EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
December 28, 1998, among XXXXXX CORPORATION, a Delaware corporation ("Xxxxxx"),
FROST BROS. ENTERPRISES, INC., a Texas corporation ("Frost"), MAQUILADORA SUR,
S.A. DE C.V., a Mexican corporation ("Maquiladora" and, collectively with Xxxxxx
and Xxxxx, the "Sellers"), and SUPREME INTERNATIONAL CORPORATION, a Florida
corporation ("Buyer"). Sellers and Buyer are collectively referred to as the
"Parties".
W I T N E S S E T H:
WHEREAS, Sellers and their affiliates are engaged in, among
other things, the business related to the Xxxx Xxxxx and Manhattan trademarks,
including, without limitation, the manufacturing and selling of dress shirts
with the Xxxx Xxxxx and Manhattan trademarks (the "Business");
WHEREAS, Sellers own or hold certain assets, including land,
buildings, fixed assets, equipment, inventory and other personal property, and
trademarks, contracts and other intangible property used in the Business as
presently conducted;
WHEREAS, Xxxxxx (the "Debtor-Seller") intends to file a
voluntary petition for relief commencing cases (the "Chapter 11 Case") under
Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Code for the Southern District of New York (the
"Bankruptcy Court");
WHEREAS, Buyer wishes to purchase, and Sellers are willing to
sell, all of Sellers' right, title and interest in and to all of the assets of
Sellers used primarily by Sellers in the conduct of the Business (other than
Excluded Assets as defined below), and as part of such purchase and sale of such
assets, Buyer is willing to assume certain obligations and liabilities of
Sellers related to the Assets (as defined below) and the Business, all in the
manner and subject to the terms set forth herein and, with respect to the
Debtor-Seller, in accordance with sections 105, 363 and 365 of the Bankruptcy
Code;
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
SECTION 1.
PURCHASE AND SALE OF ASSETS
1.1 ASSETS TO BE TRANSFERRED. Subject to the terms and
conditions of this Agreement, and except as otherwise expressly provided in
Sections 1.2 and 1.4 hereof, at the Closing (as defined in Section 10.1 hereof),
Sellers shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Sellers, all of Sellers' right, title
and interest in and to all property, plant, machinery, equipment, inventories,
goodwill, and other
assets of every kind, character and description, whether tangible or intangible,
whether real, personal or mixed, and wherever situated, owned, possessed, leased
or licensed by any of Sellers or their affiliates and used primarily by any of
Sellers in the conduct of the Business, with such changes, deletions or
additions thereto as may occur from the date hereof to the Closing in accordance
with the terms and conditions of this Agreement and any Ancillary Agreement (as
defined herein) executed in connection herewith, including, without limitation,
each of the assets set forth on Schedule 1.1 (collectively, the "Assets"), free
and clear of all Encumbrances except Permitted Encumbrances (as hereinafter
defined).
1.2 EXCLUDED ASSETS. The parties to this Agreement expressly
understand and agree that notwithstanding anything herein or in the Ancillary
Agreements to the contrary, none of the Sellers is hereunder selling, assigning,
transferring or conveying to Buyer, and the Assets shall not include, any of the
assets, rights and properties set forth on Schedule 1.2 (the "Excluded Assets").
1.3 OTHER TRANSACTIONS. In addition to the transactions
contemplated above, the following acts or transactions shall also occur at or
before the Closing:
(a) Buyer and Xxxxxx each shall execute and deliver a
Distribution Services Agreement substantially in the form attached
hereto as Exhibit 1.3(a);
(b) Buyer and Xxxxxx each shall execute and deliver a Xxxx of
Sale and Assignment substantially in the form attached hereto as
Exhibit 1.3(b);
(c) Buyer and Frost each shall execute and deliver a Trademark
Assignment substantially in the form attached hereto as Exhibit 1.3(c);
(d) Buyer and Xxxxxx each shall execute and deliver a
Trademark Assignment substantially in the form attached hereto as
Exhibit 1.3(d);
(e) Maquiladora and Buyer each shall execute and deliver a
Xxxx of Sale and Assignment substantially in the form attached hereto
as Exhibit 1.3(e);
(f) Buyer shall execute and deliver an Assumption Agreement
substantially in the form attached hereto as Exhibit 1.3(f); and
(g) Buyer, Xxxxxx and the escrow agent thereunder each shall
execute and deliver an escrow agreement among such parties in form and
substance satisfactory to each party (the "Escrow Agreement").
The agreements set forth in paragraphs (a) through (g) of
this Section 1.3 are hereinafter referred to as the "Ancillary Agreements."
1.4 ASSIGNMENT OF ASSETS. (a) To the extent that any lease,
contract, license, agreement, sales or purchase order, commitment, property
interest, qualification or other Asset to be sold, assigned, transferred or
conveyed to Buyer, or any claim, right or benefit arising thereunder or
resulting therefrom (the "Interests"), cannot be sold, assigned, transferred or
conveyed without the approval, consent or waiver of, or filing with, the issuer
thereof or the
other party thereto or any third person (including a government or governmental
unit), or to the extent that such sale, assignment, transfer or conveyance or
attempted sale, assignment, transfer or conveyance of any such Interest would
constitute a breach thereof or a violation of any law, this Agreement shall not
constitute a sale, assignment, transfer or conveyance thereof or an attempted
sale, assignment, transfer or conveyance thereof.
(b) Notwithstanding anything to the contrary contained herein,
no Seller is obligated to sell, assign, transfer or convey to Buyer, and Buyer
is not obligated to purchase from any Seller, any of a Seller's rights and
obligations in and to any of the Interests without first having the necessary
approvals, filings, consents or waivers required to effect such sale,
assignment, transfer or conveyance.
(c) To the extent that any of the approvals, consents,
filings, waivers, permits, licenses, registrations or other authorizations
referred to in Section 1.4(a) hereof have not been obtained by Sellers as of the
Closing, Sellers shall, during the remaining term of such Interest, use all
reasonable efforts, to (i) obtain the consent of any such third person
(including a government or governmental unit) and (ii) cooperate with Buyer in
any reasonable and lawful arrangement designed to provide the benefits of such
Interest to Buyer. Without limiting the foregoing, Buyer will indemnify the
Seller Indemnified Parties (as defined in Section 3.1(a)) for any and all
Damages (as defined in Section 3.1(c)) in connection with such efforts of
Sellers. Upon Closing, Sellers will undertake at their expense, and Buyer will
cooperate, to promptly effect and record the transfer of the Intellectual
Property.
1.5 OBTAINING PERMITS AND LICENSES. Buyer shall use all
reasonable efforts to obtain as of the Closing or as soon thereafter as may be
practicable all permits and licenses required by any governmental agency with
respect to the Assets or the conduct of the Business as presently conducted by
Sellers and all approvals, filings, consents or waivers necessary for Buyer to
conduct the Business as presently conducted by Sellers, without any guaranty or
liability of Sellers with respect thereto. Subject to Buyer's obligations in
Section 1.4(c), Sellers shall provide any cooperation reasonably requested by
Buyer to assist Buyer in obtaining such permits and licenses. Sellers will
assign, transfer and convey to Buyer at the Closing those permits and licenses
which are held or used by Sellers primarily in the conduct of the Business as
presently conducted and can be assigned without having to obtain the consent of
any third party with respect thereto, provided that Sellers and Buyer will work
together and use all reasonable efforts to obtain any third party consents
necessary to the assignment or transfer of any other permits or licenses held by
Sellers primarily in the conduct of the Business as presently conducted which
are so assignable or transferable. Subsequent to the assignment, transfer and
conveyance of each Asset on or after the date of the Closing, to the extent
permitted by law, Sellers shall have the right to cancel any permits or licenses
held by Sellers now applicable to such Asset to the extent not assignable or
transferable to Buyer pursuant to this Section 1.5.
SECTION 2.
CONSIDERATION
2.1 PURCHASE PRICE. Buyer shall pay Sellers for the Assets as
follows:
(a) Buyer shall provide Xxxxxx with a good faith deposit (the
"Deposit") of $1 million that will be held in accordance with the
Escrow Agreement;
(b) Buyer shall pay Xxxxxx an amount equal to the Net Book
Value (as defined below) of the Inventory; and
(c) Buyer shall pay Xxxxxx $17 million, LESS the amount of the
Deposit, for all Assets other than the Inventory.
All payments made to a Seller pursuant to this Section 2.1
(all such payments, collectively, the "Purchase Price") shall be made by wire
transfer of immediately available funds to an account designated in writing by
Xxxxxx. Payments made to Xxxxxx pursuant to Section 2.1(a) shall be made
simultaneously upon the execution of this Agreement. All payments made to Xxxxxx
pursuant to Sections 2.1(b) and (c) shall be made at Closing. All payments to
Xxxxxx pursuant to Section 2.1(b) shall be made in accordance with Section 2.2.
2.2 INVENTORY. (a) Ten (10) business days prior to the
Closing Date, Xxxxxx shall deliver to Buyer its good faith estimate of the Net
Book Value of the Inventory as of the close of business on the Closing Date.
Buyer shall pay Xxxxxx at Closing 85% of such estimated Net Book Value of the
Inventory. The balance of such estimate shall be deposited in escrow (the
"Inventory Escrow") by Buyer in accordance with the Escrow Agreement. For
purposes hereof, "Net Book Value" shall mean:
(i) with respect to those dress shirts with the brands XXXX
XXXXX and MANHATTAN that have all brand labels attached
and are packaged ready for sale that are held for sale
in the ordinary course of business ("Finished Goods")
and are less than 6 months old and are part of a
program currently sold ("Current Merchandise"), and
with respect to those items of tangible personal
property that are in the process of production
(work-in-process) for sale as Current Merchandise, (x)
for XXXX XXXXX shirts (including, without limitation,
those not sold to Sears, Xxxxxxx & Co.), 70% of the
last selling price of such Current Merchandise to
Sears, Xxxxxxx & Co. (as maintained on Sellers' books
and records), (y) for MANHATTAN shirts sold to Kmart
Corporation or Wal-Mart Corporation, 80% of the last
selling price of such inventory to Kmart Corporation or
Wal-Mart Corporation (as maintained on Seller's books
and records), as the case may be, and (z) for MANHATTAN
shirts not sold to Kmart Corporation or Wal-Mart
Corporation, 80% of the last selling price of such
inventory to Wal-Mart Corporation (as maintained on
Seller's books and records);
(ii) with respect to Finished Goods not included in
Current Merchandise ("Non-Current Merchandise"), (x)
with respect to Non-Current Merchandise in inventory
for less than one year, 50% of the last selling price
of such Non-Current Merchandise (as maintained on
Sellers' books and records), and (y) with respect to
Non-Current Merchandise in inventory for one year or
more, an amount to be negotiated in good faith by the
Parties;
(iii) with respect to raw materials used for any Current
Merchandise, 80% of the actual cost of such materials
(as maintained on the Sellers' books and records);
(iv) with respect to all other raw materials, 50% of the
actual cost of such materials (as maintained on the
Sellers' books and records);
(v) with respect to all trim, including, without
limitation, packing, labels, buttons, zippers, and
hang tags (collectively, "Trim") used in connection
with any Current Merchandise, 80% of the actual cost
of such Trim (as maintained on the Sellers' books and
records), and
(vi) with respect to all other Trim, $0.
