FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
MARCH 29, 1999 (MARCH 12, 1999)
Date of Report (Date of earliest event reported)
PAUL HARRIS STORES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 0-07264 35-0907402
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
6003 GUION ROAD
INDIANAPOLIS, INDIANA 46268
(Address of principal
executive offices)
Registrant's telephone number, including area code: (317) 293-3900
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 12, 1999, a wholly-owned subsidiary of Paul Harris Stores,
Inc. (the "Registrant") acquired from The J. Peterman Company (the "Peterman
Company") substantially all of the assets of the Peterman Company. The
Peterman Company had been operating as a debtor-in-possession since filing a
voluntary petition under Chapter 11 of the Federal Bankruptcy Code on January
25, 1999. On February 25, 1999, the Peterman Company filed with the United
States Bankruptcy Court for the Eastern District of Kentucky, Lexington
Division (the "Bankruptcy Court") its "Emergency Motion to Employ Agent with
Authority to Sell Assets Subject to Higher and Better Offers" and other relief
(the "Sale Motion"). On March 5, 1999, the auction authorized by the order
granting relief requested by the Sale Motion was conducted and the
Registrant's offer to purchase the assets of the Peterman Company was accepted
subject to negotiation and execution of a definitive agreement. The sale of
assets was consummated on March 12, 1999, pursuant to an Asset Purchase
Agreement which resulted from arms-length negotiation.
The Peterman Company operated a mail-order catalog distribution
center in Lexington, Kentucky (the "Center") and had 13 retail outlets
nationwide. The Registrant assumed 10 of the 13 retail outlet leases pursuant
to a Bankruptcy Court order entered on March 18, 1999. The Registrant intends
to close the Center. The Registrant expects to continue to operate the 10
retail outlets under the name The J. Peterman Company.
The consideration paid by the Registrant consisted of approximately
$10,000,000 in cash (subject to adjustment) and the assumption of certain
operating obligations of the Peterman Company. The Registrant paid the cash
portion of the purchase price with borrowings under its existing line of
credit with LaSalle National Bank.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
The historical financial information required by this Current Report
on Form 8-K is not included herein as it was impracticable for the
Registrant to provide such information. Such historical financial
information will be filed as soon as practicable, which the
Registrant believes will be within 60 days from the date of this
Current Report.
(b) Pro forma financial information.
The pro forma financial information required by this Current Report
on Form 8-K is not included herein as it was impracticable for the
Registrant to provide such information. Such pro forma financial
information will be filed as soon as practicable, which the
Registrant believes will be within 60 days from the date of this
Current Report.
(c) Exhibits.
The exhibit set forth on the Index to Exhibits on page 4 is
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAUL HARRIS STORES, INC.
Dated: March 29, 1999 By: /S/ THOMAS MCCAIN
Thomas McCain
Senior Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Page No.
Exhibit in this
NO. DESCRIPTION FILING
2 Asset Purchase Agreement, as amended, dated as of March 12,
1999, among the Registrant, The J. Peterman Company and
Peterman Acquisition Corp....................... 5
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 12, 1999 (this
"AGREEMENT"), among The J. Peterman Company, a Kentucky
corporation as debtor/debtor-in-possession ("SELLER"), and Paul
Harris Stores, Inc., an Indiana Corporation ("PHSI"), and
Peterman Acquisition Corp., an Indiana corporation and a wholly
owned subsidiary of PHSI ("BUYER"). Notwithstanding the several
references to PHSI and Buyer herein, PHSI and Buyer shall be
jointly and severally responsible for all of the obligations of
Buyer hereunder.
RECITALS:
A. On January 25, 1999, Seller filed a voluntary
petition under Chapter 11 of the Federal Bankruptcy Code, Title
11, United States Code, Section 101 et seq., as amended (the
"BANKRUPTCY CODE"), in the United States Bankruptcy Court for the
Eastern District of Kentucky, Lexington Division (the "BANKRUPTCY
COURT"), as Case No. 99-50142 (the "BANKRUPTCY CASE").
B. On February 25, 1999, Seller filed with the
Bankruptcy Court its "Emergency Motion to Employ Agent with
Authority to Sell Assets Subject to Higher and Better Offers" and
other relief (the "SALE MOTION"). On March 5, 1999, the auction
authorized by the order entered granting relief requested by the
Sale Motion was conducted and PHSI's offer to purchase the Assets
(as hereinafter defined) of Seller as contemplated by this
Agreement was accepted subject to negotiation and execution of a
"definitive agreement". Pursuant to appropriate notice and
following a hearing, the Bankruptcy Court entered its order (the
"SALE ORDER") on the date hereof approving the proposed sale of
the Assets to PHSI or its designee(s) pursuant to a "definitive
agreement". This Agreement is the "definitive agreement"
referenced in the two preceding sentences and Buyer is a
"designee" of PHSI to purchase the Assets.
C. Seller desires to sell, transfer and assign the
Assets to Buyer, and Buyer desires to purchase the Assets from
Seller, upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and
the respective representations, warranties, covenants and
agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
Sale and Purchase of Assets;
ASSUMPTION OF CERTAIN LIABILITIES
1.1. SALE AND PURCHASE OF ASSETS. Upon the terms and
subject to the conditions set forth in this Agreement, on the
Closing Date (as hereinafter defined), Seller agrees to sell,
transfer, convey, assign and deliver to Buyer, and Buyer agrees
to purchase, acquire and accept from Seller, free and clear of
all Liens and Claims (each as hereinafter defined), all of
Seller's right, title and interest in and to the following assets
(collectively, the "ASSETS"):
(a) INVENTORY. All of Seller's right, title and
interest in and to the following: Seller's inventory of all
goods located in Seller's 13 retail stores (the "STORES"), all
goods located at Seller's premises in Lexington, Kentucky
commonly known as the "Center" (the "CENTER") and all other goods
owned by Seller wherever located (other than inventory sold or to
be sold by ADZ pursuant to the Bankruptcy Court's order of
January 29, 1999) (collectively, the "INVENTORY").
