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EXHIBIT 10.2
INTERIM AGREEMENT
AGREEMENT made this 5th day of February, 1999 by and among M&L
INTERNATIONAL, INC., an Illinois corporation with its principal office at 0000
Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("M&L International"), AMEREX
(USA) INC., a New York corporation with its principal office at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Amerex"), and M&L INTERNATIONAL GROUP, LLC, a
Delaware Limited Liability Company with its principal office at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("M&LIG").
WITNESSETH:
WHEREAS, M&L International is, simultaneously with the execution and
delivery of this Agreement, filing a petition to commence a reorganization case
(the "Reorganization Case") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"); and
WHEREAS, after commencement of the Reorganization Case, M&L
International will be operating its business as a debtor-in-possession pursuant
to the Bankruptcy Code; and
WHEREAS, M&L, Amerex and M&LIG have concurrently entered into an Asset
Purchase Agreement dated February 5, 1999 pursuant to which Amerex and M&LIG
agree to purchase certain assets from M&L International and M&L International
agrees to sell such assets to Amerex and M&LIG, all upon the terms and subject
to the conditions set forth in such agreement (the "Asset Purchase Agreement");
and
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WHEREAS, Chase Manhattan Bank ("Chase") for itself, and as agent for
certain other lenders (Chase and such other lenders to be referred to herein,
collectively, as the "Secured Bank Group") have a first security interest in,
and a cross collateralized continuing first lien on, the assets of M&L
International (both tangible and intangible) together with the assets of its
affiliated companies Mackintosh of New England Co. ("MacKintosh") and Biscayne
Apparel International, Inc. d/b/a Xxxxx ("Xxxxx") as security for the cross
collateralized obligations to the Secured Bank Group of Xxxxxxxxxx, Xxxxx and
M&L International; and
WHEREAS, it is essential in order to preserve the viability of the
business of M&L International as a going concern and to preserve the value of
the assets of M&L International pending the sale of such assets, that certain
purchase orders issued by customers to M&L International be fulfilled and that
letters of credit be established for the manufacture of goods to fulfill these
customer purchase orders; and
WHEREAS, M&L International is unable to open such letters of credit
because it has insufficient credit for such purpose; and
WHEREAS, M&L International, Amerex and M&LIG believe it is in the best
interest of all the parties to enter into this Agreement on the terms and
conditions hereinafter set forth, pursuant to which such customers' purchase
orders shall be assigned by M&L to Amerex and M&LIG, the right to manufacture
the goods and fill such customers' purchase orders shall be assigned to Amerex
and M&LIG, and the right to use M&L International's trademarks and to license or
sub-license on a non-exclusive basis the trademarks licensed to M&L
International shall be assigned to Amerex and/or M&LIG, as more particularly set
forth herein; and
WHEREAS, in order to induce Amerex and M&LIG to enter into this
Agreement and to post letters of credit to manufacture the goods to fill such
customers purchase orders, M&L
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International is prepared to indemnify and hold Amerex and M&LIG harmless from
and against any loss or liability resulting from the assignment of such purchase
orders and the posting of letters of credit and manufacture of goods to fill
such purchase orders; and
WHEREAS, Amerex is only willing to enter into the Asset
Purchase Agreement, and purchase the assets and business of M&L International,
on the condition that the parties hereto enter into, and the Bankruptcy Court
approves, this Interim Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
Section 1. Sale of Customer Purchase Orders and Supplier Purchase
Orders
1.1 M&L International does hereby assign to Amerex and M&LIG absolutely
and irrevocably, free and clear of all claims, mortgages, security interests,
liens, judgments, encumbrances and charges of any kind or nature, all of its
right, title and interest in and to each of the customer purchase orders set
forth on Schedule 1.1 annexed hereto (the "Contracts"). This is an absolute
conveyance and assignment.
