Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by and among
TODAY'S MAN, INC.,
XXXX & XXXX, INC.,
BENMOL, INC.,
D&L INC.,
and
CHRISTOPHER'S MEN'S STORES, INC.
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March 20, 2003
TABLE OF CONTENTS
Page No.
1. Definitions.........................................................1
2. Basic Transaction..................................................10
(a) Purchase and Sale of Assets...............................10
(b) Assumption of Liabilities.................................10
(c) Purchase Price............................................10
(d) Contract Assumption and Assignment........................11
(e) Closing...................................................12
(f) Deliveries at the Closing.................................12
(g) Allocation................................................13
(h) Adjustments to the Purchase Price.........................13
3. Representations and Warranties of the Sellers......................13
(a) Organization of the Sellers...............................14
(b) Authorization of Transaction..............................14
(c) Noncontravention..........................................14
(d) Brokers' Fees.............................................14
(e) Title to and Possession of Acquired Assets................14
(f) Financial Statements......................................15
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(g) Real Estate...............................................15
(h) Intellectual Property.....................................15
(i) Tangible Assets...........................................17
(j) Inventories...............................................17
(k) Contracts.................................................17
(l) Insurance.................................................18
(m) Employees and Labor Matters...............................19
(n) Warranties Survive Closing................................19
4. Representations and Warranties of the Buyer........................19
(a) Organization of the Buyer.................................20
(b) Authorization of Transaction..............................20
(c) Noncontravention..........................................20
(d) Brokers' Fees.............................................20
(e) Warranties Survive Closing................................20
5. Covenants..........................................................20
(a) General; Bankruptcy Court Filings.........................20
(b) Approvals, Consents and Notice............................21
(c) Operation of the Business.................................21
(d) Full Access...............................................22
(e) Notice of Developments....................................22
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(f) Competing Proposals and Overbids..........................23
(g) Payment of Expense Reimbursement Fee......................23
(h) Equity Capital............................................24
(i) Senior Debt Financing.....................................24
(j) Sub-Debt Financing........................................24
(k) Employee Matters..........................................25
(l) Tax, Financial and Accounting Matters.....................25
(m) Wind Down of the Bankruptcy Estate........................25
6. Conditions to Obligation to Close..................................26
(a) Conditions to Obligations of the Buyer....................26
(b) Conditions to Obligation of the Sellers...................27
7. Termination........................................................27
(a) Termination of Agreement..................................27
(b) Effect of Termination.....................................28
8. Resolution of Disputes, Binding Arbitration........................29
9. Miscellaneous......................................................30
(a) Press Releases and Public Announcements...................30
(b) No Third-Party Beneficiaries..............................30
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(c) Entire Agreement..........................................30
(d) Succession and Assignment.................................30
(e) Counterparts..............................................30
(f) Headings..................................................30
(g) Notices...................................................30
(h) Governing Law.............................................31
(i) Amendments and Waivers....................................31
(j) Severability.............................................31
(k) Construction..............................................32
(l) Incorporation of Exhibits and Schedules...................32
(m) Specific Performance......................................32
(n) Force Majeure.............................................32
Exhibit A - Agency and License Agreement
Exhibit B - Allocation Schedule
Disclosure Schedule - Exceptions to Representations and Warranties
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of this 20th
day of March, 2003, by and among Christopher's Men's Stores, Inc., a New York
corporation (the "Parent"), Today's Man, Inc., a Pennsylvania corporation
("TMI"), Xxxx & Xxxx, Inc., a Delaware corporation ("FFI"), Benmol, Inc., a
Delaware corporation ("BI"), and D&L Inc., a Delaware corporation ("DLI"). TMI,
FFI, BI and DLI are hereinafter referred to individually as, a "Seller" or
"Debtor" and collectively, as the "Sellers" or "Debtors". The Buyer (defined
below), the Parent and the Sellers are sometimes referred to herein
individually, as a "Party" and collectively, as the "Parties."
WITNESSETH:
WHEREAS, Sellers are debtors in cases pending under Chapter 11 of the
United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq., as amended (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the District of
New Jersey (the "Bankruptcy Court"), which cases have been ordered to be jointly
administered under the main Case No. 03-16677-GMB (the "Chapter 11 Case"); and
WHEREAS, this Agreement contemplates a transaction in which the Parent
or a wholly owned subsidiary of Parent (collectively, with the Parent, the
"Buyer") will purchase, in exchange for cash, all of the Acquired Assets all
upon the terms and subject to the conditions set forth herein and in accordance
with Sections 105, 363 and 365 of the Bankruptcy Code;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties, intending to be legally bound,
hereby agree as follows.
1. Definitions. In addition to other terms defined herein, as used in this
Agreement the following terms shall have the meanings set forth below. Whenever
required by the context of this Agreement, the singular shall include the plural
and the masculine shall include the feminine and vice versa.
1.1 "Acquired Assets" means the following tangible and intangible
assets and properties, real, personal and mixed (other than the Excluded
Assets), wherever located, which are owned, leased or otherwise used by any of
the Sellers or any Affiliate of the Sellers as of the Closing Date and which are
used, in whole or in part, in the operations of the Business:
(a) real property leases and subleases used in the operation
of the Business as specified by the Buyer in ss.1.1(a) of the Disclosure
Schedule as an Assigned Contract and concerning which Buyer has not notified
Sellers, at any time up until the time of the Sale Hearing, to withdraw the
request to assume and assign the lease to the Buyer (collectively, the "Real
Estate Leases");
(b) all tangible personal property, including machinery,
equipment, supplies, manufactured and purchased parts, furniture, fixtures,
furnishings, automobiles, trucks, tractors, trailers, tools, tooling, leasehold
improvements, computer hardware and software, servers, modems, data processing
equipment, office equipment, shelving, racks, displays, counters, equipment,
cash registers and other items of similar character relating to the Business,
including, without limitation, as listed on ss.1.1(b) to the Disclosure Schedule
(collectively, the "Machinery and Equipment");
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(c) all inventories of the Business owned or possessed by the
Sellers, including, without limitation, work-in-process and finished goods and
packaging materials as of the Closing Date (collectively, the "Inventories");
(d) all Intellectual Property associated with the Business,
including, without limitation, all Intellectual Property listed on ss.3(h) to
the Disclosure Schedule, all licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder (including, without limitation, all
rights of assignment), remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions, and all
other trade names or trademarks used in connection with the operations of the
Business;
(e) leases and subleases to Machinery and Equipment and other
personal property, and rights thereunder relating to the Business at or in
connection with the premises subject to the Real Estate Leases, as specified by
the Buyer in ss.1.1(e) to the Disclosure Schedule as an Assigned Contract and
concerning which Buyer has not notified Sellers, at any time up until the time
of the Sale Hearing, to withdraw the request to assume and assign the lease to
the Buyer (the "Leases");
(f) all contracts and agreements set forth and described in
ss.1.1(f) of the Disclosure Schedule;
(g) all security deposits relating to the Real Estate Leases
and customer deposit escrow accounts, including all Cash in respect thereof
(collectively, the "Deposits"), including, without limitation, those Deposits
listed in ss.1.1(g) of the Disclosure Schedule;
(h) all credits, rights to receive refunds and/or Inventories,
parts, components or supplies in respect of all cash prepayments, advances or
deposits paid to vendors or suppliers of the Sellers in respect of the Business
for specific items of Inventories, supplies or services ordered for future
delivery (collectively, the "Inventory Advances"), all of which Inventory
Advances, including the specific vendor or supplier, and the specific items of
Inventories, supplies or services still on order or which have been received,
are set forth in ss.1.1(h) of the Disclosure Schedule;
(i) all supplies, packaging materials, marketing and sales
literature, advertising materials (including without limitation photos,
previously-used television, radio, print, and other ads, and all creative work
supporting the Sellers' web site, whether in the possession of the Sellers or
their advertising agencies), catalogues, consumable materials and other items of
similar character used in the operation of the Business (collectively, "Supplies
and Marketing Materials");
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(j) to the extent such items are related to the Acquired
Assets or the Assumed Liabilities, all claims, deposits, prepayments, refunds,
causes of action, lawsuits, judgments, demands, choses in action, rights of
recovery, rights of set-off, and rights of recoupment (collectively, "Claims"),
including any such Claim relating to Intellectual Property infringement, rights
under Assigned Contracts, Claims against vendors or suppliers, and other rights
or Claims in respect of the Acquired Assets of any nature whatsoever, whether
being pursued by or otherwise available to the Sellers with respect to the
Business;
(k) to the extent their transfer is permitted by law, all
franchises, approvals, permits, licenses, applications, orders, registrations,
certificates, variances, product registrations and similar rights obtained from
governments and governmental agencies, and the benefit of those governmental
licenses, permits, approvals, license applications, orders, registrations,
certificates and similar rights which are used in the operation of the Business
or with respect to the Acquired Assets and which are transferable;
(l) all books, records, manuals, ledgers, files, documents,
computer software, tapes, computer disks, source code, manuals, correspondence,
lists, architectural plans, drawings and specifications, product designs,
creative materials, advertising and promotional materials, studies, reports, and
other printed or written materials of the Business, including, without
limitation, all vendor lists, customer lists, sales, manufacturing and customer
records, technical and support manuals, parts manuals, personnel and payroll
records, accounting records, purchase records, price lists, correspondence, and
quality control records (excluding each Seller's corporate minute book, stock
ownership records, financial, accounting and tax records and tax returns)
(collectively, the "Records");
(m) to the extent such items are directly related to the
Acquired Assets or the Assumed Liabilities, all guarantees, warranties,
indemnities and similar rights in favor of the Sellers with respect to any
Acquired Assets; and
(n) to the extent their transfer is permitted by law, all of
the Sellers' rights in, to and under any Assigned Contract with any consultants,
agents, representatives, customers, suppliers, vendors or otherwise, of the
Sellers and/or the Business regarding non-competition, non-solicitation and/or
confidentiality of trade secrets, proprietary or other information.