(b) FURNITURE, FIXTURES AND EQUIPMENT. All of
Seller's right, title and interest in and to the following: All
furniture, fixtures and equipment owned by Seller (the "FFE"),
including, without limitation, all furniture, fixtures and
equipment located at the Stores, at the Center or at any other
location, and all automobiles, trucks and other vehicles (but
excluding any equipment held under capital leases) (collectively,
the "FFE").
(c) CERTAIN LEASES. Subject to the third sentence of
this subsection (c), the right to assume all of Seller's right,
title and interest in and to the following: (i) Seller's lease of
the Center (the "CENTER LEASE"), as it shall have been amended to
reflect the principal terms discussed at a hearing on March 5,
1999 before the Bankruptcy Court regarding the auction sale of
the Assets to PHSI to provide for a term ending on July 15, 1999,
at the rental rate of $40,000 per month, and such other terms and
conditions as shall be mutually agreeable to Buyer and the
landlord thereunder, and (ii) not fewer than 10 of Seller's 13
Store leases (but in any event, two of the Store leases to be
assumed by Buyer shall be the leases of Seller's Stores located
in Grand Central Station, New York, New York, and in Troy,
Michigan). Each of the 13 Store leases is herein called a "STORE
LEASE") and the Center Lease and each Store Lease that Buyer (or
as provided below any assignee from PHSI of rights hereunder)
actually does assume is herein called an "ASSUMED LEASE".
Notwithstanding the foregoing, PHSI or Buyer may assign its
rights to assume any of the Store Leases on or before March 16,
1999, in which case Seller will make the assignment and transfer
to PHSI's or Buyer's assignee that would otherwise be made to
Buyer with respect to such Store Lease. Buyer shall notify
Seller in writing of the Store Leases that Buyer (or its
assignee) intends to assume not later than Noon, EST, on March
15, 1999.
(d) CERTAIN OTHER CONTRACTS. The right to assume all
of Seller's right, title and interest in and to the following:
Each of the other Contracts (as hereinafter defined) of Seller
that (i) are hereafter identified by Buyer (with the cooperation
of Seller in compliance with Section 5.1 below) in writing on or
prior to March 18, 1999 (unless the counterparty waives such
deadline in which event such deadline shall be extended to March
22, 1999) and (ii) that Seller agrees to assign to Buyer (which
agreement shall not unreasonably be withheld). The Contracts
that Buyer actually does assume, collectively with the Assumed
Leases, are herein called the "ASSUMED CONTRACTS".
The parties acknowledge that the assumption by Buyer of
each of the Assumed Contracts will be subject to the entry by the
Bankruptcy Court of one or more orders (the "ASSIGNMENT
ORDER(S)") approving Seller's motions to the Bankruptcy Court by
which Seller will ask the Bankruptcy Court to approve its
assumption and the assignment to Buyer or PHSI's assignee(s) of
the Assumed Contracts pursuant to Bankruptcy Code <section>365
(the "ASSUMPTION AND ASSIGNMENT MOTION(S)"). As of the date
hereof, no Assignment Order has been entered. Accordingly, none
of the Assumed Contracts will be assumed by and assigned to Buyer
until after the Closing Date. Seller agrees (i) to the extent
not previously filed, to promptly file all Assumption and
Assignment Motions in form and substance satisfactory to Buyer
and (ii) to use its best efforts to cause the Bankruptcy Court to
grant all of the relief requested in each of the Assumption and
Assignment Motion(s). The parties agree that such assumption and
assignment of the Assumed Contracts shall occur promptly upon the
entry of the applicable Assignment Order(s), and shall be
effective as of the Closing Date.
Buyer shall be responsible to cure all monetary and
non-monetary defaults that are not excused by the Bankruptcy
Court required to be paid in order to effectuate the assumption
and assignment of the Assumed Contracts (other than any unpaid
rent under any Store Lease or the Center Lease with respect to
any period between March 1, 1999 and March 7, 1999)
(collectively, "CURE OBLIGATIONS"), and shall be entitled to any
and all benefits available under such Assumed Contracts
including, without limitation, any deposits, credits and or
tenant allowances.
(e) PERMITS. All of Seller's right, title and
interest in and to the following: All of the assignable Permits
(as hereinafter defined) that are necessary for the operation of
Seller's business as it exists on the Closing Date, and all
rights related thereto.
(f) INTELLECTUAL PROPERTY. All of Seller's right,
title and interest in and to the following: The name "J.
Peterman", "Peterman" and all variations thereof in which Seller
owns rights, all logos, trademarks and other marks, trade names,
trade dress, labels or other trade rights, and all copyrights,
licenses and other intellectual property rights of any character
or description, whether or not registered, other than any of the
foregoing restricted by the Excluded Licenses (as hereinafter
defined) (collectively the "INTELLECTUAL PROPERTY"). The
Intellectual Property shall include all goodwill attached or
associated with the Intellectual Property and any renewals of
trademarks, tradenames, service marks or similar property,
together with all rights corresponding thereto throughout the
world, including the full right to sue for and recover damages
and profits recoverable for infringement of such trademarks,
tradenames and service marks occurring on or after the Closing
Date and all of Seller's rights against computer software
providers who have represented in writing to Seller that such
software is Year 2000 compliant.
(g) OTHER INTANGIBLES. All of Seller's right, title
and interest in and to any and all customer lists and records,
mailing lists, marketing, sales and promotional materials and
records, manuals, training materials, and similar items, and all
books, records, files, computer software, data or databases,
correspondence, memoranda, notes and other documents or papers
and other evidence thereof that are in any manner related to any
of the foregoing or the other Assets, other than the Excluded
Assets (collectively, the "BOOKS AND RECORDS").
