Exhibit 10.5
STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of October 8, 2003, by and between
Hampshire Group, Limited, a corporation organized under the laws of the State of
Delaware ("Seller"), and each individual listed on Annex A to this Agreement
(each a "Buyer" and together, "Buyers").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of capital
stock (the "HIL Shares") of Hampshire Investments, Limited (the "HIL");
WHEREAS, HIL primarily holds real estate property and other investments;
WHEREAS, Seller has determined to dispose of HIL because of its desire to
divest itself of the real estate properties and business conducted by HIL;
WHEREAS, Seller was represented in the negotiation of such divestiture by a
special committee of its Board of Directors composed entirely of independent
directors;
WHEREAS, the Board of Directors of the Seller desires for Seller to sell
the HIL Shares to Buyers, and Buyers desire to purchase the HIL Shares from
Seller, on the terms and subject to the conditions set forth herein; and
WHEREAS, Buyers are the respective owners of the shares of issued and
outstanding common stock, par value $0.10 per share, of Seller (the "Seller
Common Stock") listed after their names on Annex A hereto, representing an
aggregate of 450,000 shares, which shares shall be transferred to Seller in
exchange for the HIL Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Buyer" shall have the meaning given to such term in the first paragraph of
this Agreement.
"Buyers" shall have the meaning given to such term in the first paragraph
of this Agreement.
"Closing" shall have the meaning given to such term in Section 2.2.
"Closing Date" shall have the meaning given to such term in Section 2.2.
"HIL Shares" has the meaning given to such term in the Recitals of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien, security interest, charge, preference,
participation interest, priority or security agreement.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to the Securities Act
or any successor law.
"Seller" has the meaning given to such term in the first paragraph of this
Agreement.
2. PURCHASE AND SALE OF HIL SHARES; CLOSING
2.1. PURCHASE AND SALE OF HIL SHARES. On the terms and subject to the
conditions hereof, (a) Seller hereby sells, assigns, transfers and conveys the
HIL Shares, free and clear of any Liens, to Buyers in the respective amounts
listed after their names on Annex A hereto, and Buyers hereby purchase and
accept the HIL Shares from Seller; and (b) each Buyer hereby sells, assigns,
transfers and conveys the respective number of shares of Seller Common Stock
listed after such Buyer's name on Annex A hereto.
2.2. CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Willkie Farr & Gallagher LLP, 787
Seventh Avenue, New York, New York 10019, at such time (the "Closing Date") as:
(a) Seller delivers to Buyers certificates representing the HIL Shares,
duly endorsed (or accompanied by duly executed stock powers), for transfer to
Buyers, or otherwise in Buyers' names; and
(b) Each Buyer delivers to Seller the number of shares of Seller Common
Stock listed after such Buyer's name on Annex A hereto, by delivery of
certificates representing such shares, duly endorsed (or accompanied by duly
executed stock powers), for transfer to Seller, or otherwise causes such shares
to be transferred to Seller.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyers as follows:
3.1. ORGANIZATION AND GOOD STANDING. Each of Seller and HIL is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has full corporate power and authority to
execute and deliver this Agreement and perform and consummate the transactions
contemplated hereby.
3.2. AUTHORITY. The execution and delivery of this Agreement by Seller and
the performance of Seller's obligations hereunder have been duly authorized by
all necessary action by Seller. This Agreement has been duly executed and
delivered by Seller and constitutes a valid and binding obligation of Seller
enforceable in accordance with its terms, except as may be limited by general
principles of equity and subject to applicable bankruptcy, insolvency,
moratorium or similar laws of general application related to or affecting
creditors' rights.
3.3. CAPITALIZATION. Immediately prior to the Closing, the authorized
capital stock of HIL will consist of 1,000 shares of common stock, $0.01 par
value per share, of which 1,000 shares are issued and outstanding. Upon
consummation of the transactions contemplated hereby, Buyers will acquire good
and valid title to all issued and outstanding shares of HIL.
3.4. OWNERSHIP OF HIL SHARES. Seller beneficially owns the HIL Shares free
and clear of all Liens.
3.5. NO CONFLICTS. The execution and delivery of this Agreement by Seller
and the performance of Seller's obligations hereunder will not (a) result in a
violation of Seller's certificate of incorporation or bylaws, each as amended to
date, (b) result in a violation of any law, judgment or order applicable to
Seller, (c) conflict with, result in a breach of, or constitute a default, or
give rise to any right of termination, acceleration or cancellation, under any
material contract to which Seller is a party or (d) result in the creation or
imposition of any Lien upon the HIL Shares. No consents, waivers or approvals of
parties to any material contract to which Seller is a party are required in
connection with the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS
Each Buyer represents and warrants to Seller as follows:
4.1. AUTHORITY. The execution and delivery of this Agreement by Buyer and
the performance of Buyer's obligations hereunder have been duly authorized by
all necessary action by Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer
enforceable in accordance with its terms, except as may be limited by general
principles of equity and subject to applicable bankruptcy, insolvency,
moratorium or similar laws of general application related to or affecting
creditors' rights.