(b) As soon as practicable following the Closing Date and in
any event within 60 calendar days thereof, Xxxxxx shall prepare and deliver to
Buyer a Statement of Net Book Value of the Inventory as of the close of business
on the Closing Date (including the notes thereto, the "Closing Date Statement"),
together with the workpapers used in the preparation thereof. There shall be
attached to the Closing Date Statement an annex setting forth in reasonable
detail the computation of the Net Book Value of the Inventory.
(c) The Closing Date Statement shall be based upon a full
physical count of the Inventory as of the close of business on the date
immediately preceding the Closing Date which shall be conducted by Seller and
observed and participated in by Buyer and its representatives (the "Count").
Buyer and Sellers shall share equally the cost of the Count.
(d) Unless Buyer delivers written notice to Xxxxxx on or prior
to the 45th day following Buyer's receipt of the Closing Date Statement and the
workpapers used in the preparation thereof of Buyer's objection to any matters
related to the Count or the amount set forth in the Closing Date Statement,
specifying in reasonable detail all disputed amounts and the basis therefor,
Buyer shall be deemed to have accepted and agreed to the Closing Date Statement.
If Buyer so notifies Xxxxxx, Xxxxxx and Buyer shall have 10 business days
thereafter to resolve their differences, and each of Xxxxxx and Buyer shall make
a good faith effort to resolve their differences. If any amount remains in
dispute, all such amounts remaining in dispute shall be submitted for resolution
to a "Big 5" accounting firm mutually agreed upon by Buyer and Xxxxxx which has
not had a material relationship with either Buyer or Xxxxxx or their respective
affiliates within the two years preceding the appointment (the "Arbiter"). If
Buyer and Xxxxxx cannot agree on the Arbiter, they shall request the American
Arbitration Association to appoint the Arbiter, and such appointment shall be
binding and conclusive on the parties hereto. Within 10 business days after the
Arbiter's acceptance of its appointment under this Section 2.2(d) as Arbiter,
each of Xxxxxx and Buyer shall submit to the Arbiter (and each other) a single
presentation setting forth its proposed resolution of the dispute and the basis
therefor and the resulting computation of the Closing Date Statement and the Net
Book Value of the Inventory. Within 20 business days after the Arbiter's
acceptance of its appointment under this Section 2.2(d) as Arbiter, the Arbiter
shall accept either Buyer's or Xxxxxx'x proposed resolution of the dispute and
the resulting computation of the Closing Date Statement and the Net Book Value
of the Inventory, and shall notify each of Buyer and Xxxxxx of its decision in
writing. Such
decision shall be final, binding and conclusive on all parties hereto. The party
whose proposed resolution is not accepted shall pay all of the Arbiter's fees
and expenses with respect to its engagement under this Section 2.2(d). Each
party agrees to execute, if requested by the Arbiter, a reasonable engagement
letter with the Arbiter with respect to its engagement under this Section
2.2(d).
(e) If the Net Book Value of the Inventory as determined above
exceeds the estimate thereof, the Inventory Escrow shall be delivered to Xxxxxx
and Buyer shall pay Xxxxxx by wire transfer of immediately available funds an
amount equal to any excess which is attributable solely to the Count identifying
a greater quantity of Inventory than that which was estimated, together with
interest on such amount at an annual rate equal to the reference rate from time
to time of The Chase Manhattan Bank plus 1.00% from and including the Closing
Date to but not including the date of payment. If the Net Book Value of the
Inventory is less than the estimate thereof but greater than 85% of such
estimate, the portion of the Inventory Escrow equal to any such excess shall be
delivered to Xxxxxx and the balance shall be delivered to Buyer. If the Net Book
Value of the Inventory is equal to 85% of such estimate, the Inventory Escrow
shall be delivered to Buyer. If the Net Book Value of the Inventory is less than
85% of the estimate thereof, the Inventory Escrow shall be delivered to Buyer
and Xxxxxx shall pay Buyer an amount equal to such difference between the
estimate and the Net Book Value by wire transfer of immediately payable funds to
an account designated in writing by Buyer, together with interest on such amount
at an annual rate equal to the reference rate from time to time of The Chase
Manhattan Bank plus 1.00% from and including the Closing Date to but not
including the date of payment. Any amounts payable pursuant to this Article
2.2(e) in addition to the Inventory Escrow shall be made on the third business
day following (i) the 45th day after the delivery to Buyer of the Closing Date
Statement and the workpapers used in the preparation thereof, if there shall
have been no dispute between Xxxxxx and Buyer with respect thereto, or (ii) the
date mutual agreement is reached as to the Closing Date Statement, if a dispute
with respect thereto is settled by the parties without resort to arbitration, or
(iii) the issuance of the Arbiter's written decision under Article 2.2(d).
2.3 ALLOCATION OF PURCHASE PRICE. (a) Buyer and Sellers agree
that they shall allocate the Purchase Price among the Assets as of the Closing
Date on Internal Revenue Service ("IRS") Form 8594, in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and the
Treasury regulations promulgated thereunder. Buyer shall provide Sellers with a
copy of Buyer's proposed fair market value allocation (the "Allocation") as
promptly as reasonably practicable. The Allocation shall be determined by the
joint agreement of Buyer and Sellers based upon (i) the allocation provided for
in Sections 2.1(b) and (c) and (ii) to the extent further allocation is
required, the fair market value of the Assets as of the Closing Date. In the
event that Buyer and Sellers are unable to agree on the Allocation within 90
days of the date on which Buyer provides Sellers with a copy of the Allocation,
a third-party appraiser jointly selected by Buyer and Sellers, the cost of which
shall be borne equally by Buyer, on the one hand, and Sellers on the other hand,
shall resolve all items with respect to the Allocation to which there is a
dispute between the parties.
(b) Buyer and Sellers shall timely file with the appropriate
Tax authorities copies of the agreed upon IRS Form 8594 and shall use the
Allocation in the preparation of all Tax Returns (as defined in Section 5.14),
including any attachments thereto, and for all other Tax
purposes. In the event any party hereto receives notice of an audit in respect
of the Allocation, such party shall notify the other party in writing as to the
date and subject of such audit as promptly as reasonably practicable.
(c) If any Tax Return filed by Buyer or a Seller relating to
the transactions contemplated hereby is challenged by the Tax authority with
which such Tax Return was filed on the basis of the Allocation, as finally
adjusted, the party filing such Tax Return shall keep the other party generally
apprised of its decisions and the current status and progress of all
administrative and judicial proceedings, if any, that are undertaken at the
election of such party with respect thereto.
(d) Any adjustment to the Purchase Price or the amount of
Assumed Liabilities shall result in an appropriate adjustment to the Allocation
and the IRS Form 8594 described above.
2.4 GRANT OF LICENSE. On the Closing Date, Buyer shall xxxxx
Xxxxxx non-exclusive, non-assignable, non-sublicensable royalty-free licenses
for a period of six months solely to use the name XXXX XXXXX and all trademarks,
service marks, trade names, trade dress and logos containing such name solely in
connection with the manufacture and sale by Xxxxxx of belts, neckwear, jeans and
suspenders in the United States in the ordinary course of Xxxxxx'x business
consistent with Xxxxxx'x past practice. Xxxxxx agrees that it shall cease all
use of the XXXX XXXXX name after such six-month period.
SECTION 3.
LIABILITIES, OBLIGATIONS AND INDEMNITIES
3.1 LIABILITIES AND INDEMNITY. (a) Buyer understands and
agrees that, from and after the Closing, except for the Excluded Liabilities (as
defined below), without any further responsibility or liability of, or recourse
to, Sellers or any of their affiliates or any of their respective directors,
shareholders, officers, employees, agents, consultants, representatives,
successors, transferees or assigns (herein sometimes collectively referred to as
"Seller Indemnified Parties"), Buyer shall absolutely and irrevocably assume and
be solely and exclusively liable and responsible for any Liabilities (as defined
below) (whenever arising) associated with the Business, including, without
limitation, those set forth on Schedule 3.1(a) hereof (collectively, the
"Assumed Liabilities").
The term "Liability" shall mean and include any direct or
indirect indebtedness, liability, claim, loss, damage (excluding consequential
damages, including without limitation, lost business profits), deficiency, cost
of environmental investigation or remediation, obligation or responsibility, of
whatever kind or nature, whether known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured, accrued or
unaccrued, absolute, contingent or otherwise.
(b) Buyer shall pay each Assumed Liability (or reimburse
Sellers therefor) on the later of the date on which such Assumed Liability is
due or within two business days after Seller advises Buyer of the amount
thereof; subject to Buyer's right to dispute such Assumed Liability with the
third party to whom the Assumed Liability is owed, in good faith, by
appropriate proceedings; PROVIDED, HOWEVER, that the grant to Buyer of such
right to dispute shall not in any way affect the obligation of Buyer pursuant to
this Agreement to indemnify the Seller Indemnified Parties and hold each of them
harmless from and against any and all Damages incurred or suffered by any of
them arising out of or relating to such Assumed Liability, including by reason
of Buyer disputing such Assumed Liability.
(c) Notwithstanding anything to the contrary contained in
Section 3.1(a) hereof, the term "Assumed Liabilities" shall not mean or include,
or be deemed to mean or include, and Sellers hereby agree, jointly and
severally, to indemnify and hold harmless each of Buyer and its affiliates and
their respective directors, shareholders, partners, officers, employees, agents,
consultants, representatives, successors, transferees and assigns (hereinafter
sometimes collectively referred to as "Buyer Indemnified Parties") against any
Excluded Liabilities (as defined below) and any liability, loss, damage
(excluding consequential damages, including, without limitation, lost business
profits), claim, expense and other costs incident to proceedings or
investigations or the prosecution or defense of any claim (collectively,
"Damages") incurred by any of them arising out of or relating to any Excluded
Liability. It is understood that indemnity claims under this Section 3.1(c) may
be brought by Buyer Indemnified Parties at any time and shall not be limited as
to dollar amount.
(d) Buyer shall indemnify and hold harmless the Seller
Indemnified Parties against all Assumed Liabilities and any Damages incurred by
any of them arising out of or relating to any Assumed Liability. It is agreed
and understood that claims under this Section 3.1(d) may be brought by Seller
Indemnified Parties at any time and shall not be limited as to dollar amount.
(e) Buyer shall also indemnify and hold harmless the Seller
Indemnified Parties against any Damages (i) which are caused by or arise out of
any breach of any covenant or agreement of Buyer under this Agreement or any
Ancillary Agreement or (ii) which are caused by or arise out of any breach of
any representation or warranty of the Buyer hereunder which survives Closing
pursuant to Section 6.5.
