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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 12, 1999
BISCAYNE APPAREL, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 1-9635 65-0200397
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1373 BROAD STREET
CLIFTON, NJ 07013
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(Address of principal executive offices)(Zip Code)
(973) 473-3240
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Registrant's telephone number, including area code:
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(Former Name or Former Address, if Changed Since Last Report)
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CURRENT REPORT ON FORM 8-K
BISCAYNE APPAREL, INC.
FEBRUARY 12, 1999
ITEM 3 BANKRUPTCY OR RECEIVERSHIP.
Biscayne Apparel, Inc. (the "Registrant") announced that it and its subsidiary,
M&L International, Inc. ("M&L") filed for protection under Chapter 11 of the
Bankruptcy Code. The Chapter 11 petitions were filed with the United Sates
Bankruptcy Court for the Southern District of New York on February 5, 1999.
The Registrant did not make the interest payment due on December 15, 1998
relating to its 13% Subordinated Notes due December 15, 1999 (the "Subordinated
Notes"). Pursuant to the Indenture for the Subordinated Notes, the Registrant's
nonpayment of interest became an event of default under the Subordinated Notes.
Once an event of default under the Subordinated Notes occurs and is continuing,
the Indenture Trustee by notice to the Registrant, or the holders of a majority
in principal amount of the Subordinated Notes then outstanding by notice to the
Registrant and the Trustee, may declare to be due and payable immediately an
amount equal to the sum of the outstanding principal balance of the Subordinated
Notes and any accrued interest thereon. If the Subordinated Notes, and accrued
interest thereon, were accelerated, the Registrant would not be able to operate
without immediate alternative financing being available.
Additionally, the Registrant has not been in compliance with the requirements of
its Loan Agreement with its bank lenders relating to collateral coverage and
levels of tangible net worth. The Registrant's senior bank lenders have allowed
the Registrant to remain in violation of its Loan Agreement. However, a
Reservation of Rights and Waiver agreement was entered into whereby the
Registrant's senior bank lenders agreed to extend credit at their discretion
without waiving any rights that arose upon the events of default.
The Registrant had discussed its continuing financing needs for 1999 with its
existing lenders and other lenders. Neither existing lenders or any other
lenders agreed to fund such needs or otherwise to provide working capital
financing that would permit the Registrant to operate as it has in the past.
Without immediate financing available for M&L, the Registrant was faced with the
alternative of a sale or liquidation of M&L. If M&L were unable to open letters
of credit on a timely basis, the value of M&L's assets and operations, as a
going concern, would rapidly diminish. Therefore, the Registrant entered into
the Agreements referred to below under Item 5 of this Current Report, which
Agreements provide that the purchaser, which is affiliated with Amerex (USA)
Inc., would open letters of credit for M&L and in turn receive an assignment of
related customer order backlog against such goods. The Agreements are subject to
the approval of the Bankruptcy Court.
The Registrant and M&L filed for protection under Chapter 11 of the Bankruptcy
Code to effect an orderly sale of M&L pursuant to the Agreements. M&L
anticipates that the net proceeds from finalization of the sale and liquidation
of its assets shall be sufficient to ultimately repay its liabilities.
Nonetheless, the consummation of the transactions provided for under the
Agreements is contingent upon the approval of the Bankruptcy Court and on the
satisfaction of various terms and conditions of the Agreements.
Previously, The Registrant announced that it had retained the investment banking
arm of Kurt Salmon Associates, an Atlanta-based consultant to retailers and
consumer products companies, to advise the Registrant on strategic alternatives.
As a result of this process, the Registrant determined to dispose of the
majority of the assets of its subsidiaries' Biscayne Apparel International, Inc.
("BAII") and Mackintosh of New England Co. ("Mackintosh"). The Registrant is in
the process of finalizing the sale and liquidation of the remaining assets of
these subsidiaries.
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This Current Report contains certain forward-looking statements which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from these
forward-looking statements. Disposition of some or all of the remaining
operating units and/or assets of the Registrant may not be completed within the
foreseeable future. All forward-looking statements should be considered in light
of these risks and uncertainties.
ITEM 5 OTHER EVENTS.
Concurrent with the Chapter 11 filings described above under Item 3, , the
Registrant announced that M&L has entered into an Asset Purchase Agreement and
an Interim Agreement (collectively "the Agreements") with a subsidiary of Amerex
(USA) Inc. to purchase a substantial portion of M&L's assets and operations,
subject to the approval of the Bankruptcy Court.
EXHIBIT NO. DESCRIPTION
10.1 Asset Purchase Agreement, dated February 5, 1999, by and among M&L
International, Inc. and M&L International (H.K.) Limited, as Sellers
and, M&L International Group, LLC, M&L Hong Kong, Ltd. and Amerex (USA)
Inc., as Buyer
10.2 Interim Agreement, dated February 5, 1999, by and among M&L
International Inc., Amerex (USA) Inc. and M&L International Group, LLC
99.1 Press Release, dated February 5, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned thereunto duly authorized.
BISCAYNE APPAREL, INC.
Date: February 12, 1998
By: /s/ Peter Vandenberg
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Peter Vandenberg, Jr.
President, Chief Operating Officer, Treasurer
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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10.1 Asset Purchase Agreement, dated February 5, 1999, by and among M&L
International, Inc. and M&L International (H.K.) Limited, as Sellers
and, M&L International Group, LLC, M&L Hong Kong, Ltd. and Amerex (USA)
Inc., as Buyer
10.2 Interim Agreement, dated February 5, 1999, by and among M&L
International Inc., Amerex (USA) Inc. and M&L International Group, LLC
99.1 Press Release, dated February 5, 1999.
</TABLE>
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
M & L INTERNATIONAL GROUP, LLC
M & L HONG KONG, LTD.
AND AMEREX (USA) INC.
(Buyer)
AND
M & L INTERNATIONAL, INC.
AND
M & L INTERNATIONAL (H.K.) LIMITED
(Sellers)
Dated February 5, 1999
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I DEFINITIONS.............................................................................................2
Affiliate................................................................................................2
Amerex...................................................................................................2
Assets...................................................................................................2
Assigned Contracts.......................................................................................2
Assumed Liabilities......................................................................................2
Bankruptcy Code..........................................................................................2
Bankruptcy Court.........................................................................................2
Books and Records........................................................................................2
Break Up Fee.............................................................................................2
Business ................................................................................................2
Business Day.............................................................................................3
Buyer....................................................................................................3
Closing .................................................................................................3
Closing Date.............................................................................................3
Code.....................................................................................................3
Contracts................................................................................................3
Customer Orders..........................................................................................3
Deposit..................................................................................................3
Employee Benefit Plan....................................................................................3
Employee Pension Benefit Plan............................................................................3
Employee Welfare Benefit Plan............................................................................3
Environmental Laws.......................................................................................3
Equipment................................................................................................4
ERISA....................................................................................................4
Escrow Agreement.........................................................................................4
Escrow Amount............................................................................................4
Estimated Purchase Price.................................................................................4
Excluded Assets..........................................................................................4
Excluded Contracts.......................................................................................4
GAAP.....................................................................................................4
Government...............................................................................................5
Higher and Better Offers.................................................................................5
Improvements.............................................................................................5
Intellectual Property Rights.............................................................................5
Interim Agreement........................................................................................5
Interim Gross Profits....................................................................................5
Interim Net Sales........................................................................................5
Inventory................................................................................................5
Leased Real Property.....................................................................................5
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Leases...................................................................................................5
Lien.....................................................................................................5
M&LHK....................................................................................................5
M&L Hong Kong............................................................................................5
M&LIG....................................................................................................5
M&L International........................................................................................5
Mackintosh...............................................................................................5
Material Adverse Effect..................................................................................5
Multiemployer Plan.......................................................................................6
Operating Costs and Expenses.............................................................................6
Order ...................................................................................................6
Permits..................................................................................................6
Person ..................................................................................................6
Premises ................................................................................................6
Purchase Orders..........................................................................................6
Purchase Price...........................................................................................6
Reorganization Case......................................................................................6
Returned Goods...........................................................................................6
Sale Hearing.............................................................................................6
Secured Bank Group.......................................................................................6
Sellers..................................................................................................6
Sellers' Cost............................................................................................6
Sellers' Receivables.....................................................................................6
Severance Plans..........................................................................................7
Subsidiary...............................................................................................7
Taxes....................................................................................................7
Transaction Taxes........................................................................................7
Warn.....................................................................................................7
ARTICLE II PURCHASE AND SALE......................................................................................7
Section 2.1 Assets to be Sold and Purchased..............................................................7
Section 2.2 Assumed Liabilities.........................................................................11
Section 2.3 Allocation of Assets and Liabilities Between M&LIG and M&LHK................................12
ARTICLE III PURCHASE PRICE; ESCROW...............................................................................12
Section 3.1 Purchase Price..............................................................................12
Section 3.2 Payment of Purchase Price...................................................................12
Section 3.3 Escrow Amount...............................................................................13
Section 3.4 Deposit.....................................................................................13
Section 3.5 Physical Inventory; Estimated Purchase Price................................................14
Section 3.6 Post-Closing Adjustment.....................................................................15
ARTICLE IV CLOSING...............................................................................................16
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ARTICLE V REPRESENTATION AND WARRANTIES OF THE SELLERS...........................................................17
Section 5.1 Corporate Organization......................................................................17
Section 5.2 Qualification to Do Business................................................................17
Section 5.3 Authorization and Validity of Agreements....................................................18
Section 5.4 No Conflict or Violation....................................................................18
Section 5.5 Consents and Approvals......................................................................18
Section 5.6 Compliance with Law.........................................................................19
Section 5.7 Litigation..................................................................................19
Section 5.7 Litigation..................................................................................19
Section 5.9 Employee Benefits...........................................................................20
Section 5.10 Contracts..................................................................................20
Section 5.11 Inventory..................................................................................21
Section 5.12 Purchase Orders............................................................................21
Section 5.13 Permits....................................................................................21
Section 5.14 Leases.....................................................................................21
Section 5.15 Environmental Matters......................................................................22
Section 5.16 Insurance..................................................................................22
Section 5.17 Intellectual Property Rights...............................................................22
Section 5.18 Equipment..................................................................................23
Section 5.19 Condition of Title of Assets...............................................................23
Section 5.20 Brokers' and Finders' Fees.................................................................23
Section 5.21 Hong Kong Receivables......................................................................23
Section 5.22 Disclaimer.................................................................................23
ARTICLE VI REPRESENTATION AND WARRANTIES OF BUYER................................................................24
Section 6.1 Organization................................................................................24
Section 6.2 Authorization and Validity of Agreements....................................................24
Section 6.3 No Conflict or Violation....................................................................24
Section 6.4 Consents and Approvals......................................................................25
Section 6.5 Brokers' and Finders' Fees..................................................................25
Section 6.6 Acknowledgment by Buyer.....................................................................25
ARTICLE VII COVENANTS OF THE SELLERS.............................................................................27
Section 7.1 Conduct of Business Before the Closing Date Acknowledgement by Buyer........................27
Section 7.2 Consents and Approvals......................................................................28
Section 7.3 Access to Properties and Records............................................................28
Section 7.4 Assigned Contracts..........................................................................28
Section 7.5 Reasonable Efforts..........................................................................29
Section 7.2 Curing of Default under Assigned Contracts..................................................29
Section 7.6 Notice to the Buyer.........................................................................29
Section 7.8 Break-Up Fee................................................................................29
Section 7.9 Higher and Better Offers; Bidding Procedures................................................30
Section 7.10 Application for the Order..................................................................30
Section 7.11 Post Closing Responsibilities of Sellers...................................................32
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Section 7.12 Misdirected Payments.......................................................................32
Section 7.13 Trademark Assignments......................................................................32
Section 7.14 Access to Books and Records................................................................32
Section 7.15 Withdrawal of Motion or Order by Sellers...................................................32
ARTICLE VIII COVENANTS OF BUYER..................................................................................33
Section 8.1 Actions Before Closing Date.................................................................33
Section 8.2 Consents and Approvals......................................................................33
Section 8.3 Collection of Sellers'Accounts Receivable...................................................33
Section 8.4 Returns of Sellers'Goods....................................................................33
Section 8.5 Right to Set-off............................................................................35
Section 8.6 Misdirected Payments........................................................................35
Section 8.7 Access to Books and Records.................................................................35
ARTICLE IX EMPLOYEES.............................................................................................36
Section 9.1 Termination of Employees....................................................................36
Section 9.2 COBRA.......................................................................................37
Section 9.3 Employee Benefit Plans......................................................................37
ARTICLE X TAXES; RECORDING FEES..................................................................................37
ARTICLE XI CONDITIONS PRECEDENT
TO PERFORMANCE BY THE SELLERS...........................................................................38
Section 11.1 Representations and Warranties of the Buyer................................................38
Section 11.2 Performance of the Obligations of the Buyer................................................38
Section 11.3 Consents and Approvals.....................................................................39
Section 11.4 No Violation of Orders.....................................................................39
Section 11.5 Entry of the Order.........................................................................39
ARTICLE XII CONDITIONS PRECEDENT TO THE
PERFORMANCE BY THE BUYER................................................................................39
Section 12.1 Representations and Warranties of the Sellers..............................................39
Section 12.2 Performance of the Obligations of the Sellers..............................................40
Section 12.3 Consents and Approvals.....................................................................40
Section 12.4 No Violation of Orders.....................................................................40
Section 12.5 No Material Adverse Change.................................................................40
Section 12.6 Intentionally Omitted......................................................................41
Section 12.7 Entry of the Order.........................................................................41
ARTICLE XIII TERMINATION.........................................................................................41
Section 13.1 Conditions of Termination..................................................................41
Section 13.2 Specific Performance.......................................................................42
Section 13.3 Effect of Termination; Right to Proceed....................................................43
ARTICLE XIV GENERAL AND MISCELLANEOUS............................................................................44
Section 14.1 Successors and Assigns.....................................................................44
Section 14.2 Governing Law; Jurisdiction................................................................44
Section 14.3 Expenses...................................................................................44
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Section 14.4 Notice of Bankruptcy Proceedings...........................................................44
Section 14.5 Further Assurances.........................................................................44
Section 14.6 Severability...............................................................................45
Section 14.7 Notices....................................................................................45
Section 14.8 Amendments; Waivers........................................................................47
Section 14.9 Public Announcements.......................................................................47
Section 14.10 Entire Agreement..........................................................................47
Section 14.11 Parties in Interest.......................................................................48
Section 14.12 Section and Paragraph Headings............................................................48
Section 14.13 Business Days.............................................................................48
Section 14.14 Counterparts..............................................................................48
Section 14.15 Treatment of Lease for Warehouse Premises in
Auburn, Washington ("Auburn Lease")............................................................48
</TABLE>
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List of Schedules
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Schedule 1 Assigned Contracts
Schedule 2.1(a)(i) Equipment
Schedule 2.1(a)(ii) Leased Real Property
Schedule 2.1(a)(iii) Inventory
Schedule 2.1(a)(v) Trademarks, Tradenames, Patents, Logos
Schedule 2.1(a)(ix) Prepaid Expenses/Security Deposits
Schedule 2.1(a)(xvi) M&L Hong Kong Accounts Receivable
Schedule 2.1(b)(iii) Excluded Contracts
Schedule 2.2(a) Assumed Liabilities
Schedule 3.1 Purchase Price Formula
Schedule 5.2 Jurisdictions Where Sellers Are Qualified to do Business
Schedule 5.5 Consents and Waivers Required for Transaction
Schedule 5.6 Compliance with Law
Schedule 5.7 Litigation
Schedule 5.9 Employee Benefit Plans
Schedule 5.10 Contracts
Schedule 5.12 Purchase Orders for which L/Cs have Not Been Opened
Schedule 5.13 Permits
Schedule 5.14 Defaults Under Leases
Schedule 5.15 Environmental Law Violations
Schedule 5.16 Insurance Policies
Schedule 5.17 Intellectual Property
Schedule 5.18 Equipment (with original purchase price over $10,000)
Schedule 5.19 Condition of Title to Assets
Schedule 7.1 Budget
Schedule 9.1 Employees to Be Retained
Schedule 11.2 Buyer Closing Documents
Schedule 12.2 Sellers Closing Documents
List of Exhibits
Exhibit A Form of Escrow Agreement
Exhibit B Form of Order
</TABLE>
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated this 5th day of February, 1999 by and
among M&L INTERNATIONAL GROUP, LLC, a Delaware limited liability company with
its principal office at 350 Fifth Avenue, New York, New York 10118 ("M&LIG"),
M&L HONG KONG, LTD., a Hong Kong corporation ("M&LHK"), and AMEREX (USA) INC.,
a New York corporation with its principal office at 350 Fifth Avenue, New York,
New York 10018 ("Amerex") (M&LIG, M&LHK and Amerex to be referred to hereinafter
collectively as "Buyer"), M&L INTERNATIONAL, INC., an Illinois corporation with
its principal office at 1333 North Kingsbury Street, Chicago, Illinois, 60622
("M&L International") and M&L INTERNATIONAL (H.K.) LIMITED, a Hong Kong
Corporation with its principal office at M-F, Keep Mount Centre, 9-11 Shing Wan
Road, TaiWai, N.T. Hong Kong ("M&L Hong Kong") (M&L International and M&L Hong
Kong to be referred to hereinafter collectively as the "Sellers").
W I T N E S S E T H:
WHEREAS, M&L International is, simultaneously with the execution and
delivery of this Agreement, filing a petition to commence a reorganization case
(the "Reorganization Case") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court");
WHEREAS, after commencement of the Reorganization Case, M&L
International will be operating its business as a debtor-in-possession pursuant
to the Bankruptcy Code;
WHEREAS, Buyer desires to purchase certain assets from Sellers and
Sellers desire to sell such assets to Buyer, all upon the terms and subject to
the conditions set forth in this Agreement; and
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WHEREAS, Sellers and Buyer are simultaneously entering into an
agreement (the "Interim Agreement") pursuant to which Amerex agrees to
facilitate the continued operation of the Business from the date hereof until
the Closing Date by opening letters of credit subject to the terms and
conditions of the Interim Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall mean, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such other Person;
"Amerex" - See Preamble hereto;
"Assets" - See Section 2.1 (a);
"Assigned Contracts" shall mean the Contracts of Sellers
listed on Schedule 1 annexed hereto;
"Assumed Liabilities" - See Section 2.2(a);
"Bankruptcy Code" - See the Recitals hereto;
"Bankruptcy Court" - See the Recitals hereto;
"Books and Records" - See Section 2.1(a)(xv);
"Break Up Fee" - See Section 7.8;
"Business" shall mean all the business activities and
operations of the Sellers;
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"Business Day" shall mean any day other than Saturday, Sunday
and any day which is a legal holiday or a day on which banking institutions in
New York City are authorized by law or other governmental action to close;
"Buyer" - See the Preamble hereto;
"Closing" - See Article IV;
"Closing Date" - See Article IV;
"Code" shall mean the Internal Revenue Code of 1986, as
amended;
"Contracts" shall mean any and all contracts, agreements,
leases, licenses, indentures, notes, mortgages, instruments, open Purchase
Orders, open Customer Orders, or other binding arrangements to which either
Seller is a party, whether oral or written, and all modifications and amendments
thereto;
"Customer Orders" shall mean the Sellers' customer orders,
contracts or other commitments to customers of the Business;
"Deposit" - See Section 3.4;
"Employee Benefit Plan" shall mean an Employee Pension Benefit
Plan or an Employee Welfare Benefit Plan, where no distinction is required by
the context in which the term is used;
"Employee Pension Benefit Plan" shall have the meaning set
forth in Section 3(2) of ERISA;
"Employee Welfare Benefit Plan" shall have the meaning set
forth in Section 3(l) of ERISA;
"Environmental Laws" shall mean all federal, state and local
laws, statutes, ordinances and regulations, including, without limitation, any
applicable judicial or
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administrative order, consent decree or judgment, all as in effect as of the
Closing Date relative to the applicable Premises, relating to the regulation and
protection of the environment and natural resources (including, without
limitation, ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include but are not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. ss.
