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) February 17, 1995
PHILLIPS-VAN HEUSEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-724 13-1166910
(Commission File Number) (IRS Employer Identification Number)
1290 Avenue of the Americas, New York, New York 10104
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 541-5200
Page 1 of 96 pages
Exhibit Index appears on page 5
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ITEM 2. Acquisition or Disposition of Assets
On February 17, 1995, Phillips-Van Heusen Corporation (the
"Registrant"), a Delaware corporation, completed its previously
reported acquisition of substantially all of the remaining assets
of Crystal Brands, Inc. and five of its wholly owned direct and
indirect subsidiaries, Crystal Apparel, Inc., Gant Corporation,
Crystal Sales, Inc., Eagle Shirtmakers, Inc. and Crystal Brands
(Hong Kong) Limited (collectively "Crystal Brands"). The assets
acquired constituted the men's and women's apparel design,
production, marketing, sale (including retail sale) and
distribution business (the "Business") operated by Crystal Brands
and included the acquisition of the "Izod," "Gant" and "Salty
Dog" brand trademarks owned by Crystal Brands. The purchase
price for the assets acquired was $114.7 million, which was paid
in cash but is subject to certain adjustments. Pursuant to the
Asset Sale Agreement between the parties, the Registrant also
assumed certain liabilities of Crystal Brands. The majority of
the purchase price was paid from the Registrant's available cash
and the remaining portion was funded through a loan under the
Registrant's existing credit facility provided by Bankers Trust
Company (which also acts as agent for the other banks in the
facility), The Bank of New York, The Chase Manhattan Bank, N.A.,
Chemical Bank, CIBC, Inc., Citibank, N.A., The First National
Bank of Boston, and Union Bank.
The terms of the Asset Sale Agreement were negotiated by the
Registrant and Crystal Brands on an arm's length basis. The
purchase price paid for the assets acquired from Crystal Brands
was based upon the projected tangible net worth of the assets
acquired on or about the closing date and will be adjusted to
reflect the actual tangible net worth thereof as of February 17,
1995.
Crystal Brands has operated under Chapter 11 of the Federal
Bankruptcy Code since January 1994, and the acquisition by the
Registrant received approval from a Federal Bankruptcy Court on
February 17, 1995.
ITEM 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Pursuant to Rule 3.05(b) promulgated under Regulation S-X,
the Registrant is required to file audited financial statements
for the Business for the fiscal year ended December 31, 1994.
Audited financial statements of the Business for the fiscal year
ended December 31, 1994, have not yet been prepared due both to
the recent end of such period and the fact that the Business was
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not a separate reporting unit of Crystal Brands. Therefore, the
required financial statements are currently not available and
will be filed with the Commission as soon hereafter as is
practicable, but in no event later than May 3, 1995.
(b) Pro forma financial information.
Pursuant to Article 11 of Regulation S-X, the Registrant is
required to file a pro forma condensed balance sheet, a pro forma
condensed statement of income, and accompanying explanatory notes
based on the financial statement providing investors with
information about the continuing impact of the acquisition of the
Business by showing how it might have affected the historical
financial statements of the Registrant for the fiscal year ended
January 29, 1995 had the transaction been consummated at January
31, 1994. Pro forma financial statements for the Registrant,
including the Business, for the fiscal year ended January 29,
1995 have not yet been prepared due both to the recent end of
such period and the fact that the acquisition was only recently
consummated. Therefore, the required pro forma financial
statements are currently not available and will be filed with the
Commission as soon hereafter as is practicable, but in no event
later than May 3, 1995.
(c) Exhibits:
1. Asset Sale Agreement, dated January 24, 1995, among
Crystal Brands, Inc., Crystal Apparel, Inc., Gant
Corporation, Crystal Sales, Inc., Eagle Shirtmakers,
Inc., Crystal Brands (Hong Kong) Limited and Phillips-
Van Heusen Corporation
*2. Financial Data Schedule
3. Phillips-Van Heusen Corporation Press Release, dated
February 17, 1995
________________________
* To be filed by amendment
<PAGE>
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 hereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
By Pamela N. Hootkin
Name: Pamela N. Hootkin
Title: Vice President
Date: March 6, 1995
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
1 Asset Sale Agreement, dated January 24,
1995, among Crystal Brands, Inc., Crystal
Apparel, Inc., Gant Corporation, Crystal
Sales, Inc., Eagle Shirtmakers, Inc.,
Crystal Brands (Hong Kong) Limited and
Phillips-Van Heusen Corporation
* 2 Financial Data Schedule
3 Phillips-Van Heusen Corporation Press
Release, dated February 17, 1995
________________________
* To be filed by amendment
<PAGE>
ASSET SALE AGREEMENT
AMONG
CRYSTAL BRANDS, INC.,
CRYSTAL APPAREL, INC.,
GANT CORPORATION,
CRYSTAL SALES, INC.,
EAGLE SHIRTMAKERS, INC.,
CRYSTAL BRANDS (HONG KONG) LIMITED
AND
PHILLIPS-VAN HEUSEN CORPORATION
DATED AS OF JANUARY 24, 1995
<PAGE>
ASSET SALE AGREEMENT
AGREEMENT, dated as of January 24, 1995, among Crystal
Brands, Inc., a Delaware corporation, Crystal Apparel, Inc., a
Maine corporation, Gant Corporation, a Delaware corporation,
Crystal Sales, Inc., a Maine corporation, Eagle Shirtmakers,
Inc., a New York corporation, and Crystal Brands (Hong Kong)
Limited, a Hong Kong corporation (hereinafter referred to
collectively as "Seller"), and Phillips-Van Heusen Corporation, a
Delaware corporation (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, each Seller (other than Crystal Brands (Hong Kong)
Limited) is a "debtor-in-possession" under Chapter 11, Title 11
of the United States Code (the "Bankruptcy Code") in Case No. 94
B 40318, et seq. (PBA) in the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court"); and
WHEREAS, Seller is engaged in the design, production,
marketing, sale (including retail sale) and distribution of men's
and women's apparel products and related executive and adminis-
trative functions (collectively, the "Business"); and
WHEREAS, Seller desires to sell, assign and transfer to
Purchaser, and Purchaser desires to purchase and acquire from
Seller, the Business as a going concern and substantially all of
the assets and properties relating thereto (other than the
Excluded Assets, as hereinafter defined) for the purchase price,
the assumption of certain liabilities and obligations of Seller,
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and upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions. As used in this Agreement, the Exhibits,
Schedules and other documents delivered in connection herewith,
the following terms shall have the indicated meanings, which
meanings shall be applicable, except to the extent otherwise
indicated in a definition of a particular term, both to the
singular and plural forms of such terms. Any agreement referred
to below shall mean such agreement as amended, supplemented and
modified from time to time to the extent permitted by the
applicable provisions thereof and by this Agreement.
"Accounts Payable" has the meaning specified in Section
2(d)(ii) of this Agreement.
"Accounts Receivable" has the meaning specified in Section
2(a)(xii) of this Agreement.
"Affiliate" shall mean, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under
common control with such Person.
<PAGE>
"Approval Order" has the meaning specified in Section 5(d)
of this Agreement.
"Assets" has the meaning specified in Section 2(a) of this
Agreement.
"Assumed Liabilities" has the meaning specified in Section
2(d) of this Agreement.
"Balance Sheet Date" shall mean October 1, 1994.
"Bankruptcy Code" has the meaning specified in the
first recital of this Agreement.
"Bankruptcy Court" has the meaning specified in the first
recital of this Agreement.
"Best Efforts" shall mean commercially reasonable good faith
efforts but shall in no event require the commencement of litiga-
tion or the surrender of any legal or contractual rights against
or the payment of any fees or other amounts to any third party;
provided, however, that nothing herein shall obviate (i) Seller's
obligation to pay amounts due under any contract or with respect
to any contractual relationship which Seller is required
hereunder to maintain and (ii) the obligation of Seller to incur
expenses (including attorneys' fees and expenses) in connection
with the preparation, filing and prosecution of the motion for
the Approval Order.
<PAGE>
"Business" has the meaning specified in the second recital
of this Agreement.
"Business Day" shall mean any weekday on which commercial
banks in New York City are open. Any action, notice or right
which is to be exercised or lapses on or by a given date which is
not a Business Day may be taken, given or exercised, and shall
not lapse, until the end of the next Business Day.
"Closing" has the meaning specified in Section 9(a) of this
Agreement.
"Closing Date" has the meaning specified in Section 9(a) of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean that certain letter
agreement dated as of November 21, 1994, between Crystal Brands,
Inc. and Purchaser with respect to, among other things, the
treatment of confidential information regarding Seller and the
Business.
"Environmental Laws" has the meaning specified in Section
3(m) of this Agreement.
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"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated
thereunder.
"ERISA Affiliate" has the meaning specified in Section 3(r)
of this Agreement.
"Excluded Assets" has the meaning specified in Section 2(a)
of this Agreement.
"Excluded Liabilities" has the meaning specified in Section
2(d) of this Agreement.
"Financial Statements" shall mean the unaudited Balance
Sheets of the Business as at January 1, 1994 and October 1, 1994
and the related Statements of Operations of the Business for the
fiscal year and nine months then ended, respectively, and the
unaudited Statement of Cash Flows of the Business for the nine
month period ended October 1, 1994.
"Hart-Scott-Rodino Act" has the meaning specified in Section
5(e) of this Agreement.
"Intellectual Property" has the meaning specified in Section
2(a)(x) of this Agreement.
"Inventory" has the meaning specified in Section 2(a)(iii)
of this Agreement.
<PAGE>
"Knowledge of Seller" shall mean the actual knowledge of
Seller. For all such purposes, the knowledge of Seller shall
include the actual knowledge of each of the officers and direc-
tors of Seller, and other management personnel who would reason-
ably be expected to have knowledge of, or responsibility for, the
subject matter in question.
"Leased Real Estate" has the meaning specified in Section
2(a)(ii) of this Agreement.
"Leases" has the meaning specified in Section 2(a)(ii) of
this Agreement.
"Letter Agreement" has the meaning specified in Section 5(d)
of this Agreement.
"Liens" has the meaning specified in Section 3(d)(i) of this
Agreement.
"Material Adverse Effect" shall mean a material adverse
effect on the business, assets, financial condition or results of
operations of the Business taken as a whole or a material adverse
effect on the ability of Seller to perform its obligations
hereunder.
"Materials of Environmental Concern" shall mean chemicals,
pollutants, contaminants, industrial, toxic or hazardous sub-
stances or wastes that could give rise to liability under any
Environmental Law, including, without limitation, insecticides,
<PAGE>
fungicides, rodenticides, gasoline or any other petroleum product
or by-product, polychlorinated biphenyls, asbestos, urea
formaldehyde, radiation, emissions, waves or fields and
radioactive materials.
"Multiemployer Pension Plan" has the meaning specified in
Section 2(f)(i) of this Agreement.
"Multiemployer Plans" has the meaning specified in Section
2(f)(ii) of this Agreement.
"Person" shall mean an individual, corporation, partnership
(limited or general) joint venture, association, trust, any other
unincorporated organization or entity or a governmental entity or
any department or agency thereof.
"Petition Date" shall mean January 21, 1994.
"Plans" has the meaning specified in Section 2(f)(ii) of
this Agreement.
"Purchase Price" has the meaning specified in Section 2(b)
of this Agreement.
"Purchaser" has the meaning specified in the first paragraph
of this Agreement.
"Seller" has the meaning specified in the first paragraph of
this Agreement.
<PAGE>
"Supplies" has the meaning specified in Section 2(a)(iv) of
this Agreement.
"Tax" or "Taxes" shall mean federal, state, local or foreign
income, capital gains, profits, gross receipts, payroll, capital
stock, franchise, employment, withholding, social security,
unemployment, disability, real property, personal property,
stamp, excise, occupation, sales, use, transfer, mining, value-
added, investment credit recapture, alternative or add-on mini-
mum, environmental, estimated or other taxes, duties or assess-
ments of any kind, including any interest, penalty and additions
imposed with respect to such amounts.
"Tax Returns" shall mean all returns and reports (including
schedules attached thereto) required to be filed with or supplied
to a taxing authority with respect to Taxes.
"Trademarks" has the meaning specified in Section 2(a)(x) of
this Agreement.
"Transferred Employees" has the meaning specified in Section
2(f)(i) of this Agreement.
"WARN" has the meaning specified in Section 3(f) of this
Agreement.
