AGREEMENT FOR PURCHASE OF ASSETS
THIS AGREEMENT, dated as of January 1, 1995 between and among VINTAGE,
INC., a Delaware corporation having its principal executive offices at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as
"Vintage" or the "Buyer") and SEGUE, LTD., a California corporation having its
principal executive offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "Segue" or the "Seller") and ▇▇▇▇ ▇▇▇▇▇▇▇▇, an
individual having his principal place of residence at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "Shareholder").
WHEREAS, Hampshire Designers, Inc., a Delaware Corporation having its
principal executive offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, (hereinafter referred to as "Hampshire"), is the sole stockholder of
Vintage.
WHEREAS, ▇▇▇▇▇▇▇▇ is the president, the sole director and the sole
stockholder of Segue.
WHEREAS, Segue designs, markets and distributes fashion sweaters and
related knitted and woven apparel, the majority of which is imported through
Global Services, Ltd. and Keynote Services, Ltd.
WHEREAS, the Seller desires to sell, and the Buyer desires to purchase
certain assets of the Seller (the "Purchased Property" as hereinafter defined),
which property constitutes substantially all of the assets of Segue as of the
Purchase Date, all upon the terms, and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises, representations
warranties and mutual agreements herein set forth, the Buyer and the Seller and
the Shareholder hereby agree as follows:
1. DEFINITIONS
As used herein, the following terms shall, unless the context clearly
indicates otherwise, have the following meanings:
(a) "Purchase Date" shall mean as of 12:01 A.M. Eastern Daylight Savings
Time, January 1, 1995.
(b) "Closing" shall have the meaning set forth in Section 6 hereof.
(c) "Closing Date" shall mean 1:30 P.M. Eastern Daylight Savings Time on
February 15, 1995, or such other date as the parties shall mutually agree upon
in writing, but in any event not later than February 28, 1995.
(d) "Premises" shall mean the real property leased to Segue as described on
Exhibit 1, attached hereto and made a part hereof.
(e) "Premises Lease" shall mean that certain lease made as of the 2nd day
of September, 1992 between 38 & 6 ASSOCIATED and SEGUE, LTD., attached hereto as
Exhibit 2 and made a part hereof respecting the property (the "Property")
described thereon.
(f) "Equipment and Other Leases" shall mean any lease covering Machinery
and Equipment used by Segue at the Premises or at any other location other than
the Premises or real estate lease other than for the Premises, listed on Exhibit
3, annexed hereto and made a part hereof; copies of which have been delivered to
the Buyer.
(g) "Accounts Receivable" shall mean any and all receivables of Segue,
including, but not limited to, all trade accounts receivable, balances due from
factors and other receivables acceptable to the Buyer.
(h) "Finished Inventory" shall mean Segue's inventory of finished Products
on the Purchase Date, including such finished Products in transit and held at
contractors.
(i) "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 and held at contractors on
the Purchase Date, for use in connection with the operations, plus additions
thereto through the Closing Date, in which Segue had or shall have any rights,
title or interest, together with any rights of Segue 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.
(j) "Machinery and Equipment" shall mean any and all of the machinery and
equipment, including, but not limited to, sewing machines and other machines,
hand tools, tooling, owned or used by Segue in the design, marketing and
distribution of Products, or located at or on the Premises, including, without
limitation, those items listed on Exhibit 7, annexed hereto and made a part
hereof, and in which Segue had any rights, title or interest as of the Purchase
Date, plus additions thereto through the Closing Date, and all of the
replacement parts for any of the foregoing in which Segue had or shall have as
of such dates any rights, title or interest, together with all information,
patents, drawings, manuals and data relating to the operation of the machinery
and equipment and the manufacture of Products and any rights of Segue in and to
the warranties and licenses, if any, received from manufacturers and vendors of
the aforesaid items and any related claims, credits, rights of recovery and
set-off with respect to the Machinery and Equipment.
(k) "Intangible Property" shall have the meaning set forth in Section
2(a)(v) hereof.
(l) "Other Property" shall mean all Purchased Property described in Section
2(a) hereof other than Machinery and Equipment, Finished Inventory, Other
Inventory and Intangible Property.
(m) "Purchased Property" shall have the meaning set forth in Section 2(a)
hereof.
(n) "Excluded Property" shall have the meaning set forth in Section 2(a)
hereof.
(o) "Purchase Orders" shall mean those open purchase orders of Segue listed
on Exhibit 10, annexed hereto and made a part hereof, copies of which have been
delivered to the Buyer.
(p) "Sales Commitments" shall mean those open sales orders, commitments and
agreements of Segue to sell Products listed on Exhibit 11, annexed hereto and
made a part hereof, copies of which have been delivered to the Buyer.
(q) "Accounts Payable" shall mean trade accounts payable for the
manufacture or purchase of Products delivered to Segue or services rendered for
Segue (the "Accounts Payable"), but limited to those items listed on Exhibit 12,
attached hereto and made a part hereof.
(r) "Accrued Expenses and Other Liabilities" shall mean accrued expenses
and other liabilities of Segue such as accrued vacation of Transferred Employees
but excluding accrued payroll and employee benefits, and excluding liabilities
for federal and state income taxes ("Accrued Expenses and Other Liabilities"),
but limited to those items listed on Exhibit 13, attached hereto and made a part
hereof.
(s) "Licenses and Permits" shall have the meaning set forth in Section
2(a)(x) hereof.
(t) "Other Contracts" shall mean those employment agreements, service
contracts and other agreements not constituting Premises Lease, Equipment and
Other Leases, Purchase Orders, Sales Commitments or Licenses and Permits, which
are listed on Exhibit 14, annexed hereto and made a part hereof, to the extent
that any of such contracts remain executory after the Purchase Date, copies of
which have been delivered to the Buyer.
(u) "Assumed Contracts" shall mean collectively the Premises Lease,
Equipment and Other Leases, Accounts Payable, Accrued Expenses and Other
Liabilities, Purchase Orders, Sales Commitments, Other Contracts and Licenses
and Permits related to the operation of Segue.
(v) "Transferred Employees" shall mean those employees of Segue engaged in
the design, marketing and distribution of Products and listed on Exhibit 16,
annexed hereto and made a part hereof, whose employment by Segue is terminated
as of the Closing Date and whose employment by Vintage, as hereinafter provided
in Section 8(e), begins on the Closing Date.
(w) "Products" shall mean men's, women's and children's sweaters and
related knitted and woven apparel, including, but not limited to, blouses, tops,
vests, dresses, skirts, slacks, suits and coats.