1.2. EXCLUDED ASSETS. Buyer shall not purchase (and
Seller shall retain) any assets of Seller that are not included
within the Assets pursuant to Section 1.1 including, without
limitation, all of the following (collectively, the "EXCLUDED
ASSETS"):
(a) all cash, cash equivalents and accounts receivable
of Seller (other than cash, cash equivalents and accounts
receivable arising on or after March 8, 1999) and all amounts
relating to sales occurring prior to March 8, 1999, and all bank
accounts of Seller;
(b) Seller's interest in Connectrix Systems LLC;
(c) all rights or obligations under Seller's Consumer
Products "Sales Agency Agreement" with MGM and Seller's licences
with 20th Century Fox, Universal Studios Licensing, Inc. and
Connectrix Systems LLC (collectively, the "EXCLUDED LICENSES"),
or under all other Contracts of Seller that are not Assumed
Contracts, or under this Agreement (including, without
limitation, all amounts paid to Seller hereunder);
(d) all general intangibles of Seller other than the
Intellectual Property and the Other Intangibles;
(e) all causes of action and litigation of Seller
against third parties (other than those affecting Buyer's
ownership and control of or rights to use or otherwise receive
the benefit of any of the Assets);
(f) all claims, as defined in Section 101(5) of the
Bankruptcy Code, of Seller whensoever arising (other than those
affecting Buyer's ownership and control of or rights to use or
otherwise receive the benefit of any of the Assets), including,
but not limited to, the claim of the Seller's bankruptcy estate
or the Seller against First Chicago;
(g) all of Seller's corporate minute books, stock
records and tax returns, and any refunds of Taxes (as hereinafter
defined) due to Seller from any Governmental Entity (as
hereinafter defined) or insurance premiums or other prepaid
expenses made pursuant to Contracts that are not Assumed
Contracts;
(h) all amounts paid or payable to Seller by ADZ, and
all inventory returned to Seller by ADZ, pursuant to the
arrangements with ADZ referred to in Section 1.1(a); and
(i) all proceeds of any of the foregoing.
1.3. ASSUMPTION OF CERTAIN LIABILITIES. (a) Upon
the terms and subject to the conditions set forth in this
Agreement, and specifically Section 1.4 hereof, on the Closing
Date, Buyer agrees to assume only those liabilities and
obligations arising out of or based upon Buyer's ownership and
operation of the Assets from and after the Closing Date (and in
particular, with respect to the Assumed Contracts, only the
obligations thereunder to the extent that such obligations are
required pursuant to such Assumed Contracts to be performed after
the Closing Date) (collectively, the "ASSUMED LIABILITIES").
(b) Except as otherwise provided in Section 1.4 and
Section 1.5 hereof, Buyer shall assume only the Assumed
Liabilities described in subsection (a) above. Except as
otherwise provided in Section 1.4 and Section 1.5 hereof, all
other obligations, debts, Taxes, operating expenses, rent,
utilities and other liabilities of Seller of any kind, character
or description, whether accrued, absolute, contingent or
otherwise, shall not be assumed by Buyer and shall be retained by
Seller. Without limitation of the foregoing, but subject to
Section 1.4 and Section 1.5 hereof:
(i) Buyer shall not assume, and Seller shall retain,
all loans, accounts and other amounts payable or to become
payable by Seller, whether to financial institutions,
officers, stockholders, affiliates or otherwise to any other
person;
(ii) Buyer shall not assume, and Seller shall retain,
all claims, as defined in Section 101(5) of the Bankruptcy
Code, asserted or assertable against Seller (collectively,
"CLAIMS") (other than those arising out of Buyer's
assumption, ownership and operation of the Assumed
Contracts) under Sections 501, 502, 503, 505, 506, 507 and
509 of the Bankruptcy Code or otherwise;
(iii) Buyer shall not assume, and Seller shall retain,
all liabilities and obligations of Seller in respect of any
federal, state, local or foreign taxes, assessments,
charges, duties and fees or similar charges of any kind
whatsoever (whether imposed directly or through
withholding), including any interest, penalties and
additions imposed with respect to such amounts, in each case
with respect to the income, operations or assets of Seller
(collectively, "TAXES") arising with respect to any period
prior to March 8, 1999; and
(iv) Buyer shall not assume, and Seller shall retain,
all liabilities and obligations under any agreement, lease,
license, contract, note, mortgage, indenture, arrangement or
other obligation (collectively, "CONTRACTS") of Seller that
are not Assumed Contracts, including, without limitation,
(i) any Contract representing any indebtedness and (ii) any
employment agreements, Employee Plans or other employment
related Contracts or arrangements. In particular, but
without limitation, Buyer shall not assume any liabilities
of Seller under, or be deemed a successor company to Seller
in connection with, any Employee Plan, collective bargaining
agreement or other employment related arrangement to which
the present or former employees of Seller are or were
entitled (including any severance arrangements), and shall
have no obligation to employ any of Seller's employees in
connection with or after the transactions contemplated
hereby. For purposes of this Agreement, the term "EMPLOYEE
PLAN" means any pension, retirement, profit-sharing,
deferred compensation, stock purchase, stock option, bonus
or other incentive plan, any program, arrangement, agreement
or understanding relating to or otherwise affecting the
delivery of medical, dental or other health benefits to the
current or former employees of Seller, any life insurance,
accident, disability, workers' compensation, severance or
separation plan, or any other employee benefit plan,
including, without limitation, any employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended), and, with respect to all
of the above, to which Seller contributes or is a party or
is bound or under which it may have liability and under
which the current or former employees of Seller are or were
eligible to participate or derive a benefit.
