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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of Earliest Event Reported) Commission File Number:
MARCH 27, 1998 01-12888
____________________
SPORT-HALEY, INC.
(Exact name of registrant as specified in its charter)
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COLORADO 84-1111669
(State of incorporation) (I.R.S. Employer
Identification Number)
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4600 E. 48TH AVENUE
DENVER, COLORADO 80216
303/320-8800
____________________
(Address of principal executive
offices and telephone number)
____________________
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ITEM 5. OTHER EVENTS
On March 27, 1998, Sport-Haley, Inc. (the "Registrant") closed on
its purchase of 52% of the outstanding shares of capital stock of B&L
Sportswear, Inc. ("B&L"). The acquisition was completed pursuant to the terms
of a stock purchase agreement (the "Agreement") among the Registrant; B&L;
Marvin Urquhart ("Urquhart"), and Larry M. Jones and Roberta C. Jones
("collectively, "Jones"), Urquhart and Jones being all of the shareholders of
B&L (the "Shareholders"). The Registrant acquired all of Urquhart B&L stock
for $165,490 in cash and acquired from Jones for $6,490 sufficient additional
shares to acquire a 52% ownership interest in B&L. The cash payments were made
out of working capital of the Registrant. The Registrant and Jones entered
into a buy-sell agreement restricting transfer of their shares of B&L and
granting the other party a right of first refusal upon the occurrence of
certain events which could lead to a change in ownership of the shares.
In addition to the share purchases, the Registrant loaned B&L
$386,317 to pay in full certain outstanding obligations and to acquire certain
equipment. Principal on the loan and accrued interest at 8% per annum are both
payable in full on March 31, 2003. The loan is secured by all fixed assets and
inventory of B&L.
Larry Jones, B&L's President and founder, will continue as President
and a director of B&L pursuant to an employment agreement with B&L which
extends through March 30, 2001. The Registrant has agreed to vote its shares
to elect Mr. Jones as a director of B&L until the earlier of the date upon
which he ceases to be a shareholder or April 24, 2003. At closing, Roberta
Jones resigned as Secretary-Treasurer and as a director of B&L. R.G.
Tomlinson, Chairman of the Board and Chief Executive Officer of the Registrant,
and Steve Auger, Chief Financial Officer of the Registrant, were both elected
as directors of B&L. Mr. Auger was elected as Secretary-Treasurer and Grant
Beeman, the Vice President of Manufacturing of the Registrant, was elected as a
Vice President.
B&L, a company headquartered in Four Oaks, North Carolina, has been a
principal cutting and sewing contractor utilized by the Registrant for several
years and is expected to manufacture the Registrant's products on an exclusive
basis in the future. Management of the Registrant believes that the
acquisition of a controlling interest in B&L will enhance the Registrant's
ability to control costs, product delivery and inventory. It also believes
that by utilizing a captive manufacturer, the Registrant will be able to expand
its corporate and retail sales efforts, remain competitive and maintain
historical margins.
FORWARD LOOKING STATEMENTS
The statements contained in this report that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes,
intentions or strategies regarding the future. Forward looking statements
include expectations of trends to continue through the remainder of the
forthcoming year. Forward looking statements involve a number of risks and
uncertainties. Among other factors that would cause actual results to differ
materially are the following: business conditions and growth in the fashion
golf apparel market
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and the general economy, competitive factors, price pressures in the high-end
market; inventory risks due to shifts in market demand and/or price erosion of
purchased apparel, raw fabric and trim; changes in product mix; and other risks
or uncertainties detailed in other Securities and Exchange Commission filings.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
10.16 Stock Purchase Agreement among the Registrant, Marvin Urquhart, Larry
M. Jones and Roberta C. Jones, and B&L Sportswear, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPORT-HALEY, INC.
Date: April 24, 1998 By: /s/ ROBERT G. TOMLINSON
-------------------------------
Robert G. Tomlinson, Chairman of the Board
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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10.16 Stock Purchase Agreement among the Registrant, Marvin Urquhart, Larry
M. Jones and Roberta C. Jones, and B&L Sportswear, Inc.
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STOCK PURCHASE AGREEMENT
COMMON STOCK
This Stock Purchase Agreement ("Agreement") effective as of the 1st
day of January, 1998, by and between Sport-Haley, Inc., a Colorado Corporation
("Purchaser"), Marvin Urquhart ("Urquhart") , Larry M. Jones and Roberta C.