(x) "Vintage Preferred Stock" shall mean the Vintage, Inc. Series A
preferred stock, no par value per share, a copy of which is attached hereto as
Exhibit 27.
(y) "Vintage Common Stock" shall mean the Vintage, Inc. common stock, $0.10
par value per share, of which a copy of a certificate therefor is attached
hereto as Exhibit 29.
(z) "Hampshire Common Stock" shall mean the Hampshire Group, Limited common
stock, $0.10 par value per share, of which a copy of a certificate therefor is
attached hereto as Exhibit 30, to be delivered pursuant to Section 3(b) hereof.
(aa) "Financial Statements" shall have the meaning set forth in
Section 6(t) hereof.
(bb) "Budget" shall mean the Segue/ Vintage Budget prepared by the
Segue staff for the year ending December 31, 1995, attached hereto as
Exhibit 23 and made a part hereof.
(cc) "Escrow Agreement and Joint Escrow Instructions" shall mean the
agreement between and among the parties hereto setting forth the delivery
instructions for the "Contingent Purchase Price" as set forth in Section
3(c) hereof attached hereto as Exhibit 33 and made a part hereof.
(dd) "Escrow Agent" shall mean that individual appointed by the
parties hereto to serve in the responsibilities set forth in the Escrow
Agreement.
(ee) "Fair Market Value" shall mean the average mean between the last
quoted bid and asked prices on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), for the twenty trading days
immediately preceding the Determination Date. If the Hampshire Common Stock
is not quoted on NASDAQ, or listed on an exchange, or representative quotes
are not otherwise available, the Fair Market Value shall mean the amount
determined by the parties to be the fair market value of the Stock based
upon a good faith attempt to value the Hampshire Common Stock accurately.
(ff) "Determination Date" shall mean the date that the Hampshire
Common Stock is to be delivered in accordance with Section 3(c) hereof.
2. PURCHASE AND SALE OF THE PURCHASED PROPERTY
(a) Purchase. Subject to the terms and conditions herein set forth, on the
Closing Date, the Seller shall sell, transfer and assign to the Buyer and the
Buyer shall purchase, all of the Seller's rights, title and interest in and to
the Purchased Property described below, free and clear of all mortgages, liens,
charges, encumbrances or security interests of any nature whatsoever other than
those expressly described on Exhibit 15, attached hereto and made a part hereof.
As used in this Agreement, the "Purchased Property" shall mean all tangible and
intangible assets of the Seller other than furniture and fixtures, either owned,
leased or otherwise held by the Seller on the Purchase Date, plus any and all
additions thereto through the Closing Date, including, without limitation, all
of the items described below:
(i) All Accounts Receivable including, without limitations, those
items listed on Exhibit 4, attached hereto and made a part hereof;
(ii) All Finished Inventory and Other Inventory including, without
limitation, those items listed on Exhibit 5, attached hereto and made a
part hereof (to be confirmed by audit);
(iii) All non-inventoried supplies, tooling, repair parts and other
assets located on the Premises, held at contractors or used in the
operations of Segue on the Purchase Date, plus additions thereto through
the Closing Date, excluding items consumed, abandoned or disposed of in the
normal course of operations as obsolete or worn out;
(iv) All Machinery and Equipment, including, without limitation, those
items listed on Exhibit 7. Said Exhibit 7 shall be amended to include any
additions to machinery and equipment, and tangible personal property other
than inventory and furniture and fixtures owned by the Seller and used in
the operations between the Purchase Date and the Closing Date;
(v) All intangible personal property and rights of the Seller,
including, without limitation, all patents, trademarks, service marks,
trade names, copyrights, (whether registered or unregistered) designs,
patterns, computer programs and program products, inventions, know-how,
trade secrets, customer lists, other similar rights, claims against third
parties and all other rights owned, held or leased by the Seller on the
Purchase Date, plus additions thereto through the Closing Date, and all
goodwill of the Seller relating to the business and operations of Segue
(collectively the "Intangible Property") including, without limitation
those listed on Exhibit 8, annexed hereto and made a part hereof;
(vi) All of Seller's Purchase Orders, Other Contracts or other
commitments to suppliers, of goods and services for undelivered materials,
supplies or other items to be utilized in the operations after the Purchase
Date as listed on Exhibits 10 and 14 hereof;
(vii) All Sales Commitments, contracts and orders obligating the
Seller, or outstanding proposals by Segue to sell Products to customers,
after the Purchase Date as listed on Exhibit 11 to the Agreement;.
(viii) The Premises Lease described on Exhibit 2 hereof;
(ix) All Equipment and Other Leases covering machinery and equipment
used at the Premises or in the operations of Segue and any private or
public warehouses, used in the operations of Segue, and listed on Exhibit 3
hereto;
(x) All government permits, authorizations and licenses which are
transferable and owned or held by the Seller and used in the operations,
(collectively, the "Licenses and Permits"), including, without limitation
those described on Exhibit 18. attached hereto and made a part hereof;
(xi) The parties agree that the Purchased Property includes all assets
owned by Segue and all assets used in the operations of Segue, including,
but not limited to all assets located on the Premises on the Purchase Date
and on the Closing Date except those assets specifically excluded (the
"Excluded Property") as listed on Exhibit 9, attached hereto and made a
part hereof.
(b) Sale at Closing Date. The sale, transfer, assignment and delivery by
the Seller of the Purchased Property to the 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 pursuant to Section 5 and substantially similar to those attached
hereto as Exhibit 20.
(c) Subsequent Documentation. The parties shall, at any time and from time
to time after the Closing Date, upon the reasonable request of either party 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
the Buyer, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession any or all of the Purchased Property to be
purchased by the Buyer as provided herein or documents for the benefit of the
Seller.
(d) Assignment and Transfer of Contracts and Warranties. On the Closing
Date, the Seller shall assign and transfer to the Buyer and the Buyer shall
acquire, all of the 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 the Seller with respect to the Purchased Property
and the Premises. To the extent that the assignment of any Assumed Contract
shall require the consent of any other party thereto, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment, without
consent, would constitute a breach thereof. The Seller will use its best efforts
to obtain the consent of the other parties to such contracts for the assignment
thereof to the Buyer. If such consent is not obtained in respect of any such
Assumed Contract, the Seller will cooperate with the Buyer in any reasonable
arrangement requested by the Buyer to provide to the Buyer the benefits under
any such Assumed Contract, including enforcement, at the cost of the Seller and
for the benefit of the Buyer, of any and all rights of the Seller against the
other party thereto with respect to such Assumed Contracts.