Section 1.4. PROVISIONS RELATING TO THE PERIOD MARCH
8, 1999 THROUGH THE CLOSING DATE. From and including the opening
of Seller's business on March 8, 1999 and through the Closing
Date (the "INTERIM PERIOD"), Seller shall operate its business
and operations solely for the benefit of PHSI and Buyer. Buyer
shall be entitled to receive from Seller the gross amount of all
revenue generated from the Assets and the operation of Seller's
business during the Interim Period. During such period, unless
PHSI or Buyer shall otherwise consent in writing, Seller shall
(a) operate the Assets and the business of Seller only in the
ordinary and usual course of business diligently and in good
faith, consistent with past practice since filing the petition in
the Bankruptcy Case; (b) maintain all existing policies of
insurance (or comparable policies) covering any of the Assets in
full force and effect; (c) use all reasonable efforts to preserve
the business organization of Seller intact; (d) use all
reasonable efforts to keep available the services of the present
officers and employees of Seller; and (e) use all reasonable
efforts to preserve the existing relationships with suppliers,
distributors, customers and others having business relations with
Seller such that Seller's business will not be impaired. Seller
shall confer with Buyer on at least a daily basis to keep it
informed with respect to operational matters of a material nature
relating to Seller and to report the general status of the
ongoing operations of Seller. During the Interim Period, PHSI
and Buyer shall be responsible for all normal and ordinary
expenses of Seller associated with the operation of the business
of Seller (including without limitation, per diem rent,
utilities, occupancy costs, shipping payments, supplies,
salaries, wages and benefits) and arising in compliance with this
Section 1.4. Such expenses shall be paid by PHSI or Buyer when
due in the ordinary course, and if not so paid shall be added to
the Purchase Price. The obligations assumed by PHSI and Buyer
pursuant to this Section 1.4 are expressly limited to the
operating expenses arising during the Interim Period in the
ordinary and usual course of its business consistent with past
practice and any Cure Obligations with respect to the Assumed
Contracts. In no event shall PHSI or Buyer be responsible for
any expenses or other liabilities with respect to any period
prior to the commencement of the Interim Period, even if those
expenses or liabilities are paid or payable after the
commencement of the Interim Period other than the Cure
Obligations (collectively, other than the Cure Obligations,
"PRIOR PERIOD EXPENSES"). Notwithstanding the foregoing, PHSI or
Buyer, in their discretion, may pay any Prior Period Expenses
and, at their option, either (i) apply such Prior Period Expenses
so paid as a reduction of the Purchase Price or (ii) have the
right to assert an indemnifiable administrative expense claim in
respect thereof pursuant to Section 7.2 hereof.
1.5. TRANSFER TAXES. PHSI and Buyer shall be solely
responsible for any and all sales, excise, use or other similar
taxes or governmental charges which may be imposed or assessed as
a result of or in connection with the sale and purchase of the
Assets hereunder, together with any interest, additions or
penalties with respect thereto and any interest in respect of
such additions or penalties.
ARTICLE II
PURCHASE PRICE; CLOSING
2.1. PURCHASE PRICE. (a) The aggregate purchase
price for the sale and purchase of the Assets (the "PURCHASE
PRICE") shall be the amount equal to the sum of (i) $5,443,000
PLUS (ii) the price of the Inventory as determined based on the
methodology used in Schedule A to the letter agreement among
Seller and certain entities referred to as Agents dated February
25, 1999 ("SCHEDULE A"), as such methodology is applied to the
Inventory based on the inventory report (the "INVENTORY REPORT")
prepared by RGIS with respect to its inventory as of various
specified inventory dates (as such report-based price is
adjusted, using the Schedule A methodology, to reflect retail
sales in each Store either before (in the case of an inventory
conducted before the commencement of the Interim Period) or since
(in the case of an inventory taken after the commencement of the
Interim Period) the date of the inventory taken in such Store so
that the price of Inventory shall be based upon the Inventory at
the commencement of the Interim Period plus returns received
thereafter, and PLUS (iii) the price to be paid by Buyer for the
Returned Goods as determined in accordance with subsection (b)
below.
(b) The parties acknowledge that the Inventory
includes a substantial number and variety of returned goods that
have not been counted in the RGIS inventory (the "RETURNED
GOODS"). Between the date hereof and the Settlement Date (as
hereinafter defined), Seller and Buyer shall mutually agree in
good faith upon a fair and reasonable method of estimating
(through sampling or another mutually acceptable method) the
volume and composition of the Returned Goods or, if they cannot
so agree, Buyer shall at its expense conduct a physical count of
the Returned Goods under the supervision of Seller. Based upon
such estimation (or actual count), Seller and Buyer shall apply
thereto the pricing methodology used in Schedule A to determine
the price to be paid by Buyer for the Returned Goods hereunder.
(c) At Seller's direction, PHSI has previously paid
the amount of $1,000,000 to Heller Financial, Inc. ("HELLER"),
Seller's secured creditor, as an earnest money deposit (the
"EARNEST MONEY"), the payment of which is hereby acknowledged by
PHSI and Seller.
2.2. CLOSING. Upon the terms and subject to the
conditions set forth in this Agreement, the closing of the sale
and purchase of the Assets (the "CLOSING") shall take place
simultaneously with the execution and delivery of this Agreement
at the offices of Stoll, Keenon & Park, LLP, 201 East Main
Street, Lexington, Kentucky. The date and time at which the
Closing actually occurs is hereinafter referred to as the
"CLOSING DATE".
2.3. CLOSING MATTERS. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing:
(a) Buyer shall deliver to Heller that amount equal to
all outstanding principal, interest, costs and expenses owing to
Heller as of March 15, 1999(the "HELLER AMOUNT"), by wire
transfer of immediately available funds to the account designated
by Heller prior to the Closing.
(b) Buyer shall deliver an amount equal to (i) the
remainder of $9,000,000 MINUS the Heller Amount (such remainder
being the "REMAINING AMOUNT") PLUS (ii) the $30,000 amount of the
Breakup Fee referred to in Section 5.6 below (such aggregate
amount being the "ESCROW AMOUNT"), in escrow to Seller by wire
transfer of immediately available funds on March 15, 1999, in
such amount to the trust account of Fifth-Third Bank (the "ESCROW
AGENT" which term includes any successor escrow agent who becomes
the escrow agent of the Escrow Amount with the consent of both
Seller and Buyer (which consent shall not be withheld by either
party if such successor is a financial institution regulated by
state or federal banking authorities)).
(c) Seller shall deliver to Buyer such bills of sale,
endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, in form and substance
reasonably satisfactory to Buyer, as shall be effective to vest
in Buyer all of Seller's right, title and interest in and to the
Assets and, simultaneously therewith, will take such steps as may
be necessary to place Buyer in actual possession and operating
control of the Assets.
(d) Buyer shall deliver to Seller such written
undertakings, in form and substance reasonably satisfactory to
Seller, whereby Buyer shall assume and agree to perform the
Assumed Liabilities.
(e) Seller and Buyer shall deliver to each other such
other documents, certificates, instruments and writings required
to be delivered pursuant to Article VI of this Agreement or
otherwise required pursuant to this Agreement.