<PAGE>
2. The Transaction.
(a) Sale and Purchase of Assets. On the Closing Date,
on the terms and subject to the conditions set forth in this
Agreement, Seller hereby agrees to sell, convey, assign, transfer
and deliver or cause to be sold, conveyed, assigned, transferred
and delivered to Purchaser, and Purchaser hereby agrees to
purchase and accept from Seller, all of the right, title and
interest of Seller in and to all of the assets, rights, privileg-
es, claims, contracts and properties of every kind, nature,
character and description, real, personal and mixed, tangible and
intangible, absolute or contingent, wherever located, primarily
used in or relating to the conduct of the Business, other than
the Excluded Assets (collectively, the "Assets"), free and clear
of all Liens (but, as to property leased by or to Seller, subject
to the respective leases thereof), including, without limitation,
the following:
(i) all the furniture, fixtures, furnishings,
vehicles, machinery, equipment, tools, dies, molds, spare parts
and other tangible personal property which are located or
customarily based at any facility owned or leased by Seller and
primarily used in or relating to the conduct of the Business, and
all warranties and guarantees, express or implied, existing for
the benefit of Seller or its Affiliates in connection with the
foregoing;
<PAGE>
(ii) the tenant's leasehold interest in the
premises more particularly described in Schedule 2(a)(ii) hereto
arising under the leases (the "Leases") more particularly de-
scribed in said Schedule 2(a)(ii), and all easements, privileges,
rights-of-way, riparian and other water rights, lands underlying
any adjacent streets or roads, appurtenances, licenses, permits
and other rights pertaining to or accruing to the benefit of such
property (hereinafter collectively referred to as the "Leased
Real Estate");
(iii) all inventories of Seller of raw materials,
work-in-process, goods in transit and finished goods relating to
the Business wherever located (hereinafter collectively referred
to as the "Inventory");
(iv) all packaging materials and other supplies
of Seller relating to the Business wherever located (hereinafter
collectively referred to as the "Supplies");
(v) each of the contracts, agreements, purchase
commitments for materials and other services and real and person-
al property leases, whether or not entered into in the ordinary
course of business, relating to the Business, all as set forth on
Schedule 2(a)(v) hereto, Seller's purchase orders relating to the
Business, Seller's rights under any confidentiality agreements
relating to the Business (if and to the extent assignable) and
any contracts, agreements, purchase commitments for materials and
<PAGE>
other services and personal property leases entered into by
Seller relating to the Business after the date hereof in the
ordinary course of business of a type similar to those listed on
such Schedule 2(a)(v) and as permitted by Section 5(c) of this
Agreement;
(vi) all unfilled sales orders, invoices, con-
tracts and commitments with customers relating to the Business
which have been entered into prior to the date hereof in the
ordinary course of business or in compliance with Section 5(c)
hereof and which are in existence on the Closing Date;
(vii) all unfilled purchase orders, invoices,
contracts and commitments with suppliers relating to the Business
which have been entered into prior to the date hereof in the
ordinary course of business or in compliance with Section 5(c)
hereof and which are in existence on the Closing Date;
(viii) all of the Business as a going concern
(including, without limitation, the names "Crystal Brands,"
"Crystal Brands, Inc.," "Crystal Apparel, Inc.," "Crystal Sales,
Inc." or any simulations or variations thereof) and the goodwill
pertaining thereto; provided, however, that each Seller shall
have the right to use its respective name as its corporate name
until, and solely in connection with, the consummation of its
plan of reorganization/liquidation under the Bankruptcy Code and
matters attendant thereto;
<PAGE>
(ix) all customer, client and vendor lists and
merchandise and sales promotion literature and promotional and
advertising materials owned by Seller and related to the Busi-
ness, and all catalogues, research material, management informa-
tion systems, software, technology and specifications, if any,
owned by Seller and used primarily in the Business, other than
software, lists and other materials used by Seller for the sole
purpose of reconciling claims in its bankruptcy cases;
(x) all United States and foreign trademarks,
tradenames, service marks and registrations and applications for
registration therefor (collectively referred to herein as the
"Trademarks"), United States and foreign patents and patent
applications and improvements thereon, assumed names, logos,
copyrights, copyright registrations and applications therefor,
including derivatives and renewals thereof, trade secrets,
formulae, inventions, technical information, know-how, processes,
other confidential information and all other intellectual
property throughout the world owned by, licensed to or used by
Seller in connection with or applicable to the Business (the
foregoing being collectively referred to herein as "Intellectual
Property"), including, without limitation, the registered
Trademarks listed on Schedule 2(a)(x) hereto, and all derivations
thereof, together with the goodwill of Seller symbolized by the
marks, and such patents and patent applications, trademark and
<PAGE>
copyright registrations and applications therefor being more
particularly described on Schedule 2(a)(x) hereto;
(xi) subject to Section 5(c) hereof, all advance
payments, prepaid expense items and credits relating to the
Business in existence on the Closing Date;
(xii) all accounts and notes receivable and
contingent rights relating thereto, deposits and advances, and
other receivables associated with or arising out of the Business
(other than those owing from any Seller to another Seller or from
an Affiliate of Seller to Seller) in existence on the Closing
Date (the "Accounts Receivable");
(xiii) all of Seller's books and records pertain-
ing primarily to the Business, including, without limitation, all
books of account, tax books and records relating to property,
sales and other Taxes not based on or measured by income, busi-
ness books and records, operating data and plans, together with
all files, contracts, instruments and other documents pertaining
to the Assets being acquired by Purchaser hereunder; provided,
however, that Purchaser shall preserve such books and records and
Seller shall have the right of reasonable access to and examina-
tion of such books and records, including the right to make
copies thereof, for a period of six (6) years from the Closing
Date upon reasonable notice to Purchaser and during normal
business hours. At the end of such six-year period, Purchaser
<PAGE>
shall not destroy or dispose of such books and records without
first offering to deliver them to Seller, at no cost or expense
to Seller; and
(xiv) all federal, state, local, foreign and
other governmental licenses, permits, approvals and authoriza-
tions associated with or necessary for the conduct of the
Business as conducted on the Closing Date, other than those which
are not transferable.
Notwithstanding anything to the contrary contained herein,
it is agreed that Seller is not selling and Purchaser is not
buying (1) any cash, cash equivalents, securities or other
investments held by Seller; (2) the minute books, stock record
books, stock ledgers, Tax Returns, tax books and records and
similar financial and other records of Seller which, (x) relate
to income taxes; provided, however, that Purchaser shall have
access during regular business hours to such records, including
for purposes of making summaries and copies thereof (at
Purchaser's expense), as they pertain to the Business and Assets
upon reasonable notice to Seller; and provided further, however,
that in the event that Seller desires to destroy or dispose of
any such records, Seller shall first offer to deliver, at
Purchaser's expense, any or all of such Tax Returns, tax books
and records and similar financial or other records relating to
income taxes payable with respect to the Business as Purchaser
may request; and (y) in the case of all other Tax Returns and tax
<PAGE>
books and records, do not pertain primarily to the Business;
provided, however, that Purchaser shall have access during
regular business hours to such records, including for purposes of
making summaries and copies thereof (at Purchaser's expense), as
they pertain to the Business and Assets upon reasonable notice to
Seller; (3) Seller's claim, right or interest in any refunds of
Taxes paid by Seller; (4) any claims, counterclaims, offsets,
defenses or causes of action arising prior to the Closing Date,
other than to the extent relating to the Assets or Assumed
Liabilities; (5) Seller's claim, right or interest in any
payments due to Seller from Jones Apparel Group, Inc., or any
Affiliate thereof, in connection with the sale of the "Evan
Picone" trademark; or (6) any assets, properties or contracts
listed on Schedule 2(a)(6) hereto (collectively, the "Excluded
Assets").
(b) Purchase Price. Subject to adjustment pursuant to
Section 2(c) hereof, the purchase price for the Assets (the
"Purchase Price") shall be $148,870,000, consisting of (i)
$66,400,000 for the Intellectual Property, (ii) $11,708,000 for
fixed assets, (iii) $6,903,000 for other noncurrent assets, (iv)
$24,288,000 for the estimated amount of receivables on the
Closing Date, (v) $36,500,000 for the estimated amount of
inventory on the Closing Date and (vi) $3,071,000 for the
estimated amount of other current assets on the Closing Date. On
the Closing Date, the Purchase Price shall be paid by (a) wire
<PAGE>
transfer to the account specified by Seller on or prior to the
Closing Date of immediately available funds (the "Cash Portion")
in the amount of $114,711,000, or, in the event that Purchaser
enters into the agreement or delivers the bonds contemplated by
the first sentence of Section 2(c)(viii) hereof, $111,711,000 and
(b) the assumption by Purchaser of the items of Assumed
Liabilities that represent (i) accounts payable, which are
estimated to be $5,247,000 on the Closing Date, (ii) accrued
expenses, which are estimated to be $11,113,000 on the Closing
Date and (iii) noncurrent liabilities, which are estimated to be
$17,799,000 on the Closing Date. On the Closing Date, $3,000,000
of the Cash Portion shall be deposited by Purchaser in an escrow
account (the "Escrow Account") pursuant to an Escrow Agreement
(the "Escrow Agreement"), substantially in the form attached
hereto as Exhibit A, with an escrow agent mutually acceptable to
Seller and Purchaser, and released at the Supplemental Closing as
provided in Section 2(c)(vi) hereof. Interest earned on funds
held in the Escrow Account shall be for the account of the party
hereto which is entitled thereto as provided in said Section
2(c)(vi).
(c) Purchase Price Adjustment. (i) Promptly
after the Closing Date, Purchaser shall cause to be prepared and
delivered to Seller an audited balance sheet of the Business as
of the Closing Date (the "Closing Date Balance Sheet") and a
calculation of Tangible Net Worth as reflected on the Closing
Date Balance Sheet. The Closing Date Balance Sheet shall be
<PAGE>
prepared within 90 days of Closing in accordance with the books
and records of Seller and with generally accepted accounting
principles applied on a basis consistent with the Projected
Balance Sheet. For purposes of this Agreement (A) "Tangible Net
Worth" shall mean an amount equal to (1) the total Assets of the
Business, excluding the Excluded Assets, on a balance sheet less
(2) any intangible asset value, including, without limitation,
excess reorganization value, goodwill and deferred Taxes, of the
Business set forth on the same balance sheet less (3) total
current liabilities of the Business set forth on the same balance
sheet less (4) noncurrent liabilities of the Business set forth
on the same balance sheet, in each case prepared in accordance
with generally accepted accounting principles applied on a basis
consistent with the Projected Balance Sheet and (B) "Projected
Balance Sheet" shall mean the projected February 25, 1995 balance
sheet of Seller, a copy of which is annexed hereto as Exhibit B.
(ii) Seller shall have a period of ten
Business Days after delivery of the Closing Date Balance Sheet to
present in writing to Purchaser any objections Seller may have to
any of the matters set forth therein which relate to Purchaser's
calculation of Tangible Net Worth as of the Closing Date, which
objections shall be set forth in reasonable detail. If no
objections are raised within such ten Business Day period, the
Closing Date Balance Sheet and the calculation of Tangible Net
Worth as of the Closing Date shall be deemed to be accepted and
<PAGE>
approved by Seller and a supplemental closing (the "Supplemental
Closing") shall be held on the fifth Business Day following the
expiration of such ten Business Day period, or on such other date
as may be mutually agreed upon in writing by Purchaser and
Seller.
(iii) If Seller shall raise any objections
within the aforesaid ten Business Day period, Seller and
Purchaser, together with their respective independent certified
public accountants, shall attempt promptly to resolve the matter
or matters in dispute and, if resolved, such firms shall send a
joint notice to Purchaser and Seller stating the manner in which
the dispute was resolved, and a confirmation of Purchaser's
calculation of Tangible Net Worth as of the Closing Date or a
revised calculation of Tangible Net Worth as of the Closing Date
based upon such resolution, whereupon the confirmed or revised
calculation of Tangible Net Worth as of the Closing Date shall be
final and binding on the parties hereto. The Supplemental
Closing shall then take place five Business Days following the
receipt of such notice by Purchaser and Seller, or on such other
date as may be mutually agreed upon in writing by Purchaser and
Seller.
(iv) If such dispute cannot be resolved by
Purchaser and Seller nor by the aforesaid accounting firms within
30 days after the delivery of Seller's objection to the Closing
Date Balance Sheet, then the specific matters in dispute shall be
<PAGE>
submitted to Coopers & Lybrand (New York City office) or, if such
firm declines to act in such capacity, such other firm of
independent certified public accountants mutually acceptable to
Purchaser and Seller (in either case, the "Final Arbiter"), which
firm shall make a final and binding determination as to such
matter or matters within 45 days of its appointment. The Final
Arbiter shall send its written determination to Purchaser and
Seller, together with a confirmation of Purchaser's calculation
of Tangible Net Worth as of the Closing Date or, if necessary, a
revised calculation of Tangible Net Worth as of the Closing Date
based upon such determination, whereupon the confirmed or revised
calculation of Tangible Net Worth as of the Closing Date shall be
binding on the parties hereto, absent fraud or manifest error.
The Supplemental Closing shall then take place five Business Days
following the receipt of such documents by Purchaser and Seller,
or on such other date as may be mutually agreed upon in writing
by Purchaser and Seller.
(v) The parties hereto agree to cooperate
with each other and each other's authorized representatives and
with the Final Arbiter in order that any and all matters in
dispute shall be resolved as soon as practicable and that final
determination of Tangible Net Worth as of the Closing Date shall
be made.
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(vi) At the Supplemental Closing, Purchaser
shall pay to Seller the amount, if any, by which Tangible Net
Worth as of the Closing Date exceeds $48,311,000, or Seller shall
pay to Purchaser the amount, if any, by which Tangible Net Worth
as of the Closing Date is less than $48,311,000, in either case,
with interest on the difference between Tangible Net Worth as of
the Closing Date and $48,311,000 at a rate of interest per annum
equal to the sum of (1) the rate quoted by Bankers Trust on the
Closing Date for the offering by Bankers Trust to leading banks
in the London interbank market of U.S. dollar deposits having a
90-day term and in the amount of $3,000,000 plus (2) .50% less,
in the case of a payment by Seller, the amount of interest earned
on funds on deposit in the Escrow Account which the party
receiving payment is hereby entitled to receive. Any payment
required to be made by Seller to Purchaser under this Section
2(c)(vi) shall first be made out of the Escrow Account, and if
the funds in the Escrow Account are not sufficient to satisfy
Seller's obligation to Purchaser, then Seller shall pay any
remaining monies owed to Purchaser, in each case by wire transfer
in U.S. dollars in immediately available funds to an account
specified by Purchaser, on the date of the Supplemental Closing.