1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. ss. 136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ss. 7401 et seq.) ("RCRA"); the Federal Water Pollution
Control Act, as amended (29 U.S.C. ss. 300f et seq.); and any and all
regulations promulgated thereunder, and all similar or analogous state, local
and federal statutes, counterparts or equivalents and any transfer of ownership
notification or approval statutes;
"Equipment" - See Section 2.1(a)(i);
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
"Escrow Agreement" - See Section 3.3;
"Escrow Amount" - See Section 3.3;
"Estimated Purchase Price" - See Section 3.5;
"Excluded Assets" - See Section 2.1(b);
"Excluded Contracts" - See Section 2.1(b)(iii);
"GAAP" shall mean U.S. generally accepted accounting
principles;
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"Government" shall mean any agency, division, subdivision,
audit group or procuring office of the Government of the United States, and
state, or any foreign government, including the employees or agents thereof;
"Higher and Better Offers" - See Section 7.9;
"Improvements" - See Section 2.1(a)(ii);
"Intellectual Property Rights" - See Section 2.1(a)(vi);
"Interim Agreement" - See Recitals hereto;
"Interim Gross Profits" shall mean Sellers' gross profits on
Interim Net Sales;
"Interim Net Sales" shall mean Sellers' net sales for the
period January 1, 1999 through the Closing Date;
"Inventory" - See Section 2.1(a)(iii);
"Leased Real Property" - See Section 2.1(a)(ii);
"Leases" shall mean those real property leases listed on
Schedule 5.10;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, claim, lien (statutory or other) or conditional sale agreement;
"M&LHK" - See the Preamble hereto;
"M&L Hong Kong" - See the Preamble hereto;
"M&LIG" - See the Preamble hereto;
"M&L International" - See the Preamble hereto;
"Mackintosh" shall mean Mackintosh of New England Co.,
"Material Adverse Effect" shall mean a material adverse effect
on the Assets, the Business or the use or operation thereof, in each case, taken
as a whole, or a material adverse
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effect on Sellers' ability to consummate the transactions contemplated by this
Agreement other than the commencement of the Reorganization Case as contemplated
herein;
"Multiemployer Plan" shall have the meaning set forth in
Section 3(37) of ERISA;
"Operating Costs and Expenses" - See Schedule 3.1;
"Order" - See Section 7.10;
"Permits" - See Section 2.1(a)(xiii);
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or Government;
"Premises" - See Section 2.1(a)(ii);
"Purchase Orders" shall mean the Sellers' purchase orders,
contracts or other commitments to suppliers of goods and services for materials,
supplies or other items used in the Business;
"Purchase Price" - See Section 3.1;
"Reorganization Case" - See Recitals hereto;
"Returned Goods" - See Section 8.4;
"Sale Hearing" - See Section 7.10;
"Secured Bank Group" shall mean, collectively, Chase Manhattan
Bank for itself, and as agent for certain other lenders of Sellers, together
with such other lenders;
"Sellers" - See the Preamble hereto;
"Sellers' Cost" - see Schedule 3.1;
"Sellers' Receivables" - See Section 8.3;
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"Severance Plans" shall mean all severance plans, programs or
practices of the Sellers;
"Subsidiary" shall mean with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, of
which more than 50% of either the equity interests in, or the voting control of,
such corporation or other organization is, directly or indirectly, through
subsidiaries or otherwise, beneficially owned by such Person;
"Taxes" shall mean for all purposes of this Agreement all
taxes, however denominated, including any interest, penalties or additions to
tax that may become payable in respect thereof, imposed by any Government, which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, workmen's compensation taxes and other obligations of the same
or a similar nature, whether arising before, on or after the Closing; and "Tax"
shall mean any one of the foregoing;
"Transaction Taxes" - See Article X;
"WARN" shall mean the Federal Worker Adjustment and Retraining
Notification Act.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Assets to be Sold and Purchased.
(a) Subject to Section 2.1(b) and the other terms and
conditions hereof, at the Closing Sellers shall sell, assign, transfer, convey
and deliver to Buyer free and clear of all Liens,
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and Buyer shall purchase from Sellers, all of the property, assets and rights
used or held for use in the Business (collectively, the "Assets") including:
(i) all of Sellers' rights, title and interest in and to
the machinery, equipment, tools, supplies, spare parts, vehicles, furniture and
other tangible personal property owned, used or held for use in the Business on
the Closing Date (the "Equipment"), as set forth on Schedule 2.1(a)(i);
(ii) all of Sellers' rights, title and interest in and to
the real property leased by Sellers and used in the Business (the "Premises")
and all of Sellers' rights, title and interest in and to all buildings,
improvements and fixtures constructed thereon (the "Improvements," and together
with the Premises, the "Leased Real Property" ) as set forth on Schedule
2.1(a)(ii);
(iii) all raw materials, work-in-progress and inventories of
finished goods, whether in possession of Sellers or any supplier, manufacturer
or contractor of Sellers on the Closing Date (the "Inventory") which, as of
December 31, 1998, is as set forth on Schedule 2.1(a)(iii);
(iv) all claims, rights and chooses in action of Sellers
against third parties in respect of unliquidated rights under manufacturers' and
vendors' warranties, guarantees or similar obligations to the extent same are
assignable;
(v) all of Sellers' rights, title and interest in, to and
under all patents, patent applications, trade names, trademarks, copyrights,
copyright applications, service marks, trademark and service mark registrations
and applications, domain names, logos and other intangible property as set forth
on Schedule 2.1(a)(v), in each case, together with the good will of the business
associated therewith, whether owned or licensed by Sellers (including, without
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limitation, all of Sellers' right to use the names "M&L" and "M&L International"
and any derivations thereof) whether or not used in the Business, and the
trademarks and trademark applications listed on Schedule 2.1(a)(v) annexed
hereto under the heading "Mackintosh Trademarks" which are currently owned of
record by Mackintosh;
(vi) all of Sellers' rights in, to and under trade secrets,
formulae and specifications and technical know-how, whether currently being used
or under development, including engineering and other drawings, data, design and
specifications, product literature and related materials, in each case which are
owned or licensed by Sellers as of the Closing Date (together with the
intellectual property described in Section 2.1(a)(v), the "Intellectual Property
Rights") and all of Sellers' books, records and computer software programs
relating thereto;
(vii) all of Sellers' rights in, to and under the goodwill of
the Business;
(viii) all of Sellers' rights, titles and interests in, to and
under all Assigned Contracts;
(ix) all prepaid expenses, prepaid rents, and other
prepayments, including security deposits relating to the Assigned Contracts, as
of the Closing Date which, as of December 31, 1998, are as set forth on Schedule
2.1(a)(ix);
(x) all existing customer lists, credit policies and credit
information with respect to all existing customers of, and all existing cost and
pricing data for, the Business other than customer information pertaining to the
collection of Sellers' Receivables;
(xi) all existing supplier lists, product specifications,
bills of materials, production routings and all other production information;
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(xii) all existing business plans, advertising and
promotional plans, product development plans, forecasts, market research
reports, competitor information, and reference catalogs;
(xiii) all of Sellers' rights under governmental licenses,
certificates, permits, franchises, similar authorizations and approvals of
Seller (the "Permits") relating to or necessary to the lawful conduct of the
Business as of the Closing Date (including all rights of Sellers to obtain
renewals and extensions thereof, together with all causes of action in favor of
Sellers heretofore accrued or hereafter accruing with respect thereto), in each
case to the extent such Permits are transferable;
(xiv) all transferable warranties and guarantees pertaining
to the Assets; and
(xv) all books and records relating to the Business and the
Assets (the "Books and Records") including, without limitation, records with
respect to costs, Inventory and Equipment; materials, catalogues,
correspondence, mailing lists, art work, films, negatives, photographs, sales
materials and records; purchasing materials and records; personnel records with
respect to employees of the Business being retained by Buyer; media materials
and plates; sales order files; ledgers and other books of account of Sellers;
plans, specifications, surveys, reports and other materials relating to the
Leased Real Property; other records required to continue the Business as
heretofore and now being conducted by Sellers; and all software programs,
computer printouts, databases and related items used in the Business;
(xvi) accounts receivable of M&L Hong Kong as of the Closing
Date, which as of December 31, 1998, are set forth on Schedule 2.1(a)(xvi); and
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(xvii) all designs, patterns and supplies owned by Sellers or
used by Sellers in the Business.
(b) The Assets shall not include the following assets and
properties (the "Excluded Assets"):
(i) all cash and cash equivalents, if any, belonging to
Sellers;
(ii) all accounts receivable of M&L International existing
prior to the Closing Date;
(iii) the Contracts set forth on Schedule 2.1(b)(iii) (the
"Excluded Contracts");
(iv) the capital stock of M&L Hong Kong;
(v) any and all Employee Benefit Plans of Sellers and all
assets related thereto;
(vi) any and all real property owned by Sellers;
(vii) any and all amounts due to Sellers from Affiliates;
(viii) any Tax attributes or Tax receivables of Sellers,
including any tax loss carryforward attributable to federal or state income
Taxes;
(ix) prepaid expenses to professionals; and
(x) all Books and Records relating to or used in the
collection of Sellers' Receivables or in the possession or control of Sellers'
outside accountants.
Section 2.2 Assumed Liabilities.; Assumption of Obligations Under Assigned
Contracts
(a) Upon the Closing, Buyer shall assume all accounts payable,
liabilities and obligations of Sellers set forth on Schedule 2.2 (a) (the
"Assumed Liabilities").
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(b) From and after the Closing, Buyer shall perform all obligations
required to be performed after Closing under the Assigned Contracts (the
"Assumed Contract Obligations").
(c) Buyer shall not assume or be bound by or otherwise be
responsible for any liabilities or obligations of Sellers of any kind or nature,
known, unknown, contingent or otherwise, other than the Assumed Liabilities and
the Assumed Contract Obligations.
Section 2.3 Allocation of Assets and Liabilities Between M&LIG and M&LHK.
M&LIG and M&LHK shall purchase the Assets, and assume the Assumed Liabilities,
in such proportion as they shall determine. Buyer shall notify Sellers of such
determination prior to the Closing.
ARTICLE III
PURCHASE PRICE; ESCROW
Section 3.1 Purchase Price. The purchase price for the Assets (the
"Purchase Price") shall be determined in accordance with the formula set forth
on Schedule 3.1 annexed hereto. The Purchase Price shall be allocated to the
Assets in accordance with applicable provisions of the Code and Internal Revenue
Service Regulations and Sellers and Buyer agree to make the necessary and
appropriate Tax filings in connection therewith.
Section 3.2 Payment of Purchase Price. . At the Closing, the Estimated
Purchase Price, less the Deposit, the Assumed Liabilities, and the Escrow Amount
(the "Closing Cash Payment"), shall be paid by Buyer to, or for the account of
Sellers, by wire transfer of immediately available funds unless otherwise
directed by the Bankruptcy Court pursuant to the Order. The balance of the
Purchase Price, if any, shall be paid by Buyer as provided in Section 3.6.
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Section 3.3 Escrow Amount. At Closing, Two Hundred Thousand Dollars
($200,000) of the Purchase Price (the "Escrow Amount") shall be deposited by
Buyer into escrow with Greenberg Traurig, counsel to the Sellers, as escrow
agent (the "Escrow Agent"), to be held and disbursed by the Escrow Agent
pursuant to the terms of Section 3.6 and an escrow agreement in the form annexed
hereto as Exhibit A (the "Escrow Agreement") until the actual Purchase Price is
determined.
Section 3.4 Deposit.
(a) As a good faith deposit against the Purchase Price, the Buyer
is delivering to Greenberg Traurig, counsel to the Sellers, concurrently with
the execution and delivery of this Agreement, the sum of $250,000 (the
"Deposit"), which shall be held by such attorneys in a segregated interest
bearing escrow account pending application or disbursement thereof in accordance
with this Agreement and pursuant to the Order. At the time of the Closing, the
amount of the Deposit and interest earned thereon shall be applied in partial
payment of the Purchase Price. In the event that this Agreement shall be
terminated by the Sellers pursuant to Article XIII due to a breach of this
Agreement by Buyer then the Deposit and interest earned thereon shall be
retained by the Sellers as damages in respect of the Buyer's default and Sellers
specifically reserve the right to sue for damages and for specific performance
as provided in Section 13.2(b). Upon any other termination of this Agreement,
the Deposit and all interest earned thereon shall be promptly returned to the
Buyer, and if Buyer has terminated this Agreement pursuant to Article XIII due
to a breach of this Agreement by Sellers, Buyer specifically reserves the right
to sue for damages and for specific performance as provided in Section 13.2(a).
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(b) In order to induce the Sellers' counsel to act as escrow
holder (in such capacity, the "Deposit Escrow Agent"), the parties hereby
confirm that the Deposit Escrow Agent (i) shall not incur any liability for any
action taken by it hereunder, except to the extent that the same constitutes
gross negligence or willful misconduct by the Deposit Escrow Agent, (ii) shall
be entitled to rely upon and assume to be accurate all notices and advice given
to the Deposit Escrow Agent hereunder (absent specific knowledge to the
contrary) and to rely upon any document and/or signature believed by it in good
faith to be to be genuine and rendered by an authorized representative of the
subject person, (iii) may, notwithstanding its status as Deposit Escrow Agent,
act as counsel for the Sellers, without any claims of conflict of interest by
reason thereof, (iv) may resign at any time, provided that such resignation
shall not become effective until a substitute escrow agent is appointed by
mutual agreement of the Sellers and the Buyer, and the Deposit Escrow Agent has
delivered to its successor all funds then held in escrow hereunder, and (v) may,
in the event of any dispute hereunder, deposit any and all funds held in escrow
hereunder into the Court pending resolution of such dispute, and thereby be
relieved of its obligations as Deposit Escrow Agent hereunder.
Section 3.5 Physical Inventory; Estimated Purchase Price.
(a) Sellers' and Buyer's representatives, employees, agents or
accountants shall jointly conduct a physical inspection and counting of
Inventory, including a count of Inventory returned from and after January 1,
1999, not more than ten (10) and not fewer than five (5) days prior to the Sale
Hearing. Buyer and Sellers shall attempt in good faith to resolve any disputes
regarding the Inventory count during such physical inspection and counting and,
in any event, shall resolve any disputes not more than three (3) days prior to
the Sale Hearing.
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(b) Three (3) days prior to the Sale Hearing, Sellers shall deliver to
Buyer the following:
(i) a certificate (the "Interim Period Certificate") signed by a
Vice President of M&L International certifying Sellers' reasonable good faith
estimate of the Operating Costs and Expenses, the Interim Net Sales and the
Interim Gross Profits, accompanied by reasonably detailed documentation
substantiating such estimates; and
(ii) a certificate (the "Purchase Price Certificate") signed by a
Vice President of M&L International setting forth, in the detail required by
Schedule 3.1, Sellers' reasonable good faith estimate of the Purchase Price (the
"Estimated Purchase Price") calculated in the manner set forth in Schedule 3.1
applying the results of the physical Inventory count referred to in Section
3.5(a) and the Sellers' estimate of Operating Costs and Expenses, Interim Net
Sales and Interim Gross Profits set forth on the Interim Period Certificate.
Section 3.6 Post-Closing Adjustment.
(a) From and after the Closing, Buyer and its agents and
representatives shall have the right to inspect and examine the Books and
Records, and any other materials reasonably requested of Sellers, for the
purpose of calculating the actual Purchase Price.
(b) If, within sixty (60) days after the Closing, Buyer and
Sellers agree upon the Purchase Price, the procedures in Section 3.6(c) shall be
followed. If the Sellers and Buyer do not agree upon the Purchase Price within
such sixty (60) day period, the accounting firm of M.R. Weiser & Co., LLP (the
"Independent Accountants") shall be jointly retained by Sellers and Buyer to
determine the Purchase Price based upon Schedule 3.1. The determination of the
Independent Accountants shall be conclusive and binding upon the parties. The
fees and disbursements of the Independent Accountants shall be shared equally by
Sellers and Buyer. The
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amounts owed by Sellers to the Independent Accountants shall constitute a
priority administrative claim in the Reorganization Case. Upon determination of
the Purchase Price by the Independent Accountants, the procedures in Section
3.6(c) shall be followed.
(c) (i) If the Closing Cash Payment, plus the Deposit and the Assumed
Liabilities, is less than the Purchase Price as agreed to by the Sellers and
Buyer or as determined by the Independent Accountants, then, upon delivery to
the Escrow Agent of joint written instructions from Sellers and Buyer, the
Escrow Agent shall remit to Sellers out of the Escrow Amount the amount of such
shortfall (the "Purchase Price Shortfall") and the balance of the Escrow Amount,
if any, shall be remitted to Buyer, provided that, if the Escrow Amount is not
sufficient to cover the entire Purchase Price Shortfall, Buyer shall pay to the
Sellers the amount of such deficiency within three (3) days after determination
thereof; and
(ii) If the Closing Cash Payment, plus the Deposit and the Assumed
Liabilities, exceeds the Purchase Price as agreed to by the Sellers and Buyer or
as determined by the Independent Accountants (the "Overpayment") then, upon
delivery to Escrow Agent of joint written instructions from Sellers and Buyer,
the Escrow Agent shall remit to the Buyer the full Escrow Amount and the Sellers
shall be liable to Buyer for the amount by which the Overpayment exceeds the
Escrow Amount. Buyer shall have a priority administrative claim for the
Overpayment against the estate of M&L International in the Reorganization Case.
ARTICLE IV
CLOSING
The Closing under this Agreement (the "Closing") shall take place at
the offices of Rosen & Reade, LLP, 757 Third Avenue, New York, New York 10017 at
10:00 a.m. on the day
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immediately following the day on which all of the conditions contained in
Article XI and Article XII have been satisfied or waived by the Sellers or the
Buyer, as the case may be, or on such later date and at such other place and
time as may be mutually agreed to by the parties hereto (the "Closing Date").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to the Buyer as follows:
Section 5.1 Corporate Organization. M&L International is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois, and M&L Hong Kong is a corporation duly organized, validly
existing and in good standing under the laws of Hong Kong. Each of the Sellers
has all requisite corporate power and authority to own its properties and assets
and to conduct its businesses as now conducted. No direct or indirect Subsidiary
or Affiliate of M&L International other than M&L Hong Kong owns or has any
rights in the Assets.
Section 5.2 Qualification to Do Business. Schedule 5.2 sets forth each
jurisdiction in which each of the Sellers is qualified to do business as a
foreign corporation. Each Seller is qualified to do business as a foreign
corporation and is in good standing in every jurisdiction which the character of
the property owned or leased by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect.
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Section 5.3 Authorization and Validity of Agreements. Each of the
Sellers has all requisite corporate power and authority to enter into this
Agreement, and, subject to the Bankruptcy Court's entry of the Order and the
receipt of the consents, waivers and approvals set forth on Schedule 5.5, to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement, and the performance of each Sellers' obligations hereunder
have been duly authorized by all necessary corporate action by the Boards of
Directors of each of such Sellers, and no other corporate proceedings on the
part of such Sellers are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by each of the Sellers and,
subject to the Bankruptcy Court's entry of the Order, constitutes its valid and
binding obligation, enforceable against it in accordance with its terms.
Section 5.4 No Conflict or Violation. Subject to the Bankruptcy's
Court's entry of the Order and receipt of all consents and waivers set forth on
Schedule 5.5, the execution, delivery and performance by each of the Sellers of
this Agreement do not and will not violate or conflict with any provision of the
Certificates or Articles of Incorporation or By-laws (or equivalent documents)
of such Sellers and do not and will not violate any provision of law, or any
order, judgment or decree of any court or other governmental or regulatory
authority applicable to either of such Sellers, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Assigned Contract.
Section 5.5 Consents and Approvals. Schedule 5.5 sets forth a true and
complete list of each consent, waiver, authorization or approval of any
Governmental or regulatory authority, domestic or foreign, or of any other
Person, and each declaration to or filing or registration with any such
Governmental or regulatory authority, that is required in connection with the
execution and delivery of this Agreement by the Sellers or the performance by
the Sellers of their
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respective obligations hereunder, except to the extent the failure to obtain
such consent, waiver, authorization or approval would not have a Material
Adverse Effect.
Section 5.6 Compliance with Law. Except as set forth on Schedule 5.6,
to the best knowledge of Sellers, the Sellers (a) are not in violation of any
law, regulation, order or other legal requirement with respect to or affecting
the Assets which violation could have a Material Adverse Effect and (b) are not
in default of any order, writ, judgment, award, injunction or decree of any
national, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to the Business or any of the
assets, properties or operations thereof including, without limitation, the
Assets.
Section 5.7 Litigation. Except as set forth in Schedule 5.7, and except
for the Reorganization Case and claims filed with the Bankruptcy Court in
connection therewith, there are no claims, complaints, charges, actions, suits,
condemnation or other proceedings, labor disputes or investigations pending
before any federal or state court, arbitrator or governmental authority brought
by or against either of the Sellers or, to the Sellers' knowledge, threatened to
be brought against either of the Sellers, which, if adversely determined, would
have a Material Adverse Effect.
Section 5.8 Labor Relations.
(a) The Sellers are not a party to any collective bargaining
agreement or collective bargaining relationship and there are no unfair labor
practice or representation proceedings pending or threatened with respect to the
Sellers and any of their current or former employees or any labor or other
collective bargaining unit representing any current or former employee of the
Sellers.
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(b) To the best knowledge of Sellers, Sellers are in
compliance with all federal, state and local laws, regulations and orders
relating to the employment of labor, including, without limitation, all such
laws, regulations and orders relating to wages, hours, WARN, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax except for non-compliance that would not
result in a Material Adverse Effect.
Section 5.9 Employee Benefits. Schedule 5.9 lists all Employee Benefit
Plans (including Multiemployer Plans and the Severance Plans) whether or not
covered by ERISA, and any executive compensation arrangement, excess benefit
plan or supplemental pension plan, change in control agreement or other
severance plan or arrangement that either of the Sellers maintains, or to which
either of the Sellers contributes. With respect to all Employee Benefit Plans
listed in Schedule 5.9, the Sellers have delivered to the Buyer complete and
accurate copies of all applicable plans (to the extent in written form) and
related summary plan descriptions.
Section 5.10 Contracts. Set forth on Schedule 5.10 is a list of all
Contracts. The Sellers have delivered to the Buyer copies of all Assigned
Contracts which copies are true and complete in all respects. All Assigned
Contracts are and, subject to the Order, at Closing will be in full force and
effect and are, and subject to the Order, at Closing will be legally binding and
enforceable by and against the Sellers and the other parties thereto. Neither of
the Sellers is in monetary default under any Assigned Contract to which it is a
party and there is no non-monetary default that could have a Material Adverse
Effect. No condition, event or act is existing or has occurred that (with or
without the lapse of time or the giving of notice, or both) would result in any
monetary default under any Assigned Contract or which would result in a
non-monetary default under any Assigned Contract that could have a Material
Adverse Effect.
