SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K
__________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 26, 1996
HARTMARX CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 1-8501 36-3217140
(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
101 NORTH WACKER DRIVE 60606
CHICAGO, ILLINOIS 60606 (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: 312-372-6300
(Not Applicable)
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(Former name or former address, if changed since last year)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 26, 1996 (the "Closing Date"), a wholly-
owned subsidiary of the Registrant acquired substantially
all of the license rights, current assets, properties and
operations of the Plaid Clothing Group, Inc. and its
subsidiaries ("Plaid") pursuant to an Asset Purchase
Agreement ("Agreement") dated as of November 5, 1996, as
amended on November 26, 1996. Plaid has been operating
as a debtor-in-possession under Chapter 11 of the United
States Bankruptcy Code since July 17, 1995. The purchase
price for the acquired assets was as a result of arms-
length negotiations among unrelated parties.
At the Closing Date, consideration for the assets
acquired consisted of a cash payment of $27 million,
assumption of $7.1 million of accounts payable and other
scheduled liabilities, a future royalty payment of 2% of
the first year sales of certain brand names acquired in
the transaction, less $.5 million, and certain other
payments described in the Agreement. The purchase price
paid at closing is subject to further adjustment pursuant
to the Agreement, based upon the determination of working
capital as of the final closing date balance sheet. The
cash paid for the assets purchased was made from
available borrowing capacity under the Registrant's
existing revolving credit facility which is in effect
through July 2000.
In addition, in order to facilitate the goodwill and
cooperation of Plaid's unsecured creditors, such
unsecured creditors will receive the proceeds resulting
from the exercise of a five-year warrant to purchase
400,000 shares of Registrant's common stock, exercisable
at $5.50 per share, and the sale of the underlying
shares, pursuant to an exercise formula.
The acquired assets included license rights to
manufacture and market men's tailored suits, sportcoats
and slacks under the Burberry's, Claiborne and Evan-
Picone brands, as well as ownership of the Palm Beach and
Brannoch trade names. The inventory and receivables
associated with the above-described brands and trade
names were also purchased along with production,
warehouse and distribution facilities located in
Knoxville, TN (owned), Somerset, KY (owned),
Chambersburg, PA (leased), and Erlanger, KY (leased).
The Registrant has continued to operate such facilities
subsequent to the closing, but intends to close the
Chambersburg facility within 12 months.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
It is impractical at this time to provide the
financial information as required by this Item 7(a). In
accordance with Items 7(a)(4) of Form 8-K, audited
financial information for each of the two years ended
December 31, 1995 and for the period from January 1, 1996
through the closing date, along with a statement of
assets acquired and liabilities assumed as of the closing
date, will be filed by amendment to this Form 8-K as soon
as practical, but no later than February 10, 1997.
(b) Pro forma financial information.
It is impractical at this time to provide the pro
forma financial information required by this Item 7(b).
In accordance with Item 7(b) of Form 8-K, pro forma
financial information will be filed by amendment to this
Form 8-K as soon as practical, but no later than February
10, 1997.
(c) Exhibits
Exhibit Number
2.1 Asset Purchase Agreement
dated November 5, 1996
among HMX/PBP Company,
Hartmarx Corporation and
Plaid Clothing Group, Inc.
and certain affiliates.
2.2 Amendment No.1, dated
November 26, 1996, to the
Asset Purchase Agreement.
2.3 Press Release, dated
November 22, 1996.
2.4 Press Release, dated
November 27, 1996.
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, in the City of Chicago, State
of Illinois.
Dated: December 10, 1996
HARTMARX CORPORATION
By:---------------------
Glenn R. Morgan
Executive Vice
President, Chief
Financial Officer
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBER DESCRIPTION NUMBERED PAGE
2.1 Asset Purchase Agreement
dated November 5, 1996
among HMX/PBP Company,
Hartmarx Corporation
and Plaid Clothing Group,
Inc. and certain affiliates.
2.2 Amendment No. 1, dated
November 26, 1996, to the
Asset Purchase Agreement.
2.3 Press Release,
dated November 22, 1996
2.4 Press Release,
dated November 27, 1996
Exhibit 2.1
Asset Purchase Agreement
dated as of November 5, 1996
by and among
HMX/ PBP Company,
Hartmarx Corporation
and
Plaid Clothing Group Inc., Plaid Retail Group Inc.,
Plaid Investment Co., Inc., Plaid Finance Corp.,
Plaid International Inc., Palm Beach Company, Inc.,
J. Schoeneman, Inc., Schoeneman Enterprises Holding, Inc.,
Schoeneman Enterprises, Inc. and Ambrook Manufacturing, Inc.
Table of Contents
PAGE
Article I
Basic Transaction
Section 1.1 Acquired Assets . . . . . . . . . . . . . . . . 2
Section 1.2 Excluded Assets . . . . . . . . . . . . . . . . 3
Section 1.3 Rejected Assets . . . . . . . . . . . . . . . . 4
Section 1.3.1 Right to Reject Assets . . . . . . . . . 4
Section 1.3.2 Removal of Rejected Assets . . . . . . . 5
Section 1.4 Assumed Liabilities . . . . . . . . . . . . . . 5
Section 1.5 Excluded Liabilities . . . . . . . . . . . . . . 6
Section 1.6 Consideration . . . . . . . . . . . . . . . . . 8
Section 1.6.1 Purchase Price . . . . . . . . . . . . . 8
Section 1.6.2 Royalties . . . . . . . . . . . . . . . 10
Section 1.6.3 Cincinnati Employee Payments . . . . . . 11
Section 1.7 Allocation of the Consideration . . . . . . . . 11
Article II
Closing of the Transaction
Section 2.1 The Closing . . . . . . . . . . . . . . . . . . 11
Section 2.2 Deliveries at the Closing . . . . . . . . . . . 12
Article III
Conditions to Obligations
Section 3.1 Conditions to Obligations of Buyer . . . . . . . 12
Section 3.1.1 Representations and Warranties . . . . . 12
Section 3.1.2 No Material Changes . . . . . . . . . . 12
Section 3.1.3 Due Diligence . . . . . . . . . . . . . 12
Section 3.1.4 Performance . . . . . . . . . . . . . . 13
Section 3.1.5 Consents; Liens; Licenses . . . . . . . 13
Section 3.1.6 Successful Bidder . . . . . . . . . . . 13
Section 3.1.7 Cincinnati Lease . . . . . . . . . . . . 13
Section 3.1.8 Chambersburg Lease . . . . . . . . . . . 14
Section 3.1.9 CIT Agreements . . . . . . . . . . . . . 14
Section 3.1.10 Board Approval . . . . . . . . . . . . 14
Section 3.1.11 Collective Bargaining Agreement . . . . 14
Section 3.1.12 Assignment Order . . . . . . . . . . . 14
Section 3.1.13 Sale Order . . . . . . . . . . . . . . 14
Section 3.1.14 Litigation . . . . . . . . . . . . . . 14
Section 3.1.15 Other Documents . . . . . . . . . . . . 15
Section 3.1.16 Financial Statements . . . . . . . . . 16
Section 3.2 Waiver of Buyer s Conditions . . . . . . . . . . 16
Section 3.3 Conditions to Sellers Obligations . . . . . . . 16
Section 3.3.1 Representations and Warranties . . . . . 16
Section 3.3.2 HSR Period . . . . . . . . . . . . . . . 16
Section 3.3.3 Assignment Order . . . . . . . . . . . . 16
Section 3.3.4 Sale Order . . . . . . . . . . . . . . . 17
Section 3.3.5 CIT Approval . . . . . . . . . . . . . . 17
Section 3.3.6 Performance . . . . . . . . . . . . . . 17
Section 3.4 Waiver of Sellers Conditions . . . . . . . . . 17
Article IV
Representations and Warranties
Section 4.1 Representations and Warranties of Sellers . . . 17
Section 4.1.1 Organization of Sellers . . . . . . . . 17
Section 4.1.2 Authorization . . . . . . . . . . . . . 17
Section 4.1.3 Noncontravention . . . . . . . . . . . . 18
Section 4.1.4 Brokers Fees . . . . . . . . . . . . . 18
Section 4.1.5 Subsidiaries and Investments . . . . . . 18
Section 4.1.6 Financial Statements . . . . . . . . . . 18
Section 4.1.7 Absence of Certain Developments . . . . 19
Section 4.1.8 Compliance with Laws . . . . . . . . . . 20
Section 4.1.9 Title to Properties . . . . . . . . . . 20
Section 4.1.10 Real Property . . . . . . . . . . . . . 20
Section 4.1.11 Intellectual Property . . . . . . . . . 23
Section 4.1.12 Contracts and Commitments . . . . . . . 23
Section 4.1.13 Insurance . . . . . . . . . . . . . . . 24
Section 4.1.14 Litigation . . . . . . . . . . . . . . 24
Section 4.1.15 Product . . . . . . . . . . . . . . . . 25
Section 4.1.16 Employee Benefit Plans . . . . . . . . 25
Section 4.1.17 Environment, Health and Safety . . . . 26
Section 4.1.18 Insider Interests . . . . . . . . . . . 27
Section 4.1.19 Closing Date . . . . . . . . . . . . . 27
Section 4.2 Representations and Warranties of Buyer . . . . 27
Section 4.2.1 Organization of Buyer . . . . . . . . . 27
Section 4.2.2 Authorization of Transaction . . . . . . 27
Section 4.2.3 Noncontravention . . . . . . . . . . . . 27
Section 4.2.4 Financial Capacity to Perform . . . . . 27
Section 4.2.5 Brokers Fees . . . . . . . . . . . . . 28
Section 4.2.6 Closing Date . . . . . . . . . . . . . . 28
Article V
Covenants
Section 5.1 Pre-Closing Covenants of Sellers . . . . . . . . 28
Section 5.2 Approval of the Sale Order . . . . . . . . . . . 30
Section 5.3 Reasonable Access . . . . . . . . . . . . . . . 30
Section 5.4 Cooperation . . . . . . . . . . . . . . . . . . 30
Article VI
Employee Matters
Section 6.1 Employment of Certain Employees . . . . . . . . 31
Section 6.2 Union Matters . . . . . . . . . . . . . . . . . 31
Section 6.3 Chambersburg . . . . . . . . . . . . . . . . . . 32
Article VII
Licenses, Contracts and Leases
Section 7.1 Executory Contracts, Licenses and Leases
of Seller . . . . . . . . . . . . . . . . . . 32
Section 7.2 Nonassignable Contracts . . . . . . . . . . . . 33
Section 7.3 Performance of Obligations . . . . . . . . . . . 33
Article VIII
Additional Agreements
Section 8.1 Press Releases . . . . . . . . . . . . . . . . . 34
Section 8.2 Transaction Expenses . . . . . . . . . . . . . . 34
Section 8.3 Certain Taxes . . . . . . . . . . . . . . . . . 34
Section 8.4 Further Assurances . . . . . . . . . . . . . . . 34
Section 8.5 Transition Assistance . . . . . . . . . . . . . 35
Section 8.6 Confidentiality . . . . . . . . . . . . . . . . 35
Section 8.7 Sellers Names . . . . . . . . . . . . . . . . . 35
Section 8.8 Communications . . . . . . . . . . . . . . . . . 35
Section 8.9 Accounts Receivable . . . . . . . . . . . . . . 35
Section 8.10 Dismissal of Chapter 11 Case . . . . . . . . . 36
Article IX
Termination
Section 9.1 Termination . . . . . . . . . . . . . . . . . . 36
Section 9.2 Effect of Termination . . . . . . . . . . . . . 36
Section 9.3 Waiver of Right to Terminate . . . . . . . . . . 37
Article X
Miscellaneous
Section 10.1 No Third Party Beneficiaries . . . . . . . . . 37
Section 10.2 Successors and Assigns . . . . . . . . . . . . 37
Section 10.3 Counterparts . . . . . . . . . . . . . . . . . 37
Section 10.4 Headings . . . . . . . . . . . . . . . . . . . 37
Section 10.5 Notices . . . . . . . . . . . . . . . . . . . . 37
Section 10.6 Governing Law . . . . . . . . . . . . . . . . . 39
Section 10.7 Survival . . . . . . . . . . . . . . . . . . . 39
Section 10.8 Amendments and Waivers . . . . . . . . . . . . 39
Section 10.9 Incorporation of Exhibits and Schedules . . . . 39
Section 10.10 Construction . . . . . . . . . . . . . . . . . 39
Section 10.11 Remedies . . . . . . . . . . . . . . . . . . . 40
Section 10.12 Risk of Loss . . . . . . . . . . . . . . . . . 40
Section 10.13 Severability . . . . . . . . . . . . . . . . . 40
Section 10.14 Entire Agreement . . . . . . . . . . . . . . . 40
Section 10.15 Hartmarx s Obligation . . . . . . . . . . . . 40
Index of Exhibits and Schedules
Exhibits
Exhibit A . . . . . . . . Defined Terms
Exhibit B . . . . . . . . . . Sale Order
Schedules
Schedule 1-A . . . . . .. . . . . Real Property
Schedule 1-B . . . . . . . . Excluded Trademarks
Schedule 1-C . . . Excluded Knoxville Equipment
Schedule 1-D . . . . . . . . . Accounts Payable
Schedule 1-E . . . . . . . . . Employee Payables
Schedule 1-F . . . . . Other Assumed Liabilities
Schedule 1-G . . Acquired Brands and Projections
Schedule 1-H . . . . Cincinnati Employee Payments
Schedule 1-I . . . . . . . . . . . . . Allocation
Schedule 1-J . . Chambersburg Pant Shop Equipment
Schedule 3-A . . . Consents, Liens and Licenses
Schedule 4-A . . . Jurisdiction of Incorporation
Schedule 4-B . . . . . . . . . . . . . Litigation
Schedule 4-C . . . Subsidiaries and Investments
Schedule 4-D . . . . . . . Financial Statements
Schedule 4-E . . . . . . . . . . . . . [Reserved]
Schedule 4-F . . . . . . . . . . . . Developments
Schedule 4-G . . . . . . . . Real Property Leases
Schedule 4-H . . . . . . . . . . . . . [Reserved]
Schedule 4-I . . . . . . . Intellectual Property
Schedule 4-J . . . . . Contracts and Commitments
Schedule 4-K . . . . . . . . . . . . . Insurance
Schedule 4-L . . . . . . Employee Benefit Plans
Schedule 5-A . . . . . . Benefit Plan Arrangements
Schedule 6-A . . . . . . . . . . . . . . Employees
Schedule 7-A . . . . . . . . . . . . . .Cure Costs
Asset Purchase Agreement
This Agreement (this "Agreement") is entered into as of
November 5, 1996, by and among HMX/PBP Company ("Buyer"),
Hartmarx Corporation ("Hartmarx") (but solely for purposes of
Sections 4.2.2 - 4.2.4, 10.8 and 10.15) and Plaid Clothing Group
Inc. ("Plaid"), Plaid International Inc. ("PII"), Plaid Retail
Group Inc. ("PRG), Plaid Investment Co., Inc. "PIC"), Plaid
Finance Corp. ("PFC"), Palm Beach Company, Inc. ("PBC"),
J. Schoeneman, Inc. ("JSI"), Schoeneman Enterprises Holding, Inc.
("SEH"), Schoeneman Enterprises, Inc. ("SEI") and Ambrook
Manufacturing, Inc. ("AMI") (together with Plaid, PBC, PII, JSI,
PRG, PIC, PFC, SEH, AMI and SEI, each a "Seller," and
collectively, the "Sellers"). Buyer and Sellers are referred to
collectively herein as the "Parties." Capitalized terms used
herein and not otherwise defined are defined in Exhibit A hereto.
Whereas, subject to the terms and conditions set forth in
this Agreement, Sellers desire to sell to Buyer, and Buyer
desires to acquire from Sellers, substantially all of the
businesses, assets, real property and personal properties of each
of Sellers (as defined herein, the "Acquired Assets").
Whereas, on July 17, 1995 (the "Petition Date"), each of
Sellers filed a voluntary petition for relief under Chapter 11 of
Title 11 of the Bankruptcy Code, 11 U.S.C. SECTION 101 et seq., which
cases are currently before the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court"),
jointly administered under the caption In re Plaid Clothing
Group, Inc. et al., Case No. 95 B 43065 (collectively, the
"Chapter 11 Case"). Sellers have remained in possession of their
assets and continued in the management and operation of their
businesses pursuant to Sections 1107 and 1108 of the Bankruptcy
Code.
Whereas, on or about October 16, 1996, Hartmarx and Sellers
entered into a Letter of Intent (the "Letter of Intent") to
provide for, among other things, (a) the sale of the Acquired
Assets, (b) the reimbursement of certain of Hartmarx's costs and
expenses incurred in connection with the proposed sale of the
Acquired Assets in certain circumstances and (c) the procedures
for offers in connection with the sale of the Acquired Assets,
which procedures were presented for approval to the Bankruptcy
Court by motion dated October 16, 1996 (the "Procedures Motion").