(f) Except for the Assumed Liabilities or as may be expressly
agreed upon in any Ancillary Agreement, Buyer is not assuming, and is not
responsible for, any Liability of any of Sellers, whether or not related to the
Business or the Assets ("Excluded Liabilities"), including without limitation,
the following:
(i) Liabilities accruing prior to the Closing to the
extent that a Seller actually is reimbursed therefor
under its insurance policies;
(ii) A Seller's payables to its affiliates which are not
identified on Schedule 3.1(f)(ii) hereto arising
prior to the Closing Date;
(iii) Liabilities under any bond, note, debenture or
similar instrument or any other indebtedness for
borrowed money arising prior to the Closing Date;
(iv) Any cash overdrafts;
(v) Liabilities related to accounts receivable of the
Business arising prior to Closing.
(vi) Liabilities of any Seller related to Excluded Assets;
and
(vii) Liabilities of any Seller under this Agreement or any
Ancillary Agreement.
(g) Sellers shall also jointly and severally indemnify and
hold harmless each Buyer Indemnified Party against any Damages (i) which are
caused by or arise out of any breach of any covenant or agreement of any Seller
hereunder or under any Ancillary Agreement or (ii) which are caused by or arise
out of any breach of any representation or warranty of any Seller hereunder
which survives Closing pursuant to Section 5.15. No claim for breach of a
representation or warranty shall be asserted under this Section 3.1(g) after the
expiration of the survival period of the relevant representation or warranty
under Section 5.15. The maximum amount recoverable by Buyer Indemnified Parties
for indemnification for claims for breaches of representations and warranties
under this Section 3.1(g) in the aggregate shall be the Purchase Price.
(h) Any indemnification amounts payable to Buyer Indemnified
Parties or Seller Indemnified Parties hereunder shall be paid to them by wire
transfer of immediately available funds to a bank account designated by them in
writing. Indemnification amounts payable by Debtor-Seller shall constitute
administrative expenses of the Debtor-Seller's bankruptcy estates under sections
503(b) and 507(a)(1) of the Bankruptcy Code.
(i) The indemnification obligations of the Sellers and the
Buyer set forth in this Section 3.1 shall constitute the sole and exclusive
remedy of the Buyer and the Sellers for the recovery of any Liabilities or
Damages, except for Liabilities or Damages which are caused by or arise out of
the fraud of the other party.
3.2 INDEMNIFICATION PROCEDURE. The obligation of a party (the
"Indemnifying Party") to indemnify any person or entity (the "Indemnified
Party") under Section 3.1 hereof is conditioned upon receiving from the
Indemnified Party written notice of the assertion or institution of a claim
arising from or related to any liability set forth in Section 3.1 hereof (a
"Claim") or of the occurrence of an event which the Indemnified Party reasonably
believes could lead to the assertion of a Claim, specifying in reasonable detail
the nature and amount of such Claim, promptly after the Indemnified Party
becomes aware of such Claim or event; provided, however, that the failure of the
Indemnifying Party to receive such notice on a timely basis shall relieve the
Indemnifying Party of its obligation to indemnify hereunder only if and to the
extent that such failure is prejudicial to its ability to defend such Claim.
Subject to the terms hereof, the Indemnifying Party shall have the absolute
right, in its sole discretion and at its sole expense, to elect to defend,
settle or otherwise protect against any Claim with legal counsel of its own
selection reasonably satisfactory to the Indemnified Party, provided, however,
that no Claim (other than those arising from or related to an Excluded
Liability) may be settled by the Indemnifying Party without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
The Indemnified Party shall have the right, but not the obligation, to
participate, at its own expense, in the defense of any Claim (other than those
arising from or related to an Excluded Liability) through counsel of its own and
the fees and expenses of such counsel will be at the expense of such Indemnified
Party unless (i) the Indemnifying Party specifically authorized the employment
of such counsel and specifically agreed to pay such counsel's fees, (ii) based
on the advice of outside counsel, there is a conflict of interest between the
position of the Indemnifying Party on the one hand and the Indemnified Party on
the other hand, or (iii) the Indemnifying Party fails to assume the defense or
fails to contest such action in good faith, in any which case, if the
Indemnified Party notifies the Indemnifying Party that it elects to employ
separate counsel, the Indemnifying Party will not have the right to assume the
defense of such Claim on behalf of the Indemnified Party and the reasonable fees
and expenses of such separate counsel shall be borne by the Indemnifying Party.
The Indemnified Party shall, and shall cause its affiliates to, at all times
cooperate in all reasonable ways with, make its relevant files and records
available for inspection and copying by, and make (subject to assertion of
attorney-client and other applicable privileges) its employees available or
otherwise render reasonable assistance to the Indemnifying Party in connection
with its defense of any Claim (other than those arising from or related to an
Excluded Liability). In the event the Indemnified Party, without the prior
consent of the Indemnifying Party (which shall not be unreasonably withheld or
delayed), makes any settlement with respect to any Claim, the Indemnifying Party
shall be discharged from all obligations under Section 3.1 hereof with respect
to such Claim.
3.3 OTHER INDEMNIFICATION PROVISIONS. The Parties shall make
appropriate adjustments for tax benefits actually realized as a result of an
indemnifiable Liability and for insurance proceeds actually recovered by or on
behalf of an Indemnified Party in respect of an indemnifiable Liability in
determining the amount of Damages pursuant to any Claims asserted under this
Article 3.
SECTION 4.
EMPLOYEES AND EMPLOYEE BENEFITS
4.1 EMPLOYMENT. Buyer shall offer employment, commencing on
the Closing Date, to (i) all salaried and hourly employees employed by
Maquiladora at the Xxxxx Hermosa Dress Shirt Facility and (ii) those other
employees of Xxxxxx primarily related to the Business selected by Buyer (Buyer
shall give Xxxxxx written notice of its selections at least 5 days prior to the
Closing Date); provided that (1) any employees that are members of the union
party to the Collective Contract for Indefinite Time, dated December 20, 1996,
between the Union of Maquila Industry of Xxxxx Hermosa and Maquiladora (the
"Xxxxx Hermosa Collective Bargaining Agreement") shall be employed on such terms
and conditions as required by the Xxxxx Hermosa Collective Bargaining Agreement,
(2) any employees not covered by the Xxxxx Hermosa Collective Bargaining
Agreement shall be offered employment beginning at salaries no less than the
salaries received by them on the date immediately prior to Closing, and with
benefits substantially comparable in the aggregate to similarly situated
employees of Buyer. Those employees to whom offers of employment are made and
who commence employment as of the Closing Date and the Returned Employees (as
defined below) shall be collectively referred to as the "Transferred Employees."
For purposes of this Section 4.1, any person on short-term disability, vacation
or leave of absence with a definite date of return shall be considered offered
employment as set forth in this Section 4.1; but any person on long-term
disability, layoff or on a
leave of absence shall not be considered offered employment by Buyer unless they
return to work within six months of the Closing Date ("Returned Employees") and,
in such event, they shall be considered offered employment on the date they
return to work. In addition, Buyer shall assume the employment and/or severance
agreements entered into between any Seller and any of the Transferred Employees;
provided, however, that Buyer shall not be obligated to assume any employment
and/or severance agreement unless it is between a Seller and a Transferred
Employee and it is disclosed to Buyer in writing prior to Closing; and provided,
further, that at or prior to Closing the Sellers shall pay to the Transferred
Employees all retention bonuses payable under such employment and severance
agreements or any retention program, including, without limitation, the
Management Incentive Retention Program. Schedule 4.1 contains a copy of the
Management Incentive Retention Program, together with a list of any employment
and severance agreements relating to Transferred Employees pursuant to which a
retention bonus is payable and a complete and correct list of each Transferred
Employee to whom a retention bonus may be payable and the amount of such bonus.
Except as set forth on Schedule 4.1, no retention bonus is payable to any
Transferred Employee.
4.2 WELFARE PLANS. Sellers shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare plan
expenses and benefits for each Transferred Employee with respect to claims
incurred by such Transferred Employees or their covered dependents prior to the
Closing Date. Expenses and benefits with respect to claims incurred by
Transferred Employees or their covered dependents on or after the Closing Date
shall be the responsibility of Buyer. For purposes of this Section 4.2, a claim
is deemed incurred when the services that are the subject of the claim are
performed; in the case of life insurance, when the death occurs, in the case of
long-term disability benefits, when the disability occurs.
4.3 SERVICE CREDIT. Buyer will (i) waive all limitations as to
preexisting conditions and waiting periods with respect to participation and
coverage requirements applicable to the Transferred Employees under any welfare
plan that such employees may be eligible to participate in after the Closing
Date to the extent such preexisting conditions, exclusions and waiting periods
were satisfied under a Seller's medical plan and (ii) recognize service with a
Seller for purposes of eligibility and vesting (but not benefit accruals) under
any employee benefit plan, program, or arrangement of the Buyer in which such
employees are eligible to participate; PROVIDED, HOWEVER, that in no event shall
such employees be entitled to any credit to the extent that it would result in a
duplication of benefits with respect to the same period of service.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers hereby jointly and severally represent and warrant to
Buyer that:
5.1 ORGANIZATION AND CORPORATE POWER. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each Seller has in all material
respects all requisite power and authority to own, lease and operate the Assets
owned, leased and operated by it and to conduct the Business as
presently conducted by it. Each Seller has the requisite corporate power and
authority to enter into and perform this Agreement and each Ancillary Agreement
to which it is a party.
5.2 DUE AUTHORIZATION; NO BREACH. The execution, delivery and
performance by each Seller of this Agreement and each Ancillary Agreement to
which such Seller is a party and the transactions contemplated hereby and
thereby have been approved by the Board of Directors of each Seller and no
further corporate action is required to be taken by any of Sellers and their
affiliates in order to execute, deliver and perform this Agreement and the
Ancillary Agreements to which such Seller is a party and to transfer the Assets
to Buyer. This Agreement is a valid and legally binding obligation of each
Seller, enforceable against each Seller in accordance with its terms subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights and remedies generally, and subject,
as to enforceability, to the effect of general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity), and
each Ancillary Agreement and other agreement or instrument contemplated by this
Agreement, when executed and delivered by any Seller in accordance with the
provisions thereof, will be a valid and legally binding obligation of each
Seller which is a party thereto, enforceable against each such party in
accordance with its terms subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to the effect
of general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity). All persons who have executed this
Agreement on behalf of a Seller, or who will execute on behalf of a Seller, any
agreement or instrument contemplated by this Agreement, have been duly
authorized to do so by all necessary corporate action. Except for necessary
consents, approvals and authorizations of the Bankruptcy Court and except as set
forth on Schedule 5.6 hereto, neither the execution and delivery of this
Agreement, any Ancillary Agreement and the other agreements and documents to be
executed or delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby and thereby, will (i) violate, or conflict with, any
provision of the articles of incorporation or by-laws (or other governing
documents) of any Seller or any of their affiliates, (ii) violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event of default which with notice or lapse of time or both would become a
default) under, or result in the termination (or grant a right of termination)
of, cancellation, amendment or accelerate (or grant the right to accelerate) the
performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Assets under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, agreement, lease, Permit or other material instrument to which any
Seller or any of their affiliates is a party or by which they or any of the
Assets are bound or (iii) violate, or conflict with, any order, writ,
injunction, arbitration award, judgment or decree of any court, governmental
body or arbitrator applicable to Sellers or any applicable statute, law, rule or
regulation, except, in the case of clause (ii) or (iii), as would not have a
material adverse effect on the Business taken as a whole (a "Material Adverse
Effect").