Any funds remaining in the Escrow Account after giving effect to
any payments required to be made by Seller to Purchaser under
this Section 2(c)(vi) shall be paid to Seller by wire transfer in
U.S. dollars in immediately available funds to an account
specified by Seller, on the date of the Supplemental Closing.
<PAGE>
If, on the other hand, Purchaser is required to make a payment to
Seller under this Section 2(c)(vi), Purchaser shall pay to Seller
the amount owed to Seller, and all funds in the Escrow Account
shall be paid to Seller, in each case by wire transfer in U.S.
dollars in immediately available funds to an account specified by
Seller, on the date of the Supplemental Closing. Purchaser shall
not be deemed to "owe" Seller any amount under this Section
2(c)(vi) to the extent that Tangible Net Worth as of the Closing
Date is less than or equal to $48,311,000.
(vii) The fees and expenses hereunder of the
Final Arbiter shall be paid one-half by Purchaser and one-half by
Seller.
(viii) Purchaser, in its sole and absolute
discretion, may (A) enter into a written agreement with the ILGWU
National Retirement Fund prior to the Closing Date, provided that
(1) such agreement is satisfactory in all respects to Purchaser
in its sole and absolute discretion and (2) either (x) such
agreement provides for waivers, reasonably satisfactory to
Seller, of Seller's obligations under Section 4204(a)(3)(A) of
ERISA and Purchaser's obligations under Section 4204(a)(1)(B) of
ERISA or (y) in lieu of either such waiver, Purchaser, in its
sole and absolute discretion and at its expense, provides to the
Multiemployer Pension Plan at the Closing either or both of the
bonds contemplated under said Section 4204(a)(3)(A) or said
Section 4204(a)(1)(B), as applicable, or (B) deliver both such
<PAGE>
bonds to the Multiemployer Pension Plan at the Closing in the
absence of such agreement. In the event that Purchaser, in its
sole and absolute discretion, enters into such agreement and/or
delivers such bonds, then, notwithstanding anything in this
Agreement to the contrary, (I) the Cash Portion, as set forth in
Section 2(b) hereof, shall be decreased to $111,711,000, and (II)
the amount of the wire transfer set forth in Section 9(d)(i)
hereof shall be decreased to $108,711,000. In the event that
Purchaser, for any reason, does not enter into such agreement
and/or deliver such bonds, then, notwithstanding anything in this
Agreement to the contrary, Purchaser shall not assume any
liability of Seller under Section 4204 of ERISA with respect to
the Multiemployer Pension Plan, in which event (X) the provisions
of Section 2(f)(iv) hereof shall be void ab initio and have no
force or effect and (Y) all liabilities of Seller under the
Multiemployer Pension Plan shall be deemed to be Excluded
Liabilities under this Agreement other than any accrued but
unpaid contributions thereto appearing on the Closing Date
Balance Sheet.
(d) Assumption of Liabilities. Purchaser hereby
agrees that as of the Closing it will assume and agree to pay,
perform and discharge all of the following liabilities and
obligations of Seller (hereinafter collectively referred to as
the "Assumed Liabilities"):
<PAGE>
(i) all unperformed and unfulfilled obligations
which are required to be performed and fulfilled under the
contracts, agreements, leases, licenses, permits, applications,
unfilled sales and purchase orders, invoices and other commit-
ments assigned to Purchaser pursuant to subsections (ii), (v),
(vi) and (vii) of Section 2(a) hereof, but, on the Closing Date
or promptly thereafter, Seller shall cure any existing defaults
thereunder as of the Closing Date and pay any other amounts
required pursuant to Section 365 of the Bankruptcy Code to be
paid to effectuate the assignments to Purchaser contemplated by
this Agreement;
(ii) all accounts payable and accrued liabilities
incurred in the ordinary course of business owed by Seller to the
extent relating to the Business (other than those (A) owing by
any Seller to another Seller or to an Affiliate of Seller or (B)
fees and expenses of professionals and other administrative
expenses incurred outside of the ordinary course of business in
connection with Seller's bankruptcy proceeding) arising on or
after the Petition Date and in existence on the Closing Date (the
"Accounts Payable");
(iii) all obligations with respect to returns,
credits, discounts and allowances relating to products sold and
shipped or orders accepted prior to the Closing Date and incurred
by Seller in the ordinary course of business to the extent
relating to the Business;
<PAGE>
(iv) all obligations of Seller incurred in the
ordinary course of business on or after the Petition Date for all
operating and other expenses relating to the Leased Real Estate
or any of the other Assets, other than liabilities arising under
Environmental Laws with respect to the conduct of the Business or
conditions in connection with the Business on or prior to the
Closing Date;
(v) all obligations of Seller to be assumed by
Purchaser pursuant to Subsection 2(f) hereof;
(vi) all obligations of Seller with respect to
outstanding letters of credit (A) securing Seller's obligations
under any employment agreement listed on Schedule 2(a)(v) or 3(e)
hereto or with respect to workers' compensation, (B) relating to
the purchase of Inventory or (C) otherwise pertaining to the
Business and set forth on Schedule 2(d)(vi) hereto, and Purchaser
shall obtain and deliver at the Closing replacement, stand-by or
back-to-back letters of credit with respect thereto in form and
substance reasonably acceptable to Seller and the respective
issuing banks or shall return such letters of credit to Seller
for cancellation or otherwise shall provide for the assumption of
any or all outstanding letters of credit, which assumptions
shall, to the reasonable satisfaction of Seller, relieve Seller
of its obligations with respect thereto;
<PAGE>
(vii) all real and personal property taxes
accrued through and payable after the Closing Date with respect
to the Assets; and
(viii) all severance and other obligations of
Seller under employment and severance contracts with persons who
are employees of the Business as of the Closing Date and which
contracts are set forth in part (iii) of Schedule 3(e) hereto;
provided, however, except for the severance obligations under the
Employment Agreement, dated as of August 18, 1993, between
Crystal Brands, Inc. and Charles J. Campbell, no such obligation
shall exceed a period of one year.
(e) Exclusion of Liabilities. Purchaser shall not
assume, and shall not be liable for, any liabilities of Seller
other than as expressly provided in Section 2(d) hereof (the
"Excluded Liabilities"). Without limiting the generality of the
foregoing and notwithstanding anything in Section 2(d) to the
contrary, Purchaser shall not assume and shall not be liable for
any of the following liabilities or obligations of Seller;
provided, however, that notwithstanding anything in this Section
2(e) to the contrary, Purchaser shall assume and be liable for
the following liabilities to the extent they are included in the
calculation of accounts payable, accrued expenses or noncurrent
liabilities appearing on the Closing Date Balance Sheet:
<PAGE>
(i) any and all Taxes levied by any foreign,
federal, state or local taxing authority;
(ii) any liabilities or obligations for severance
or similar payments arising as a result of consummation of the
transactions contemplated hereby, other than as provided in
Sections 2(d)(viii), 2(f)(i) and 2(f)(ii) hereof, and, except as
otherwise expressly provided herein, any other liabilities or
obligations of Seller which arise out of or are incurred with
respect to this Agreement and the transactions contemplated
hereby (including Seller's legal and accounting fees);
(iii) any liabilities or obligations which are
not directly incident to or arising out of or incurred with
respect to the Business or the Assets;
(iv) any liability arising under Environmental
Laws, the Code, ERISA or the Multiemployer Pension Plan (except
to the extent provided in Section 2(f) hereof) with respect to
the conduct of the Business or conditions in connection with the
Business on or prior to the Closing Date;
(v) any liabilities or obligations for property
damage or bodily injury or other harm to any purchaser or subse-
quent consumer of any product of the Business manufactured prior
to the Closing Date, whether in respect of any express or implied
representation, warranty or otherwise;
<PAGE>
(vi) any indebtedness for borrowed money or other
interest bearing obligations;
(vii) any amounts payable to Seller's
Affiliates;
(viii) any cash overdraft liability;
(ix) any liabilities accruing prior to the
Closing Date to the extent that Seller or any of its Affiliates
is actually reimbursed therefor under its insurance policies;
(x) any liability or obligation of Seller or any
Affiliates of Seller to the extent related to the Excluded
Assets;
(xi) any workers' compensation claims relating to
occurrences prior to the Closing Date, and any damages or
liabilities arising out of or in connection with any litigation
or other claims pending against Seller and/or any of its
Affiliates on the Closing Date, other than Accounts Payable
assumed by Purchaser pursuant to Section 2(d)(ii) hereof; and
(xii) any liability arising out of or in
connection with a violation of any law relating to occupational
safety and health or discrimination on the basis of age, race,
creed, color or disability.
<PAGE>
(f) Employee Relations.
(i) Employment. Purchaser shall assume on the
Closing Date, the collective bargaining agreement set forth on
Schedule 2(f)(i) hereto (excluding any liability of Seller with
respect to the multiemployer pension plan set forth on Schedule
2(f)(i) hereto (the "Multiemployer Pension Plan") other than any
accrued but unpaid contributions thereto and except to the
extent, if any, otherwise provided in Section 2(f)(iv) hereof)
and shall offer employment as of the Closing Date to all of the
bargaining unit employees who are covered by such agreements and
employed in the Business on the day immediately preceding the
Closing Date. Purchaser shall also offer employment as of the
Closing Date to all of the non-bargaining unit employees who are
employed in the Business on the day immediately preceding the
Closing Date, except Purchaser's offer of employment to any non-
bargaining unit employee who is not actively employed on the
Closing Date shall be limited to the continuation of such
employee's particular status and accompanying rights under
Seller's applicable plans or policies, including a right to
return to active employment, if any. Each offer of employment to
non-bargaining unit employees who are actively employed on the
Closing Date (including employees who are on vacation or a
regularly scheduled day off) shall initially be at the same
compensation rate, position and place of employment held by such
employee immediately prior to the Closing Date (such information
<PAGE>
as of December 31, 1994 is disclosed by Seller on Schedule
2(f)(i) hereto). Seller's non-bargaining unit employees who
accept or are deemed to have accepted Purchaser's offer of
employment shall be hereinafter referred to as "Transferred
Employees" as of the Closing Date. Subject to applicable laws
and Section (ii) below, Purchaser shall have the right to dismiss
any or all Transferred Employees at any time, with or without
cause, and to change the terms and conditions of employment
(including employee benefits provided) of any or all Transferred
Employees.
(ii) Benefit Plans. Schedule 2(f)(ii)(A) sets
forth a complete and correct list of all employee benefit plans
within the meaning of Section 3(3) of ERISA and all bonus or
other incentive compensation, deferred compensation, supplemental
retirement, retiree benefit, severance, salary continuation, sick
or other leave of absence, layoff, vacation pay, holiday, reloca-
tion, or change in control plan, policy or arrangement, excluding
any multiemployer plans within the meaning of Section 3(37) of
ERISA ("Multiemployer Plans") as to which Seller has an obliga-
tion to contribute or pay benefits (collectively, "Plans").
Purchaser shall assume all Plans as of the Closing Date and shall
initially provide coverage for Transferred Employees and the
persons set forth on Schedule 2(f)(ii)(B) under the Plans.
Schedule 2(f)(ii)(C) sets forth a complete and correct list of
<PAGE>
all Multiemployer Plans as to which Seller has an obligation to
contribute.
(iii) Benefit Plan Procedures. All employees or
former employees, and their beneficiaries or eligible dependents,
who were participating in a Plan immediately prior to the Closing
Date shall continue to participate in accordance with the terms
of the Plan after the Closing Date. Nothing in this Agreement
shall prevent Purchaser from amending or terminating its employee
benefit plans at any time after the Closing Date except as
follows:
(1) Purchaser shall continue coverage of each
Transferred Employee under severance pay plans substantially
similar to the Seller's severance pay plans applicable to
such employee for at least 18 months after the Closing Date;
(2) Purchaser shall provide, without duplication
of benefits, all Transferred Employees with vacation time
rather than cash in lieu of vacation time for all vacation
earned and unpaid through the Closing Date, except as may be
otherwise required by applicable law;
(3) Purchaser's medical and dental plans covering
Transferred Employees, former employees and their eligible
dependents, through the end of the calendar year in which
the Closing Date occurs, shall grant credit for amounts paid
by participants during such calendar year up to the Closing
<PAGE>
Date, shall not exclude pre-existing conditions to the
extent not excluded under Seller's plans and shall provide,
without any right to amend or terminate, for retiree medical
and life insurance benefits for employees and former
employees (and their eligible dependents) who, as of the
Closing Date, have satisfied the age and service conditions
for such benefits consistent with the applicable provisions
of Seller's retiree medical and life insurance plans in
effect immediately prior to the Closing Date; and
(4) Purchaser shall grant Transferred Employees
credit under Purchaser's qualified retirement plans,
including any 401(k) Plan, covering such employees for
purposes of eligibility and vesting for their period of
service with Seller prior to the Closing Date; provided,
however, that the same shall not result in duplication of
benefits.
(iv) Multiemployer Pension Plan. Subject to the
provisions of Section 2(c)(viii) hereof, Seller and Purchaser
elect to undertake a transaction covered by Section 4204 of ERISA
with respect to the Multiemployer Pension Plan, as follows:
(1) As of the Closing Date, Purchaser shall be
obligated, and as of the Closing Date, Purchaser
expects, to contribute to the Multiemployer Pension
Plan with respect to the Business for substantially the
<PAGE>
same number of contribution base units for which Seller
had an obligation to contribute to such plan
immediately prior to the Closing;
(2) Except to the extent that the same arises
from fire, flood, transportation delays, civil unrest,
war or other cause beyond its reasonable control,
Purchaser shall take any and all reasonable actions
necessary or appropriate to avoid incurring any
complete or partial withdrawal liability with respect
to the Multiemployer Pension Plan with respect to the
Business prior to August 1, 1995;
(3) If Purchaser withdraws from the Multiemployer
Pension Plan in a complete or partial withdrawal with
respect to the Business acquired hereunder during the
period commencing on the Closing Date and ending on the
last day of the fifth full plan year following the
Closing Date, Seller shall be secondarily liable for
any withdrawal liability Seller would have had to the
Multiemployer Pension Plan (but for Section 4204 of
ERISA) if the liability of Purchaser with respect to
such plan is not paid. Purchaser shall timely pay any
withdrawal liability incurred by it during such period.