On or about October 24, 1996, the Bankruptcy Court entered an
order granting the Procedures Motion (the "Procedures Order").
Now, Therefore, in consideration of the mutual promises
herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties,
intending to be legally bound, hereby agree as set forth herein.
Article I
Basic Transaction
Section 1.1 Acquired Assets. On and subject to the terms
and conditions of this Agreement, and subject to the satisfaction
of the conditions precedent set forth herein, at the Closing,
Buyer shall purchase, acquire and accept from Sellers, and
Sellers shall sell, transfer, convey, assign and deliver to
Buyer, all their right, title and interest in, to and under all
of the assets and property of Sellers, of every kind and
description, wherever located, and whether real, personal or
mixed, tangible or intangible, as such assets and property shall
exist on the Closing Date, including, without limitation:
(a) all Cash;
(b) all Accounts Receivable;
(c) all Pre-Paid Expenses;
(d) all Real Property;
(e) all Inventory;
(f) all Assigned Contracts;
(g) all Intellectual Property and Intellectual
Property Licenses;
(h) all Authorizations, variances and similar rights
obtained from Authorities affecting or relating in any way to the
Acquired Assets or the Assumed Liabilities;
(i) all right, title and interest in and to all
insurance proceeds arising out of or related to the Acquired
Assets or the Assumed Liabilities;
(j) all right, title and interest in and to the
personal property, vehicles, machinery and equipment (including
leasehold interests in equipment subject to capitalized leases to
the extent assignable), spare parts, office furniture, office
fixtures and supplies used or useful in connection with the
Acquired Assets or the Assumed Liabilities, wherever located
(including any such property located at any Leased Real Property
regardless of whether the lease with respect thereto is assigned
to Buyer) and whether owned or leased, including equipment to be
installed at any facility;
(k) all lists and records pertaining to customer
accounts (whether past or current), suppliers, distributors,
personnel and agents and all other books, ledgers, files,
documents, correspondence and business records relating to the
Acquired Assets or the Assumed Liabilities;
(l) all claims, warranties, guarantees, refunds,
causes of action, rights of recovery, rights of set-off and
rights of recoupment of every kind and nature affecting or
relating in any way to the Acquired Assets or the Assumed
Liabilities;
(m) all books, records, ledgers, files, documents,
correspondence, lists, drawings, specifications, advertising and
promotional materials, studies, reports and other materials
whether in hard copy, microfiche, film, video, computer or other
format, used or affecting or relating in any way to the Acquired
Assets or the Assumed Liabilities;
(n) all other property owned by Sellers or in which
Sellers have an interest as of the Closing Date.
All of the foregoing are collectively referred to herein as the
"Acquired Assets." Except for the Assumed Liabilities, as
expressly set forth herein, the Acquired Assets will be conveyed
to Buyer free and clear of any and all Liens, claims,
encumbrances, debt, security interests and causes of action of
any kind or nature.
Section 1.2 Excluded Assets. Notwithstanding the
foregoing, the Acquired Assets shall not include any of the
following assets or property (collectively, the "Excluded
Assets"):
(a) the capital stock of any Seller owned by any other
Seller;
(b) the minute and stock transfer books, Tax Returns,
corporate records, accounting records, any documents which
Sellers are required by law to retain in its possession and other
documents relating to the organization, maintenance and existence
of each Seller as a corporation, and all documents required in
connection with the Chapter 11 Cases; provided, however, that
Buyer shall be given reasonable access to, and may make copies
of, such documents as they exist as of the Closing Date.
(c) any claims or causes of action of Sellers arising
under Sections 542, 543, 544, 545, 547, 548, 549, 551 or 553 of
the Bankruptcy Code;
(d) any rights, claims, counterclaims or causes of
action not related to, or arising in connection with, the
Acquired Assets or the Assumed Liabilities;
(e) all insurance policies in existence as of the
Closing Date, subject to Buyer's rights to insurance proceeds
pursuant to Section 1.1(i);
(f) any insurance rights or claims of any Seller not
related to, or arising in connection with, the Acquired Assets or
the Assumed Liabilities;
(g) any assets of any Employee Benefit Plan,
including, without limitation, any assets of any Employee Pension
Plan or Employee Welfare Plan;
(h) any assets and properties (real or personal) of
Sellers that, in the ordinary course of business, were located at
Sellers' closed facility in Wilmington, Delaware as of
September 1, 1996;
(i) the Excluded Trademarks;
(j) any refunds or repayments owing to Sellers arising
from any overpayment by Sellers of premiums for workers
compensation insurance relating to claims arising at any time
prior to the Closing;
(k) the Excluded Knoxville Equipment;
(l) any Rejected Assets;
(m) any and all assets of Sellers which infringe upon
or are otherwise in conflict with the proprietary rights of any
third party;
(n) any of the rights of Sellers under the Transaction
Documents;
(o) all escrow funds related to Excluded Liabilities,
except as otherwise agreed upon by the parties;
(p) all goodwill associated with the Acquired Assets
and Assumed Liabilities; and
(q) in the event that either (i) the Union employees
at the Chambersburg facility fail to ratify that certain
agreement, dated November 4, 1996, among the Union, Hartmarx and
Sellers (the "Union Ratification") or (ii) Sellers despite their
best efforts, shall have failed to obtain for Buyer either (x) an
agreement with the lessor under the lease covering the
Chambersburg, Pennsylvania facility (the "Chambersburg Lease") or
(y) assurances satisfactory to Buyer that Buyer will be provided
at least 12 months' access to such facility, in either case on
terms and conditions satisfactory to Buyer, and either such event
results in any administrative claims for severance payments or
damages relating to termination of the Chambersburg Lease (either
of items (i) or (ii) above, a "Chambersburg Event") then Excluded
Assets shall include the Chambersburg Pant Shop Equipment;
provided that such equipment shall be liquidated promptly by
Sellers and all proceeds therefrom in excess of (1) all
administrative claims resulting from the occurrence of a
Chambersburg Event (2) $350,000 shall be promptly paid over to
Buyer.
Section 1.3 Rejected Assets.
Section 1.3.1 Right to Reject Assets. Buyer shall
have the right to reject any portion of any of the Acquired
Assets, other than the Designated Licenses (the "Rejected
Assets"), without adjustment to the Purchase Price by providing
written notice to Plaid of Buyer's election to reject any such
assets at least two business days prior to the hearing on the
Sale Motion, in which event such Rejected Assets shall be deemed
Excluded Assets for purposes of this Agreement; provided,
however, that to the extent such Rejected Assets include any
Inventory or Accounts Receivables related to the Excluded
Trademarks, the Parties shall negotiate, in good faith, an
appropriate reduction to the Purchase Price.
Section 1.3.2 Removal of Rejected Assets. Buyer
shall provide Sellers and their duly authorized representatives
with reasonable access to Buyer's facilities following the
Closing to permit the removal and/or disposition by Sellers from
such facilities of any of the Rejected Assets.
Section 1.4 Assumed Liabilities. On and subject to the
terms and conditions of this Agreement, and subject to the
satisfaction of the conditions precedent set forth herein, Buyer
shall assume only the following obligations and liabilities
(collectively, the "Assumed Liabilities") of any of Sellers (and
the omission of any obligation or liability from this section
shall be deemed an affirmative agreement by the Parties that such
obligation or liability shall not be assumed by Buyer):
(a) any trade (including payables for piece goods and
trim) and other accounts payable (including for employee payroll,
utilities and supplies) of Sellers as identified on Schedule 1-D,
to the extent set forth on the Closing Balance Sheet (other than
the footnotes thereto, if any), but only to the extent such
liabilities: (i) are properly recorded thereon, (ii) have been
incurred in the ordinary course of business consistent with past
custom and practice, and (iii) are of the same type and nature as
those liabilities of Sellers, with respect to Acquired Assets and
Assumed Liabilities, set forth on the face of the Prior Balance
Sheets, none of which relates to any (A) Taxes (to the extent not
expressly agreed to be paid by Buyer pursuant hereto), (B) any
intercompany note payables or any intercompany indebtedness for
borrowed money, (C) breach of contract, (D) breach of warranty,
(E) tort, (F) infringement, (G) workers' compensation claims or
liabilities, obligations or reserves relating to any workers'
compensation insurance program or arrangement, (H) violation of
law, (I) any action, suit or proceeding (including, without
limitation, any obligation or liability arising under any
Environmental, Health and Safety Laws or product liability laws),
or (J) subject to the penultimate sentence of Section 1.6, health
insurance or other medical benefits;
(b) any accrued vacation and holiday pay, and the
payment obligations set forth in the penultimate sentence of
Section 1.6, and certain other accrued union and non-union
employee benefit obligations as identified on Schedule 1-E, to
the extent set forth on the Closing Balance Sheet, but excluding
any and all severance obligations;
(c) solely to the extent that the aggregate of the
Assumed Liabilities specified in subsection (a) and subsection
(b) of this Section 1.4 are less than the Maximum Assumed
Payables, other current liabilities of Sellers identified on
Schedule 1-F (which schedule shall be prepared by Sellers, but
subject to Buyer s approval), but only to the extent such
liabilities are set forth on the Closing Balance Sheet, it being
understood that, notwithstanding the foregoing limitations, in no
event shall the Assumed Liabilities specified in subsections (a),
(b) and (c) of this Section 1.4 be less than or greater than the
Maximum Assumed Payables;
(d) any liabilities and obligations to the extent
arising solely, and attributable to actions, conditions or events
occurring solely, after the Closing Date and relating exclusively
to (i) the Assigned Contracts, (ii) the assumed Intellectual
Property Licenses (including the Designated Licenses), (iii) that
certain headquarters lease of Sellers in New York, New York (the
"HQ Lease"), and (iv) outstanding purchase orders of inventory
(other than purchase orders under which any Seller or the third-
party supplier is in default) made by Sellers to suppliers (but
only to the extent, in the sole and reasonable discretion of
Buyer, that such orders were made on price and quantity terms,
and otherwise consistent with, Sellers' normal course of business
and past custom and practice); and in each case, only to the
extent such contracts, licenses, leases and purchase orders are
identified and expressly designated on the Assigned Contracts
List and are actually assigned to Buyer; and
(e) any other specific liabilities and obligations, if
any, expressly assumed by Buyer under this Agreement and the
Approval Order.
Section 1.5 Excluded Liabilities. Notwithstanding anything
contained herein to the contrary, except as expressly set forth
in Section 1.4 hereof, Buyer shall not assume or in any way
become liable for any of the debts, liabilities or obligations of
any nature whatsoever of any Seller or any predecessor thereof,
whether presently existing or arising hereafter, whether accrued,
absolute or contingent, whether known or unknown, whether
disclosed on the Schedules hereto or otherwise or undisclosed,
whether due or to become due and whether related to the Acquired
Assets or otherwise, and regardless of when or by whom incurred,
including, without limitation:
(a) any liabilities of Sellers incurred or arising or
relating to actions, conditions or events occurring prior to the
Petition Date;
(b) any liabilities of Sellers incurred outside the
ordinary course of business of Sellers;
(c) any liabilities of Sellers which relate to the
Chapter 11 Case or any professional fees or expenses (including,
without limitation, consultants , attorneys , accountants and
other agents fees and expenses associated therewith);
(d) any liabilities of Sellers which are not
specifically listed on Schedule 1-D, Schedule 1-E or Schedule 1-
F;
(e) any liabilities of Sellers of the kinds specified
in subsection (a), subsection (b) and subsection (c) of
Section 1.4 to the extent the aggregate of such liabilities
exceeds the Maximum Assumed Payables;
(f) any liabilities of Sellers for expenses, Taxes or
fees incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement or the consummation
(or preparation for the consummation) of the transactions
contemplated hereby (including, without limitation, all
attorneys and accountants fees, brokerage fees and sales, use
and transfer taxes);
(g) any liabilities of Sellers for indebtedness for
borrowed money, indebtedness secured by Liens on its assets or
guarantees of any of the foregoing;
(h) any liabilities of Sellers for Taxes for any
period;
(i) any liabilities or obligations for Taxes arising
from or with respect to the Acquired Assets which is incurred in,
attributable to, or assessed in any period or portion thereof
prior to or in connection with the Closing (including property
taxes and sales, occupation, use or transfer taxes that may be
incurred in connection with the consummation of the transactions
contemplated hereby);
(j) any liabilities of Sellers (i) arising by reason
of any violation or alleged violation of any federal, state,
local or foreign law or any requirement of any Government
Authority, (ii) arising under or relating to any Environmental,
Health and Safety Laws, or (iii) arising by reason of any breach
or alleged breach by any Seller of any agreement, contract,
lease, license, commitment, instrument, judgment, order or decree
(regardless of when any such liability or obligation is asserted
or liquidated);
(k) any liabilities of Sellers arising by reason of or
relating to any legal action or proceeding arising out of or in
connection with the Acquired Assets or any conduct of Sellers or
Sellers officers, directors, employees, consultants, agents,
advisors, shareholders or lenders, as of or prior to the Closing,
relating to the Acquired Assets (including, without limitation,
any liabilities or obligations for any claims (whenever made) or
proceedings arising out of, relating to, resulting from or caused
by any products manufactured, serviced, distributed or sold by
Sellers at any time on or prior to the Closing Date);
(l) any liabilities of Sellers which Buyer may or
could become liable for as a result of or in connection with the
failure by Buyer or Sellers to comply with any applicable bulk
sales or transfers laws;
(m) any liabilities of Sellers, whether known or
unknown, and whether accrued, absolute, contingent or otherwise,
relating to severance, dismissal and/or WARN pay with respect to
any employee of any Seller;
(n) except as may be expressly set forth in Schedule
1-E, any liabilities of Sellers for salaries, bonuses (including,
without limitation, retention bonuses) or other compensation;
(o) any of Sellers liabilities or obligations for
workers compensation claims, health care claims or similar
claims, subject to the penultimate sentence of Section 1.6; and
(p) any liability or obligation of any Seller, whether
known or unknown, and whether accrued, absolute, contingent or
otherwise, and not expressly assumed by Buyer under Section 1.4
(including, without limitation, any liabilities or obligations
arising out of transactions entered into at or prior to the
Closing, any action or inaction at or prior to the Closing or any
state of facts existing at or prior to the Closing, regardless of
when asserted).
All of the foregoing are collectively referred to herein as the
"Excluded Liabilities." Each Seller hereby acknowledges that it
is retaining its Excluded Liabilities.
Section 1.6 Consideration. The total consideration (the
"Consideration") hereunder for the Acquired Assets shall consist
of (a) the Purchase Price, (b) the Royalties, (c) the Cincinnati
Employee Payments, and (d) the assumption by Buyer of the Assumed
Liabilities, as each is calculated and as each may be adjusted
pursuant to the terms of this Agreement. As part of the Assumed
Liabilities, prior to the Closing, in a manner acceptable to
Buyer and Sellers, Buyer agrees to fund an amount not to exceed
$600,000, which amount represents an estimate of benefits payable
under the Plaid Medical Plan that are accrued but unpaid as of
the Closing Date and for related administrative expenses, up to
the amount of such liabilities reflected on the Closing Balance
Sheet ("Accrued Claim Amount"), provided, that, (a) to the extent
that the actual amount of such claims and expenses is less than
the Accrued Claim Amount, Sellers shall be entitled to the
excess, and (b) to the extent that the actual amount of such
claims and expenses is more than the Accrued Claim Amount, Buyer
shall not be liable for any portion of the excess. Buyer shall
not assume any obligation to pay any medical or dental benefits
to or on behalf of any employee or former employee (or any
dependent) covered under the Plaid Medical Plan.
Section 1.6.1 Purchase Price.
Section 1.6.1.1 Basic Amount. At the Closing,
Buyer shall pay cash in the amount of $36,000,000, less such
amount as may be determined in accordance with Section 1.3.1,
subject further to adjustment and hold-back as set forth in this
Section 1.6.1 (the "Purchase Price"), to Sellers (subject to any
applicable prorations) by wire transfer of immediately available
funds to Sellers account (or accounts) in accordance with
written instructions to be given by Sellers to Buyer at least two
business days prior to the Closing.