5.3 REAL PROPERTY. (a) Legal descriptions of the Xxxxx
Hermosa Dress Shirt Facility (the "Real Property") have previously been
delivered to Buyer.
(b) True and complete copies of the lease between Sr. Xxxxxx
Xxxxxx Xxxxxx and Maquiladora and all material amendments and modifications
thereto pertaining to the Xxxxx
Hermosa Dress Shirt Facility (the "Real Property Lease") have previously been
delivered to Buyer.
(c) Except as set forth on Schedule 5.3(c), (i) the Real
Property Lease is a valid and subsisting agreement in full force and effect and
constitutes a valid and binding obligation of Maquiladora and, to Sellers'
Knowledge (as defined below), of any other party thereto, and is legally
enforceable against Maquiladora and, to Sellers' Knowledge, any other party
thereto, (ii) the Real Property Lease may be assigned by Maquiladora without the
consent of any other party and without resulting in an increase in rent or
penalty to the tenant or an early termination, (iii) no Seller has received any
written notice from the other party to the Real Property Lease of the
termination thereof or alleging a default by any Seller, (iv) there is no
default or event which, with notice or lapse of time or both, would constitute a
material default on the part of a Seller (nor, to Sellers' Knowledge, on the
part of any other party thereto) under the Real Property Lease, (v) no Seller
has transferred, assigned, hypothecated, pledged or encumbered any of its rights
or interest thereunder, and (vi) Maquiladora has, and immediately after the
Closing, Buyer will have, good, valid and enforceable title to the leasehold
estate in the Leased Real Property, free and clear of any pledges, security
interests, liens, mortgages, encumbrances, equities, claims, reservations, third
party rights or obligations affecting such title (including, without limitation,
third party leases or subleases, easements, rights of way or other consents and
use restrictions) of any nature (collectively, "Encumbrances"), except for (w)
Encumbrances listed on Schedule 5.3(c) or (x) Encumbrances specified in Sections
5.5(ii) and 5.5(v), (y) Encumbrances created by, or arising as a result of the
ownership of, the Assets by Buyer and (z) Encumbrances that are not material to
the conduct of the Business at the Xxxxx Hermosa Dress Shirt Facility. For the
purposes of this Agreement, "Sellers' Knowledge" shall mean actual knowledge of
any executive officer of Xxxxxx.
5.4 PERSONAL PROPERTY. (a) Except as disclosed or provided for
in this Agreement or any Exhibit or Schedule 5.4 attached hereto, and except for
dispositions of assets after the date hereof and prior to the Closing in
accordance with the terms of this Agreement, all of the material fixtures,
plants, buildings, improvements, machinery, equipment, vehicles and other
tangible Assets referred to in Section 1.1, other than the Inventory, are
located on the Real Property or the Andalusia Facility.
(b) All of the fixtures, plants, buildings, structures and
improvements on the Real Property and all machinery, equipment, vehicles and
other tangible personal property included in the Assets are being purchased by
Buyer "AS IS, WHERE IS", except as otherwise provided in this Agreement.
5.5 TITLE AND CONDITION OF ASSETS; ENTIRE BUSINESS. Sellers
have good and marketable title to, or hold by valid and existing lease or
license, all of the Assets and will transfer same to Buyer at the Closing.
Except for Encumbrances created by, or arising as a result of the ownership of
the Assets by, Buyer, the Assets are free and clear of all material
Encumbrances, except:
(i) taxes and general and special assessments not in default
and payable without penalty or interest;
(ii) Encumbrances which, individually or in the aggregate, do
not have a Material Adverse Effect;
(iii) Encumbrances of public record;
(iv) inchoate mechanic's and material men's liens for
construction in progress and workmen's, repairmen's, warehousemen's and
carrier's liens arising in the ordinary course of business; and
(v) Encumbrances set forth on Schedule 5.5 hereto.
Encumbrances referred to in paragraphs (i), (ii), (iii) or
(iv) of this Section 5.5 are collectively referred to as "Permitted
Encumbrances".
5.6 CONSENTS. Schedule 5.6 hereto sets forth all material
actions, approvals, permits, consents or authorizations, including but not
limited to any action, approval, consent or authorization by any third party,
financial institution, governmental or quasi-governmental agency, commission,
board, bureau or instrumentality, required to be obtained by any of Sellers and
their affiliates in order to consummate the transactions contemplated hereby,
including, without limitation, (i) the expiration of any applicable waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
(ii) consents required to transfer or assign any Contracts or Permits (as
defined in Section 5.8) to Buyer and (iii) necessary consents, approvals and
authorizations of the Bankruptcy Court.
5.7 COMPLIANCE WITH LAWS. Except (i) as set forth in Schedule
5.7 hereto and (ii) as to Environmental Laws, which are covered by Section 5.9
hereof, Seller is not with respect to the conduct of the Business as presently
conducted or the use of the Assets, in default under or in violation of any
federal, state or local statute, law, ordinance, regulation, rule, judgment,
order or decree which would have a Material Adverse Effect.
5.8 PERMITS AND LICENSES. Schedule 5.8 attached hereto sets
forth all governmental licenses, permits, franchises and other governmental
authorizations (collectively "Permits") which are issued to, held or used in
relation to the Business by any Seller or for which any Seller has applied,
including the dates of issuance and expiration or of application as the case may
be, which are material to the Business as presently conducted by Sellers. Except
as set forth on Schedule 5.8 hereto, within the past 24 months, Seller has not
received any written warning, notice of violation or probable violation, notice
of revocation or other written communication from or on behalf of any
governmental entity, which violation would have a Material Adverse Effect.
5.9 ENVIRONMENTAL MATTERS. Complete copies of all
environmental audits or environmental risk assessments with respect to the Real
Property that are in the possession of the Sellers or any of their respective
environmental consultants have been provided to the Buyer. Except for any of the
following that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:
(a) the Sellers hold and are in compliance with all applicable
Environmental Permits, and the Sellers are in compliance with all
applicable Environmental Laws;
(b) the Sellers have not received any Environmental Claim, and
to the Sellers' Knowledge there is not any threatened Environmental
Claim or any circumstances, conditions or events that would reasonably
be expected to give rise to any Environmental Claim against the
Sellers;
(c) to the Sellers' Knowledge, there are no (i) underground
storage tanks, (ii) polychlorinated bipehnyls, (iii) asbestos or
asbestos-containing materials, (iv) ureaformaldehyde insulation, (v)
sumps, (vi) surface impoundments, (vii) landfills, (viii) sewers or
septic systems, or (ix) Hazardous Materials present at the Real
Property that would reasonably be expected to give rise to liability of
the Sellers under any Environmental Laws;
(d) Sellers have not, to the Sellers' Knowledge, assumed,
contractually or by operation of law, any liabilities or obligations
under any Environmental Laws;
(e) Buyer acknowledges that the representations and warranties
contained in this Section 5.9 are the only representations and
warranties being made by the Sellers herein with respect to
environmental, health and safety matters and no other representation or
warranty contained in this Agreement, express or implied, is being made
with respect thereto; and
(f) for purposes of this Agreement, the following terms shall
have the following meanings:
"Environmental Claim" means any written notice, claim, demand,
action, complaint, proceeding, request for information or other written
communication by any person alleging liability (including, without limitation,
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damage, personal injury, fines or penalties)
arising out of, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Hazardous Materials at the Real
Property or (ii) circumstances forming the basis of any violation or alleged
violation of, or liabilities under, any Environmental Law or Environmental
Permit;
"Environmental Permits" means all permits required pursuant
to Environmental Laws;
"Environmental Laws" means all applicable domestic and foreign
federal, state and local statues, rules, regulations, ordinances, orders,
decrees and common law relating to contamination, pollution or protection of
human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the Solid
Waste Disposal Act, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, and the Safe Drinking Water Act, and similar state
and local laws, all as amended as of the date hereof;
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials and substances regulated
pursuant to, or that could form the basis of liability under, any Environmental
Law.
5.10 LABOR MATTERS. Schedule 5.10 sets forth each collective
bargaining agreement or other material written agreement with a labor union or
labor organization relating the employees at the Xxxxx Hermosa Dress Shirt
Facility to which any of the Sellers is a party or by which it is bound.
(a) To the Sellers' Knowledge, none of the Sellers is, or has
been notified in writing that it will be, the subject of any proceeding
asserting it has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment.
(b) There are no strikes or work stoppages involving the
employees of the Xxxxx Hermosa Dress Shirt Facility pending or to the Seller's
Knowledge threatened which would, individually or in the aggregate, have a
Material Adverse Effect.
(c) Each of the Sellers is in compliance with all federal,
state or other applicable laws, domestic or foreign, respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except for violations or failures so to comply, if any, that, either
individually or in the aggregate, do not have a Material Adverse Effect.
5.11 LITIGATION. Except as set forth on Schedule 5.11, there
are no actions, suits or proceedings pending against any Seller or, to the
Sellers' Knowledge, threatened or investigations pending or threatened against
any Seller, at law or in equity, or before or by any governmental entity that
are reasonably likely to have a Material Adverse Effect or prevent or
substantially delay the ability of the Sellers to consummate the transactions
contemplated by this Agreement. There are no judgments, decrees, injunctions or
orders of any governmental entity or arbitrator outstanding specifically and
expressly against the Sellers having, or that in the future would have, a
Material Adverse Effect.
5.12 INTELLECTUAL PROPERTY. Schedule 5.12(a) sets forth a true
and complete list of all material Intellectual Property owned or used by any of
the Sellers primarily in the conduct of the Business. Schedule 5.12(a) also sets
forth all material third-party interests in, rights or licenses to use, or
rights to license any other person to use any of the Intellectual Property that
the Sellers have granted related to the Brands. The Intellectual Property is
sufficient for the conduct of the Business related to the Brands as currently
operated by Sellers, except for any insufficiencies that would not, individually
or in the aggregate, have a Material Adverse Effect. The Intellectual Property
is owned or licensed by the Sellers free and clear of any liens, except where
the failure to so own or license or the existence of any liens would not,
individually or in the aggregate, have a Material Adverse Effect. All of the
Intellectual Property has been duly and validly registered or issued by or filed
with the appropriate domestic or foreign governmental entity and all such
registrations are in full force and effect, except for any failures to register,
issue, file or be in full force and effect that would not, individually or in
the aggregate, have a Material Adverse Effect. All payments and actions required
to apply for, obtain, maintain and renew such Intellectual Property in
accordance with all applicable laws and regulations of the appropriate
governmental entity have been duly and promptly made and taken, except for any
failures to make such payments or take such action that would not, individually
or in the aggregate, have a Material Adverse Effect. All trademarks included in
the Intellectual Property have been and are in substantially continuous use
since their initial adoption, except for any failures of substantially
continuous use that would not, individually or in the aggregate, have a Material
Adverse Effect. All products or other material embodying or containing any
Intellectual Property bear the proper statutory notices applicable to the
particular type of intellectual property, except for any failures to bear the
proper statutory notices that would not, individually or in the aggregate, have
a Material Adverse Effect. The Sellers do not infringe upon or unlawfully or
wrongfully use any patent, trademark, trade name, service xxxx, copyright or
trade secret owned or validly claimed by another except, in each case, as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.13 CONTRACTS. With respect to the contracts listed in
Schedule 3.1(a) above, (i) no Seller is in default of any material obligation
under any of such contracts (other than by reason of the commencement of the
Chapter 11 Case), except for any such default that would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) to Sellers' Knowledge, no
other party to any of such contracts is in default of any material obligation
thereunder and (iii) there does not exist under any provision thereof any event
that, with the giving of notice or the lapse of time or both, would constitute a
material default thereunder, except for the failure to obtain any necessary
consents and except for any such default that would not, individually or in the
aggregate, have a Material Adverse Effect.
