONAL AGREEMENTS
For a period of twelve (12) months following the Closing, Buyer and the Acquired
Company shall not compete, directly or indirectly, in any manner with the
business conducted by Seller or solicit or attempt to solicit for hire any
employees of Seller as of the date of this Agreement. Further, for a period of
twelve (12) months following the Closing, Buyer and the Acquired Company shall
not enter, directly or indirectly, into the employ of or render any service to
or become affiliated with, any person, firm, or corporation which competes with
Seller. The term "compete(s)" for the purposes of this Section 9.5 shall mean
any business which is involved in the sale to any customer of Seller as of the
date of Closing of lady's and men's swimwear and/or swimwear cover-ups and/or
lady's activewear and/or bodywear or any business which holds a license for
apparel products from any licensor of Seller as of the date of Closing. Without
in any way limiting the foregoing, Buyer and the Acquired Company expressly
agree that this Section 9.5 prohibits Buyer and the Acquired Company, directly
or indirectly, for a period of twelve (12) months following the Closing, from
purchasing the assets or capital stock of the company holding the Umbro license
for Canada or such company purchasing the assets or capital stock of any company
with which the Buyer or the Acquired Company is affiliated. Any reference to
"Seller" in this Section 9.5 includes Seller's affiliated and/or subsidiary
companies. The foregoing shall not apply to the purchase of Iron Knights by the
Buyer or the Acquired Company, or by a company with which Buyer or the Acquired
Company is affiliated, or the purchase of Iron Knights of the Acquired Company
or the development of a business relationship between the Acquired Company and
Iron Knights.
Buyer and the Acquired Company expressly acknowledge that they are fully aware
of the nature of Seller's business as a result of Buyer's and the Acquired
Company's independent investigations, and that Buyer and the Acquired Company
have been given a full opportunity to consult with Seller's executives
concerning the nature and scope of Seller's business. Buyer and the Acquired
Company expressly acknowledge that the provisions of this Section 9.5 do not
impose economic hardship on them.
9.6 CERTAIN INDEBTEDNESS
As of the date hereof, the Acquired Company is indebted to Republic Acceptance
Corporation in the principal amount of $519,086.71 (The "Republic
Indebtedness"), which indebtedness has been guaranteed by Seller, and Seller has
guaranteed the performance of the obligations by the Acquired Company under a
Lease Agreement dated May 11, 1994 between the Acquired Company and Rose Real
Estate Services, Inc., Agent (the "Lease Agreement"). Effective within 60 days
after the Closing, (i) Buyer shall have provided documentation to Seller
evidencing that
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Buyer shall have been substituted as Guarantor and Seller shall have been
released from its obligation under the guaranty for the Republic Indebtedness,
and (ii) Buyer shall provide documentation that Seller is released from its
guaranty of the Lease Agreement of the Acquired Company's premises at 1028, 1030
and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. Additionally, Buyer hereby
expressly guarantees payment of and assumes liability for all accounts payable
of the Acquired Company set forth on Annex C. Buyer shall indemnify and hold
Seller harmless from any liability it may have with respect to the Republic
Indebtedness, the Lease Agreement, and the accounts payable set forth on Annex
C.
Each of Buyer and the Acquired Company agrees, effective at the time of Closing,
to assume and be responsible for all obligations, including making timely rental
payments totaling $75,342.00 to Seller in equal monthly payments of $6,278.50 on
or before the first day of each month with the first such payment being due
August 1, 1999 and performing all required maintenance, of the equipment leased
to Seller under a lease agreement, by and between Information Leasing
Corporation, as Lessor, and Signal Apparel Company, Inc. as Lessee, pursuant to
Rental Schedule No. 46989700 attached to Master Lease Agreement dated February
1, 1997, between Information Leasing Corporation and Seller.
9.7 INDEMNIFICATION
9.7.1 Liability, Loss or Damage
Buyer, and the Acquired Company agree to indemnify Seller and save Seller
harmless from any and all liability, loss, or damage Seller may suffer as a
result of claims, demands, costs, or judgments against Seller arising from any
failure of Buyer or the Acquired Company to perform any and all of their
respective obligations under this Agreement and the Resolution, including, but
not limited to any liability of Seller resulting from Buyer's or the Acquired
Company's failure to discharge when due any liability of the Acquired Company
assumed by Buyer or the Acquired Company, or arising after the Closing Date; and
Seller agrees to indemnify Buyer and/or the Acquired Company and save Buyer
and/or the Acquired Company harmless from any and all liability, loss, or damage
Buyer and/or the Acquired Company may suffer as a result of claims, demands,
costs, or judgments against Buyer and/or the Acquired Company arising from any
failure of Seller to perform any and all of its obligations under this Agreement
and the Resolution . (For the purposes of this Section 9.7, any such party or
parties seeking indemnification shall be referred to as "Indemnitee" and the
party or parties from which indemnification is sought shall be referred to as
"Indemnitor").
9.7.2 Duration
Indemnity under this agreement shall commence on the Closing Date, and
shall continue in full force until one (1) year after all of the obligations of
the Buyer and Acquired Company under this Agreement and the Resolution have been
fully satisfied.
9.7.3 Notice
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Any party seeking indemnification from another party or parties agrees to
notify Indemnitor in writing of any claim made against Indemnitee with respect
to matters for which Indemnitee is entitled to receive indemnification hereunder
at the addresses as disclosed in Section 9.4.
9.7.4 Enforcement; Attorneys Fees
In the event Indemnitee institutes any action to enforce any of the terms
or conditions of this Section 9.7, Indemnitee shall be entitled to recover from
the Indemnitor all costs and reasonable attorney fees incurred by Indemnitee.
9.8 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of New York, County of New York, or, if it has or can
acquire jurisdiction, in the United States District Court for the Southern
District of New York, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
9.9 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
9.10 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
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9.11 ENTIRE AGREEMENT AND MODIFICATION
This Agreement and the other agreements referenced herein supersede all prior
agreements between the parties with respect to their subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to their subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
9.12 SCHEDULES
(a) The disclosures in the Schedules must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the body of this
Agreement and those in the Schedules (other than an exception expressly set
forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
9.13 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement without the prior
consent of the other parties except that Buyer may assign any of its rights
under this Agreement to any Subsidiary of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and permitted assigns.
9.14 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
9.15 SECTION HEADINGS, CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
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9.16 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
9.17 GOVERNING LAW
This Agreement will be governed by the laws of the State of New York without
regard to conflicts of laws principles.
9.18 COUNTERPARTS; FACSIMILE SIGNATURES
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. This
Agreement may be executed with facsimile signatures.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Seller: Buyer:
------ -----
SIGNAL APPAREL COMPANY, INC. /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
ACQUIRED COMPANY:
-----------------
GIDI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Vice President
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attest:
----------------------------------
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