Section 1.6.1.2 Closing Date Adjustment. Not
less than two business days before the Closing Date, Sellers
shall, in good faith and in accordance with GAAP and prepared in
a manner consistent with the Prior Balance Sheets, prepare an
estimated balance sheet (the "Estimated Balance Sheet") of
Sellers as of the open of business on the Closing Date on a
reasonable basis using Sellers then best available financial
information. In connection with the preparation of the Estimated
Balance Sheet on a mutually agreed upon date prior to the Closing
Date, Sellers and Buyer, including their respective
representatives, shall observe a full physical count by Sellers
of all inventory of Sellers. The Estimated Balance Sheet shall
be prepared on a basis consistent with the Prior Balance Sheets,
and shall, among other things, estimate Accounts Receivable,
Inventory and Pre-Paid Expenses ("Estimated Accounts Receivable,"
"Estimated Inventory" and "Estimated Pre-Paid Expenses"
respectively, and collectively, the "Closing Date Estimates");
provided, however, that if Buyer does not agree with any or all
of the Closing Date Estimates prepared by Sellers, Buyer may, in
its discretion, in good faith and in accordance with GAAP,
estimate any or all of Accounts Receivable, Inventory and Pre-
Paid Expenses of Sellers as of the open of business on the
Closing Date, and in such event, for purposes of this section,
the Closing Date Estimates shall be deemed to be equal to the
average of Sellers' and Buyer's good faith determination thereof.
At the Closing, the Purchase Price will be increased (if such
amount is positive) or decreased (if such amount is negative),
dollar-for-dollar, by the following amount (the "Closing Date
Adjustment"):
the sum of (a) the result of Estimated Accounts
Receivable minus $22,565,000, multiplied by .90, (b)
the result of Estimated Inventory minus $32,283,000,
multiplied by .70 and (c) the result of Estimated Pre-
Paid Expenses minus $1,053,000.
In preparing the Estimated Balance Sheet, Sellers shall exclude
(i) any Accounts Receivable that are not owned, legally and
beneficially, 100% by Sellers or by CIT, (ii) any Pre-Paid
Expenses representing fees or other expenses arising in or
related to the Chapter 11 Case, and (iii) the Excluded Assets,
and Sellers shall include in Estimated Inventory the Unsold
Brooks Finished Inventory.
Section 1.6.1.3 Closing Date Hold-Back. On the
Closing Date, in anticipation of the post-closing determination
and adjustment described in Sections 1.6.1.4 and 1.6.1.5, Buyer
shall hold back and retain from the Purchase Price an amount
equal to the absolute value of the Closing Date Adjustment plus
$500,000 (the "Closing Date Hold-Back"). The Closing Date Hold-
Back is expressly subject to the provisions of Section 1.6.1.5.
Section 1.6.1.4 Post-Closing Determination.
Within 20 days after the Closing Date, Buyer shall, in good faith
and in accordance with GAAP, prepare a final balance sheet (the
"Closing Balance Sheet") of Sellers as of the open of business on
the Closing Date on a reasonable basis using the then best
available financial information. The Closing Balance Sheet shall
be prepared on a basis consistent with the Prior Balance Sheets
and the Estimated Closing Balance Sheet, and shall, among other
things, state Accounts Receivable, Inventory and Pre-Paid
Expenses ("Final Accounts Receivable," "Final Inventory" and
"Final Pre-Paid Expenses" respectively, and collectively, the
"Closing Date Balances"). Buyer shall give Sellers and their
representatives a full and complete opportunity to observe and
participate in the preparation of the Closing Balance Sheet, and
shall make available to Sellers all records and work papers used
in preparing the Closing Balance Sheet. If Sellers believe that
the Closing Balance Sheet was not prepared in accordance with
GAAP and consistent with the Prior Balance Sheets or contains one
or more manifest errors, then Sellers may, within fifteen days
after receipt of the Closing Balance Sheet, deliver a notice (an
"Objection Notice") to Buyer setting forth in reasonable detail
all disputed items and the amounts thereof in Sellers
calculation of the disputed amount(s). The Parties will use
reasonable efforts to resolve, in good faith, any disagreements
as to such computations, but if they do not obtain a final
resolution within thirty days after Buyer has received the
Objection Notice, the Parties will jointly retain an independent
accounting firm of recognized national or regional standing (the
"Accounting Firm") to resolve any remaining disagreements. If
the Parties are unable to agree on the choice of the Accounting
Firm, the Accounting Firm shall be a "big-six" accounting firm
selected by lot (after excluding one firm designated by Buyer and
by Sellers). The Parties shall use their best efforts to cause
the Accounting Firm to resolve all disagreements over such
disputed items as soon as practicable, the Parties and their
respective employees shall cooperate with the Accounting Firm
during its engagement. The determination of the Accounting Firm
will be conclusive and binding upon the Parties. The Parties
shall bear the costs and expenses of the Accounting Firm based on
the percentage which the portion of the contested amount not
awarded to each party bears to the amount actually contested by
such party. Buyer shall deduct Sellers' obligation under the
preceding sentence (up to a maximum of $50,000) from the Closing
Date Hold-Back and remit such amounts in satisfaction of such
obligation. In preparing the Closing Balance Sheet, Final
Inventory shall include the Unsold Brooks Finished Inventory.
Section 1.6.1.5 Post-Closing Adjustment.
Within five business days after either the Parties agree upon, or
the Accounting Firm's determination of, the Closing Date
Balances, a final increase or decrease to the Purchase Price (the
"Final Adjustment") shall be calculated as follows:
the sum of (a) the result of Final Accounts Receivable
minus
$22,565,000, multiplied by .90, (b) the result of Final
Inventory minus
$32,283,000, multiplied by .70 and (c) the result of
Final Pre-Paid Expenses
minus $1,053,000.
Buyer shall pay to Sellers (if such amount is positive), or
Sellers shall pay to Buyer (if such amount is negative), the sum
of (a) the Closing Date Hold-Back and (b) the Final Adjustment by
wire transfer of immediately available funds plus interest
accrued thereon from the Closing Date to the date of payment at a
rate of 7% per annum (which obligation shall be joint and several
among the obligors).
Section 1.6.1.6 Application of GAAP. All
determinations pursuant to this Section 1.6.1 shall be made in
accordance with GAAP.
Section 1.6.2 Royalties. Buyer shall pay to Sellers,
on or before the 45th day following the first anniversary of the
Closing Date, cash in an amount (the "Royalties") equal to 2% of
Buyer s Net Sales Revenues during the first year following the
Closing in respect of those product categories acquired by Buyer
from Sellers, as set forth on Schedule 1-G (the "Product
Categories"). In the event that Buyer sells or discontinues,
prior to the first anniversary of the Closing Date, any of the
businesses relating to the Product Categories, the sales of which
are included in Sellers' September 1996 sales forecast for 1997,
which projections appear opposite each Product Category on
Schedule 1-G (the "Projections"), then revenues generated from
sales for any such sold Product Categories shall be deemed equal
to the projected annual sales for such Product Categories as
reflected in the Projections. For purposes of this section, "Net
Sales Revenue" shall mean revenues generated from sales, net of
returns, discounts and allowances, each as determined in
accordance with GAAP.
Section 1.6.3 Cincinnati Employee Payments. Buyer
agrees to offer employment on an at-will basis to each employee
of Sellers employed at Sellers' Cincinnati, Ohio facility as of
October 16, 1996 and also employed on the date immediately prior
to the Closing Date (collectively, the "Cincinnati Employees").
As an inducement to accept such short-term at-will employment,
Buyer agrees to pay each Cincinnati Employee within two business
days after termination of his or her employment by Buyer the
amount set forth on Schedule 1-H (collectively, the "Cincinnati
Employee Payments"), as such schedule may be amended by Buyer
through the Closing. Notwithstanding anything to the contrary
contained herein, Buyer shall not assume any severance
obligations for any employee or former employee of any of Sellers
or their predecessors.
Section 1.7 Allocation of the Consideration. The
Consideration shall be allocated among the Acquired Assets in
such manner as Buyer may determine, as reflected on Schedule 1-I
(as such Schedule may be amended by Buyer prior to Closing, and
adjusted to reflect the adjustments set forth herein). Each
Seller shall agree to such allocation and will file all necessary
forms to effectuate such allocation. All allocations made
pursuant to this Section shall be binding upon the Parties and
upon each of their successors and assigns, and the Parties shall
report the transaction herein in accordance with such allocations
for tax purposes and shall not take any position on any tax
return that is inconsistent therewith.
Article II
Closing of the Transaction
Section 2.1 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at a place and time mutually agreed to by the Parties, on the
later of (a) the eleventh day after the entry by the Bankruptcy
Court of the Sale Order, or such earlier date after the entry of
such Sale Order that Buyer elects in its sole discretion to
proceed with the Closing prior to such eleventh day; and (b) the
first business day subsequent to the entry by the Bankruptcy
Court of the Sale Order on which there is no stay of the Sale
Order or the Closing in effect; or such other time as the parties
agree (the "Closing Date"). Notwithstanding the foregoing, the
Closing is expressly subject to the satisfaction or waiver of
each of the conditions to closing set forth in Article III
hereof. The parties hereto agree that time is of the essence
with respect to the transactions contemplated hereby.
Section 2.2 Deliveries at the Closing. At the Closing,
each Seller shall convey to Buyer good and marketable title to
all of its Acquired Assets, free and clear of all Liens, claims,
charges, security interests and other encumbrances, and deliver
to Buyer special warranty deeds, bills of sale, assignments of
leases and contracts, documents acceptable for recordation in the
United States Patent and Trademark Office, the United States
Copyright Office and any other similar domestic or foreign
office, department or agency, all in form and substance
satisfactory to Buyer and its counsel and any other instruments
of conveyance (collectively, "Conveyance Documents") which are
necessary or desirable to effect transfer of such Acquired Assets
to Buyer. Each Party shall deliver to the other Parties the
other documents, instruments or certificates required to be
delivered as a condition precedent to such other Parties
obligations pursuant to Sections 3.1 and 4.1. Each Seller shall
deliver to Buyer certification pursuant to Treasury Regulation SECTION
1.1445-2(b)(2) that such Seller is not a foreign person.
Simultaneously with the deliveries described in this section,
Sellers will take such steps as may be necessary to put Buyer in
immediate actual possession and operating control of the Acquired
Assets.
Article III
Conditions to Obligations
Section 3.1 Conditions to Obligations of Buyer. The
obligation of Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions as of the Closing:
Section 3.1.1 Representations and Warranties. The
representations and warranties of Sellers contained herein, in
the other Transaction Documents and in all certificates and other
documents delivered by Sellers to Buyer pursuant hereto and
thereto or in connection with the transactions contemplated
herein shall be true and correct in all material respects
(without regard to any qualifications as to materiality or
material adverse effect) at and as of the Closing Date as though
then made and as though the Closing Date were substituted for the
date of this Agreement.
Section 3.1.2 No Material Changes. There shall have
been no Material Adverse Effect or a material adverse change in
the Spring 1997 order book (including, without limitation,
quantity of units, price terms and conditions and suppliers) of
Sellers, in each case where such change occurs after the time
Buyer s condition to Closing set forth in Section 3.1.3 has been
satisfied or waived.
Section 3.1.3 Due Diligence. Sellers shall have
provided Buyer and its accountants, consultants and attorneys
sufficient access to the Acquired Assets and Sellers books and
records to complete its legal, accounting and business due
diligence review of Sellers (including, without limitation,
factory and facility inspections, review of the Schedules hereto,
any amendments or supplements thereof and the items referred to
therein, environmental due diligence, review and evaluation of
the condition and aging of accounts receivable and inventory,
review of financial statements for the calendar year ending
December 31, 1995, review of management information systems, and
a review and comparative analysis of actual performance versus
projected performance with respect to, among other things,
margins, revenues, gross profits and selling, general and
administrative expenses) and any and all benefit plans maintained
or contributed to by any of Sellers. Buyer's right of access
shall include the right to enter upon any of the Acquired Assets
to conduct an environmental investigation of said Assets, which
investigation may include, in the sole judgment of Buyer,
environmental testing (including, but not limited to, soil
testing, surface or groundwater testing, air monitoring, testing
of the integrity of underground storage tanks, and sampling of
suspect asbestos-containing materials), Sellers shall cooperate
with Buyer to complete this investigation. Buyer's obligation to
consummate the transactions contemplated hereby is subject to
Buyer being satisfied in its sole discretion with the results of
such due diligence review; provided, however, that Buyer shall be
deemed to have waived this condition (other than with respect to
any Environmental Matters with respect to which this condition
shall remain in effect until Closing) if, prior to November 13,
1996 at 5:00 P.M. New York time, Buyer shall not have provided
Sellers with written notice of Buyer's disapproval of the results
of such due diligence review.
Section 3.1.4 Performance. Sellers shall have
performed and complied in all material respects with all
covenants and agreements required by this Agreement and the
Letter of Intent to be performed or complied with by Sellers on
or prior to the Closing Date.
Section 3.1.5 Consents; Liens; Licenses. All
consents, permits, approvals, licenses and other authorizations
(including, without limitation, any necessary environmental
consents, permits and approvals) by foreign, federal, state and
local governmental agencies that are required for the
consummation of the transactions contemplated hereby or by third
parties that are required in order to prevent a breach of, or a
default under or a termination or modification of, any contract
to which the Acquired Assets are subject (including, without
limitation, (a) the expiration or early termination of any and
all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR Act )
and (b) the written consents of the licensors under the
Designated Licenses to the assignment to Buyer (without cost to
Buyer or, except with respect to the payment of Cure Costs,
Seller) of the Designated Licenses), the absence of which would
have a Material Adverse Effect or which is listed on Schedule 3-
A, will have been obtained.
Section 3.1.6 Successful Bidder. Buyer shall be the
successful bidder in the auction, if any, regarding the Acquired
Assets.
Section 3.1.7 Cincinnati Lease. Buyer shall have (a)
entered into an agreement with the lessor under the lease
covering the Cincinnati, Ohio facility, or (b) otherwise obtained
assurances satisfactory to Buyer that Buyer will be provided at
least 240 days access to such facility, in either case on terms
and conditions satisfactory to Buyer.
Section 3.1.8 Chambersburg Lease. Buyer shall have
obtained assurances satisfactory to Buyer that Buyer will be
provided at least 12 months access to the Chambersburg facilities
on terms and conditions satisfactory to Buyer.
Section 3.1.9 CIT Agreements. CIT shall have (a)
approved this Agreement (subject only to CIT's right to withdraw
such approval if it determines, in its sole and absolute
discretion, that the consummation of the transactions
contemplated by this Agreement will not result in the
indefeasible payment in full and in cash of all of Seller's
obligations to CIT (excluding the claims of CIT's participants)
at the Closing) and such approval shall not have been withdrawn,
(b) released and turned over to Buyer all property or assets in
its possession, custody and control (directly or indirectly,
beneficially or legally) that represent Acquired Assets
(including, but not limited to any proceeds in or submitted to
any lock-box accounts) and (c) agreed to release and turn over to
Buyer any property or assets that come into its possession,
custody and control after the Closing that represent Acquired
Assets and to cooperate with Buyer and provide Buyer with
documents and information relating to such property and assets to
the extent reasonably requested by Buyer (together, the "CIT
Agreements"). CIT shall have executed such agreement, documents,
instruments and certificates as Buyer reasonably requests to
insure satisfaction of the conditions set forth in this section.
Section 3.1.10 Board Approval. Buyer's board of
directors shall have approved the transactions contemplated
hereby and the form, terms and conditions of this Agreement.
Section 3.1.11 Collective Bargaining Agreement.
Sellers shall have entered into a new collective bargaining
agreement with the Union on terms and conditions satisfactory to
Buyer.
Section 3.1.12 Assignment Order. The Bankruptcy
Court shall have entered the Assignment Order, in form and
substance satisfactory to Buyer, directing Sellers to assume and
assign to Buyer the Assigned Contracts (including the HQ Lease
and the Designated Licenses), which licenses, Designated
Licenses, contracts and leases shall be assigned, subject to the
provisions of Section 7.1, without any cure cost to Buyer or
adequate assurance of future performance liability pursuant to
Sections 365(b) and 365(f)(2) of the Bankruptcy Code.
Section 3.1.13 Sale Order. The Bankruptcy Court
shall have entered, and the clerk of the court shall have entered
on the docket, on or before November 15, 1996, the Sale Order, in
form and substance satisfactory to Buyer, authorizing Sellers to
enter into and consummate this Agreement and confirming that
Buyer constitutes a good faith purchaser within the meaning of
Section 363(m) of the Bankruptcy Code.