2.4. SETTLEMENT. (a) Immediately upon the assignment
to Buyer (or PHSI's assignee(s)) of the final Store Lease to be
assigned pursuant to the Assignment Order(s) (the "SETTLEMENT
DATE"), Seller and Buyer shall jointly instruct the Escrow Agent
in writing to distribute the Escrow Amount as follows:
(i) first, to Buyer, the amount of any Prior Period
Expenses payable to Buyer or PHSI pursuant to the final
sentence of Section 1.4;
(ii) second (and only to the extent of any remaining
amount of the Escrow Amount), to Seller, an amount equal to
the Purchase Price MINUS the Ernest Money and MINUS the
Heller Amount; and
(iii) third (and only to the extent of any remaining
amount of the Escrow Amount), to Seller, an amount of
$30,000 in respect of the Breakup Fee; and
(iv) fourth, to Buyer, any remaining amount of the
Escrow Amount.
(b) If the Purchase Price is in excess of $10,000,000
and, after the distributions set forth in subsection (a), Seller
has not received the full amount of the Purchase Price (after
taking into account the deductions therefrom for Prior Period
Expenses, the Earnest Money and the Heller Amount), then on the
Settlement Date, Buyer shall deliver to Seller the amount by
which the Purchase Price is in excess of $10,000,000, by wire
transfer of immediately available funds in such amount.
2.5. ALLOCATION OF PURCHASE PRICE. Within 30 days
after the Closing Date, Buyer and Seller shall mutually agree in
writing upon the allocation of the Purchase Price among the
various Assets. Each of Seller and Buyer agrees that it shall
report for federal, state, local and all other Tax purposes in a
manner consistent with such allocation, and that it shall not
take any position inconsistent with such allocation in connection
with any examination, claim, action or other proceeding by or
against any taxing authority or for any other purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to PHSI and Buyer
as follows (subject, in each case, to the limitations and
requirements imposed by law or the Bankruptcy Court in connection
with the Bankruptcy Case):
3.1. ORGANIZATION AND QUALIFICATION. Seller is duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Kentucky, and has all requisite power and
authority to own, lease and operate its properties and the Assets
and to carry on its business as now being conducted.
3.2. AUTHORITY. Subject to the Sale Order and the
Assignment Order(s), Seller has all requisite power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller, the
performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby have been duly authorized.
This Agreement has been duly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by
Seller do not, and the performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby will
not, (i) conflict with or violate the certificate of
incorporation or bylaws, in each case as amended or restated, of
Seller or (ii) conflict with or violate any United States
federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to Seller or by
or to which any of the Assets is bound or subject.
(b) Other than the Sale Order and the Assignment
Order(s), the execution and delivery of this Agreement by Seller
do not, and the performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not,
require Seller to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any
court, administrative agency or commission or other governmental
entity, authority or instrumentality, whether foreign or domestic
(a "GOVERNMENTAL ENTITY"), or any third party.
3.4. WARRANTY OF TITLE. Seller is the true and lawful
owner of the Assets (but, in the case of the FFE only, the
representations and warranties made in this Section 3.4 are made
only with respect to those items of FFE listed on SCHEDULE 3.4
attached hereto which are not leased by the Seller). Upon the
sale of the Assets to Buyer pursuant to this Agreement, (a) all
right, title and interest in and to all of the Assets, free and
clear of any and all liens, encumbrances, security interests,
mortgages, pledges, claims, charges, options or restriction of
any nature whatsoever including, without limitation, Seller's
right or equity of redemption, if any (collectively "LIENS") and
any and all Claims, will pass to Buyer on the Closing Date and
(b) subject only to the Assignment Order(s), all of the Assumed
Contracts included in the Assets shall be validly assigned to
Buyer and, except to the extent thereafter amended by Buyer,
Buyer shall have all of the rights and privileges thereunder
after the Closing Date to the same extent as though Buyer were
the original party thereto.
3.5. LEASES; CONTRACTS. (a) SCHEDULE 3.5 attached
hereto constitutes true, correct and complete list of all of the
Store Leases. Seller has delivered to Buyer true and complete
copies of all of the Store Leases and the Center Lease, each as
amended and in full force and effect.
(b) With respect to each of the Store Leases and the
Center Lease, (i) such lease creates a valid leasehold interest
in all premises or property purported to be leased thereunder,
(ii) Seller is in possession and quiet enjoyment of all of such
premises or property and (iii) such lease is valid, binding and
enforceable in accordance with its terms.
3.6. AFFILIATE ARRANGEMENTS. No current or former
director, officer or employee of Seller has an interest in any of
the Assets.
3.7. INTELLECTUAL PROPERTY. SCHEDULE 3.7 attached
hereto sets forth a true, correct and complete list of all of the
Intellectual Property that is patented, registered or otherwise
the subject of any filing with any Governmental Entity (other
than charter documents, qualifications to do business and other
similar documents filed with the secretaries of state or similar
officials of any jurisdiction). Seller is the true and lawful
owner of, and owns all right, title and interest in and to, all
of the Intellectual Property and, to Seller's Knowledge (as
hereinafter defined), (a) the use and registration of the
Intellectual Property do not infringe any rights of any other
person and are not being infringed by any other person and (b)
other than those threatened by John Peterman of which Buyer is
aware, there is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened, by or against Seller regarding
the ownership of, or rights to sell or use, any of the
Intellectual Property. For purposes of this Agreement, "SELLER'S
KNOWLEDGE" means the conscious awareness of John Rice.
3.8. PERMITS. To Seller's Knowledge, Seller possesses
all licenses, permits and other authorizations from Governmental
Entities required by applicable provisions of laws, ordinances,
rules and regulations (collectively, "PERMITS"), necessary for
the operation of Seller's business as it existed on the date of
filing of the petition in the Bankruptcy Case.
3.9. COMPLIANCE WITH LAW. To Seller's Knowledge,
Seller is in compliance with the terms and conditions of all of
the Permits and all laws, rules, regulations and orders
applicable to its business; and Seller has not received any
notification that Seller is in violation of any Permit or any
such law, rule, regulation or order.