1.2 "Acquisition Documents" means the collective reference to this
Agreement as duly executed, the Exhibits and the Disclosure Schedule annexed
hereto and other documents contemplated by this Agreement, all as approved by
the Parties.
1.3 "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
1.4 "Affiliated Receivables" means any Receivables which are due to any
of the Sellers from any Subsidiary or Affiliate of a Seller, including, any
officer, director, employee, stockholder or other equity owner of the Sellers.
1.5 "Agency and License Agreement" has the meaning set forth inss.2(e)
below.
1.6 "Agent" has the meaning set forth inss.2(e) below.
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1.7 "Assumed Liabilities" means and is limited (without duplication)
only to those Liabilities and obligations existing as at the Closing Date which
relate solely to the operation of the Business, and which shall be limited to
the following:
(a) all Liabilities and obligations with respect to the
payment of the Cure Amounts subject to the Debtors' responsibility to make all
post-petition payments on the Assigned Contracts as set forth in ss.ss.2(d) and
5(a) of this Agreement;
(b) all Liabilities and obligations becoming due or to be
performed from and after the Closing Date under all Assigned Contracts,
including any modifications thereto agreed to by Buyer with third party lessors;
(c) all Liabilities and obligations with respect to gift
certificates, gift cards, merchandise credits and the like issued by TMI and
redeemable for cash and/or merchandise; and
(d) any sales Taxes, use Taxes, transfer Taxes or similar
Taxes arising out of the transactions contemplated by this Agreement.
1.8 "Bankruptcy Court" has the meaning set forth in the preface above.
1.9 "Bankruptcy Code" has the meaning set forth in the preface above.
1.10 "Business" means the individual or collective reference to the
business operations conducted by any or all of the Sellers, including, without
limitation, the operation of menswear retail stores.
1.11 "Buyer" has the meaning set forth in the preface above.
1.12 "Buyer Designation Rights" has the meaning set forth inss.2(e)
below.
1.13 "Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
1.14 "Chapter 11 Case" has the meaning set forth in the preface above.
1.15 "Closing" has the meaning set forth inss.2(f) below.
1.16 "Closing Date" has the meaning set forth inss.2(f) below.
1.17 "Code" means the Internal Revenue Code of 1986, as amended.
1.18 "Cure Amounts" has the meaning set forth inss.2(d) below.
1.19 "Designated Stores" has the meaning set forth inss.2(e) below.
1.20 "Disclosure Schedule" has the meaning set forth in ss.3 below.
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1.21 "Due Diligence Investigation" means the business, operational,
legal, financial, environmental, and accounting due diligence investigation
conducted by the Buyer and its prospective equity investors and lenders and each
of their representatives, of the Sellers, of the Acquired Assets, the Assumed
Liabilities, the Business and each of the Sellers' respective operations,
finances, assets, liabilities and prospects.
1.22 "Due Diligence Investigation Period" means the period of time
commencing on the date of this Agreement and expiring at 5:00 p.m., Eastern
Standard Time, on the date which is ten (10) days prior to the date of the Sale
Hearing as set forth in ss.2(d), or as may otherwise be extended by agreement
between the Buyer and the Sellers or as ordered by the Bankruptcy Court.
1.23 [Intentionally omitted].
1.24 [Intentionally omitted].
1.25 [Intentionally omitted].
1.26 "Environmental, Health and Safety Laws" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including, without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any chemical, compound, product,
solid, gas, liquid, waste, byproduct, material, pollutant or contaminant which
is hazardous, toxic or otherwise harmful to health, safety, natural resources,
wildlife or the environment, including, without limitation, asbestos (whether
friable or not), PCB's, radon and urea, formaldehyde foam, petroleum and
petroleum products, radiation, or other hazardous waste, which is included or
defined under or regulated by any environmental laws, each as amended and as now
or hereafter in.
1.27 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.28 [Intentionally omitted].
1.29 "Excluded Assets" shall mean and be limited to:
(a) all Cash and account receivables of each of the Sellers
and Affiliated Receivables;
(b) all right, title, and interest in and to all of the assets
and properties of the Sellers or any Affiliate or Subsidiary of the Sellers
which are not in any manner owned or leased by, or used in connection with, the
operations of the Sellers and/or the Business and which are not Acquired Assets;
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(c) the corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and other documents
relating to the organization, maintenance, and existence of the Sellers or any
Subsidiary of the Sellers as a corporation or other business entity and the
financial, accounting and tax records and tax returns of Sellers;
(d) any avoidance Claims which may be asserted in connection
with the Chapter 11 Case;
(e) any insurance policies of the Sellers, including any
unearned premium refunds with respect to such policies;
(f) any agreement with any Subsidiary of the Sellers or with
any of the stockholders of the Sellers or their Affiliates (other than an
agreement that is a Real Estate Lease), or any agreement under which any of the
Sellers has advanced or loaned any monies or provided any goods or services to
any of their directors, officers, employees or the Sellers' Stockholders,
including any and all inter-company promissory notes. Notwithstanding that they
are Excluded Assets, the Sellers represent that they have listed all such
agreements on ss.1.29 of the Disclosure Schedule;
(g) any Claims of Sellers (other than those related to an
Acquired Asset or Assumed Liability), including without limitation Claims
against any of the officers, directors or employees of Sellers, any employee
loans or advances, and any Claims of any Sellers against any of its lenders;
(h) any interest of any of the Sellers' in any other Person,
including without limitation, stock of FFI, BMI and DLI;
(i) any of the rights of the Sellers under this Agreement and
the other Acquisition Documents; and
(j) deposits with any credit card companies, including, but
not limited to, Discover, Visa, Master Card and American Express.
1.30 "Excluded Liabilities" means all Liabilities and obligations of
every kind and description of the Sellers or any Affiliate or Subsidiary of the
Sellers which are not Assumed Liabilities. Without limiting the generality of
the foregoing, such Excluded Liabilities shall include:
(a) any accounts payable or accrued expenses incurred prior to
the Closing;
(b) any Liabilities for administrative claims, or any
Liabilities to any secured creditors or general unsecured creditors of any of
the Sellers or any Affiliate or Subsidiary of the Sellers, in the Chapter 11
Case, other than those Assumed Liabilities specified in ss.1.7 hereof;
(c) any accrued severance obligations to any employee of the
Sellers or any Affiliate or Subsidiary of the Sellers;
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(d) any accounts or notes payables, accrued expenses or other
Liabilities or obligations (whether written, oral or otherwise expressed in any
agreement or understanding) which is or may be due by any of the Sellers, any of
Sellers' Subsidiaries to any officer, director, employee or stockholder of any
of the Sellers or any Affiliate of any of such Persons, except as otherwise set
forth in this Agreement;
(e) any Liabilities or obligations payable under any note or
indenture or with respect to any indebtedness for borrowed money (including
capitalized lease obligations other than the Leases referenced in ss.1.1(e));
(f) except as may be expressly included in the Assumed
Liabilities, any Liability for Taxes, or any Liability for the unpaid Taxes of
any Person under IRS Reg. ss.1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise;
(g) any Liability, whether as a transferee or successor, by
contract or otherwise, for (i) infringement of Intellectual Property (including
those Claims or Liabilities disclosed on the schedules referred to in ss.3(h) of
this Agreement), (ii) violation of any laws, including any Environmental, Health
and Safety Laws, ERISA or other administrative claims or contingency;
(h) any Liability or obligation to indemnify any Person
(including the Sellers' officers, directors and stockholders) by reason of the
fact that such Person was a director, officer, employee, or agent of any of the
Sellers or their Subsidiaries or was serving at the request of any such entity
as a partner, trustee, director, officer, employee, or agent of another entity
(whether such indemnification is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such indemnification is pursuant to any statute, charter document, bylaw,
agreement, or otherwise);
(i) any Liability or obligation in connection with any
avoidance actions or potential creditor Claims in connection with the Chapter 11
Case;
(j) except for the Cure Amounts, any Liability or obligation
to pay any costs and expenses required to be paid in connection with obtaining
an assumption order in the Chapter 11 Case;
(k) any Liability or obligation of the Sellers (i) in respect
of any or all of the Excluded Liabilities, (ii) under this Agreement, or (iii)
under any Transfer Instrument, Assignment Instrument or other certificate or
agreement with Buyer or any third Party entered into on or after the date of
this Agreement which is not one of the Assumed Liabilities; and
(l) any Liability or obligation due by Seller under the terms
of the Agency and License Agreement.