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4.2. SECURITIES ACT REPRESENTATIONS. Buyer understands that the issuance to
Buyer of the HIL Shares as contemplated hereby is intended to be exempt from
registration under the Securities Act. Buyer is not intending to, and will not
offer or distribute the HIL Shares acquired hereunder or any interest therein
except in compliance with the Securities Act. Buyer has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the HIL Shares and Buyer is capable of
bearing the economic risks of such investment, including a complete loss
thereof. Buyer has been given the opportunity to ask questions of and receive
answers from Seller concerning Seller, HIL and the HIL Shares. Buyer has been
furnished with all information it deems necessary or desirable to evaluate the
merits and risks of the acquisition of the HIL Shares and Seller has made
available to Buyer or its agents all documents and information relating to an
investment in the HIL Shares requested by or on behalf of Buyer. In evaluating
the suitability of an investment in the HIL Shares, Buyer has not relied upon
any representations (other than the representations and warranties of Seller
contained herein) or other information (other than as contemplated by the
preceding sentences), whether oral or written, made by or on behalf of Seller.
Buyer is an "accredited investor" as such term is defined in Regulation D under
the Securities Act.
4.3. NO CONFLICTS. The execution and delivery of this Agreement by Buyer
and the performance of Buyer's obligations hereunder will not (a) result in a
violation of such Buyer's organizational documents (if such Buyer is a
corporation, limited liability company, partnership or other entity), (b) result
in a violation of any law, judgment or order applicable to Buyer, (c) conflict
with, result in a breach of, or constitute a default, or give rise to any right
of termination, acceleration or cancellation, under any material contract to
which Buyer is a party or (d) result in the creation or imposition of any Lien
upon the shares of Seller Common Stock to be delivered by Buyer to Seller
pursuant to this Agreement. No consents, waivers or approvals of parties to any
material contract to which Buyer is a party are required in connection with the
transactions contemplated hereby.
4.4. BUYERS' OWNERSHIP OF SELLER COMMON STOCK. Each Buyer beneficially owns
the number of shares of Seller Common Stock listed after his name on Annex A
hereto, free and clear of all Liens.
5. GENERAL PROVISIONS
5.1. TAX INDEMNIFICATION. Seller shall indemnify HIL, its subsidiaries, and
each Buyer, and hold them harmless from and against without duplication, any
loss, claim, liability, expense, or other damage attributable to (i) all income
taxes (or the non-payment thereof) of HIL and its subsidiaries for all taxable
periods ending on or before the Closing Date and the portion through the end of
the Closing Date for any taxable period that includes (but does not end on) the
Closing Date and (ii) all income taxes of any member of an affiliated,
consolidated, combined or unitary group of which HIL or any of its subsidiaries
(or any predecessor of any of the foregoing) is or was a member on or prior to
the Closing Date, including pursuant to Treasury Regulation ss.1.1502-6 or any
analogous or similar state, local, or foreign law or regulation.
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5.2. BUYER ACKNOWLEDGEMENT. Each Buyer hereby acknowledges that Seller
makes no express or implied representations or warranties whatsoever (x) with
respect to the business, financial condition, results of operations or prospects
(including probable success or profitability after the Closing) of HIL and its
subsidiaries or (y) the assets, whether real, personal or mixed, owned directly
or indirectly by HIL, which are being indirectly transferred to it on an "AS IS,
WHERE IS" basis, i.e., without representations or warranties regarding value,
condition of use, merchantability or fitness for a particular purpose or (z) the
liabilities of HIL which relate directly or indirectly to such HIL assets. Each
Buyer hereby further acknowledges he or she is relying on his or her own
familiarity with HIL and its direct and indirect assets and liabilities in
making his or her decision to purchase the HIL Shares and no Buyer will have any
recourse against Seller after the Closing, by way of indemnification rights or
claims for damages or otherwise for any matter whatsoever relating to HIL or its
direct or indirect assets or liabilities (other than a breach of the
representation made by Seller in Section 3.4 hereof and as set forth in Section
5.1).
5.3. 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 transactions contemplated thereby, including all fees and expenses of
agents, representatives, counsel, and accountants.
5.4. PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby will be
issued at such time and in such manner as Seller determines. Unless consented to
by Seller in advance or required by applicable law, prior to Seller's public
announcement of the Closing, each Buyer shall, and shall cause each of its
affiliates to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person.
5.5. NOTICES. All notices, consents, 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 fax (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, in
each case to the appropriate addresses and fax numbers set forth below (or to
such other addresses and fax numbers as a party may designate by notice to the
other parties):
Seller: Hampshire Group, Limited
Special Committee of the Board of Directors
605 Park Avenue
Apartment 9D
New York, New York 10021
Attention: Irwin Winter
Facsimile: (212) 734-4045
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with a copy to: Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, N.Y. 10036
Attention: Malcolm I. Ross, Esq. and Scott L.