3.10. YEAR 2000 COMPLIANCE. To the Seller's
knowledge, except as set forth on SCHEDULE 3.10 attached hereto,
Seller has reviewed the areas within its computer system,
business and operations which could be adversely affected by, and
has developed a program to address on a timely basis, the risk
that computer hardware or software used by Seller (or any of its
material suppliers, customers or vendors) in the receipt,
transmission, processing, manipulation, storage, retrieval or
other utilization of data or the operation of mechanical or
electrical systems of any kind may be unable to recognize and
perform properly date-sensitive functions involving dates prior
to and after December 31, 1999 (the "YEAR 2000 PROBLEM"). To the
Seller's knowledge, except as set forth on SCHEDULE 3.10 attached
hereto, the Year 2000 Problem will not result in any material
adverse effect on any of the Assets as a result of any failure on
the part of Seller.
3.11. BROKERS. Except as set forth in Section 5.6
hereof with respect to the Breakup Fee, no broker, finder or
investment banker, including any director, officer, employee,
affiliate or associate of Seller, is entitled to any brokerage,
finder's or other fee or commission payable by PHSI or Buyer in
connection with the transactions contemplated by this Agreement
based on arrangements made by or on behalf of Seller or any of
its affiliates.
3.12. NO OTHER REPRESENTATIONS AND WARRANTIES. Except
as set forth herein, Seller makes no representations and
warranties and the Assets are being sold to Buyer AS IS AND WHERE
IS without representation or warranty of any kind, including
warranties of merchantability or fitness for a particular
purpose.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as
follows:
4.1. ORGANIZATION AND AUTHORITY. Buyer is a
corporation duly organized and validly existing under the laws of
the State of Indiana, and has all requisite power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Buyer, the
performance of this Agreement by Buyer and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Buyer and no other
corporate proceeding on the part of Buyer is necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms.
4.2. NO CONFLICT; REQUIRED CONSENTS AND APPROVALS.
(a) The execution and delivery of this Agreement by
Buyer do not, and the performance of this Agreement by Buyer and
the consummation of the transactions contemplated hereby will
not, (i) conflict with or violate the Articles of Incorporation
or the By-Laws of Buyer or (ii) conflict with or violate any
United States federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree applicable
to Buyer or by or to which any of its properties or assets is
bound or subject.
(b) Other than the Sale Order and the Assignment
Order(s), the execution and delivery of this Agreement by Buyer
do not, and the performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby will not,
require Buyer to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any
court, administrative agency or commission or other Governmental
Entity, or any third party.
4.3. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Buyer.
ARTICLE V
COVENANTS
5.1. FURTHER ASSURANCES; COOPERATION. (a) At any
time and from time to time after the Closing, Seller shall, at
the reasonable request of Buyer and at Buyer's expense and
without further consideration to Seller, execute and deliver any
further bills of sale, endorsements, assignments and other
instruments of conveyance and transfer, and take such other
actions as Buyer may reasonably request in order (i) more
effectively to transfer, convey, assign and deliver to Buyer, and
to place Buyer in actual possession and operating control of, and
to vest, perfect or confirm, of record or otherwise, in Buyer all
right, title and interest in, to and under the Assets, (ii) to
assist in the collection or reduction to possession of any and
all of the Assets or to enable Buyer to exercise and enjoy all
rights and benefits with respect thereto, or (iii) to otherwise
carry out the intents and purposes of this Agreement. In the
case of rights (including, without limitation, under any Assumed
Contract) which cannot be transferred effectively without the
consent of third parties, Seller shall use its best efforts
(within commercially reasonable limits) to obtain such consent
and to assure to Buyer the benefits thereof during the respective
terms thereof.
(b) From and after the date hereof, the parties hereto
shall cooperate and respectively use all reasonable efforts to
take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate and make effective the
transactions contemplated by this Agreement. Without limitation
of the foregoing (i) Seller shall cooperate with, and not resist
or impede, any reasonable efforts by Buyer to sell any consigned
goods included in the Inventory Report and (ii) Buyer shall
cooperate with, and not resist or impede, any reasonable efforts
of Seller to pursue or defend its standing to assert its rights
in all causes of action, litigation and claims referred to in
Section 1.2(e) and (f).
5.2. BOOKS AND RECORDS. On the Closing Date, Seller
shall deliver to Buyer all of the Books and Records. However, if
at any time after the Closing Date, Seller or Buyer discover any
other Books and Records that have not been delivered to Buyer,
Seller shall promptly deliver them to Buyer. From and after the
Closing Date, Seller may retain copies of such Books and Records
as are reasonably necessary in connection with the administration
of the Bankruptcy Case and, during the pendency of the Bankruptcy
Case, Buyer shall make the same available for inspection and
copying by Seller or its authorized representatives at Seller's
expense, upon reasonable request and upon reasonable notice
during normal business hours. Seller shall not, and shall cause
its respective representatives not to, use or publicly disclose
any information retained or obtained pursuant to this Section 5.2
for any purpose unrelated to the administration of the Bankruptcy
Case.
5.3. CHANGE AND USE OF "J. PETERMAN" NAME. On or
prior to March 19, 1999, Seller shall amend its charter documents
so as to change its name to a name that does not include the
words "J. Peterman" or "Peterman" or any variations thereof, and
file as promptly as practicable after the Closing Date, in all
jurisdictions where it is qualified to do business, any documents
necessary to reflect such change. At any time and from time to
time after the Closing Date, Seller shall execute and deliver to
Buyer all consents reasonably requested by Buyer, and shall
otherwise reasonably cooperate with Buyer, in order to enable
Buyer lawfully to use the names "J. Peterman" and "Peterman" and
any variations thereof in which Buyer owns rights. From and
after the Closing Date, Seller shall immediately cease the use of
such name or any variations thereof for all purposes whatsoever
(except that such name may be referred to as a former name in any
tax or other filing required to be made with any Governmental
Entity or otherwise as shall be reasonably necessary in
connection with the administration of the Bankruptcy Case).