Jones (collectively "Jones") and B&L Sportswear, Inc., a North Carolina
Corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Urquhart owns 49 shares and Jones owns 49 shares (the
"Shares") of the issued and outstanding common stock of B&L Sportswear, Inc., a
North Carolina Corporation, being all the issued and outstanding common stock
as of the date of this Agreement; and
WHEREAS, the Company owes the sum of $56,500.00 plus interest, costs,
and penalties to the Seller (the "Urquhart's Loan").
WHEREAS, Urquhart desires to sell his Shares and the Urquhart Loan to
the Purchaser and Jones desires to sell two (2) of their shares, and the
Purchaser desires to purchase them from Urquhart and Jones upon the terms and
conditions hereinafter set forth; and
WHEREAS, Purchaser has required that the Company, Jones, and Urquhart
make certain representations to Purchaser as to the status of the Company and
its conduct of its business; and
WHEREAS, Jones, Company, and Urquhart have certain rights to purchase
the shares and desire to waive such rights.
NOW, THEREFORE, in consideration of the mutual and dependent promises
hereinafter set forth, the parties hereto agree as follows:
I
SALE AND PURCHASE OF SHARES AND SELLER'S LOAN
1.1. Sale and Transfer or Shares. At the Closing, as hereinafter
defined, Jones and Urquhart agree to sell and transfer the Shares and the
Urquhart Loan to Purchaser and Purchaser agrees to purchase the Shares and the
Urquhart Loan from Urquhart.
1.2 Purchase Price and Payment. In consideration for the sale and
transfer of the Shares and the Urquhart Loan, Purchaser shall pay to Urquhart
the sum of Two Hundred Fifteen Thousand Dollars ($215,000.00) and Jones, the
sum of Six Thousand Four Hundred Eighty Nine and 89/100 ($6,489.89) U.S. cash
in the following manner:
1.2.1 Cash at Closing. Two Hundred Fifteen Thousand Dollars
($215,000.00) to Urquhart and Six Thousand Four Hundred Eighty Nine and 89/100
($6,489.89) to Jones, cash at Closing in the
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form of Purchaser's corporate check made payable to each of Urquhart and Jones
or a wire transfer to their respective bank accounts.
II
CLOSING
2.1 Date and Place. The transaction described herein shall be
consummated at the offices of Purchaser, at 1:00 p.m., on or before the thirty-
first (31st) day of March, 1998.
2.2 Deliveries at Closing. At the Closing, Urquhart and Jones
shall deliver to Purchaser the certificates representing the Shares properly
endorsed for transfer on the books of the Company and the Promissory Note
securing the Urquhart's Loan properly endorsed to Purchaser together with
assignments of any documents securing same. Purchaser, in turn, shall deliver
to Seller the consideration described in Section 1.2.1. Purchaser and Jones
shall deliver to Purchaser the Mutual Release referred to in Article XII. The
Company shall deliver the items referred to in Paragraphs 8.4, 8.5, 8.6, 8.7,
8.9, 8.10, 8.11, 8.12, 8.13 and 8.14.
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants, and covenants as follows:
3.1 Organization and Good Standing. The Company is a corporation,
duly organized, validly existing, and in good standing under the laws of the
State of North Carolina, with full corporate power to own its properties and
conduct its business as it is now being conducted. A copy of the Articles of
Incorporation of the Company and all amendments thereto effected on or prior to
the date hereof certified by the Secretary of State of North Carolina together
with a copy of the Bylaws of the Company, certified by the Secretary of the
Company, shall be delivered to the Purchaser on the Closing Date.
3.2 Capitalization; Title to Shares. The Company's authorized
capital stock consists of One Hundred Thousand (100,000) shares of common
stock of which Ninety-eight (98) shares are issued and outstanding. No other
equity securities of the Company are authorized, issued, or outstanding; and
there are no outstanding options, agreements, contracts, or commitments
relating to any shares of the Company other than this agreement.