1.2 M&L International agrees to assign to Amerex and M&LIG, absolutely
and irrevocably, free and clear of all claims, mortgages, security interests,
liens, judgments, encumbrances and charges of any kind or nature, all of its
right, title and interest in and to additional customer purchase orders as
mutually agreed to by the parties (the "Additional Contracts"). When made, this
will be an absolute conveyance and assignment.
1.3 M&L International does hereby assign to Amerex and M&LIG,
absolutely and unconditionally, free and clear of all claims, mortgages,
security interests, liens, judgments, encumbrances and charges of any kind or
nature, all of its right, title and interest in and to each of the purchase
orders issued by M&L to its suppliers in connection with the manufacture of
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goods to fulfill the Contracts, as set forth on Schedule 1.3 (the "Supplier
Purchase Orders") and to any additional Supplier Purchase Orders as mutually
agreed to by the parties hereto (the "Additional Supplier Purchase Orders").
When made, this will be an absolute conveyance and assignment.
1.4 It is agreed that neither M&L International, its bankruptcy estate,
nor the Secured Bank Group shall have any interest whatsoever in the Contracts,
Additional Contracts, Supplier Purchase Orders, Additional Supplier Purchase
Orders, L/C's (as defined below) or any goods manufactured pursuant thereto or
any accounts receivable resulting therefrom.
Section 2. Grant of Licenses and Consents
2.1 M&L International and/or Mackintosh (as the case may be) hereby
irrevocably and absolutely grant to Amerex and M&LIG a royalty free
non-exclusive license with respect to the trademarks and trade names set forth
on Schedule 2.1, all copyrights, drawings, patterns, sketches, designs, style
and model numbers, artwork and other intangible property owned by M&L
International and/or its affiliates (collectively, the "Intellectual Property"),
to use such Intellectual Property in connection with the manufacture and sale of
goods to fulfill the Contracts and Additional Contracts. M&L International
hereby absolutely and irrevocably assigns and sub-licenses on a non-exclusive
basis to Amerex and M&LIG the right to use all licensed Intellectual Property in
connection with the manufacture and sale of any merchandise or goods pursuant to
the Contracts and Additional Contracts.
2.2 M&L International hereby irrevocably grants to Amerex and M&LIG a
royalty free non-exclusive sub-license to use all licensed rights it has from
Healthtex Apparel Corp, Starter Corporation and Eclipse, Incorporated (the
"Licensors") in connection with the manufacture and sale of the goods to fulfill
the Contracts and Additional Contracts. M&L
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International shall obtain an order of the Bankruptcy Court authorizing Amerex
to use the trademarks or trade names of Licensors, or in lieu thereof, obtain
the consent of the Licensors to the non-exclusive license and/or to the
sub-licensing of the trademarks and trade names for use by Amerex and M&LIG in
the manufacture and sale of goods pursuant to the Contracts and Additional
Contracts. M&L International hereby irrevocably consents to the Licensors
granting directly to Amerex and M&LIG non-exclusive licenses and/or sub-licenses
authorizing Amerex and M&LIG to use all licensed rights in connection with the
manufacture and sale of any merchandise or goods manufactured and sold to
fulfill the Contracts and Additional Contracts. Amerex agrees to pay
respectively to each Licensor the percentage royalty due to such Licensor under
the license agreement between M&L International and such Licensor solely with
respect to the goods manufactured and sold by Amerex or M&LIG pursuant to the
Contracts and Additional Contracts which utilize such Licensor's trademark or
trade name; provided however, Amerex and M&LIG shall have no obligation to any
Licensor with respect to any minimum or guaranteed royalties.
2.3 M&L International acknowledges that the consideration for these
non-exclusive licenses, sub-licenses and consents has been fully paid and
received by M&L International.
