STOCK RESALE AGREEMENT
THIS STOCK RESALE AGREEMENT (the "Agreement"), dated as of March 16, 1999,
is by and among Signal Apparel Company, Inc., an Indiana corporation ("Signal"),
Tahiti Apparel, Inc., a New Jersey corporation ("Tahiti"), Zvi Ben-Haim
("Ben-Haim"), Michael Harary ("Harary") and Ming-Yiu Chan ("Chan") (each of
Ben-Haim, Harary and Chan being referred to herein as a "Stockholder" and
collectively as the "Stockholders"). Any reference herein to any Stockholder
shall be deemed to also include a reference to the heirs, estate and personal
representatives of such Stockholder. Unless otherwise indicated herein, each
capitalized term used herein but not defined herein shall have the meaning
attributed to it in the Asset Purchase Agreement, dated as of December 18, 1998,
by and among Signal, Tahiti, Ben-Haim and Harary (the "Asset Purchase
Agreement").
W I T N E S S E T H :
WHEREAS, in connection with the closing of the transactions contemplated by
the Asset Purchase Agreement, Tahiti has on the date hereof received an
aggregate of 13,366,316 shares (the "Shares") of common stock, par value $0.01
per share, of Signal (the "Common Stock");
WHEREAS, it is intended that as soon as practicable Tahiti will transfer,
after adjustment all of the remaining 12,266,316 Shares to the Stockholders as
contemplated by the Asset Purchase Agreement; and
WHEREAS, the parties desire to make certain representations, covenants and
agreements relating to the Shares.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto, intending to be legally bound, do hereby agree as
follows:
1. Initial Transfer by Tahiti. In accordance with Section 2.04 of the Asset
Purchase Agreement, Tahiti shall Transfer (as defined in Section 2) the
remaining Shares to the Stockholders and such Shares shall be subject to the
restrictions set forth in this Agreement.
2. General Restriction on Transfer of Shares. No Stockholder shall Transfer
any Shares except in accordance with the terms and provisions of this Agreement.
Any purported Transfer in violation of this Agreement shall be null and void and
of no force and effect and the purported transferees shall have no rights or
privileges in or with respect to the Shares purported to have been so
transferred. Signal shall refuse to recognize any such Transfer and shall not
reflect on its records any change in record ownership of such Shares purported
to have been so transferred.
For purposes of this Agreement, "Transfer" shall mean the sale, assignment,
transfer, pledge, hypothecation, gift or other disposition of all or a portion
of the Shares, whether pursuant to that certain Registration Rights Agreement,
dated as of the date hereof, by and
among Signal, Tahiti and the Stockholders, or otherwise, or the encumbrance or
granting of any rights, options or interests whatsoever in such Shares.
3. Permitted Transferees. Each of the Stockholders may Transfer in a
private transaction any or all of its Shares to any Permitted Transferee (as
defined below), provided that such Permitted Transferee agrees in writing to be
bound by the provisions of this Agreement and to deliver, if appropriate, an
appropriate investment representation for purposes of compliance with the
Securities Act of 1933, as amended (the "Securities Act").
For purposes of this Agreement, "Permitted Transferee" shall mean the
Stockholders and any immediate family member of an individual Stockholder
including, without limitation, any spouse or former spouse, child or trust for
the benefit of such individuals, or any charitable organizations or charitable
trusts.
4. Permitted Transfers. During each twelve (12) month period commencing on
(i) the date hereof and (ii) each of the first four (4) anniversaries of the
date hereof, each Stockholder and his Permitted Transferees shall have the right
to Transfer up to five percent (5%) of the Shares held by such Stockholder on
the date hereof. There shall be excluded from the calculation the number of
Shares as to which the Stockholder and his Permitted Transferees have the right
to Transfer pursuant to the foregoing five percent (5%) limitation any of the
Shares as to which a Stockholder makes a Transfer to a Permitted Transferee. In
addition, the five percent (5%) limitation on a Stockholder's right to Transfer
shall be cumulative so that, if, in any year during the five (5)-year period,
the Stockholder and his Permitted Transferees have made Transfers aggregating
less than five percent (5%) of the Shares, he and his Permitted Transferees may
make a Transfer or Transfers in subsequent years, in addition to the five
percent (5%) permitted for each such year, equal to the amountof the Shares in a
previous twelve (12) month periods that were not transferred and which were less
than the five percent (5%) per year as to which he and his Permitted Transferees
were permitted to Transfer. Further, should any member of the WGI Group (as
defined in Section 7hereof) Transfer shares of the Common Stock in any year in
an amount greater than five percent (5%) of the shares of the Common Stock which
the WGI Group (collectively) owns, the Stockholder may Transfer such additional
percentage of his Shares in addition to the five percent (5%) of the Shares he
is otherwise permitted to Transfer hereunder (provided, however, that this
sentence shall not apply to any Transfer of shares between one member of the WGI
Group and another member of the WGI Group). In addition to the "5% per year"
Transfers described above, each of the Stockholders shall be permitted to make
one or more Transfers of an aggregate of not more than 100,000 of his Shares
during the period commencing on the date hereof and ending on the fifth
anniversary of the date hereof, provided that such Transfer or Transfers are not
made in an exchange for value. The Shares shall be free of all restrictions set
forth in this Agreement (A) upon the expiration of such five (5) year period or
(B) if earlier with respect to any Stockholder, upon termination of such
Stockholder's employment with the Company (if any) under the circumstances
contemplated in Section 8(D) of the Employment Agreement (if any) between the
Company and such Stockholder dated March 16, 1999.