1.31 Final Order" shall mean an order or judgment the operation or
effect of which is not stayed, and as to which order or judgment (or any
revision, modification or amendment thereof), the time to appeal or seek review
or rehearing has expired, and as to which no appeal or petition for review or
motion for rehearing has been taken or made or any appeal or petition has been
dismissed and no further appeal or petition is possible.
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1.32 "Financial Statement" has the meaning set forth inss.3(f) below.
1.33 "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
1.34 "Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, copyright registrations and all
applications and renewals in connection therewith, (d) all logos, mask works and
all applications, registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information. (f) all inventions, ideas,
improvements, research and development, know-how, technical knowledge, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals, (g) all
computer software (including data and related documentation), (h) all formulae,
(i) all intangible assets relating to web sites, and all other similar interests
and proprietary rights which the Sellers have any right of ownership or use, and
(j) all copies and tangible embodiments thereof (in whatever form or medium).
1.35 "Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including, any liability for Taxes.
1.36 "Lien" means any mortgage, deed, pledge, lien, security interest,
encumbrance, charge, or other claim or interest of any kind or nature, whether
known or unknown.
1.37 "Material Adverse Effect" means any event or condition which is
reasonably likely to have a material adverse effect on the business, financial
condition, results of operations of the Business or any of the Sellers taken as
a consolidated or combined whole.
1.38 [Intentionally omitted].
1.39 "Most Recent Balance Sheet" means the balance sheet dated as at
January 31, 2003, contained within the Most Recent Financial Statements.
1.40 "Most Recent Financial Statements" has the meaning set forth
inss.3(f) below.
1.41 "Most Recent Fiscal Year End" means February 2, 2002.
1.42 [Intentionally omitted].
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1.43 "Ordinary Course of Business" means the ordinary course of the
operation of the Business consistent with past custom and practice (including
with respect to quantity and frequency); provided, however, that for all
Post-Petition periods, Ordinary Course of Business shall be different in custom
and practice from the Pre-Petition period, to the extent and in the manner
described in ss.5(c).
1.44 "Party" has the meaning set forth in the preface above.
1.45 "Permitted Liens" means and is limited to: (i) Liens arising by
operation of Law, (ii) Liens for current Taxes not yet due, (iii) items
constituting part of the Acquired Assets which are leased by the Sellers, (iv)
Liens to be discharged by the Bankruptcy Court, or (v) Liens described in
ss.1.50 of the Disclosure Schedule.
1.46 "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.47 "Preliminary Approval Order" means the order of the Bankruptcy
Court approving the Expense Reimbursement Fee, bidding procedures, and the form,
manner and notice to be given of the sale pursuant to this Agreement.
1.48 "Pre-Petition" means any date or period prior to March 4, 2003,
the date of filing of the Debtors' Chapter 11 bankruptcy proceedings in the
Bankruptcy Court.
1.49 "Post-Petition" means any date or period commencing on or after
March 4, 2003, the date of filing of the Debtors' Chapter 11 bankruptcy
proceedings in the Bankruptcy Court.
1.50 "Purchase Price" has the meaning set forth inss.2(c) below.
1.51 "Sale Order" means a Final Order of the Bankruptcy Court approving
this Agreement in accordance with Sections 105, 363, 365 and other applicable
provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure,
in form and substance reasonably acceptable to the Buyer and the Sellers.
1.52 "ss." or "Section" means any of the sections referred to in this
Agreement or in the Disclosure Schedule unless the context requires otherwise.
1.53 "Sellers" and "Seller" have the meanings set forth in the preface
above.
1.54 "Store Closing Sale" has the meaning set forth inss.2(e) below.
1.55 "Subsidiary" means any corporation, partnership, limited liability
company, or other business entity, with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or equity interests or
has the power to vote or direct the voting of sufficient securities to elect a
majority of the members of the board of members of the board of directors,
managers, or equivalent governing body.
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1.56 "Tax" means any federal, state, local, or foreign income, capital
gains, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, including any liability of another
Party for any of the foregoing, payable pursuant to a tax-sharing or tax
indemnification agreement.
1.57 "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On the terms and subject to
the conditions of this Agreement and the Sale Order, at the Closing the Buyer
agrees to purchase from the Sellers, and each of the Sellers hereby agrees to
sell, transfer, convey, and deliver to the Buyer, all of the right, title, and
interest of the Sellers in and to all of the Acquired Assets as the same are
constituted on the Closing Date free and clear of any and all Liens, claims,
interests and encumbrances, in exchange for the consideration specified below in
this ss.2. The Buyer will not purchase or acquire at the Closing or otherwise
any of the Excluded Assets.
(b) Assumption of Liabilities. On the terms and subject to the
conditions of this Agreement, at the Closing the Buyer agrees to assume, pay,
perform, discharge and become responsible for all of the Assumed Liabilities as
the same are constituted on the Closing Date. The Buyer will not assume or have
any responsibility, however, with respect to any Excluded Liabilities or other
obligation or Liability of any of the Sellers or any Subsidiary or Affiliate of
any of the Sellers which are not included within the definition of Assumed
Liabilities.
(c) Purchase Price. The Buyer shall pay to the Sellers the sum
of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000), subject to
adjustment in accordance with ss.2(i) below (the "Purchase Price"). The Purchase
Price shall be payable as follows:
(i) On the date this Agreement is executed, the Buyer
shall pay to the Sellers the sum of Five Hundred Thousand Dollars ($500,000)
(the "Escrow Deposit"). The Escrow Deposit shall be held in escrow by the
Buyer's counsel pursuant to an escrow agreement in a form mutually satisfactory
to the Parties and their counsel (the "Escrow Agreement"). The Escrow Agreement
shall provide, without limitation, that if the Agreement is terminated by any
Party for any reason (except for the Buyer's uncured breach pursuant to
ss.7(a)(v)(A) or pursuant to ss.7(a)(v)(C)) prior to the Closing, the Escrow
Deposit and interest thereon shall be immediately returned to the Buyer. The
return of the Escrow Deposit shall be independent of and shall not apply against
the Sellers' obligation to pay the Expense Reimbursement Fee to Buyer, if any.
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(ii) On the Closing Date the Buyer shall pay to the
Sellers cash in the amount of the remainder of the Purchase Price (less the
Escrow Deposit and net of any adjustment required by ss.2(i)) payable at Closing
by wire transfer or delivery of other immediately available funds to one or more
accounts designated by the Sellers prior to the Closing.
(d) Contract Assumption and Assignment. Pursuant to Section
365 of the Bankruptcy Code, the Sellers shall assume and assign to the Buyer all
executory contracts which the Buyer designates in Sections 1.1(a), (e) and (f)
of the Disclosure Schedule except that Buyer may notify the Sellers to withdraw
the request to assume and assign one or more of the Real Estate Leases or other
executory contracts at any time or from time to time up until the time of the
hearing before the Bankruptcy Court to approve the Sale (the "Sale Hearing").
Notwithstanding the foregoing, the Buyer shall request that the Sellers assume
and assign to Buyer at least seventeen (17) of the Real Estate Leases (the
"Minimum Leases"). The executory contracts so designated and not withdrawn by
Buyer are collectively referred to as the "Assigned Contracts." Subject to the
Minimum Leases, real estate or other leases which are the subject of any such
notification given by Buyer shall be subject to Agent's rights under the Agency
and License Agreement. Regardless of when the Bankruptcy Court enters an order
authorizing assumption and assignment of a particular Assigned Contract, all
Assigned Contracts shall be deemed to be assigned to the Buyer as of the
Closing. The Buyer shall be responsible for paying all amounts required to be
paid in connection with the assumption of the Assigned Contracts under Section
365(b) of the Bankruptcy Code (which amounts may be established by agreement
between the Buyer and the counterparty) (collectively, the "Cure Amounts"),
except that Debtors shall be responsible to pay all lease obligations pro-rated
from the date of filing and accruing post-petition under the Assigned Contracts
through the date of Closing. Buyer shall further be responsible to pay all
amounts, subject to any agreed modification, arising after the Closing Date
under each Assigned Contract, and shall provide adequate assurance of future
performance, where applicable. All Cure Amounts shall be paid by the Buyer on
the latest to occur of the Closing Date or the date on which each such Cure
Amount is established by Final Order of the Bankruptcy Court or the date or
dates established by Agreement between the Buyer and the counterparty to the
respective Assigned Contract.
(e) Designated Stores. Prior to the Closing and subject to
ss.2(d) above, Buyer shall be permitted to designate certain of the Sellers'
retail store locations (the "Designated Stores") at which Buyer and/or Agent
shall conduct store closing sales and/or going out of business sales (the "Store
Closing Sale")(such right being the "Buyer Designation Rights"). Pursuant to the
terms of an agency and license agreement between Buyer, Sellers and a joint
venture comprised of American Recovery Group, Hilco Merchant Resources, LLC, and
Hilco Real Estate, LLC (collectively, the "Agent"), to be executed prior to the
Preliminary Order Date in the form attached hereto as Exhibit A (the "Agency and
License Agreement") which shall be subject to review, modification and agreement
by Buyer, Sellers and Agent, Agent shall have the right to dispose of the
Acquired Assets, including, but not limited to, Inventories, Machinery and
Equipment, and Supplies and Marketing Materials located at the Designated
Stores. Sellers shall grant Agent, effective as of the completion of the Closing
and through and including the termination of the Store Closing Sale, a license
to occupy and use the Designated Stores. Buyer shall grant Agent, effective as
of the completion of the Closing and through and including the termination of
the Store Closing Sale, a license to use the furniture, fixtures, equipment and
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personal property located thereat for the purpose of conducting the Store
Closing Sale. The Agency and License Agreement shall provide that Agent shall
not be entitled to add any additional inventory to the Designated Stores;
provided, however, Agent and Buyer shall be entitled to transfer inventory
between the Designated Stores and the remaining stores of Sellers purchased by
Buyer. Sellers shall also grant Agent the exclusive right to market and attempt
to sell all of Sellers' right, title and interest in and to one or more of the
real estate leases for the Designated Stores, and the right to provide notice to
Sellers of Agent's election to require Sellers to assume and assign any such
real estate lease to any such party as Agent shall designate and Agent shall be
responsible for all cure costs associated with such real estate leases other
than Post-Petition costs arising after April 1, 2003, through the Closing Date.