Section 3.1.14 Litigation. No action or proceeding
before any court or government body, other than any appeal of the
Sale Order, will be pending or threatened which is reasonably
likely to result in a Material Adverse Effect, prevent the
carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
Section 3.1.15 Other Documents. On the Closing Date,
Sellers will have delivered to Buyer each of the following:
(a) a certificate signed by Sellers in a form
reasonably satisfactory to Buyer, dated the Closing Date, stating
that the conditions specified in Sections 3.1.1, 3.1.2 and 3.1.4
have been satisfied;
(b) certified copies of the resolutions duly adopted
by the board of directors of each Seller authorizing the
execution, delivery and performance of this Agreement and the
other agreements contemplated hereby, and the consummation of the
transactions contemplated hereby, each as contemplated in
compliance with Section 4.1.2 hereof;
(c) evidence of title insurance as follows:
(i) with respect to the Real Property, Buyer
shall have obtained, at Buyer's sole cost and expense,
an ALTA Owner's (or Leasehold owner's, as applicable)
Title Insurance Policy or Policies Form B-1992 issued
by a title insurance company satisfactory to Buyer (the
"Title Policy"), together with copies of all underlying
title documents identified therein, insuring fee simple
title to the Real Property to be in Buyer as of the
Closing Date, subject only to the Permitted Exceptions
(as defined in Section 4.1.10(a)(i) hereof) in such
amount as Buyer determines to be the fair market value
(including all improvements thereon) of the Real
Property issued thereunder. The Title Policy shall
contain an extended coverage endorsement deleting all
standard printed exceptions, an ALTA Zoning Endorsement
3.1, with parking, a survey endorsement, a contiguity
endorsement, if applicable, and an access endorsement
evidencing legal access to the Real Property and such
other endorsements as reasonably requested by Buyer;
(ii) such further affidavits, agreements and
assurances (including "gap" and other indemnities)
reasonably and customarily required by the title
insurer in order to facilitate Buyer's efforts and
ability to obtain the Title Policy; and
(iii) with respect to the Real Property, and
as to which a Title Policy is to be procured, Buyer
shall have obtained, at Buyer's sole cost and expense,
a current survey of the Real Estate, certified to
Buyer, the title insurer, any third party lending
institution designated by Buyer and any other party
reasonably designated by Buyer, prepared by a licensed
surveyor and conforming to current ALTA Minimum Detail
Requirements for Land Title Surveys, disclosing the
location of all improvements, easements, party walls,
sidewalks, roadway, utility lines and other matters
customarily shown on such surveys and showing access
affirmatively to public streets and roads (the
"Survey"); provided, that (other than Permitted
Exceptions) the Survey shall not disclose any survey
defect or encroachment from or onto the Real Property
which has not been cured or insured over prior to the
Closing; and
(d) an affidavit of service and publication from
Sellers evidencing compliance with the order of the Bankruptcy
Court, dated October 28, 1996, regarding notice of the Hearing on
the motion seeking approval and authorization for the Sale Order
(the "Sale Motion").
Section 3.1.16 Financial Statements. Buyer shall
have received from Sellers (i) financial information sufficient
to permit Buyer and Hartmarx, in their sole and absolute
discretion, and without additional cost to Buyer (or Hartmarx),
to satisfy their obligations with respect to applicable law,
including, without limitation, all securities laws, rules and
regulations with respect to the transactions (which may require
Sellers to provide Buyer and/or Hartmarx certified financial
statements for periods preceding the Closing) and (ii) such
unaudited financial statements of Sellers for the current year
through the most recent period for which such financial
statements are available, prepared in accordance with GAAP.
Section 3.2 Waiver of Buyer's Conditions. Any conditions
specified in Section 3.1 may be waived by Buyer, in whole or in
part, without the need to provide any additional notice to the
Bankruptcy Court or any creditor or other party in interest other
than Sellers by proceeding to close; provided, that no such
waiver (other than a waiver of Section 3.1.3 that is deemed to
have occurred pursuant to the terms of such Section) will be
effective unless it is set forth in a writing executed by Buyer.
Section 3.3 Conditions to Sellers Obligations. Except as
otherwise expressly provided in this Agreement, the obligation of
Sellers to consummate the transactions contemplated hereby is
subject to the satisfaction of the following conditions on or
before the Closing Date:
Section 3.3.1 Representations and Warranties. The
representations and warranties of Buyer and Hartmarx contained
herein, in the other Transaction Documents and in all
certificates and other documents delivered by Buyer to Sellers
pursuant hereto and thereto or in connection with the
transactions contemplated hereby shall be true and correct in all
material respects at and as of the Closing as though then made
and as though the Closing Date were substituted for the date of
this Agreement.
Section 3.3.2 HSR Period. Any and all applicable
waiting periods under the HSR Act shall have expired or been
terminated.
Section 3.3.3 Assignment Order. The Bankruptcy Court
shall have entered the Assignment Order authorizing Sellers to
assume and assign to Buyer the Assigned Contracts (including the
HQ Lease and the Designated Licenses).
Section 3.3.4 Sale Order. The Bankruptcy Court shall
have entered, and the clerk of the court shall have entered on
the docket, on or before November 15, 1996, the Sale Order.
Section 3.3.5 CIT Approval. CIT shall have approved
the Purchase Agreement (subject only to CIT's right to withdraw
such approval if it determines, in its sole and absolute
discretion, that the consummation of the transactions
contemplated by this Agreement will not result in the
indefeasible payment in full and in cash of all of Seller's
obligations to CIT (excluding the claims of CIT's participants)
at the Closing) and such approval shall not have been withdrawn.
Section 3.3.6 Performance. Buyer and Hartmarx shall
have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing
Date.
Section 3.4 Waiver of Sellers Conditions. Any conditions
specified in Section 3.3 may be waived by Sellers, in whole or in
part, without the need to provide notice to the Bankruptcy Court
or any creditor or other party in interest other than Buyer;
provided, that no such waiver will be effective unless it is set
forth in a writing executed by Sellers.
Article IV
Representations and Warranties
Section 4.1 Representations and Warranties of Sellers. As
a material inducement to Buyer to enter into and perform its
obligations under this Agreement, each Seller jointly and
severally represents and warrants to Buyer as follows:
Section 4.1.1 Organization of Sellers. Each Seller
is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is
qualified to do business in every jurisdiction in which the
failure to so qualify could have a material adverse effect on the
business, assets, condition (financial or otherwise), operating
results or prospects of such Seller or of the Acquired Assets.
Schedule 4-A attached hereto lists the state of incorporation of
each Seller and all of the jurisdictions in which such Seller is
qualified to do business as a foreign corporation. The copies of
each Seller s certificate of incorporation and bylaws which have
been furnished to Buyer, reflect all amendments made thereto at
any time prior to the date of this Agreement and are correct and
complete and in compliance with all applicable provisions of law.
Section 4.1.2 Authorization. Except for the entry of
the Sale Order, the execution, delivery and performance by each
Seller of this Agreement, the Transaction Documents and the
transactions contemplated hereby have been duly and validly
authorized by each Seller and no other corporate act or
proceeding on the part of any Seller, its board of directors or
its stockholders is necessary to authorize the execution,
delivery or performance by such Seller of this Agreement or any
Transaction Document or the consummation of the transactions
contemplated hereby. Subject to Entry of the Sale Order, this
Agreement has been duly executed and delivered by each Seller and
this Agreement and the other Transaction Documents to which each
Seller is a party each constitute a valid and binding obligation
of such Seller, enforceable against such Seller in accordance
with their respective terms.
Section 4.1.3 Noncontravention. Subject to the entry
of the Sale Order and the Assignment Order, neither the execution
and the delivery of the Transaction Documents, nor the
consummation of the transactions contemplated thereby, shall
(a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other
restriction of any government, governmental agency, or court to
which any Seller is subject or any provision of the articles of
incorporation or bylaws of any Seller which would have a Material
Adverse Effect, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under, any agreement, contract,
lease, license, instrument or other arrangement that represents
an Assigned Contract or to which any of the Acquired Assets is
subject, which would have a Material Adverse Effect, or (c)
result in the imposition of any Lien upon any of the Acquired
Assets. No Seller is required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval
of, any government or governmental agency in order for the Party
to consummate the transactions contemplated by the Transaction
Documents, except as may be required under the HSR Act.
Section 4.1.4 Brokers Fees. No Seller has any
liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions
contemplated by the Transaction Documents.
Section 4.1.5 Subsidiaries and Investments. Except
as set forth on Schedule 4-C attached hereto, at all times prior
to the date hereof, no Seller has had any Subsidiaries other than
other Sellers. Except as set forth on Schedule 4-C attached
hereto, no Seller owns, directly or indirectly, any stock,
partnership interest or joint venture interest in, or any
security or equity interest issued by, any other Person or any
option or right to acquire any of the foregoing.
Section 4.1.6 Financial Statements. Schedule 4-D
attached hereto contains the following financial statements
(collectively the "Financial Statements"):
(a) the consolidated and consolidating (audited with
respect to the year ended December 31, 1994) balance sheets of
Sellers as of December 31, 1995, and December 31, 1994 and the
related consolidated statements of income, shareholders' equity
and changes in financial position for the twelve-month periods
then ended; and
(b) the consolidated unaudited balance sheet of
Sellers as of May 31, 1996 (the "May Balance Sheet").
Each of the Financial Statements has been based on information
contained in Sellers books and records and fairly presents, in
all material respects, Sellers financial condition and results
of operations as of the times and for the periods referred to
therein, and each of the Financial Statements have been prepared
in accordance with GAAP.
Section 4.1.7 Absence of Certain Developments.
(a) Except as set forth in Schedule 4-F or as
authorized pursuant to any order entered by the Bankruptcy Court,
since May 31, 1996, Sellers have conducted their business only in
the ordinary course of business consistent with past custom and
practice (taking into account their position as debtors in
possession, including their liquidity and constraints imposed by
their lenders), have incurred no liabilities other than in the
ordinary course of business consistent with past custom and
practice (excluding liabilities directly relating to the Chapter
11 Case, such as professional fees), and have not:
(i) sold, assigned or transferred any of
Sellers' assets, except in the ordinary course of
business consistent with past custom and practice, or
mortgaged, pledged or subjected them to any Lien,
except for Liens for current property Taxes not yet due
and payable, or canceled without fair consideration any
material debts or claims owing to or held by them;
(ii) sold, assigned, transferred, abandoned
or permitted to lapse any licenses or permits which,
individually or in the aggregate, are material to the
Acquired Assets or any portion thereof, or any of the
Intellectual Property, Intellectual Property Licenses
or other intangible assets, or disclosed any material
proprietary confidential information to any Person,
except in the ordinary course of business consistent
with past custom and practice, or granted any license
or sublicense of any rights under or with respect to
any Intellectual Property or Intellectual Property
Licenses;
(iii) made or granted any increase in, or
amended or terminated, any existing employee plan,
program, policy or arrangement to which any Seller is a
party or contributes or which any Seller maintains,
including, without limitation, any Employee Benefit
Plan, or adopted any new employee benefit plan or
arrangement, or amended or renegotiated any existing
collective bargaining agreement or entered into any new
collective bargaining agreement or multi-employer plan;
(iv) conducted its cash management practices
(including the collection of receivables, payment of
payables and maintenance of inventory control and
pricing and credit practices) other than in the usual
and ordinary course of business consistent with past
custom and practice (taking into account Sellers
position as debtors in possession, including their
liquidity and constraints imposed by their lenders); or
(v) suffered any extraordinary loss, damage,
destruction or casualty loss or waived any rights of
material value, whether or not covered by insurance and
whether or not in the ordinary course of business or
consistent with past custom and practice.
(b) No party (including any Seller) has accelerated,
terminated, modified, or canceled any contract, lease, sublease,
license, sublicense or other agreement set forth on the Assigned
Contracts List.
Section 4.1.8 Compliance with Laws. Other than with
respect to the nonpayment of claims, each Seller and its
predecessors have complied with all laws, including the
regulations promulgated pursuant thereto, and court or
administrative orders and processes (other than ERISA and
Environmental, Health and Safety Laws, which matters are
addressed in Sections 4.1.16 and 4.1.17, respectively), where the
failure to so comply would have a Material Adverse Effect, and no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
or threatened against any of them alleging any failure to comply
with such laws, regulations, orders or processes which is
reasonably likely to have a Material Adverse Effect.
Section 4.1.9 Title to Properties.
(a) Subject to the entry of the Sale Order, Sellers
have good and marketable title, free and clear of all Liens
(other than Liens for current Taxes not yet due and payable and
Liens otherwise reflected on the Financial Statements) to all of
the Acquired Assets other than the Real Property used in the
conduct of Sellers business.
(b) The Acquired Assets (other than cash and
inventory), together with the Excluded Assets, constitute all
assets that are owned or leased that Sellers use to conduct their
business and operations as of the date hereof.
Section 4.1.10 Real Property.
(a) Schedule 1-A lists all Real Property (other than
the Sellers' Real Property located in Wilmington, Delaware) that
Sellers own in fee (the "Owned Real Property"), including a legal
description thereof. With respect to each parcel of Owned Real
Property of each Seller and subject to entry of the Sale Order:
(i) such Seller (as the case may be) has
good and marketable title to such parcel of real
property, free and clear of any Lien, easement,
covenant, condition or other restriction, except for
installments of real property taxes and special
assessments not yet delinquent, zoning laws, ordinances
and regulations affecting the Owned Real Property,
provided the same are not violated by existing
improvements or the current use and operation of the
Owned Real Property, and recorded easements, covenants,
conditions and other restrictions which do not
individually or in the aggregate impair the current
use, occupancy, value or marketability of title of the
parcel of real property subject thereto (the "Permitted
Exceptions") and except for those matters listed in the
title reports and surveys described on Schedule 1-A;
(ii) there are no pending or threatened
condemnation proceedings, lawsuits or administrative
actions relating to the parcel of Owned Real Property
or other matters affecting materially and adversely the
current use, occupancy or value thereof;
(iii) the improvements located on the parcel
of Owned Real Property are supplied with utilities and
other services necessary for the operation thereof; the
improvements are in compliance, in all material
respects, and have been operated and maintained by such
Seller in accordance with, in all material respects,
all applicable laws, rules and regulations (other than
Environmental, Health and Safety Laws, which matters
are addressed in Section 4.1.17); and all approvals of
Governmental Authorities (including licenses, permits
and certificates) required in connection with the
ownership or operation thereof have been obtained;
(iv) there are no leases, subleases,
licenses, concessions or other agreements, written or
oral, granting to any party the right of use or
occupancy of any portion of the parcel of Owned Real
Property, other than those set forth in Schedule 1-A;
(v) there are no outstanding options or
rights of first refusal granted by Sellers to purchase
the parcel of Owned Real Property, or any portion
thereof or interest therein, other than those set forth
in Schedule 1-A;
(vi) there are no parties in possession of
the parcel of Owned Real Property, other than Sellers,
other than those set forth in Schedule 1-A;
(vii) none of the improvements on the Owned
Real Property encroaches upon real property of another
person and no structure of any other person
substantially encroaches upon any Owned Real Property,
except as shown on the surveys; and
(viii) there is vehicular access from the
parcel of real property to a public road either
directly or via a permanent, irrevocable, appurtenant
easement benefitting such parcel.
(b) Schedule 4-G lists all leased Real Property
("Leased Real Property") of each Seller. Each Seller has
delivered a true, correct and complete copy of each of the leases
and subleases for the Leased Real Property to Buyer. With
respect to each lease and sublease comprising the Leased Real
Property of each Seller:
(i) the lease or sublease is legal, valid,
binding, enforceable and in full force and effect, and
constitutes the entire agreement between the parties
and there are no other agreements, whether oral or
written, between the parties;
(ii) except as set forth in Schedule 4-G, no
Seller is in default under the lease or sublease and,
to Seller's knowledge, no other party to the lease or
sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iii) no party to the lease or sublease has
repudiated any provision thereof, and there are no
disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease, other than as
disclosed in Schedule 4-G;
(iv) with respect to each sublease, to the
knowledge of such Seller, the representations and
warranties set forth in subsections (i) through (iii)
above are true and correct with respect to the
underlying lease;
(v) such Seller has not assigned,
transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or
subleasehold other than as set forth in Schedule 4-G;
(vi) all improvements leased or subleased
thereunder are supplied with utilities and other
services necessary for the operation of each such
Seller's business conducted at such site; the
improvements leased to Sellers are in compliance in all
material respects and have been operated and maintained
by each such Seller in accordance with, in all material
respects, all applicable laws, rules and regulations
(other than Environmental, Health and Safety Laws,
which matters are addressed in Section 4.1.17); and all
approvals of Governmental Authorities (including
licenses, permits and certificates) required in
connection with the ownership or operation thereof have
been obtained;
(vii) each such Seller has a good and valid
leasehold estate in the Leased Real Property, free and
clear of any Lien, easement, covenant, condition or
other restriction, except for Permitted Exceptions; and
(viii) none of the improvements on the
Leased Real Property located in Erlanger, Kentucky
encroaches upon real property of another person and no
structure of any other person substantially encroaches
upon such Leased Real Property which, in any case,
could have a Material Adverse Effect on the current
use, occupancy, value or marketability of title of such
Leased Real Property.
Section 4.1.11 Intellectual Property.