(e) Limited Assumption of Obligations. The Buyer shall have no obligation,
direct or indirect, and shall not assume or agree to pay, perform or discharge,
nor shall the Buyer be directly or indirectly responsible or obligated for, any
debts, obligations, contracts or liabilities of the Seller wherever or however
incurred, other than those expressly set forth herein in Exhibits 2, 3, 10, 11,
12, 13, 14, 15 and 18 (the "Assumed Obligations"); it being understood that the
Seller shall remain responsible for all such other debts, obligations,
contracts, claims and liabilities of Segue. The Buyer shall have executed and
delivered to the Seller such instrument of assumption, substantially in the form
of Exhibit 21 hereto, as may be necessary to duly effectuate the assumption by
the Buyer of the Assumed Obligations.
(f) Interim Period Conduct of Business. All operations of Segue 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 the 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
the Seller. Promptly after the Closing Date, representatives of the Buyer and
the Seller shall prepare schedules reflecting the transactions entered into by
the Seller during such period and the expenses allocable thereto, and on the
date the adjustments described in Section 4(a) hereof 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 dispute to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, independent public
accountants, who shall resolve the dispute in the manner specified in Section
4(b) hereof.
(g) The Seller hereby acknowledges that the Purchased Property includes the
name "Segue" and hereby assigns this name to the Buyer; and further the Seller
agrees that within fifteen (15) days after the Closing, the Seller will take
such actions as are necessary to change the name of Segue, Ltd., a California
corporation, to a name not including the name Segue in any form, whereby
Vintage, Inc. may use the name Segue, Inc.
3. PURCHASE PRICE AND PAYMENT
The Seller and the Buyer hereby agree:
(a) Purchase Price. The purchase price for the Purchased Property shall be
Five Hundred and Forty Thousand Dollars ($540,000), plus a contingent purchase
payment of Twenty-Six Thousand (26,000) shares of Hampshire Common Stock set
forth in Section 4(c) below (the "Purchase Price"). The Purchase Price shall be
allocated to the tangible assets of the Sellers, as compiled on the balance
sheet of Segue for December 31, 1994 (Exhibit 26) with any excess being
allocated to intangible assets.
(b) Payment of Purchase Price. On the Closing Date, the Buyer shall deliver
to the Seller a bank check payable to the order of the Seller in the amount of
Five Hundred and Forty Thousand Dollars ($540,000); and the Buyer shall deliver
to the Escrow Agent (as hereinafter defined) two stock certificates issued in
the name of the Seller representing a total of Twenty-Six Thousand (26,000)
shares of Hampshire Common Stock.
(c) Contingent Purchase Price. The Escrow Agent, pursuant to an Escrow
Agreement which is attached hereto as Exhibit 33, shall be instructed to deliver
to the Seller at the end of two years from the date hereof (the "Determination
Date"), the number of shares of Hampshire Common Stock as equals $130,000 worth
of such stock (based on the Fair Market Value of such stock) provided Vintage
achieves eighty percent (80%) of the net income as set forth in the Budget for
the Year Ending December 31, 1995 (the "1995 Financial Condition"), attached
hereto as Exhibit 23 and made a part hereof; and to deliver the number of shares
of Hampshire Common Stock as equals $130,000 worth of such Stock (based on the
Fair Market Value of such stock) provided Vintage achieves an equal income
performance for the year ending December 31, 1996 (the "1996 Financial
Condition") as required for the year ending December 31, 1995 as set forth
above. If the number of shares of Hampshire Common Stock due to Seller pursuant
to this Section 4(c) is less than 26,000 shares, the Escrow Agent shall return
the balance of such shares to the Buyer within five days. All transfers of
Hampshire Common Stock by the Escrow Agent hereunder, shall be effected by the
Escrow Agent through Hampshire. If the number of shares of Hampshire Common
Stock due to Seller pursuant to this Section 4(c) is greater than 26,000, Buyer
shall within five days provide to Seller such excess or the cash equivalent of
such excess (based on the average value of such stock for the sixty days
preceding the Determination Date). Further, if on the business day immediately
preceding the Determination Date, the closing price of the Hampshire Common
Stock as quoted on NASDAQ, or other exchange, is equal to or less than five
dollars ($5) per share, either Buyer or Seller may, on the Determination Date,
opt (the "Cash Option") that in lieu of the Escrow Agent delivering to the
Seller the escrowed Hampshire Common Stock, Buyer shall pay to Seller (i)
$130,000 if only one of either the 1995 Financial Condition or the 1996
Financial Condition is satisfied by Buyer pursuant to this Section 3(c) or (ii)
$260,000 if both the 1995 Financial Condition and the 1996 Financial Condition
are satisfied by the Buyer pursuant to this Section 3(c). In the event either
Buyer or Seller exercises the Cash Option, the Escrow Agent shall return to the
Buyer the escrowed Hampshire Common Stock within five days of such exercise.
This Section 3(c) shall be subject to the Buyer's rights under and limitations
and restrictions of Section 13 hereof. Notwithstanding the above, the shares of
Hampshire Common Stock shall not be delivered on the Determination Date without
the Seller first having made adequate financial provision for the requirements
of Section 13 hereof.
(d) Piggy - Back Registration Rights. To the extent applicable, the Company
hereby agrees to arrange through Hampshire Group, Limited a "cost-free"
registration for all Hampshire Common Stock delivered pursuant to this Section 3
providing that Hampshire Group, Limited files a registration statement (other
than a registration on Form 5-4 or S-8) under the Securities Act of 1933, as
amended.
(e) Certificate Endorsements. The certificates representing the shares of
Vintage Common Stock and Hampshire Stock shall bear the following legend:
"The shares of stock represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, (the "Act") and may not be
transferred unless a registration statement has been declared effective with
respect to such shares, except in a transaction which, in the opinion of counsel
to the issuing company qualifies as an exempt transaction under the Act and the
rules and regulations promulgated thereunder."
"The shares of stock represented by this Certificate are subject to set-off as
provided in an Agreement for Purchase of Assets dated as of January 1, 1995
between and among Vintage, Inc. and Segue, Ltd. and ▇▇▇▇ ▇▇▇▇▇▇▇▇."
The certificate representing the shares of Vintage Common Stock shall also bear
the following legend:
"The shares of stock represented by this Certificate are subject to a
Stockholders Agreement dated February 15, 1995 between Hampshire Designers, Inc.
and ▇▇▇▇ ▇▇▇▇▇▇▇▇."
The certificate representing the shares of Hampshire Common Stock shall also
bear the following legend:
"The shares of stock represented by this Certificate are subject to an absolute
restriction on sale for two (2) years from issue."