3.3 No Breach. Neither the execution nor the delivery of this
Agreement nor the consummation of the transaction contemplated hereby nor
compliance with nor fulfillment of the terms and provisions of this Agreement
will: (a) conflict with or result in a breach of the terms, conditions, or
provisions of or
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constitute a default under the Articles of Incorporation or By-Laws of the
Company; (b) require any approval, consent, authorization, or other order or
action of any court, governmental authority, regulatory body or any creditor of
the Company; (c) conflict with or result in a breach of the terms, conditions,
or provisions of or constitute a default under any contract, indenture, trust
agreement, trust instrument, note, bond, mortgage, deed of trust, security
agreement or other instrument to which the Company is a party or by which it is
bound.
3.4 Financial Statements. The Company has delivered to the
Purchaser copies of the December 31, 1998 financial statements, all of which
(including all notes, comments, and schedules contained therein or annexed
thereto) the Company warrants to have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
last fiscal year and are true and correct and are an accurate summary of the
financial condition of the Company.
3.5 Absence of Changes or Specified Events. Since August 31,
1998, there has not been and will not be as of the Date of Closing.
3.5.1 Capital Stock, Options. Dividends, Etc. Any change
in the Company's authorized, issued, or outstanding capital stock; the granting
of any stock option or right to purchase shares or the issuance of any security
convertible into Shares: any purchase, redemption, retirement, or other
acquisition on of any shares; any agreement to do any of the foregoing; or any
declaration, setting aside, or payment to any dividend or the making of any
other distribution or payment in respect of shares.
3.5.2 Sale or Pledge of Assets; Incurring of Indebtedness.
Any sale or lease of the properties or assets of the Company which is not in
the ordinary course of business or any mortgage or pledge of any of the
Company's properties or assets, any indebtedness incurred, assumed, or
guaranteed by the Company.
3.6 Accounts and Notes Receivables. The accounts receivable of
the Company shown on the Balance Sheet have been collected or are collectible
in the ordinary course of business in the book amounts thereof after
subtracting any allowance for doubtful accounts included in the Balance Sheet
or the proceeds of collateral held as security for such receivables and subject
to the uncollectability of any account identified in writing by Seller
communicated to Seller prior to the Closing.
3.7 Inventory. The inventory of the Company as of the Closing
consists of items of a quality and quantity usable in the normal course of the
Company's business, no material amount of which is obsolete under normal
business considerations, which have not been adequately reserved for.
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3.8 Building and Equipment. The furniture, fixtures and equipment
owned or used by the Company are in normal operating condition, free from any
known defects; other than such defects as would normally be corrected or
repaired in the ordinary course of business.
3.9 Minute Books. The Company's minute book contains complete and
accurate records of all meetings and other corporate actions of its
stockholders and board of directors (including committees of the board of
directors).
3.10 Books of Account; Returns and Reports. The Company's books or
account reflect all of its items of income and expenses, assets, liabilities,
and accruals. The Company has filed all reports and returns required by law or
regulation to be filed; and it has duly paid or accrued on its books of account
all taxes, duties, and charges due pursuant to such reports and returns.
3.11 Title to Properties; Absence of Liens and Encumbrances, Etc.
The Company has good and marketable title to all of its properties and assets,
free and clear of all mortgages, liens, charges, and other encumbrances, except
(i) the liens of current taxes not yet due and payable; and (ii) such
imperfections of title, if any, as are not in the aggregate substantial in
character, amount, or extent as applied to any single property or assets and do
not in the aggregate materially detract from the value or interfere with the
present or contemplated future use of any property or asset subject thereto or
affected hereby or otherwise materially impair business operations. The Company
has not received notice or violation of any applicable zoning regulation,
ordinance, or other law, order, regulation, or requirement relating to its
operations or its owned or leased properties; and, so far as is known to the
Seller, there is no such violation and all company buildings conform with all
applicable ordinances, codes, and regulations.
3.12 No Distributions. There shall be no distributions, payouts,
or dividends distributed to any officer, stockholder or director other than the
regular salaries of employees, officers and directors, which have historically
been paid to same.
IV
REPRESENTATIONS AND WARRANTIES OF URQUHART AND JONES
Urquhart and Jones hereby represent, warrant and covenant as follows:
4.1 Shares, Free and Clear. The Shares are fully paid,
non-assessable, and validly issued; Urquhart and Jones have full right, power,
and authority to sell, transfer, and deliver the Shares. The delivery of the
certificates representing the Shares duly endorsed for transfer or with
properly executed stock powers
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attached, will transfer to the Purchaser valid and marketable title to the
Shares free and clear of all claims, liens, charges, encumbrances, and equities
whatsoever.