5.14 TAX MATTERS. (a) Except as set forth on Schedule 5.14,
there are no Liens upon any of the Assets in respect of Taxes except for Liens
for current Taxes that are not yet due and payable and all Taxes required to be
withheld by Sellers with respect to the Business or its activities, properties
or employees have been withheld and paid over to the appropriate Tax authority.
None of the Sellers (or any predecessor of a Seller) is a party to, nor has any
Seller received any notice in writing or, to Seller's Knowledge, any oral notice
with respect to, any proposed or pending action by any governmental authority
for assessment or collection of Taxes with respect to the Business or its
activities, properties or employees, nor is any Seller a party to any dispute
or, to Seller's Knowledge, threatened dispute in which action or dispute an
adverse determination reasonably could be expected to result in a foreclosure of
an Asset and no such claim for assessment or collection of Taxes has been made
in writing or, to the Seller's Knowledge, orally upon any Seller. For purposes
of this Agreement, (i) the term "Tax" or "Taxes" shall mean all United States
federal, state and local and all foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, excise, value added, net
worth, intangible, privilege, business, license, transfer, estimated, stamp,
alternative or add-on minimum, environmental, withholding and any other taxes,
duties, assessments or other similar governmental charges, together with all
interest, penalties and additions to Tax imposed with respect to such amounts,
(ii) the term "Tax Returns" shall mean any return (including any consolidated
combined or unitary return), declaration, estimated, installment, report, claim
for refund or information return or statement relating to Taxes which is
required to be filed with any governmental agency or other Tax authority,
including any schedule or attachment thereto, and
including any amendment thereof and (iii) the term "Tax authority" shall mean
any authority having jurisdiction over Taxes.
(b) Neither Xxxxxx nor Xxxxx is a "foreign person" within the
meaning of section 1445 of the Code, and Sellers will furnish Buyer with an
affidavit that satisfies the requirements of section 1445(b)(2) of the Code.
None of the Assets sold by Maquiladora are United States real property interests
within the meaning of Section 897 of the Code and the Treasury Regulations
promulgated thereunder.
5.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by Sellers contained in Sections 5.3(c),
5.5, 5.11, 5.12 and 5.13 shall survive the Closing for a period of twelve months
after the Closing Date and shall thereupon expire together with any right to
indemnification for breaches thereof (except to the extent a claim for
indemnification for breach thereof has been made prior to the expiration of such
period). The other representation and warranties contained in Section 5 shall
not survive the Closing.
(b) EXCEPT AS SET FORTH IN THIS AGREEMENT AND IN OTHER
CERTIFICATES DELIVERED PURSUANT TO THIS AGREEMENT, SELLERS DO NOT MAKE ANY
REPRESENTATION OR WARRANTY TO BUYER WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT
TO THE BUSINESS OR THE ASSETS OR ASSUMED LIABILITIES INCLUDING WHETHER OR NOT
THE BUSINESS OR THE ASSETS OR ASSUMED LIABILITIES CONTAIN OR REFLECT ANY
ABNORMALLY DANGEROUS CONDITION OR DEFECT, WHETHER LATENT OR PATENT.
SECTION 6.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers that:
6.1 ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Buyer has full corporate power and authority to enter into and perform
this Agreement.
6.2 DUE AUTHORIZATION; NO BREACH. (a) The execution and
performance by Buyer of this Agreement, the Ancillary Agreements to which it is
a party and each of the other agreements contemplated hereby and the
transactions contemplated hereby and thereby has been approved by its Board of
Directors, and no further corporate action is required to be taken by it in
order to execute, deliver and perform this Agreement. Each of this Agreement and
the Ancillary Agreements to which it is a party is a valid and legally binding
obligation of Buyer, and each agreement or instrument contemplated by this
Agreement, when executed and delivered by Buyer in accordance with the
provisions hereof, will be a valid and legally binding obligation of Buyer in
each case enforceable against Buyer in accordance with its terms subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors rights and remedies generally, and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity). All
persons who have executed this Agreement on behalf of Buyer or who will execute
on behalf of Buyer any agreement or instrument contemplated by this Agreement,
have been duly authorized to do so by all necessary corporate action. Except as
set forth on Schedule 6.2 hereto, neither the execution and delivery of this
Agreement, the Ancillary Agreements and all other agreements and documents to be
executed or delivered hereunder, nor the performance and fulfillment by Buyer of
all its representations, warranties, covenants and obligations hereunder, will
(i) violate, or conflict with, any provision of Buyer's certificate of
incorporation or by-laws, (ii) violate, or conflict with, or result in a breach
of any provisions of, or constitute a default under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any Encumbrance upon any of the properties or assets of Buyer under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, agreement, lease or other material instrument
to which Buyer is a party or by which it is bound, or (iii) violate, or conflict
with, any order, writ, injunction, arbitration award, judgment or decree of any
court, governmental body or arbitrator applicable to Buyer or any statute, law,
rule or regulation, except, in the case of clause (i) or (ii), as would not have
a material adverse effect on the ability of Buyer to perform its obligations
hereunder or any Ancillary Agreement to which it is a party.
6.3 CONSENTS. Except for those permits, consents and approvals
required for the transfer of the Assets, permits of the type described in
Section 5.8, and except as set forth in Schedule 6.2 and for the expiration of
the applicable waiting periods under the HSR Act and necessary consents,
approvals and authorizations of the Bankruptcy Court, no action, approval,
consent or authorization, including but not limited to, any action, approval,
permit, consent or authorization by any third party, financial institution,
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is required to be obtained by Buyer in order to consummate the
transactions contemplated hereby.
6.4 AVAILABILITY OF FUNDS. Buyer has available and will have
available on the Closing Date sufficient funds to enable it to consummate the
transactions contemplated by this Agreement.
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by Buyer contained in Section 6 shall
survive the Closing for a period of twelve months after the Closing Date and
shall thereupon expire together with any right to indemnification for breaches
thereof (except to the extent a claim for indemnification for breach thereof has
been made prior to the expiration of such period).
SECTION 7.
COVENANTS
7.1 CONDUCT OF THE BUSINESS. From the date hereof until the
Closing, or termination of this Agreement in accordance with Section 9 hereof,
Sellers will, subject, in the case of Debtor-Seller, to orders of the Bankruptcy
Court entered sua sponte or on motion of a third party,
(a) operate the Business in the normal course of business;
provided that Sellers may remove Excluded Assets, if any, from the
Xxxxx Hermosa Dress Shirt Facility;
(b) refrain from making any disposition of any Assets other
than sales of Inventory in the ordinary course of business;
(c) use reasonable efforts to preserve the business
relationships of Sellers with respect to the Business;
(d) refrain from (i) materially modifying or terminating any
contract listed on Schedule 3.1(a) or otherwise assumed by Buyer
hereunder or (ii) entering into any new contract related to the
Business outside the ordinary course of business;
(e) refrain from granting any license or sublicense concerning
the Intellecutal Property;
(f) not commit to do any of the foregoing.
7.2 ACCESS TO INFORMATION. (a) Buyer hereby acknowledges that
it has completed all of its due diligence in connection with this Agreement.
However, solely for the purpose facilitating the consummation of the Agreement,
from the date of this Agreement to the Closing, the Sellers shall (i) give Buyer
and its authorized representatives and lender banks reasonable access during
business hours and with reasonable prior notice (and without unreasonably
affecting the ability of the Sellers to conduct their business in the ordinary
course) to all books, records, personnel, offices and other facilities and
properties of the Sellers and their accountants and accountants' work papers,
(ii) permit Buyer to make such copies and inspections thereof as Buyer may
reasonably request, (iii) furnish Buyer with such financial and operating data
and other information with respect to the Business as Buyer may from time to
time reasonably request and (iv) from time to time advise Buyer as to Sellers'
purchases of Inventory related to the Business.
(b) All such information and access shall be subject to the
provisions of the Confidentiality Agreement (as defined in Section 12.2).
7.3 REASONABLE BEST EFFORTS. Each Party will use all
reasonable best efforts to take all action and to do all things necessary to
consummate and make effective the transactions contemplated by this Agreement on
or about January 31, 1999 (without payment of money, commencement of litigation,
the assumption of any material obligation or the entering of any agreement to
divest or hold separate any assets).
7.4 ALTERNATIVE PROPOSALS. Prior to the filing of the Chapter
11 Case, Xxxxxx agrees that (a) neither it nor any of its subsidiaries shall,
and it shall direct and use its reasonable best efforts to cause its officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) with respect to a
merger, acquisition, consolidation, recapitalization, liquidation, dissolution
or similar transaction (including any tender or exchange offer) involving, or
any purchase of all or any significant portion of the assets or any equity
securities of, Xxxxxx or any of its subsidiaries that would prevent, delay or
impede the consummation of the transactions contemplated hereby (any such
proposal or offer being hereinafter referred to as an "Alternative
Proposal") or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions or otherwise cooperate in any
way with, any person relating to an Alternative Proposal, or otherwise
facilitate or encourage any effort or attempt to make or implement an
Alternative Proposal; (b) upon execution and delivery of this Agreement, it will
(and shall direct and use its best efforts to cause its officers, directors,
employees, agents and representatives to) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, and it will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 7.4; and (c) it will notify Buyer
immediately if any such inquiries or proposals are received or discussions are
sought to be initiated or continued with it.
7.5 ACCESS TO FACILITIES. Buyer agrees that after the Closing,
Buyer will permit Sellers and their representatives reasonable access during
normal business hours and upon reasonable notice to the Xxxxx Hermosa Dress
Shirt Facility to remove (to the extent not removed prior to the Closing Date)
all Excluded Assets from such facilities at the Seller's expense.
7.6 ANDALUSIA ASSETS. The Buyer agrees to remove the Andalusia
Assets from the Andalusia Facility at its expense as promptly as practicable
after the Closing Date, but in no event later than 90 days after the Closing
Date. Sellers agree to cooperate with Buyer in making the Andalusia Assets ready
for transfer.
7.7 ACCOUNTS RECEIVABLE. Buyer and Sellers agree to jointly
seek to reach agreements with customers of the Business regarding chargebacks
and returns received after the Closing Date with respect to sales made by Buyer
in connection with the Business after the Closing Date.