(t) Restriction on Sale of Shares. Each of Seller and Shareholder agrees
not to sell or transfer the Hampshire Common Stock for a period of two (2) years
from the Closing Date. Shareholder also agrees that he will not sell, transfer
or assign the Vintage Common Stock unless sold in accordance with the
Stockholders Agreement, attached hereto as Exhibit 31.
4. ADJUSTMENTS
(a) To the extent that the Seller incurs any of the following pertaining to
use of the Premises or the manufacture of Products for the Buyer, the following
items shall be adjusted and 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) Payroll expenses and payroll taxes (including vacation pay,
whether accrued or otherwise);
(iv) Reimbursable employee business expenses;
(v) Employee benefit expenses, including, but not limited to,
workmen's' compensation claims, group benefits and medical benefits
(excluding such claims and benefits as are attributable to occurrences
prior to the Purchase Date);
(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, representatives of the Seller and the
Buyer shall complete a schedule itemizing all amounts requiring adjustment
pursuant to Section 2(f) and 4(a) hereof 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 or personal check by the appropriate
party to the other within three (3) business days after the approval of the
schedule by the Buyer and the Seller. Any dispute between the Buyer and the
Seller as to the items described in this Section 4 or in Section 2(f) hereof
which does not exceed One Hundred Thousand Dollars ($100,000) shall be resolved
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, independent certified public accountants, who shall resolve
any such dispute referred to them by the Buyer and the 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.
The Buyer and the Seller shall each pay fifty percent (50%) of the fee of such
accountants for resolving any such dispute.
5. CLOSING
(a) The closing under this Agreement ("▇▇▇ ▇▇▇▇▇▇▇") shall be effected by
the delivery by the Seller of the executed ▇▇▇▇(s) of Sale, endorsement,
assignments and such other instruments of transfer and conveyance sufficient to
convey full and clear title to the Purchased Property and the delivery by the
Buyer of the executed assumption agreement and the Purchase Price set forth
herein. The Closing shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
One Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the
Closing Date or at such other place as may be mutually agreed upon in writing by
the Buyer and the Seller and the Shareholder.
6. REPRESENTATIONS AND WARRANTIES OF TILE SELLER AND SHAREHOLDER
The Seller and the Shareholder jointly and severally represent and warrant
to the Buyer as follows: (a) Organization and Standing. Segue, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, 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 Segue. The Articles of Incorporation of Segue Ltd., a true
copy having been delivered to the Buyer, authorizes ten thousand (10,000) share
of capital stock of one class of which one thousand (1,000) shares are issued
and outstanding, all of which are owned by ▇▇▇▇▇▇▇▇. There are no outstanding
warrants or options, written or oral, to purchase shares of Segue and there are
no understandings with present or former employees that they have any rights
whatsoever to any ownership of Segue.
(c) Corporate Authority. The 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 the Seller, enforceable against the 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 the 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 the Seller of its obligations hereunder will not conflict with or
violate any provision of Seller's Certificate of Incorporation or its By-Laws or
conflict with or violate any provisions of, or result in a default or
acceleration of any obligation under any mortgage, lease, contract, agreement,
indenture or other instrument or undertaking or any order, decree or judgment to
which the Seller is a party or by which its property is bound.
(d) Authority of Shareholder. The Shareholder 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) Title to Purchased Property. The Seller owns all of the rights, title
and interest in and to all of the Purchased Property free and clear of
restrictions on, or conditions to transfer or assignment, and free and clear of
all mortgages, liens, charges, pledges, claims, encumbrances, restrictions and
security interest of any nature whatsoever other than those listed on Exhibit
15, attached hereto and made a part hereof. On the Closing Date, all of the
Purchased Property shall be free and clear of restrictions on, or conditions to
transfer or assignment, and free and clear of all mortgages, liens, charges,
pledges, claims, encumbrances and security interests, except only those liens
listed on Exhibit 14 hereto, if any.
(f) Net Worth. Segue's net assets, excluding any intangible assets, are
presently, and shall be as of the Purchase Date greater than One Hundred
Thousand Dollars ($100,000).
(g) Condition of Premises and Machinery and Equipment. Neither the Seller
nor the Shareholder have any knowledge or information available to them 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 the 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
Machinery and Equipment are in good condition and are fit for the uses and
purposes for which the Seller is currently using them as of the Purchase Date
and the Closing Date. The Purchased Property constitutes all of the assets
necessary to run the business of the Seller.
(h) Inventory. Inventories are stated at the lower of cost or market - cost
is determined using the first-in, first-out ("FIFO") method. Quantities on hand
or in process do not exceed normal requirements of the Seller's business and all
excess inventory has been reduced to realizable value less cost of distribution
and normal gross margin. All Products manufactured by or for the Seller or sold
by the Seller from and after January 1,1992, including, without limitation, the
Finished Inventory, have been manufactured in accordance with all applicable
customer specifications and standards and are fit for the end use for which they
were or hereafter are purchased. The 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; and the sale by the Buyer
of any such Products manufactured by or for the Seller shall not result in the
violation of such laws, rules or regulations because of any act or omission of
the Seller in such manufacturing. The Other Inventory is of a type and quality
usable and sellable in the ordinary course of business.
(i) Compensation Due Transferred Employees. The Seller has delivered to the
Buyer Exhibit 16, which includes a true and complete list showing the names and
job descriptions of all Transferred Employees as of the Closing Date, together
with a statement as to the full amount of compensation paid or payable to, or on
behalf of, each employee of Segue, Ltd. for services rendered during the
calendar years ended December 31,1993 and 1994, the current base compensation
rate for each such person, the vacation earned but not taken, and the number of
vacation days to which each such person is entitled in 1995. Except for any such
benefits that may have accrued prior to the Closing Date, the 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 as
otherwise disclosed in the aforementioned Exhibit 16 and 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. The 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 the Seller or its assets, with respect to any period after the date
hereof except as disclosed in the Agreement.
(j) Union Agreements and Employment Agreements. The Seller is not now and
never has been a party to any union agreement or similar agreement nor does the
Seller have any agreement(s) with any Transferred Employees which are not
described in Exhibits 14 and 16 attached hereto and made a part hereof.
(k) Contracts and Agreements. The copies of the Assumed Contracts
previously furnished by the Seller to the Buyer constitute true, correct and
complete copies of all such agreements, reflecting all amendments to the Closing
Date. The 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 the Seller has not received any notice of default, nor is the
Seller in default, nor does any condition exist which with notice or lapse of
time, or both, would render the Seller in default under any Assumed Contract. To
the extent there are any product liability claims against either the Buyer or
the Seller respecting any delivered product pursuant to a sale made by the
Seller prior to the Closing Date, such claims shall be the responsibility of
Seller and any damages suffered by Buyer in respect thereof shall be fully
indefinable by Seller and Shareholder in favor of Buyer pursuant to Section 11
hereof.