4.2 Urquhart's Loan Enforceable. The Urquhart Loan is enforceable
against the Company pursuant to the terms of the Promissory Note and any
security documents securing same. This representation and warranty only
applies to Urquhart.
4.3 Urquhart & Jones Authority. The execution and delivery by
Urquhart and Jones of this Agreement and the performance by Urquhart and Jones
of the transactions contemplated hereby nor the execution nor the delivery of
this agreement, nor the consummation of the transactions contemplated hereby,
nor compliance with, nor fulfillment of the terms and provisions of this
agreement, will require any approval, consent, authorization, or other order or
action of any court, governmental authority, or regulatory body; (a) conflict
with or result in a breach of the terms, conditions, or provisions of or
constitute a default under any contract, indenture, trust agreement, trust
instrument, note, bond, mortgage, agreement, or other instrument or obligation
to which Urquhart and Jones are a party, by which they or their property or
assets may be bound, or give any party with rights thereunder the right to
terminate, modify, or otherwise change the rights or obligations of the Seller
under such contract, indenture, trust agreement, trust instrument, note, bond,
mortgage, agreement, or other instrument or obligation; or (b) violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to
Urquhart and Jones or their assets or property. This Agreement constitutes the
valid and binding obligation of Urquhart and Jones enforceable against Urquhart
and Jones in accordance with its terms, except as the enforcement of the same
may be limited by applicable bankruptcy insolvency, reorganization, or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents, warrants and covenants as follows:
5.1 Purchaser's Authority. The execution and delivery by the
Purchaser of this Agreement and the performance by the Purchaser of the
transactions contemplated hereby nor the execution nor the delivery of this
agreement, nor the consummation of the transactions contemplated hereby, nor
compliance with, nor fulfillment of the terms and provisions of this agreement,
will require any approval, consent, authorization, or other order or action of
any court, governmental authority, or regulatory body; (a) conflict with or
result in a breach of the terms, conditions, or provisions of or constitute a
default under any contract,
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indenture, trust agreement, trust instrument, note, bond, mortgage, agreement,
or other instrument or obligation to which the Purchaser is a party, by which
it or its property or assets may be bound, or give any party with rights
thereunder the right to terminate, modify, or otherwise change the rights or
obligations of the Purchaser under such contract, indenture, trust agreement,
trust instrument, note, bond, mortgage, agreement, or other instrument or
obligation; or (b) violate any order, writ, injunction, decree, statute, rule,
or regulation applicable to the Purchaser or his assets or property. This
Agreement constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, except as the
enforcement of the same may be limited by applicable bankruptcy insolvency,
reorganization, or other similar laws relating to the enforcement of creditors'
rights generally and by general equitable principles.
VI
ACCESS TO INFORMATION
6.1 Information. The Company, Jones and Urquhart agree that the
Purchaser and its counsel, accountants, agents, and other representatives shall
have full access for a period through March 31, 1998, to all of the Company's
properties, books, contracts, commitments, and records and to such of its
attorneys, accountants, agents, and other representatives as may be necessary
or advisable for the Purchaser to investigate the operations, business,
financial condition, and prospects of the Company; and the Seller shall furnish
the Purchaser during such period with all such information concerning the
Company and its affairs as the Purchaser may reasonably request. Nothing
contained in this section shall relieve the Company, Jones or Urquhart from any
liability which may arise from any breach of warranty, covenant,
representation, or agreement contained in this Agreement. The Purchaser agrees
to maintain the confidentiality of such information.
VII
CONDUCT OF BUSINESS PENDING CLOSING
Pending the Closing, except as otherwise consented to by the Purchaser
in writing, the Company covenants that:
7.1 Business in Ordinary Course. The Company's business shall be
conducted only in the ordinary course and its books, records, and accounts
shall be maintained in accordance with past practices.
7.2 Maintenance of Physical Assets. The Company will continue to
maintain and service its physical assets in the same manner as has been its
consistent past practice, including, without limitation, the maintenance of
inventories and supplies in quantities consistent with good business practice.