7.8 BUYER'S KNOWLEDGE OF BUSINESS; SELLERS' REPRESENTATIONS
MODIFIED by BUYER'S Knowledge. On the date of this Agreement, to the knowledge
of Buyer, Sellers' representations and warranties made in this Agreement or in
any Ancillary Agreement that may be entered into on or prior to the date hereof
are true and correct. Buyer hereby agrees that to the extent any representation
or warranty of Sellers made herein or in any such Ancillary Agreement is, to the
knowledge of Buyer acquired prior to the date hereof, untrue or incorrect, (i)
Buyer shall have no rights hereunder or thereunder by reason of such untruth or
inaccuracy, and (ii) any such representation or warranty by Sellers shall be
deemed to be amended to the extent necessary to render it consistent with such
knowledge of Buyer. In addition, between the date hereof and the Closing, Buyer
may acquire additional knowledge concerning the matters covered by Sellers'
representations and warranties. Accordingly, Buyer agrees that, if the Closing
occurs, then to the extent any representation or warranty of Sellers made herein
or in any Ancillary Agreement entered into at or prior to the Closing, to the
knowledge of Buyer acquired from and after the date hereof and prior to the
Closing, is untrue or incorrect, (x) Buyer shall have no rights hereunder or
thereunder by reason of such untruth or inaccuracy, and (y) any such
representation or warranty by Sellers shall be deemed to be amended to the
extent necessary to render it consistent with such knowledge of Buyer. Any
knowledge of Buyer acquired after the Closing shall have no effect by reason of
this Section 7.8 on any representation or warranty of Sellers made herein or in
any Ancillary Agreement.
SECTION 8.
CONDITIONS OF CLOSING
8.1 MUTUAL CONDITIONS. The obligations of each Party to
consummate the transactions contemplated by this Agreement are, unless waived by
each Party, subject to the fulfillment on or before the Closing, of each of the
following conditions:
(a) No statute, rule, regulation, injunction or restraining
order shall be in effect to forbid or enjoin the consummation of the
transactions contemplated by this Agreement;
(b) The transactions contemplated by this Agreement to be
completed before the Closing shall have been consummated upon the terms
and subject to the conditions set forth therein;
(c) The Approval Order (as defined in Section 14.2(b)), in
form and substance satisfactory to the Debtor-Seller and the Buyer,
shall have been entered by the Bankruptcy Court, and such Approval
Order shall not have been stayed, vacated or otherwise rendered
ineffective by any court of competent jurisdiction; and
(d) All waiting periods under the HSR Act shall have expired
or been terminated.
8.2 ADDITIONAL CONDITIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are,
unless waived by Sellers, subject to the fulfillment, on or before the Closing
of each of the following additional conditions:
(a) Buyer and each other party thereto other than a Seller
shall have executed and delivered each of the Ancillary Agreements to
which it is a party; and
(b) Buyer shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing Date; provided, however, that notwithstanding
anything herein to the contrary, this Section 8.2(b) shall be deemed to
have been satisfied even if the Buyer shall have failed to so perform
its agreements contained in this Agreement unless the failure to so
perform or comply would, individually or in the aggregate, have a
material adverse effect on the business, results of operations, assets,
properties or financial condition of Buyer taken as a whole (a
"Purchaser Material Adverse Effect");
(c) The representations and warranties of Buyer contained in
this Agreement and in any Ancillary Agreement shall be true and correct
as of the Closing Date, as though made on and as of the Closing Date,
except that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such
date; provided, however, that notwithstanding anything herein to the
contrary, this Section 8.2(c) shall be deemed to have been satisfied
even if such representations or warranties are not true and correct as
of the Closing Date or as of such other date, as the case may be,
unless the failure of any of the representations or warranties to be so
true
and correct would have or would be reasonably likely to have
(determined without regard to materiality or Purchaser Material Adverse
Effect qualifiers contained therein), individually or in the aggregate,
a Purchaser Material Adverse Effect.
8.3 BUYER'S CONDITIONS. Subject to Section 8.4, the
obligations of Buyer to consummate the transactions contemplated by this
Agreement are, unless waived by Buyer, subject to the fulfillment, on or before
the Closing, of each of the following additional conditions:
(a) Each Seller and each other party thereto other than Buyer
shall have executed and delivered each of the Ancillary Agreements to
which it is a party;
(b) The Sellers shall have performed in all material respects
its agreements contained in this Agreement required to be performed on
or prior to the Closing Date; provided, however, that notwithstanding
anything herein to the contrary, this Section 8.3(b) shall be deemed to
have been satisfied even if the Sellers shall have failed to so perform
its agreements contained in this Agreement unless the failure to so
perform or comply would, individually or in the aggregate, have a
Material Adverse Effect;
(c) The representations and warranties of the Sellers
contained in this Agreement and in any Ancillary Agreement shall be
true and correct as of the Closing Date, as though made on and as of
the Closing Date, except that those representations and warranties
which address matters only as of a particular date shall remain true
and correct as of such date; provided, however, that notwithstanding
anything herein to the contrary, this Section 8.3(c) shall be deemed to
have been satisfied even if such representations or warranties are not
true and correct as of the Closing Date or as of such other date, as
the case may be, unless the failure of any of the representations or
warranties to be so true and correct would have or would be reasonably
likely to have (determined without regard to materiality or Material
Adverse Effect qualifiers contained therein), individually or in the
aggregate, a Material Adverse Effect;
(d) An Overbid Procedures Order (as defined in Section 14.1)
in form and substance satisfactory to Buyer shall have been entered by
the Bankruptcy Court within forty-five (45) days after the commencement
of the Chapter 11 Case, and such Overbid Procedures Order shall not
have been stayed, vacated or otherwise rendered ineffective by any
court of competent jurisdiction;
(e) No Seller shall have accepted the bid of any person other
than Buyer as the highest and best offer for the Assets;
(f) An Approval Order in form and substance satisfactory to
the Buyer shall have been entered by the Bankruptcy Court ninety (90)
days after the commencement of the Chapter 11 Case; and
(g) Consent of Sr. Xxxxxx Xxxxxx Xxxxxx to the assignment of
the Real Property Lease shall have been obtained.
8.4 SATISFACTION OF CONDITIONS. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that (a)
in the event that any Material Adverse Effect occurs from and after November 15,
1998 primarily as a result of changes in conditions, including economic or
political developments, applicable to the apparel industry generally; or (b) the
commencement of the Chapter 11 Case; or (c) the failure of Xxxxxx to make its
scheduled interest payment under its 10 1/2% Senior Secured Notes due December
31, 1998; or (d) from and after the date of this Agreement any of the events
described in clauses (a), (b) or (c) hereof has or is reasonably likely to have
any direct or indirect adverse consequence or effect to the Sellers, the
occurrence of any such event or series of events listed in (a), (b), (c) or (d)
hereof, shall not, in any way, be deemed to constitute a Material Adverse Effect
or to cause the failure of any of the conditions set forth in Section 8.3 to
have been satisfied or to otherwise give the Buyer the right to terminate this
Agreement.
SECTION 9.
TERMINATION; SURVIVAL
9.1 TERMINATION BY BUYER OR SELLERS. Anything herein or
elsewhere to the contrary notwithstanding, this Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to or at the
Closing by:
(a) mutual written consent of Xxxxxx and Buyer;
(b) Xxxxxx or Buyer, by written notice to the other, if a
court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree
or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and such order, decree, ruling or
other action shall have become final and nonappealable;
(c) Xxxxxx or Buyer, by written notice to the other, if the
Closing Date shall not have occurred by April 30, 1999 (or such later
date as may be agreed in writing by the parties), unless the Closing
Date shall not have occurred on or before such date due to the failure
of the party seeking to terminate this Agreement to have fulfilled any
of its obligations under this Agreement; and provided further, that
Xxxxxx may not terminate this Agreement pursuant to this Section 9.1(c)
by reason of failure of the Bankruptcy Court to hold a hearing on or
otherwise rule on the Approval Order prior to such date.
(d) Xxxxxx or Buyer, by written notice to the other party, if
the other party is in breach in any material respect of any of its
representations or warranties made in this Agreement, or is in
violation or default in any material respect of any of its covenants or
agreements in this Agreement, if such breach, violation or default is
not cured within ten (10) business days after written notice; provided,
however, that Buyer may not terminate this Agreement pursuant to this
Section 9.1(d) unless Sellers' breach, violation or default would have
or would reasonably be likely to have a Material Adverse Effect as
provided in Sections 8.3(c) and (d).
(e) Xxxxxx, by written notice to the Buyer, if any Seller
shall have accepted the bid of any person other than Buyer as the
highest or best offer for any or all of the Assets;
(f) Buyer, by written notice to Xxxxxx, if (i) any Seller
shall have accepted the bid of any person other than Buyer as the
highest and best offer for the Assets or (ii) if the conditions
contained in Section 8.3(d) or 8.3(f) shall not have been timely
satisfied; or
(g) Buyer, by written notice to Xxxxxx, if the Debtor-Seller
has not filed the Chapter 11 Case with the Bankruptcy Court prior to
December 31, 1998.
9.2 SURVIVAL. If this Agreement is terminated pursuant to
Section 9.1 hereof, this Agreement shall become void and of no further force and
effect, except for the provisions of these Sections 11.1(b), 11.2, 12.1, 12.2,
15.8 and 15.9 hereof; provided that such termination shall not relieve any party
for liability for Damages resulting from its breach of this Agreement. Promptly
following termination of this Agreement each party will destroy or return to the
other parties all documents received from such parties in connection with the
contemplated transaction, except documents which have been publicly distributed.
If this Agreement is terminated pursuant to Section 9.1 (other than clause
9.1(d)) Xxxxxx shall promptly return the Deposit to Buyer. Xxxxxx shall retain
the Deposit if this Agreement is terminated pursuant to Section 9.1(d). Buyer
acknowledges that Xxxxxx'x retention of the Deposit pursuant to the previous
sentence shall in no way limit any of the Sellers' rights and remedies
hereunder.
SECTION 10.
CLOSING
10.1 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx as soon as
practicable after all the conditions to Closing set forth in Article 8 hereof
shall be satisfied or duly waived, or at such other time and place as Buyer and
Sellers may mutually agree.
10.2 SELLERS' OBLIGATIONS AND CLOSING DELIVERIES. At the
Closing, Sellers shall deliver to Buyer:
(a) Bills of Sale and Assignments substantially in the forms
attached as Exhibits 1.3(b) and (e) hereto;
(b) Executed copy of each document of transfer required of
Sellers with respect to the permits and licenses to be assigned or
transferred at Closing as described in Section 1.5 hereof;
(c) Such other instruments of sale, transfer, conveyance and
assignment, in form and substance reasonably satisfactory to Buyer's
counsel, as shall be effective to vest in Buyer good title, rights and
interest to the Assets (the General Assignments and other instruments
referred to in Sections 10.2(a), 10.2(b) and 10.2(c) being collectively
referred to herein as the "Assignment and Assumption Instruments");
(d) Executed copy of each of the Ancillary Agreements;
(e) Written receipt executed by Sellers of payment of the
Purchase Price paid at Closing; and
(f) Certificate of the President or any Vice President of
Sellers that the conditions set forth in Section 8.3(b) and (c) have
been satisfied.