(a) Schedule 4-I sets forth a complete and correct
list of all: (i) patented or registered Intellectual Property and
pending patent applications or other applications for
registrations of Intellectual Property owned or filed by or on
behalf of each Seller; (ii) all trade names and unregistered
trademarks and service marks owned or used by each Seller; (iii)
all unregistered copyrights owned or used by each Seller and
material to the conduct of the Acquired Assets and such Seller s
business; and (iv) all Intellectual Property Licenses or similar
agreements or arrangements for the Intellectual Property to which
each Seller is a party, either as licensee or licensor.
(b) Subject to entry of the Assignment Order, except
as set forth in Schedule 4-I: (i) each Seller owns and possesses
all right, title and interest in and to, or has a valid and
enforceable license to use, the Intellectual Property necessary
for the operation of the Acquired Assets and such Seller s
business as currently conducted or as currently proposed to be
conducted, free and clear of all Liens, licenses, security
interests, encumbrances and other restrictions; (ii) no claim by
any third party contesting the validity, enforceability, use or
ownership of any of the Intellectual Property has been made, is
currently outstanding or is threatened, and there are no grounds
for the same; (iii) no Seller has received any notices of, or is
aware of any facts which indicate a likelihood of, any
infringement or misappropriation by, or conflict with, any third
party with respect to the Intellectual Property; (iv) no Seller
has infringed, misappropriated or otherwise taken any action that
conflicts with any intellectual property rights or other rights
of any third parties and no Seller is aware of any infringement,
misappropriation or conflict which will occur as a result of the
continued operation of any Seller's business as currently
conducted or as currently proposed to be conducted; (v) the
transactions contemplated by this Agreement will not conflict
with, violate, terminate or create an enforceable right to
terminate any Intellectual Property License or other agreement
with any third party relating to the Intellectual Property.
Section 4.1.12 Contracts and Commitments. Except as
set forth in Schedules 4-G, 4-I or 4-J, no Seller is a party to
any written or oral:
(a) agreement or indenture relating to the borrowing
of money or mortgaging, pledging or otherwise placing a Lien on
any of Sellers' assets or property;
(b) lease or agreement under which it is lessee of or
holds or operates any personal property owned by any other party;
(c) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by it;
(d) contract relating to the supply or distribution of
Sellers' products;
(e) contract or group of related contracts with the
same party continuing over a period of more than six (6) months
from the date or dates thereof that is not terminable by each
party thereto on thirty (30) days or less notice without penalty;
(f) license or royalty agreement;
(g) agreement, arrangement or understanding with any
officer, director, partner, stockholder or other insider or
Affiliate of Seller (other than for employment on customary
terms);
(h) contract which prohibits it from freely engaging
in business anywhere in the world (other than territorial
limitations contained in any Licenses); or
(i) other agreement relating to the Acquired Assets or
the Assumed Liabilities, whether or not entered into in the
ordinary course of business.
Except as disclosed in Schedules 4-G, 4-I or 4-J, (i) to the best
of Sellers knowledge, no contract or commitment described on
such schedules has been breached in any material respect or
canceled by the other party that has not been duly cured or
reinstated, (ii) each Seller has in all material respects
performed all of its obligations required to be performed by it
under such contracts and commitments to the date of this
Agreement and is not in receipt of any written claim of default
under any such contract or commitment, and (iii) to Sellers
knowledge, no event has occurred which, with the passage of time
or the giving of notice or both, would result in a breach or
default under any such contract or commitment. Buyer has been
supplied with a true and correct copy of all written contracts as
specified on Schedules 4-G, 4-I or 4-J, together with all
amendments, waivers or other changes thereto.
Section 4.1.13 Insurance. Schedule 4-K attached
hereto lists and briefly describes each insurance policy
maintained by each Seller with respect to its properties, assets
and business. All of such insurance policies are in full force
and effect, and no Seller is in default with respect to its
obligations under any of such insurance policies or has received
any notification of cancellation of any of such insurance
policies or has any claim outstanding which could be expected to
cause a material increase in such Seller s insurance rates.
Section 4.1.14 Litigation. Except as set forth on
Schedule 4-B attached hereto, there are no actions, suits,
grievances, proceedings (including, without limitation,
arbitration proceedings), orders, governmental investigations or
inquiries or claims pending or to Sellers knowledge threatened
against or affecting any Seller at law or in equity, or before or
by any governmental department, commission, board, bureau, agency
or instrumentality (including, without limitation, the U.S. Equal
Employment Opportunity Commission or the National Labor Relations
Board or any similar foreign, state or local body), and there is
no basis for any of the foregoing. Schedule 4-B sets forth for
each matter included thereon a concise summary of the matter
setting forth, if known to any Seller and if applicable, the
amount of any claim against any Seller in connection with such
matter and the docket number of any action in connection with
such matter. The matters set forth on Schedule 4-B would not,
alone or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 4.1.15 Product. No material liability exists
for replacement or other damages in connection with sales or
deliveries of products sold by the Sellers at any time prior to
the Closing Date. Except as disclosed in writing to Buyer prior
to the date hereof, no products heretofore sold by Sellers are
now subject to any returns, discounts, allowances, credits or
other accommodations, formal or informal, written or oral, other
than Sellers standard terms and conditions of sale.
Section 4.1.16 Employee Benefit Plans.
(a) Except for Employee Benefit Plans listed on
Schedule 4-L, with respect to current or former employees of
Sellers, independent contractors, or the spouses, beneficiaries
or dependents thereof, Sellers do not maintain, do not contribute
or have any obligation to contribute to and do not have or have
not had any liability or potential liability with respect to any
(i) qualified defined contribution or defined benefit plans or
arrangements (whether or not terminated) which are employee
pension benefit plans (as defined in Section 3(2) of ERISA)
("Employee Pension Plan"); (ii) any ongoing or terminated funded
or unfunded employee welfare benefit plans (as defined in Section
3(1) of ERISA) ("Employee Welfare Plan"); or (iii) any plan,
policy, program or arrangement (whether or not terminated) which
provides non-qualified deferred compensation benefits, bonus
benefits or compensation, incentive benefits or compensation,
severance benefits or compensation, "change of control" (as set
forth in Code Section 280G) benefits or compensation or any
program, plan, policy or arrangement which provides any health,
life, disability, accident, vacation, tuition reimbursement or
other fringe benefits ("Employee Other Benefit Plan"). Sellers
have complied in all material respects with the requirements of
Section 4980B of the Code, and with the requirements of ERISA and
the Code with respect to all Employee Benefit Plans. Except as
listed in Schedule 4-L, none of Sellers is obligated (under any
contract entered into before the Closing) to make any payments
that would be nondeductible under Section 280G of the Code (or
any corresponding provision of state, local or foreign income Tax
law). Except as set forth on Schedule 4-L, Sellers do not and
have not within the last five years participated in or
contributed to any multi-employer plan (as defined in Section
3(37) of ERISA) ("Multi-employer Plan") nor do Sellers have any
other liability, including any potential withdrawal liability,
with respect to any Multi-employer Plan and Sellers have not
incurred any current or potential withdrawal liability as a
result of a complete or partial withdrawal (or potential partial
withdrawal) from any Multi-employer Plan. Except as disclosed on
Schedule 4-L, Sellers do not maintain or have any obligation to
contribute to (or any other liability with respect to) any funded
or unfunded Employee Benefit Plan which provides post-retirement
health, accident or life insurance benefits to current or former
employees, current or former independent contractors, current or
future retirees, their spouses, dependents or beneficiaries,
other than limited health benefits required to be provided to
former employees, their spouses and other dependents under Code
Section 4980B.
(b) As of the Closing Date, except as disclosed on
Schedule 4-L, none of the Employee Pension Plans have incurred
any "accumulated funding deficiency" as such term is defined in
Section 302 of ERISA or Section 412 of the Code, whether or not
waived, and no proceeding by the PBGC to terminate any such
Employee Pension Plan has been instituted or threatened. Except
as disclosed on Schedule 4-L, Sellers have not incurred any
liability to the PBGC, the Internal Revenue Service, the
Department of Labor, any other governmental agency, any Multi-
employer Plan or any person with respect to any Employee Benefit
Plan currently or previously maintained by members of the
Controlled Group of Companies that includes any Seller that has
not been satisfied in full, and no condition exists that presents
a material risk to Sellers of incurring such a liability, other
than liability for premiums due the PBGC.
(c) With respect to each Employee Benefit Plan,
Sellers have furnished to Buyer accurate descriptions of the
Employee Benefit Plans.
Section 4.1.17 Environment, Health and Safety.
Except as would not result in a Material Adverse Effect, each
Seller has obtained all permits, licenses, and other
authorizations which are required for the ownership and operation
of the Acquired Assets under all applicable Environmental, Health
and Safety Laws and none will require consent, notification or
other action to remain in full force and effect after the
consummation of the transactions contemplated hereby. No Seller
has handled or disposed of any substance, arranged for the onsite
or offsite disposal of any substance, exposed any employee or
other individual to any substance or condition, or owned or
operated the Acquired Assets or any property or facility (and no
such property is contaminated with hazardous materials,
substances or wastes) or otherwise conducted any activity, and
there are no other conditions or circumstances in connection with
or relating to Acquired Assets or Real Property, so as to give
rise to any material liability or corrective or remedial
obligation under or relating to any Environmental, Health and
Safety Laws. Each Seller has complied in all material respects
with all Environmental, Health and Safety Laws, and no action,
suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, order or notice has been filed or commenced or to
any Seller's knowledge, threatened, against, or issued to, any
Seller alleging any failure to so comply or alleging any
liability under Environmental, Health and Safety Laws. No Seller
has either expressly or by operation of law, assumed or
undertaken any material liability of any other Person under any
Environmental, Health and Safety Laws. No underground storage
tanks, lead, asbestos-containing materials, or PCB-containing
equipment or fluids have been or are present on any real property
listed on Schedule 1-A. No Real Property nor any property to
which any substance located on or resulting from the use of any
Acquired Assets has been transported is listed on, or to any
Seller s knowledge, proposed for listing on the National
Priorities List, CERCLIS or any similar federal, state, local or
foreign list of sites requiring investigation or cleanup. There
has been no environmental investigation, audit, test or review of
which any Seller has knowledge in relation to any Acquired Asset,
including, without limitation, any Real Property, which has not
been delivered to Buyer at least five days prior to the date
hereof. The transactions contemplated by this Agreement do not
impose any obligations under any Environmental, Health and Safety
Laws for site investigation or cleanup, or notification to any
government agencies or third parties.
Section 4.1.18 Insider Interests. No officer or
director of any Seller or any relative of such an officer or
director has any agreement with any Seller or any interest in any
property (real, personal or mixed, tangible or intangible) used
in or pertaining to the Acquired Assets, except solely as a
shareholder or employee.
Section 4.1.19 Closing Date. The representations and
warranties of Sellers contained in this Section 4.1 and elsewhere
in this Agreement and all information contained in any exhibit,
schedule or attachment hereto or in any writing delivered by, or
on behalf of, any Seller to Buyer shall be true and correct on
the Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement.
Section 4.2 Representations and Warranties of Buyer. As a
material inducement to Sellers to enter into and perform their
obligations under this Agreement, Buyer represents and warrants
to Sellers as follows:
Section 4.2.1 Organization of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation.
Section 4.2.2 Authorization of Transaction. Subject
to approval of its board of directors, each of Buyer and Hartmarx
has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of
each of Buyer and Hartmarx, enforceable in accordance with its
terms and conditions (except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting the
enforcement of creditors rights (including, without limitation,
preference and fraudulent conveyance or transfer laws) and by
general principles of equity (regardless of whether such
enforceability is sought in a proceeding in equity or at law)).
Section 4.2.3 Noncontravention. Except as would not
have a material adverse effect on Buyer's ability to consummate
the transactions contemplated hereby, neither the execution and
the delivery of the Transaction Documents, nor the consummation
of the transactions contemplated thereby, shall (a) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
government, governmental agency, or court to which Buyer or
Hartmarx is subject or any provision of the articles of
incorporation or bylaws of Buyer or Hartmarx, or (b) conflict
with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice
under, any agreement, contract, lease, license, instrument or
other arrangement to which Buyer or Hartmarx is subject. Neither
Buyer nor Hartmarx is required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for Buyer to
consummate the transactions contemplated by the Transaction
Documents, except as may be required under the HSR Act.
Section 4.2.4 Financial Capacity to Perform. Buyer
or Hartmarx has, and on the Closing Date and each other date that
a payment to Sellers becomes due hereunder Buyer or Hartmarx will
have, sufficient funds and credit arrangements available to cause
Buyer to deliver the Purchase Price and any additional amounts
payable by Buyer hereunder on such dates.
Section 4.2.5 Brokers Fees. Buyer has no liability
or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by
the Transaction Agreements.
Section 4.2.6 Closing Date. The representations and
warranties of Buyer contained in this Section 4.2 and elsewhere
in this Agreement and all information contained in any exhibit,
schedule or attachment hereto or in any writing delivered by, or
on behalf of, Buyer to Sellers shall be true and correct on the
Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement.
Article V
Covenants
Section 5.1 Pre-Closing Covenants of Sellers. From and
after the date of this Agreement to the Closing Date, except as
otherwise consented to in writing by Buyer, each Seller shall
(and shall cause its Subsidiaries that are Sellers to):
(a) conduct such Seller's operations in a manner
consistent with commercially reasonable business practices
(taking into account Sellers' status as debtors-in-possession in
the Chapter 11 Case, including their liquidity and constraints
imposed by their lenders) and use its best efforts to maintain
its businesses, employees, customers, assets and operations as an
ongoing business as presently conducted, including by (i) keeping
available the services of officers and employees, (ii)
maintaining satisfactory relationships with others having
business relationships with it (iii) conducting its cash
management customs and practices (including, without limitation,
the collection of receivables and payment of payables) in the
usual and ordinary course of business, (iv) making all payments
in post-petition liabilities when due under all pre-petition and
post-petition licenses, contracts and leases in effect on the
date hereof, (v) placing purchase orders only for reasonable
quantities and at reasonable prices and accepting customer orders
only for reasonable quantities on reasonable terms and at rates
and in amounts consistent with past custom and practice and
(vi) consulting with Buyer on a regular basis regarding the
status of items referred to in clauses (i) through (v) above,
including providing to Buyer not less than weekly a written
schedule of each of (1) updated cash flow projections of Sellers
and (2) raw materials inventory commitments of Sellers identified
by brand to the extent appropriate;
(b) promptly inform Buyer in writing of any variances
from the representations and warranties contained in Section 4.1;
(c) permit Buyer and its representatives to have full
access to each Seller's books, records, property, facilities,
customers, suppliers, sales representatives, consultants, key
employees and independent accountants in connection with Buyer s
due diligence review of such Seller;
(d) use its best efforts to: (i) obtain Court approval
of the Assignment Order and the Sale Order; (ii) obtain all third
party and governmental approvals necessary or desirable to
consummate the transactions contemplated hereby, and (iii) cause
the other conditions hereunder to be satisfied;
(e) maintain all of the Acquired Assets in good
repair, order and condition, except for ordinary wear and tear
not caused by neglect, and maintain insurance reasonably
comparable to that in effect on the date hereof;
(f) maintain the existence of and use reasonable
efforts to protect all of its Intellectual Property and
Intellectual Property Licenses (including, without limitation,
the Designated Licenses) that constitute Acquired Assets;
(g) maintain the existence of and protect all of its
governmental permits, licenses, approvals and other
authorizations with respect to the Acquired Assets;
(h) comply with all applicable laws, ordinances, and
regulations in the operation of the Acquired Assets (including,
but not limited to, environmental and employee health and safety
matters, and taking into account such Seller's status as debtors-
in-possession in the Chapter 11 Case), where the failure to
comply would have a Material Adverse Effect;
(i) maintain its books, accounts and records in
accordance with past custom and practice;
(j) not (1) hire any new employee at an annual salary
in excess of $50,000 or (2) terminate any key employee without
the oral approval of Buyer;
(k) except as listed on Schedule 5-A, not establish or
contribute to any new, increase the benefit provided under, or
amend or terminate any existing, plan, program, policy or
arrangement covering employees including, without limitation, any
Employee Benefit Plan, or amend or terminate any such existing
plan, program, policy or arrangement;
(l) without Buyer s prior written consent (except as
part of Sellers' existing factoring arrangements with CIT), not
enter into or offer, propose or solicit any other Person to enter
into any transaction, arrangement or contract involving the
extension of credit by any Seller in excess of $10,000;
(m) not enter into any transaction, arrangement or
contract with any officer, director, partner, stockholder or
other insider or Affiliate of Sellers, except for transactions
between Sellers entered into in the ordinary course of business;
(n) other than sales of the Excluded Assets, not enter
into any transaction (including, without limitation, transferring
any of the Acquired Assets (including, without limitation, any
property, plant and/or equipment located in the facilities being
acquired by Buyer), placing any Liens on the Acquired Assets or
entering into any new employment agreements) other than sales of
Inventory in the ordinary course of business;
(o) not enter into or modify any union contract;
(p) not assume or assign any contract or agreement
relating to the Acquired Assets under Section 365 of the
Bankruptcy Code; or
(q) (i) not take or agree to take any action that
would make any representation and warranty of any Seller
hereunder inaccurate in any material respect at, or as of any
time prior to, the Closing Date, or (ii) not omit or agree to
omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material
respect at any such time.