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7.3 Customers. The Company will continue to service the accounts
of its customers and/or clients in the same manner as has been its consistent
practice.
7.4 Common Stock, Options, Dividends, Etc. The Company shall not
issue any shares of its common stock or securities convertible into common
stock; purchase, redeem, retire, or otherwise acquire any shares, or agree so
to do; sell or give any option or right to purchase, hypothecate, pledge, or
otherwise encumber or dispose of any shares, or agree so to do; or declare; set
aside; or pay any dividend on any shares except with the written approval of
the Purchaser.
7.5 Preservation of Goodwill, Etc. The Company shall use its best
efforts to preserve the Company's business organization intact and to preserve
the goodwill of its suppliers, customers, and others having business relations
with it.
7.6 Compliance with Laws, Etc. The Company shall comply with all
laws applicable to it and to the conduct of its business and will conduct its
business in such a manner that on the Closing Date the representations and
warranties contained in this agreement shall be true as though such
representations and warranties were made on and as of such date.
VIII
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS
All obligations of the Purchaser under this Agreement are subject to
the fulfillment, at or before the Closing, of each of the following conditions:
8.1 Representations True at Closing; Performance by Urquhart and
Jones. The representations and warranties of Urquhart and Jones contained in
this Agreement shall be deemed to have been made again at and as of the time of
the Closing hereunder and, except as affected by transactions permitted by this
Agreement, shall then be true and correct in all material respects; Urquhart
and Jones 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 and all required consents to the transactions contemplated
herein shall have been obtained by Urquhart and Jones.
8.2 Material Adverse Change. From the date hereof to the Closing,
there shall not have been any material adverse change in the properties,
business, financial condition, or prospects of the Company.
8.3 Litigation Affecting Closing. On the Closing Date no suit,
action, or other proceeding shall be pending before any court or governmental
agency in which it is sought to restrain, prohibit,
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or to obtain damages or other relief in connection with this agreement or the
consummation of the transactions contemplated hereby.
8.4 Amended and Restated Bylaws. B&L shall, on or before the
closing date, furnish to Sport-Haley, Inc. a resolution adopting the Amended
and Restated Bylaws, in form and content as is reasonably acceptable to
Purchaser.
8.5 Opinion of Purchaser's Counsel. An opinion of B&L's counsel
addressed to Sport-Haley, Inc., in form and content as is satisfactory to
Purchaser's counsel, which opinion shall certify that the corporation is in
good standing in its state of incorporation, that the 50% of the issued and
outstanding stock of the company is owned by Urquhart and that fifty percent
(50%) of the issued and outstanding stock of the Company is owned by Jones,
that such stock is free and clear of all liens and encumbrances, and that there
are no agreements, covenants, stockholder purchase agreements, or any other
agreements that would prevent the transfer of such stock to Sport-Haley in
exchange for the consideration stated herein. Such opinion shall also certify
that the Security Agreement, Promissory Note, and Financing Statements referred
to in Paragraph 8.12 are valid and enforceable against B&L according to their
terms.
8.6 Employment Contract. Purchaser shall have received a
Management Agreement whereunder Larry M. Jones will manage the day-to-day
affairs of the Company, which agreement is acceptable to Purchaser in
Purchaser's reasonable discretion.
8.7 Cancellation of Jones Promissory Note. The Company and Jones
shall have provided to Purchaser evidence satisfactory to Purchaser, in
Purchaser's sole and absolute discretion that the Demand Promissory Note from
the Company to Jones, dated August 1, 1995 in the original principal amount of
$60,000.00 has been paid or canceled and is no longer an enforceable obligation
against the Company.
8.8 Lease of Company Property. Purchaser shall have approved, in
Purchaser's sole and absolute discretion, a lease between Jones and the Company
whereunder Jones has leased the real property and improvements which constitute
the facilities which house the Company's operations (the "Facilities"). Jones
shall furnish within five (5) days subsequent to execution of this Agreement,
evidence of ownership of the Facilities by Jones.
8.9 Lender Consent. Purchaser shall have been furnished by Jones,
an agreement from any lender(s) who hold encumbrances on the Facilities, that
notwithstanding the subordinate nature of said lease, as long as tenant is
current and not in default under the lease, such lender(s) will not disturb the
tenancy of the tenant.