<PAGE>
3. Representations and Warranties of Seller. Seller hereby
represents and warrants to Purchaser as follows:
(a) Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has full
corporate power and authority to own, lease and operate its
properties and carry on the Business as it is now being conducted
and, subject to Bankruptcy Court approval pursuant to the Approv-
al Order, to sell and convey the Assets to Purchaser.
(b) Execution and Effect of Agreement. Subject to
obtaining Bankruptcy Court approval pursuant to the Approval
Order, Seller has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereun-
der, and the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and the
performance of Seller's obligations hereunder have been duly
authorized by all necessary corporate action on the part of
Seller. This Agreement has been duly executed and delivered by
Seller and, following the approval of this Agreement and the
transactions contemplated hereby by the Bankruptcy Court pursuant
to the Approval Order, will constitute the legal, valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms.
<PAGE>
(c) No Contravention. Subject to obtaining the
approval of the Bankruptcy Court pursuant to the Approval Order,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i)
violate or conflict with any provision of Seller's Certificate of
Incorporation or By-Laws, (ii) except as set forth on Schedule
3(c) hereto, (with or without the giving of notice or the lapse
of time or both) violate, or result in a breach of, or constitute
a default under, or conflict with, or give rise to a right of
termination of, or accelerate the performance required by, any of
the terms of any agreement, lease, mortgage, indenture or other
instrument to which Seller is a party or by which it is bound,
except to the extent any of the foregoing is not enforceable due
to operation of applicable bankruptcy law or the Approval Order,
and except for that certain Post-Petition Credit Agreement, dated
as of February 22, 1994, among Seller, the lenders party thereto
and Citibank, N.A., as Agent for such lenders, which Credit
Agreement shall be terminated at the Closing or the requisite
consents thereunder to this Agreement will have been obtained, or
(iii) violate or conflict with any judgment, decree, order or
award of any court, governmental body or arbitrator, or any law,
rule or regulation applicable to Seller, nor will the same result
in the creation of any Liens (as hereinafter defined) upon any of
the Assets.
<PAGE>
(d) Title to Assets.
(i) Personal Property. Seller is the owner of
the Assets other than the Leased Real Estate, and, by the execu-
tion and delivery at the Closing of the instruments of transfer
provided for herein and such other documents as may reasonably be
requested by Purchaser or its counsel, Purchaser will be vested
with good, valid and marketable title to each of the Assets other
than the Leased Real Estate and leased personal property (subject
to their respective leases), free and clear of all liens, mort-
gages, pledges, imperfections of title, security interests, prior
assignments and charges of any kind or nature whatsoever
(collectively, "Liens").
(ii) Real Estate. Seller does not own any real
property which it uses in connection with the operation of the
Business. Schedule 2(a)(ii) hereto contains a list of all real
property leased by Seller and used in connection with the opera-
tion of the Business. Subject to entry of the Approval Order and
the assumption and assignment of the Leases pursuant thereto,
each of the Leases is a valid and subsisting leasehold interest
of Seller free of subtenancies and other occupancy rights, and,
except as enforceability against Seller may be limited by
applicable bankruptcy law, is a binding obligation of Seller,
enforceable against Seller in accordance with its terms, and is
in full force and effect. To the knowledge of Seller, following
the assumption and upon the assignment of the Leases by Seller to
<PAGE>
Purchaser in accordance with the provisions of Section 365 of the
Bankruptcy Code and the requisite order of the Bankruptcy Court,
there will be no defaults thereunder and no circumstances or
events which, with notice or the passage of time or both, would
constitute defaults under the Leases except, in either instance,
for defaults which, individually or in the aggregate, do not or
would not reasonably be expected to have a Material Adverse
Effect or are unenforceable due to operation of applicable
bankruptcy law or the Approval Order. Subject to entry of the
Approval Order, and except as set forth in Schedule 3(c) hereto,
the consummation of the transactions contemplated by this Agree-
ment will not (A) permit the landlord under any of the Leases to
accelerate the rent due thereunder or cause any material lease
term to be renegotiated, (B) constitute a material default under
any of the Leases or (C) require the consent of the landlord
under any Lease or any other third party.
(e) Contracts. Except for those listed on Schedule
2(a)(v) hereto, Schedule 3(e) attached hereto lists as of the
date hereof all written contracts, agreements, commitments and
personal property leases which relate to the Business and which
meet the criteria specified in the paragraphs below:
(i) involve future expenditures or receipts or
other performance with respect to goods or services having a
total value in excess of $100,000, other than purchase and sales
orders issued in the ordinary course of business; or
<PAGE>
(ii) involve a lease, sublease, installment
purchase or similar arrangement for the use of personal property
which involves a total consideration in excess of $100,000; or
(iii) contain any severance pay obligations or
payments to employees due as a result of the consummation of the
transactions contemplated hereby; or
(iv) involve an employment or consulting rela-
tionship which involves total consideration in excess of $100,000
during the term of such agreement; or
(v) contain commitments of suretyship, guaranty
or indemnification (except for guarantees, warranties and indem-
nities provided by Seller in respect of its products in the
ordinary course of business); or
(vi) relate to the disposition or acquisition of
the assets or stock of, or any interest in, any business enter-
prise; or
(vii) are material to the Business and are
terminable or may be accelerated by the other party thereto upon
an assignment thereof to Purchaser; or
(viii) contain a covenant not to compete; or
(ix) involve the handling, treatment, storage,
transportation, recycling, reclamation or disposal of Materials
<PAGE>
of Environmental Concern generated by the Business or the Assets;
or
(x) relate to the confidential treatment of
information regarding Seller.
Each contract to be assumed by Purchaser, subject to entry of the
Approval Order and the assumption and assignment of such
contracts pursuant thereto, is in full force and effect, is valid
and enforceable, to the knowledge of Seller there are no
outstanding material disputes thereunder, and Seller is not in
breach of any provision thereof where such breach, with or
without the giving of notice or the passing of time or both, is
reasonably likely to have a Material Adverse Effect, except for
breaches which Seller is obligated to cure as of the Closing Date
pursuant to Section 2(e)(i) hereof, or are unenforceable due to
the operation of applicable bankruptcy law or the Approval Order.
Each of Seller's unfilled sales orders, contracts and commitments
with customers, comprising part of the Assets, is capable of
being filled in accordance with Seller's past practices in the
ordinary course of business and was executed at prices in
conformity with then existing sales prices of Seller, subject to
returns, credits, discounts and allowances in the ordinary course
of business, consistent with past practice. Each of Seller's
purchase orders, contracts and commitments with suppliers,
comprising part of the Assets, was entered into in the ordinary
course of business.
<PAGE>
(f) Absence of Certain Changes or Events. Since the
Balance Sheet Date, the Business has been conducted only in the
ordinary course, consistent with past practice. Since the
Balance Sheet Date, except as set forth on Schedule 3(f) or as
permitted under Section 5(c) of this Agreement, with respect to
the Business, there has not been: (i) any Material Adverse
Effect, (ii) any damage, destruction, or casualty loss, whether
or not covered by insurance, to any material Assets, (iii) any
disposition by Seller or any of its Affiliates of any assets
relating to the Business other than in the ordinary course of
business consistent with past practice, (iv) any Lien created on
any Asset, (v) any condemnation proceedings commencing with
respect to any Asset or notice received by Seller as to the
proposed commencement of any such proceeding, (vi) except in the
ordinary course of business consistent with past practice, any
increase in, or commitment or plan adopted to increase, the
wages, salaries, compensation, pension or other benefits or
payments to employees, (vii) any entering into of any contract or
any renewal of any lease relating to the Business which (x) calls
for payments exceeding $100,000 or (y) does not expire within one
year or is not cancelable by Purchaser within one year without
penalty, (viii) any modification in any material respect of any
material contract relating to the Business, (ix) any hiring of
new employees except to the extent that such employees (A) were
hired in the ordinary course of business and (B) in each instance
have salaries (1) commensurate with their positions and the
<PAGE>
location where they work and (2) of less than $75,000 per year,
(x) any capital expenditures in excess of $100,000, (xi) any
change in accounting methods, principles or practices of Seller
relating to the Business, (xii) any waiver or release of any
material rights relating to the Assets or the Assumed Liabili-
ties, (xiii) any "plant closing" or "mass layoff," as those terms
are defined in the Worker Adjustment and Retraining Notification
Act of 1988 ("WARN") or any state law, affecting any site of
employment, facility, operating unit, or employee of the Busi-
ness, (xiv) except as previously disclosed to Purchaser in
writing, any loss or threatened or prospective loss of all or a
significant portion of a significant customer's business,
(xv) any termination of any material distribution agreement, or
(xvi) the agreement of Seller to do any of the foregoing.
(g) Compliance with Laws. Except as otherwise dis-
closed herein, the business and activities of the Business are
presently being conducted in compliance with all applicable
requirements of laws, ordinances, regulations and rules and all
applicable requirements of governmental bodies and agencies
having jurisdiction over Seller, except for such non-compliance
as is not reasonably likely to have a Material Adverse Effect.
(h) Financial Statements. Seller has previously delivered
to Purchaser a copy of the Financial Statements. The Financial
Statements present fairly in all material respects the financial
position, results of operations and, in the case of the interim
<PAGE>
statements, cash flows of the Business as of the
respective dates thereof and for the periods covered thereby in
accordance with generally accepted accounting principles applied
on a consistent basis, subject, in the case of the interim
statements, to normal year-end adjustments and the absence of
footnotes and, in the case of the fiscal year end statements, to
the inclusion of matters relating to Seller's former jewelry
business in the footnotes and the absence of a statement of cash
flows.
(i) Litigation; Consents. There is no action, suit,
litigation, proceeding or formal or informal governmental inquiry
or investigation pending or, to Seller's knowledge, threatened
against Seller which seeks to restrain or prohibit or otherwise
challenges the consummation, legality or validity of the
transactions contemplated hereby or which, if adversely
determined, would have a Material Adverse Effect. Seller is not
in violation of any term of any judgment, decree, injunction or
order entered by any court or governmental authority and
outstanding against it relating to or with respect to the
Business or any Asset. Except as set forth in Sections 3(c),
3(d), 5(d), 5(e) and 8(e) hereof, no consent, approval or
authorization of any governmental authority or other third party
on the part of Seller is required in connection with the
execution, delivery and performance of this Agreement or the
consummation of any of the transactions contemplated hereby.
(j) Intellectual Property. Seller will transfer to
Purchaser on the Closing Date good, valid and marketable title to
all of the Intellectual Property owned by Seller, free and clear
of all Liens. Except as set forth on Schedule 3(j), (i) Seller
has the sole and exclusive right to use the registered Trademarks
in the United States of America in connection with the goods
listed, in each case as set forth on Schedule 2(a)(x) hereto;
(ii) Seller is the owner of all right, title and interest in and
to the registered Trademarks; (iii) no claims have been asserted
in writing by any Person against Seller for the use of any
Intellectual Property, challenging or questioning the validity
thereof, alleging that any Intellectual Property constitutes an
infringement of another Person's intellectual property or
challenging or questioning the validity or effectiveness of any
license or agreement relating thereto to which Seller is a party,
which claims remain pending and which, if adversely determined,
would have a Material Adverse Effect and, except as set forth on
Schedule 3(j), Seller has no knowledge as of the date hereof of
any claim with respect to the matters set forth in this clause
(iii) without regard to its effect on the Business as currently
conducted; and (iv) to the knowledge of Seller, the use of the
Intellectual Property by Seller in the Business does not infringe
on, or conflict with, the rights of any Person in a manner which
is reasonably likely to have a Material Adverse Effect. Schedule
2(a)(x) sets forth a true, correct and complete list of the issue
<PAGE>
and expiration dates of all of the Trademark registrations and
applications of Seller relating to the Business.
(k) Insurance. Seller has heretofore made available
for inspection by Purchaser a true and complete copy of all
material policies of fire, liability, workers' compensation,
environmental and other forms of insurance owned or held by
Seller which relate to the Business. In the reasonable judgment
of Seller, such policies cover risks customarily insured by
businesses similar to the Business. All such policies are in
full force and effect, the premiums due thereon have been paid,
Seller has complied in all material respects with the provisions
of such policies and no notice of cancellation or termination has
been received with respect to any such policy (except for the
lapse of any thereof at the end of its term), it being
understood, however, that Seller may terminate all such policies
as to the Assets or the Business as of the Closing Date.