Section 5.2 Approval of the Sale Order. Provided that
Buyer is the successful bidder at the auction (if any) or that no
other prospective purchaser bids at such auction, the Parties
agree to take all reasonable steps to cause the Sale Order to be
entered, and if entered, to comply with every term and
requirement under the Sale Order.
Section 5.3 Reasonable Access. Sellers shall afford Buyer
and its counsel, accountants, lenders and other authorized
representatives reasonable and continuing access during normal
business hours to Sellers properties, facilities, equipment,
books and records to enable Buyer and its advisors and lenders to
make such reasonable investigations as they shall desire to make
of the affairs of Sellers relating to the Acquired Assets or the
Assumed Liabilities. Sellers shall furnish to Buyer or permit
Buyer to obtain from Sellers' accountants such additional
financial and operating data and other information which are
readily available to Sellers or such accountants (and, except as
otherwise provided herein, without any duty of Sellers to obtain
any audit of same) as Buyer and its counsel, accountants, lenders
and other authorized representatives shall from time to time
reasonably request and shall afford Buyer and its representatives
and lenders an opportunity to ask questions and to obtain from
Sellers or such accountants any additional information which is
readily available to Sellers or such accountants pertaining to
such investigation. In addition, from and after the date hereof,
Sellers shall permit representatives of Buyer access to Sellers
employees and facilities during regular business hours to
facilitate a smooth and orderly transition with respect to the
operations of the Acquired Assets.
Section 5.4 Cooperation. From time to time during the
pendency of the Chapter 11 Case and after the Closing and subject
to any restrictions contained in the Sale Order, each Party will
execute and deliver to the other party such instruments of
conveyance, assignment, transfer and delivery and take such other
action as the other party reasonably may request to consummate
the transactions contemplated hereby, including, without
limitation, (a) executing affidavits and performing such other
acts as are reasonably necessary to file any documents required
to record the assignment of the Intellectual Property to Buyer
with the Patent and Trademark Office and such other agencies as
Buyer may designate, (b) filing all notices, reports and other
filings with any governmental authority required to be submitted
jointly by Buyer and Sellers in connection with the execution and
delivery of this Agreement, the other Transaction Documents and
the consummation of the transactions contemplated hereby.
Subsequent to the Closing, the Parties, at their own cost, will
assist each other (including making records available) in the
preparation of their respective Tax Returns and the filing and
execution of Tax elections, if required, as well as any audits or
litigation that may ensue as a result of the filing thereof, to
the extent that such assistance is reasonably requested. Buyer
shall maintain the records purchased hereunder and Sellers shall
maintain the books and records retained hereunder pursuant to
their standard retention policy; provided, that no such records
shall be destroyed unless the holder provides the other Party
hereunder with at least ninety (90) days prior written notice.
Upon receipt of notice of destruction, the non-holder shall have
the option, at its sole cost and expense, to take possession of
the records set for destruction, in which case the non-holder
shall assume all further cost of storage and destruction of such
records. The Parties shall be afforded access to and the right
to copy such records in the hands of the other Party during
normal business hours, at the expense of the person requesting
access.
Article VI
Employee Matters
Section 6.1 Employment of Certain Employees. Buyer agrees
to offer employment to the following persons, each of whom is
listed on Schedule 6-A, employed by Sellers as of October 16,
1996, from and after the Closing, on terms and conditions
satisfactory to Buyer in its sole discretion: (a) 95 employees,
or such lesser number of employees employed by Sellers on the
date immediately prior to the Closing Date, at the Erlanger
factory; (b) 270 employees, or such lesser number of employees
employed by Sellers on the date immediately prior to the Closing
Date, at the Knoxville factory; (c) 630 employees, or such lesser
number of employees employed by Sellers on the date immediately
prior to the Closing Date, at the Somerset factory; and (d) such
other employees as are specified on Schedule 6-A (as it may be
amended by Buyer through the Closing Date).
Section 6.2 Union Matters. Buyer shall use its good faith
efforts to obtain the agreement of the Union to permit all of
Sellers Union employees hired by Buyer to be enrolled in Buyer s
Retirement Income Plan upon the Closing and the agreement of the
Amalgamated Clothing Retirement Fund and the Textile Retirement
Fund, as the case may be, to release their claims against Sellers
which accrued for August, September, October and November 1996.
Whether or not Buyer obtains such agreements, Buyer shall provide
to Sellers Union employees hired by Buyer service credit for
purposes of benefit accrual in its Retirement Income Plan (or
equivalent plan maintained or established by Buyer), only from
August 1996 forward, or adjust the benefit such that such Union
employees obtain four months of benefit accrual credit in such
Retirement Income Plan; provided, however, that such Union
Employees hired by Buyer shall be given service credit for
purposes of vesting for the period employed by Sellers, but not
for purposes of eligibility for early retirement, disability or
other subsidized benefits. Buyer shall provide to Sellers' Union
employees hired by Buyer retirement benefits on terms and
conditions comparable to those currently provided to Sellers'
employees under Sellers' present plan, subject in each case to
the limitation on service credit for purposes of benefit accrual
described in the preceding sentence.
Section 6.3 Chambersburg. Subject to satisfaction of the
conditions set forth in Section 3.1.8 and the Union Ratification,
(i) Buyer agrees to offer employment to all employees at Seller s
Chambersburg facility on terms and conditions satisfactory to
Buyer, which shall include wage, workrule and benefit terms
substantially the same as are currently in effect, with the
exception that there will be no provision for severance benefits
and (ii) Buyer agrees to keep the Chambersburg coat shop
operation open until at least May 1, 1997 and the Chambersburg
pant shop operation open until at least August 1, 1997.
Article VII
Licenses, Contracts and Leases
Section 7.1 Executory Contracts, Licenses and Leases of
Seller. Sellers shall have filed with the clerk of the
Bankruptcy Court a motion (the Assignment Motion ) for an order
authorizing Sellers to assume and assign to Buyer the Assigned
Contracts and the Intellectual Property Licenses. The Assigned
Contracts and Intellectual Property Licenses shall be identified
(by the date of the Assigned Contract and the Intellectual
Property License (if available), the other party to the license,
contract or lease and the address of such party) on the Assigned
Contracts List. Such list shall set forth the amounts or other
actions necessary to cure defaults under each of such Assigned
Contracts and Intellectual Property License as determined by
Sellers based on Sellers' books and records. In cases in which
Sellers are unable to establish that a default exists, such list
shall designate the relevant cure amount at $0.00. The
Assignment Motion shall request that objections to such motion
shall be due on the same date as required for competing bids for
the Acquired Assets, and, unless a party to an Assigned Contract
or an Intellectual Property License succeeds on its objection, if
any, the cure cost associated with such Assigned Contract or
Intellectual Property License shall be the amount set forth on
the Assigned Contracts List. The Assignment Motion shall further
request that the Court require as the only necessary adequate
assurance of future performance the promise by Buyer to perform
under the Assigned Contracts and Intellectual Property Licenses.
Sellers shall be responsible for payment, at or before Closing,
of all cure costs associated with those contracts referred to on
Schedule 7-A, including under Section 365(b)(i) of the Bankruptcy
Code (the "Cure Costs"), subject to a maximum amount of $50,000
(the "Cure Cap"), and if the Cure Costs exceed the Cure Cap, then
Buyer may, in its sole discretion, (a) pay all or some of the
excess Cure Costs, and/or (b) at such time, and notwithstanding
anything contained herein to the contrary, amend the Assigned
Contracts List to remove licenses, contracts or leases; provided,
however, that Sellers are required to pay all Cure Costs
associated with any contracts other than those contracts set
forth on Schedule 7-A, including those associated with the
assumption of the Designated License for the Claiborne name.
Buyer shall have the right, upon written notice to Sellers at any
time prior to the Closing, to reject any Assigned Contract or
Intellectual Property License (other than the Designated
Licenses). In the event Buyer so provides written notice with
respect to a license, contract or lease, such license, contract
or lease shall be deemed not to be included in the Assigned
Contracts or the Acquired Assets. The Assignment Order shall
provide that upon such assignment to Buyer, all defaults shall
have been deemed cured.
Section 7.2 Nonassignable Contracts. To the extent
that the assignment by Sellers to Buyer of any license, contract
or lease that is designated an Assigned Contract or an
Intellectual Property License (including the Designated Licenses)
is not permitted by Bankruptcy Court order or otherwise or is not
permitted without the consent of any other party to such license,
contract or lease, this Agreement shall not be deemed to
constitute an assignment of any such license, contract or lease
if such consent is not given or if such assignment otherwise
would constitute a breach of, or cause a loss of contractual
benefits under, any such license, contract or lease, and Buyer
shall assume no obligations or liabilities thereunder. In such
event, Sellers shall exercise their best efforts, in good faith,
to obtain the consent of the other party to such license,
contract or lease to permit assignment of such license, contract
or lease to Buyer. Sellers shall advise Buyer promptly in
writing with respect to any license, contract or lease under
which it knows or has reason to believe it will not receive the
required consent. Sellers shall take all reasonable actions
requested by Buyer and cooperate with Buyer to obtain any new
license, contract or lease (if necessary) on substantially
similar terms and conditions as those under the existing license,
contract or lease. Without in any way limiting Sellers
obligations to obtain all consents and waivers necessary for the
sale, transfer, assignment and delivery of the Assigned
Contracts, Intellectual Property Licenses and the Transferred
Assets to Buyer hereunder, if any such consent is not obtained or
if such assignment is not permitted irrespective of consent and
the Closing hereunder is consummated, Sellers shall continue to
use their best efforts to obtain such consents and shall
cooperate with Buyer in any arrangement designed to provide Buyer
with the rights and benefits (subject to the obligations) under
the such licenses, contracts or leases. Nothing contained in
this section shall be deemed a waiver by Buyer of its right to
determine that the non-assignability of any license, contract or
lease constitutes a Material Adverse Effect to the Acquired
Assets with respect to the transactions contemplated in this
Agreement.
Section 7.3 Performance of Obligations. Unless otherwise
agreed to in writing by the Parties, through and including the
Closing Date, Sellers shall make all payments on post-petition
liabilities when due under all Designated Licenses. The Parties
hereto shall cooperate in attempting to obtain the consensual
transfer to Buyer of the licenses, executory contracts and
unexpired leases specified by Buyer, whether pursuant to
Bankruptcy Court order or otherwise.
Article VIII
Additional Agreements
Section 8.1 Press Releases. Prior to the Closing or until
this Agreement may be terminated in accordance with its terms and
except as may otherwise be required by law or the applicable
rules of any national securities exchange, neither Party shall
issue any press releases or make any other public announcements
relating to the transactions contemplated by this Agreement,
without the prior written consent of the other Party hereto;
provided, further, that prior to filing any pleadings relating to
such transactions, Sellers shall consult with Buyer regarding the
content of such pleadings.
Section 8.2 Transaction Expenses. Except as otherwise
agreed in this Agreement, the Letter of Intent or the Procedures
Order, Buyer shall pay all expenses incurred by Buyer in
connection with the transactions contemplated hereby (whether
consummated or not), and Sellers shall pay all expenses incurred
by Sellers in connection with the transactions contemplated
hereby (whether consummated or not).
Section 8.3 Certain Taxes. Notwithstanding any other
provision of this Agreement to the contrary, all transfer,
documentary, sales, occupation, lease use, stamp, registration
and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be
paid by Sellers when due, and Sellers shall, at Sellers expense,
file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, occupation,
lease use, stamp, registration and other Taxes and fees, and, if
required by applicable law, Buyer shall join in the execution of
any such Tax Returns and other documentation. All real property
Taxes, personal property Taxes and similar ad valorem obligations
levied with respect to the Acquired Assets for a taxable period
which includes (but does not end on) the Closing Date
(collectively, the "Apportioned Obligations") shall be
apportioned between Sellers, on the one hand, and Buyer, on the
other, as of the Closing Date based on the number of days of such
taxable period included in the Pre-Closing Tax Period and the
number of days of such taxable period included in the Post-
Closing Tax Period. Notwithstanding any other provision of this
Agreement to the contrary, Sellers shall be liable for the
proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the
Post-Closing Tax Period.
Section 8.4 Further Assurances. Each Seller shall execute
and deliver such further instruments of conveyance and transfer
and take such additional action as any Buyer may reasonably
request (including assisting any Buyer in the collection of
receivables) to effect, consummate, confirm or evidence the
transfer to such Buyer of the Acquired Assets being purchased by
such Buyer, and each Seller shall execute such documents as may
be necessary to assist any Buyer in preserving or perfecting such
Buyer's rights in the Acquired Assets being purchased by such
Buyer.
Section 8.5 Transition Assistance. From the date hereof,
no Seller shall in any manner take or cause to be taken any
action which is designed, intended or might reasonably be
anticipated to have the effect of discouraging customers,
employees, suppliers, lessors, and other associates of any Seller
from maintaining the same business relationships with a Buyer
which purchased Acquired Assets from such Seller after the date
of this Agreement as were maintained with such Seller prior to
the date of this Agreement. Each Seller shall cooperate
reasonably with each Buyer to enable each Buyer to comply with
all legal disclosure obligations in respect to periods prior to
the Closing (including, without limitation, in connection with
Tax filings, securities transactions and the like), and shall
provide such information or testimony as may be reasonably
requested by any Buyer in connection with any litigation,
arbitration, investigation or other proceeding as to the extent
related to periods prior to the Closing.
Section 8.6 Confidentiality. If the transactions
contemplated hereby are consummated, as of and after Closing the
Parties shall keep confidential all information and materials
regarding the other Party. Without limiting the foregoing, each
Seller shall maintain confidential and shall not use or disclose,
directly or indirectly (except as required by law, order of the
Bankruptcy Court or as authorized in writing by Buyer prior to
such disclosure), any confidential or proprietary information or
materials regarding Sellers, the Acquired Assets or the Assumed
Liabilities. Each Seller acknowledges that the information,
observations and data relating to the Acquired Assets or Assumed
Liabilities which such Seller possesses after the Closing are the
property of Buyer. Each Seller agrees that it shall not,
directly or indirectly use for its own purposes or disclose to
any third party any of such information, observations or data
without the prior written consent of Buyer, unless and to the
extent that the aforementioned matters become generally known to
and available for use by the public other than as a result of any
Seller s acts or omissions to act.
Section 8.7 Sellers Names. Upon the Closing, each Seller
shall change its name to a name which is dissimilar to the name
and tradenames currently used by any Seller. Each Seller shall
cause the Secretary of State of the state of its incorporation to
record and register such name change on its official records.
Sellers shall cause the style of the Chapter 11 Cases to reflect
each such name change, and will cease the use of all of Sellers'
current names in any documents, dockets, pleadings or other
papers filed in the Bankruptcy Court or otherwise.
Section 8.8 Communications. All mail and other
communications relating to the Acquired Assets or Assumed
Liabilities received by Sellers at any time after the Closing
shall be promptly turned over to Buyer. All mail and other
communications not relating to the Acquired Assets, Assumed
Liabilities received by Buyer at any time after the Closing shall
be promptly turned over to Sellers.
Section 8.9 Accounts Receivable. In the event a payment is
made to Sellers of any Accounts Receivable on or after the
Closing Date, Sellers shall promptly forward to Buyer the amount
of such Accounts Receivable. At Buyer s request, Sellers shall
use reasonable efforts to assist Buyer in the collection of any
Accounts Receivable.
Section 8.10 Dismissal of Chapter 11 Case. Sellers will
not file any motion subsequent to the Closing to dismiss the
Chapter 11 Case.
Article IX
Termination
Section 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing only as follows:
(a) by mutual written consent of Buyer and Sellers;
(b) by either Buyer or Sellers if there has been a
material misrepresentation or material breach of warranty or
covenant on the part of the other Party in respect of the
representations, warranties or covenant set forth in this
Agreement or the covenants set forth in the other Transaction
Agreements;
(c) by Buyer or Sellers if Buyer is not the successful
bidder at the auction (if any);
(d) by Buyer pursuant to written notice delivered to
Sellers on or before November 13, 1996, that, as a result of
information obtained by Buyer in connection with its legal,
accounting and business due diligence investigation, Buyer is
unwilling to proceed with the transaction contemplated hereby, or
pursuant to written notice delivered to Sellers after Buyer first
has knowledge of any event which has occurred making it
impossible for Sellers to satisfy a condition to Buyer s
obligation to consummate the transactions contemplated hereby;
(e) by Buyer or Sellers if CIT has not approved this
Agreement prior to November 6, 1996 (subject only to CIT's right
to withdraw such approval if it determines in its sole and
absolute discretion, that the consummation of the transactions
contemplated by this Agreement will not result in the
indefeasible payment in full and in cash of all of Seller's
obligations to CIT (excluding the claims of CIT's participants)
at the Closing) or has withdrawn such approval; or
(f) by Buyer or Sellers if the transactions
contemplated hereby have not been consummated by November 27,
1996; provided, however, that neither party shall be entitled to
terminate this Agreement pursuant to this provision if such
party s material breach of this Agreement has prevented the
consummation of the transactions contemplated hereby.