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8.10 Resignation of Roberta C. Jones. Purchaser shall have
received the resignation of Roberta C. Jones as Secretary-Treasurer and as a
Director of the Company.
8.11 Election of Robert G. Tomlinson, Steve Auger, and Grant
Beeman. Robert G. Tomlinson shall have been elected to the Board of Directors
of the Company. Grant Beeman shall have been elected as a Vice President of
the Company, and Steve Auger shall have been elected as Director and
Secretary-Treasurer of the Company. The Company shall furnish to Purchaser
appropriate Minutes or Resolutions of the Company reflecting such fact.
8.12 Updated Inventory. Purchaser shall have received a current
inventory (as of 1/31/98) of all fixed assets.
8.13 Security Interest in Fixed Assets, Inventory, Etc. Purchaser
shall have received an executed Security Agreement and UCC Financing Statement
between B&L, as Debtor, and Purchaser as Secured Party, creating a security
interest in all fixed assets and inventory now owned or hereafter acquired (the
Personal Property), together with a Promissory Note in the amount of the
principal balances of all loans to be paid or acquired by Purchaser pursuant to
Paragraph 10.4.
IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF URQUHART AND JONES
All obligations of Urquhart and Jones under this agreement are subject
to the fulfillment, at or before the Closing, of each of the following
conditions:
9.1 Purchaser's Representations True at Closing; Performance by
Purchaser. The Purchaser's representations and warranties contained in this
agreement shall be deemed to have been made again at and as of the time of the
Closing hereunder and shall then be true and correct in all material respects;
the Purchaser 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.
9.2 Litigation, Affecting Closing. On the Closing Date no suit,
action, or other proceeding shall be pending before any court or governmental
agency in which it is sought to restrain, prohibit, or to obtain damages or
other relief in connection with this agreement or the consummation of the
transactions contemplated hereby.
X
INDEMNIFICATION
10.1 Seller's Indemnification. Urquhart and Jones shall indemnify
and hold Purchaser and the Company harmless against any
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loss, cost or damage, including reasonable attorneys fees which Purchaser
should suffer should any representation and warranty of Seller herein prove to
be incorrect.
10.2 Purchaser's Indemnification. Purchaser shall indemnify and
hold Urquhart and Jones, and their heirs, successors and assigns, harmless
against any loss, cost or damage, including reasonable attorneys' fees which
they should suffer should any representation and warranty of Purchaser herein
prove to be incorrect.
10.3 Removal from Guaranty. Purchaser shall cause Urquhart to be
removed from the personal guaranty under which Seller guaranteed the One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00) loan from Branch
Banking and Trust Company to the Company within a reasonable period of time
following closing. Notwithstanding the Purchaser's obligation to remove
Urquhart from such guaranty, Purchaser shall indemnify and hold Seller, his
heirs, and assigns, harmless against any loss, cost, or damage, including
reasonable attorneys' fees which Urquhart should suffer by reason of his being
obligated to Branch Banking and Trust Company under the personal guaranty
referred to in this Paragraph 10.2.1.
10.4 Company Loan Payment. Within thirty (30) days subsequent to
the Closing, Purchaser shall pay or acquire the bank loans in favor of BB&T
Bank. Purchaser shall indemnify and hold Urquhart and Jones, their heirs,
successors and assigns against any loss, cost or damage, including reasonable
attorneys' fees, which Urquhart or Jones should suffer by reason of Purchaser's
failure to pay said loans within the period of time set forth in this paragraph
10.4.
XI
WAIVER OF BUY-SELL AGREEMENT
Jones, Urquhart, and the Company, by execution of this Agreement do
hereby waive any rights which they may have under the Buy-Sell Agreement
between Jones, Urquhart, and the Company as contained in the Bylaws of the
Company, or any other agreements verbal or written.
XII
MUTUAL RELEASE
At the Closing, Urquhart, Jones and B&L shall enter into a Mutual
Release Agreement in form and content as is attached hereto as Exhibit A.
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XIII
MISCELLANEOUS
13.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time upon the occurrence of any of the
following:
(a) Agreement. By agreement of the parties hereto.