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Section 5.11 Inventory. The Inventory is, and at Closing will be,
usable or salable in the ordinary course of business consistent with Sellers'
past practices. In-process and finished goods have been produced in compliance
with Sellers's applicable quality control procedures and are fit for the uses
intended.
Section 5.12 Purchase Orders. Except as set forth on Schedule 5.12, all
Purchase Orders outstanding as of the date hereof have been entered into by the
Sellers in the ordinary course of business consistent with past practice.
Section 5.13 Permits. A list of all Permits is set forth on Schedule
5.13. Except with respect to matters disclosed on Schedule 5.6, all Permits have
been paid for and are in full force and effect with respect to each of the
Premises. Except with respect to matters disclosed on Schedule 5.6, Sellers have
no knowledge of any law or regulation of any governmental authority having
jurisdiction which might require any of the Premises to be improved beyond its
present state or which might restrict the use and enjoyment of any of the
Premises in the manner in which it is currently being used and enjoyed.
Section 5.14 Leases. Each of the Leases is, and, subject to the Order,
as of the Closing shall be, a valid and subsisting lease enforceable against the
parties thereto in accordance with its terms with no amendments or other
modifications thereto that are not listed on Schedule 5.10. Except as set forth
in Schedule 5.14, to the Sellers' knowledge, no default of a landlord under any
of such Leases, after giving effect to applicable grace periods, if any, exists
or is alleged to exist. Except as set forth on Schedule 5.14, Sellers have not
received any notices alleging a default by Sellers under the Leases and there
are no monetary defaults by Sellers under any of the Leases and there are no
non-monetary defaults under any Lease that would have a Material Adverse Effect.
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Section 5.15 Environmental Matters. The Sellers have furnished to the
Buyer copies of all reports, tests, notices, studies and other like information
in the possession of or ordered by Sellers relating to the presence or absence
of toxic or hazardous materials at the Leased Real Property. To the best of
Sellers' actual knowledge, except as set forth in Schedule 5.15, neither the
Sellers nor any of the Leased Real Property are in violation of any
Environmental Law.
Section 5.16 Insurance. Annexed hereto as Schedule 5.16 is a true and
complete list of all insurance policies held by Sellers, including the names of
the insurance carriers, a general description of the risks insured against under
each policy, the amount of coverage, the named insured or insureds thereunder,
the annual premium and the effective date and terms thereof. True and correct
copies of all such insurance policies have been delivered to Buyer. The coverage
under such policies is adequate to cover all risks of Sellers which reasonably
and prudently should be insured against with regard to the Assets and in the
operation and conduct of the Business. All such policies are in full force and
effect and no notice or warning of cancellation, termination or premium increase
has been received with respect thereto, and Sellers are in compliance with all
conditions contained therein.
Section 5.17 Intellectual Property Rights. Schedule 5.17 sets forth a
list of all Intellectual Property Rights of Sellers. Copies of all registrations
and applications with respect thereto filed with or issued by any governmental
body have been delivered to Buyer. Except as set forth on Schedule 5.17, (i) all
Intellectual Property Rights are owned by Sellers; (ii) none of the Intellectual
Property Rights have been assigned, pledged, mortgaged, transferred or licensed
to or from any third person, (iii) Sellers have not received any written notice
of invalidity, infringement or misappropriation from any third party with
respect to any Intellectual Property Rights; (iv) to the knowledge of Sellers,
Sellers have not interfered with, infringed upon,
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misappropriated or otherwise come into conflict with any intellectual property
or other rights of any third parties; and (v) to the knowledge of Sellers, no
third party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property Rights of Sellers.
Section 5.18 Equipment. Schedule 5.18 sets forth a list of all
Equipment with an original purchase price in excess of $10,000. Except as
otherwise set forth in Schedule 5.18, Sellers have good and valid title to all
of the Equipment and the Equipment is in good operating condition and repair and
is suitable for the uses for which it is currently used.
Section 5.19 Condition of Title of Assets. Except as set forth on
Schedule 5.19, Sellers own all the Assets free and clear of any and all Liens
except for claims that may be filed with the Bankruptcy Court in the
Reorganization Case. At Closing, the Assets will be transferred to Buyer free
and clear of all Liens, including, without limitation, any and all Liens for
Taxes.
Section 5.20 Brokers' and Finders' Fees. Except for Kurt Salmon
Associates Capital Advisors, Inc. ("KSA") no advisor, broker, finder or any
other Person has been consulted or performed any services in connection with the
transactions contemplated by this Agreement by or for the Sellers. All fees and
expenses due and owing to KSA shall be the sole responsibility of Sellers.
Section 5.21 Hong Kong Receivables. The accounts receivable of M&L Hong
Kong as of the Closing Date will be valid and collectible in full.
Section 5.22 Disclaimer. Except as otherwise set forth in this
Agreement, Sellers make no representation or warranty concerning the condition
of the Assets and the Assets are being sold "as is" and "where is."
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Each Buyer hereby represents and warrants to the Sellers as follows:
Section 6.1 Organization. M&LIG is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority to own its properties and
assets and to conduct its business as now conducted. M&LHK is a corporation duly
organized, validity existing and in good standing under the laws of Hong Kong,
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted. Amerex is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and has all requisite corporate power and authority to own
its properties and assets and to conduct its business as now conducted.
Section 6.2 Authorization and Validity of Agreements. Each Buyer has
all requisite power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and the
performance by each Buyer of its obligations hereunder and thereunder have been
duly authorized by all necessary actions of the members, managers and directors
of each Buyer, as the case may be. This Agreement has been duly executed by each
Buyer and constitutes the valid and binding obligations of each Buyer,
enforceable against each Buyer in accordance with its terms.
Section 6.3 No Conflict or Violation. The execution, delivery and
performance by each Buyer of this Agreement does not and will not violate or
conflict with any provision of the Certificate of Formation or Limited Liability
Company Agreement of M&LIG, the Articles of Incorporation or By-Laws of M&LHK,
or the Certificate of Incorporation or By-Laws of
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Amerex, and does not and will not violate any provisions of law, or any order,
judgment or decree of any court or other governmental or regulatory authority
applicable to any Buyer, nor violate nor will result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which any Buyer is a party or by
which any Buyer is bound or to which any of its properties or assets is subject.
Section 6.4 Consents and Approvals. The execution, delivery and
performance of this Agreement on behalf of each Buyer do not require the consent
or approval of, or filing with, any Government, governmental body or agency or
other entity or Person except: (i) as may be required to transfer any Permits;
(ii) entry of the Order by the Bankruptcy Court; and (iii) the approval of the
Managers of M&LIG, the Board of Directors of M&LHK, and the Board of Directors
of Amerex (which limited liability company and corporate approvals have been
obtained).
Section 6.5 Brokers' and Finders' Fees. Except for Houlihan Lokey, no
advisor, broker, finder or any other Person has been consulted or performed any
services in connection with the transactions contemplated by this Agreement by
or for Buyer. All fees, costs and expenses due and owing to Houlihan, Lokey
shall be the sole responsibility of Buyer.
Section 6.6 Acknowledgment by Buyer. Buyer has inspected the Assets and
has relied upon such inspection and Buyer acknowledges that, except for the
representations and warranties of Sellers set forth in this Agreement, the
Assets are being sold "as is" and "where is." Buyer acknowledges that its offer
to purchase the Assets pursuant to this Agreement is subject to Higher and
Better Offers and that other bidders may receive from Sellers information about
the Assets and that Sellers and their respective employees are bound by their
fiduciary duties under the Bankruptcy Code.
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ARTICLE VII
COVENANTS OF THE SELLERS
The Sellers covenant as follows:
Section 7.1 Conduct of Business Before the Closing Date
Acknowledgment by Buyer.
Subject to the terms and conditions of Bankruptcy Court orders in the
Reorganization Case consistent with this Agreement and the Interim Agreement,
including a contemplated cash collateral stipulation with the Secured Bank
Group:
(a) From the date hereof to the Closing Date, without the
prior written consent of the Buyer, the Sellers shall not make any material
change in (i) the physical condition of any Leased Real Property, or (ii) the
operation of the Business, and the Sellers shall conduct the Business in the
ordinary course consistent with the Sellers' status as debtors and debtors in
possession under chapter 11 of the Bankruptcy Code, except in all cases as
required or expressly permitted pursuant to the terms hereof and the Interim
Agreement. Buyer hereby consents to the operation of the Business pursuant to
the budget annexed hereto as Schedule 7.1 (the "Budget"). Notwithstanding
anything in this Agreement to the contrary, Sellers shall not be obligated to
open letters of credit for the benefit of Sellers' suppliers or to place orders
except as contemplated by the Interim Agreement.
(b) Without limiting the generality of the foregoing, from the
date hereof to the Closing Date, the Sellers shall (i) use their commercially
reasonable efforts to preserve and maintain the Assets and the existing
relationships with suppliers, customers and their agencies and others having
business with the Sellers; (ii) promptly, and in any event within two (2) days
of the Sellers obtaining knowledge thereof, notify Buyer in writing of any
material damage to or
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destruction of the Assets; (iii) except as otherwise provided in the Budget,
cause all purchases of, and Purchase Orders for, merchandise to be documented in
accordance with the Sellers' past practices, except that Sellers shall not be
required to open letters of credit for the benefit of Sellers' suppliers; and
(iv) maintain in effect the insurance policies listed in Schedule 5.16.
(c) Notwithstanding any other provisions of this Section 7.1,
and except as otherwise provided in Section 14.15, from the date hereof to the
Closing Date, the Sellers shall not renew, or fail to renew, any Lease relating
to any Leased Real Property pursuant to a renewal option contained therein, or
exercise any options with respect thereto, or amend any Assigned Contract,
without the prior written consent of Buyer.
Section 7.2 Consents and Approvals. The Sellers shall use commercially
reasonable efforts to obtain all necessary consents, waivers, authorizations and
approvals of all governmental and regulatory authorities, domestic and foreign,
and of all other Persons whose consent is required in order for the Sellers to
be able to enter into and consummate the transactions contemplated by this
Agreement.
Section 7.3 Access to Properties and Records. Except as otherwise
granted, limited or addressed in this Agreement, from the date hereof to the
Closing Date (or the earlier termination of this Agreement pursuant to Article
XIII), the Sellers shall, during normal business hours, (i) provide to the Buyer
and its representatives full access to the Premises, Books & Records, and other
information of each of the Sellers as it relates to the Assets, and (ii) make
available for inspection and copying by the Buyer copies of any documents
relating to the foregoing.
Section 7.4 Assigned Contracts. On the Closing Date, the Sellers shall
assume, pursuant to Section 365 of the Bankruptcy Code, all Assigned Contracts,
with the costs, expenses
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and liabilities of such assumption to be borne by Sellers as provided for in
section 365 of the Bankruptcy Code.
Section 7.5 Reasonable Efforts. Sellers will use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary or proper consistent with applicable law
to consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
Section 7.6 Curing of Default under Assigned Contracts. The Sellers
shall, on or prior to the Closing, cure any and all defaults under the Assigned
Contracts which are required to be cured pursuant to the Order so that such
contracts may be assumed by the Sellers and assigned to the Buyer in accordance
with the provisions of Section 365 of the Bankruptcy Code, and Buyer shall have
no liability or responsibility for such defaults. At Closing, Sellers shall
assign to Buyer all their rights under the Assigned Contracts free and clear of
all Liens.
Section 7.7 Notice to the Buyer. The Sellers shall notify the Buyer in
writing of (i) any fact or circumstance which will cause any of the
representations or warranties set forth in Article V that are qualified by a
materiality standard to be untrue as of the Closing Date; and (ii) any fact or
circumstance which will cause any of the representations and warranties set
forth in Article V that are not qualified by a materiality standard to be
materially untrue as of the Closing Date.
Section 7.8 Break-Up Fee. If (i) Sellers accept an alternative offer to
purchase the Assets and do not sell the Assets to Buyer, and Buyer is not in
breach of this Agreement, or if, (ii) in violation of the Order, Sellers do not
close the sale of the Assets, or if, (iii) Sellers move to withdraw the Order or
the Motion; in any of the foregoing instances, Sellers shall pay to Buyer the
sum of $250,000 (the "Break-up Fee").
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Section 7.9 Higher and Better Offers; Bidding Procedures. Immediately
after the execution and delivery of this Agreement and commencement of the
Reorganization Case, M&L International shall file a motion with the Bankruptcy
Court (the "Preliminary Motion") requesting orders (the "Preliminary Orders")
approving: (i) the Break-up Fee; (ii) a bidding procedure for alternative offers
and counter offers (the "Bidding Procedure"); (iii) an abbreviated notice period
for a hearing with respect to the Order; and (iv) the Interim Agreement. Such
Bidding Procedure shall provide that alternative offers shall contain the
additional undertaking by such alternative bidder ("Alternative Bidder") to: (x)
pay to the Buyer the Break-up Fee provided in Section 7.8; (y) pay to Amerex the
Service Fee and reimburse Amerex for the Expenses as required by Section 3.2 of
the Interim Agreement; and (z) perform and assume the obligations set forth in
Section 3.3 of the Interim Agreement (collectively, the "Additional
Undertakings"). Such Preliminary Orders and Bidding Procedure shall further
provide that the Sellers shall not be required to entertain an alternative offer
unless such offer is for a value of at least $250,000 greater than the offer set
forth in this Agreement plus the Additional Undertakings (the "Higher and Better
Offer"). Such Preliminary Orders and Bidding Procedure shall further provide
that counter offers shall be made in increments of at least $100,000; that in
all instances Alternative Bidders shall, in addition to the higher cash offer,
assume the Additional Undertakings; and that Buyer shall be exempt from assuming
the Additional Undertakings and shall be deemed to have made the highest and
best offer as long as its cash offer is at least $100,000 more than the cash
offer made by the Alternative Bidder making the highest Higher and Better Offer.
Section 7.10 Application for the Order. Within three (3) days after the
execution and delivery of this Agreement and commencement of the Reorganization
Case, the Sellers shall,
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following consultation with the Buyer, file a motion (the "Motion") with the
Bankruptcy Court seeking an order pursuant to Sections 363 and 365 of the
Bankruptcy Code (the "Order"), in substantially the form of Exhibit B annexed
hereto, authorizing and approving the sale and assignment of the Assets on the
terms and conditions set forth in this Agreement. The Sellers shall request the
Court to schedule one or more hearings to approve the sale of the Assets on or
before February 26, 1999 (the "Sale Hearing"), and shall further request that
the Order provide that (i) the Bankruptcy Court shall retain jurisdiction to
determine any claims, disputes or causes of action arising out of or relating to
this Agreement or any of the transactions contemplated hereby (including any
objections to the sale of the Assets hereunder), (ii) the Buyer is a bona fide
good faith purchaser, (iii) the Sellers are authorized to sell, assign, transfer
and convey the Assets pursuant to Sections 363 and 365 of the Bankruptcy Code
free and clear of all liens, pledges, security interests and encumbrances of
every kind and nature and other interests, with all such liens, pledges,
security interests, encumbrances and interests attaching to the proceeds of sale
to the extent and in the same order of priority of any existing liens, security
interests, encumbrances and interests of record or as may be determined by the
Court. In furtherance of obtaining the Order, the parties shall file such
affidavits, motions and other papers, and take such other action, in the
Reorganization Case as shall be necessary or appropriate to support the sale of
the Assets to the Buyer on the terms and conditions of this Agreement subject to
Sellers' obligation to seek approval of Higher and Better Offers and perform its
obligations as a debtor-in-possession. The Sellers shall provide to the Buyer,
at the time of filing, a true and complete copy of the Motion papers.
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Section 7.11 Post Closing Responsibilities of Sellers. After the
Closing, Sellers shall be responsible for and shall pay to Buyer: (i) the
Processing Fee, as more specifically set forth in Section 8.4 hereof; and, (ii)
any fee agreed upon for the collection of Sellers' Receivables.
Section 7.12 Misdirected Payments. If any payments by customers in
respect of receivables other than Sellers' Receivables are paid to Sellers,
Sellers shall, within five (5) days after receipt thereof, remit such payment to
Buyer.
Section 7.13 Trademark Assignments. At or prior to the Closing, Sellers
shall record with the United States Patent and Trademark Office, or deliver to
Buyer, an assignment from Mackintosh to M&L International of the trademarks and
trademark applications listed on Schedule 2.1(a)(v) under the heading
"Mackintosh Trademarks," duly executed and in recordable form.
Section 7.14 Access to Books and Records. From and after the Closing,
Sellers shall, during regular business hours and upon reasonable prior written
notice, grant to Buyer access to Books and Records of Sellers pertaining to the
Excluded Assets to the extent Buyer requires such access in connection with
responding to any inquiries of any Government or for other reasonable purposes
specified in reasonable detail by Buyer.
Section 7.15 Withdrawal of Motion or Order by Sellers. If Sellers move
to withdraw the Motion or the Order, then, in addition to any other rights and
remedies of Buyer hereunder, (i) Buyer shall be permitted to solicit and hire
employees of Sellers without any liability to Sellers and (ii) Sellers hereby
agree that Kurt Gutfreund ("Gutfreund") shall be released from any and all
claims, causes of action, obligations and liabilities to Sellers (including
under his present employment agreement with M&L International) without the
execution of any further instrument, other than a release from Gutfreund
releasing Sellers from any liabilities with respect
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to his employment by Sellers (other than compensation and incentive compensation
already earned but unpaid, and reimbursable expenses not previously reimbursed),
and Sellers acknowledge receipt of good and valuable consideration therefor,
provided, however, that Buyer shall make reasonably available to Sellers, to
assist Sellers in the liquidation of its assets, at reasonable times and upon
reasonable request, employees hired by Buyer.
ARTICLE VIII
COVENANTS OF BUYER
Section 8.1 Actions Before Closing Date. Prior to Closing, the Buyer
shall not take any action which shall cause it to be in breach of any
representations, warranties, covenants or agreements contained in this
Agreement. The Buyer shall use commercially reasonable efforts to perform and
satisfy all conditions to Closing to be performed or satisfied by the Buyer
under this Agreement as promptly as practicable, but in no event later than the
Closing Date.
Section 8.2 Consents and Approvals. The Buyer shall use commercially
reasonable efforts to obtain all necessary consents, waivers, authorizations and
approvals of all governmental and regulatory authorities, domestic and foreign,
and of all other Persons whose consent is required in order for the Buyer to be
able to enter into and consummate the transactions contemplated by this
Agreement.
Section 8.3 Collection of Sellers' Accounts Receivable. Subject to
Buyer and Sellers entering into a mutually acceptable agreement satisfactory to
the Secured Bank Group, after the Closing, Buyer hereby agrees to assist Sellers
in the collection of Sellers' accounts receivable existing as of the close of
business on the day prior to the Closing Date ("Sellers' Receivables").
Section 8.4 Returns of Sellers' Goods. Buyer agrees to accept from
customers, and to process, returns of goods sold by Sellers prior to the Closing
Date ("Returned Goods"). Sellers
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shall pay to Buyer a fee equal to five percent (5%) of the Sellers' cost of any
and all Returned Goods (the "Processing Fee") as reimbursement for Buyer's costs
and expenses of processing, handling, postage, storage, transportation and
servicing of Returned Goods. Such payment shall be made by Sellers within thirty
(30) days after receipt of Buyer's monthly statement therefor. If the Returned
Goods are claimed by the customer to be damaged or non-conforming, or if such
Returned Goods are in fact damaged or nonconforming, then Buyer shall give
Sellers notice of such Returned Goods (the "Returned Goods Notice") and Sellers
and Sellers' designated agents or representatives shall have the right to
inspect such Returned Goods. If Sellers do not object in writing within five (5)
days after delivery of the Returned Goods Notice, then the Returned Goods shall
be deemed to be damaged or nonconforming goods ("Damaged Goods"). If Sellers so
advise Buyer of their desire to do so by written notice delivered within five
(5) days after delivery of the Returned Goods Notice, Sellers shall have the
right, at Sellers' sole cost and expense, to take possession of Damaged Goods
and, after removing all labels and other proprietary markings and references
indicating origin of the Damaged Goods, to sell the Damaged Goods for their own
account. Sellers shall not be entitled to any compensation with respect to
Damaged Goods. If the Returned Goods are finished goods for Fall 1998 or Spring
1999 styles and are not Damaged Goods, Buyer shall, provided any and all Liens
on such Returned Goods have been released and discharged pursuant to an order of
the Bankruptcy Court, compensate Sellers in the amount of sixty percent (60%) of
Sellers' Cost of such Returned Goods, less the Processing Fee. If the Returned
Goods are finished goods for styles older than Fall 1998 and are not Damaged
Goods, Buyer shall, provided any and all Liens on such Returned Goods have been
released and discharged pursuant to an order of the Bankruptcy Court, compensate
Sellers in the amount of fifty percent (50%) of Sellers' Cost of such Returned
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Goods, less the Processing Fee. Payment in respect of such Returned Goods shall
be remitted to Sellers on a monthly basis together with a statement indicating
all Returned Goods for the period. Such statement shall be subject to audit by
Sellers, as reasonably requested. Any and all Returned Goods purchased by Buyer
shall be held by Buyer free and clear of any and all liens, pledges, charges,
judgments, security interests and encumbrances of every kind or nature.