(l) Employees. Except as set forth on Schedule 3(l)
hereto, there are no pending or, to the knowledge of Seller,
threatened strikes, work stoppages, slowdowns, material
grievances or other labor disputes with respect to individuals
employed in the Business and Seller has not experienced any such
labor controversy within the past two years. Except as set forth
on Schedule 3(l) hereto, there are no pending or, to the
knowledge of Seller, threatened complaints or charges with any
federal, state or local governmental agency or court or any
<PAGE>
arbitrator with respect to any individual or group of individuals
currently or formerly employed in the Business alleging
employment discrimination or other unfair labor practice charges
or otherwise relating to their employment by Seller and Seller
has not experienced any such proceeding, litigation or
arbitration within the past two years. No individuals employed
in the Business other than those covered by the collective
bargaining agreement listed in Schedule 2(a)(v) are represented
by any labor organization, and to the knowledge of Seller no
group of such individuals or labor organization with respect to
such individuals have made a pending demand for recognition or
have filed a petition seeking a representation proceeding with
the National Labor Relations Board. Except as set forth in
Schedule 3(l) hereto, (i) Seller is not a party to, or otherwise
bound by, any consent decree with, or citation by, any
governmental authority relating to current employees or
employment practices of the Business; (ii) Seller is in compli-
ance with all applicable agreements, contracts, and policies
relating to employment, employment practices, wages, hours, and
terms and conditions of employment of the employees of the
Business, except to the extent relating to the period prior to
the Petition Date and except for such noncompliance that, indi-
vidually or in the aggregate, would not have a Material Adverse
Effect; (iii) Seller has not closed any plant or facility operat-
ing in connection with the Business, effectuated any layoffs of
employees or implemented any early retirement, separation or
<PAGE>
window program which affected employees of the Business since
January 1, 1994, nor has Seller planned or announced any such
action or program in the future; and (iv) Seller is in compliance
with its obligations pursuant to WARN, and all other notification
and bargaining obligations arising under any collective bargain-
ing agreement, statute or otherwise with regard to employees of
the Business, except for such noncompliance that, individually or
in the aggregate, would not have a Material Adverse Effect.
(m) Environmental Matters. Except as set forth on Schedule
3(m) hereto:
(i) the operations of the Business are in compli-
ance with all applicable federal, state, local or other govern-
mental statutes, codes, rules, regulations, ordinances, decrees,
orders or other requirements of law relating to the protection of
human health and safety or the environment (collectively, "Envi-
ronmental Laws") and all permits issued pursuant to Environmental
Laws, except for such noncompliance which is not reasonably
likely to have a Material Adverse Effect;
(ii) Seller has obtained all material permits
required under all applicable Environmental Laws necessary to
operate the Business as it currently operates, except for permits
the absence of which is not reasonably likely to have a Material
Adverse Effect, and all such permits are in full force and
effect;
<PAGE>
(iii) within the two years prior to the date
hereof, Seller has not received any written communication alleg-
ing, asserting or otherwise indicating that Seller may be in
violation of, or may have liability under, any Environmental Laws
or any permit issued pursuant to Environmental Laws relating to
the Business, the subject of which has not been fully resolved
with the relevant governmental body, other than such communica-
tions relating to matters which are not reasonably likely to give
rise to material liability of Seller relating to the Business
under any Environmental Laws;
(iv) no Leased Real Estate has any Materials of
Environmental Concern in, on, about, beneath, or in any way
emanating from it, which: (A) constitute a material violation of
any Environmental Laws, (B) could reasonably be expected to have
a Material Adverse Effect, or (C) could materially interfere with
the operation or materially impair the value of the Leased Real
Estate;
(v) no Materials of Environmental Concern have
been (A) used, generated, stored, disposed of, or are otherwise
present at, the Leased Real Estate, or (B) generated or disposed
of by Seller at any location, in either case in a manner that
could reasonably be expected to give rise to a Material Adverse
Effect;
<PAGE>
(vi) Seller has not assumed by contract any
material liabilities, contingent or otherwise, under Environmen-
tal Laws relating to the Business; and
(vii) there are no reports, studies, recommenda-
tions, or assessments that address any issues of compliance with
or liability under Environmental Laws (other than communications
to Seller that are subject to, the attorney-client privilege) in
the possession or control of Seller that have not been provided
to Purchaser.
(n) Taxes. Seller has duly filed, or has obtained a
filing extension from the appropriate federal, state, local and
foreign governments or governmental agencies with respect to, all
material Tax Returns required to be filed by Seller on or prior
to the Closing Date for all Taxes which if unpaid might result in
a Lien upon any of the Assets as of the Closing Date after giving
effect to the transactions contemplated hereby. Payment in full
of all Taxes shown to be due on such Tax Returns, which if unpaid
might result in a Lien upon any of the Assets as of the Closing
Date after giving effect to the transactions contemplated hereby,
has been made. All written assessments of Taxes due and payable
by, on behalf of or with respect to Seller, which if unpaid might
result in a Lien upon any of the Assets as of the Closing Date
after giving effect to the transactions contemplated hereby, have
been paid by Seller, or are being contested in good faith by
appropriate proceedings. There are no tax Liens on any Assets
<PAGE>
that would remain as of the Closing Date after giving effect to
the transactions contemplated hereby that arose in connection
with any failure (or alleged failure) to pay any Tax, except for
Liens for Taxes not yet due and payable. All amounts required to
be withheld by Seller from employees of the Business for income
taxes, social security and other payroll taxes have been collect-
ed and withheld, and have either been paid to the respective
governmental agencies, set aside in accounts for such purpose, or
accrued, reserved against and entered upon Seller's books and
records. None of the Assets is required to be treated as being
owned by a person other than Seller pursuant to section 168(f)
(8) of the Internal Revenue Code of 1954, as amended.
(o) Permits and Approvals. Seller has all licenses,
permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities required for the conduct of
the Business as presently conducted by Seller, except where the
failure to have such licenses, permits, consents, approvals,
authorizations, qualifications and orders would not reasonably be
expected to have a Material Adverse Effect. Within the past
eighteen months, Seller has not received a written notice
alleging a violation or probable violation or notice of
revocation or other written communication from or on behalf of
any governmental entity, which violation has not been corrected
or otherwise settled, alleging (i) any violation of any material
license, permit, consent, approval, authorization, qualification
<PAGE>
or order or (ii) that Seller requires any material license,
permit, consent, approval, authorization, qualification or order
not currently held by Seller.
(p) Affiliate Transactions. Except as contemplated by
this Agreement, Seller has not engaged in any transaction outside
the ordinary course of business with any Affiliate which was (i)
material to the business or operations of the Business or (ii)
undertaken in contemplation of the sale of the Business.
(q) Inventory. The Inventory relating to the Business
was produced or acquired by Seller in the ordinary course of
business, and Seller has good and marketable title to the Inven-
tory. The Inventory is useable and saleable in a manner consis-
tent with past practices, subject to appropriate reserves in
accordance with generally accepted accounting principles applied
on a consistent basis.
(r) ERISA Matters.
(i) A true and complete copy of the following
documents with respect to each Plan, if applicable, have been
delivered or made available to Purchaser: (i) plan documents and
related trust agreements, and amendments thereto, (ii) the most
recent summary plan description, annual report (Form 5500 and
schedules) and actuarial valuation, and (iii) the most recent
determination letter by the Internal Revenue Service.
<PAGE>
(ii) Each Plan complies in form and operation in
all material respects with the applicable requirements of the
Code and ERISA, and has been operated in accordance with its
terms, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. In particular, each
Plan that is intended to qualify under Section 401 of the Code
has been determined by the Internal Revenue Service to so
qualify, and, except as set forth on Schedule 3(r), to Seller's
knowledge, nothing has occurred since the date of such
determination which is reasonably likely to adversely affect the
qualification of such Plan.
(iii) Except as set forth on Schedule 3(r), there
are no pending or, to Seller's knowledge, threatened claims,
litigations or other proceedings relating to the Plans and, to
Seller's knowledge, there are no pending or threatened claims,
litigations or other proceedings relating to the Multiemployer
Plans, in each case other than routine, uncontested claims for
benefits or which could reasonably be expected to have a Material
Adverse Effect.
(iv) Except as disclosed on Schedule 3(r), Seller
and any corporations, trades or businesses under common control
within the meaning of Code Section 414(b) or (c) ("ERISA Affili-
ates") do not have any outstanding liability (whether or not
assessed) under Title IV of ERISA with respect to any Plan or any
<PAGE>
Multiemployer Plan that could reasonably be expected to have a
Material Adverse Effect.
(v) Each of the Plans has been maintained and
administered in compliance with applicable laws, including,
without limitation, the Code and ERISA, except for acts or
omissions which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(s) Subsidiaries. Seller does not own a majority of
the equity of any corporation, partnership, joint venture or
other business entity which owns any assets employed in the
Business, other than another Seller.
4. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as follows:
(a) Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full corporate
power and authority to own, lease and operate its properties and
carry on its business as it is now being conducted.
(b) Execution and Effect of Agreement. Purchaser has
the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and the performance of
<PAGE>
Purchaser's obligations hereunder have been duly authorized by
all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
(c) No Contravention. Neither the execution and delivery of
this Agreement nor the consummation of the transac-tions effected
hereby will (i) violate or conflict with any provision of
Purchaser's Certificate of Incorporation or ByLaws, (ii) (with or
without the giving of notice or the lapse of time or both)
violate, or result in a breach of, or constitute a default under,
or conflict with, or give rise to a right of termination of, or
accelerate the performance required by, any of the terms of any
agreement, lease, mortgage, indenture or other instrument to
which Purchaser is a party or by which it is bound, or (iii)
violate or conflict with any judgment, decree, order or award of
any court, governmental body or arbitrator, or any law, rule or
regulation applicable to Purchaser.
(d) Litigation; Consents. There is no action, suit,
litigation, proceeding or formal or informal governmental inquiry
or investigation pending or, to Purchaser's knowledge, threatened
against Purchaser which seeks to restrain or prohibit or
otherwise challenges the consummation, legality or validity of
the transactions contemplated hereby or which is reasonably
likely to have a material adverse effect on the ability of
<PAGE>
Purchaser to perform its obligations hereunder, and, except as
set forth in Section 6(d) hereof, no consent, approval or
authorization of any governmental authority or other third party
on the part of Purchaser is required in connection with the
execution, delivery and performance of this Agreement or the
consummation of any of the transactions contemplated hereby.
5. Covenants of Seller. Seller hereby covenants and agrees
that:
(a) Access to Documents; Opportunity to Ask Questions.
From and after the date hereof and until the Closing Date, Seller
shall make available for inspection by Purchaser or its represen-
tatives, upon reasonable advance notice and during normal busi-
ness hours, such corporate records, books of account, contracts
and other documents relating to the Business as may be requested
by Purchaser, its managerial employees, counsel and auditors in
order to permit Purchaser and such representatives to make
reasonable inspection and examination of the business and affairs
of the Business. Seller shall further cause its managerial
employees, counsel and regular independent certified public
accountants to be available upon reasonable advance notice to
answer questions of Purchaser's representatives concerning the
business and affairs of the Business, shall furnish or make
available to Purchaser such financial and operating data and
other information with respect to the Business and the Assets as
may reasonably be requested by Purchaser and shall further cause
<PAGE>
them to make available all relevant books and records in connec-
tion with such inspection and examination. In addition hereto
and not in limitation hereof, Purchaser shall have the right to
talk to Seller's managerial employees regarding the possibility
and terms of employment of such employees by Purchaser on and
after the Closing Date.
(b) Maintenance of Insurance. From and after the date
hereof and until the Closing Date, Seller shall maintain in full
force and effect all of its presently existing insurance coverage
with respect to the Business or the Assets, or use its Best
Efforts to obtain and maintain insurance comparable to such
existing coverage.
(c) Conduct of Business. From and after the date
hereof and until the Closing Date, Seller: (i) will cause the
Business to be conducted in the ordinary course and consistent
with the present conduct of the Business, (ii) will use its Best
Efforts to maintain the employees of the Business and to main-
tain, preserve and protect the assets, business relationships and
goodwill of the Business, (iii) will maintain the books and
records relating to the Business in the usual and ordinary
manner, on a basis consistent with past practice, (iv) will
refrain from entering into any contract or renewing any lease
relating to the Business which either (x) calls for payments
exceeding $100,000 or (y) does not expire within one year or is
not cancelable by Purchaser within one year without penalty, in
<PAGE>
each case without the prior approval of Purchaser, (v) will
refrain from modifying in any material respect any material
contract relating to the Business without the prior approval of
Purchaser, except with respect to Excluded Assets, (vi) will
comply with all applicable laws, including, but not limited to,
Environmental Laws, except such non-compliance as is not
reasonably likely to have a Material Adverse Effect, (vii) will
not hire any new employees, except to the extent that such
employees (A) were hired in the ordinary course of business and
(B) in each instance have salaries (1) commensurate with their
position and place of employment and (2) of less than $75,000 per
year, (viii) except in the ordinary course of business consistent
with past practice, will not provide for any general increase in
the wages, salaries, compensation, pension or other benefits
payable to the employees of the Business, in each case without
the prior consent of Purchaser, (ix) will refrain from making any
disposition of any assets relating to the Business other than in
the ordinary course of business consistent with past practice and
other than Excluded Assets, (x) will not permit any of the Assets
to become subject to any Lien, other than existing Liens, (xi)
will not waive any material claims or rights relating to the
Assets or the Assumed Liabilities, (xii) shall refrain from
making any commitment for capital expenditures in excess of
$100,000 without the prior consent of Purchaser, (xiii) will
refrain from making any change in accounting methods, principles
or practices relating to the Business including, without
<PAGE>
limitation, any changes with respect to reserves for Inventory,
(xiv) shall refrain from effecting any material change in its
existing customer relationships without the prior approval of
Purchaser, (xv) will not, at any time within 60 days prior to the
Closing Date, effectuate a "plant closing" or "mass layoff" as
those terms are defined in WARN or any state law, affecting any
site of employment, facility, operating unit, or employee, of the
Business, (xvi) shall not enter into any further severance
arrangements or agreements providing therefor, (xvii) will not
take any action which would cause any of the representations and
warranties made by Seller in this Agreement not to be true and
correct in all material respects on and as of the Closing Date
with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date, (xviii)
shall maintain in full force and effect each employee benefit
plan as defined in Section 3(3) of ERISA in which any employees
of Seller or any of its subsidiaries participate and, to the
extent permitted by the applicable provisions of the Bankruptcy
Code, shall timely make all required contributions thereto and
shall administer each such plan in accordance with its terms,
(xix) shall maintain the Assets in good repair and working order,
normal wear and tear excluded, (xx) shall pay all Accounts
Payable on a timely basis and consistent with past practice and
(xxi) will not agree to do anything which would violate any of
the foregoing.