10.3 BUYER'S OBLIGATIONS AND CLOSING DELIVERIES. At the
Closing, Buyer shall deliver, or cause to be delivered, to Sellers:
(a) The Purchase Price payable at Closing;
(b) Executed copy of each of the Ancillary Agreements;
(c) Certificate of the President or any Vice President of
Buyer to the effect that the conditions set forth in Section 8.2(b) and
(c) have been satisfied.
SECTION 11.
EXPENSES AND POST CLOSING OBLIGATIONS
11.1 TAXES AND OTHER CHARGES. (a) Buyer shall be responsible
for and shall pay any ad valorem personal property taxes, including any interest
or penalties thereon, which are attributable or are assessed with respect to the
operation and ownership of the Business, such taxes, assessments, interest and
penalties are included in the Assumed Liabilities.
(b) Regardless of whether or not the transactions contemplated
hereby are consummated, each party to this Agreement shall pay all expenses
incurred by it or on its behalf in connection with the preparation,
authorization, execution and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby, including, but not limited to, all fees and expenses of all
consultants, brokers, investment bankers, agents, representatives, counsel and
accountants engaged by such party; except that Buyer shall bear and timely pay
(and shall indemnify the Seller Indemnified Parties against) any Liability for
all sales, documentary, stamp, transfer and similar Taxes (including, without
limitation, all recording fees and related charges) arising from or attributable
or related to the transactions contemplated by this Agreement and the Ancillary
Agreements.
(c) Sellers and Buyer shall cooperate regarding the filing of
any Tax Returns relating to the Business that cover a period which includes the
date of the Closing.
(d) Sellers, at their option, shall have sole control over any
contest or other proceeding (including claims for refund or challenges of tax
assessments) which relates to liability for Taxes for periods or portions
thereof ending on or prior to the Closing Date.
11.2 BREAKUP FEE. The Sellers, jointly and severally, shall
pay to the Buyer as a fee (a "Breakup Fee") $1,000,000 if a Breakup Fee Event
(as defined below) shall occur at any time; provided that the Sellers shall not
be obligated to pay the Breakup Fee if, prior to the
occurrence of a Breakup Fee Event, this Agreement has been validly terminated
pursuant solely to Section 9.1(a), 9.1(b), 9.1(c) or 9.1(d). This obligation
shall survive the termination of this Agreement and shall constitute an
administrative expense of the Debtor Sellers' bankruptcy estates in the Chapter
11 cases under Sections 503(b) and 507(a)(i) of the Bankruptcy Code. The Breakup
Fee shall be earned upon the occurrence of a Breakup Fee Event. The Sellers
shall pay the Breakup Fee to the Buyer on the earliest to occur of (x) the
closing of an Alternative Proposal (as defined below), (y) the termination of an
Alternative Proposal or (z) the effective date of a plan of reorganization duly
confirmed by the Bankruptcy Court. A "Breakup Fee Event" is the occurrence of
any of the following:
(a) the termination of this Agreement by Xxxxxx pursuant to
Section 9.1(e);
(b) the termination of this Agreement by the Buyer pursuant to
Section 9.1(f); or
(c) the refusal of the Bankruptcy Court to confirm the
transactions contemplated hereby or the confirmation by the Bankruptcy
Court of a sale of the Assets to another party.
11.4 INSURANCE DATA. To the extent that, after the Closing,
either Buyer or any Seller requires any information regarding claim data,
payroll or other information in order to make filings with insurance carriers
relating to the Business, Sellers shall promptly supply such information to
Buyer and Buyer shall promptly supply such information to Sellers.
11.5 FURTHER ASSURANCES. At any time after the Closing, the
parties agree to cooperate with one another to execute and deliver such other
documents, instruments of transfer or assignment, files, books and records and
do all such further acts and things as may be reasonably required to carry out
the transactions contemplated hereunder.
11.6 ACCESS TO BOOKS, RECORDS AND FACILITIES. Each Seller
agrees that on and after the Closing it will permit Buyer and its
representatives, during normal business hours and upon reasonable advance
notice, (i) to have access to and to examine and make copies of all books and
records of such Seller (except books and records protected by attorney-client or
other privilege which such Seller may be entitled to assert against Buyer in any
pending or threatened proceeding, suit or action) which relate solely to the
Business to the extent that the events reflected therein relate to transactions
or events occurring prior to the Closing or to transactions or events occurring
subsequent to the Closing which arise out of transactions or events occurring
prior to the Closing, and (ii) to have access to and to examine and make copies
of all documents listed in the Schedules attached hereto and all files, records
and papers of any and all proceedings and matters listed in the Schedules
attached hereto. All books and records of any Seller relating to the Business
will be preserved by such Seller in accordance with such Sellers' records
retention policy. Buyer agrees that, after the Closing, it will permit, and will
cause its subsidiaries to permit, Sellers and their representatives full access
during normal business hours and upon reasonable advance notice to all of their
respective properties, plants and facilities used in connection with the
Business, and to have access to the books and records (except records protected
by attorney-client or other privilege which Buyer or its affiliates may be
entitled to against Sellers in any pending or threatened proceeding, action or
suit) of the Business, to the
extent that any of the foregoing relates to periods prior to the Closing, and is
reasonably necessary in connection with any then pending or threatened
litigation, claim, liability, or judicial or administrative matters in which
Sellers are involved and which involves or arises out of the ownership or
operation of the Business by Sellers.
11.7 AUDITED FINANCIAL STATEMENTS. Within 60 days following
the Closing Date, Xxxxxx shall deliver to Buyer, at Xxxxxx'x cost, audited
consolidated financial statements relating to the Assets and the Business for
such periods as required by Regulations S-X promulgated by the Securities and
Exchange Commission (the "Audited Financial Statements"). The Audited Financial
Statements shall (a) be prepared by a firm of independent accountants selected
by Xxxxxx, (b) be in conformity with generally accepted accounting principles
consistently applied throughout the periods covered thereby and (c) comply with
the requirements of Regulation S-X. The obligation of Xxxxxx to provide the
Audited Financial Statements to Buyer shall only be applicable if Buyer's
independent accountants determine that the Audited Financial Statements are
required pursuant to Regulation S-X and the other rules promulgated by the
Securities and Exchange Commission.
SECTION 12.
PUBLICITY, CONFIDENTIALITY
12.1 PUBLICITY. The Parties agree that no publicity, release
or announcement concerning the execution of this Agreement, any of the
provisions of this Agreement or the transactions contemplated hereby shall be
issued without the advance written approval of the form and content of the same
by the Parties; provided, however, that no such consent shall be required when
such disclosure is required by applicable law.
12.2 CONFIDENTIALITY. Buyer confirms that it is bound by the
terms of the confidentiality agreement, dated March 31, 1998 (the
"Confidentiality Agreement"), between Buyer and Xxxxxx and that it will keep and
treat the evaluation material and all other items of confidential information
provided by Sellers to Buyer hereunder in accordance with the terms of that
confidentiality agreement.
SECTION 13.
NOTICES
13.1 NOTICES. Any notices or communications permitted or
required hereunder shall be deemed sufficiently given if hand-delivered, or sent
by (i) registered or certified mail return receipt requested, (ii) telecopy or
other electronic transmission service (to the extent receipt is confirmed) or
(iii) by overnight courier, in each case to the parties at their respective
addresses and telecopy numbers set forth below, or to such other address of
which any party may notify the other party in writing.
If to Sellers, to
Xxxxxx Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx, Esq.
Executive Vice President and
General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. First, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer, to
Supreme International, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx
Chairman and CEO
with a copy to:
Broad and Xxxxxx
000 Xxxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
SECTION 14.
BANKRUPTCY PROCEDURES
14.1 SOLICITATION OF PROPOSALS. (a) Buyer and the Sellers
acknowledge that under the Bankruptcy Code the sale of assets including the
assumption and assignment of executory contracts and unexpired leases are
subject to Bankruptcy Court approval. Buyer and Sellers acknowledge that to
obtain such approval the Debtor-Seller must demonstrate that it has taken
reasonable steps to obtain the highest and best price possible for the Assets,
including, but not limited to, giving notice of the transactions contemplated by
this Agreement to creditors and other interested parties as ordered by the
Bankruptcy Court, providing information about the Assets to responsible bidders,
subject to appropriate confidentiality agreements, entertaining higher and
better offers from responsible bidders and, if necessary, conducting an auction.
(b) To facilitate the foregoing, the Debtor-Seller shall,
promptly following the Petition Date, seek the entry of an order (the "Overbid
Procedures Order") containing the overbid
procedures and protections contained in the form of Overbid Procedures Order
attached hereto as Exhibit 15.1 or as otherwise reasonably satisfactory to the
Buyer.
(c) Unless this Agreement has been terminated in accordance
with its terms, or if the Board of Directors of any Seller determines in good
faith that it is necessary to do so to comply with its fiduciary duties under
applicable corporate law or the Bankruptcy Code, the Sellers will not, directly
or indirectly through any officer, director, employee, representative,
affiliate, adviser or agent, or otherwise, (i) solicit, initiate or encourage or
take any other action to facilitate, any inquiry or the making of any proposal
that constitutes, or could be expected to lead to, an Overbid; provided that (x)
the Debtor-Seller shall give the notice of the transactions contemplated by this
Agreement to such persons and in such manner as the Bankruptcy Court shall
direct and (y) following the commencement of the Chapter 11 Case, such Seller
may, in response to an unsolicited request from a BONA FIDE prospective
purchaser (A) provide public and non-public information concerning the Assets,
so long as such prospective purchaser shall have executed a confidentiality
agreement no less favorable to Sellers than that executed by Buyer's affiliate,
and (B) participate in negotiations or discussions concerning such prospective
purchaser's Overbid.
14.2 BANKRUPTCY COURT ACTIONS. (a) The Debtor-Seller shall
file with the Bankruptcy Court on the date of the commencement of the Chapter 11
Case a motion, together with appropriate supporting papers and notices, seeking
the entry of the Overbid Procedures Order, in form and substance satisfactory to
Buyer, approving the terms of Section 14 and Sections 11.2 hereof. The
Debtor-Seller shall use its best efforts to obtain entry of the Overbid
Procedures Order at the first hearing conducted by the Bankruptcy Court in the
Chapter 11 Case, subject to the Bankruptcy Court's calendar. Each of the
Debtor-Seller and the Buyer acknowledge that the form of Overbid Procedures
Order attached as Exhibit 14.1 hereto is in form and substance satisfactory to
such party.