Notwithstanding the foregoing, in no event shall Buyer be obligated to purchase
Returned Goods in excess of $1,000,000, in the aggregate, at Sellers' cost. Upon
receiving any Returned Goods in excess of $1,000,000 at Sellers' cost ("Excess
Returned Goods"), Buyer shall, within five (5) days after receipt thereof, elect
whether or not to purchase such Excess Returned Goods. If Buyer elects not to
purchase any Excess Returned Goods, Buyer shall so notify Sellers in writing
within five (5) days after receipt of such Excess Returned Goods whereupon
Sellers shall have the right to accept such Excess Returned Goods and to sell
them. To facilitate such sale by Sellers, Buyer grants to Sellers a limited
non-exclusive license and sublicense to utilize the Intellectual Property Rights
solely in connection with the sale of Excess Returned Goods.
Section 8.5 Right to Set-off. Buyer shall have the right to set off the
Processing Fee against any amounts owed by Buyer to Sellers for undamaged
Returned Goods.
Section 8.6 Misdirected Payments. Unless otherwise provided in the
agreement referred to in Section 8.3, after the Closing, if any payments by
customers in respect of Sellers' Receivables are paid to Buyer, Buyer shall,
within five (5) days after receipt thereof, remit such payment to Sellers.
Section 8.7 Access to Books and Records. From and after the Closing,
Buyer shall, upon reasonable prior written notice and during regular business
hours, provide Sellers with reasonable access to any employees of Buyer who were
previously employees of Sellers (and
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make such employees available to Sellers and its counsel and accountants), and
the Books and Records as necessary or desirable to enable Sellers to comply with
their duties under the Bankruptcy Code and Bankruptcy Rules, including without
limitation, their duties and responsibilities relating to (i) preparing and
filing of operating reports, (ii) preparing and filing schedules of assets and
liabilities, (iii) preparing and filing their statement of financial affairs,
(iv) attending statutory meetings of creditors, (v) analyzing claims (including
preparing objections to claims), (vi) attending hearings and depositions
relating to collecting assets of M&L International's estate, (vii) preparing and
filing tax returns, (viii) preparing and filing data and information required to
comply with applicable securities laws. Sellers shall be responsible for
reimbursing Buyer for the reasonable costs and expenses actually incurred for
any travel, food and lodging for Buyer's employees who are required to travel to
New York, New York, to attend hearings or depositions and such obligation of
Sellers shall constitute a priority administrative claim in the Reorganization
Case. In addition, from and after the Closing, Buyer shall, during regular
business hours and upon reasonable prior written notice, grant to Sellers access
to the Books and Records to the extent Sellers require such access to respond to
inquiries of any Government or for other reasonable purposes specified in
reasonable detail by Sellers.
ARTICLE IX
EMPLOYEES
Section 9.1 Termination of Employees. Immediately prior to the Closing
and in accordance with the applicable requirements of all applicable laws,
rules, regulations and orders, including, without limitation, WARN, if
applicable, Sellers shall terminate the employment of each of its employees who
perform services for or with respect to the operations of the Business (the
"Business Employees"). Buyer shall offer employment to the Business Employees
listed on
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Schedule 9.1 on such terms and conditions as Buyer shall, in its sole
discretion, determine. Prior to the Closing Date, Sellers shall provide Buyer
with reasonable access to the Business Employees for purposes of interviewing
and communicating offers of employment. Any Business Employee who becomes
employed by Buyer (or any Affiliate of Buyer) is hereinafter referred to as a
"Transferred Employee."
Section 9.2 COBRA. Buyer shall have no liability under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or any similar
state or local law, to any Business Employee who does not become a Transferred
Employee. Sellers shall have no liability under COBRA or any similar state or
local law with respect to any Transferred Employee.
Section 9.3 Employee Benefit Plans. Sellers shall have no liability for
claims by any Transferred Employee accruing on or after January 1, 1999 under
Employee Benefit Plans maintained by Buyer for Transferred Employees. Buyer
shall have no liability for claims by any Business Employee accruing prior to
January 1, 1999 under Employee Benefit Plans maintained by Sellers for Business
Employees.
ARTICLE X
TAXES; RECORDING FEES
Unless the Order provides for an exemption therefrom, all state and
local transfer, excise, value-added or other similar taxes, and all recording
and filing fees (collectively, "Transaction Taxes") that may be imposed by
reason of the sale, transfer, assignment and delivery of the
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Assets shall be the sole responsibility of Sellers, except that Buyer shall pay
all recording fees with respect to trademark assignments.
ARTICLE XI
CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Sellers in their sole discretion:
Section 11.1 Representations and Warranties of the Buyer. All
representations and warranties made by each Buyer in this Agreement shall be
true and correct in all respects on and as of the Closing Date as if again made
by such Buyer on and as of such date, except for failures to be true and correct
that do not result in a material adverse effect on such Buyer's ability to
execute and deliver this Agreement or perform its obligations hereunder, and the
Sellers shall have received a certificate dated the Closing Date and signed by
the Chairman, President or the Chief Financial Officer of each Buyer to that
effect. Notwithstanding anything herein to the contrary, the representations and
warranties of each Buyer shall not survive the Closing.
Section 11.2 Performance of the Obligations of the Buyer. Each Buyer
shall have performed in all material respects all obligations required under
this Agreement and such Buyer shall have performed in all material respects all
obligations required under the Interim Agreement to be performed by it on or
before the Closing Date, and the Sellers shall have received a certificate dated
the Closing Date and signed by the Chairman, President or the Chief Financial
Officer of each Buyer to that effect, and each Buyer shall have delivered to
Sellers on
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or before the Closing Date the documents, instruments and certificates set forth
on Schedule 11.2.
Section 11.3 Consents and Approvals. Other than the Bankruptcy Court's
entry of the Order which is addressed in Section 11.5, all consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, or any other Person, required in connection with the
execution, delivery and performance of this Agreement, shall have been duly
obtained and shall be in full force and effect on the Closing Date.
Section 11.4 No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares this
Agreement invalid or unenforceable in any respect or which prevents or stays the
consummation of the transactions contemplated hereby shall be in effect.
Section 11.5 Entry of the Order. The Bankruptcy Court shall have
entered the Order and no order staying, reversing, modifying or amending the
Order shall then be in effect.
ARTICLE XII
CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Buyer in its sole discretion:
Section 12.1 Representations and Warranties of the Sellers. All
representations and warranties made by the Sellers in this Agreement shall be
true and correct in all respects on and as of the Closing Date as if again made
by the Sellers on and as of such date except for failures to
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be true and correct that do not have a Material Adverse Effect, and the Buyer
shall have received a certificate dated the Closing Date and signed by a Vice
President or by the chief financial officer of each of the Sellers to that
effect. Notwithstanding anything herein to the contrary, the representations and
warranties of Sellers shall not survive the Closing.
Section 12.2 Performance of the Obligations of the Sellers. The Sellers
shall have performed in all material respects all obligations required under
this Agreement and the Interim Agreement to be performed by them on or before
the Closing Date, and the Buyer shall have received a certificate dated the
Closing Date and signed by a Vice President or the chief financial officer of
each of the Sellers to that effect, and the Sellers shall have delivered to the
Buyer on or before the Closing Date the documents, instruments and certificates
set forth on Schedule 12.2.
Section 12.3 Consents and Approvals. Other than the entry by the
Bankruptcy Court of the Order which is addressed in Section 12.7, all consents,
waivers, authorizations and approvals of any governmental or regulatory
authority, domestic or foreign, or any other Person required in connection with
the execution, delivery and performance of this Agreement shall have been duly
obtained and shall be in full force and effect on the Closing Date.
Section 12.4 No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents or stays the consummation of the transactions contemplated hereby,
shall be in effect.
Section 12.5 No Material Adverse Change. No material adverse change
resulting from fire or other casualty that is not insured shall have occurred
in, or with respect to, the Assets or Business, at any time after the date
hereof.
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Section 12.6 Intentionally Omitted.
Section 12.7 Entry of the Order. The Bankruptcy Court shall have
entered the Order and no order staying, reversing, modifying or amending the
Order shall then be in effect.
ARTICLE XIII
TERMINATION
Section 13.1 Conditions of Termination. Notwithstanding anything to the
contrary contained herein, this Agreement may be terminated at any time before
the Closing:
(a) By mutual consent of the Sellers and the Buyer;
(b) By the Buyer, if any condition contained in Article XII,
other than Section 12.7, has not been satisfied or waived by the Closing Date;
(c) By the Buyer or the Sellers, if any court or other
governmental or regulatory authority has issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action has become final and non-appealable;
(d) By the Buyer, if the Buyer provides the Sellers with
written notice of a failure to fulfill the condition set forth in Section 12.2
and the Sellers have failed within 15 days after such notice to have fulfilled
such condition or provide adequate assurance to the Buyer of the Sellers'
ability to fulfill such condition;
(e) By Buyer, if a material adverse change has occurred in, or
with respect to, the Assets or the Business at any time after the date hereof;
(d) By the Buyer, if the condition set forth in Section 12.7
has not been satisfied by March 5, 1999 or, if additional time is required by
the Bankruptcy Court, March 12, 1999;
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(f) By Sellers, if any condition contained in Article XI has
not been satisfied or waived by the Closing Date;
(g) By Sellers, if Sellers provide Buyer with written notice
of a failure to fulfill the condition set forth in Section 11.2 and Buyer has
failed within 15 days after such notice to have fulfilled such condition, or
provide adequate assurance to Sellers of Buyer's ability to fulfill such
condition;
(h) By Buyer, if the Preliminary Motion referred to in Section
7.9 is not filed immediately after execution and delivery of this Agreement and
commencement of the Reorganization Case, upon written notice delivered to
Sellers within three (3) days after such failure to file or such later date as
the parties shall mutually agree upon;
(i) By Buyer, if the Preliminary Orders referred to in Section
7.9 are not entered by the Bankruptcy Court by February 9, 1999, upon written
notice delivered to Sellers within three (3) days after such failure or such
later date as the parties shall mutually agree upon; and
(j) By Buyer, if the Motion is not filed within three (3) days
after execution and delivery of this Agreement and commencement of the
Reorganization Case, upon written notice delivered to Sellers within three (3)
days after such failure to file or such later date as the parties shall mutually
agree upon.
If the Buyer or the Sellers terminate this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which such termination
is made.
Section 13.2 Specific Performance. (a) Sellers acknowledge and agree
that if, after entry of the Order, Sellers fail to proceed with the Closing in
any circumstance other than those
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described in clauses (a), (c), (g) or (h) of Section 13.1 above, Buyer will not
have adequate remedies at law with respect to such breach. In such event, and in
addition to Buyer's right to terminate this Agreement, Buyer shall be entitled,
without the necessity or obligation of posting a bond or other security, to seek
from the Bankruptcy Court specific performance of Sellers' obligations under
this Agreement. Sellers specifically affirm the appropriateness of such
injunctive or other equitable relief in any such action.
(b) Buyer acknowledges and agrees that if, after entry of the
Order, Buyer fails to proceed with the Closing in any circumstance other than
those described in clauses (a), (b), (c), (d) or (e) above, Sellers will not
have adequate remedies at law with respect to such breach. In such event, and in
addition to Sellers' right to terminate this Agreement, Sellers shall be
entitled, without necessity or obligation of posting a bond or other security,
to seek from the Bankruptcy Court specific performance of Buyer's obligations
under this Agreement. Buyer specifically affirms the appropriateness of such
injunctive or other equitable relief in any such action.
Section 13.3 Effect of Termination; Right to Proceed. In the event that
this Agreement shall be terminated pursuant to Section 13.1, the agreements
contained in Sections 3.4, 7.8, 7.15 and 14.3 shall survive the termination
hereof, provided that the Break-up Fee shall only be payable if approved by the
Bankruptcy Court. In the event that a condition precedent to its obligation is
not met, nothing contained herein shall be deemed to require any party to
terminate this Agreement as opposed to waiving such condition precedent and
proceeding with the transactions contemplated by this Agreement.
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ARTICLE XIV
GENERAL AND MISCELLANEOUS
Section 14.1 Successors and Assigns. Except as otherwise provided in
this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect.
Section 14.2 Governing Law; Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York, without giving effect to the principles of conflicts
of laws thereof. Except as specifically provided herein, the parties hereto
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent to the
jurisdiction of the Bankruptcy Court.
Section 14.3 Expenses. Except as otherwise provided herein, each of the
parties hereto shall pay its own expenses in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, any legal
and accounting fees, whether or not the transactions contemplated hereby are
consummated.
Section 14.4 Notice of Bankruptcy Proceedings. The Sellers shall, from
and after the date hereof, provide the Buyer's counsel with all notices and
pleadings filed by the Sellers in the Reorganization Case in accordance with
Federal Rule of Bankruptcy Procedure 2002.
Section 14.5 Further Assurances. The Sellers and the Buyer agree that,
from time to time, whether before, at or after the Closing Date, each of them
shall forthwith execute and deliver such documents as the Buyer or the Sellers
or their respective counsel may reasonably request to effectuate the purposes of
this Agreement.
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Section 14.6 Severability. In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the provisions of this Agreement shall remain in full force
and effect only if, after excluding the portion deemed to be unenforceable, the
remaining terms shall provide for the consummation of the transactions
contemplated hereby in substantially the same manner as originally set forth at
the later of the date this Agreement was executed or last amended.
Section 14.7 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and electronic
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the date after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service; or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is
given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to Sellers:
M&L International, Inc.
c/o Trivest
2665 South Bayshore Drive
Suite 800
Miami, Florida 33133-5301
Attn: Peter Vandenberg, Jr.
Telecopier No.: (305) 285-0102
44
<PAGE> 52
Copy to:
Greenberg Traurig
Met Life Building
200 Park Avenue, 15th Floor
New York, New York 10166
Attn: Richard N. Tilton, Esq.
Telecopier No.: (212) 801-6400
Salomon Green & Ostrow, P.C.
919 Third Avenue
15th Floor
New York, New York 10022
Attn: Nicholas F. Kajon, Esq.
Telecopier No.: (212) 319-8505;
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Attn.: Mark F. Liscio, Esq.
Telecopier No.: (212) 309-6273;
And, if a committee is appointed in the
Reorganization Case, to counsel for such committee at
the address specified by Sellers in written notice to
Buyer given in the manner set forth herein.
If to the Buyer:
M & L International Group, LLC
c/o AMEREX (USA) Inc.
350 Fifth Avenue
New York, New York 10018
Attn: Fred R. Shvetz, Chairman
Telecopier No.: (212) 967-3352
Copy to:
Rosen & Reade, LLP
757 Third Avenue
New York, New York 10017
Attn: Lawrence A. Blatte, Esq.
Telecopier No.: (212) 755-5600
Any party may change its address for the purpose of this Section by
giving the other party written notice of its new address in the manner set forth
above.
45
<PAGE> 53
Section 14.8 Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as a further or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
Section 14.9 Public Announcements. Subject to Sellers' fiduciary
duties, including their obligation to give notice of the proposed sale and the
opportunity to make Higher and Better Offers, which will be published in
newspapers and periodicals of general circulation, the parties agree that after
the signing of this Agreement, neither party shall make any press release or
public announcement concerning this transaction without the prior written
approval of the other party unless a press release or public announcement is
required by law or order of the Bankruptcy Court. If any such announcement or
other disclosure is required by law or order of the Bankruptcy Court, the
disclosing party agrees to give the nondisclosing party prior notice of, and an
opportunity to comment on, the proposed disclosure. The parties acknowledge that
the Sellers shall file this Agreement with the Bankruptcy Court.
Section 14.10 Entire Agreement. This Agreement, the Escrow Agreement,
the Interim Agreement and all other agreements referred to herein, contain the
entire understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All schedules hereto and any documents and instruments delivered
46
<PAGE> 54
pursuant to any provision hereof are expressly made a part of this Agreement as
fully as though completely set forth herein.
Section 14.11 Parties in Interest. Except as otherwise provided in
Section 7.15, nothing contained in this Agreement is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the Sellers and the Buyer and their respective successors and permitted
assigns. Nothing in this Agreement is intended to relieve or discharge the
obligations or liability of any third persons to the Sellers or to the Buyer. No
provision of this Agreement shall give any third persons any right of
subrogation or action over or against the Sellers or the Buyer.
Section 14.12 Section and Paragraph Headings. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
Section 14.13 Business Days. Any reference in this Agreement to a day
shall mean a Business Day. If the day on which any action is required to be
performed or to take place is not a Business Day in New York City, then such
action shall not be required, or shall not take place, until the next Business
Day thereafter.
Section 14.14 Counterparts. This Agreement may be executed in two or
more counterparts each of which shall be an original and all of which, taken
together, shall be deemed one and the same document.
Section 14.15 Treatment of Lease for Warehouse Premises in Auburn,
Washington ("Auburn Lease"). The Sellers and Buyer agree to cooperate in good
faith to renegotiate the Auburn Lease with the lessor so that such renegotiated
lease will be reasonably acceptable to both Sellers and Buyer. Buyer shall
notify Sellers in writing not less than three (3) days prior to
47
<PAGE> 55
the Sale Hearing whether it elects to purchase the Auburn Lease as part of the
Assets being purchased. If Buyer does not elect to purchase the Auburn Lease,
then M&L International may elect to reject the Auburn Lease. If M&L
International rejects the Auburn Lease, Buyer shall pay to Sellers as additional
Purchase Price an amount equal to the full amount of the landlord's allowed
claim arising out of such rejection as determined by the Bankruptcy Court, such
amount to be paid to Sellers without offset or deduction within ten (10) days
after entry of an order of the Bankruptcy Court determining such damages. Such
payment shall constitute part of the general assets of the estate of M&L
International and shall not be allocated to pay any specific claims.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
48
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
M & L INTERNATIONAL GROUP, LLC
By:
-------------------------------
Name: FRED R. SHVETZ
Title: Chairman
M & L HONG KONG, LTD.
By:
--------------------------------
Name: FRED R. SHVETZ
Title: Chairman
M & L INTERNATIONAL, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
M & L INTERNATIONAL (H.K.) LIMITED
By
--------------------------------
Name:
------------------------------
Title:
-----------------------------
AMEREX (USA) INC.
By
--------------------------------
Name:
------------------------------
Title:
-----------------------------
49
<PAGE> 57
SCHEDULE 3.1
The Purchase Price shall be calculated as follows:
1. The value of the Inventory at the Closing Date. In determining the
value of the Inventory, the following guidelines shall be applied:
a. Raw materials shall be priced at 50% of Sellers' Cost, except
raw materials for Fall 1999 styles which will be priced at
100% of Sellers' Cost.
b. Finished goods for Fall 1998 and Spring 1999 styles, for which
there are open customer orders, shall be individually priced
at the lesser of (i) 92% of Sellers' Cost, or (ii) 70% of net
selling price, but in no event less than 60% of Sellers' Cost.
c. Finished goods for Fall 1998 or Spring 1999 styles (which are
not damaged goods), for which there are no open customer
orders shall be priced at 60% of Sellers' Cost.
d. Unsold finished goods (which are not damaged goods), which
consist of styles older than Fall 1998, shall be priced at 50%
of Sellers' Cost.
e. Damaged goods shall have no value in the Inventory price
calculation.
"Sellers' Cost" shall mean: (i) as to Inventory owned by Sellers as of
September 30, 1998, cost as reported in Sellers' September 30, 1998
financial statements (excluding management loads); and (ii) as to
Inventory acquired after September 30, 1998, Sellers' landed duty-paid
cost including agents' fees and overseas office costs (excluding
management loads).
2. Operating Costs and Expenses incurred by the Sellers on a consolidated
world-wide basis from January 1, 1999 through the Closing Date.
"Operating Costs and Expenses" shall include all normal current period
items, calculated on the basis of GAAP consistently applied and shall
exclude the following:
a. Corporate charges and intercompany charges other than normal
local M&L Hong Kong charges.
b. Transaction fees and expenses related to the transactions
contemplated by this Agreement.
c. Interest.
d. Depreciation and amortization.
<PAGE> 58
e. Costs and expenses pertaining to the period prior to January
1, 1999, including, without limitation, the portion of any
accrued bonus, vacation, severance and termination benefits
for Business Employees attributable to the period prior to
January 1, 1999.
f. Taxes.
3. $3,000 for the Andy Johns trademarks.
4. Security deposits, prepaid rent and other prepaid expenses as of the
Closing Date.
5. 100% of accounts receivable of M&L Hong Kong as of the Closing Date.
There shall be deducted from the above items the following:
6. The greater of (i) 29% of Interim Net Sales; or (ii) Interim Gross
Profits.
7. 5% of Inventory returned to the Sellers during the period January 1,
1999 to the Closing Date.
The Purchase Price shall be the total of items 1, 2, 3, 4 and 5 minus items 6
and 7.
<PAGE> 59
SCHEDULE 1
ASSIGNED CONTRACTS
NEW YORK
1. Ti-Tone Communications, Inc. Service Agreement
Ti-Tone Communications, Inc.
386 Broadway, 2nd floor
New York, New York 10013
(212) 431-7765
dated 5/04/98 thru 5/03/99
M&L & Ti-Tone Communications, Inc.
facsimile service
2. Tele Dynamics Service Contract
Tele Dynamic
330 Seventh Avenue
New York, New York 10001
(212) 594-7333
dated 7/01/98 thru 6/30/99
M&L & Tele Dynamics
telephone system
3. NY Lease SZS 33 Associates L.P.
c/o M.S. Management Associates, Inc.
One Merchant Plaza
P.O. Box 7033
Indianapolis, IN 46207
dated 7/01/93
M&L & SZC 33 Associates L.P.
NY Office space lease
AUBURN
1. Advanced Filter & Mechanical Inc.
Advanced Filter & Mechanical Inc.