(b) Adverse Facts. By the Purchaser if any facts
are discovered in the course of its investigation of the Company which
materially contravene any representation, warranty, or covenant that Urquhart
and Jones have made or would be required to make at Closing; or by Urquhart and
Jones if any facts are discovered in the course of its investigation which
materially contravene any representation, warranty, or covenant that Purchaser
has made or would be required to make at Closing. Purchaser may terminate under
this paragraph only during the period ending March 31, 1998 as referenced in
paragraph 6.1.
(c) Failure of Conditions. By Purchaser if the
conditions set forth in Article VII shall not have been met or waived by
Purchaser at or before the Closing; by Urquhart and Jones if the conditions set
forth in Article VIII shall have not been met or waived by Urquhart and Jones
at or before the Closing.
If this Agreement is terminated, the parties are released from any and
all obligations or liability hereunder.
13.2 Survival of Representations and Warranties. Urquhart, Jones,
and the Company and Purchaser agree that this Agreement (together with its
exhibits) constitutes the entire agreement between the parties and that the
representations, warranties, and covenants of Urquhart, Jones, the Company, and
Purchaser provided for herein shall survive the Closing.
13.3 Notices, Etc. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when personally delivered or two (2) days after such notice shall
have been mailed, certified mail, postage prepaid, return receipt requested to:
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Purchaser: Sport-Haley, Inc.
4600 East 48th Avenue
Denver, Colorado 80216
office: (303) 320-8800
fax: (303) 320-8806
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With a copy to: Karsh & Fulton, Professional Corporation
Attention: Larry C. Fulton
950 South Cherry Street, Suite 710
Denver, Colorado 80222
office: (303) 759-9669
fax: (303) 782-0902
Urquhart: Marvin Urquhart
3141 Magnolia Avenue
Panama City, Florida 32401
office (904) 769-3226
fax: (904) 763-6787
To the Company Larry M. Jones
and Jones: B&L Sportswear, Inc.
533 U.S. 301 South
Four Oaks, North Carolina 27524
office (919) 963-4026
fax: (919) 963-409
With a copy to: Randall B. Pridgen, Esq.
Dill, Fountain, Hoyle, Pridgen,
Straud & Naylor
One Federal Square
300 North Grace Street
P.O. Drawer 1617
Rocky Mount, North Carolina 27802-1617
office: (919) 446-0041
fax: (919) 446-5906
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or to such other addresses as shall be subsequently designated by notice to all
parties.
13.4 Counterparts. This agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.5 Public Announcement. The parties agree that all press releases
or other public announcements relating to the transactions contemplated herein
shall require the prior approval of all parties hereto.
13.6 Expenses. Each party hereto shall pay its own expenses
incident to this agreement and the preparation to consummate the transactions
provided for herein.
13.7 Parties in Interest. This agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective heirs,
executors, personal representatives, successors, and assigns, provided that any
assignment of this agreement prior to Closing without the written consent of
the other party shall be void.
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13.8 North Carolina Law to Govern. This agreement shall be
construed and enforced in accordance with the laws of the State of North
Carolina.
13.9 Partial Invalidity. If any term, provision, covenant, or
condition of this agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the provisions shall remain
in full force and effect and shall in no way be affected, impaired, or
invalidated.
13.10 No Commissions. All negotiations relative to this Agreement
have been carried on directly by the Purchaser, the Company, Jones and Seller.
All parties hereto warrant and represent to the other that no salesman, broker,
or finder is entitled to a fee or commission as a result of this transaction.
13.11 Expenses. Each party to this Agreement shall bear its own
expenses, including attorneys fees.
XIV
FACSIMILE SIGNATURES
14.1 Facsimile signatures shall be acceptable for all parties
hereto.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date first above written.
PURCHASER:
SPORT-HALEY, INC.,
A COLORADO CORPORATION
By: /s/ Robert G. Tomlinson
------------------------------
Robert G. Tomlinson, Chief
Executive Officer
/s/ Marvin Urquhart
------------------------------
Marvin Urquhart, Individually
/s/ Larry M. Jones
------------------------------
Larry M. Jones, Individually
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/s/ Roberta C. Jones
------------------------------
Roberta C. Jones, Individually
COMPANY:
B&L SPORTSWEAR, INC.,
A NORTH CAROLINA CORPORATION
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ATTEST:
/s/ Robert C. Jones By: /s/ Larry M. Jones
- --------------------------- ----------------------------
Roberta C. Jones, Larry M. Jones, President
Secretary
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