2.4 M&L International consents to Amerex and M&LIG manufacturing the
goods in the factories currently doing business with M&L International to
fulfill the Contracts and Additional Contracts. Subject to orders of the
Bankruptcy Court, and the provisions of any cash collateral stipulations or
orders, M&L International agrees that it will, at its sole cost and expense,
take all actions reasonably necessary or appropriate, in the ordinary course of
business as historically conducted by M&L International (except for the opening
of Letters of Credit by M&L International) to facilitate the ability of Amerex
and M&LIG to perform the Contracts and
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Additional Contracts and M&L International will not take any action that would
interfere with the ability of Amerex or M&LIG to perform the Contracts and
realize the benefits of the licenses and sub-licenses granted to Amerex pursuant
to this Agreement. All costs and expenses incurred by M&L International in
performing its obligations pursuant to the foregoing sentence shall be included
in "Operating Costs and Expenses," as defined in the Asset Purchase Agreement.
If Amerex or M&LIG requests M&L International to take any action outside the
ordinary course of business as historically conducted by M&L International,
Amerex shall advance to M&L International any third party costs and expenses
incurred by M&L International in connection therewith.
Section 3. Letters of Credit
3.1 Provided the Licensors have consented to the sub-licenses to Amerex
and M&LIG for the use of the trademarks and trade names of Licensors, or the
Bankruptcy Court has entered orders authorizing Amerex to use the trademarks and
trade names of Licensors, Amerex agrees to open letters of credit ("L/Cs") to
the factories and material suppliers in its own name for the manufacture and
direct purchase by Amerex and/or M&LIG of goods to fulfill the Contracts. From
time to time, as Additional Contracts are assigned to Amerex, Amerex agrees to
open additional L/Cs to the suppliers and manufacturers for the manufacture of
goods to fulfill such Additional Contracts. Amerex shall have the absolute right
at any time to refuse to accept Additional Contracts and to refuse to open L/Cs
for the manufacture of goods to fulfill such Additional Contracts.
Simultaneously with opening any L/Cs or entering into any contracts with
factories or suppliers, Amerex will deliver to M&L International copies of such
L/Cs and contracts.
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3.2 M&L International agrees to pay to Amerex a service fee in the sum
of four (4%) percent of the total face amount of all of the L/Cs opened by
Amerex (the "Service Fee") and to reimburse Amerex for all bank charges, bank
fees and other bank expenses incurred by Amerex in connection with opening the
L/Cs and the advances provided for in Section 2.4 but not to exceed one-half
percent (1/2%) of the total face amount of all L/Cs (the "Expenses"), provided
that, such Service Fee and Expenses shall not be payable to Amerex (i) if the
Bankruptcy Court approves the sale of the assets and business of M&L
International to M&LIG pursuant to the Asset Purchase Agreement and M&L
International is not in default thereunder, (ii) if M&LIG closes the purchase of
the assets and business of M&L International despite any default by M&L
International, or (iii) if the Bankruptcy Court does not approve a sale of the
assets and business of M&L International to M&LIG or to any Alternate Bidder (as
defined below).
3.3 In the event that the assets and business of M&L International
shall be sold to a successful alternate bidder (the "Alternate Bidder"), the
order of the Bankruptcy Court approving the sale to the Alternate Bidder shall
require the Alternate Bidder to:
(a) on the closing date of the sale to the Alternate Bidder
(the "Alternate Bid Closing Date"), post letters of credit as substitutes for
all L/Cs posted by Amerex ("Amerex Open L/Cs") and obtain the delivery for
cancellation by the beneficiary of the Amerex Open L/Cs for which it is
substituting, or, in the alternative, deliver the written undertaking of a
commercial bank having assets of least $200,000,000 to honor and pay all draws
upon each Amerex Open L/C and to indemnify the bank which issued the Amerex Open
L/Cs against such Amerex Open L/Cs; and
(b) on the Alternate Bid Closing Date, purchase back from
Amerex for $1.00 the Contracts and Additional Contracts, and assume and
indemnify Amerex and M&LIG against
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all obligations thereunder including, without limitation, any obligations to
Licensors to pay royalties and license fees, and to assume all obligations under
the Supplier Purchase Orders and Additional Supplier Purchase Orders; and
(c) pay to Amerex on the Alternate Bid Closing Date, out of
the purchase price, the Service Fee and Expenses.