516 Valley Avenue Northeast
Puyallup, WA 98372-2503
(253) 770-2443
dated 2/17/98
M&L & Advanced Filter and Mechanical, Inc.
heating and airconditioning service and check
<PAGE> 60
AUBURN
2. Rider to Alarm Service Agreement
Security Link From Ameritech 3003 16th
Avenue West Seattle, WA 98119
dated 10/15/97
M&L & Security Link from Ameritech
change in alarm system
3. Addendum Rider to Alarm Service Agreement
Security link from Ameritech
3003 16th Avenue West
Seattle, WA 98119
(206) 443-9620
SecurityLink from Ameritech
dated 11/10/97
M&L & SecurityLink form Ameritech
addition to alarm system
4. Copy Kit "plus" Agreement
West Star Business Systems, Inc.
P.O. Box 58043
Seattle, WA 98138-1043
206) 575-9710
dated 2/25/99 thru 2/25/00
M&L & West Star Business Systems, Inc.
service and parts for copy machine
5. Equipment Maintenance
Pitney Bowes
501 N Riverpoint Blvd. Suite 200
Spokane, WA 99202-1664
(800) 522-0020
dated 10/01/98
M&L & Pitney Bowes
mail machine maintenance
6. Postage Meter Rental
Pitney Bowes
501 N. Riverpoint Blvd., Suite 200
Spokane, WA 99202-1664
(800) 522-0020
dated 10/01/98
M&L & Pitney Bowes
mail machine maintenance
<PAGE> 61
AUBURN
7. Facsimile Rental
Pitney Bowes
501 N Riverpoint Blvd. Suite 200
Spokane, WA 99202-1664
(800) 322-8000
dated 1/01/99
M&L & Pitney Bowes
Fax machine rental
8. Lease
HRP Properties 6
P.O. Box 700
Mercer Island, WA 98040
dated 7/23/91
M&L & HRP Properties 6
Auburn Warehouse Lease
CHICAGO
1. Amerinet Maintenance Agreement with M & L
Amerinet
324 E. Roosevelt Rd. Suite 201
Wheaton, IL 60187
(708) 653-8699
dated 6/08/92
M&L & Amerinet
service and parts for computers
2. Allcom Equipment Maintenance Agreement
Allcom Inc.
5621 W. Howard Street
Niles, IL 60714
dated 4/01/93
M&L & Allcom Inc.
labor only on phone system/full main. on voice mail
3. Cannon Financial Services Lease
Cannon Financial Service, Inc.
200 Commerce Square Blvd.
P.O. Box 370
Burlington, NJ 08016
(800) 220-0200
dated 12/04/96 for 48 months
M&L & Cannon Financial Services
color copy machine lease
<PAGE> 62
CHICAGO
4. Maintenance Agreement Service Division
Cannon Financial Service, Inc
200 Commerce Square Blvd.
P.O. Box 370
Burlington, NJ 08016
(800) 220-0200
M&L & Ambassador Office Equipment
color copy maintenance and supplies
5. Addendum to Maintenance Agreement
React Computer Service, Inc.
15W 700 Frontage Rd.
Hinsdale, IL 6052-5543
(708) 323-6200
dated 1/08/98
M&L & React Computer Services, Inc.
printer service
6. Central Station Protective Signaling Service Renewal
Wells Fargo Alarm Service, Inc.
230 W. Division Street
Chicago, IL 60610
(312) 337-3100
dated 9/25/97
M&L & Wells Fargo
security alarm system service
7. Service Purchase Agreement
Peak Technologies
9200 Berger Rd.
Columbia, MD 21046-1602
(410) 312-6000
dated 11/09/98 and 12/30/97
M&L & Peak Technologies
service on dot matrix printers (one for each printer)
8. Credit Recommendation Contract
Crex of New York, Inc. d/b/a Credit International
P.O. Box 5426
Flushing, NY 11354
(718) 539-8085
dated 3/01/98
M&L & CREX of New York, Inc. d/b/a Credit International
<PAGE> 63
CHICAGO
9. Credit Recommendation Contract
Dun & Bradstreet
P.O. Box 92542
Chicago, IL 60675-2542
(800) 284-4953
dated 3/9/98
M&L & Dun & Bradstreet
credit checks
10. Facsimile Rental Agreement
Pitney Bowes
P.O. Box 85390
Louisville, KY 40285-5390
dated 9/23/97 for 36 month minimum
M&L & Pitney Bowes
facsimile rental and maintenance agreement front desk
11. Facsimile Equipment Maintenance
Pitney Bowes
P.O. Box 85390
Louisville, KY 40285-5390
dated 01/01/99 renewal
M&L Pitney Bowes
back fax machine maintenance
12. Equipment Maintenance
Pitney Bowes P.O. Box 85390
Louisville, KY 40285-5390
M&L & Pitney Bowes
mailing machine maintenance
13. QuickLease Agreement
IBM Credit Corp.
1605 LBJ Freeway
Dallas, TX 75234
(972) 280-4750
dated 2/23/98
M&L & IBM Credit Corp.
RS6000 computer and maintenance
<PAGE> 64
CHICAGO
14. Connector Account Schedule Charges
MSCNET
Two Prudential Plaza, Suite 2625
Chicago, IL 60601
(312) 803-6271
dated 01/21/98
M&L & MCSNet
Internet Access
15. Annual Typewriter Maintenance Renewal
United Business Machines
875 E. Rand Rd.
Desplaines, IL 60016
(847) 299-3000
dated 3/12/98
M&L & United Business Machines
typewriter maintenance
16. Preventive Maintenance Agreement
Shavitz and Sons, Inc.
8245 N. Kimball Avenue
Skokie, IL 60076
(708) 674-8252
M&L & Shavitz and Sons, Inc.
heating and air conditioning maintenance
17. Copier Service Agreement
Camadon, Inc.
600 Bunker Court
Vernon Hills, IL 60061
(800) 542-7634
dated 12/14/95
M&L & Camadon/IKON
5570 model copier maintenance agreement
18. Copier Service Agreement
Camadon, Inc.
600 Bunker Court
Vernon Hills, IL 60061
(800) 542=7634
M&L & Camadon/IKON
6750 model copier maintenance agreement
<PAGE> 65
CHICAGO
19. Rental Agreement
Sparkling Spring Mineral Water Co.
1629 Park Avenue West
Highland Park, IL 60035
(708) 831-3442
dated 4/21/93
M&L & Sparkling Spring Mineral Water Co.
2 water cooler rentals
20. Monthly Commitment and Term Agreement
LCI International Telecom Corp.
4650 Lakehurst Court
Dublin, OH 43016
dated 8/16/95
M&L & LCI International
long distance carrier agreement
21. UPS Incentive Program
United Parcel Service
1400 S. Jefferson Street
Chicago, IL 60607
(800) 782-7892
dated 6/08/98
M&L & United Parcel Service
shipping carrier service contract for better rates
22. Chicago Lease
Everbury Partners, Ltd. L.P.
c/o Urban Estates, Inc.
1777 N. Clybourn Avenue
Chicago, IL 60614
dated 4/01/97
M&L & Everbury Partners, Ltd. Limited
Chicago Office space lease
23. License Agreement
Healthtex Apparel Corp.
200 Weldin Building, Concord Plaza
3411 Silverside Road
Wilmington, DE 19810
(302) 477-3930
dated 11/01/97
M&L & Healthtex Apparel Corp.
Healthtex License Agreement
<PAGE> 66
CHICAGO
24. License Agreement
Eclipse, Incorporated
110 E. 9th Street, Suite C-1259
Los Angeles, CA 90079
dated 7/13/97
M&L & Eclipse
Eclipse License Agreement
25. Hong Kong Lease
Ravelin Limited
13 Miles, Castel Peak Rd.
Sham Tseng
New Territories, Hong Kong
dated 1/12/96
M&L & Ravelin Limited
Hong Kong office lease
26. Bangladesh Verbal Lease
Abdur Rahman
#4 Naoratan Colony, Bailey Rd.
Dhaka 2, Bangladesh
880 2 416687
M&L & Abdur Rahman
Bangladesh office lease
27. Sri Lanka Lease
Maree Ruanee Gunasekera
#13/2 Elibank Rd.
Colombo 5, Sri Lanka
dated 07/15/97
M&L & Maree Ruanee Gunasekera
Sri Lanka office lease
28. Moore Forms Handling Equipment Maintenance Service Agreement
Moore Document Automation Systems
P.O. Box 951030
Dallas, TX 75395-1030
dated 2/20/99
M&L & Moore Document Automation Systems
invoice detacher maintenance
<PAGE> 67
HONG KONG
1. Air Conditioner Preventive Maintenance Service Agreement
Quiet & Cool Engineering Company Ltd.
Flat 2E, Fu Cheung Centre
5-7 Wong Chuk Yeung Street
Fotan, Shatin, Hong Kong
dated 1/05/98
M&L & Quiet & Cool Engineering Co. Ltd.
Air Conditioning Maintenance
2. Messengerial Services Contract
Alliance Express Service Co.
Room 5-6, 3/F, Block A
Wing Kut Industrial bldg.
608 Castle Peak Rd, Kin.
Hong Kong
dated 1/10/97
M&L & Alliance Express Service So.
Messenger Services
3. Lectra Systems Services Agreement
Lectra Systems (HK) Limited
Units 1112-1113, 11/F New East Ocean Centre
No. 9 Science Museum Road
Tsinshatsui East
Kowloon, Hong Kong
dated 1/01/98
M&L & Lectra Systems Services Agreement
Lectra Design Equipment Maintenance
4. Office Automation Equipment Maintenance Certificate
Shun Hing Electric Service Centre Ltd.
18/F, Shun Hing Centre
8 Shing Ylu Street
Kwai Chung, N.T.
Hong Kong
dated 4/22/98
M&L & Shun Hing Electric Service Centre Ltd.
Fax Machine Maintenance
5. Tradelink Registration and Subscriber Form
Tradelink Electronic Document Services, Ltd.
Suite 89, 5/F, Hong Kong Trade & Exhibition Centre
1 Trademart Drive, Kowloon Bay, Hong Kong
dated 02/11/98
M&L & Valunet Standard
Import & Export Declaration Services
<PAGE> 68
HONG KONG
6. Personal Computer Maintenance Agreement
Asia Pacific Systems Ltd.
Unit 13, 8/F, Hing Wah Centre
82-84 to Daw Wan Road,
Kowloon
dated 3/10/98
M&L & Asia Pacific Systems Ltd.
Computer Maintenance
<PAGE> 69
SCHEDULE 2.1 (A) (I)
EQUIPMENT
The following is a list of equipment purchased after 12/1/94.
All equipment purchased prior to that date will also be transferred as part of
this transaction
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
3 Drawer Vert File 1-5-95 268.00
5 Ft Bookcase Black 2-1-95 256.00
2 4Dr Letter Files 4-195 268.00
4 Designer Stack Chairs 5-1-95 213.80
2 Drawer Legal File 6-1-95 237.04
Refrigerator for lunch R 8-1-95 433.00
Two Work Station Chairs 9-1-95 444.18
Phillocraft 60"x96" 10-1-95 421.36
Lighting From Sup LGT 11-30-95 105.32
Floor Cushions 9-1-95 164.77
Chair for office Act MGR 10-1-95 210.37
Univ 1110-247SC-TC 10-1-95 274.44
Lighting Fixture 1-1-95 117.00
Table Lamp 2-1-95 228.00
Folding Table 4-1-95 107.50
Paneling for Progm Area 10-1-95 626.10
Work Chair & Stool 11-30-95 691.65
Univ 1110-247SC-TC 10-1-95 225.29
Multitask Chairs 1-1-96 365.92
Lighting 4-1-96 117.90
Multitask Chair 6-1-96 169.05
Office Panels 11-1-96 131.05
AIRM Kit for Chairs 6-1-96 165.63
Multitask Chairs 6-1-96 1,564.04
Color Printer 12-1-94 7,143.40
SLT Cards & Install 12-1-94 862.29
486 PC with Accessories 12-1-94 3,069.00
Chameleon NFS 1-1-95 1,224.25
Cambex Disk Drive 12-1-94 20,451.75
HP laser printer compusa 1-1-95 1,568.41
486 PC Zeos 1-1-95 2,435.00
Design PC-Zeos 12-1-94 1,985.00
PC Computer 3-1-95 1,828.88
PC Computer 3-1-95 1,224.25
</TABLE>
<PAGE> 70
SCHEDULE 2.1 (A) (I)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Chameleon Software 4-1-95 618.63
Notebook 5-1-95 326.58
BTN Hole Machine 10-1-95 800.00
6 Chairs Sewg Room 10-1-95 150.00
Eyelet Machine 10-1-95 100.00
Print Unit W/3 WS Cards 1-1-95 9,597.50
Novell Software Upgrade 2-1-95 1,711.91
HP Desk Jet Printer 4-1-95 1,030.68
486 PC 5-1-95 1,835.00
Lectra Machine 6-1-95 40,531.69
Power Converter-Electra 7-1-95 2,022.00
Conner Python Int 2-4GB 8-1-95 909.50
Chameleon Software 9-1-95 619.44
Juki MO3704 (Sewg Rm) 10-1-95 2,324.63
Memory Chips for Netw 12-1-95 1,109.25
PC Computer 3-1-95 3,424.30
Chameleon Software 4-1-95 618.64
Fax Machine 6-1-95 322.17
Motherboard 7-1-95 377.84
Zeos Computer 9-1-95 2,474.00
Juki LH -3128-S 10-1-95 2,754.19
PC Computer 3-1-95 5,655.00
2-486 Pers Computers 4-1-95 3,770.00
Modem 3-1-95 993.23
USRO Courrier Modem 4-1-95 910.29
3-486 PC Computers 5-1-95 5,505.00
IBM RS/6000 Series 6-1-95 1,361.00
Chameleon Software 7-1-95 619.44
Laptop Computer 8-1-95 2,762.95
Amerinet Purchases 9-1-95 1,117.29
Juki DDL-DDDON -7-WS 10-1-95 2,862.94
PC For Walmart 12-31-95 3,683.59
PC Computer 3-1-95 630.63
Chameleon Software 3 4-1-95 1,590.81
Wolf & Heap Forms 10-1-95 350.00
PC Computer 3-1-95 2,884.68
1-486 Pers Computers 4-1-95 1,835.00
Memory 2-1-96 1,317.00
</TABLE>
<PAGE> 71
SCHEDULE 2.1 (A) (I)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Compudyne P75 w/moni 3-31-96 1,300.91
Conn 2GB SCS &Delphi 4-1-96 1,122.97
Monitor 5-1-96 653.26
8 Port Adapter & Interfae 7-1-96 686.25
17" Monitor 8-1-96 926.60
Main Printer 9-1-96 6,888.23
Actg/AP Software 10-1-96 8,544.86
Software Costs Install 12-1-96 1,841.07
Detacher 1-1-96 727.00
Memory 2-1-96 727.20
Micro Computer ATO M 3-31-96 1,799.00
Nove Anyxcpt 4-1-96 1,616.67
HP Lasetjet 5M 5-1-96 1,942.17
Shipping Machine 8-1-96 3,258.15
Micron Computer 11-1-96 4,836.00
Primavision Wkstation 12-1-96 19,500.00
Netmanage Software 2-1-96 1,225.06
Memory -Amex 1-1-96 2,221.59
Memory 2-1-96 552.93
Union Special 52800-BE 3-31-96 1,760.00
WD 2.5 Harddrive & HP 4-1-96 1,481.04
Memory 5-1-96 1,165.00
Micron Computer 7-1-96 6,294.00
HP Laserjet 5m 8-1-96 1,960.59
Millennia Computer 9-1-96 2,498.00
Micron Comp 11-1-96 2,448.00
Primavision CLC Driver 12-1-96 4,000.00
Chameleon Software 1-1-96 619.44
Micron Computer ATO 2-1-96 3,736.00
ADAPEC Kit &Seagate 4-1-96 908.35
Dell Network Comp 11-1-96 10,560.77
Deskpro 4000 12-1-96 2,043.41
Pro/5 Data Server 4-1-96 638.50
PC Computer-Mocron 1-1-96 2,468.00
Novell Software 1/1/97 2,249.58
Novell Software 1/1/97 1,035.61
Computer (Mr G) 1/1/97 4,054.23
Computer 1/1/97 5,003.52
</TABLE>
<PAGE> 72
SCHEDULE 2.1 (A) (1)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Computer 1/1/97 3,078.84
Primavision software 1/1/97 2,400.00
Nova computer 2/1/97 2,753.55
CADD Engr Supply 2/1/97 843.00
WACOM Tech 2/1/97 179.97
CDW enet cards 1/8/97 659.99
CDW Serial port adapter 3/1/97 1,521.04
Basis Computer 3/1/97 5,471.50
Nova Pentium Pro 3/1/97 2,437.09
Basis International 3/1/97 1,250.00
Computer Equipment 4/1/97 3,277.81
Nova PC 6/1/97 1,336.54
IBM TP 560E 5/150 6/1/97 2,799.40
delete above 7/1/98 2,799.40
IBM TP 560E 5/166 7/1/97 4,600.13
2 PC for office 7/1/97 10,326.60
HP deskjet printer 7/1/97 269.00
HP Jetdirect printer 8/1/97 333.87
Minolta PC 9/1/97 328.77
Int P60/180 9/1/97 271.27
HP Officejet 500 9/1/97 542.47
Epso LQ 570+ 9/1/97 277.76
Printer Buffer 10/01/97 416.95
NT Software 10/01/97 958.95
Software upgrade AIX 10/01/97 2,871.58
Laptop for Suren 11/01/97 4,174.96
Modem 11/01/97 542.49
HP Laserjet printer 12/01/97 424.10
RS6000 12-1-97 40,862.32
Printer 12/01/97 8,059.32
Disk Drive 12/01/97 296.70
Monitor 12/01/97 490.80
Software (Eudora & L Smtst) 12/01/97 1,332.57
Computer Hardware 12/01/97 5,533.38
Monitor 01/01/98 489.72
Task Chair 01/01/98 268.33
Phone 02/01/98 641.79
5 PCs 02/01/98 4,463.58
</TABLE>
<PAGE> 73
SCHEDULE 2.1 (A) (I)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Monitor & sound card 02/01/98 606.65
Aspen Computer 02/01/98 9,045.76
AJ telephone system 02/01/98 4,437.00
Surge Protectors 05/01/98 268.58
Compusa 05/01/98 385.10
Monitors 05/01/98 364.18
PC 09/01/98 1,160.22
MS Office (sftwr) 09/01/98 361.46
PC 09/01/98 3,096.17
PC 03/01/98 3,650.47
Software 03/01/98 497.93
PC 10/27/98 970.55
Fusinon 3.0 software 11/30/98 295.33
hardware 11/30/98 608.12
Computer (3) 11/30/98 3,048.61
Computer 11/30/98 1,233.32
Phone system upgrade 11/30/98 6,719.81
----------
427,134.40
Ford Windstar 2-1-97 21,724.31
Monitor 7-1-96 433.97
Showroom Chairs 01/01/98 1,926.25
Monitor 11/01/98 291.17
----------
2,651.39
Air Conditioners 8-1-95 8,625.00
Computer Software 8-1-95 1,750.00
Computer Network & Accs 8-1-95 24,825.00
Telephone Connections 8-1-95 1,000.00
Fax Machine 8-1-95 1,500.00
Office Furniture 8-1-95 500.00
Computer 7-1-96 4,800.00
Computer Table 7-1-96 575.00
Chairs 7-1-96 770.00
</TABLE>
<PAGE> 74
SCHEDULE 2.1 (A) (I)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Marker Table 7-1-96 360.00
Printer 7-1-96 2,045.00
Table 7-1-96 360.00
Curtains 7-1-96 1,495.00
Copier 3/1/97 5,475.00
Generator 3/1/97 5,250.00
PC wiring 3/1/97 2,000.00
Scanner 3/1/97 950.00
Air conditioners 10/01/97 5,000.00
Copiers 10/01/97 4,750.00
IBM PC 10/01/97 2,250.00
Furniture 10/01/97 1,500.00
FAX 10/01/97 1,150.00
PC 10/01/98 1,200.00
---------
78,130.00
Van 3-1-97 15,000.00
RF Base Station 3-1-95 9,239.28
Computer 3/1/97 7,883.40
Power system for Computer 3/1/97 2,162.92
2 PCs for office 3/1/97 2,901.39
Computer Equipment 4/1/97 561.73
Datamax used prodigy prtr 7/1/97 1,362.72
Tables w/ lighting 5/1/97 2,460.85
Time Clock 04/01/98 1,009.98
Printer 09/01/98 1,641.27
---------
29,223.54
Fortress UPS 9-1-95 881.28
Lift Truck 9-1-95 17,122.25
Washer & Dryer 10/01/97 1,042.54
Bike 04/01/98 1,058.85
---------
20,104.92
</TABLE>
<PAGE> 75
SCHEDULE 2.1 (A) (I)
EQUIPMENT
<TABLE>
<CAPTION>
In Service
Description Date Cost
<S> <C> <C>
Install New Pump 1-1-96 5,135.75
Sprinklers in Washroom 7-1-96 257.52
Fixture & Outlets 10-1-96 2,359.85
Overhead doors 5/1/97 4,897.86
----------
12,650.98
Leasehold Impv NY Starter 08/31/98 56,218.28
w/o Starter 46,848.57
----------
9,369.71
Generator for Office 6-1-96 4,400.00
Air Conditioner 03/01/98 2,600.00
----------
7,000.00
Susuki Motorcycle 7-1-96 2,945.00
Susuki Motorcycle 03/01/98 2,625.00
----------
5,570.00
619,189.54
</TABLE>
<PAGE> 76
SCHEDULE 2.1(A)(II)
LEASED REAL PROPERTY
SHOWROOM
100 WEST 33RD ST
NEW YORK CITY, NY 10001
OFFICE SPACE
1333 N KINGSBURY
CHICAGO, IL 60622
RETAIL SPACE
222 MERCH MART PLAZA
CHICAGO, IL 60654
OFFICE
9-11 SHING WAG ROAD
HONG KONG
OFFICE
36 & 36.6 PAMANKADA RD
KIRILLAPON, WLLAWATTE, SRI LANKA
OFFICE
DKAKA, BANGLADESH
OFFICE
CHITTAGONG, BANGLADESH
<PAGE> 77
SCHEDULE 2.1(A) (III)
INVENTORY AS OF 12/31/98
<TABLE>
<CAPTION>
TOTAL
<S> <C>
FINISHED GOOD/PHYSICAL COUNT $ 5,095,865.00
INTRANSIT INVENTORY 536,491.00
INVENTORY AT STORE OUTLET 25,724.82
PIECE GOODS AT OTHER MAKERS 347,472.94
--------------
TOTAL BOOK INVENTORY 6,005,553.76
LESS ESTIMATED BOOK RESERVES FOR
OBSOLESCENCE AND MARKDOWNS (1,190,774.00)
--------------
NET INVENTORY $ 4,814,779.76
==============
</TABLE>
<PAGE> 78
SCHEDULE 2.1(A)(V)
TRADEMARKS, TRADENAMES, PATENTS, LOGOS
<TABLE>
<CAPTION>
OWNED TRADEMARKS REGISTRATION NO.