Subject to the terms of this Agreement and the Sale Order, Buyer shall grant to
Agent a limited license and right to use the trade names, logos and customer
lists, acquired by Buyer pursuant to this Agreement. As between Buyer and
Sellers, the conduct of the Store Closing Sale shall be for the sole account of
Buyer; provided, however, that Buyer and Agent shall be liable for costs and
expenses at the Designated Stores in accordance with the terms and conditions of
the Agency and License Agreement.
(f) Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Blank Rome
LLP, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx Xxxxx Corporate Park, Cherry Hill, New Jersey
or Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx commencing at 10:00 a.m. local
time on the second business day following the date when the Sale Order becomes a
Final Order or such other date as the Parties may mutually determine (the
"Closing Date"). Notwithstanding the foregoing, the Parties agree that at the
sole election of the Buyer, the Closing Date may occur prior to the second
business day following the date on which the Sale Order becomes a final Order on
48 hours prior written notice to Sellers and so long as the Bankruptcy Court
makes a finding that the ten-day stay period provided under Federal Rules of
Bankruptcy Procedure 6004(g) and 6006(d) shall not apply to the transactions
contemplated by this Agreement.
(g) Deliveries at the Closing. At the Closing:
(i) the applicable Sellers shall deliver to the
Buyer, the various certificates, instruments and documents referred to inss.6(a)
below;
(ii) the Buyer shall deliver to the applicable
Sellers, the various certificates, instruments, and documents referred to
inss.6(b) below;
(iii) the applicable Sellers shall execute,
acknowledge (if appropriate), and deliver to the Buyer (A) bills of sale,
assignments and other instruments of transfer in such form and content as shall
be reasonably satisfactory to counsel to the Buyer and counsel to the Sellers,
and (B) such other instruments of sale, transfer, conveyance, and assignment as
the Buyer and its counsel reasonably may request (collectively, the "Transfer
Instruments");
(iv) the Buyer shall execute and deliver to the
Sellers (A) an acknowledgement of the assumptions and assignments of the
Assigned Contracts in such form and content as shall be reasonably satisfactory
to counsel to the Buyer and counsel to the Sellers, and (B) such other
instruments as the Sellers and its counsel reasonably may request with respect
to the Assigned Contracts (collectively, the "Assignment Instruments"); and
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(v) the Buyer shall deliver to the Sellers, the
Purchase Price consideration specified inss.2(c) above.
(h) Allocation. The Parties agree to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in accordance with
the allocation schedule attached hereto as Exhibit B.
(i) Adjustments to the Purchase Price.
(i) Inventory Adjustment. Prior to the Closing Date,
the Parties shall appoint a mutually agreeable independent party (the "Auditor")
to audit and value the Inventories of the Sellers. Such valuation shall be made
according to Sellers' prior practices in accordance with GAAP. No later than
three (3) days prior to the Closing (the date of such audit is referred to as
the "Inventory Date"), the Auditor shall deliver to each of the Parties a list
of all the Inventories in a format consistent with that of ss.3(j) of the
Disclosure Schedule (the "Inventory Schedule"), together with all applicable
work papers, schedules, and other documents used in connection with the
preparation of the Inventory Schedule, which Inventory Schedule shall be final,
binding and conclusive on Buyer and Sellers. The Purchase Price shall be
adjusted as follows: (x) to the extent the total value of the Inventories listed
on the Inventory Schedule differs from the total value of the Inventories listed
on ss.3(j) of the Disclosure Schedule, the Purchase Price shall be increased or
decreased, as applicable, by an amount equal to 50% of the amount of such
increase or decrease, and (y) the Purchase Price shall be decreased by an amount
equal to 50% of the amount of the value of the Inventory sold between the
Inventory Date and the Closing Date, based on the cost of goods sold calculated
by the Sellers using their internal information management system. Any and all
fees and expenses of the Auditor shall be borne one-half by the Sellers and
one-half by the Buyer.
(ii) Rent Adjustment. The Purchase Price shall be
increased by the amount of base rent, common area maintenance charges, taxes and
insurance paid by Sellers prior to Closing during May, 2003 on a per diem basis
for the period after the Closing solely with respect to the Assigned Contracts.
(iii) Additional Adjustments. The Purchase Price
shall be increased by an amount equal to the value of the Deposits as of the
Closing Date.
3. Representations and Warranties of the Sellers.
Each of the Sellers jointly and severally represents and warrants to
the Buyer that the statements contained in this ss.3 are correct and complete as
of the date of this Agreement, and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement, except that any representation and
warranty made as of a specified date need only be correct and complete as of
that date) except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule is arranged in sections and paragraphs corresponding to the
lettered and numbered Sections and paragraphs contained in ss.1 and this ss.3.
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(a) Organization of the Sellers. Each of the Sellers is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. Each of the Sellers has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and, subject to obtaining the Sale Order, to perform
its obligations hereunder. Without limiting the generality of the foregoing, the
board of directors of each of the Sellers have duly authorized the execution and
delivery of this Agreement, and, subject to obtaining the Sale Order, the
performance of this Agreement by the Sellers. Subject only to obtaining the
Bankruptcy Court approval, this Agreement constitutes the valid and legally
binding obligation of each of the Sellers, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Except as is otherwise disclosed in
ss.3(c) and ss.3(k) of the Disclosure Schedule, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the Transfer Instruments and the Assignment
Instruments referred to in ss.2 above), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
any of the Sellers or any of their Subsidiaries are subject or any provision of
the charter or bylaws of any of the Sellers and their Subsidiaries. Except with
respect to obtaining the Preliminary Approval Order, the Sale Order, and, to the
extent that they are embodied in separate orders, Final Order(s) of the
Bankruptcy Court approving the Debtors' assumption and assignment of the
Assigned Contracts to Buyer pursuant to ss.365 of the Bankruptcy Code, none of
the Sellers nor any of their Subsidiaries are required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Sellers to consummate the
transactions contemplated by this Agreement (including the Transfer Instruments
and Assignment Instruments referred to in ss.2 above).
(d) Brokers' Fees. Except as set forth on ss.3(d) of the
Disclosure Schedule, none of the Sellers, nor any of their Subsidiaries or any
of their Affiliates has any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable or
obligated.
(e) Title to and Possession of Acquired Assets. Except as set
forth on ss.3(e) of the Disclosure Schedule and subject to the Sale Order, each
of the Sellers has valid title to, or a valid leasehold interest in, all of the
Acquired Assets, wherever located. Except as set forth on ss.3(e) of the
Disclosure Schedule, all of the Acquired Assets are owned or leased by, and are
in the physical possession of, only the Sellers, and no other Person. The
Acquired Assets represent all assets (other than the Excluded Assets) used by
Sellers to operate and conduct the Business at the locations being acquired by
Buyer in a manner as presently operated and conducted.
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(f) Financial Statements. Each of the Sellers has heretofore
delivered or made available to the Buyer the following financial statements
(collectively the "Financial Statements"): (i) audited consolidated and
consolidating balance sheets and statements of income, changes in stockholders'
equity, and cash flow of such Seller as of and for the fiscal year ended
February 2, 2002 (the "Most Recent Fiscal Year End Financial Statement"); and
(ii) unaudited consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow of such Seller, as of
January 31, 2003 (the "Most Recent Financial Statements"). The combined balance
sheet of the Sellers as of January 31, 2003, is herein referred to as the "Most
Recent Balance Sheet." Except for the absence of footnote disclosures and other
presentation items, and subject to year-end audit adjustments which will not be
material individually or in the aggregate, all of the Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, present fairly in
all material respects the consolidated financial condition of the Sellers and
their Subsidiaries as of such dates and the results of operations for such
periods, are correct and complete in all material respects, and are consistent
with the books and records of the Sellers and their Subsidiaries (which books
and records are correct and complete in all material respects).
(g) Real Estate. ss.3(g) of the Disclosure Schedule lists and
describes briefly all real estate leased or subleased to any of the Sellers
which is used in the Business. The Sellers have delivered to the Buyer correct
abstracts of the leases and subleases listed in ss.3(g) of the Disclosure
Schedule. The Sellers shall as soon as practical after the date of this
Agreement, deliver to the Buyer correct and complete copies of the leases and
subleases listed in ss.3(g) of the Disclosure Schedule (as amended to date).