<PAGE>
(d) Bankruptcy Court Approvals. Promptly after the
execution of this Agreement, but in no event later than five
Business Days after the date hereof, Seller shall file with the
Bankruptcy Court one or more motion(s) or other application(s),
in form reasonably satisfactory to Purchaser, for (i) an order
(the "Scheduling Order"), substantially in the form of Exhibit C
hereto, authorizing Seller to enter into the letter agreement of
even date herewith between Seller and Purchaser (the "Letter
Agreement"), a copy of which is annexed hereto as Exhibit D, and
(ii) an order (the "Approval Order"), substantially in the form
of Exhibit E hereto, upon no less than 20 days notice (or such
shorter time period as the Bankruptcy Court may approve) and a
hearing, authorizing Seller to enter into and perform all of its
obligations pursuant to this Agreement and the transactions
contemplated hereby, including, without limitation, (x) the sale,
conveyance, assignment, transfer and delivery by Seller to
Purchaser of the Assets, free and clear of all Liens and (y) the
assumption and assignment of the executory contracts and
unexpired leases to be assumed and assigned pursuant to the terms
hereof and which order shall contain, inter alia, a finding that
Purchaser has acted in "good faith" within the meaning of Section
363(m) of the Bankruptcy Code. Each such order shall be in form
and substance reasonably satisfactory to Seller and Purchaser.
Seller agrees to use its Best Efforts to obtain the Scheduling
Order and the Approval Order. Purchaser understands and agrees
that until the Bankruptcy Court has approved this Agreement and
<PAGE>
authorized Seller to consummate the transactions contemplated
hereby, Seller's obligations hereunder to consummate such
transactions are subject to such approval and to the receipt of
higher and better offers from third parties in accordance with
the Letter Agreement and the Scheduling Order.
(e) Hart-Scott-Rodino Filings. Seller shall make all
filings which may be required by it in connection with the
consummation of the transactions contemplated hereby as promptly
as possible with the Federal Trade Commission and the U.S.
Department of Justice-Antitrust Division pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott-
Rodino Act") in accordance with Section 363(b)(2) of the
Bankruptcy Code, and, from and after the date hereof and until
the Closing Date, Seller shall cooperate with Purchaser in
connection with such filings.
(f) Other Consents; Conditions Precedent. From and
after the date hereof and until the Closing Date, Seller shall
use its Best Efforts to obtain any other required consents to the
transactions contemplated hereby and to cause the conditions
precedent to the consummation of the transactions contemplated
hereby to be satisfied.
(g) Notification. Seller shall notify Purchaser and
keep it advised as to (i) any litigation or administrative
proceeding pending or, to Seller's knowledge, threatened against
<PAGE>
Seller which challenges or seeks to restrain or enjoin the
consummation of any of the transactions contemplated hereby; (ii)
any damage or destruction of any material Assets; (iii) any loss
or prospective or threatened loss of all or a significant portion
of a significant customer's business; (iv) any proposed or
threatened termination of any material distribution agreement or
license agreement; and (v) any event which might reasonably be
expected to result in a Material Adverse Effect.
(h) No Solicitation. Except as may be required by the
Bankruptcy Court in connection with higher and better offers or
potentially higher and better offers or any related auction,
Seller shall not and shall cause its Affiliates not to (i)
solicit or initiate the submission of any inquiries, indications
of interest, proposals or offers from any corporation,
partnership, person, entity or group, other than Purchaser and
its Affiliates (collectively, "Third Parties"), concerning
(A) the sale or other disposition of any of the assets of the
Business, other than sales of products of the Business in the
ordinary course of business, (B) any merger, consolidation,
recapitalization or other business combination transaction
involving the Business, or (C) any other form of transaction
involving the disposition of an interest in any of the Assets,
other than sales of products of the Business in the ordinary
course of business, or (ii) otherwise encourage any effort or
attempt by any Third Party to do or seek any of the foregoing;
<PAGE>
provided, however, that prior to entry of the Approval Order,
Seller may respond to unsolicited inquiries by Third Parties and
negotiate with and provide to such Third Parties, based on the
advice of counsel, any information, documents or other materials
concerning Seller, the Assets or the Business as may be requested
by such Third Parties; and, provided further, that this Section
5(h) shall not be construed to restrict Seller from serving upon
those persons requesting documents under Rule 2002 of the Federal
Rules of Bankruptcy Procedure or as otherwise required by the
Bankruptcy Court and publishing notice of the proposed trans-
action hereunder or any auction as provided in the Scheduling
Order or required by the Federal Rules of Bankruptcy Procedure,
which notice may indicate that the proposed transaction hereunder
is subject to higher and better offers.
(i) Access to Real Estate. From and after the date
hereof and until the Closing Date, Seller shall grant access to
the Leased Real Estate located in Reading, Pennsylvania, which is
used primarily as a warehouse and distribution facility, to
Purchaser, its representatives and agents, including, without
limitation, environmental consultants retained by Purchaser, for
the purpose of conducting an inspection and audit thereof which
updates the Environmental Risk Assessment Survey thereof
performed by Environmental Risk Limited, as set forth in its
report of November 1991. Such inspection and audit will be
limited to the matters which were investigated in connection with
<PAGE>
said report, as well as a follow-up on the implementation of the
recommendations made therein and, if necessary, testing for the
presence of asbestos and lead paint.
(j) Landlord Consent. Seller shall use its Best
Efforts to obtain, in writing, from each landlord of Leased Real
Estate listed on Schedule 3(c) hereto such landlord's consent to
the assignment hereunder by Seller to Purchaser of such
landlord's Lease with Seller, to the extent required under such
Lease.
6. Covenants of Purchaser. From and after the date hereof
and until the Closing Date, Purchaser hereby covenants and agrees
that:
(a) Representations and Warranties. Purchaser will
not take any action which would cause any of the representations
and warranties made by it in this Agreement not to be true and
correct in all material respects on and as of the Closing Date
with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
(b) Hart-Scott-Rodino Filings. Purchaser shall make
all filings which may be required by it in connection with the
consummation of the transactions contemplated hereby as promptly
as possible with the Federal Trade Commission and the U.S.
Department of Justice-Antitrust Division pursuant to the Hart-
Scott-Rodino Act, and, from and after the date hereof and until
<PAGE>
the Closing Date, Purchaser shall cooperate with Seller in
connection with such filings.
(c) Other Consents; Conditions Precedent. Purchaser
shall use its Best Efforts to (i) assist Seller in obtaining the
approval of the Bankruptcy Court and any other required consents
to the transactions contemplated hereby and (ii) cause the
conditions precedent to the consummation of the transactions
contemplated hereby to be satisfied.
7. Conditions Precedent to Purchaser's Obligation. The
obligation of Purchaser to consummate the transactions contem-
plated hereby on the Closing Date is, at the option of Purchaser,
subject to the satisfaction (or waiver by Purchaser) of the
following conditions:
(a) Each of the representations and warranties of
Seller contained in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date with the same force
and effect as though the same had been made on and as of the
Closing Date, except for changes specifically permitted or
contemplated by such representations and warranties or by Section
5 of this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct in all material respects as of such date.
<PAGE>
(b) Seller shall have performed and complied in all
material respects with the covenants and provisions in this
Agreement required herein to be performed or complied with by
Seller from and after the date hereof through the Closing Date.
(c) No order shall have been entered by any court or by
any other governmental or regulatory body, nor shall any statute,
rule, regulation or executive order have been promulgat-ed or
enacted by any United States federal or state governmental
authority, restraining, prohibiting or enjoining the consummation
of the transactions contemplated hereby.
(d) Since the Balance Sheet Date, there shall have
been no change in the business, assets, financial condition or
results of operations of the Business taken as a whole which had
a Material Adverse Effect.
(e) The Bankruptcy Court shall have entered the
Scheduling Order and the Approval Order and such Orders shall be
substantially in the forms of Exhibit C and Exhibit E hereof,
respectively, or otherwise in substance reasonably satisfactory
to Purchaser and shall not be subject to a stay by any court of
competent jurisdiction.
(f) The applicable waiting periods under the Hart-
Scott-Rodino Act shall have expired or been terminated.
<PAGE>
(g) Purchaser shall have received each of the certifi-
cates, agreements, instruments and other documents set forth in
Section 9(c) hereof.
(h) Purchaser, at its cost and expense, shall have
received a report from an independent environmental consultant
selected by Purchaser, in its sole discretion, in connection with
the inspection and audit of the Leased Real Estate located in
Reading, Pennsylvania with respect to environmental conditions
thereat as contemplated under Section 5(i) hereof, which report
does not disclose any environmental condition which is reasonably
likely to have a Material Adverse Effect.
(i) Seller shall have executed and delivered to
Purchaser assignments of the Trademarks and the other
Intellectual Property rights in form and substance acceptable to
Purchaser and its counsel and such confirmatory assignments as
may be necessary to record in the United States Patent and
Trademark Office, the assignment to Purchaser of the United
States registered Trademarks and shall have executed such other
confirmatory assignments prepared by Purchaser which are in
substance reasonably acceptable to Seller and its counsel as
Purchaser or its counsel deem to be necessary or advisable to
record in state trademark offices and foreign patent and
trademark offices foreign registered Trademarks and other
Intellectual Property rights.
<PAGE>
(j) Seller shall have entered into the Escrow
Agreement.
8. Conditions Precedent to Seller's Obligation. The
obligation of Seller to consummate the transactions contemplated
hereby on the Closing Date is, at the option of Seller, subject
to the satisfaction (or waiver by Seller) of the following
conditions:
(a) Each of the representations and warranties of
Purchaser contained in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date with the same
force and effect as though the same had been made on and as of
the Closing Date, except for changes specifically permitted or
contemplated by such representations and warranties or by Section
6 of this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct in all material respects as of such date.
(b) Purchaser shall have performed and complied in all
material respects with the covenants and provisions in this
Agreement required herein to be performed or complied with by
Purchaser from and after the date hereof through the Closing
Date, including, without limitation, payment of the Purchase
Price, subject to the deposit of a $3,000,000 portion of the
<PAGE>
Purchase Price into the Escrow Account pursuant to Section 2(b)
hereof.
(c) No order shall have been entered by any court or
by any other governmental or regulatory body, nor shall any
statute, rule, regulation or executive order have been promulgat-
ed or enacted by any United States federal or state governmental
authority, restraining, prohibiting or enjoining the consummation
of the transactions contemplated hereby.
(d) The Bankruptcy Court shall have entered the
Approval Order substantially in the form of Exhibit E hereto or
otherwise in substance reasonably satisfactory to Seller, and
such Approval Order shall not be subject to a stay by any court
of competent jurisdiction.
(e) The applicable waiting periods under the Hart-
Scott-Rodino Act shall have expired or been terminated.
(f) Seller shall have received each of the certifi-
cates, agreements, instruments and other documents set forth in
Section 9(d) hereof.
(g) Purchaser shall have entered into the Escrow
Agreement.
<PAGE>
9. Closing Date; Closing.
(a) The closing hereunder (herein called the "Clos-
ing") shall take place at the offices of Weil, Gotshal & Manges,
767 Fifth Avenue, New York, New York 10153 at 10:00 A.M. on the
date that is no more than five (5) Business Days after the first
date on which all of the conditions set forth in Sections 7(e)
and (f) hereof and Sections 8(d) and (e) hereof have been satis-
fied or waived, unless otherwise mutually agreed upon in writing
by Purchaser and Seller, but in no event later than February 28,
1995, unless otherwise mutually agreed to in writing by Purchaser
and Seller. The close of business on the date of the Closing is
referred to in this Agreement as the "Closing Date".
(b) All corporate actions and proceedings to be taken
and all documents to be executed and delivered by Seller in
connection with the consummation of the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to
Purchaser and its counsel. All corporate actions and proceedings
to be taken and all documents to be executed and delivered by
Purchaser in connection with the consummation of the transactions
contemplated hereby shall be reasonably satisfactory in form and
substance to Seller and its counsel. All corporate actions and
proceedings to be taken and all documents to be executed and
delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously and no actions or proceed-
<PAGE>
ings shall be deemed taken nor any documents executed or deliv-
ered until all have been taken, executed and delivered.
(c) At the Closing, Seller shall deliver, or shall
cause to be delivered, to Purchaser the following:
(i) Such bills of sale, endorsements, assign-
ments, and other good and sufficient instruments of transfer and
conveyance to vest in Purchaser Seller's title to the Assets in
accordance herewith;
(ii) A good standing certificate of Seller, dated
within 10 days of the Closing Date, issued by the Secretary of
State of each jurisdiction of incorporation of Seller;
(iii) An incumbency and specimen signature
certificate, dated the Closing Date, from Seller with respect to
the officers of Seller executing this Agreement and any other
documents delivered hereunder by or on behalf of Seller;
(iv) A certificate of Seller, dated the Closing
Date, signed by the chief executive officer or chief financial
officer of Seller, certifying as to the matters set forth in
Sections 7(a) and (b) hereof;
(v) A copy of the resolutions adopted by the
Board of Directors of Seller authorizing the execution, delivery
and performance of this Agreement and the consummation of the
<PAGE>
transactions contemplated hereby, certified by a duly authorized
officer of Seller as of the Closing Date;
(vi) A copy of each of the Scheduling Order and
the Approval Order; and
(vii) Such other documents and instruments as may
be reasonably requested by Purchaser or its counsel to effectuate
the terms of this Agreement.