(b) The Debtor-Seller shall file with the Bankruptcy Court on
the date of commencement of the Chapter 11 Case a motion, together with
appropriate supporting papers and notices, seeking the entry of an order,
pursuant to Bankruptcy Code sections 105, 363 and 365, authorizing and
approving, INTER ALIA, the sale and assignment of the Assets on the terms and
conditions set forth herein, free and clear of all Encumbrances, to Buyer, and
the assumption by the Sellers and the assignment to and assumption by Buyer of
the contracts set forth on Section 3.1(a), and containing a finding that Buyer
has acted in "good faith" within the meaning of section 363(m) of the Bankruptcy
Code (the "Approval Order"), all in form and substance satisfactory to the
Debtor-Seller and the Buyer. The Debtor-Seller shall use its best efforts to
obtain entry of the Approval Order at the first hearing conducted by the
Bankruptcy Court in the Chapter 11 Case, subject to the Bankruptcy Court's
calendar. Each of the Debtor-Seller and the Buyer acknowledges that the form of
Approval Order attached as Exhibit 14.2 hereto is in form and substance
satisfactory to such party.
(c) The Sellers shall provide Buyer with copies of all
motions, applications and supporting papers and notices prepared by the Sellers
(including forms of orders and notices to interested parties) relating in any
way to Buyer, this Agreement or the transactions contemplated hereby prior to
the filing thereof in the Chapter 11 Case.
SECTION 15.
MISCELLANEOUS
15.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon, and inure to the benefit of, all the Parties and their respective
successors, legal representatives and assigns permitted in accordance with this
Section 15.1. Nothing herein shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party hereto. No assignment of
this Agreement or of any rights or obligations hereunder may be made by any
party (by operation of law or otherwise) without the prior written consent of
the other party, and any attempted assignment without the required consents
shall be void.
15.2 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
attached hereto and the documents and agreements referred to herein to be
delivered and the acts to be performed at or subsequent to the Closing
(collectively, the "Items") are incorporated herein and expressly made a part of
this Agreement as fully as though completely set forth herein.
15.3 SPECIFIC PERFORMANCE. Each of Sellers and Buyer
acknowledges that the other will have no adequate remedy at law if it fails to
perform any of its obligations under this Agreement. In such event, the
performing party shall have the right, in addition to any other rights it may
have, to specific performance of this Agreement.
15.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, of the Parties. In pleading or proving any provision of this
Agreement, it shall not be necessary to produce more than one such counterpart.
15.5 HEADINGS; INTERPRETATION. (a) The headings contained in
this Agreement are inserted for convenience of reference only and shall not
otherwise affect the meaning or interpretation or be deemed a substantive part
of this Agreement.
(b) Except to the extent that the context otherwise requires
"include," "includes" and "including" are deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
15.6 WAIVER. The failure of any Party at any time or times to
enforce or require performance of any provision hereof shall in no way operate
as a waiver or affect the right of such Party at a later time to enforce the
same. No waiver by any Party of any condition or the breach of any term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach, or a waiver of any other condition or of
any term, covenant, representation or warranty contained in this Agreement. Any
agreement on the part of a Party hereto to a waiver shall be valid only if set
forth in an instrument in writing signed by such Party.
15.7 SEVERABILITY. If any provision of this Agreement shall
hereafter be held to be invalid or unenforceable for any reason, that provision
shall be reformed to the maximum extent permitted to preserve the Parties'
original intent, failing which, it shall be severed from
this Agreement with the balance of this Agreement continuing in full force and
effect. Such occurrence shall not have the effect of rendering the provision in
question invalid in any other jurisdiction or in any other case or
circumstances, or of rendering invalid any other provisions contained herein to
the extent that such other provisions are not themselves actually in conflict
with any applicable law.
15.8 GOVERNING LAW; FORUM; APPOINTMENT OF AGENT. Each of the
Parties hereto hereby irrevocably and unconditionally consents to submit (i) if
prior to the commencement of the Chapter 11 Case, to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America, in
each case located in the County of New York, and (ii) if on or after the
commencement of the Chapter 11 Case, to the exclusive jurisdiction of the
Bankruptcy Court for any action to enforce, which arises out of or in any way
relates to, any of the provisions of this Agreement and the Ancillary Agreements
(an "Action") in any court or before any governmental authority; it being
understood that, notwithstanding the jurisdiction of the Bankruptcy Court,
matters that have been reserved for arbitration under Section 2.2(d) shall not
be submitted to the Bankruptcy Court for arbitration. Each of the parties hereto
hereby irrevocably and unconditionally waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any such Action, the
defense of sovereign immunity, any claim that it is not personally subject to
the jurisdiction of the aforesaid courts for any reason other than the failure
to serve process in accordance with this Section 15.8, that it or its property
is exempt or immune from the jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and to the fullest extent permitted by applicable law,
that the Action in any such court is brought in an inconvenient forum, that the
venue of such Action is improper, or that this Agreement or the Ancillary
Agreements, or the subject matter hereof or thereof, may not be enforced in or
by such courts and further irrevocably waives, to the fullest extent permitted
by applicable law, the benefit of any defense that would hinder, xxxxxx or delay
the levy, execution or collection of any amount to which the party is entitled
pursuant to the final judgment of any court having jurisdiction.
15.9 BROKERS. Each of the Parties represents and warrants to
the other that, except for Sellers' retention of Xxxxxx Del Genio Xxxxx & Co.,
LLC, the fees and expenses of which shall be paid by Sellers, no broker or
finder has acted on its behalf in connection with the transactions contemplated
by this Agreement. Each of the Parties agrees to indemnify, defend and hold the
other party harmless against any claim or demand for any commission,
compensation or other payment by any other broker, finder or similar agent
claiming to have been or that was in fact employed by or on behalf of it.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
XXXXXX CORPORATION
By: /S/ XXXX XXXX
------------------------------
Name: Xxxx Xxxx
Title: EVP & General Counsel
SUPREME INTERNATIONAL CORPORATION
By: /S/ XXXXXX XXXXXXXXXXX
-------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Chairman
TABLE OF CONTENTS
PAGE
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SECTION 1. PURCHASE AND SALE OF ASSETS...........................................................................1
1.1 ASSETS TO BE TRANSFERRED...............................................................1
1.2 EXCLUDED ASSETS........................................................................2
1.3 OTHER TRANSACTIONS.....................................................................2
1.4 ASSIGNMENT OF ASSETS...................................................................2
1.5 OBTAINING PERMITS AND LICENSES.........................................................3
SECTION 2. CONSIDERATION.........................................................................................3
2.1 PURCHASE PRICE.........................................................................3
2.2 INVENTORY..............................................................................4
2.3 ALLOCATION OF PURCHASE PRICE...........................................................6
2.4 GRANT OF LICENSE.......................................................................7
SECTION 3. LIABILITIES, OBLIGATIONS AND INDEMNITIES..............................................................7
3.1 LIABILITIES AND INDEMNITY..............................................................7
3.2 INDEMNIFICATION PROCEDURE..............................................................9
3.3 OTHER INDEMNIFICATION PROVISIONS......................................................10
SECTION 4. EMPLOYEES AND EMPLOYEE BENEFITS.......................................................................10
4.1 EMPLOYMENT............................................................................10
4.2 WELFARE PLANS.........................................................................11
4.3 SERVICE CREDIT........................................................................11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLERS............................................................11
5.1 ORGANIZATION AND CORPORATE POWER......................................................11
5.2 DUE AUTHORIZATION; NO BREACH..........................................................12
5.3 REAL PROPERTY.........................................................................12
5.4 PERSONAL PROPERTY.....................................................................13
5.5 TITLE AND CONDITION OF ASSETS; ENTIRE BUSINESS........................................13
5.6 CONSENTS..............................................................................14
5.7 COMPLIANCE WITH LAWS..................................................................14
5.8 PERMITS AND LICENSES..................................................................14
5.9 ENVIRONMENTAL MATTERS.................................................................14
5.10 LABOR MATTERS.........................................................................16
5.11 LITIGATION............................................................................16
5.12 INTELLECTUAL PROPERTY.................................................................16
5.13 CONTRACTS.............................................................................17
5.14 TAX MATTERS...........................................................................17
5.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................18
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................18
6.1 ORGANIZATION AND POWER................................................................18
6.2 DUE AUTHORIZATION; NO BREACH..........................................................18
6.3 CONSENTS..............................................................................19
6.4 AVAILABILITY OF FUNDS.................................................................19
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................19
SECTION 7. COVENANTS............................................................................................19
7.1 CONDUCT OF THE BUSINESS...............................................................19
7.2 ACCESS TO INFORMATION.................................................................20
7.3 REASONABLE BEST EFFORTS...............................................................20
7.4 ALTERNATIVE PROPOSALS.................................................................20
7.5 ACCESS TO FACILITIES..................................................................21
7.6 ANDALUSIA ASSETS......................................................................21
7.7 ACCOUNTS RECEIVABLE...................................................................21
7.8 Buyer's Knowledge of Business; Sellers' Representations Modified by Buyer's
Knowledge.............................................................................21
SECTION 8. CONDITIONS OF CLOSING................................................................................22
8.1 MUTUAL CONDITIONS.....................................................................22
8.2 ADDITIONAL CONDITIONS OF SELLERS......................................................22
8.3 BUYER'S CONDITIONS....................................................................23
8.4 SATISFACTION OF CONDITIONS............................................................24
SECTION 9. TERMINATION; SURVIVAL.................................................................................24
9.1 TERMINATION BY BUYER OR SELLERS.......................................................24
9.2 SURVIVAL..............................................................................25
SECTION 10. CLOSING.............................................................................................25
10.1 CLOSING...............................................................................25
10.2 SELLERS' OBLIGATIONS AND CLOSING DELIVERIES...........................................25
10.3 BUYER'S OBLIGATIONS AND CLOSING DELIVERIES............................................26
SECTION 11. EXPENSES AND POST CLOSING OBLIGATIONS...............................................................26
11.1 TAXES AND OTHER CHARGES...............................................................26
11.2 BREAKUP FEE...........................................................................26
11.4 INSURANCE DATA........................................................................27
11.5 FURTHER ASSURANCES....................................................................27
11.6 ACCESS TO BOOKS, RECORDS AND FACILITIES...............................................27
11.7 AUDITED FINANCIAL STATEMENTS..........................................................28
SECTION 12. PUBLICITY, CONFIDENTIALITY..........................................................................28
12.1 PUBLICITY.............................................................................28
12.2 CONFIDENTIALITY.......................................................................28
SECTION 13. NOTICES.............................................................................................28
13.1 NOTICES...............................................................................28
SECTION 14. BANKRUPTCY PROCEDURES...............................................................................29
14.1 SOLICITATION OF PROPOSALS.............................................................29
14.2 BANKRUPTCY COURT ACTIONS..............................................................30
SECTION 15. MISCELLANEOUS.......................................................................................31
15.1 BINDING EFFECT; ASSIGNMENT............................................................31
15.2 EXHIBITS AND SCHEDULES................................................................31
15.3 SPECIFIC PERFORMANCE..................................................................31
15.4 COUNTERPARTS..........................................................................31
15.5 HEADINGS; INTERPRETATION..............................................................31
15.6 WAIVER................................................................................31
15.7 SEVERABILITY..........................................................................31
15.8 GOVERNING LAW; FORUM; APPOINTMENT OF AGENT............................................32
15.9 BROKERS...............................................................................32