With respect to each lease and sublease listed in ss.3(g) of the Disclosure
Schedule, except as would not constitute a Material Adverse Effect:
(i) subject to the Sale Order, the lease or sublease
is legal, valid, binding, enforceable, and in full force and effect;
(ii) subject to Section 365 of the Bankruptcy Code,
the lease or sublease will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the assignments and assumptions
referred to in ss.2 above);
(iii) the Sellers have not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(iv) all parcels of real estate leased or subleased
thereunder have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation thereof; and
(v) all parcels of real estate leased or subleased
thereunder are supplied with utilities necessary for the operation of said
facilities.
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(h) Intellectual Property.
(i) The Sellers own, license or otherwise have the
right to use pursuant to license, sublicense, agreement, or permission all
material items of Intellectual Property necessary or desirable for the operation
of the Business as presently conducted and as set forth and listed on ss.3(h)(i)
of the Disclosure Schedule. Except as set forth in ss.3(h)(i) of the Disclosure
Schedule, the Sellers shall have the absolute right to assign to the Buyer all
such Intellectual Property used in the operation of the Business, without
seeking the approval or consent of any other Person. Each of the Sellers has
taken all necessary and desirable action to maintain and protect the items of
Intellectual Property listed on ss.3(h)(i) of the Disclosure Schedule in all
material respects.
(ii) None of the Sellers has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties in any material respect, and, none
of the directors or officers (or employees with responsibility for Intellectual
Property matters) of the Sellers, has, at any time during the last three (3)
years, received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that the Sellers must license or refrain from using any Intellectual
Property rights of any third party). To the knowledge of the executive officers
of the Sellers, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of any of the Sellers, which interference, infringement or
misappropriation would constitute a Material Adverse Effect.
(iii) ss.3(h)(iii) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and that
any of the Sellers uses pursuant to any license, sublicense, agreement, or
permission which is material to the Business. The Sellers have made available to
the Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in ss.3(h)(iii) of the
Disclosure Schedule, except as otherwise indicated in such section of the
Disclosure Schedule:
(A) the license, sublicense, agreement, or
permission covering the item is currently in full force and effect;
(B) subject to the rights of third parties
as set forth in 11 USCss.365 and securing the required court approval pursuant
to the Bankruptcy Code, Sellers have the right to assign such license,
sublicense, or agreement and the same will be in full force and effect following
the consummation of the transactions contemplated hereby.
(C) the underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(D) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(E) none of the Sellers has granted any
sublicense or similar right with respect to the license, sublicense, agreement,
or permission.
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(i) Tangible Assets. The Sellers own or lease all real estate,
Machinery and Equipment and other tangible assets necessary for the conduct of
the Business as presently conducted (the "Tangible Assets"). All of the Tangible
Assets have been maintained in accordance with normal industry practice in all
material respects, are in good operating condition and repair (subject to normal
wear and tear) in all material respects, and are suitable for the purposes for
which they presently are used.
(j) Inventories. ss.3(j) of the Disclosure Schedule identifies
the Inventories and all of the inventory on order as of the date of this
Agreement, all of which are in good and merchantable condition in all material
respects, and suitable and usable or salable for the purposes for which it is
intended in all material respects.
(k) Contracts. ss.3(k) of the Disclosure Schedule lists all
contracts and other agreements to which any of the Sellers is a party, and which
relate in whole or in part to the Business (collectively, the "Contracts"),
including, without limitation, the following:
(i) any agreement (or group of related agreements)
for the lease of personal property to or from any Person providing for lease
payments in excess of Twenty-Five Thousand Dollars ($25,000) per annum;
(ii) all agreements (or group of related agreements)
for the purchase or receipt of supplies, products, services, Inventories, or
other personal property, or for the sale, provision or furnishing of products or
services, (A) the performance of which will extend over a period of one year,
and results in a loss to any of the Sellers or otherwise involves consideration
in excess of Fifty Thousand Dollars ($50,000) and (B) the performance of which
will be over a period of one year or less, and results in a loss to any of the
Sellers or otherwise involves consideration in excess of Twenty-Five Thousand
Dollars ($25,000);
(iii) any agreement concerning confidentiality or
non-competition (other than agreements entered into prior to the date hereof
with third parties interested in purchasing all or a portion of the Acquired
Assets);
(iv) any agreement with any subsidiary of the Sellers
or with any of the stockholders of the Sellers or their Affiliates, or any
agreement under which any of the Sellers has advanced or loaned any monies or
provided any goods or services to any of their directors, officers, employees or
the Sellers' ten percent (10%) or greater stockholders;
(v) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of the current or former directors, officers, and
employees of any of the Sellers;
(vi) any collective bargaining agreement;
(vii) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis or providing
severance benefits;
(viii) any Lease or sublease of personal property,
including Machinery and Equipment;
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(ix) any license or sub-license of Intellectual
Property, whether as licensor or licensee; or
(x) any other oral or written agreement (or group of
related agreements) the performance of which involves consideration in excess of
Twenty-Five Thousand Dollars ($25,000), or under which the consequences of a
default or termination would constitute a Material Adverse Effect.
The Sellers have delivered or made available to the Buyer, a
correct and complete copy of each written Contract listed in ss.3(k) of the
Disclosure Schedule (as amended to date) and a written summary setting forth the
terms and conditions of each oral Contract referred to in ss.3(k) of the
Disclosure Schedule.
(A) ss.3(k) of the Disclosure Schedule lists each
executory Contract which has been entered into between one or more of the
Sellers and any other Person as of a date which is Pre-Petition and each
executory Contract which has been entered into between one or more of the
Sellers and any other Person as of a date which is Post-Petition.
(B) With respect to each such Contract referred to in
this ss.3(k), except as otherwise reflected in ss.3(e) or ss.3(k) of the
Disclosure Schedule, such Contract is currently legal, valid, binding,
enforceable, and currently in full force and effect. ss.3(k) of the Disclosure
Schedule also lists all Pre-Petition Cure Amounts which the Sellers believe are
required to be paid in accordance with ss.2(d) of this Agreement with respect to
each of the Pre-Petition executory Contracts listed on ss.1.1(f) and ss.3(k) of
the Disclosure Schedule, and, separately, the post-petition amounts which Seller
shall be responsible to pay, so as to obtain an order of the Bankruptcy Court to
permit the assumption by the Debtors and the assignment to the Buyer of the
Assigned Contracts pursuant to Section 365 of the Bankruptcy Code. Except as set
forth in ss.3(e) or ss.3(k) of the Disclosure Schedule, and except for defaults
in respect of certain Pre-Petition Contracts disclosed in ss.3(e) or 3(k) of the
Disclosure Schedule of the type referred to in Section 365(b) of the Bankruptcy
Code, (i) there are no defaults or events that with notice, the lapse of time or
both would constitute a default by the Sellers or any other party to any of the
Contracts listed on ss.3(k) of the Disclosure Schedule, (ii) no other events or
conditions have occurred that would permit termination, modification, or
acceleration, under such Contract
(l) Insurance. The Sellers have delivered or made available to
Buyer insurance loss runs for the past five years for liability, property,
workers' compensation and automobile insurance claims. With respect to the
insurance policies covering such claims: (A) each such insurance policy is
legal, valid, binding, enforceable, and in full force and effect in all material
respects; (B) neither any of the Sellers, nor any other party to such insurance
policy is in breach or default in any material respect (except with respect to
the payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the policy;
and (C) the Sellers have not, and the other party to each such policy has not,
repudiated any provision thereof in writing.
-18-
(m) Employees and Labor Matters.
(i) ss.3(m) of the Disclosure Schedule contains a
list of all employees of the Business, together with their job descriptions,
rates of salary, wages or commissions, dates of last compensation increase and
the amount thereof, vacation benefits and accrual rates, and each bonus,
deferred compensation, stock option, incentive compensation, severance or
termination pay agreement or employment benefit applicable to each such
employee.
(ii) None of the Sellers is a party to or bound by
any collective bargaining or related agreement with a labor organization, nor
has any of them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes in connection with any of the
Business for the past ten years, except for grievances filed in the Ordinary
Course of Business. There is no organizational effort presently being made or
threatened by or on behalf of any labor organization with respect to employees
of any of the Sellers.
(iii) The Sellers are in compliance, in all material
respects, with the Federal Fair Labor Standards Act and all applicable laws
relating to employment discrimination, employee welfare, wage and hour and other
employment and labor standards.
(iv) The Sellers are in compliance, in all material
respects, with the Federal Occupational Safety and Health Act, the regulations
promulgated thereunder and all other applicable laws relating to the safety of
employees or the workplace or relating to the employment of labor, including,
without limitation, any provisions thereof relating to wages, bonuses,
collective bargaining, equal pay and the payment of social security and similar
payroll taxes.
(v) Prior to the date hereof and other than as a
result of or in connection with the transactions contemplated herein, no Seller
has incurred any liability or obligation under the Worker Adjustment and
Retraining Notification Act ("WARN") or similar state Laws with respect to the
employees of the Business.
(n) Warranties Do Not Survive Closing. Notwithstanding
anything to the contrary set forth in this Agreement, the representations and
warranties of the Sellers contained herein and in any document delivered
pursuant to this Agreement shall terminate effective as of the Closing Date and
none of the Sellers shall have any Liability with respect thereto from and after
the Closing Date.
4. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Sellers that the statements
contained in this ss.4 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this ss.4), except as set forth in the Disclosure Schedule. The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this ss.4.
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(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of the Buyer has duly
authorized the execution and delivery of this Agreement. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the Transfer Instruments and the Assignment Instruments referred to
in ss.2 above), will violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws. Except as provided in ss.4(c) of the
Disclosure Schedule, the Buyer is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any Person or
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, including the assignments and
assumptions referred to in ss.2 above (the "Buyer Consents"). On or before the
Closing, the Buyer shall have obtained in writing all such Buyer Consents.
(d) Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers could become
liable or obligated. The Buyer has retained Xxxxxxxx Xxxxxx Group as its
financial advisor for the transactions contemplated by this Agreement and is
responsible for its fees.
(e) Warranties Do Not Survive Closing. Notwithstanding
anything to the contrary set forth in this Agreement, the representations and
warranties of the Buyer contained herein and in any document delivered pursuant
to this Agreement, shall be terminated as of the Closing Date and the Buyer
shall not have any liability with respect thereto from and after the Closing
Date.
5. Covenants.
The Parties agree as follows with respect to the period between the
date of this Agreement and the Closing.
(a) General; Bankruptcy Court Filings. Each of the Parties
shall use its commercially reasonable efforts to take all action and to do all
things necessary, proper, or advisable in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in ss.6 below) consistent with
applicable Bankruptcy Law. It is the Parties' intention to consummate the
transactions pursuant to a bankruptcy court-approved sale and assumption and
assignment of the Assigned Contracts under 11 U.S.C. xx.xx. 105, 363 and 365 in
Chapter 11 proceedings filed by the Sellers. Within three (3) business days
after this Agreement has been executed by Buyer and Sellers, Sellers shall file
a motion or motions ("motion") with the Bankruptcy Court:
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(i) seeking approval of the Expense Reimbursement Fee
provided for herein;
(ii) setting up bidding procedures governing the
sale;
(iii) scheduling a hearing on approval of the sale to
be held on or after May 5, 2003, but not later than 45 days after the date of
the filing of the motion;
(iv) seeking approval of the form, manner and notice
to be given of the sale;
(v) setting the deadline for filing objections;
(vi) seeking assumption and assignment of the
Assigned Contracts; and
(vii) seeking approval of the Agency and License
Agreement.
The Preliminary Approval Order approving the Expense Reimbursement Fee, bidding
procedures, and approving the form, manner and notice to be given of the sale,
must be signed by the Bankruptcy Court within ten (10) days of filing the
motion, or Buyer will have an automatic right to terminate this Agreement.
(b) Approvals, Consents and Notice. The Sellers shall promptly
give notice to all third parties to all Assigned Contracts, to all parties
entitled to receive notice under the Bankruptcy Code, and to such other Persons
as may be reasonably requested by Buyer for the purpose of obtaining the written
approval, consent and authorization of such Persons (the "Consents") whose
Consent is necessary pursuant to Section 365 of the Bankruptcy Code and to all
Persons who assert their Cure Amounts with respect to the assignments by Sellers
to Buyer of such Assigned Contracts. Sellers will give any notices to, make any
filings with, and use their commercially reasonable efforts to obtain all
required Consents and approval of:
(i) all third parties to the Assigned Contracts,
whose consent is required under Section 365 of the Bankruptcy Code require the
Consent of such party to validly assign such Assigned Contract to the Buyer on
the Closing Date;
(ii) all governments and governmental agencies in
connection with the matters referred to inss.3(c) andss.4(c) above; and
(iii) the Bankruptcy Court.
(c) Operation of the Business.
(i) Between the date of this Agreement and the
Closing Date, the Sellers shall use commercially reasonable efforts to carry on
the Business in substantially the same manner as heretofore conducted, taking
into consideration Sellers' Chapter 11 status, and shall not make or institute
any unusual or novel methods of service, sale, purchase, lease, management,
accounting or operation that will vary materially from those methods used by the
Sellers without in each instance obtaining the prior written consent of the
Buyer. In addition, each of the Sellers, shall use its commercially reasonable
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efforts to preserve the organization of the Business intact and to preserve
their present relationships with referral sources, vendors, dealers, customers,
suppliers and others having business relationships with them; including, without
limitation (A) payment of all Post-Petition obligations, to the extent required
by applicable law, prorated from the date of filing and accruing under all real
property leases and subleases used in the operation of the Business and Assigned
Contracts up through the Closing Date, and (B) purchasing advertising in the
amount of $48,000 from the date of this Agreement through April 6, 2003, as
mutually agreed in writing by the Buyer and the Sellers. To the extent Sellers
fail to make a Post-Petition payment on a Real Estate Lease which is an Assigned
Contract, Sellers shall make such payments to landlords on the Closing Date.
(ii) Without limiting the generality of the
foregoing, prior to the Closing Date, the Sellers will not, (A) enter into any
employment contract or collective bargaining agreement with or covering
employees of the Sellers or any of their Subsidiaries, written or oral, (B)
grant any increase in the base compensation of any of the officers of any of the
Sellers, or any other salaried employees earning in excess of $50,000 per annum,
other than in connection with annual employee reviews or otherwise change in any
material respect the terms of employment of any such Person, (C) adopt, amend or
modify any bonus, profit-sharing, incentive, severance, compensation, stock
option, retirement, deferred compensation, collective bargaining agreement, or
other plan, contract, or commitment for the benefit of any of the officers or
employees of the Business, (D) modify, amend or terminate (excluding any
termination effected by the other party thereto) any Assigned Contract.
Notwithstanding the foregoing, subject to the approval of the Bankruptcy Court
and upon notice to all parties in interest, the Sellers may institute a stay
bonus - severance enhancement program for retention of key employees through the
Closing.
(d) Full Access. In order to assist the Buyer and its
prospective lenders and investors in conducting their Due Diligence
Investigation and in consummating the transactions contemplated by this
Agreement, during the Due Diligence Investigation Period, the Sellers have
permitted and will continue to permit the Buyer and its lenders and investors
and their representatives to have full access at all reasonable times during
normal business hours upon reasonable advance notice to the Sellers, and in a
manner so as not to interfere with the normal business operations of the
Sellers, to (i) all leased or sub-leased real estate premises, properties, the
other Acquired Assets, financial statements, books, records (including Tax
records), Contracts, agreements and documents of or pertaining to the Sellers or
the Business, and (ii) permit the Buyer and its lenders and investors and their
representatives to meet with and interview all officers, directors, managerial
and other personnel, representatives, agents, dealers and distributors of or
pertaining to any of the Sellers and/or the Business.
(e) Notice of Developments. Each Party will give prompt
written notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties in ss.3 or ss.4 above,
as the case may be. No disclosure by any Party pursuant to this ss.5(e),
however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
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(f) Competing Proposals and Overbids.
(i) In the event and to the extent that the Sellers
or any officer, employee, agent or representative of the Sellers shall at any
time receive written proposals from any other corporation, firm or other Person
not affiliated with or a representative of the Buyer relating to (i) the
possible disposition or sale of all or any portion of any of the Acquired Assets
or any of the Business (other than the sales of Inventories in the Ordinary
Course of Business) or (ii) any joint venture, sale of securities, merger,
consolidation or other business combination involving any of the Sellers, the
Acquired Assets or the Business which would be inconsistent with the proposed
transaction contemplated hereby (each a "Competing Proposal"), the Sellers shall
notify the Buyer of each such inquiry or proposal, whether written or oral, not
later then three (3) business days of receipt of the same. During its
negotiation of the terms of any such Competing Proposal, the Sellers' boards of
directors and officers shall not withdraw from or modify or propose to withdraw
from or modify in a manner adverse to the Buyer, this Agreement or the
transactions contemplated hereby, or cause the Sellers, to enter into and
execute any letter of intent, agreement in principle, memorandum of agreement,
term sheet, agreement, contract, commitment, plan or arrangement relating to any
such Competing Proposal. Should (A) the boards of directors of the Sellers
determine in the exercise of their good faith and reasonable judgment, and after
consultation with their financial advisors and representatives of the secured
lender and unsecured creditors' committee, that the terms and conditions of such
Competing Proposal, when taken as a whole, is a "Qualified Competing Proposal,"
and otherwise complies with the submission of competing bids and bidding
procedures, then (B) the Sellers shall comply with the provisions of ss.5(f)(ii)
below. As used in this Agreement, the term "Qualified Competing Proposal" shall
mean any offer involving the acquisition of the Acquired Assets and Assumed
Liabilities for an aggregate purchase price that is in excess of $650,000 more
than the Purchase Price plus Cure Amounts, payable on the basis of all cash at
the closing of such acquisition.
(ii) In the event that the Sellers shall determine,
as aforesaid, that it has received a Qualified Competing Proposal, it shall, (A)
deliver to the Buyer the final draft of any such Qualified Competing Proposal
received by any of the Sellers, and (B) afford the Buyer an opportunity to
participate in an auction (the "Auction") to be held as noticed at the offices
of counsel for the Seller, Blank Rome LLP, 000 Xxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxx Xxxx, Xxx Xxxxxx. At any Auction so held, bidding shall proceed with the
highest Qualified Competing Proposal and subsequent bids must include additional
consideration of at least $100,000 over the previous bid.