Upon entry of an order of the Bankruptcy Court containing the
provisions in this Section 3.3, M&L International shall have no further
liability for the Service Fee and Expenses.
3.4 In consideration of the fulfillment by the Alternate Bidder of the
conditions of Section 3.3 above, at the closing of the sale by M&L International
to the Alternate Bidder, Amerex shall reassign to the Alternate Bidder all of
the Contracts and Additional Contracts and Supplier Purchase Orders and
Additional Supplier Purchase Orders previously assigned to Amerex together with
the rights to use the Intellectual Property and the licenses with respect to the
goods.
3.5 Two (2) business days prior to the hearing to approve the Asset
Purchase Agreement, Amerex shall deliver to M&L a certified statement of its
Chief Financial Officer which shall identify: (i) all Amerex Open L/Cs, (ii) all
Contracts and Additional Contracts and (iii) the amount of the Service Fee and
Expenses. M&L International and the Alternate Bidder may rely on such
certificate to establish the amounts due and obligations pursuant to Section 3.3
above.
Section 4. Indemnification of Amerex Against Loss.
M&L International hereby absolutely, irrevocably and unconditionally
agrees to indemnify and hold Amerex harmless from and against any and all loss,
cost and expense of Amerex whatsoever in connection with its opening of the L/Cs
and manufacture and the sale of
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the goods to fulfill the Contracts and Additional Contracts, provided that, any
claim for indemnification hereunder is delivered to M&L International no later
than March 31, 2000. Amerex shall use its best efforts to mitigate its losses by
the sale of such goods to the customers under the Contracts or, on canceled or
refused orders, to other customers. From time to time, Amerex shall present to
M&L International its detailed statement of any loss it suffers and shall
provide a written accounting upon request by M&L International. Notwithstanding
the foregoing, M&L International shall not be liable to Amerex for any
unrealized profit on the sale of goods. In determining the amount of loss, cost,
or expense, the Contracts and Additional Contracts shall be treated as a whole
such that any profit, gain or benefit from any specific Contract or Additional
Contract shall offset any loss or damage from other Contracts or Additional
Contracts. Amerex shall maintain appropriately detailed records which shall be
sufficient to enable the parties to determine the profit, loss, gain, benefit or
expense or cost attributable to the Contracts or Additional Contracts. The
provisions of this Section 4 shall terminate (i) upon entry by the Bankruptcy
Court of the Order (as defined in the Asset Purchase Agreement), unless M&L
International is in default under the Asset Purchase Agreement, or (ii) if,
pursuant to the Order, M&LIG closes the purchase of the assets and business of
M&L International despite any default by M&L International, or, (iii) if the
assets and business of M&L International are sold to an Alternate Bidder and the
Bankruptcy Court enters an order containing the provisions set forth in Section
3.3. If M&LIG terminates the Asset Purchase Agreement due to a default by M&L
International, the provisions of this Section 4 shall continue in effect in
accordance with its terms.
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Section 5. Conditions.
The provisions of this Agreement, the obligations of M&L International
hereunder, and the obligations of Amerex to open L/Cs for the manufacture of
goods to fulfill the Contracts is at all times conditioned upon (i) the issuance
by the Bankruptcy Court of an emergency order on or before February 9, 1999
approving (x) this Interim Agreement and all of the terms, conditions and
provisions hereof, and (y) the opening of L/Cs by Amerex to fulfill some or all
of the Contracts, and (ii) the consent of the Licensors to Amerex and M&LIG
obtaining licenses and/or sub-licenses from the Licensors or an order of the
Bankruptcy Court authorizing use by Amerex or M&LIG of the trademarks and trade
names of Licensors. Notwithstanding anything herein to the contrary, if the
initial emergency order does not approve the opening of L/Cs to fulfill all of
the Contracts and Additional Contracts, then Amerex shall only be required to
open L/Cs to the extent approved by the Bankruptcy Court in the initial
emergency order and, thereafter, if, when and as approved by the Bankruptcy
Court in subsequent orders.