(1) Licenses and Permits. The licenses and permits listed on Exhibit 18,
annexed hereto and made a part hereof, are the only licenses and permits
currently required by Segue for the operations at the Premises and all such
licenses and permits are in effect as of the date hereof. The Seller has no
knowledge of any facts which would preclude the Buyer from obtaining any such
licenses and permits upon proper submission by the Buyer of applications
therefor, nor does the Seller have knowledge of any facts relating to the
Buyer's use of the Machinery and Equipment for the continued use of the Premises
which would require the Buyer to obtain any licenses or permits in addition to
those described in Exhibit 18. The Seller has complied with all conditions or
requirements imposed by such Licenses and Permits, and the Seller has not
received any notice, nor does the 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.
(m) Insurance. Exhibit 19, annexed hereto and made a part hereof, lists and
describes all insurance policies now in force with respect to the Premises, the
Purchased Property and the Transferred Employees. The Seller will continue in
full force and effect through the Closing Date all such policies of insurance.
The 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
Property, or the Transferred Employees during the last two (2) years.
(n) Litigation and Labor Disputes. Except as described in Exhibit 17,
annexed hereto and made a part hereof, there are no actions, suits, proceedings
or investigations pending or, to the knowledge of the Seller, threatened against
the 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 Exhibit 17, the Seller is not in default with
respect to any order, writ, injunction or decree, to which Seller(s) 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 Exhibit 17,
there are no pending or, to the knowledge of the Seller, threatened labor
disputes, actions or grievances between the Seller and any labor union or any
employee or former employee of the Seller.
(o) Compliance With Laws. To the best of the knowledge of the Seller and
the Shareholder, the Seller is in compliance with all laws, statutes and
ordinances and governmental requirements, relations and orders involving or
affecting any of the Purchased Property or applicable to the manufacture of
Products and the use of the Premises for such uses and purposes and, without
limiting the foregoing, the Seller is in compliance with the provisions of the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6905 et seq. (the
"Hazardous Waste Act"), applicable to all inventory, raw materials, work in
process, supplies and other materials located on the Premises on the Purchase
Date and as of the Closing Date. None of the Purchased Property constitutes, or
would if deemed discarded constitute, "hazardous waste" as defined in Section
1004(5) of the Hazardous Waste Act.
(p) Information. The Shareholder has supervised the gathering of
information necessary to complete the Agreement documentation that supports the
representations and warranties. The Seller and the Shareholder state that they
have taken all reasonable steps to verify the accuracy of all information and
documentation provided to the Buyer regarding the operation of Segue and the
representations and warranties, and that each of the representations and
warranties are true and correct as of the closing date.
(q) Insignificant and Nonsubstantial Errors. Buyer understands that, even
though the Seller and the Shareholder have exerted every effort to make the
Agreement documentation, representations and warranties completely accurate,
there could be insignificant or nonsubstantial errors, for any particular item
or in the aggregate less than $5,000 due to unintentional oversight. Such errors
shall not be considered a breach of this Agreement, but the Seller shall make
every effort to promptly correct such errors when discovered or called to its
attention and promptly reimburse the Buyer if the item was at the expense of the
Buyer.
(r) Notification Period for Shareholder. The Buyer further waives any
rights or claims arising out of any inaccuracy in the representations and
warranties of Shareholder as to which Buyer has not given written notification
to the Seller and Shareholder of an asserted breach within three (3) years after
the Closing, which notification must describe with specificity the nature of the
asserted breach and the amount of the claim, provided that the three (3) year
limitation shall not apply to a breach of Sections 6(a), (b), (c), (d), (e) or
(t).
(s) Use of Name. The Buyer and any of its future affiliates shall have the
right to use the name "Segue" and the Seller and none of its present or future
affiliates shall use the name and any combination or similar name. The Buyer
shall have the right to represent that it is carrying on business in succession
to Segue. The Seller will on request of the Buyer and at the Buyer's expense,
give notices to that effect to such of the Seller's customers, suppliers and
others with whom the Seller has had business relations. The notices shall be in
a form satisfactory to the Buyer.
(t) Financial Statements. The financial condition of Segue is set forth in
(i) the unaudited financial statements for year ended December 31, 1994; and
(ii) the unaudited financial statements for year ended December 31,1993 with the
opinion of ▇▇▇▇▇▇▇▇ and Co., Certified Public Accountants (hereinafter referred
to jointly as the "Financial Statements"). The financial condition of Segue, as
presented by the Financial Statements, does not in any material respect differ
from the financial condition of Segue as will be presented by said audited and
certified financial statements for the year ended December 31, 1994. In
addition, on a historical basis, the financial condition of Seller on the
Closing Date will not differ in any material respect from the financial
condition of Seller as of the Purchase Date. The Seller has no liabilities not
disclosed on the Financial Statements.
(u) ▇▇▇▇▇▇▇▇'▇ Best Involvement Efforts. ▇▇▇▇▇▇▇▇ warrants and represents
that he will fulfill his obligations as set forth in this Agreement and in his
Employment Agreement described in Exhibit 32, attached hereto and made a part
hereof.
(v) Accredited Investors. The shares of stock are being acquired by the
Seller for investment purposes only and not as a nominee or agent for the
benefit of any person other than the Shareholder; and neither the Seller nor the
Shareholder has any intentions of distributing, reselling, or reassigning, the
shares of stock or any part thereof.
The Seller and the Shareholder understand that the shares of stock have not
been registered under the Securities Act of 1933, as amended ("▇▇▇ ▇▇▇▇ ▇▇▇"),
or under the laws of any jurisdiction and that neither the Buyer nor Hampshire
does not contemplate and is under no obligation to so register the shares of
stock.
The Seller and Shareholder have been advised that Vintage, Inc. is a newly
organized company capitalized with Two Hundred Thousand Dollars ($200,000) and
that it has no operating history.
The Seller and Shareholder have sufficient financial resources available to
support the loss of all or a portion of the investment in the stock, and have no
need for liquidity in the investment in the stock and are able to bear the
economic risk of the investment. The Seller and Shareholder are sophisticated
and experienced in investment matters; as a result, they are in a position to
evaluate the investment in the stock. The Seller/Shareholder is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D promulgated under
the 1933 Act.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
(a) Organization and Standing. Vintage, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and, as of the Closing Date, will be duly qualified to transact
business in the State of New York or shall have filed for and reasonably expect
to receive such qualification and good standing.