5.4. EMPLOYMENT MATTERS. Seller shall terminate the
employment of all of its employees as of the time immediately
prior to the Closing (other than those employees of Seller not
hired by Buyer, who may be retained by Seller for the purpose of
administering the Company's affairs in connection with the
Bankruptcy Case). Except as otherwise specifically provided in
Section 1.4, Seller shall be solely responsible for any and all
obligations, debts, Taxes, expenses, and other liabilities of any
kind, character or description, whether accrued, absolute,
contingent or otherwise, which may exist or arise as a result of
any wage claims, benefit claims, or other employment related
claims by or on behalf of, or with respect to, any employee of
Seller, including, without limitation, any of the foregoing
arising under any Employee Plan, collective bargaining agreement
or other employment related arrangement to which the present or
former employees of Seller are or were entitled (including any
severance arrangements) or any federal, state or local law or
regulation relating to the terms and conditions of employment by
Seller of any of its employees, or to the termination by Seller
of any of its employees. Although Buyer shall have no obligation
to employ any of Seller's employees in connection with or after
the transactions contemplated hereby, Buyer may, in its
discretion, employ any of such employees as new employees of
Buyer on or after the Closing Date.
5.5. COLBY INTERNATIONAL. In the event that Buyer
purchases from Colby International those certain goods purported
to be "on the docks" and owned by Colby International, promptly
upon such purchase, Buyer shall pay to Seller the amount of
$90,000 as additional consideration for the Assets, by wire
transfer of immediately available funds in such amount.
5.6. BREAKUP FEE. At the Closing and as a part of the
Escrow Amount, Buyer shall pay to Seller the amount of $30,000,
representing the $120,000 "breakup fee" specified in the
Bankruptcy Court's February 28, 199 Emergency Order Approving
Notice of Final Hearing and Bid Procedures (the "BREAKUP FEE"),
net of a credit of $90,000 for the amount referred to in Section
5.5 above (such credit to be applied notwithstanding that, as
provided in Section 5.5, such amount may never be required to be
paid by Buyer).
5.7. RGIS EXPENSES. Seller and Buyer each agrees to
be responsible for one-half of the fees and expenses charged by
RGIS in connection with its inventory of the Inventory.
5.8. RETURNED GOODS. In the event that, after the
Closing Date, Buyer accepts returned goods that were sold by
Seller prior to March 8, 1999, and Buyer determines not to
compensate the customer therefor (at Buyer's sole expense), Buyer
shall return such goods to the customer at Buyer's sole expense.
5.9. PUBLIC ANNOUNCEMENTS. From and after the date
hereof, Seller shall not issue any public report, statement or
press release or otherwise make any public statement regarding
this Agreement or the transactions contemplated hereby without
the prior written consent of Buyer, unless otherwise required by
applicable law or necessary and required in connection with the
Bankruptcy Case.
ARTICLE VI
CONDITIONS
6.1. CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer to consummate the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing
of the following conditions, any or all of which may be waived,
in whole or in part, to the extent permitted by applicable law,
in a written instrument executed and delivered by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Seller contained in this
Agreement shall have been true, correct and complete in all
material respects on and as of the Closing Date, as though made
on and as of the Closing Date.
(b) AGREEMENTS AND COVENANTS. Seller shall have
performed or complied with all agreements and covenants required
by this Agreement to be performed or complied with by Seller on
or prior to the Closing Date.
(c) OFFICER'S CERTIFICATE. Buyer shall have received
a certificate signed by an executive officer of Seller to the
effect set forth in Sections 6.1(a) and (b).
(d) SALE ORDER. The Sale Order shall be in full force
and effect, and the Sale Order shall not have been stayed,
amended, modified, dissolved, revoked or rescinded by the
Bankruptcy Court or any other Governmental Entity.
(e) NO LITIGATION, ETC. No litigation or other
proceeding by or before any Governmental Entity shall have been
instituted, and no Governmental Entity, including any federal or
state court of competent jurisdiction, shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent), which,
in either case, is in effect and which has the effect of making
the transactions contemplated by this Agreement illegal, or
otherwise restrains consummation of the transactions contemplated
hereby.
(f) PROCEEDINGS AND DOCUMENTS. All legal details and
other proceedings in connection with the transactions
contemplated hereby, and all documents and instruments incident
to such transactions, shall be reasonably satisfactory to Buyer
and its counsel.
6.2. CONDITIONS TO OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing
Date of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by
applicable law, in a written instrument executed and delivered by
Seller:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Buyer contained in this
Agreement shall have been true, correct and complete in all
material respects on and as of the Closing Date, as though made
on and as of the Closing Date.
(b) AGREEMENTS AND COVENANTS. Buyer shall have
performed or complied with all agreements and covenants required
by this Agreement to be performed or complied with by it on or
prior to the Closing Date.
(c) OFFICER'S CERTIFICATE. Seller shall have received
a certificate signed by an executive officer of Buyer to the
effect set forth in Sections 6.2(a) and (b).
(d) SALE ORDER. The Sale Order shall be in full force
and effect, and the Sale Order shall not have been stayed,
amended, modified, dissolved, revoked or rescinded by the
Bankruptcy Court or any other Governmental Entity.
(e) NO LITIGATION, ETC. No litigation or other
proceeding by or before any Governmental Entity shall have been
instituted, and no Governmental Entity, including any federal or
state court of competent jurisdiction, shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent), which,
in either case, is in effect and which has the effect of making
the transactions contemplated by this Agreement illegal, or
otherwise restrains consummation of the transactions contemplated
hereby.
(f) PROCEEDINGS AND DOCUMENTS. All legal details and
other proceedings in connection with the transactions
contemplated hereby, and all documents and instruments incident
to such transactions, shall be reasonably satisfactory to Seller
and its counsel.
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.1. PAYMENT OF EXPENSES. Whether or not the
transactions contemplated by this Agreement are consummated, each
party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the
transactions contemplated hereby, except as otherwise explicitly
set forth in this Agreement.
7.2. SURVIVAL; INDEMNIFICATION. (a) The
representations, warranties, covenants and agreements of the
parties contained herein shall survive the Closing until the
later of (i) the date that is six months after the Closing Date
and (ii) the date on which Seller files a Plan of Liquidation and
related Disclosure Statement with the Bankruptcy Court (the
period from the Closing Date until such later date being the
"SURVIVAL PERIOD").