- --------------------------- ---------------------------
<S> <C>
Good Friends ** 1,294,492
Good Friends Design ** 1,475,080
Hi Dives ** 1,514,693
Winning Team 1,773,699
Windy Trail 1,836,878
Wonderralls ** 1,013,839
Cyberfleece 2,088,371
Cyber Berber Applied For
Weather Tamer 730,123
Weather Tamer 1,561,092
Collie Warm as a Collie's Fur ** 1,561,093
Weather Tamer 1,577,883
Collie Design ** 1,582,648
The Kids Andy Johns 2,045,161
<CAPTION>
MACKINTOSH TRADEMARKS REGISTRATION NO.
- --------------------------- ---------------------------
<S> <C>
KAOS 1,197,990
KAOS 1,419,300
Andy Johns 1,562,284
Andy Johns 1,060,825
** These trademarks are not currently being used.
<CAPTION>
TRADEMARKS UNDER LICENSE REGISTRATION NO.
- --------------------------- ---------------------------
<S> <C>
Healthtex 1,807,653
</TABLE>
<PAGE> 79
<TABLE>
<S> <C>
Girls Club by Healthtex Applied For
Little Impressions Applied For
Starter Not disclosed in License
"S and Star" Not disclosed in License
"Starter in conjunction with Not disclosed
S and Star"
Eclipse Unregistered
</TABLE>
COPYRIGHTS
The company occasionally applies for copyright registration of artwork used in
connection with its products, however, none is considered to be material to the
operation of M&L.
<PAGE> 80
SCHEDULE 2.1 (A) (IX)
PREPAID EXPENSES
<TABLE>
<CAPTION>
As of Projected (1)
12/31/98 2/28/99
<S> <C> <C>
M & L International - US
Advances to Suppliers
Rudra 4,460 4,460 To be paid off w/ fall deliveries
Remerco 6,000 0 Paid in Jan
------ -------
US Advances 1,540 4,460
------ -------
Prepaid Expenses
Insurance 21,740 0 Not to be carried forward to Amerex
Postage 4,494 4,000 Estimate
Starter 20,833 Depends on payment and new contract terms
Trade Show 4,000 0 Trade show in Feb
Sri Lanka Rent 6,000 4,000
Bangladesh Rent 0 0
Prepaid Freight 2,877 0
Other Prepaids 7,327 0 To be amortized before Feb 28th
Due from Empl 257 0
Electra Svc contract HK 0 5,857
------ -------
US Prepaids 67,528 13,857
------ -------
Total US Prepaids & Advances 65,988 18,317
------ -------
Prepaid Hong Kong Expenses
Rental deposit 42,806 42,806
Electrical deposit 3,782 3,782
Courier Services 103 103
Trade Departments 641 641
Water Bottling deposit 288 288
Employee Adv 652 0
Maintenance contracts 1,123 201
Lectra computer ins 345 172
Insurance 1,104 1,389
Nominee fees 748 748
------ -------
Total Hong Kong Prepaids 51,592 50,130
------ -------
Liabilities Hong Kong
(1) Actual numbers at Closing
Date
may vary from projections.
Accounts Payable 31,483 31,483
Provisions for Severance 23,206 112,984
</TABLE>
<PAGE> 81
<TABLE>
<S> <C> <C>
Audit Fees 2,949 3,440
------ -------
Total Hong Kong 57,637 147,907
Liabilities
------ -------
Net Hong Kong 6,045 97,777
------ -------
Total US and Hong Kong 59,943 79,459
====== =======
</TABLE>
<PAGE> 82
SCHEDULE 2.1 (A)(XVI)
M&L INTERNATIONAL (H.K.) LTD. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
BALANCE PROJECTED
12/31/98 2/28/99
---------------- ----------------
<S> <C> <C>
Total Receivables $19,214.50 None
</TABLE>
<PAGE> 83
SCHEDULE 2.1(B)(III)
EXCLUDED CONTRACTS
<PAGE> 84
SCHEDULE 2.2
ASSUMED LIABILITIES
See Schedule 2.1(a)(ix) under the heading Hong Kong Liabilities
<PAGE> 85
<TABLE>
<S> <C> <C>
1) Illinois Charter # 5784-689-5
Incorporated Registration date 7-Jun-94
Prentice Hall Legal and Financial Services
33 North LaSalle St.
Chicago, IL 60602
2) California Charter # 1914238
Qualification Registration date 6-Oct-94
Prentice Hall Legal and Financial Services
6430 Sunset Blvd., Suite 1117
Los Angeles, CA 90028
3) Georgia Charter # 9419063
Qualification Registration date 1-Aug-94
Prentice Hall Legal and Financial Services
100 Peachtree St.
Atlanta, GA 30303
4) New York Charter #
Qualification Registration date 11-Oct-94
Prentice Hall Legal and Financial Services
80 State St.
Albany, NY 12207
5) Washington Charter # 601562673
Qualification Registration date 12-Oct-94
Prentice Hall Legal and Financial Services
1010 Union Ave. SE
Olympia, WA 98501
6) Wisconsin Charter # M047820
Qualification Registration date 17-Jun-97
CSC Termination date 25-Sep-98
25 W. Main St.
Madison, WI 53703
</TABLE>
<PAGE> 86
SCHEDULE 5.5
CONSENTS AND WAIVERS REQUIRED FOR TRANSACTION
15. CONSENT OF BANK IS REQUIRED PURSUANT TO CREDIT AGREEMENT
16. APPROVAL OF THE COMPANY'S BOARD OF DIRECTORS IS REQUIRED.
17. THE CHICAGO OFFICE LEASE CAN BE ASSIGNED TO ANY ENTITY WHICH IS A
SUCCESSOR TO ALL OR A SUBSTANTIAL PORTION OF M&L'S BUSINESS.
18. THE NEW YORK SHOWROOM LEASE MAY BE ASSIGNED TO A CORPORATION TO WHICH
SUBSTANTIALLY ALL OF THE TENANT'S ASSETS ARE TRANSFERRED PROVIDED THAT:
a. The transfer is for a good business purpose and not a device
for the transfer of the tenant's interest in the lease; and
b. The assignee has a net worth of at least $593,481.
19. THE HEALTHTEX LICENSE PROHIBITS ASSIGNMENT.
20. THE FOLLOWING CONTRACTS REQUIRE WRITTEN CONSENT:
a) West Star Business Systems -- Copy Kit "plus"
Agreement
b) Wells Fargo Alarm Service -- Security service
c) Cannon Financial Services -- Color printer lease
d) LCI International Telecom Corp -- Long distance phone
service
e) React Computer Services -- Computer printer &
terminal maintenance
f) Moore Document Information System -- Detacher
maintenance
g) Starter Corporation -- License
h) Asia Pacific Systems Limited (HK) -- Computer
Maintenance
i) Dun & Bradstreet -- Credit Report Service
<PAGE> 87
21. THE FOLLOWING CONTRACTS ARE NOT ASSIGNABLE
a) IBM Credit Corp. -- Computer Lease/Purchase
b) Pitney Bowes -- Various facsimile rental agreements and
mailing equipment rentals and service.
c) Quiet & Cool Engineering Company Ltd. (HK) -- Air conditioning
maintenance
<PAGE> 88
SECTION 5.6 COMPLIANCE WITH LAW
(a) None
(b) None
<PAGE> 89
SCHEDULE 5.7 LITIGATION
None
<PAGE> 90
SCHEDULE 5.9
EMPLOYEE BENEFIT PLANS
<TABLE>
<S> <C>
HEALTH INSURANCE Chicago & NY HEALTH and DENTAL INSURANCE AUBURN
American Unified Life and Health Insurance Regence Blue Sheild
Group # PPO-9860 MS 610
HMO-IL11980 P.O. Box 21267
Seattle, WA 98111-3267
Attention - Claim Dept.
4601 Saulk Trail Rd. Group # 028871
Richton Park, IL 60471
Phoenix Disability Insurance
ACCOUNT #'S
SHORT TERM DISABILITY LONG TERM DISABILITY
054-9024-00 054-9019-00
mail enrollments to:
Group BIlling
Phoenix Home Life Phone: 1-800-451-2513
100 Bright Meadow Blvd. Fax: 860-403-6980
P.O. Box 1900
Enfield, CT 06083-1900
Lafayette Life Insurance
POLICY # G002530
</TABLE>
PUT TODAY'S DATE IN THE TOP RIGHT CORNER OF FORM AND FAX TO:
GROUP DEPT.
LAFAYETTE LIFE INS. CO.
FAX #: 765-477-3369 COVERAGE AMOUNTS ARE:
<TABLE>
<CAPTION>
LIFE AD&D
<S> <C>
25000 25000
<CAPTION>
OVER AGE 70 COVERAGE IS 1/2
LIFE AD&D
<S> <C>
12500 12500
</TABLE>
<PAGE> 91
<TABLE>
<S> <C>
DENTAL INSURANCE Chicago
1st Commonwealth Enrollments to:
Dental HMO First Commonwealth
Plan 3000D 444 North Wells, Suite 600
Group Name is M&L International Chicago, IL 60610
Attn: Processing Dept.
Fax: (312) 644-1822
401K Plan
Principal Financial Group The Principal Financial Group
Contract # (3)77345 710 9th St.
Location # 2 Des Moines, IA 50309-1502
</TABLE>
<PAGE> 92
SCHEDULE 5.10
CONTRACTS
NEW YORK
1) Ti-Tone Communications, Inc. Service Agreement
Ti-Tone Communications,Inc.
386 Broadway,2nd floor
New York, NY 10013
(212) 431-7765
dated 5/04/98 thru 5/03/99
M&L & Ti-Tone Communications, Inc.
facsimile service
2) Tele Dynamics Service Contract
Tele Dynamic
330 Seventh Avenue
New York, NY 10001
(212) 594-7333
dated 7/01/98 thru 6/30/99
M&L & Tele Dynamics
telephone system
3) NY Lease
SZS 33 Associates L.P.
c/o M.S. Management Associates, Inc.
One Merchant Plaza
P.O. Box 7033
Indianapolis, IN 46207
dated 7/01/93
M&L & SZC 33 Associates L.P.
NY Office space lease
AUBURN
1) Advanced Filter & Mechanical Inc.
Advanced Filter & Mechanical Inc.
516 Valley Avenue Northeast
Puyallup, WA 98372-2503
(253) 770-2443
dated 2/17/98
M&L & Advanced Filter and Mechanical, Inc.
heating and air conditioning service and check
<PAGE> 93
2) Rider to Alarm Service Agreement
Security Link from Ameritech
3003 16th Avenue West
Seattle, WA 98119
(206) 443-9620
dated 10/15/97
M&L & Security Link from Ameritech
change in alarm system
3) Addendum Rider to Alarm Service Agreement
Security link from Ameritech
3003 16th Avenue West
Seattle, WA 98119
(206) 443-9620
Security link from Ameritech
dated 11/10/97
M&L & SecurityLink from Ameritech
addition to alarm system
4) Copy Kit "plus" Agreement
West Star Business Systems, Inc.
P.O. Box 58043
Seattle, WA 98138-1043
(206) 575-9710
dated 2/25/99 thru 2/25/00
M&L & West Star Business Systems, Inc.
service and parts for copy machine
5) Equipment Maintenance
Pitney Bowes
501 N Riverpoint Blvd. Suite 200
Spokane, WA 99202-1664
(800) 522-0020
dated 10/01/98
M&L & Pitney Bowes
mail machine maintenance
6) Postage Meter Rental
Pitney Bowes
501 N. Riverpoint Blvd., Suite 200
Spokane, WA 99202-1664
(800) 243-7800
dated 11/16/98
M&L & Pitney Bowes
postage meter rental
7) Facsimile Rental
Pitney Bowes
501 N. Riverpoint Blvd., Suite 200
Spokane, WA 99202-1664
(800) 322-8000
dated 1/01/99
M&L & Pitney Bowes
Fax machine rental
<PAGE> 94
8) Exclusive Listing Agreement Sublease Contract
Cushman & Wakefield of Washington, Inc.
Pacific Northwest Area
700 Fifth Ave., Suite 2700
Seattle, WA 98104-5027
dated 11/01/98 thru 4/30/99
M&L & Cushman & Wakefield of Washington, Inc.
Real Estate listing agreement
9) Lease
HRP Properties 6
P.O. Box 700
Mercer Island, WA 98040
dated 7/23/91
M&L & HRP Properties 6
Auburn Warehouse Lease
CHICAGO
1) Amerinet Maintenance Agreement with M & L
Amerinet
324 E. Roosevelt Rd.Suite 201
Wheaton, IL 60187
(708) 653-8699
dated 6/08/92
M&L & Amerinet
service and parts for computers
2) Allcom Equipment Maintenance Agreement
Allcom Inc.
5621 W. Howard St.
Niles, IL 60714
dated 4/01/93
M&L & Allcom Inc.
labor only on phone system/ full main. on voice mail
3) Cannon Financial Services Lease
Cannon Financial Service, Inc.
200 Commerce Square Blvd.
P.O. Box 370
Burlington, NJ 08016
(800) 220-0200
dated 12/04/96 for 48 months
M&L & Cannon Financial Services
color copy machine lease
4) Maintenance Agreement Service Division
Cannon Financial Service, Inc
200 Commerce Square Blvd.
P.O. Box 370
Burlington, NJ 08016
(800) 220-0200
M&L & Ambassador Office Equipment
color copy maintenance and supplies
<PAGE> 95
5) Addendum to Maintenance Agreement
React Computer Service, Inc.
15W 700 Frontage Rd.
Hinsdale, IL 60521-5543
(708) 323-6200
dated 1/08/98
M&L & React Computer Services, Inc.
printer service
6) Central Station Protective Signaling Service Renewal
Wells Fargo Alarm Service,Inc.
230 W. Division St.
Chicago, IL 60610
(312) 337-3100
dated 9/25/97
M&L & Wells Fargo
security alarm system service
7) Service Purchase Agreement
Peak Technologies
9200 Berger Rd.
Columbia, MD 21046-1602
(410) 312-6000
dated 11/09/98 and 12/30/97
M&L & Peak Technologies
service on dot matrix printers (one for each printer)
8) Credit Recommendation Contract
Crex of New York, Inc. d/b/a Credit International
P.O. Box 5426
Flushing, NY 11354
(718) 539-8085
dated 3/01/98
M&L & CREX of New York, Inc. d/b/a Credit International
credit checks
9) Credit Recommendation Contract
Dun & Bradstreet
P.O. Box 92542
Chicago, IL 60675-2542
(800) 284-4953
dated 3/9/98
M&L & Dun & Bradstreet
credit checks
10) Facsimile Rental Agreement
Pitney Bowes
P.O. Box 85390
Louisville, KY 40285-5390
dated 9/23/97 for 36 month minimum
M&L & Pitney Bowes facsimile rental and maintenance agreement front desk
<PAGE> 96
<TABLE>
<S> <C>
11) Facsimile Equipment Maintenance
Pitney Bowes
P.O. Box 85390 no actual signed contract, maintenance is billed annually
Louisville, KY 40285-5390 if invoice not paid, maintenance is discontinued and billed
dated 01/01/99 renewal per service call instead.
M&L Pitney Bowes
back fax machine maintenance
12) Equipment Maintenance
Pitney Bowes
P.O. Box 85390
Louisville, KY 40285-5390
M&L & Pitney Bowes
mailing machine maintenance
</TABLE>
<PAGE> 97
13) QuickLease Agreement
IBM Credit Corp.
1605 LBJ Freeway
Dallas, TX 75234
(972) 280-4750
dated 2/23/98
M&L & IBM Credit Corp.
RS6000 computer and maintenance
14) Connector Account Schedule Charges
MSCNET
Two Prudential Plaza, Suite 2625
Chicago, IL 60601
(312) 803-6271
dated 01/21/98
M&L & MCSNet
Internet Access
15) Annual Typewriter Maintenance Renewal
United Business Machines
875 E. Rand Rd.
Desplaines, IL 60016
(847) 299-3000
dated 3/12/98
M&L & United Business Machines
typewriter maintenance
16) Preventive Maintenance Agreement
Shavitz and Sons, Inc.
8245 N. Kimball Ave.
Skokie, IL 60076
(708) 674-8252
M&L & Shavitz and Sons, Inc.
heating and air conditioning maintenance
17) Copier Service Agreement
Camadon,Inc.
600 Bunker Court
Vernon Hills, IL 60061
(800) 542-7634
dated 12/14/95
M&L & Camadon/IKON
5570 model copier maintenance agreement
<PAGE> 98
18) Copier Service Agreement
Camadon,Inc.
600 Bunker Court
Vernon Hills, IL 60061
(800) 542-7634
M&L & Camadon/IKON
6750 model copier maintenance agreement
19) Rental Agreement
Sparkling Spring Mineral Water Co.
1629 Park Ave. West
Highland Park, IL 60035
(708) 831-3442
dated 4/21/93
M&L & Sparkling Spring Mineral Water Co.
2 water cooler rentals
20) Monthly Commitment and Term Agreement
LCI International Telecom Corp.
4650 Lakehurst Court.
Dublin, OH 43016
dated 8/16/95
M&L & LCI International
long distance carrier agreement
21) UPS Incentive Program
United Parcel Service
1400 S. Jefferson St.
Chicago, IL 60607
(800) 782-7892
dated 6/08/98
M&L & United Parcel Service
shipping carrier service contract for better rates
22) Chicago Lease
Everbury Partners, Ltd. L.P.
% Urban Estates, Inc.
1777 N. Clybourn Ave.
Chicago, IL 60614
dated 4/01/97
M&L & Everbury Partners, Ltd. Limited
Chicago Office space lease
<PAGE> 99
23) License Agreement
Healthtex Apparel Corp.
200 Weldin Building, Concord Plaza
3411 Silverside Road
Wilmington, DE 19810
(302) 477-3930
dated 11/01/97
M&L & Healthtex Apparel Corp.