(iii) The sale hearing to confirm the best offer
shall be held within five (5) business days of the Auction and not later than 45
days from the filing of the motion to approve this sale.
(g) Payment of Expense Reimbursement Fee.
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(i) From and after the date of execution and delivery
of this Agreement, if this Agreement shall be terminated prior to the Closing
Date by (A) Buyer pursuant to Section 7(a)(iv)(A) or (B) by Sellers pursuant to
Section 7(a)(vi) with respect to a Superior Proposal provided that the
transactions contemplated by the Superior Proposal are completed, the Sellers
shall, not later than three (3) business days after the later of the termination
contemplated by clause (A) above or the consummation of the transaction of the
nature contemplated by clause (B) above, pay to the Buyer an expense
reimbursement fee in an amount equal to $375,000 (the "Expense Reimbursement
Fee"). Sellers' agreement to pay the Expense Reimbursement Fee shall be subject
to the Preliminary Approval Order. The Preliminary Approval Order must be
obtained by Sellers within ten (10) days of the date of this Agreement. Sellers
shall have no liability to Agent for the Expense Reimbursement Fee or for any
liability to Agent in connection with any claim asserted under ss.503(b) of the
Bankruptcy Code in the event this Agreement is terminated or a Superior Proposal
is accepted. Sellers' liability for the payment of the Expense Reimbursement Fee
shall be solely to Buyer.
(ii) Notwithstanding the foregoing, in the event that
this Agreement is terminated for any reason other than as described in Section
5(g)(i) the Buyer shall not be entitled to the Expense Reimbursement Fee as
contemplated above.
(iii) Except as otherwise provided in this ss.5(g),
each Party agrees to pay its own costs and expenses in connection with the
transactions contemplated hereby, and the conducting of the Due Diligence
Investigation.
(h) Equity Capital. The Buyer shall use its best efforts to
have obtained, by 5:00 p.m. (Eastern Standard Time) on the date which is ten
(10) days prior to the date of the Sale Hearing (the "Financing Contingency
Date") one or more written commitments for at least $7,000,000 of equity
financing on terms reasonably satisfactory to the Buyer (the "Equity
Financing"). The Buyer shall at all times, both prior and subsequent to the
expiration of the Due Diligence Investigation Period, keep the Sellers and the
representatives of the secured and unsecured creditors of Sellers fully informed
of the status of the Equity Financing.
(i) Senior Debt Financing. In addition to Equity Financing
referred to in ss.5(h) above the Buyer shall use its best efforts to have
obtained, by 5:00 p.m. (Eastern Standard Time) on the Financing Contingency Date
one or more written commitments (the "Commitment") for at least $17,500,000 of
senior secured debt financing (to be secured by Liens on all of the Acquired
Assets) on terms reasonably satisfactory to the Buyer (the "Senior Debt
Financing"). The Buyer shall at all times, both prior and subsequent to the
expiration of the Due Diligence Investigation Period, keep the Sellers and the
representatives of the secured and unsecured creditors of Sellers fully informed
of the status of the Senior Debt Financing.
(j) Sub-Debt Financing. In addition to Equity Financing
referred to in ss.5(h) above and the Senior Debt Financing referred to in
Section 5(i) above, the Buyer shall use its best efforts to have obtained, by
5:00 p.m. (Eastern Standard Time) on the Financing Contingency Date one or more
written commitments (the "Sub-Debt Commitment") for at least $2,000,000 of
subordinated debt financing on terms reasonably satisfactory to the Buyer (the
"Sub-Debt Financing"). The Buyer shall at all times, both prior and subsequent
to the expiration of the Due Diligence Investigation Period, keep the Sellers
and the representatives of the secured and unsecured creditors of Sellers fully
informed of the status of the Sub-Debt Financing.
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(k) Employee Matters. The following agreements and covenants
shall be applicable to employees of the Business from and after the Closing:
(i) Subject to Buyer's standard employment terms and
conditions, at least five (5) business days prior to the Closing, the Buyer
shall offer employment, effective as of the Closing Date, to at least 80% of the
employees employed by Sellers at any location that is being acquired by Buyer
and at Seller's office and warehouse facility; provided, however, that it shall
be a condition precedent to such employment that such employees shall waive and
release any severance Liabilities of Sellers, including any claims for unpaid
sick and/or vacation pay. Any employee who accepts such employment by reporting
for work following the Closing Date is referred to herein as a "Buyer Employee."
Nothing in this ss.5(k) shall obligate the Buyer to continue to employ any Buyer
Employee for any specific period of time. For purposes of vacation and other
benefits provided by Buyer to the Buyer Employees, the Buyer shall give such
employees service credit for all periods of employment with the Sellers and
shall credit each Buyer Employee with sick and vacation time in an amount equal
to the sick and vacation time accrued by such employee at the time of such
employee's termination by the Sellers. At least five (5) business days prior to
the Closing Date, the Buyer shall post and/or mail to Seller's employees a
notice advising such employees that the Buyer is offering such employees
employment pursuant to terms and conditions set forth herein.
(ii) Each of the Sellers shall be responsible for,
and shall indemnify and hold the Buyer harmless against and in respect of any
liability, loss, claim, damage or deficiency that arises under WARN or other
similar statutes or regulations of any jurisdiction ("WARN Liabilities") which
arise on or prior to the Closing Date with respect to the employees of Sellers.
(iii) The terms of the Agency and License Agreement
shall govern the relationship between the Sellers' employees at the Designated
Stores and the Agent and Buyer.
(iv) Buyer agrees to utilize the alternate procedure
set forth in Rev. Proc. 96-60, 1996-2 CB 399 (the "Revenue Procedure"), with
respect to wage reporting for the Buyer Employees. Buyer's obligation hereunder
shall be conditioned on the timely receipt of all required information to be
reported under the Revenue Procedure. Buyer shall have no liability with respect
to the veracity of the information provided by Sellers hereunder, and Buyer
shall have no liability with respect to any withholding obligations for the
Buyer Employees for wages and other compensation paid by Sellers to Buyer
Employees.
(l) Tax, Financial and Accounting Matters. As soon as
practical after the date of this Agreement, the Sellers shall make available to
the Buyer correct and complete copies of all federal, state, local, and foreign
income Tax Returns filed with respect to any of the Sellers for taxable periods
ended on or after February 1, 1998.
(m) Wind Down of the Bankruptcy Estate. Following the Closing
Date, Buyer agrees to turnover or to retain Sellers' Records for a period of six
(6) months to enable Sellers to utilize the same in connection with the wind
down of Sellers' remaining operations and Sellers' performance of its continuing
duties under the Bankruptcy Code. Buyer will not destroy any Records without
notice to Sellers. Upon twenty (20) days written notice given to Buyer, Sellers
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have the right to remove any Records it designates and Buyer may make a copy of
any such Records for its own use. Buyer further agrees that for a period of six
(6) months following the Closing Date, Buyer shall, at its own expense,
designate one of its employees to respond to Sellers' reasonable requests for
Records and documentation and permit Sellers access to one computer to enable
Sellers to pursue all actions necessary for winding down the estate, including,
but not limited to, the filing of objections to claims, collections of
receivables, avoidance actions and tax and employee filings required by local,
state and federal law. Sellers shall provide reasonable prior notice of its
desire to use such employee's services and/or computer and Sellers' use of such
employee shall not exceed an average of 15 hours per week. After such six (6)
month period, Buyer and Sellers shall negotiate to establish a reasonable fee
for such services which may be thereafter required. Buyer also agrees that
notwithstanding the sale of Intellectual Property, Sellers may continue to use
the trade name "Today's Man" as may be required in the Bankruptcy Court to
consummate any plan of liquidation or xxx to collect any receivables or seek any
recoveries under Chapter 5 of the Bankruptcy Code but may not use such name for
any other purpose without the express written consent of Buyer.
6. Conditions to Obligation to Close.
(a) Conditions to Obligations of the Buyer. The obligations of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction, or waiver by the Buyer of the
following conditions:
(i) the representations and warranties set forth in
ss.3 above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied
with all of their respective covenants hereunder in all material respects
through the Closing;
(iii) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
inss.6(a)(i)-(ii) is satisfied in all respects;
(iv) there shall not be in effect any injunction,
judgment, order, decree, ruling or charge of any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
any arbitrator which (A) prohibits consummation of any of the transactions
contemplated by this Agreement, or (B) materially and adversely affects the
right of the Buyer to own the Acquired Assets to operate the Business;
(v) the Buyer shall have received all authorizations,
consents, and approvals of governments and governmental agencies referred to
inss.3(c) andss.4(c) above;
(vi) Sellers shall have obtained the Sale Order on
terms and conditions as shall be acceptable to the Buyer, to the extent the
subject of separate orders, Final Orders of the Bankruptcy Court approving the
Debtors' assumption and assignment of the Assigned Contracts to Buyer pursuant
to ss.365 of the Bankruptcy Code, provided that any objections by landlords
under ss.365 of the Bankruptcy Code with respect to any Assigned Contracts, if
sustained, shall not constitute a failure to satisfy this condition; and
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(vii) the execution of the Agency and License
Agreement by Buyer, Sellers and Agent.