(b) Corporate Authority. The Buyer has full corporate power and authority
to execute and perform in accordance with this Agreement, and this Agreement
constitutes a valid and binding obligation of the Buyer. 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 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 the Buyer of its obligations hereunder will not
conflict with or violate any provision of the Buyer's Certificate of
Incorporation or its By-Laws or conflict with or violate any provisions 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
order, decree or judgment to which the Buyer is a party or by which it or its
property is bound.
(c) Shares Authorized and Outstanding. The Certificate of Incorporation of
Vintage, Inc. authorizes Ten Thousand (10,000) shares of capital stock of which
Five Thousand (5,000) shares have been designated as common stock, $0.10 par
value per share (hereinafter referred to as "Vintage Common Stock"), and Five
Thousand (5,000) shares have been designated as preferred stock, no par value
(hereinafter referred to as "Vintage Preferred Stock"). As of the Closing Date,
disregarding the issuance of shares of Vintage Common Stock as provided
hereunder, there are Four Hundred (400) shares of Vintage Common Stock issued
and outstanding and One Thousand Eight Hundred (1,800) shares of Vintage
Preferred Stock issued and outstanding all of which are owned by Hampshire
Designers, Inc. ("Hampshire").
(d) Buyer's Effort to Remove Conditions. The Buyer will use its
commercially reasonable efforts to satisfy and remove any condition to the
Buyer's performance at Closing under this Agreement.
(e) Products Liability Claims. To the extent there are any products
liability claims against the Buyer respecting any products pursuant to a sale
made by the Buyer subsequent to the Closing date, such claims shall be the
responsibility of Buyer and shall not be indefinable by Seller.
8. COVENANTS
(a) Bulk Sales Compliance. Buyer agrees to waive the requirement that
Seller comply with the sections of the New York State Uniform Commercial Code
relating to bulk transfers (the "Bulk Sales Law").
(b) Records. The Seller and the Shareholder shall jointly preserve the
books and records relating to Transferred Employees and former employees of
Segue, the manufacture of Products and other matters for a period of at least
three (3) years after the Closing Date and shall, during such period and upon
reasonable notice, grant the Buyer access to such records during normal business
hours for the purpose of allowing the Buyer to verify information which the
Buyer may require in connection with the transfer from the Seller to the Buyer
of the operations and employees.
(c) Licenses and Permits. From and after the date hereof, the Seller shall
use its best efforts in arranging the transfer from the Seller to the Buyer, or
the issuance directly to the Buyer, of the Licenses and Permits described in
Exhibit 17 hereto.
(d) Operation of Business. During the period between the date hereof and
the Closing Date, the 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 Property without the prior written consent of the Buyer. The Seller
and Shareholder shall use their best efforts through the Closing Date to
preserve the business and suppliers of the Seller's with respect to the
manufacture of Products.
(e) Employees. During the period between the date hereof and the Closing
Date, the Seller and Shareholder will use their best efforts to keep available
the Seller's present employees now employed in the business for transfer to and
employment by the 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 the Buyer, except as required under any
contract listed on Exhibit 14 in effect as of the Purchase Date.
On and as of the Closing Date, the Buyer shall offer employment and become
the employer of all employees of the Seller listed on Exhibit 16 annexed hereto
who accept such offer and are then engaged in the operation and continue in an
active work status. The Seller shall, at the time and in the manner requested by
the Buyer, inform all Transferred Employees of the termination of their
employment by Segue as of the Closing Date and the Buyer and the Seller shall
promptly notify the Transferred Employees of Buyer's offer of employment as of
the Closing Date. To the extent there exist, prior to the Closing Date, any
unpaid accrued benefits of the type referenced in Section 6(i) hereof, Seller
shall be responsible for payment thereof. Nothing in this Agreement shall be
construed so as to entitle any employee of Segue to severance or other similar
pay under any agreement or understanding with the Seller. Except as may be
specifically required by applicable law or any agreement assumed by the Buyer,
the Buyer shall not be obligated to continue the employment relationship of any
Transferred Employee.
The Seller shall be solely responsible for any liabilities, obligations and
expenses which may be suffered by the Seller or the Buyer as the result of
claims asserted against the Seller or the Buyer as a consequence of the
termination by the 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.
Without limiting the foregoing, the Buyer will not assume and the Seller
shall indemnify and hold the Buyer harmless against:
(i) Disability, health and medical, life, safety and worker
compensation claims of present or former employees of the Seller arising
from acts or occurrences prior to the Closing Date;
(ii)NLRB or employment discrimination or grievance charges of present
or former employees arising during employment by the Seller or from the
Seller's acts or omissions prior to the Closing Date;
(iii) Savings, profit sharing, deferred compensation, retirement
benefits, incentive, bonus and termination pay payable to the Seller's
present or former employees for service with the Seller;
(iv) Any liabilities or obligations to present or former employees of
the Seller which are based on acts or omissions of Seller arising prior to
the Closing Date.
The Seller shall be responsible for the items listed in clause (i) through
(iv) above whether or not claims or charges with respect thereto were asserted
before the Purchase Date, or the employees, or former employers, of the Seller
to which the item relates become employees of the Buyer.
Any and all present or former employees of the Seller, or any entity now or
previously affiliated with the Seller, not hired by the Buyer, either at the
Closing Date or subsequent thereto, will remain the sole responsibility of the
Seller, and the Seller shall indemnify and hold the Buyer harmless from all
liabilities, obligations and expenses which may be suffered by Buyer as the
result of any claim against the Buyer by or relating to any such employee.
(f) Covenant Not To Compete. Subject to that certain Stockholder Agreement
between Hampshire Designers, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇ dated February 15, 1995 and
that certain Employment Agreement between Vintage, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇ dated
February 15, 1995, neither the Seller nor the Shareholder shall:
(i) Compete, either directly or indirectly, with the Buyer in the
manufacture or sale of Products in any geographic area in which the Seller
manufactured or sold Products during the two year period ended December 31,
1994, or in which the 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 the Buyer and any customer, supplier or
employee of the Buyer.
It is the desire and intent of the parties that the provisions of this
Section 9(f) shall be enforced to the fullest extent permissible under the law
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular subsection or portion of this Section 9(f) shall
be adjudicated to be invalid or unenforceable, this Section 8(f) 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 8(1)
in the particular jurisdiction in which such adjudication is made.
(g) Removal of Hazardous Waste. Prior to the Closing Date, the Seller shall
have removed from the Premises any of its inventory, raw materials, work in
process, supplies and any other materials which constitute "Hazardous Waste" as
defined in Section 1004(5) of the Hazardous Waste Act (all of such materials
being hereinafter referred to as "Hazardous Waste"). In determining whether any
of its inventory, raw materials, work in process, supplies and other materials
might constitute Hazardous Waste, Seller shall consider all of such inventory
and materials located on the Premises after the Purchase Date to be "discarded
material" for purposes of the definition of "solid waste" set forth in Section
1004(27) of the Hazardous Waste Act.