(d) At the Closing, Purchaser shall deliver, or shall
cause to be delivered, the following:
(i) A wire transfer of federal funds to an
account designated by Seller in the amount of $111,711,000,
subject to the provisions of Section 2(c)(viii) hereof;
(ii) A wire transfer of U.S. dollars in
immediately available funds to the Escrow Account in the amount
of $3,000,000;
(iii) An assumption agreement pursuant to which
Purchaser shall assume the liabilities referred to in Section
2(d) hereof;
(iv) A good standing certificate of Purchaser
dated within 10 days of the Closing Date, issued by the Secretary
of State of Delaware;
<PAGE>
(v) An incumbency and specimen signature certif-
icate, dated the Closing Date, from Purchaser with respect to the
officers of Purchaser executing this Agreement and any other
document delivered hereunder by or on behalf of Purchaser;
(vi) A certificate of Purchaser, dated the
Closing Date, signed by the chief executive officer or chief
financial officer of Purchaser certifying as to the matters set
forth in Sections 8(a) and (b) hereof;
(vii) A copy of the resolutions adopted by the
Board of Directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, certified by a duly
authorized officer of Purchaser as of the Closing Date; and
(viii) Such other documents and instruments as may be
reasonably requested by Seller or its counsel to effectuate the terms
of this Agreement.
10. No Survival of Representations and Warranties. The
parties hereto agree that the representations and warranties
contained in this Agreement shall not survive the Closing hereun-
der, and neither party shall have any liability to the other
after the Closing for any breach thereof. The representations
and warranties set forth in this Agreement constitute the only
representations and warranties made by Seller and Purchaser with
respect to the transactions contemplated hereby, and the property
<PAGE>
transferred pursuant hereto, and such representations and
warranties supersede all representations and warranties, written
or oral, previously made by Seller or Purchaser. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER AGREES THAT
THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN ARE IN LIEU
OF ALL OTHER WARRANTIES WHETHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, SUCH OTHER WARRANTIES BEING
SPECIFICALLY DISCLAIMED BY SELLER. Purchaser further agrees that
the Assets being sold hereunder are being sold AS IS and without
any warranty or representation whatsoever, except as specifically
stated herein. The parties hereto agree that the covenants
contained in this Agreement to be performed at or after the
Closing shall survive the Closing hereunder, and each party
hereto shall be liable to the other after the Closing for any
breach thereof.
11. Indemnification.
(a) Purchaser agrees to indemnify and hold Seller
harmless from and against:
(i) any and all liabilities and obligations of
Seller expressly assumed by Purchaser hereunder (including,
without limitation, the Assumed Liabilities); and
<PAGE>
(ii) all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including
reasonable attorneys' fees, incident to the foregoing.
(b) In the event that any legal proceedings shall be
instituted or that any claim or demand shall be asserted by any
person in respect of which indemnification may be sought from
Purchaser pursuant to the provisions of this Section 11, Seller
shall, to the extent of its knowledge thereof, cause prompt
written notice of the commencement of such proceedings or the
assertion of such claim or demand to be given to Purchaser, and
shall afford to Purchaser the right, to the extent of its
indemnification, at its option and at its own expense, to be
represented by counsel of its choice and to defend against,
negotiate, settle, or otherwise deal with any such legal proceed-
ing, claim or demand; provided, however, that the failure by
Seller to give prompt notice shall not release Purchaser of its
indemnification obligations hereunder, except to the extent such
failure actually prejudices Purchaser; and provided further,
however, that if the liability or obligation which is the subject
matter of such claim shall arise out of a transaction or cover
any period or periods wherein Seller and Purchaser shall be
responsible for part of any such liability or obligation, then
Seller and Purchaser jointly shall defend, contest, litigate,
settle and otherwise deal with any such claims, each bearing its
own expenses and each choosing its own counsel. After any final
<PAGE>
judgment or award shall have been rendered by a court,
arbitration board, or administrative agency of competent
jurisdiction, or a settlement shall have been consummated, or the
parties shall have arrived at a mutually binding agreement, with
respect to any matter which is the subject matter of an indemnity
hereunder, Seller shall forward to Purchaser notice of any sums
due and owing by Purchaser with respect to such matter and
Purchaser shall be required to pay all of the sums so owing to
Seller, by certified or bank cashier's check, within ten (10)
Business Days after the date of such notice. The parties hereto
agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such legal proceeding,
claim or demand, and neither Purchaser nor Seller will compromise
or settle any such legal proceeding, claim or demand without the
prior written consent of the other, not to be unreasonably
withheld.
12. Confidentiality; Press Releases.
(a) Purchaser agrees to keep proprietary information
regarding Seller and, prior to the Closing, to keep proprietary
information regarding the Business confidential in accordance
with the terms of the Confidentiality Agreement.
(b) Seller agrees to keep proprietary information
regarding Purchaser confidential and agrees that it will only use
such information in connection with the transactions contemplated
<PAGE>
by this Agreement and not disclose any of such information other
than (i) to Seller's directors, officers, employees, representa-
tives, and agents who are involved with the transactions contem-
plated by this Agreement, (ii) to the extent such information
presently is or hereafter becomes available, on a non-confiden-
tial basis, from a source other than Purchaser, and (iii) to the
extent disclosure is required by law, regulation, or judicial
order by any governmental authority.
(c) Prior to the filing of the motion to approve the
Approval Order, neither Purchaser nor Seller shall make any press
release or public announcement in connection with the
transactions contemplated hereby without the prior written
consent of the other party or, if required by law, without prior
consultation with the other party, it being understood, however,
that a copy of this Agreement will be filed with the Bankruptcy
Court and served upon third parties in accordance with the
procedures thereof.
13. Brokerage and Finder's Fees. Seller represents and
warrants to Purchaser that no person is or will be entitled to
any brokerage commissions or finder's fees in connection with the
transactions described in this Agreement as a result of any
action taken by Seller, and Purchaser represents and warrants to
Seller that, other than Peter J. Solomon Company Limited, the
fees and commissions of which shall be the responsibility of
Purchaser, no such commissions or fees are or will be due to any
<PAGE>
person in connection with such transaction as a result of any
action taken by Purchaser. Each of the parties hereto agrees to
indemnify and hold harmless the other from and against any claims
or causes of action asserted by any third persons for brokerage
commissions or finder's fees (including any reasonable attorneys'
fees incurred in connection therewith) in connection with the
transaction described in this Agreement as a result of any action
or alleged action taken by or on behalf of the indemnifying
party.
14. Tax Matters.
(a) Cooperation. From and after the Closing, Seller
and Purchaser shall cooperate fully with each other and make
available or cause to be made available to each other for consul-
tation, inspection and copying (at such other party's expense) in
a timely fashion such personnel, tax data, Tax Returns and
filings, files, books, records, documents, financial, technical
and operating data, computer records and other information as may
be reasonably required (i) for the preparation by Purchaser or
Seller of any Tax Returns, elections, consents or certificates
required to be prepared and filed by Purchaser or Seller or (ii)
in connection with any audit or proceeding relating to Taxes
relating to the Assets or the Business for which Purchaser or
Seller is responsible.
<PAGE>
(b) Allocation of Purchase Price. Within 30 days
after the Closing, Purchaser shall provide to Seller copies of
Internal Revenue Service Form 8594 and any required exhibits
thereto with Purchaser's proposed allocation of the Purchase
Price among the Assets. Such allocation shall be based on the
fair market value of each Asset at Closing and otherwise in a
manner consistent with Section 1060 of the Code and the regula-
tions thereunder. Within 30 days after the receipt of such Form
8594, Seller shall propose to Purchaser any changes to such Form
8594 or shall indicate its concurrence therewith. The failure by
Seller to propose any changes within such 30 days shall be deemed
to be an indication of Seller's concurrence with such form as
proposed by Purchaser. Purchaser and Seller shall endeavor in
good faith to resolve any differences with respect to the items
on Form 8594. Notwithstanding the foregoing, if Purchaser and
Seller are unable to resolve such differences, Purchaser and
Seller shall, subject to the requirements of any applicable tax
law or election, file all Tax Returns in a manner consistent with
such Form 8594 except with respect to any items that are the
subject of such differences.
(c) Taxes. Except as otherwise provided herein, after
the Closing Date, Seller shall pay, and shall indemnify and hold
harmless Purchaser from and against, any and all Taxes levied by
any foreign, federal, state or local taxing authority with
respect to the ownership or use of the Assets or the conduct of
<PAGE>
the Business on or prior to the Closing Date, and Purchaser shall
pay, and shall indemnify and hold harmless Seller from and
against, any and all such Taxes with respect to the ownership or
use of the Assets or the conduct of the Business after the
Closing Date.
15. Internal Revenue Service Forms. Seller and Purchaser
agree that, subject to the Closing hereunder, pursuant to the
"Alternative Procedure" provided in Section 5 of Revenue Proce-
dure 84-77, 1984-2 C.B. 753, with respect to filing and furnish-
ing Internal Revenue Service Forms W-2, W-3 and 941, (i) Seller
and Purchaser shall report on a "predecessor-successor" basis as
set forth therein with respect to all Transferred Employees
(including, for purposes of this Section 15, all employees
covered under the collective bargaining agreement listed in
Schedule 2(a)(v)); (ii) Seller shall be relieved from furnishing
Forms W-2 to such Transferred Employees; and (iii) Purchaser
shall assume Seller's obligation to furnish such Forms to such
Transferred Employees for the full 1995 calendar year.
16. Termination. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated by
notice from the terminating party to the other party hereto:
(a) At any time on or prior to the Closing Date, by the
mutual consent in writing of Purchaser and Seller; or
<PAGE>
(b) By either Purchaser or Seller if the Closing shall
not have occurred on or before February 28, 1995 (or such later
date as may be agreed upon in writing by the parties hereto);
provided, however, that if the Closing shall not have occurred on
or before February 28, 1995 due to the willful act or omission in
violation of this Agreement of one of the parties, that party may
not terminate the Agreement pursuant to this Section 16(b); or
(c) by Purchaser, if there has been a material
misrepresentation or breach of Seller's representations or
warranties or covenants and agreements hereunder or if the condi-
tions contained in Section 7 hereof cannot be fulfilled on or
before the Closing Date, as extended by agreement of the parties;
or
(d) by Seller, if there has been a material
misrepresentation or breach of Purchaser's representations or
warranties or covenants and agreements hereunder or if the condi-
tions contained in Section 8 hereof cannot be fulfilled on or
before the Closing Date, as extended by agreement of the parties;
or
(e) by Purchaser or Seller, if any court of competent
jurisdiction in the United States or any governmental authority
shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the
<PAGE>
transactions contemplated hereby and such order, decree, ruling
or other action shall have become final and nonappealable; or
(f) By Purchaser, if the Scheduling Order is not entered on
or prior to January 31, 1995 or the Scheduling Order is denied;
or
(g) By either party, if the Approval Order is not
entered on or prior to February 27, 1995 or the Approval Order is
denied.
In the event that this Agreement shall be terminated
pursuant to this Section 16, all further obligations of the
parties under this Agreement (other than Sections 12, 13 and 24)
shall terminate without further liability of either party to the
other; provided, that nothing herein shall relieve any party from
liability for its breach of this Agreement.
<PAGE>
17. Further Assurances. The parties hereto each agree to
execute such other documents or agreements as may be necessary or
desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby. In the
event that, after the Closing, either Seller or Purchaser re-
ceives any payment in respect of an account receivable belonging
to the other, such party shall promptly account for and remit
such payment to the party entitled thereto. Seller hereby agrees
to cooperate fully with Purchaser and its accountants, including
by cooperating with KPMG Peat Marwick in connection with KPMG
<PAGE>
Peat Marwick's issuance of an unqualified, as to scope, audit
report on the separate financials of Seller for the fiscal years
ended January 2, 1993 and January 1, 1994, all at Purchaser's
expense. Seller further agrees to cooperate fully in allowing
such financial statements to be included in any filing with the
Securities and Exchange Commission or other regulatory agency and
to cooperate fully in connection with any comfort letter or
similar letter that may be required by any underwriter with
respect to any such filing, all at Purchaser's expense.
18. Post-Closing Assistance. After the Closing Date and
through the consummation date of Seller's plan of reorganization
or liquidation, Purchaser shall make available to Seller, without
charge to Seller, the services of executive and administrative
Transferred Employees in connection with Seller's plan of
reorganization under the Bankruptcy Code.
19. Notices. Any notices or other communications required
or permitted hereunder, shall be sufficiently given if in writing
and personally delivered or sent by registered or certified mail,
postage prepaid, return receipt requested, or sent by facsimile,
addressed as follows or to such other address as any party shall
have given notice of pursuant hereto:
<PAGE>
In the case of Purchaser:
Phillips-Van Heusen Corporation
1290 Avenue of the Americas
New York, New York 10104
Attention: Chairman
Telecopier: (212) 468-7398
With a copy to:
Rosenman & Colin
575 Madison Avenue
New York, New York 10022
Attention: Edward H. Cohen, Esq.
Telecopier: (212) 940-8776
In the case of Seller:
Crystal Brands, Inc.