The Buyer may waive, to the extent permitted by Law,
any condition specified in this ss.6(a) if it executes a writing so stating at
or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction, or waiver by the Sellers, of the
following conditions:
(i) the representations and warranties set forth in
ss.4 above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(iii) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
inss.6(b)(i)-(ii) is satisfied in all respects;
(iv) there shall not be in effect any injunction,
judgment, order, decree, ruling or charge of any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
any arbitrator which prohibits consummation of any of the transactions
contemplated by this Agreement;
(v) the Sellers shall have received on the Closing
Date a cash payment in the amount of the Purchase Price;
(vi) the Sellers shall not have received and elected
to accept a Superior Offer; and
(vii) the Bankruptcy Court shall have signed and
entered the Sale Order, as applicable.
The Sellers may waive to the extent permitted by Law, any
condition specified in this ss.6(b) if they execute a writing so stating at or
prior to the Closing.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
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(ii) the Buyer or Sellers may terminate this
Agreement by giving written notice to the Sellers or Buyer, as applicable, on or
before 5:00 p.m. (Eastern Standard Time) on the business day after the Financing
Contingency Date if Buyer has not obtained the Equity Financing, the Senior Debt
Financing or the Sub-Debt Financing (it being agreed that Buyer shall give
Sellers notice on the Financing Contingency Date as to whether it has obtained
all such financings);
(iii) the Buyer may terminate this Agreement by
giving written notice to the Sellers if the Sale Order has not been obtained
within forty-five (45) days of the date of this Agreement, or the Preliminary
Approval Order has not been obtained within ten (10) days of the date of this
Agreement;
(iv) the Buyer may terminate this Agreement at any
time prior to or on the Closing Date (A) in the event that any of the Sellers
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has notified the Sellers of
the breach, and the breach has continued without cure for a period of 10 days
after the notice of breach, (B) if the Closing shall not have occurred on or
before May 30, 2003, by reason of the failure of any condition precedent under
ss.6(a) hereof (unless the failure results primarily from the Buyer breaching
any material representation, warranty, or covenant contained in this Agreement),
(C) the Preliminary Approval Order approving the Expense Reimbursement Fee and
bidding procedures has not been signed within ten (10) days of the date of this
Agreement, or (D) if Sellers have not executed and delivered all documents
necessary to effectuate the transactions contemplated by this Agreement on the
Closing Date (unless the failure results primarily from the Buyer breaching any
material representation, warranty, or covenant contained in this Agreement);
(v) the Sellers may terminate this Agreement by
giving written notice to the Buyer at any time prior to or on the Closing Date
(A) in the event the Buyer has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, the Sellers
have notified the Buyer of the breach, and the breach has continued without cure
for a period of 10 days after the notice of breach, (B) if the Closing shall not
have occurred on or before May 30, 2003, by reason of the failure of any
condition precedent under ss.6(b) hereof (unless the failure results primarily
from any of the Sellers breaching any material representation, warranty, or
covenant contained in this Agreement), or (C) if Buyer has not tendered the
Purchase Price to the Sellers or their designee on the Closing Date (unless the
failure results primarily from any of the Sellers breaching any material
representation, warranty, or covenant contained in this Agreement); and
(vi) the Sellers may terminate this Agreement by
reason of the Bankruptcy Court approving a sale of all or substantially all of
the Acquired Assets to another Person (a "Superior Proposal").
(b) Effect of Termination. Except as described in this
paragraph, upon any termination of this Agreement, all rights and obligations of
the Parties hereunder shall terminate without any Liability of any Party to any
other Party. In the event that this Agreement is terminated by Sellers pursuant
to Sections 7(a)(v)(A) or 7(a)(v)(C) above, the Escrow Deposit and any interest
accrued thereon shall be paid to Sellers as liquidated damages, and Buyer shall
have no further Liability to Sellers as a result of such termination. In the
event that this Agreement is terminated by Buyer pursuant to Sections
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7(a)(iv)(A) or 7(a)(iv)(D) or by Seller pursuant to Section 7(a)(vi) provided
that the transactions contemplated by the Superior Proposal are completed,
Sellers shall pay the Expense Reimbursement Fee to Buyer as liquidated damages,
and Sellers shall have no further Liability to Buyer as a result of such
termination. The Parties acknowledge and agree if this Agreement is terminated
pursuant to Sections 7(a)(v)(A), 7(a)(v)(C), 7(a)(iv)(A), 7(a)(iv)(D) or
7(a)(vi), the actual damages incurred by the other Party will be difficult, if
not impossible, to ascertain and accordingly, have provided for the liquidated
damages provided above. It is further agreed that this provision shall not be
construed as a penalty, but as a bona fide attempt to establish an agreed
measure of damages which a Party will suffer as a result of the termination of
this Agreement pursuant to such Sections.
8. Resolution of Disputes, Binding Arbitration.
(a) Any dispute or Claim in respect of any adverse
consequences, third party claims or otherwise arising under this Agreement, any
Exhibit or the Disclosure Schedule hereto or any other Transfer Instrument or
Assignment Instrument for which any Party shall seek indemnification which
cannot be settled or compromised shall be resolved by the Bankruptcy Court. If
the Bankruptcy Court abstains from exercising or declines to exercise
jurisdiction with respect to such dispute or Claim or is without jurisdiction,
then within thirty (30) days of the other Parties' receipt of written notice of
the subject Claim, any Party shall promptly thereafter submit the dispute for
final and binding arbitration to JAMS or End-Dispute before a three-person panel
of arbitrators who shall be either (i) retired federal judges, or (ii) other
persons experienced in resolving commercial disputes and who are acceptable to
both the Sellers and the Buyer (the "Arbitration"). Any such Arbitration shall
be brought in Philadelphia, Pennsylvania. The panel of arbitrators shall be
selected within twenty (20) days of submission of such dispute to Arbitration.
The Parties shall use their collective best efforts to promptly schedule and
conduct the hearings before such arbitrators, with a view toward concluding such
arbitration proceedings not later than thirty (30) days from the first
submission of the dispute to arbitration. In addition to, and not in lieu of,
Arbitration as a means of dispute resolution hereunder, any Party hereto shall
have the right to seek specific enforcement of this Agreement or any Exhibit,
Transfer Instrument or Assignment Instrument, or other injunctive or equitable
relief or remedy before any court of competent jurisdiction.
(b) In connection with any Arbitration pursuant to this ss.8,
the arbitrators shall, as part of their award, allocate the fee of the
Arbitration, including all fees of the arbitrators, the cost of any transcripts,
and the parties' reasonable attorneys' fees, based upon and taking into account
the arbitrators' determination of the merits and good faith of the parties'
claims and defenses in the subject proceeding.
(c) The decision and award of the arbitrators shall be final
and binding upon the parties hereto and shall be enforceable in any court of
competent jurisdiction. Any process or other papers hereunder may be served by
registered or certified mail, return receipt requested, or by personal service,
provided that a reasonable time for appearance or response is allowed.
(d) Any rights of indemnification established by reason of
such settlement, compromise, arbitration or litigation shall promptly thereafter
be satisfied by the Indemnifying Party in such amount as shall be necessary to
satisfy all applicable adverse consequences determined in accordance with such
settlement and compromise, or by final nonappealable order or judgment of the
applicable judicial or arbitration panel.
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9. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Parties; provided, however, that any Party may make any public
disclosure it believes in good faith after consultation with legal counsel is
required by applicable Law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable efforts to advise the other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person, including, but not limited to
employees of the Sellers, other than the Parties and their respective successors
and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein), the Exhibits hereto, and the Disclosure Schedule
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties; provided, however, that the Buyer may (i) assign
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers: Today's Man, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
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Copy to: Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to the Buyer: Christopher's Men's Stores, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxx
Fax: (000) 000-0000
Copy to: Xxxxxxxx Xxxxxxxx & Xxxxx LLP
Xxx Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New Jersey
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey.
(i) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Parties. The Sellers may consent to any such amendment at any time prior to
the Closing with the prior authorization of their boards of directors and the
Bankruptcy Court. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
-31-
(k) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(l) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any state or federal court having jurisdiction over the Parties
and the matter, in addition to any other remedy to which it may be entitled, at
law or in equity.
(n) Force Majeure. No failure or omission to carry out or
observe any of the terms, provisions or conditions of this Agreement shall give
rise to any claim by any Party to this Agreement against another Party or be
deemed to be breach of this Agreement if the same shall be caused by, arise out
of or be attributable to:
(i) Any war, declared or not, acts of terrorism or
hostilities, or of belligerence, blockades, revolution, insurrection, riot,
public disorder, or any other similar event, matter or thing, wherever
occurring, which shall not be within the reasonable control of the Parties.
(ii) In the event of such a delay, the dates for
completion shall be extended for a period equal to the time lost by reason of
delay.
[the balance of this page intentionally left blank]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
CHRISTOPHER'S MEN'S STORES, INC. D&L INC.
By: /s/ Xxxxxxx Xxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------- --------------------------
Name: Xxxxxxx Xxx Name: Xxxxx X. Xxxxxxx
Title: President Title: President
TODAY'S MAN, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
CFO and Acting CEO
XXXX & XXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
BENMOL, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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EXHIBIT A
AGENCY AND LICENSE AGREEMENT
[to be inserted]
-34-
EXHIBIT B
ALLOCATION SCHEDULE
[to be inserted]
-35-