Section 9.2 Effect of Termination. In the event of the
termination of this Agreement, this Agreement shall thereafter
become void and have no effect, and no Party hereto shall have
any liability to any other Party hereto or its shareholders or
directors or officers in respect thereof, except for breaches of
this Agreement prior to the time of such termination and except
as provided in the Procedures Order. Notwithstanding any
termination of this Agreement, those provisions of the Letter of
Intent that are not superseded by this Agreement (as provided in
Section 10.14 hereof) shall remain in full force and effect.
Section 9.3 Waiver of Right to Terminate. The Parties
shall be deemed to have waived their respective rights to
terminate this Agreement upon the completion of the Closing. No
such waiver shall constitute a waiver of any other rights arising
from the non-fulfillment of any condition precedent set forth in
Article III above or any misrepresentation or breach of any
warranty, covenant or agreement contained herein unless such
waiver is made in writing and then any such written waiver shall
only constitute a waiver of the specific matters set forth
therein.
Article X
Miscellaneous
Section 10.1 No Third Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person,
including without limitation Creditors of Sellers, other than the
Parties and their respective successors and permitted assigns.
Section 10.2 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No
Seller may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of Buyer.
Section 10.3 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
Section 10.4 Headings. The article and section headings
contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this
Agreement.
Section 10.5 Notices. All notices, demands and other
communications given or delivered under this Agreement shall be
in writing and shall be deemed to have been given (a) upon
receipt, if personally delivered, (b) 5 days after deposited in
the U.S. mail, if mailed by first class mail, return receipt
requested, (c) one business day after delivery to express courier
service guarantying overnight delivery, or (d) upon electronic
confirmation of receipt, if delivered by facsimile, in each case
to the recipient at the address below indicated:
If to any Buyer:
Hartmarx Corporation
101 North Wacker Drive
Chicago, Illinois 60606
Attention: Mary D. Allen
Telephone: (312) 357-5300
Telecopy: (312) 855-3868
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: James H.M. Sprayregen
Telephone: (312) 861-2000
Telecopy: (312) 861-2200
and to:
Skadden, Arps, Slate, Meager & Flom (Illinois)
333 W. Wacker Drive
Chicago, IL 60601
Attention: Brian W. Duwe
Telephone: (312) 407-0816
Telecopy: (312) 407-0411
If to any Seller:
Plaid Clothing Group Inc.
Debtors-in-Possession
730 Fifth Avenue
New York, New York 10019
Attention: Dennis P. McNamara
Telephone: (212) 830-5605
Telecopy: (212) 830-5644
with a copy to:
Kaye, Scholer, Fierman, Hays &
Handler, LLP
425 Park Avenue
New York, New York 10022
Attention: Andrew A. Kress
Telephone: (212) 836-8000
Telecopy: (212) 836-8689
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address
set forth above using any other means, but no such notice,
request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by
the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
Section 10.6 Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic laws of
the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of New York.
Section 10.7 Survival. The representations, warranties,
covenants and agreements set forth in this Agreement or in any
Transaction Document will, until March 17, 1997, survive the
Closing and the consummation of the transactions contemplated
hereby.
Section 10.8 Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless the same shall
be in writing and signed by Buyer, Hartmarx and Sellers. No
waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
Section 10.9 Incorporation of Exhibits and Schedules. The
exhibits and schedules identified in this Agreement are
incorporated herein by reference and made a part hereof. The
Parties will undertake their best efforts to complete each
exhibit and schedule prior to the date of this Agreement
(including such exhibits and schedules as may be amended
subsequent thereto). Any amendment, substitution or inclusion of
any exhibit or schedule to this Agreement after the date hereof
shall not be deemed to cure any breach hereof except for the
amendment of any schedule hereto that is expressly permitted by
the terms hereof, in which case such amendment shall be deemed to
have been included in such schedule as of the date hereof;
provided, that any amendment, substitution or inclusion of any
exhibit or schedule by Sellers after the date of this Agreement
is subject to Buyer s prior written consent. Notwithstanding
anything in this Section to the contrary, the following exhibits
and schedules must be incorporated herein as of the date of this
Agreement: Exhibits A and B, and Schedules 1-A, 1-B, 1-C, 1-G, 1-
H, 4-A, 4-B, 4-C, 4-D, 4-F, 4-G, 4-I, 4-K, 4-L, 5-A and 7-A. On
or before November 8, 1996, Sellers shall deliver to Buyer
Schedule 4-J hereto.
Section 10.10 Construction. Where specific language is
used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or
restrict in any manner the construction of the general statement
to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be
applied against any Party.
Section 10.11 Remedies. The Parties shall each have and
retain all other rights and remedies existing in their favor at
law or equity, including, without limitation, any actions for
specific performance and/or injunctive or other equitable relief
(including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this
Agreement. The Parties acknowledge that the Acquired Assets are
unique and recognize and affirm that in the event of a breach of
this Agreement by any Party, money damages may be inadequate and
the other Party may have no adequate remedy at law. In such
event, such Party shall have the right, in addition to all other
rights and remedies it may have, to specific performance of the
obligations of the other Parties hereunder.
Section 10.12 Risk of Loss. Sellers retain all risk of
loss, damage and destruction to all or any part of the Acquired
Assets until and including the Closing Date from any cause
whatsoever, whether or not they are insured therefor, including
without limitation, fire, flood, accident, acts of god,
earthquake, insurrection, riot or other causes commonly referred
to as force majeure.
Section 10.13 Severability. Whenever possible, each
provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, subject to the prior written
consent of Buyer, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement.
Section 10.14 Entire Agreement. This Agreement and the
other Transaction Documents (including the documents referred to
herein and therein but excluding the Letter of Intent) constitute
the entire agreement among the Parties and supersede any prior
understandings, agreements or representations by or between the
Parties, written or oral, that may have related in any way to the
subject matter hereof, including, but not limited to (a) the
Letter of Intent (other than Sections 5, 6, 7, 8, 11, 16, 17 and
18 thereof, which shall survive the execution of this Agreement
and the consummation or any subsequent termination hereof), and
(b) that certain Confidentiality Agreement dated June 24, 1996,
the effect and enforceability of which shall terminate at
Closing.
Section 10.15 Hartmarx s Obligation. Hartmarx hereby
agrees that it shall cause Buyer to perform all of Buyer s
obligations under this Agreement in accordance with the terms of
this Agreement.
In Witness Whereof, the Parties hereto have caused this
Agreement to be duly executed on the day and year first above
stated.
HMX/PBP Company
By: /s/ Mary D. Allen
___________________________________
Its: Executive Vice President
___________________________________
Printed Name: Mary D. Allen
_____________________
Hartmarx Corporation, solely for
purposes of Sections 4.2.2-4.2.4,
10.8 and 10.15 hereof
By: /s/ Mary D. Allen
___________________________________
Its: Executive Vice President
___________________________________
Printed Name: Mary D. Allen
_____________________
Ambrook Manufacturing, Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Palm Beach Company, Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Plaid Clothing Group Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Plaid International Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Plaid Investment Co., Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
J. Schoeneman, Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Schoeneman Enterprises, Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
____________________
Schoeneman Enterprises holding, Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Plaid Retail Group Inc.,
Debtor-In-Possession
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
PLAID FINANCE CORP.,
DEBTOR-IN-POSSESSION
By: /s/ William V. Roberti
___________________________________
Its: President and C.E.O
___________________________________
Printed Name: William V. Roberti
_____________________
Exhibit A
Defined Terms
"Accounts Receivable" means any and all currently existing
and hereafter arising or acquired accounts, accounts receivable,
and all current and future rights to payment for goods sold or
services rendered, excluding inter-company receivables, but
including, without limitation, trade accounts receivable, notes
receivable from customers, vendor credits and accounts receivable
from employees and all other obligations from customers with
respect to sales of goods, whether or not evidenced by a note,
arising in connection with the Acquired Assets, together with all
rights, title, security and guaranties with respect to each of
the foregoing.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"Assigned Contracts" means any and all right, title and
interest in, to and under those contracts and leases (executory
and otherwise) set forth in an exhibit to the Assignment Motion
(the "Assigned Contracts List") to be assumed and assigned by
Sellers to Buyer, as such exhibit may be amended pursuant to
Section 7.1, licenses and, subject to Section 1.2, purchase
orders.
"Assigned Contracts List" shall have the meaning ascribed
thereto in the definition of Assigned Contracts in this Exhibit
A.
"Assignment Motion" means that certain Motion for Order
Authorizing the Assumption and Assignment of Executory Contracts
and Unexpired Leases filed by Sellers with the Bankruptcy Court,
as described in Section 7.1.
"Assignment Order" means that certain order of the
Bankruptcy Court approving the Assignment Motion and authorizing
and directing Sellers to assume and assign the Assigned Contracts
to Buyer.
"Authorities" means any Governmental Authority, industry
group or any other agency, association, instrumentality or
authority having voluntary, contractual or mandatory authority in
respect of the Acquired Assets or the Assumed Liabilities.
"Authorizations" means all franchises, registrations,
variances, licenses, certificates, consents, permits, approvals,
authorizations, qualifications, accreditations and similar
rights.
"Bankruptcy Code" means Title 11 and applicable portions of
Titles 18 and 28 of the United States Code, as amended from time
to time.
"Bankruptcy Court" shall have the meaning ascribed thereto
in the recitals hereof.
"Business" shall have the meaning ascribed thereto in the
recitals hereof.
"Cash" means any and all cash, cash equivalents,
certificates of deposit, money market and similar accounts and
checks in the process of collection by Sellers as of the Closing.
"Chambersburg Pant Shop Equipment" shall mean the pant shop
equipment located at Sellers' Chambersburg facility and
identified on Schedule 1-J.
"Chapter 11 Case" shall have the meaning ascribed thereto in
the recitals hereof.
"CIT" means The CIT Group/Commercial Services, Inc.
"CIT Agreements" shall have the meaning ascribed thereto in
Section 3.1.9 hereof.
"Closing Balance Sheet" shall have the meaning ascribed
thereto in Section 1.6.1.4 hereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Controlled Group of Companies" has the meaning set forth in
Code Section 414.
"Creditor" shall have the meaning ascribed thereto in
Section 101(10) of the Bankruptcy Code.
"Designated Licenses" means those certain Intellectual
Property Licenses of Sellers with each of Burberrys, Evan-Picone
and Liz Claiborne.
"Employee Benefit Plan" means any qualified or non-
qualified Employee Pension Plan, Employee Welfare Plan, Multi-
employer Plan and any Employee Other Benefit Plan.
"Employee Other Benefit Plan" shall have the meaning
ascribed thereto in Section 4.1.16 hereof.
"Employee Pension Plan" shall have the meaning ascribed
thereto in Section 4.1.16 hereof.
"Employee Welfare Plan" shall have the meaning ascribed
thereto in Section 4.1.16 hereof.
"Environmental, Health and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Occupational Safety and Health Act of 1970, the Clean Air Act
and the Federal Water Pollution Control Act, each as amended,
together with all other laws, rules and regulations of federal,
state, local, and foreign governments (and all agencies thereof)
and other requirements having the force or effect of law, and all
common law and judicial decisions, relating to or imposing
liability or standards of conduct concerning pollution or
protection of the environment, public health and safety, or
employee health and safety, and all injunctions, permits,
licenses, judgments, orders, decrees and agreements of federal,
state, local and foreign governments (and all agencies thereof)
issued, promulgated or entered into thereunder, whether now or
hereinafter in effect.
"Environmental Matters" means any matter relating to
pollution, protection of the environment, public health and
safety, employee health and safety or any Environmental, Health
and Safety Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Knoxville Equipment" means the machinery and
equipment listed on Schedule 1-C, as it may be amended by Buyer,
on or before December 31, 1996, to include any such machinery and
equipment located at Sellers Knoxville, Tennessee facility which
Buyer elects, in its sole discretion, not to use in any manner in
connection with the operation of any of Buyer s businesses.
"Excluded Trademarks" means the Haspel, Turnberry and
Gleneagles trademarks, plus the trademarks listed on Schedule 1-
B, as it may be amended by Buyer, on or before December 31, 1996,
to include such trademarks that Buyer determines, in its sole
discretion, have not at any time been used by any of Sellers in
any manner in connection with or relating to the marketing of
Sellers Burberrys, Evan-Picone, Claiborne, Palm Beach and
Brannoch production lines, brands and trademarks.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis, and on the same basis
as applied to the Prior Balance Sheets.
"Governmental Authority" means any nation or government (or
agency thereof), any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Intellectual Property" means any and all of the following
owned by, issued to or licensed to any Seller, along with all
income, royalties, damages and payments due or payable at the
Closing or thereafter (including, without limitation, damages and
payments for past or future infringements or misappropriations
thereof), the right to sue and recover for past infringements or
misappropriations thereof, the right to license and sublicense,
and any and all corresponding rights and value that may now or
hereafter be secured throughout the world: (i) all inventions,
all improvements thereto, and all patents, patent applications,
and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (ii) all registered and unregistered
trademarks, service marks, trade dress, logos, trade names, and
corporate names, and all applications, registrations, and
renewals in connection therewith, (iii) all patents,
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (iv) all
trade secrets and confidential business information, (v) all
computer software and related documentation, (vi) all other
proprietary rights, (vii) all copies and tangible embodiments
thereof; and (viii) all goodwill associated with all of the foregoing.
"Intellectual Property Licenses" means any and all
contractual, statutory and other applicable rights of Sellers to
employ, utilize, generate, develop, copy, license, or sublicense
any Intellectual Property, including, without limitation, the
Designated Licenses.
"Inventory" means any and all raw materials and supplies,
manufactured and purchased components, work-in-process, finished
goods and all other items of inventory, including, without
limitation, goods returned after the Closing Date, inventory in
transit for which full payment has been made and, subject to
Section 1.2, inventory ordered but not yet delivered.
"Laws" means all statutes, laws, ordinances, regulations,
rules, orders, judgements, writs, injunctions, acts or decrees of
any Tribunal or other Governmental Authority.
"Leased Real Property" shall have the meaning ascribed
thereto in Section 4.1.10(b) hereof.
"Letter of Intent" shall have the meaning ascribed thereto
in the recitals hereof.
"Liens" means any encumbrances, obligations, liabilities,
contractual commitments, claims, including, without limitation,
any theory of successor liability, de facto merger, or
substantial continuity, whether based in law or equity, employee
benefit obligations, (including, without limitation, under the
Employee Retirement Income Security Act and the Comprehensive
Omnibus Budget Reconciliation Act, any security interest,
mortgage, lien, charge against or interest in property, adverse
claim, claim of possession, right of way, license, easement or
restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership or any option to
purchase, option, charge, retention agreement which is intended
as security or other matters.
"Material Adverse Effect" shall mean the occurrence of any
material adverse change in the business, financial condition,
operating results, employee relations, customer relations,
supplier relations, assets or operations of Sellers taken as a
whole or in the condition or value of the Acquired Assets or the
Assumed Liabilities, other than such changes as may arise from
general economic conditions or from Sellers status pursuant to
the Chapter 11 Case.
"Maximum Assumed Payables" means $7.1 million except upon
the occurrence of a Chambersburg Event, in which case Maximum
Assumed Payables means $7,450,000.
"May Balance Sheet" shall have the meaning ascribed thereto
in Section 4.1.6(b) hereof.
"Multi-employer Plan" shall have the meaning ascribed
thereto in Section 4.1.16(a) hereof.
"Owned Real Property" shall have the meaning ascribed
thereto in Section 4.1.10 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization, any other business entity, or a governmental entity
(or any department, agency, or political subdivision thereof).
"Petition Date" shall have the meaning ascribed thereto in
the recitals hereof.
"Plaid Medical Plan" means Sellers' self-funded Employee
Welfare Plan that provides eligible non-union employees with
certain medical and dental care options.
"Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the close of business on the Closing
Date.
"Pre-Paid Expenses" means any and all deposits, prepayments
and prepaid expenses of Sellers (including those expenses
identified on the May Balance Sheet as Prepaids and Others,
subject to receipt by Buyer of an itemization thereof), the
benefit for which and value of may be transferred to Buyer as of
and after the Closing, but excluding prepayments relating to
premiums for workers compensation insurance.