404 Fifth Avenue
New York, New York 10018
Attention: Secretary
Telecopier: (212) 502-6299
With a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Ted S. Waksman, Esq.
Telecopier: (212) 310-8007
20. Entire Agreement. This Agreement, the Letter
Agreement, the Escrow Agreement and the Confidentiality Agreement
represent the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and can
be amended, supplemented or changed, and any provision hereof can
be waived, only by written instrument making specific reference
to this Agreement signed by the party against whom enforcement of
any such amendment, supplement, modification or waiver is sought.
<PAGE>
21. Successors; No Third Party Beneficiaries. This Agree-
ment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
provided, however, that this Agreement and all rights and obliga-
tions hereunder may not be assigned or transferred without the
prior written consent of the other party hereto; provided
further, however, that notwithstanding the foregoing proviso,
Purchaser may assign its rights hereunder to purchase certain of
the Assets to one or more wholly-owned subsidiaries of Purchaser
but may not assign any of its obligations hereunder. The
provisions of this Agreement are not intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
<PAGE>
22. Section Headings. The section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agree-
ment.
23. Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the federal bankruptcy
laws and the laws of the State of New York, without regard to the
principles thereof relating to conflict of laws. In the event of
any dispute between Seller and Purchaser in respect of the
interpretation, construction or enforcement of the terms of this
Agreement, the parties agree to submit such dispute to the
Bankruptcy Court for resolution thereof.
<PAGE>
24. Expenses. Whether or not the transactions contemplated
hereby are consummated, the parties hereto shall pay their own
respective expenses except as otherwise provided in the Letter
Agreement and except that (i) Purchaser shall pay the applicable
filing fee in connection with the filings referred to in Sections
5(e) and 6(b) hereof, and (ii) Purchaser shall be responsible for
the payment of any and all sales, recordation, gains, transfer or
similar taxes or fees with respect to the sale of the Assets
hereunder.
25. Severability. If at any time subsequent to the date
hereof, any provision of this Agreement shall be held by any
court of competent jurisdiction to be illegal, void or unenforce-
able, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no
effect upon and shall not impair the enforceability of any other
provision of this Agreement.
26. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same
instrument.
27. Equitable Remedy. The parties hereto acknowledge and
agree that neither party would have an adequate remedy at law for
money damages in the event that this Agreement has not been
performed in accordance with its terms and, therefore, the
<PAGE>
parties hereto agree that the other party shall be entitled to
preliminary and injunctive relief and to specific performance of
the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement, as of the day and year first above written.
CRYSTAL BRANDS, INC.
CRYSTAL APPAREL, INC.
GANT CORPORATION
CRYSTAL SALES, INC.
EAGLE SHIRTMAKERS, INC.
CRYSTAL BRANDS (HONG KONG) LIMITED
By________________________________
Name: Michael B. McLearn
Title: Vice President (as to each
corporation)
PHILLIPS-VAN HEUSEN CORPORATION
By________________________________
Name: Pamela N. Hootkin
Title: Secretary and Treasurer
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
2. The Transaction . . . . . . . . . . . . . . . . . . . . 9
(a) Sale and Purchase of Assets. . . . . . . . . . . . 9
(b) Purchase Price . . . . . . . . . . . . . . . . . . 15
(c) Purchase Price Adjustment. . . . . . . . . . . . . 16
(d) Assumption of Liabilities. . . . . . . . . . . . . 22
(e) Exclusion of Liabilities . . . . . . . . . . . . . 25
(f) Employee Relations . . . . . . . . . . . . . . . . 28
3. Representations and Warranties of Seller . . . . . . . . 33
(a) Organization and Good Standing . . . . . . . . . . 33
(b) Execution and Effect of Agreement. . . . . . . . . 33
(c) No Contravention . . . . . . . . . . . . . . . . . 34
(d) Title to Assets. . . . . . . . . . . . . . . . . . 35
(e) Contracts. . . . . . . . . . . . . . . . . . . . . 36
(f) Absence of Certain Changes or Events . . . . . . . 39
(g) Compliance with Laws . . . . . . . . . . . . . . . 40
(h) Financial Statements . . . . . . . . . . . . . . . 40
(i) Litigation; Consents . . . . . . . . . . . . . . . 41
(j) Intellectual Property. . . . . . . . . . . . . . . 42
(k) Insurance. . . . . . . . . . . . . . . . . . . . . 43
(l) Employees. . . . . . . . . . . . . . . . . . . . . 43
(m) Environmental Matters. . . . . . . . . . . . . . . 45
(n) Taxes. . . . . . . . . . . . . . . . . . . . . . . 47
(o) Permits and Approvals. . . . . . . . . . . . . . . 48
(p) Affiliate Transactions . . . . . . . . . . . . . . 49
(q) Inventory. . . . . . . . . . . . . . . . . . . . . 49
(r) ERISA Matters. . . . . . . . . . . . . . . . . . . 49
(s) Subsidiaries . . . . . . . . . . . . . . . . . . . 51
4. Representations and Warranties of Purchaser . . . . . . 51
(a) Organization and Good Standing . . . . . . . . . . 51
(b) Execution and Effect of Agreement. . . . . . . . . 51
(c) No Contravention . . . . . . . . . . . . . . . . . 52
(d) Litigation; Consents . . . . . . . . . . . . . . . 52
5. Covenants of Seller. . . . . . . . . . . . . . . . . . . 53
(a) Access to Documents; Opportunity to Ask
Questions. . . . . . . . . . . . . . . . . . . . . . 53
(b) Maintenance of Insurance . . . . . . . . . . . . . . 54
(c) Conduct of Business. . . . . . . . . . . . . . . . . 54
(d) Bankruptcy Court Approvals . . . . . . . . . . . . . 57
(e) Hart-Scott-Rodino Filings. . . . . . . . . . . . . . 58
(f) Other Consents; Conditions Precedent . . . . . . . . 58
(g) Notification . . . . . . . . . . . . . . . . . . . . 58
(h) No Solicitation. . . . . . . . . . . . . . . . . . . 59
<PAGE>
(i) Access to Real Estate. . . . . . . . . . . . . . . . 60
(j) Landlord Consent . . . . . . . . . . . . . . . . . . 61
6. Covenants of Purchaser . . . . . . . . . . . . . . . . . 61
(a) Representations and Warranties . . . . . . . . . . . 61
(b) Hart-Scott-Rodino Filings. . . . . . . . . . . . . . 61
(c) Other Consents; Conditions Precedent . . . . . . . . 62
7. Conditions Precedent to Purchaser's Obligation . . . . . 62
8. Conditions Precedent to Seller's Obligation. . . . . . . 65
9. Closing Date; Closing. . . . . . . . . . . . . . . . . . 67
10. No Survival of Representations and Warranties . . . . . 70
11. Indemnification . . . . . . . . . . . . . . . . . . . . 71
12. Confidentiality; Press Releases . . . . . . . . . . . . 73
13. Brokerage and Finder's Fees . . . . . . . . . . . . . . 74
14. Tax Matters . . . . . . . . . . . . . . . . . . . . . . 75
(a) Cooperation. . . . . . . . . . . . . . . . . . . . 75
(b) Allocation of Purchase Price . . . . . . . . . . . 76
(c) Taxes. . . . . . . . . . . . . . . . . . . . . . . 76
15. Internal Revenue Service Forms. . . . . . . . . . . . . 77
16. Termination . . . . . . . . . . . . . . . . . . . . . . 77
17. Further Assurances. . . . . . . . . . . . . . . . . . . 79
18. Post-Closing Assistance . . . . . . . . . . . . . . . . 80
19. Notices . . . . . . . . . . . . . . . . . . . . . . . . 80
20. Entire Agreement. . . . . . . . . . . . . . . . . . . . 81
21. Successors; No Third Party Beneficiaries. . . . . . . . 82
22. Section Headings. . . . . . . . . . . . . . . . . . . . 82
23. Applicable Law. . . . . . . . . . . . . . . . . . . . . 82
24. Expenses. . . . . . . . . . . . . . . . . . . . . . . . 83
25. Severability. . . . . . . . . . . . . . . . . . . . . . 83
26. Counterparts. . . . . . . . . . . . . . . . . . . . . . 83
27. Equitable Remedy. . . . . . . . . . . . . . . . . . . . 83
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Schedule 2(a)(ii) Leased Real Estate
Schedule 2(a)(v) Contracts
Schedule 2(a)(x) Intellectual Property
Schedule 2(a)(6) Excluded Assets
Schedule 2(d)(vi) Assumption of Liabilities
Schedule 2(f)(i) Employee Information
Schedule 2(f)(ii)(A) Employee Benefit Plans
Schedule 2(f)(ii)(B) Certain Persons
Schedule 2(f)(ii)(C) Multiemployer Plans
Schedule 3(c) Required Consents
Schedule 3(e) Certain Contracts
Schedule 3(f) Certain Changes or Events
Schedule 3(j) Trademark Exceptions
Schedule 3(l) Employee Matters
Schedule 3(m) Environmental Matters
Schedule 3(r) ERISA Matters
Exhibit A Escrow Agreement
Exhibit B Projected Balance Sheet
Exhibit C Scheduling Order
Exhibit D Letter Agreement
Exhibit E Approval Order
<PAGE>
SCHEDULES AND EXHIBITS
The Schedules and Exhibits to the Asset Sale Agreement, (the
"Agreement"), dated as of January 24, 1995, among Crystal Brands,
Inc., Crystal Apparel, Inc., Gant Corporation, Crystal Sales,
Inc., Eagle Shirtmakers, Inc., Crystal Brands (Hong Kong) Limited
and Phillips-Van Heusen Corporation are omitted pursuant to Item
601(b)(2) of Regulation S-K. The following is a summary of the
Schedules and Exhibits to the Agreement. Capitalized terms used
herein without definition shall have the respective meanings
assigned to such terms in the Agreement.
Schedule 2(a)(ii) - Leased Real Estate
Schedule 2(a)(v) - Contracts
Schedule 2(a)(x) - Intellectual Property
Provide more particular descriptions of certain of the Assets
acquired by Purchaser from Seller.
Schedule 2(a)(6) - Excluded Assets
Lists certain assets of Seller not sold to Purchaser.
Schedule 2(d)(vi) - Assumption of Liabilities
Lists certain letters of credit which Purchaser agreed to assume.
Schedule 2(f)(i) - Employee Information
Schedule 2(f)(ii)(a) - Employee Benefit Plans
Schedule 2(f)(ii)(B) - Certain Persons
Schedule 2(f)(ii)(C) - Multiemployer Plans
Set forth information regarding collective bargaining agreements,
the employees of Seller, and Seller's employee benefit plans.
Schedule 3(c) - Required Consents
Sets forth consents to the assignment of certain leases of real
property which were to be obtained.
Schedule 3(e) - Certain Contracts
Sets forth certain contracts assumed by Purchaser which meet the
criteria set forth in Section 3(e) of the Agreement.
Schedule 3(f) - Certain Changes or Events
Sets forth changes in the Business since the Balance Sheet Date.
<PAGE>
Schedule 3(j) - Trademark Exceptions
Sets forth exceptions to Seller's right, title and interest in
the Trademarks.
Schedule 3(m) - Employee Matters
Sets forth certain minor exceptions to Seller's environmental
representations.
Schedule 3(r) - ERISA Matters
Sets forth certain minor exceptions to Seller's ERISA
representations.
Exhibit A - Escrow Agreement
Form of Escrow Agreement entered into between Crystal Brands,
Inc., Purchaser, and Citibank, N.A., as escrow agent, on the
Closing Date pursuant to which a $3,000,000 portion of the
Purchase Price was deposited by Purchaser in an escrow account
pending the final adjustment of the Purchase Price.
Exhibit B - Projected Balance Sheet
Is the projected February 25, 1995 balance sheet of Seller
prepared by Seller and used to establish the Tangible Net Worth
of the Assets pending an adjustment pursuant to Section 2(c) of
the Agreement.
Exhibit C - Scheduling Order
Form of the order sought from the Bankruptcy Court authorizing
Seller to enter into the Letter Agreement with Purchaser.
Exhibit D - Letter Agreement
Form of agreement between Purchaser and Crystal Brands, Inc.
regarding the expense reimbursement and bidding procedures in
connection with competing offers to purchase some or all of the
Assets.
Exhibit E - Approval Order
Form of the order sought from the Bankruptcy Court authorizing
Seller to enter into and perform all of its obligations pursuant
to the Agreement.
All omitted Schedules and Exhibits shall be furnished upon
request.
FOR IMMEDIATE RELEASE
February 20, 1995
From: PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas
New York, New York 10104
Contact: Irwin W. Winter
Vice President and Chief Financial Officer
(212) 468-7025
PHILLIPS-VAN HEUSEN CORPORATION COMPLETES ACQUISITION OF
CRYSTAL BRANDS APPAREL GROUP; $114.7 MILLION CASH FOR
BRANDS INCLUDING IZOD AND GANT
(New York) Phillips-Van Heusen Corporation (NYSE:PVH) has
completed its previously announced acquisition of the Apparel
Group of Crystal Brands, Inc. for $114.7 million in cash. With
the acquisition, PVH adds two of the country's most important
sportswear labels, Izod and Gant, to its roster of famous brands.
PVH is one of the world's largest apparel and footwear
companies. Its brands include Van Heusen, the number one selling
men's dress shirt in America; Geoffrey Beene, the number one
selling designer dress shirt; and G.H. Bass, the number one
selling men's and women's casual shoes. PVH is also the leading
maker of private label shirts and sweaters in the United States.
Company sales in 1993 were $1,152 billion.