Healthtex License Agreement
24) License Agreement
Eclipse, Incorporated
110 E. 9th Street, Suite C-1259
Los Angles, CA 90079
dated 7/13/87
M&L & Eclipse
Eclipse License Agreement
25) Oral Contract
J-Belt Sales
694 The Apparel Center
Chicago, IL 60654
M&L & J-Belt Sales
Sales Rep
26) Oral Contract
Liz Clark
451 E. 58th Ave.
Box 315, Suite 4167
Denver, CO 80216
M&L & Liz Clark
Sales Rep
27) Oral Contract
Alan Mallman
1356 Neshaminy Valley Dr.
Ben Salem, PA 19020
M&L & Alan Mallman
Sales Rep
<PAGE> 100
28) Oral Contract
Jerry Bassett
1300 Nicollet Mall
Suite 4035
Minneapolis, MN 55403
(612) 333-7166
M&L & Jerry Bassett
Sales Rep - Healthtex
29) Oral Contract
Mike Benson
215 Homeland St.
Fairfield, Ct 06432
(203) 331-1830
M&L & Mike Benson
Sales Rep - Healthtex
30) Oral Contract
Michael Branch
2300 Stemmons Freeway
Suite 3829
Dallas, TX 75207
(214) 637-1322
M&L & Michael Branch
Sales Rep - Healthtex
31) Oral Contract
Walt Bringman
1502 E. Schantz
Dayton, OH 45419
(513) 298-3725
M&L & Walt Bringman
Sales Rep - Healthtex
32) Oral Contract
Rusty Buckman
5033 Craig Ave
Kenner, LA 70065
(504) 456-9090
M&L & Rusty Buckman
Sales Rep - Healthtex
<PAGE> 101
33) Oral Contract
Glenda Doherty
3315 159th PL SE
Millcreek, WA 98012-8330
M&L & Glenda Doherty
Sales Rep - Healthtex
34) Oral Contract
Chuck Groomes
1644 Lochcrest
Chesterfield, MO 63017
(314) 537-9703
M&L & Chuck Groomes
Sales Rep - Healthtex
35) Oral Contract
James Haley
12735 Providence Rd.
Alpharetta, GA 30201
(770) 475-1013
M&L & James Haley
Sales Rep - Healthtex
36) Oral Contract
Priscilla Mathis
110 East 9th St
Suite B-684
Los Angles, CA 90079
M&L & Priscilla Mathis
Sales Rep - Healthtex
37) Oral Contract
William Mcjunkin
1016 Gatewood Dr
Bethel Park, PA 15102
(412) 835-2078
M&L & William Mcjunkin
Sales Rep - Healthtex
<PAGE> 102
38) Oral Contract
Elwood Regan
P.O. Box 44844
Greensboro, NC 27404-4484
(910) 854-5522
M&L & Elwood Regan
Sales Rep - Healthtex
39) Oral Contract
Susan Roholt
2109 Wimbledon Circle
Franklin, TN 37069
(615) 794-0234
M&L & Susan Roholt
Sales Rep - Healthtex
40) Oral Contract
Jan Switzer
11846 Cedar Pass
Houston, TX 77077
(218) 493-0347
M&L & Jan Switzer
Sales Rep - Healthtex
41) Buying Agreement
Jun Jin
#804, 8F Keumpoong Bldg 326-2 Kunja-Dong
Seoul, Korea
9761-342738
dated 12/17/98
M&L & Jun Jin Corporation
buying agent agreement
42) Buying Agreement
Ronnie Shahar
6 Halotus St
Ramat-Effal, Israel 52960
972 353 43129
dated 8/02/95
M&L & Ronnie Shahar
buying agent agreement
<PAGE> 103
43) Buying Agreement
Savitex
Dogan Arasli Cad.Fatih Mah Yeni
Belediye Binasi Karsisi
Esenyurt, Istanbul
Turkey
02126205778
dated 3/12/98
M&L & Savitex International
buying agent agreement
44) Hong Kong Lease
Ravelin Limited
13 Miles, Castle Peak Rd.
Sham Tseng
New Territories, Hong Kong
dated 1/12/96
M&L & Ravelin Limited
Hong Kong office lease
45) Bangladesh Verbal Lease
Abdur Rahman
#4 Naoratan Colony, Bailey Rd.
Dhaka 2, Bangladesh
880 2 416687
M&L & Abdur Rahman
Bangladesh office lease
46) Sri Lanka Lease
Maree Ruanee Gunasekera
# 13/2 Elibank Rd.
Colombo 5, Sri Lanka
dated 07/15/97
M&L & Maree Ruanee Gunasekera
Sri Lanka office lease
47) License Agreement
Starter Corporation
370 James St.
New Haven, CT 06513
dated 6/30/97
M&L & Starter Corporation
Starter License Agreement
<PAGE> 104
48) Employment Contract
Kurt Gutfreund
33 E. Bellevue, Apt # 4E
Chicago, IL 60611
dated 11/30/1994
M&L & Kurt Gutfreund
Mr. Kurt Gutfreund's Employment Contract
49) Moore Forms Handling Equipment Maintenance Service Agreement
Moore Document Automation Systems
P.O. Box 951030
Dallas, TX 75395-1030
dated 2/20/99
M&L & Moore Document Automation Systems
invoice detacher maintenance
HONG KONG
1) Air Conditioner Preventive Maintenance Service Agreement
Quiet & Cool Engineering Company Ltd.
Flat 2E, Fu Cheung Centre
5-7 Wong Chuk Yeung Street
Fotan, Shatin, Hong Kong
dated 1/05/98
M&L & Quiet & Cool Engineering Co. Ltd.
Air Conditioning Maintenance
2) Messengerial Services Contract
Alliance Express Service Co.
Room 5-6, 3/F, Block A
Wing Kut Industrial bldg.
608 Castle Peak Rd, Kln.
Hong Kong
dated 1/10/97
M&L & Alliance Express Service So.
Messenger Services
3) Lectra Systems Services Agreement
Lectra Systems (HK) Limited
Units 1112-1113, 11/F New East Ocean Centre
No. 9 Science Museum Road
Tsinshatsui East
Kowloon, Hong Kong
dated 1/01/98
M&L & Lectra Systems Services Agreement
Lectra Design Equipment Maintenance
4) Office Automation Equipment Maintenance Certificate
Shun Hing Electric Service Centre Ltd.
18/F, Shun Hing Centre
8 Shing Yiu Street
Kwai Chung, N.T.
Hong Kong
dated 4/22/98
M&L & Shun Hing Electric Service Centre Ltd.
<PAGE> 105
Fax Machine Maintenance
5) Tradelink Registration and Subscriber Form
Tradelink Electronic Document Services, Ltd.
Suite 89, 5/F, Hong Kong Trade & Exhibition Centre
1 Trademart Drive, Kowloon Bay, Hong Kong
dated 02/11/98
M&L & Valunet Standard
Import & Export Declaration Services
6) Personal Computer Maintenance Agreement
Asia Pacific Systems Ltd.
Unit 13, 8/F, Hing Wah Centre
82-84 To Daw Wan Road,
Kowloon
dated 3/10/98
M&L & Asia Pacific Systems Ltd.
Computer Maintenance
<PAGE> 106
SCHEDULE 5.12
PURCHASE ORDERS
All Purchase Orders for Fall 1999 have been entered into in the ordinary course
of business but are not consistent with past practice on the following two
points:
1) Orders have been placed later than past practice.
2) Letters of credit have not been opened.
<PAGE> 107
SCHEDULE 5.13
PERMITS
1. City of Chicago -- License
2. State of Washington -- Registration and License
3. City of Auburn -- Business Registration
4. State of Utah -- License for Quilted Clothing
<PAGE> 108
SCHEDULED 5.14
LEASES
None
<PAGE> 109
SCHEDULE 5.15
ENVIRONMENTAL LAW VIOLATIONS
None
<PAGE> 110
SCHEDULE 5.16
INSURANCE POLICIES
M & L INTERNATIONAL, INC.
<TABLE>
<CAPTION>
COVERAGE
DATES INSURANCE COMPANY POLICY # DESC. OF COVERAGE PREMIUM COVERAGE
<S> <C> <C> <C> <C> <C>
11/01/98-11/01/99 EMPLOYERS MUTUAL CASUALTY CO. 1A88S75 COMMERCIAL PROPERTY 28,000.00 170,123,440 BLANKET REAL & PERSONAL
PROPERTY INCLUDING EDP (SUB-LIMITS
APPLY-SEE POLICY FOR DETAILS)
107,810,000 BLANKET BUSINESS
INTERRUPTION/RENTS 50%
50,000,000 EARTH MOVEMENT PER
OCCURRENCE/AGGREGATE INCLUDING
SPRINKLER LEAKAGE-EXCEPT CA.
5,000,000 EARTH MOVEMENT PER
OCCURRENCE/AGGREGATE INCLUDING
SPRINKLER LEAKAGE-CA
50,000,000 FLOOD PER
OCCURRENCE/AGGREGATE-EXCEPT FLOOD
ZONE A
1,000,000 FLOOD PER
OCCURRENCE/AGGREGATE-FLOOD ZONE A
DEDUCTIBLES
5,000 COMBINED PROPERTY DAMAGE AND
TIME LIMIT EXCEPT
25,000 EARTH MOVEMENT COMBINED
PROPERTY DAMAGE AND TIME ELEMENT.
EXCEPT CA
25,000 FLOOD COMBINED PROPERTY
DAMAGE AND TIME ELEMENT, EXCEPT
FLOOD ZONE A
1,000 TRANSIT
5% CA EARTHQUAKE PER ITEM OF
INSURANCE (100,000 MINIMUM)
1% WIND FOR 1* TIER COUNTIES
(100,000 MINIMUM)
FLOOD ZONE A DEDUCTIBLE SHALL BE
AMOUNT AVAILABLE UNDER
NATIONAL FLOOD PROGRAM WHETHER IN
FORCE OR NOT
11/01/98-11/01/99 GREAT NORTHERN INSURANCE 35331938 FOREIGN LIABILITY 6,091.00 450,000 BLANKET PERSONAL PROPERTY
ENGLAND (BISCAYNE)
500,000 BLANKET PERSONAL PROPERTY
DOMINICAN REPUBLIC(BISCAYNE)
500,000 BLANKET BUSINESS INCOME
500,000 CONTINGENT BUSINESS INCOME
IN CHINA
500,000 BLANKET PERSONAL PROPERTY
ANY OTHER LOCATIONS
DEDUCTIBLES
1,000 EXCEPT
25,000 FLOOD & EARTHQUAKE
24 HOURS WAITING PERIOD-BUSINESS
INTERRUPTION
INTERNATIONAL COMMERCIAL LIABILITY
COVERAGE WITH PER OCCURRENCE/PER
OFFENSE LIMITS
1,000,000 BODILY INJURY & PROPERTY
DAMAGE LIMIT(OTHER THAN
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
COVERAGE
DATES INSURANCE COMPANY POLICY # DESC. OF COVERAGE PREMIUM COVERAGE
<S> <C> <C> <C> <C> <C>
PRODUCTS-COMPLETED OPERATIONS HAZARD
EMPLOYMENT RELATED PRACTICES HAZARD
& PROPERTY DAMAGE TO RENTED OR
OCCUPIED PREMISES
1,000,000 PERSONAL INJURY &
ADVERTISING INJURY LIMIT (OTHER THAN
EMPLOYMENT RELATED PRACTICES HAZARD)
1,000,000 PROPERTY DAMAGE TO RENTED
OR OCCUPIED PREMISES LIMIT COVERAGE
OTHER THAN CLAIMS-MADE AGGREGATE
LIMITS ONLY:
1,000,000 PRODUCTS-COMPLETED
OPERATIONS HAZARD AGGREGATE LIMIT
NOT COVERED EMPLOYMENT RELATED
PRACTICES HAZARD
1,000,000 MEDICAL EXPENSE AGGREGATE
LIMIT
INTERNATIONAL AUTOMOBILE DIC/EXCESS
LIABILITY
1,000,000 BODILY INJURY & PROPERTY
DAMAGE LIMIT
10,000 AUTO MEDICAL PAYMENTS
LIMIT-PER PERSON
RETAINED LIMITS
20,000 THRESHOLD AMOUNT ON DEFENSE
EXPENSE FOR PROPERTY DAMAGE
STATE OF HIRE BENEFITS APPLICABLE
1,000,000 EMPLOYER'S LIABILITY
50,000 REPATRIATION EXPENSE POLICY
LIMIT
50,000 REPATRIATION EXPENSE PER
EMPLOYEE
11/01/98-11/01/99 FEDERAL INSURANCE CO. 78339689 BOILER & MACHINERY 2,002.00 50,000,000 COMBINED LIMIT PER
(CHUBB) ACCIDENT (SUB LIMIT APPLY - SEE
POLICY FOR DETAILS)
DEDUCTIBLES
5.000 ALL ENTITIES
10,000 PRODUCTION MACHINES (ALL
ENTITIES)
TIME ELEMENT
24 HOURS WAITING PERIOD
48 HOURS WAITING PERIOD FOR
PRODUCTION MACHINES
11/01/98-11/01/99 ZURICH INSURANCE CO. BAP837469 BUSINESS AUTO COVERAGE 5,000.00 ALL AUTOS-INCLUDING HIRED AND
301 NON-OWNED
1.000,000 COMBINED SINGLE LIMIT
(SYMBOL 1)
1,000,000 UNINSURED/UNDERINSURED
MOTORISTS
MEDICAL PAYMENTS
5,000 PER PERSON
DEDUCTIBLES
500 COMP/COLLISION-ALL EXCEPT
TRACTORS
500 HIRED AUTO PHYSICAL DAMAGE
1,000 COMP/COLLISION-TRACTORS
11/01/98-11/01/99 GREAT AMERICAN INS. CO. TUU2534089 COMMERCIAL UMBRELLA 11,794.00 EXCESS OF UNDERLYING LIMITS
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
COVERAGE
DATES INSURANCE COMPANY POLICY # DESC. OF COVERAGE PREMIUM COVERAGE
<S> <C> <C> <C> <C> <C>
(TAMARACK INSURANCE CO.) 50,000,000 EACH OCCURRENCE
50,000,000 POLICY AGGREGATE LIMIT
50,000,000 PRODUCTS COMPLETED
OPERATIONS AGGREGATE
DEDUCTIBLES - NONE SIR-EACH
OCCURRENCE
11/01/98-11/01/99 ZURICH INSURANCE CO. WC8374188-02 WORKERS COMPENSATION 10,965.00 EMPLOYER'S LIABILITY
500,000 BI BY ACCIDENT-EACH ACCIDENT
500,000 BI BY DISEASE-EACH EMPLOYEE
500,000 BI BY DISEASE-POLICY LIMIT
100,000 REPATRIATION AND ENDEMIC
DISEASE
11/01/98-11/01/99 ZURICH-AMERICAN INS. CO. GLO8374233-02 COMMERCIAL GENERAL 2,800.00 GENERAL LIABILITY (OCCURRENCE)
LIABILITY 2,000,000 GENERAL AGGREGATE PER
LOCATION
1,000,000 OCCURRENCE LIMIT
2,000,000 PRODUCTS/COMPLETED
OPERATIONS AGGREGATE
1,000,000 PERSONAL & ADVERTISING
INJURY
50,000 FIRE DAMAGE LEGAL
LIABILITY-ANY ONE FIRE
10,000 MEDICAL EXPENSE-ANY ONE
PERSON
EMPLOYEE BENEFITS LIABILITY (CLAIMS
MADE)
1,000,000 EACH OCCURRENCE
1,000,000 AGGREGATE LIMIT
DEDUCTIBLES
1,000 EMPLOYEE BENEFITS LIABILITY
NONE-ALL OTHER
11/01/98-11/01/99 ROYAL INSURANCE CO. PSF000686 COMMERCIAL CRIME 7,755.00 1.000,000 BLANKET LIMIT FOR THE
OF AMERICA COVERAGE FOLLOWING
EMPLOYEE THEFT-MONEY, SECURITIES AND
OTHER PROPERTY
PREMISES COVERAGE-MONEY AND
SECURITIES
TRANSIT COVERAGE-MONEY AND
SECURITIES
DEPOSITORS FORGERY
COMPLETE THEFT & FUNDS TRANSFER
COVERAGE
1,000,000 SPECIAL CRIME LIMIT
DEDUCTIBLES
5,000 PER OCCURRENCE
NONE SIR SPECIAL CRIME
11/01/98-11/01/99 ROYAL INSURANCE CO. PSF000686 FIDUCIARY LIABILITY 1,800.00 1,000,000 ANNUAL AGGREGATE
QUARTERLY(NOV-JAN) ATLANTIC MUTUAL COMPANIES 146018943- OCEAN CARGO COVERAGE 30,000.00 3,000,000 ANY ONE VESSEL
0203
10,000 DEDUCTIBLE ALL OCCURRENCES
300,000 STOWED ON DECK
</TABLE>
<PAGE> 113
<TABLE>
<CAPTION>
COVERAGE
DATES INSURANCE COMPANY POLICY # DESC. OF COVERAGE PREMIUM COVERAGE
<S> <C> <C> <C> <C> <C>
1,000,000 AIRCRAFT
500,000 BARGE
06/21/98-06/21/99 OMAHA PROPERTY & CASUALTY 3-0063- FLOOD INSURANCE 6,091.00 500,000 PRIMARY -
8468-3 5,000 DEDUCTIBLE
04/12/98-04/12/99 MINN. MUTUAL 1463700H KURT GUTFREUND 2,884.40 4,000 PER MO. 90 DAY ELIMINATION
DISABILITY FOR LIFE
01/05/99- UNUM LAN653298 KURT GUTFREUND 1,519.00 2,000 PER MO. 90 DAY ELIMINATION TO
02/05/2000 DI DISABILITY AGE 65 ILLNESS
11/01/98-11/01/99 AETNA CASUALTY & SURETY 971015014 CUSTOMS BOND LIFETIME ACCIDENT
1,300.00 450,000
</TABLE>
<PAGE> 114
SCHEDULE 5.17
INTELLECTUAL PROPERTY
(i) Trademarks listed on schedule 2.1(a)(v) under the headings "Trademarks
Under License" and "Mackintosh Trademarks" are not owned by M&L.
(ii) All of the owned rights have been assigned to Chase Manhattan Bank.
(iii) None
(iv) None
(v) None
<PAGE> 115
SCHEDULE 5.18
EQUIPMENT (WITH ORIGINAL PURCHASE PRICE OVER $10,000)
<TABLE>
<CAPTION>
Acquisition
Description Cost Date Location
<S> <C> <C> <C>
Cambex Disk Drive 20,451.75 12-1-94 Chicago
office
Lectra Machine 40,531.69 6-1-95 Chicago
office
Primavision Wkstation 19,500.00 12-1-96 Chicago
office
Dell Network Comp 10,560.77 11-1-96 Chicago
office
RS6000 40,862.32 12-1-97 Chicago
office
Ford Windstar 21,724.31 2-1-97 Chicago
office
Computer Network & Accs 24,825.00 8-1-95 Sri Lanka Office
Van 15,000.00 3-1-97 Sri Lanka Office
Lift Truck 17,122.25 9-1-95 Seattle Warehouse
210,578.09
</TABLE>
<PAGE> 116
SCHEDULE 5.19
CONDITION OF TITLE TO ASSETS
The following liens exist against the companies assets
1) The Chase Manhattan Bank
New York, NY
type: original
filing # 95056478
date filed: 03/21/1995
filed with: NY
Collateral: All assets including proceeds and products
type: original
filing # 1776297
date filed 06/27/1997
filed with: NJ
Collateral: All assets including proceeds and products
type: amendment
filing # 983270055 original # 950800044
date filed 11/23/1998
filed with: WA
Collateral: Inventory
2) Canon Financial Services, Inc.