"Prior Balance Sheets" means the May Balance Sheet and
Sellers' financial statements for the calendar year ending
December 31, 1995.
"Procedures Motion" shall have the meaning ascribed thereto
in the recitals hereof.
"Procedures Order" shall have the meaning ascribed thereto in
the recitals hereof.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.6.1.1 hereof.
"Real Property" means any and all fee, leasehold and other
interests in real property which constitute Acquired Assets, in
each case together with all buildings, fixtures, appurtenances
and improvements erected thereon or affixed or attached thereto,
including, without limitation, the property and items listed on
Schedules 1-A and 4-G hereto.
"Rejected Assets" shall have the meaning ascribed thereto in
Section 1.3 hereof.
"Sale Motion" shall have the meaning ascribed thereto in
Section 3.1.15(d) hereof.
"Sale Order" means that certain order pursuant to Sections
363 and 365 of the Bankruptcy Code, substantially in the form of
the order attached hereto as Exhibit D, authorizing Sellers to
consummate the transactions contemplated hereby (including,
without limitation, Buyer's purchase of the Acquired Assets of
Sellers free and clear of any Liens, confirming that Buyer
constitute good faith purchasers within the meaning of Section
363 of the Bankruptcy Code and providing for assumption and
assignment of the Assigned Contracts on the terms and conditions
set forth in Article VII above).
"Subsidiary" means a partnership, a corporation, a limited
liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or any
other business entity with respect to which a specified Person
(or a Subsidiary thereof) has the power to elect or appoint a
majority of the directors, trustee, or members of any other
governing body or to elect or appoint a general partner managing
member or other Person with the powers normally accorded a
general partner.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding,
social security, unemployment, disability, real property,
personal property, sales, use, transfer, leasing, registration,
value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, and including any
obligation to indemnify or otherwise assume or succeed to the Tax
liability of any other Person.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Transaction Documents" means this Agreement, the Letter of
Intent, the Procedures Motion, the Procedures Order, the
Assignment Motion, the Assignment Order, the Sale Motion, the
Sale Order, and any and all other documents, instruments,
certificates, deeds, contracts, bills of sale, or other
agreements affecting or relating in any way to the purchase and
sale of the Acquired Assets and the Assumed Liabilities as
described herein.
"Tribunal" means any government, arbitration panel, court or
governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state,
province, commonwealth, nation, territory, possession, country,
parish, town, township, village municipality or other
Governmental Authority, whether now or hereafter constituted
and/or existing.
"Unsold Brooks Finished Inventory" shall mean that portion
of the Brooks Finished Inventory (as defined in the Debtor s
Motion to Approve the Stipulation and Order Authorizing The
Private Sale of Certain Assets Free And Clear of Liens, Claims,
Encumbrances and Interests ) that is repurchased by Sellers from
Hartmarx at or before the Closing and not sold to Brooks Brothers
at or before the Closing.
"Union" means UNITE.
"WARN" means the Worker Adjustment and Retraining
Notification Act, as amended from time to time.
Exhibit 2.2
AMENDMENT NO. 1
TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this
"Amendment"), dated as of November 26, 1996, amends that certain
Asset Purchase Agreement, dated as of November 5, 1996 (the
"Agreement"), by and among HMX/PBP Company ("Buyer"), Hartmarx
Corporation and Plaid Clothing Group Inc., Plaid International
Inc., Plaid Retail Group Inc., Plaid Investment Co., Inc., Plaid
Finance Corp., Palm Beach Company, Inc., J. Schoeneman, Inc.,
Schoeneman Enterprises Holding, Inc., Schoeneman Enterprises,
Inc., and Ambrook Manufacturing, Inc., (collectively the
"Sellers"). Capitalized terms not otherwise defined herein have
the meanings given such terms in the Agreement.
WHEREAS, the parties to the Agreement wish to amend the
Agreement in the manner set forth below.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, the parties hereto
covenant and agree as follows:
1. Closing. The Closing shall take place on November
26, 1996, or at such other time as the parties shall agree.
2. Section 1.6.2 of the Agreement is hereby amended
and restated to read in its entirety as follows:
"Section 1.6.2 Royalties. Buyer shall pay to
Sellers, on or before the 45th day following the first
anniversary of the Closing Date, cash in an amount
determined by subtracting (i) $500,000 from (ii) 2% of
Buyer's Net Sales Revenues during the first year
following the Closing in respect of those product
categories acquired by Buyer from Sellers, as set forth
on Schedule 1-G (the "Product Categories"). In the
event that Buyer sells or discontinues, prior to the
first anniversary of the Closing Date, any of the
businesses relating to the Product Categories, the
sales of which are included in Sellers' September 1996
sales forecast for 1997, which projections appear
opposite each Product Category on Schedule 1-G (the
"Projections"), then, for purposes of calculating
Buyer's Net Sales Revenues for the first year following
the Closing only and not for any other period, revenues
generated from sales for any such sold Product
Categories shall be deemed equal to the projected
annual sales for such Product Categories as reflected
in the Projections. On or before the 45th day
following each of the second, third and fourth
anniversary of the Closing Date, Buyer shall pay to
Sellers an amount equal to 1% of Buyer's Net Sales
Revenue in excess of $107.5 million in respect of the
Product Categories for the preceding year. "Net Sales
Revenue" shall mean revenues generated from sales, net
of returns, discounts and allowances, each as
determined in accordance with GAAP."
3. Section 3.1.16 of the Agreement is hereby amended
and restated to read in its entirety as follows:
"Section 3.1.16 Financial Statements. Buyer
shall have received from Sellers (i) financial
information sufficient to permit Buyer and Hartmarx, in
their sole and absolute discretion, and without
additional cost to Sellers, to satisfy the obligations
of Buyer (or Hartmarx) with respect to applicable law,
including, without limitation, all securities laws,
rules and regulations with respect to the transactions
(which may require Sellers to assist Buyer and/or
Hartmarx in obtaining, at Buyer's sole expense,
certified financial statements for periods preceding
the Closing) and (ii) such unaudited financial
statements of Sellers for the current year through the
most recent period for which such financial statements
are available, prepared in accordance with GAAP."
From and after the Closing, at Buyer's sole expense, Sellers
shall provide Buyer and/or Hartmarx with such assistance as Buyer
shall reasonably request in providing the financial information
referred to above.
4. Sellers' Names. The final sentence of Section 8.7
of the Agreement is hereby amended to add the clause "To the
greatest extent reasonably practicable" to the beginning of such
sentence.
5. Effective as of the Closing, ownership and control
of all bank accounts of Sellers having non-negative balances
shall be transferred to buyer and Sellers shall cooperate with
Buyer and take such further actions as may be necessary to effect
such transfers.
6. Section 1.4 of the Agreement is hereby amended and
restated to read in its entirety as follows:
"Section 1.4 Assumed Liabilities. On and subject
to the terms and conditions of this Agreement, and
subject to the satisfaction of the conditions precedent
set forth herein, Buyer shall assume only the following
obligations and liabilities (collectively, the "Assumed
Liabilities") of any of Sellers (and the omission of
any obligation or liability from this section shall be
deemed an affirmative agreement by the Parties that
such obligation or liability shall not be assumed by
Buyer):
(a) any trade (including payables for piece
goods and trim) and other accounts payable (including
for utilities and supplies) of Sellers as identified on
Schedule 1-D, to the extent set forth on the Closing
Balance Sheet (other than the footnotes thereto, if
any), but only to the extent such liabilities: (i) are
properly recorded thereon, (ii) have been incurred in
the ordinary course of business consistent with past
custom and practice, and (iii) are of the same type and
nature as those liabilities of Sellers, with respect to
Acquired Assets and Assumed Liabilities, set forth on
the face of the Prior Balance Sheets, none of which
relates to any (A) Taxes (to the extent not expressly
agreed to be paid by Buyer pursuant hereto), (B) any
intercompany note payables or any intercompany
indebtedness for borrowed money, (C) breach of
contract, (D) breach of warranty, (E) tort, (F)
infringement, (G) workers' compensation claims or
liabilities, obligations or reserves relating to any
workers' compensation insurance program or arrangement,
(H) violation of law, (I) any action, suit or
proceeding (including, without limitation, any
obligation or liability arising under any
Environmental, Health and Safety Laws or product
liability laws), or (J) subject to the penultimate
sentence of Section 1.6, health insurance or other
medical benefits;
(b) any accrued employee payroll, vacation
and holiday pay, and the payment obligations set forth
in the penultimate sentence of Section 1.6, and certain
other accrued union and non-union employee benefit
obligations as identified on Schedule 1-E, to the
extent set forth on the Closing Balance Sheet, but
excluding any and all severance obligations;
(c) solely to the extent that the aggregate
of the Assumed Liabilities specified in subsection (a)
and subsection (b) of this Section 1.4 are less than
the Maximum Assumed Payables, other current liabilities
of Sellers identified on Schedule 1-F (which schedule
shall be prepared by Sellers, but subject to Buyer's
approval), but only to the extent such liabilities are
set forth on the Closing Balance Sheet, it being
understood that, notwithstanding the foregoing
limitations, in no event shall the Assumed Liabilities
specified in subsections (a), (b) and (c) of this
Section 1.4 be less than or greater than the Maximum
Assumed Payables;
(d) any liabilities and obligations to the
extent arising solely, and attributable to actions,
conditions or events occurring solely, after the
Closing Date and relating exclusively to (i) the
Assigned Contracts, (ii) the assumed Intellectual
Property Licenses (including the Designated Licenses),
(iii) that certain headquarters lease of Sellers in New
York, New York (the "HQ Lease"), and (iv) outstanding
purchase orders of inventory (other than purchase
orders under which any Seller or the third-party
supplier is in default) made by Sellers to suppliers
(but only to the extent, in the sole and reasonable
discretion of Buyer, that such orders were made on
price and quantity terms, and otherwise consistent
with, Sellers' normal course of business and past
custom and practice); and in each case, only to the
extent such contracts, licenses, leases and purchase
orders are identified and expressly designated on the
Assigned Contracts List and are actually assigned to
Buyer; and
(e) any other specific liabilities and
obligations, if any, expressly assumed by Buyer under
this Agreement and the Approval Order."
7. Waiver of Sale Order Condition. The conditions
set forth in Sections 3.1.13 and 3.3.4 of the Agreement that the
Sale Order be entered on or before November 15, 1996 are hereby
waived by each of the parties hereto.
8. Miscellaneous. The provisions of Sections 10.1,
10.2, 10.3, 10.4, 10.5, 10.6, 10.8, 10.10 and 10.14 of the
Agreement shall also govern this Amendment.
9. Effect of this Amendment. The Agreement, as
amended pursuant to the terms of this Amendment, shall be and
continue in full force and effect after the time of this
Amendment with respect to each of the parties hereto.
In Witness Whereof, each of the parties hereto has
caused this Amendment to be duly executed on the day and year
first above stated.
HMX/PBP Company
By: Mary D. Allen
Its: Executive Vice President
Printed Name: Mary D. Allen
Hartmarx Corporation, solely for
purposes of Sections 4.2.2-4.2.4,
10.8 and 10.15 hereof
By: Mary D. Allen
Its: Executive Vice President/General
Counsel
Printed Name: Mary D. Allen
Ambrook Manufacturing, Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Palm Beach Company, Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Plaid Clothing Group Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Plaid International Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Plaid Investment Co., Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
J. Schoeneman, Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Schoeneman Enterprises, Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Schoeneman Enterprises Holding, Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Plaid Retail Group Inc.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
Plaid Finance Corp.,
Debtor-In-Possession
By: Dennis P. McNamara
Its: Senior Vice President/General
Counsel
Printed Name: Dennis P. McNamara
EXHIBIT 2.3
HARTMARX ACQUISITION OF PLAID ASSETS APPROVED
--MAJOR STRATEGIC GROWTH OPPORTUNITY--
Contact: Adriana Schmeling 212-840-4772
CHICAGO, November 22, 1996 -- Hartmarx Corporation
(NYSE: HMX) today announced that its purchase offer for
certain of the assets of Plaid Clothing Group Inc. has
received court approval.
Elbert O. Hand, chairman and chief executive officer
of Hartmarx, commented, "The acquisition of the five
product lines of Plaid is a major threshold for Hartmarx.
We have concentrated our efforts in the past four years
on restoration of our core strengths in marketing and
manufacturing of branded consumer apparel products by
establishing new brands and product lines while
eliminating all retail operations and reducing our debt
burden. Our renewed financial strength has enabled the
Company to turn its attention to major new growth
opportunities such as the Plaid brands: Burberry's,
Claiborne, Evan-Picone, Palm Breach and Brannoch, our
recently announced sportswear venture with Robert
Comstock and the Kenneth Cole tailored clothing line."
Homi B. Patel, president and chief operating officer
of Hartmarx, stated, "The terms of our purchase include a
cash payment of $36 million, subject to adjustment based
upon changes in working capital since May 31, 1996, the
assumption of up to $7.1 million in accounts payable and
other liabilities, and a royalty payment of 2% of the
first year sales of the acquired brands. In addition, we
will issue 400,000 warrants to purchase Hartmarx
Corporation common stock at $5.50 per share to be
dedicated exclusively for the benefit of the unsecured
creditors."
Mr. Patel continued, "This acquisition allows us to
increase our market presence and profitability with some
exceptionally well-accepted brands. Each brand fits into
its own niche with little overlap or duplication in the
key segments."
"The acquisition process was complex and the dire
financial condition of Plaid required the cooperation of
many parties to maintain an economically viable unit.
The help and understanding of Plaid's major suppliers,
licensors and the union, UNITE, was crucial to bringing
this transaction to fruition and saving over 1,000 jobs."
Mary D. Allen, executive vice president, general
counsel and secretary of Hartmarx, stated, "Now that we
have received formal court approval, we plan to complete
the transaction by the end of November. This will be
preceded by a pre-closing valuation of the assets of
Plaid Clothing Group, Inc."
Glenn R. Morgan, executive vice president and chief
financial officer of Hartmarx, noted, "The success
Hartmarx has attained in debt reduction over the past
four years has made it possible to pursue major
opportunities such as Plaid. The cash generated by our
current operating companies from earnings and improved
utilization of working capital has enabled us to fund
this acquisition from our existing credit facility. Even
after the cash payment for the Plaid assets our November
30, 1996 equity-to-debt ratio should be the highest since
1991. We have very substantial availability under our
credit arrangements and our lenders have given this
transaction their strong endorsement."
Mr. Hand concluded, "We are confident that this
acquisition will be very well received by all of our
constituencies, including our customers, our suppliers,
our employees and our shareholders. We have already
received very favorable feedback from both the retailer
and the investment analyst community since the court
decision."
The comments set forth above contain forward-looking
statements made in reliance upon the safe harbor
provisions of the Private Securities Litigation Reform
Act of 1995. The statements contained in Exhibit 99 of
the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission are incorporated
herein by reference and the reader is referred to such
statements for a discussion of factors which could affect
the Company's operations and forward-looking statements
contained in this release.
Hartmarx products and markets business, casual and
golfing apparel under a number of leading brands
including Hart Schaffner & Marx, Hickey-Freeman, Austin
Reed, KM by Krizia, Tommy Hilfiger, Nino Cerruti, Pierre
Cardin, Perry Ellis, Gieves & Hawkes, Racquet Club,
Daniel Hechter, Karl Lagerfeld, John Alexander, Riserva,
Jack Nicklaus, Bobby Jones, Sansabelt, Hawksley & Wight,
Crossings and Barrie Pace through a broad range of
channels including fine specialty and leading department
stores, value-oriented retailers and direct mail
catalogs.
EXHIBIT 2.4
HARTMARX ACQUISITION OF PLAID ASSETS COMPLETED
Contact: Frank Brenner 312-357-5111
CHICAGO, November 27, 1996 -- Hartmarx Corporation
(NYSE: HMX) today announced that it has completed its
purchase of certain assets of Plaid Clothing Group, Inc.
in accordance with the November 22, 1996 bankruptcy court
order approving this transaction.
Hartmarx produces and markets business, casual and
golfing apparel under a number of leading brands
including Hart Schaffner & Marx, Hickey-Freeman,
Burberry's, Austin Reed, KM by Krizia, Tommy Hilfiger,
Nino Cerruti, Pierre Cardin, Perry Ellis, Kenneth Cole,
Gieves & Hawkes, Claiborne, Evan Picone, Daniel Hechter,
Riserva, Robert Comstock, Karl Lagerfeld, Palm Beach,
Racquet Club, John Alexander, Brannoch, Jack Nicklaus,
Bobby Jones, Sansabelt, Hawksley & Wight, Crossings and
Barrie Pace through a broad range of channels including
fine specialty and leading department stores, value-
oriented retailers and direct mail catalogs.