Kaufman, Esq.
Facsimile No.: (212) 479-6275
Buyer: Ludwig Kuttner, President
627/712 Plank Road
Keene, Virginia 22946
Facsimile No.: (434) 293-5721
with a copy to: Willkie Farr & Gallagher LLP
767 Seventh Avenue, 39th Floor
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile No.: (212) 728-8111
5.6. GOVERNING LAW. This Agreement will be governed by the laws of the
State of Delaware without regard to conflicts of laws principles.
5.7. FURTHER ASSURANCES. The parties agree, to the extent commercially
reasonable, (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, as may reasonably be requested for the purpose of
carrying out the intent of this Agreement and the transactions contemplated
hereby.
5.8. 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.
5.9. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of this Agreement
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between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the parties.
5.10. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither the
Seller, on the one hand, nor any of the Buyers, on the other hand, may assign
any of its rights under this Agreement without the prior consent of the other
party. 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.
5.11. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable through arbitration or otherwise, 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.
5.12. SECTION HEADINGS, CONSTRUCTION. The headings of 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.
5.13. ARBITRATION. Any dispute or controversy arising under, out of, in
connection with, or in relation to this Agreement or any breach of this
Agreement shall be determined and settled by arbitration in New York, New York,
by a panel of three arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect. Any award rendered
therein shall be final and binding upon the parties thereto, provided, however,
that each of the parties shall bear its own legal fees and expenses.
5.14. DEFENSE OF CLAIMS.
(a) Seller shall indemnify, defend and hold harmless Buyers from and
against any and all losses, damages, amounts paid in settlement,
judgments and fees and expenses of counsel (including fees and
expenses relating to defense of any Proceedings) resulting from or
arising out of any claim, action, suit or proceeding ("Proceedings")
threatened or commenced by any Person relating to the transactions
contemplated hereby (other than Proceedings commenced by Seller
against Buyers for a breach of this Agreement). If any Buyer receives
notice of any matter which may give rise to a claim for
indemnification hereunder, such Buyer shall notify Seller promptly
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thereafter; provided, however, that no delay on the part of Buyers in
notifying Seller shall relieve Seller from any obligation hereunder
unless, and then solely to the extent that, Seller is actually
prejudiced thereby.
(b) Once any Buyer has given notice of the matter to Seller, Seller shall
assume the defense of such matter and defend against the matter in any
manner it deems appropriate. Buyers may retain separate counsel at
their sole cost and expense (except that Seller shall be responsible
for the fees and expenses of one counsel for Buyers to the extent any
Buyer is advised, in writing by its counsel, that the counsel Seller
has selected has a conflict of interest).
(c) Seller shall be relieved of its obligations under this Section 5.14 as
to any Buyer if such Buyer shall consent to the entry of a judgment or
enter into any settlement with respect to any matter which may give
rise to a claim for indemnification without the written consent of
Seller.
(d) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 5.14 shall be subject to the limitations,
if any, on indemnification set forth in Section 145 of the Delaware
General Corporation Law ("the GCL") with respect to any Buyer who is
or was a director, officer, employee or agent of Seller or any
subsidiary of Seller (it being the intent of the parties hereto to
provide indemnification to the Buyers to the maximum extent permitted
by applicable law). Further, any such Buyer hereby agrees to grant to
the Seller the undertaking contemplated by Section 145 (e) of the GCL
as a condition to the receipt in advance of any expenses of any
Proceeding if, in the opinion of counsel to Seller, such undertaking
is required under applicable law in order to permit Seller to advance
expenses hereunder.
5.15. COUNTERPARTS. This Agreement may be executed via facsimile and 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYERS: HAMPSHIRE GROUP, LIMITED:
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By: THE SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS CONSTITUTED PURSUANT
/s/ Ludwig Kuttner TO A RESOLUTION OF THE BOARD OF
- ----------------------- DIRECTORS DATED JULY 7, 2003
Ludwig Kuttner
/s/ Peter W. Woodworth By: /s/ Irwin Winter
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Peter W. Woodworth Name: Irwin Winter
Title: Chairman
/s/ Charles W. Clayton
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Charles W. Clayton
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ANNEX A
Number of shares
of Seller Common Number of HIL Shares
Name Stock being paid being purchased
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Ludwig Kuttner
PO Box 359 360,000 800
Keene, VA 22946
Social Security No.: 226 31 5630
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Peter W. Woodworth
702 Main Street 76,500 170
Winona, MN 55987
Social Security No.: 470 52 5623
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Charles W. Clayton
300 Compass Point 13,500 30
Anderson, SC 29625
Social Security No.: 249 58 4345
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