Section 6. General and Miscellaneous
6.1 No party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect.
6.2 This Agreement shall be construed, performed and enforced in
accordance with, and governed by, the laws of the State of New York, without
giving effect to the principles of conflicts of laws thereof. The parties hereto
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent to the
jurisdiction of, the Bankruptcy Court.
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6.3 The parties agree that, from time to time, each of them shall
forthwith execute and deliver such documents as the other parties hereto or
their respective counsel may reasonably request to effectuate the purposes of
this Agreement.
6.4 In the event that any part of this Agreement is declared by any
court or other judicial or administrative body to be null, void or
unenforceable, said provision shall survive to the extent it is not so declared,
and all of the provisions of this Agreement shall remain in full force and
effect only if, after excluding the portion deemed to be unenforceable, the
remaining terms shall provide for the consummation of the transactions
contemplated hereby in substantially the same manner as originally set forth at
the later of the date this Agreement was executed or last amended.
6.5 All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given: (i)
on the date of service if served personally on the party to whom notice is to be
given; (ii) on the day of transmission if sent via facsimile transmission to the
facsimile number given below, and electronic confirmation of receipt is obtained
promptly after completion of the transmission; (iii) on the date after delivery
to Federal Express or similar overnight courier or the Express Mail service
maintained by the United States Postal Service; or (iv) on the fifth day after
mailing, if mailed to the party to whom notice is given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party at
its address or telecopier number set forth below:
If to M&L International:
M&L International, Inc.
c/o Trivest
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000-0000
Attn.: Xxxxx Xxxxxxxxxx, Xx.
Telecopier No.: (000) 000-0000
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With a copy to:
Xxxxxxxxx Traurig
Met Life Building
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000;
Xxxxxxx Xxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000;
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: Xxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000;
and, if a committee is appointed in the Reorganization Case,
to counsel for such committee at the address specified by M&L
International in written notice to Amerex given in the manner
set forth herein.
If to Amerex or M&LIG:
Amerex (USA) Inc.
000 Xxxxx Xxx.
Xxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxxx
Chairman
Telecopier No. (000) 000-0000
With a copy to:
Xxxxx & Reade, LLP
000 Xxxxx Xxx.
Xxx Xxxx, XX 00000
Attn.: Xxxxxxxx X. Xxxxxx, Esq.
Telecopier No. (000) 000-0000
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Any party may change its address for the purpose of this Section by giving the
other party written notice of its new address in the manner set forth above.
6.6 This Agreement may be amended or modified, and any of the terms,
covenants, representations, warranties or conditions hereof may be waived, only
by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. Any waiver by any party of any
condition, or of the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall not be
deemed to be nor construed as a further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
6.7 This Agreement contains the entire understanding among the parties
hereto with respect to the transactions contemplated hereby and supersedes and
replaces all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All schedules hereto and any
documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement as fully as though completely set forth
herein.
6.8 The section headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
6.9 Any reference in this Agreement to a day shall mean a Business Day.
If the day on which any action is required to be performed or to take place is
not a Business Day in New York, New York, then such action shall not be
required, or shall not take place, until the next Business Day thereafter.
6.10 This Agreement may be executed in two or more counterparts each of
which shall be an original and all of which, taken together, shall be deemed one
and the same document.
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6.11 Amerex, M&LIG and M&L International shall each be entitled to
specific performance of the terms and provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the day and year first above written.
M&L International, Inc.
By:
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Name:
---------------------------------
Title:
--------------------------------
Amerex (USA) Inc.
By:
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Name:
---------------------------------
Title:
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M&L International Group LLC
By:
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Name:
---------------------------------
Title:
--------------------------------
Mackintosh of New England Co.
(as to Section 2.1 only)
By:
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Name:
---------------------------------
Title:
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List of Schedules
Schedule 1.1 Customer Purchase Orders
Schedule 1.3 Supplier Purchase Orders
Schedule 2.1 Trademarks