(b) After the Closing Date, Seller shall indemnify and
hold Buyer and PHSI harmless from and against any liability,
loss, damage, claim, cost or expense (including, without
limitation, expenses of investigation and defense and reasonable
fees and disbursements of counsel), liens or other obligations of
any nature whatsoever (collectively, "LOSSES"), incurred by Buyer
or PHSI and arising out of or based upon (i) any breach by Seller
of its representations, warranties, covenants or agreements set
forth in this Agreement or in any document or instrument
delivered by Seller at the Closing pursuant hereto; (ii) any
claim, action, suit, proceeding or investigation of any kind, at
law or in equity, to the extent arising primarily from acts,
omissions, events or other conditions that occurred or existed
with respect to Seller or the Assets at any time prior to the
Closing and for which Buyer is not responsible under this
Agreement; or (iii) any obligations, debts, Taxes, operating
expenses, rent, utilities and other liabilities of Seller of any
kind, character or description, whether accrued, absolute,
contingent or otherwise, that are not expressly assumed or agreed
to be paid by Buyer pursuant to this Agreement above (including,
without limitation, any of the foregoing arising under any
Employee Plan, collective bargaining agreement or other
employment related arrangement to which the present or former
employees of Seller are or were entitled (including any severance
arrangements) or any federal, state or local law or regulation
relating to the terms and conditions of employment by Seller of
any of its employees, or to the termination by Seller of any of
its employees). Buyer and PHSI shall have the right to assert
any claims by Buyer or PHSI for indemnification hereunder as an
administrative expense claim in the Bankruptcy Case or in any
subsequent Chapter 11 or Chapter 7 bankruptcy case of Seller.
(c) Buyer and PHSI, jointly and severally, shall
indemnify and hold Seller harmless from and against any Losses
incurred by Seller and arising out of or based upon (i) any
breach by Buyer or PHSI of their representations, warranties,
covenants or agreements set forth in this Agreement or (ii) any
liabilities assumed or agreed to be paid by Buyer hereunder.
(d) The indemnification obligations of the parties
hereunder shall terminate upon the expiration of the Survival
Period; PROVIDED, HOWEVER, that with respect to any claim for
indemnification that is made in writing with reasonable
specificity prior to the expiration of the Survival Period, all
rights to indemnification in respect of such claim shall continue
until the final disposition of such claim.
7.3. ENTIRE AGREEMENT, ASSIGNMENT, ETC. This
Agreement (including the Exhibits and Schedules hereto)
constitutes the entire agreement, and supersedes all other
agreements, understandings, representations and warranties, both
written and oral, between the parties with respect to the subject
matter hereof, and shall not be assignable by operation of law or
otherwise and is not intended to create any obligations to, or
rights in respect of, any persons other than the parties hereto;
PROVIDED, HOWEVER, that Buyer may assign all or any part of its
rights and obligations hereunder to a wholly owned subsidiary of
Buyer (in which case such subsidiary shall be included within the
term "Buyer" for all purposes of this Agreement and shall be
jointly and severally liable for the obligations of Buyer
hereunder); PROVIDED, FURTHER, that in the event of any such
assignment, Buyer shall nevertheless remain fully responsible to
Seller for all obligations of Buyer hereunder.
7.4. CAPTIONS. The Article, Section and paragraph
captions herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof.
7.5. SEVERABILITY. If any term or other provision of
this Agreement, or any portion thereof, is invalid, illegal or
incapable of being enforced by any rule of law or public policy,
all other terms and provisions of this Agreement, or remaining
portion thereof, shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
materially adverse to any party.
7.6. MODIFICATION OR AMENDMENT. The parties hereto
may modify or amend this Agreement at any time, by written
agreement executed and delivered by the duly authorized officers
of each party hereto.
7.7. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given on the date delivered, if
delivered personally, on the fifth business day after being
mailed by registered or certified mail (postage prepaid, return
receipt requested), in each case, to the parties at the following
addresses, or on the date sent and confirmed by electronic
transmission to the telecopier number specified below (or at such
other address or telecopier number for a party as shall be
specified by notice given in accordance with this Section):
(a) If to Buyer or PHSI, to:
Paul Harris Stores, Inc.
6003 Guion Road
Indianapolis, IN 46250
Attention: Thomas McCain, Senior Vice
President and Chief Financial Officer
Telecopier No.: (317) 298-6828
with a copy to:
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, IN 46204
Attention: James M. Carr, Esq.
Telecopier No.: (317) 237-1000
(b) If to Seller, to:
The J. Peterman Company
c/o Stoll, Keenon & Park, LLP
201 East Main Street
Suite 1000
Lexington, KY 40507
Attention: Gregory D. Pavey, Esq.
Telecopier No.: (606) 253-1093
with a copy to:
Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, OH 45202
Attention: Stephen D. Lerner, Esq.
Telecopier No.: (513) 381-0205
No provision of this Agreement, including this Section,
shall be deemed to constitute consent to the manner and address
for service of process in connection with any legal proceeding
(including such arising out of or in connection with this
Agreement), which service shall be effected as required by
applicable law.
7.8. FAILURE OR DELAY NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty, covenant or agreement herein, nor
shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
7.9. COUNTERPARTS. This Agreement may be executed in
the original or by telecopy in any number of counterparts, each
of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument. Each
officer of any party hereto who signs this Agreement or any other
agreement or other document delivered in connection with the
transactions contemplated hereby shall be deemed to have signed
the same in his or her capacity as an officer of such party, and
not in his or her individual capacity.
7.10. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the law of the Commonwealth
of Kentucky, without regard to the conflicts of laws principles
thereof.
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<PAGE>
IN WITNESS WHEREOF, this Asset Purchase Agreement has
been duly executed and delivered by the duly authorized officers
of each of the parties hereto as of the date first written above.
THE J. PETERMAN COMPANY
By /S/ JOHN R. RICE
Name: John R. Rice
Title: Senior Vice President
PAUL HARRIS STORES, INC.
By /S/ THOMAS MCCAIN
Name: Thomas McCain
Title: Senior Vice President
and Chief Financial Officer
PETERMAN ACQUISITION CORP.
By /S/ THOMAS MCCAIN
Name: Thomas McCain
Title: Treasurer