5. Restrictive Stock Legend. Signal shall cause each certificate of any
Stockholder evidencing the Shares outstanding during the period the restrictions
set forth in this Agreement are in effect to bear a legend in the following
form:
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THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS
AND CONDITIONS OF THE STOCK RESALE AGREEMENT DATED MARCH 16, 1999, AS IT
MAY BE AMENDED, AMONG SIGNAL APPAREL COMPANY, INC., TAHITI APPAREL, INC.
ZVI BEN-HAIM. MICHAEL HARARY AND MING-YIU CHAN, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SIGNAL APPAREL COMPANY, INC.
Upon the expiration of the restrictions on Transfer set forth in this Agreement,
Signal shall, upon the written request of the Stockholder, issue to the
Stockholder a new certificate evidencing such shares without the legend required
by this Section 5. Shares Transferred in accordance with Section 4 hereof shall
be issued without such legend.
6. Representations and Warranties of the Stockholders. Each Stockholder
represents and warrants to Signal as follows: This Agreement has been duly
executed and delivered by such Stockholder and constitutes the valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms.
7. WGI Group. As used herein, the "WGI Group" shall be deemed to included
WGI, LLC, Stephen Walsh, Paul R. Greenwood, any spouse or child of any member of
the WGI Group who is a natural person, and any other individual or entity which
is an "affiliate" of any other member of the WGI Group as defined in the
regulations of the S.E.C. promulgated under the Securities Act.
8. Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if personally served or sent by telecopy, on the
business day after notice is delivered to a courier or mailed by express mail
for next day delivery, and on the third day after mailing if mailed to the party
to whom notice is given, by first class mail, registered, return receipt
requested, postage prepaid and addressed as follows:
If to Tahiti and the Stockholders, to:
Tahiti Apparel, Inc.
500 Seventh Avenue
New York, New York 10018
Att'n: Zvi Ben-Haim and Michael Harary
Telecopy: (212) 354-5314
Telephone: (212) 944-7117
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with a copy to:
Wachtel & Masyr, LLP
110 East 59th Street
New York, NY 10022
Attention: Morris Missry, Esq.
Telecopy: (212) 909-9500
Telephone: (212) 909-9490
and
Robert T. Lincoln, Esq.
Dunnington, Barthlow & Miller, LLP
666 Third Avenue
New York, New York 10017
Telecopy: (212) 661-7769
Telephone: (212) 682-8811
If to Signal, to:
Signal Apparel Company, Inc.
500 Seventh Avenue
New York, New York 10018
Attention: Chief Financial Officer
Telecopy: (212) 354-5314
Telephone: (212) 944-7117
with a copy to:
Witt, Gaither & Whitaker, P.C.
1100 SunTrust Bank Bldg.
736 Market Street
Chattanooga, TN 37402
Attention: Steven R. Barrett, Esq.
Telecopy: (423) 266-4138
Telephone: (423) 265-8881
Any party may change its address for the purposes of this Section by giving
written notice to the other parties hereto in accordance with the provisions
hereof.
9. Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an instrument
in writing signed by each of the parties hereto.
10. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns,
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including, without limitation, in the case of any corporate party hereto any
corporate successor by merger or otherwise.
11. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement.
12. Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action inconsistent
herewith or not to take an action consistent herewith or required hereby, the
validity, legality and enforceability of the remaining provisions and
obligations contained or set forth herein shall not in any way be affected or
impaired thereby.
13. Remedies Cumulative. All rights, powers and remedies provided under
this Agreement, or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any right, power or remedy by such party.
14. No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
15. Third Party Beneficiaries. Except as expressly provided herein, this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
16. Governing Law. This Agreement shall be governed by, and interpreted
under, the laws of the State of New York applicable to contracts made and to be
performed therein without regard to conflict of laws principles.
17. Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together constitute an instrument. Each counterpart may consist of a number of
copies each signed by less than all, but together signed by all, the parties
hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
SIGNAL APPAREL COMPANY, INC.
By: /s/ Thomas McFall
---------------------------
Name: Thomas McFall
Title: CEO
TAHITI APPAREL, INC.
By: /s/ Zvi Ben-Haim
---------------------------
Name: Zvi Ben-Haim
Title: President
STOCKHOLDERS:
/s/ Zvi Ben-Haim
---------------------------
Zvi Ben-Haim
/s/ Michael Harary
---------------------------
Michael Harary
/s/ Ming-Yiu Chan,
by Robert T. Lincoln, Attorneyin-Fact
---------------------------
Ming-Yiu Chan