(h) Life Insurance. The Buyer may, at its election and for its benefit,
insure ▇▇▇▇▇▇▇▇ against accidental loss or death for an amount not to exceed Two
Million Dollars ($2,000,000) and ▇▇▇▇▇▇▇▇ shall agree to submit to such physical
examinations, supply such information and take such other steps as may be
required in connection therewith.
(i) Leases. From and after the date hereof, the Seller shall use its best
efforts in arranging the assignment or subletting to Vintage, or execution of
new leases in the name of Vintage on substantially as favorable terms as those
contained in, those real estate and other leases under which the Seller
conducted its business prior to the Closing Date, which is identified by the
Buyer after the date hereof as leases which it desires to assume or otherwise
operate under.
(j) Compliance with Laws. If the Seller is not in compliance to the extent
set forth in Section 6(o) hereof, the Seller shall use its best efforts to
ensure such compliance and to correct any violations of such laws, statutes,
ordinances, governmental requirements, relations and orders.
9. CONDITIONS PRECEDENT OF THE BUYER
The obligations of the 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 the Buyer, in its sold option:
(a) Representations and Warranties True at Closing. The representations and
warranties of the 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 and Shareholder's Compliance with Agreement. The Seller and
the Shareholder shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing.
(c) Opinion of Seller's Counsel. The Seller shall have delivered to the
Buyer at the Closing an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Attorneys at Law, dated
the Closing Date, to the effect that:
(i) Segue, Ltd. is a corporation duly organized, validly existing and
in good standing under the laws of the State of California,
(ii) Sellers have full corporate power and authority to sell the
Purchased Property to the Buyer;
(iii) All corporate proceedings required to be taken by the Seller to
authorize it to carry out this Agreement and the transactions contemplated
herein have been duly and properly taken, and this Agreement has been duly
and validly executed and constitutes the valid and binding obligation of
the Seller and the Shareholder in accordance with its terms;
(iv) The instruments of conveyance delivered by the Seller to the
Buyer at the Closing have been duly authorized and validly executed and
constitute valid and binding instruments of conveyance of the Seller in
accordance with their respective terms; and
(v) The execution and delivery of this Agreement, and the performance
of the Seller and the Shareholder of their obligations hereunder will not
conflict or violate any provision of Segue's Certificate of Incorporation
or its By-Laws or conflict with or violate any provisions of, or result in
a default or acceleration of any obligation under, any mortgage, lease,
contract, agreement, indenture, or other instrument or undertaking, of
which such counsel has knowledge, or any order decree or judgment, of which
such counsel has knowledge, to which the Seller is a party or by which any
of them or their property is bound.
(d) Injunction: Strike. On the Closing Date, there shall be no effective,
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 the Seller, at the Premises, shall not be
on strike or threatening to strike or disruption of the Seller's business.
(e) Casualty. Neither the Purchased Property 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 Property have been stolen,
taken by eminent domain or subject to condemnation.
(t) Resolutions and Seller's Certificate. The Seller shall have delivered
to the Buyer copies of the resolutions of the Board of Directors and Shareholder
of Segue, authorizing the transactions contemplated herein, with such
resolutions to be certified to be true and correct by its Secretary, together
with a certificate of the President and the Secretary of Segue dated the Closing
Date, certifying in such detail as the Buyer may request to the fulfillment of
the conditions specified in subsection 9(a) and (b) above.
(g) Lease. A new lease or sublet agreement for the Premises, in the name of
Vintage, shall have been executed by all parties thereto and delivered at the
Closing and Vintage shall post reasonable additional security respecting such
lease if so required by the landlord of the Property.
(h) No Material Adverse Change in Business. There shall have been no
developments or changes in the business of the Seller since December 31, 1994,
which would have a material adverse effect on the value of its business or on
the Purchased Property or goodwill of the Seller.
(i) Consents. On or prior to the Closing Date, the 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 the
Buyer to conduct business at the Premises and manufacture Products in
substantially the same manner as the Seller conducted business and manufactured
Products prior to the Closing.
(j) Employment Agreement. ▇▇▇▇▇▇▇▇ shall have executed an Employment
Agreement with Vintage substantially in the form of the draft Employment
Agreement attached hereto as Exhibit 32.
(k) Shareholders' Agreement. ▇▇▇▇▇▇▇▇ and Hampshire, the two shareholders
of Vintage, shall have executed a shareholders' agreement providing in respect
to Vintage, among other things: (x) the dividend policy; (y) method of election
of a Board of Directors; and (z) a buy-sell provision, substantially in the form
of the draft Stockholders' Agreement attached hereto as Exhibit 31.
10. CONDITIONS PRECEDENT OF THE SELLER AND SHAREHOLDER
The obligations of the Seller and the Shareholder 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 the Seller and the Shareholder, in their
sole option:
(a) Subordinated Note. The subordinated note payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by
Segue and assumed by the Buyer in the amount of Six Hundred and Eighty-Nine
Thousand, Three-Hundred Twenty-One and 02/100 Dollars ($689,321.02) shall be
paid in full by Vintage, Inc. simultaneous with the Closing under this
Agreement.
(b) Representations and Warranties True at Closing. The representations and
warranties of the Buyer 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. The 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) Resolutions and Buyer's Certificate. The Buyer shall have delivered to
the Seller copies of the resolutions of the Board of Directors of the Buyer
authorizing the transactions contemplated herein, with such resolutions to be
certified to be true and correct by its Secretary together with a certificate of
the President and the Secretary of the Buyer, dated the Closing Date, certifying
in such detail as the Seller may request to the fulfillment of the conditions
specified in subsections 10(a) and (b) above.
(e) Opinion of Buyer's Counsel. The Buyer shall have delivered to Seller at
the Closing an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Attorneys at Law, dated the
Closing Date, to the effect that according to its knowledge:
(i) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(ii) The Buyer has full corporate power and authority to purchase the
Purchased Property from the Seller;
(iii) All corporate proceedings required to be taken by the Buyer to
authorize it to carry out this Agreement and the Assignment and Assumption
Agreement and the transactions contemplated herein and therein have been
duly and properly taken, and this Agreement, and the Assignment and
Assumption Agreement constitute valid and binding obligations of the Buyer
in accordance with their terms; and
(iv) The execution and delivery of this Agreement, and the Assignment
and Assumption Agreement, and the performance by the Buyer of its
obligations hereunder and thereunder, will in no way conflict with or
violate any provision of the Buyer's Certificate of Incorporation or its
By-Laws or conflict with or violate any provision of, or result in a
default or acceleration of any obligation under, any mortgage, lease,
contract, agreement, indenture, or other instrument or undertaking, of
which such counsel has knowledge, or any order, decree or judgment, or
which such counsel has knowledge, to which the Buyer is a party or by which
it or its property is bound.
(f) Parent Company Contribution. The Buyer has received from Hampshire
Designers, Inc., its parent company, a One Million, Two Hundred and Fifty
Thousand Dollar ($1,250,000) cash transfer which shall have been designated as
Twenty Thousand Dollars ($20,000) in exchange for Four Hundred (400) shares of
Vintage Common Stock; One Hundred and Eighty Thousand Dollars ($180,000) in
exchange for One Thousand-Eight Hundred (1,800) shares of Vintage Preferred
Stock; Eight Hundred Thousand Dollars ($800,000) Subordinated Note Payable
(Exhibit 34); and Two Hundred and Fifty Thousand Dollars ($250,000) intercompany
advances payable.
(g) 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.
11. INDEMNIFICATION
(a) The Seller and the Shareholder shall jointly and severally indemnify
and hold the 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 the
Seller or the Shareholder contained in this Agreement;
(ii) Any and all claims, other than liabilities of the Seller
expressly assumed by the Buyer under this Agreement, which are asserted by
persons who are not parties to this Agreement against the Buyer or the
Purchased Property arising out of any claim or alleged claim against the
Seller, 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 the Buyer or the ultimate purchaser or
user of Products manufactured by the Seller or of Finished Inventory based
upon defects or alleged defects therein, provided that the Buyer is
reasonably satisfied that such goods are defective or otherwise not
acceptable to the customer for commercially sound reasons;
(iv) Any liabilities of the Seller which are not expressly assumed by
the Buyer under the terms of this Agreement; or
(v) Any and all claims asserted in respect of the conduct by the
Seller of its business at the Premises prior to the Closing without regard
to whether such claims exist on the Closing Date or arise at any time
thereafter, and any and all actions, suits, proceedings, demands,
assessments or judgments, costs and expenses incidental to any of the
foregoing.
(b) The Buyer shall indemnify and hold the 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, warranty or covenant of the Buyer
contained in this Agreement; and
(ii) The Buyer's failure to perform Assumed Contracts and any and all
actions, suites, proceedings, demands, assessments or judgments, costs and
expenses incidental to any of the foregoing.
(iii) Any and all claims asserted in respect to the conduct by the
Buyer of its business after the Closing, and any all actions, suits,
proceedings, demands, assessments or judgments, costs and expenses
incidental to any of the foregoing.
(c) (i) If a claim shall be made or threatened, or an action or proceeding
shall be commenced or threatened against a party hereto (the "Aggrieved Party")
which could result in liability of the other party (the "Indemnifying Party")
under its indemnification obligations hereunder, the Aggrieved Party shall 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).
12. SHAREHOLDER'S GUARANTEE
The Shareholder hereby guarantees to the Buyer full payment or the
performance of the Seller in all respects. Pursuant to this Section 12, the
Buyer is entitled immediately to deduct any sum due to the Buyer under this
Agreement from the Hampshire Common Stock to be delivered to the Seller pursuant
to Section 3(c) hereof; the vintage Common stock; dividends, bonus or salary
payable to the Shareholder or from any other monies owed to the Shareholder
without first seeking recourse against the Seller.
13. BUYER'S RIGHT OF SET-OFF
In the event that the Buyer has one or more claims under this Agreement
against the Seller or the Shareholder reasonably alleging a breach of or claim
under one or more of the provisions hereof and notifies the Seller and the
Shareholder in writing of the amount of and reasonable basis for such claims on
or prior to the third anniversary of the Closing, the Buyer shall deduct the
amount from (x) the Hampshire Common Stock; (y) the Vintage Common Stock; and/or
(z) the salary, bonus and dividends payable to the Shareholder from Vintage; and
the amount shall be paid to the Seller/Shareholder only upon: (i) a final and
unappealable court order directing such payment; or (ii) such date, if any, as
may be agreed upon in writing by the Buyer and the Seller, whichever first
occurs. The Buyer's rights set forth in this Section 13 shall be in addition to,
and shall not in any way limit or restrict, the Buyer's other rights and
remedies arising under this Agreement or by law or otherwise.
Without limiting the foregoing, not withstanding the agreement by the
parties hereto who waive compliance with any bulk sale law, the Seller and the
Shareholder agree that if the Buyer is required, due to application of any Bulk
Sales Law or otherwise, to pay debts or other liabilities of the Seller, the
Buyer may deduct the amount of all such payments made by it in the same manner
set forth in the above paragraph.
14. BROKERAGE
The Seller and the Buyer represent and warrant to each other that all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by the Seller and the Shareholder directly with the Buyer
and without the intervention of any broker, finder or other third party.
15. 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 the Shareholder: With copy to:
Segue, Ltd. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Attn: President ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Shareholder: With copy to:
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
37 Hemlock Ridge Road ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Buyer: With copy to:
Vintage, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Attn: Secretary ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Post Office Box 2667 1 Citicorp Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
Mr. ▇▇▇▇▇▇ Warsaw, President
Hampshire Designers, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address or to such other person as the Seller, the Shareholder
or the Buyer shall have last designated by notice to the other party.
16. NATURE AND SURVIVAL OF REPRESENTATIONS
All statements contained in any certificate or other instrument delivered
by or on behalf of the Buyer or the Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Buyer and by the Seller, respectively,
hereunder. All representations and warranties and agreements made by the parties
hereto in this Agreement or pursuant hereto shall survive the closing hereunder.
17. EXPENSES
The parties hereto shall bear their respective expenses in connection with
the transactions herein contemplated.
18. 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 right or remedies arising because the Closing hereunder does not
occur or is not commenced on or before February 28, 1995, the Agreement shall be
terminated as of that date and neither Buyer nor Seller shall have any further
rights or obligation hereunder.
19. 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.
20. NEW YORK LAW TO GOVERN
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
21. 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.
22. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original if executed by Purchaser and all of which together
shall constitute one and the same instrument.
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 as
of the date first hereinabove written.
ATTEST:
SEGUE, LTD., SELLER
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Its President
WITNESS:
SHAREHOLDER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Secretary
VINTAGE, INC., BUYER
/s/ ▇▇▇▇▇▇ Warsaw
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By ▇▇▇▇▇▇ Warsaw
Its President and Chief Executive Officer