Burlington, NJ
type: original
filing # 003639085
date filed 01/14/1997
filed with: IL
Collateral: Assets including proceeds and products - Leased Business
Machinery/Equipment including proceeds and products
3) IBM Credit Corp
White Plains, NY
type: original
filing # 003814423
date filed 03/10/1998
filed with: IL
Collateral: Leased Computer Equipment
<PAGE> 117
M&L International Inc. SCHEDULE 7.1
Consolidated Forecast Statement of
Income
INC1 For The Year Ended December 31, 1999
<TABLE>
<CAPTION>
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
JAN FEB MAR 1st APR MAY JUNE 2nd Six % OF
1999 1999 1999 Qtr 1999 1999 1999 Qtr Months SALES
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales 2,806,001 458,247 529,841 3,794,089 390,239 1,009,691 2,496,380 3,896,310 7,690,399 100.00
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Cost of sales 2,002,755 339,646 416,902 2,759,303 261,043 732,004 1,652,052 2,645,099 5,404,403 70.27
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Gross profit 803,246 118,600 112,939 1,034,786 129,196 277,687 844,327 1,251,210 2,285,996 29.73
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Selling expenses 335,126 247,814 235,033 817,973 253,330 297,494 280,885 831,709 1,649,682 21.45
General & administrative 500,412 460,377 464,791 1,425,580 488,094 428,527 443,229 1,359,850 2,785,430 36.22
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Total S,G & A 835,538 708,191 699,824 2,243,553 741,424 726,021 724,115 2,191,559 4,435,112 57.67
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Operating income 32,292 589,591 586,884 1,208,767 612,228 448,334 120,213 940,349 2,149,116 27.95
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Interest Expense and Other
Expenses 28,801 34,133 41,666 104,599 44,747 56,352 68,022 169,121 273,721 3.56
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Interest Expense BAI 0 0 0 0 0 0 0 0 0 0.00
Banking Fees - Default 0 0 0 0 0 0 0 0 0 0.00
Interest Term Loan 0 0 0 0 0 0 0 0 0 0.00
Discontinued Operations Exp 0 0 0 0 0 0 0 0 0 0.00
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Income bef. sub,OH & taxes 61,093 623,724 628,550 $1,313,366 656,975 504,686 52,191 $1,109,470 $2,422,836 31.50
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Amortization of intangibles 0 0 0 0 0 0 0 0 0
Equity in subsidiary 0 0 0 0 0 0 0 0 0 0.00
Corporate Overhead 0 0 0 0 0 0 0 0 0 0.00
Management fee 0 0 0 0 0 0 0 0 0 0.00
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Income before taxes 61,093 623,724 628,550 1,313,366 656,975 504,686 52,191 1,109,470 2,422,836 31.50
Income tax provision 0 0 0 0 0 0 0 0 0 0
--------- ------- ------- ---------- ------- --------- --------- ---------- ---------- ------
Net income 61,093 623,724 628,550 1,313,366 656,975 504,686 52,191 1,109,470 2,422,836 31.50
========= ======= ======= ========== ======= ========= ========= ========== ========== ======
</TABLE>
<PAGE> 118
M&L International Inc. SCHEDULE 7.1
Consolidated Forecast Statement of Income
For The Year Ended December 31, 1999
<TABLE>
<CAPTION>
--------- --------- --------- ----------- ----------- --------- --------- ---------
JULY AUG SEPT 3RD NINE OCT NOV DEC
1999 1999 1999 QTR MONTHS 1999 1999 1999
--------- --------- --------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales 4,330,729 6,120,085 6,551,988 17,002,803 24,693,202 5,378,957 2,228,609 2,528,468
--------- --------- --------- ----------- ----------- --------- --------- ---------
Cost of sales 2,836,321 3,965,513 4,322,551 11,124,385 16,528,787 3,492,677 1,423,018 1,680,755
--------- --------- --------- ----------- ----------- --------- --------- ---------
Gross profit 1,494,408 2,154,572 2,229,437 5,878,418 8,164,414 1,886,280 805,591 847,713
--------- --------- --------- ----------- ----------- --------- --------- ---------
Selling expenses 329,510 418,642 390,422 1,138,575 2,788,257 426,142 340,350 337,796
General & administrative 520,510 491,347 457,028 1,468,885 4,254,315 519,291 467,971 450,579
--------- --------- --------- ----------- ----------- --------- --------- ---------
Total S,G & A 850,020 909,989 847,450 2,607,460 7,042,572 945,433 808,321 788,375
--------- --------- --------- ----------- ----------- --------- --------- ---------
Operating income 644,388 1,244,583 1,381,987 3,270,958 1,121,842 940,847 2,730 59,338
--------- --------- --------- ----------- ----------- --------- --------- ---------
Interest Expense and Other 82,896 92,377 91,972 267,245 540,965 81,255 40,047 38,256
Expenses
Interest Expense BAI 0 0 0 0 0 0 0 0
Banking Fees - Default 0 0 0 0 0 0 0 0
Interest Term Loan 0 0 0 0 0 0 0 0
Discontinued Operations Exp 0 0 0 0 0 0 0 0
--------- --------- --------- ----------- ----------- --------- --------- ---------
Income bef. sub,OH & taxes 561,492 1,152,207 1,290,015 $ 3,003,714 $ 580,877 859,592 42,777 21,082
--------- --------- --------- ----------- ----------- --------- --------- ---------
Amortization of intangibles 0 0 0 0 0 0 0 0
Equity in subsidiary 0 0 0 0 0 0 0 0
Corporate Overhead 0 0 0 0 0 0 0 0
Management fee 0 0 0 0 0 0 0 0
--------- --------- --------- ----------- ----------- --------- --------- ---------
Income before taxes 561,492 1,152,207 1,290,015 3,003,714 580,877 859,592 42,777 21,082
--------- --------- --------- ----------- ----------- --------- --------- ---------
Income tax provision 1,000 3,000 3,000 7,000 7,000 3,000 0 0
--------- --------- --------- ----------- ----------- --------- --------- ---------
Net income 560,492 1,149,207 1,287,015 2,996,714 573,877 856,592 42,777 21,082
========= ========= ========= =========== =========== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
---------- ----------- ------ ------------ ------
4TH % OF 1998 % OF
QTR TOTAL SALES CONSOLIDATED SALES
---------- ----------- ------ ------------ ------
<S> <C> <C> <C> <C> <C>
Net sales 10,136,034 34,829,236 100.00 44,602,596 100.00
---------- ----------- ------ ----------- ------
Cost of sales 6,596,450 23,125,238 66.40 29,454,119 66.04
---------- ----------- ------ ----------- ------
Gross profit 3,539,584 11,703,998 33.60 15,148,477 33.96
---------- ----------- ------ ----------- ------
Selling expenses 1,104,287 3,892,544 11.18 5,242,094 11.75
General & administrative 1,437,841 5,692,156 16.34 6,511,585 14.60
---------- ----------- ------ ----------- ------
Total S,G & A 2,542,128 9,584,700 27.52 11,753,679 26.35
---------- ----------- ------ ----------- ------
Operating income 997,456 2,119,298 6.08 3,394,798 7.61
---------- ----------- ------ ----------- ------
Interest Expense and Other 159,558 700,524 2.01 1,012,008 2.27
Expenses
Interest Expense BAI 0 0 0.00 610,949 1.37
Banking Fees - Default 0 0 0.00 250,000 0.56
Interest Term Loan 0 0 0.00 319,823 0.72
Discontinued Operations Exp 0 0 0.00 1,024,033 2.30
---------- ----------- ------ ----------- ------
Income bef. sub,OH & taxes 837,897 $ 1,418,774 4.07 $ 1,399,883 3.14
---------- ----------- ------ ----------- ------
Amortization of intangibles 0 0 0.00 20,016 0.04
Equity in subsidiary 0 0 0.00 0 0.00
Corporate Overhead 0 0 0.00 152,330 0.34
Management fee 0 0 0.00 0 0.00
---------- ----------- ------ ----------- ------
Income before taxes 837,897 1,418,774 4.07 1,267,569 2.84
---------- ----------- ------ ----------- ------
Income tax provision 3,000 10,000 0.70 10,854 0.86
---------- ----------- ------ ----------- ------
Net income 834,897 1,408,774 4.04 1,256,714 2.82
========== =========== ====== =========== ======
</TABLE>
<PAGE> 119
SCHEDULE 9.1
EMPLOYEES
<TABLE>
<CAPTION>
CHICAGO N.Y. OFFICE BANGLADESH - DHAKA
------- ----------- ------------------
<S> <C> <C>
EXECUTIVES Cliff Uttan Sharif Ahmed
---------- John Nitti David Halder
David Pick MD Shahadat Hossain
Albert DeCarlo Helen Tirado MD Golam Rabbi
Ken MacFarlane Barbara Arlia Abdullah Mahamud
Kurt Gutfreund Michael Mager Richard Milton
Patricia Pierce Kathryn Devlin S. H. Khan
Daniel Sinnaduray Shafiquer Rahaman
SEATTLE Neser-Uddin
------- Amir Hossain
OFFICE Abul Kalam
------ Anna Clark Michale Kulantono
Denny Ko Ruhul Amin
Alexandria Schroeder Merv Box S.M. Babul
Andrea Landon Patty Barker M.R. Shelly
Andrew Shalla William Barry Kamal Ahmed
Arline Rogers Donna Battles Samir K. Saha
Arlene Bernstein Joyce Braunschweig Tashin M. Shelly
Aronette Espada Daniel Desmet Firoz Alam
Carol Gongala Keely Dever Abu Hanif
Denise Rix James Krager Abul Kalam Azad
Ericka Hall Dean Owens Anis Kal
Fran Pappalardo Joyce Palmer Saiful Islam
Gale Johnson Melvin Ploegman Faruk Ahmed
German Velez Timothy Risovi Saleh Ahmed
Giselle Thomas Fern Tyler P.V.P.A. Jayasinghe
Hoa Vu J.B. Rana Sashi
Jamille Wilson SRI LANKA
John Severns --------- HONG KONG
Julie Baro ---------
Karen Williams-Aguirre A. Thatchanamoorthy
Kelly Kramer Perera W. Janaka Ronald Hui Kam Tai
Ky Huynh M.C. Offen Chito Marcelino
Leslie Cohn Jenifer Nicholas Lam Kin Chi Kaser
Lisa Warechowicz Nalani Bathotuwa Chan Yuk Fun Debby
Lissette Torres Shanthi Weerasinghe Young Nga Kit
Magdalena Jarzebska G.C. Demoore Chan Chun Kit (Thomson)
Tyrone Fernando
</TABLE>
<PAGE> 120
<TABLE>
<S> <C> <C>
Mahendra Shah Priyankara Mendis Lui Kat Cheing (Tommy)
Marie Sabatka P.L.A. Udayakantha Kwan Suk Kuen (Idy)
Marlisse Rosado C. Thushara Shelly Tan Shaonen
Mel Smith K.G. Gunaratne Wong Wai Yan
Nikia Carter M. Chandramoghan Ng Sui Ha
Nurith Landau Mohamed Irshad Ho sat Yin
Nyekro Kuykendall Pong Shiu Kuen
Paula Polizzi-Kellas BANGLADESH - CHITTAGONG Yam Chun Choi
Pamela Cabrera ----------------------- Yeung Ming Kit (Fready)
Ramona Strickland Li Chi Kwan
Raymond McCallister MD Haroon Ng Kit Pui
Richard Cobbins MD Khurshid Alam Li Fu Yau Tai
Richard Ostrowski Aminul Haque Li Lai Yung
Robert Rud Anayet Rabbi Fung Siu Mei
Rodolfo Borja Lucky Ghose
Rosa Perez Ismail Hossain
Rosalind Young Sajjad Hossain
Rosalino Capio J.M.D.J. Sydney
Rosemary Jordan Noel Gunaratne
Sakinah Hudson
Sarah Thomas MADRAS
Sue Kandefer ------
Sylkia Julia
Tim Makinster G. Bhagyesh
Tracy Congdon
</TABLE>
<PAGE> 121
SCHEDULE 12.2
Closing Documents
1. Bill of Sale
2. Assignment of Assigned Contracts
3. Resolutions of the Board of Directors of each Seller approving the
Asset Purchase Agreement and the sale of the Assets, certified by an
officer of each Seller.
4. Certified copy of Certificates of Incorporation for each Seller.
5. Good standing certificates for each Seller from the jurisdiction in
which it was organized and all jurisdictions in which each Seller is
qualified to do business as a foreign corporation.
6. UCC-3 Termination Statements with respect to all Liens affecting the
Assets in form for recordation in all jurisdictions where Financing
Statements are filed.
7. Terminations of any and all recorded Liens against trademarks included
in the Intellectual Property Rights.
8. The trademark assignments referred to in Section 7.12 in recordable
form, or evidence of recordation thereof.
9. Assignments of all trademarks included in the Intellectual Property
Rights, in recordable form.
10. Any third party consents required for consummation of the sale of the
Assets by Sellers.
11. Escrow Agreement signed by Sellers.
<PAGE> 1
EXHIBIT 10.2
INTERIM AGREEMENT
AGREEMENT made this 5th day of February, 1999 by and among M&L
INTERNATIONAL, INC., an Illinois corporation with its principal office at 1333
North Kingsbury Street, Chicago, Illinois 60622 ("M&L International"), AMEREX
(USA) INC., a New York corporation with its principal office at 350 Fifth
Avenue, New York, New York 10118 ("Amerex"), and M&L INTERNATIONAL GROUP, LLC, a
Delaware Limited Liability Company with its principal office at 350 Fifth
Avenue, New York, New York 10118 ("M&LIG").
WITNESSETH:
WHEREAS, M&L International is, simultaneously with the execution and
delivery of this Agreement, filing a petition to commence a reorganization case
(the "Reorganization Case") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"); and
WHEREAS, after commencement of the Reorganization Case, M&L
International will be operating its business as a debtor-in-possession pursuant
to the Bankruptcy Code; and
WHEREAS, M&L, Amerex and M&LIG have concurrently entered into an Asset
Purchase Agreement dated February 5, 1999 pursuant to which Amerex and M&LIG
agree to purchase certain assets from M&L International and M&L International
agrees to sell such assets to Amerex and M&LIG, all upon the terms and subject
to the conditions set forth in such agreement (the "Asset Purchase Agreement");
and
<PAGE> 2
WHEREAS, Chase Manhattan Bank ("Chase") for itself, and as agent for
certain other lenders (Chase and such other lenders to be referred to herein,
collectively, as the "Secured Bank Group") have a first security interest in,
and a cross collateralized continuing first lien on, the assets of M&L
International (both tangible and intangible) together with the assets of its
affiliated companies Mackintosh of New England Co. ("MacKintosh") and Biscayne
Apparel International, Inc. d/b/a Varon ("Varon") as security for the cross
collateralized obligations to the Secured Bank Group of Mackintosh, Varon and
M&L International; and
WHEREAS, it is essential in order to preserve the viability of the
business of M&L International as a going concern and to preserve the value of
the assets of M&L International pending the sale of such assets, that certain
purchase orders issued by customers to M&L International be fulfilled and that
letters of credit be established for the manufacture of goods to fulfill these
customer purchase orders; and
WHEREAS, M&L International is unable to open such letters of credit
because it has insufficient credit for such purpose; and
WHEREAS, M&L International, Amerex and M&LIG believe it is in the best
interest of all the parties to enter into this Agreement on the terms and
conditions hereinafter set forth, pursuant to which such customers' purchase
orders shall be assigned by M&L to Amerex and M&LIG, the right to manufacture
the goods and fill such customers' purchase orders shall be assigned to Amerex
and M&LIG, and the right to use M&L International's trademarks and to license or
sub-license on a non-exclusive basis the trademarks licensed to M&L
International shall be assigned to Amerex and/or M&LIG, as more particularly set
forth herein; and
WHEREAS, in order to induce Amerex and M&LIG to enter into this
Agreement and to post letters of credit to manufacture the goods to fill such
customers purchase orders, M&L
2
<PAGE> 3
International is prepared to indemnify and hold Amerex and M&LIG harmless from
and against any loss or liability resulting from the assignment of such purchase
orders and the posting of letters of credit and manufacture of goods to fill
such purchase orders; and
WHEREAS, Amerex is only willing to enter into the Asset
Purchase Agreement, and purchase the assets and business of M&L International,
on the condition that the parties hereto enter into, and the Bankruptcy Court
approves, this Interim Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
Section 1. Sale of Customer Purchase Orders and Supplier Purchase
Orders
1.1 M&L International does hereby assign to Amerex and M&LIG absolutely
and irrevocably, free and clear of all claims, mortgages, security interests,
liens, judgments, encumbrances and charges of any kind or nature, all of its
right, title and interest in and to each of the customer purchase orders set
forth on Schedule 1.1 annexed hereto (the "Contracts"). This is an absolute
conveyance and assignment.
1.2 M&L International agrees to assign to Amerex and M&LIG, absolutely
and irrevocably, free and clear of all claims, mortgages, security interests,
liens, judgments, encumbrances and charges of any kind or nature, all of its
right, title and interest in and to additional customer purchase orders as
mutually agreed to by the parties (the "Additional Contracts"). When made, this
will be an absolute conveyance and assignment.
1.3 M&L International does hereby assign to Amerex and M&LIG,
absolutely and unconditionally, free and clear of all claims, mortgages,
security interests, liens, judgments, encumbrances and charges of any kind or
nature, all of its right, title and interest in and to each of the purchase
orders issued by M&L to its suppliers in connection with the manufacture of
3
<PAGE> 4
goods to fulfill the Contracts, as set forth on Schedule 1.3 (the "Supplier
Purchase Orders") and to any additional Supplier Purchase Orders as mutually
agreed to by the parties hereto (the "Additional Supplier Purchase Orders").
When made, this will be an absolute conveyance and assignment.
1.4 It is agreed that neither M&L International, its bankruptcy estate,
nor the Secured Bank Group shall have any interest whatsoever in the Contracts,
Additional Contracts, Supplier Purchase Orders, Additional Supplier Purchase
Orders, L/C's (as defined below) or any goods manufactured pursuant thereto or
any accounts receivable resulting therefrom.
Section 2. Grant of Licenses and Consents
2.1 M&L International and/or Mackintosh (as the case may be) hereby
irrevocably and absolutely grant to Amerex and M&LIG a royalty free
non-exclusive license with respect to the trademarks and trade names set forth
on Schedule 2.1, all copyrights, drawings, patterns, sketches, designs, style
and model numbers, artwork and other intangible property owned by M&L
International and/or its affiliates (collectively, the "Intellectual Property"),
to use such Intellectual Property in connection with the manufacture and sale of
goods to fulfill the Contracts and Additional Contracts. M&L International
hereby absolutely and irrevocably assigns and sub-licenses on a non-exclusive
basis to Amerex and M&LIG the right to use all licensed Intellectual Property in
connection with the manufacture and sale of any merchandise or goods pursuant to
the Contracts and Additional Contracts.
2.2 M&L International hereby irrevocably grants to Amerex and M&LIG a
royalty free non-exclusive sub-license to use all licensed rights it has from
Healthtex Apparel Corp, Starter Corporation and Eclipse, Incorporated (the
"Licensors") in connection with the manufacture and sale of the goods to fulfill
the Contracts and Additional Contracts. M&L
4
<PAGE> 5
International shall obtain an order of the Bankruptcy Court authorizing Amerex
to use the trademarks or trade names of Licensors, or in lieu thereof, obtain
the consent of the Licensors to the non-exclusive license and/or to the
sub-licensing of the trademarks and trade names for use by Amerex and M&LIG in
the manufacture and sale of goods pursuant to the Contracts and Additional
Contracts. M&L International hereby irrevocably consents to the Licensors
granting directly to Amerex and M&LIG non-exclusive licenses and/or sub-licenses
authorizing Amerex and M&LIG to use all licensed rights in connection with the
manufacture and sale of any merchandise or goods manufactured and sold to
fulfill the Contracts and Additional Contracts. Amerex agrees to pay
respectively to each Licensor the percentage royalty due to such Licensor under
the license agreement between M&L International and such Licensor solely with
respect to the goods manufactured and sold by Amerex or M&LIG pursuant to the
Contracts and Additional Contracts which utilize such Licensor's trademark or
trade name; provided however, Amerex and M&LIG shall have no obligation to any
Licensor with respect to any minimum or guaranteed royalties.
2.3 M&L International acknowledges that the consideration for these
non-exclusive licenses, sub-licenses and consents has been fully paid and
received by M&L International.
2.4 M&L International consents to Amerex and M&LIG manufacturing the
goods in the factories currently doing business with M&L International to
fulfill the Contracts and Additional Contracts. Subject to orders of the
Bankruptcy Court, and the provisions of any cash collateral stipulations or
orders, M&L International agrees that it will, at its sole cost and expense,
take all actions reasonably necessary or appropriate, in the ordinary course of
business as historically conducted by M&L International (except for the opening
of Letters of Credit by M&L International) to facilitate the ability of Amerex
and M&LIG to perform the Contracts and
5
<PAGE> 6
Additional Contracts and M&L International will not take any action that would
interfere with the ability of Amerex or M&LIG to perform the Contracts and
realize the benefits of the licenses and sub-licenses granted to Amerex pursuant
to this Agreement. All costs and expenses incurred by M&L International in
performing its obligations pursuant to the foregoing sentence shall be included
in "Operating Costs and Expenses," as defined in the Asset Purchase Agreement.
If Amerex or M&LIG requests M&L International to take any action outside the
ordinary course of business as historically conducted by M&L International,
Amerex shall advance to M&L International any third party costs and expenses
incurred by M&L International in connection therewith.
Section 3. Letters of Credit
3.1 Provided the Licensors have consented to the sub-licenses to Amerex
and M&LIG for the use of the trademarks and trade names of Licensors, or the
Bankruptcy Court has entered orders authorizing Amerex to use the trademarks and
trade names of Licensors, Amerex agrees to open letters of credit ("L/Cs") to
the factories and material suppliers in its own name for the manufacture and
direct purchase by Amerex and/or M&LIG of goods to fulfill the Contracts. From
time to time, as Additional Contracts are assigned to Amerex, Amerex agrees to
open additional L/Cs to the suppliers and manufacturers for the manufacture of
goods to fulfill such Additional Contracts. Amerex shall have the absolute right
at any time to refuse to accept Additional Contracts and to refuse to open L/Cs
for the manufacture of goods to fulfill such Additional Contracts.
Simultaneously with opening any L/Cs or entering into any contracts with
factories or suppliers, Amerex will deliver to M&L International copies of such
L/Cs and contracts.
6
<PAGE> 7
3.2 M&L International agrees to pay to Amerex a service fee in the sum
of four (4%) percent of the total face amount of all of the L/Cs opened by
Amerex (the "Service Fee") and to reimburse Amerex for all bank charges, bank
fees and other bank expenses incurred by Amerex in connection with opening the
L/Cs and the advances provided for in Section 2.4 but not to exceed one-half
percent (1/2%) of the total face amount of all L/Cs (the "Expenses"), provided
that, such Service Fee and Expenses shall not be payable to Amerex (i) if the
Bankruptcy Court approves the sale of the assets and business of M&L
International to M&LIG pursuant to the Asset Purchase Agreement and M&L
International is not in default thereunder, (ii) if M&LIG closes the purchase of
the assets and business of M&L International despite any default by M&L
International, or (iii) if the Bankruptcy Court does not approve a sale of the
assets and business of M&L International to M&LIG or to any Alternate Bidder (as
defined below).
3.3 In the event that the assets and business of M&L International
shall be sold to a successful alternate bidder (the "Alternate Bidder"), the
order of the Bankruptcy Court approving the sale to the Alternate Bidder shall
require the Alternate Bidder to:
(a) on the closing date of the sale to the Alternate Bidder
(the "Alternate Bid Closing Date"), post letters of credit as substitutes for
all L/Cs posted by Amerex ("Amerex Open L/Cs") and obtain the delivery for
cancellation by the beneficiary of the Amerex Open L/Cs for which it is
substituting, or, in the alternative, deliver the written undertaking of a
commercial bank having assets of least $200,000,000 to honor and pay all draws
upon each Amerex Open L/C and to indemnify the bank which issued the Amerex Open
L/Cs against such Amerex Open L/Cs; and
(b) on the Alternate Bid Closing Date, purchase back from
Amerex for $1.00 the Contracts and Additional Contracts, and assume and
indemnify Amerex and M&LIG against
7
<PAGE> 8
all obligations thereunder including, without limitation, any obligations to
Licensors to pay royalties and license fees, and to assume all obligations under
the Supplier Purchase Orders and Additional Supplier Purchase Orders; and
(c) pay to Amerex on the Alternate Bid Closing Date, out of
the purchase price, the Service Fee and Expenses.
Upon entry of an order of the Bankruptcy Court containing the
provisions in this Section 3.3, M&L International shall have no further
liability for the Service Fee and Expenses.
3.4 In consideration of the fulfillment by the Alternate Bidder of the
conditions of Section 3.3 above, at the closing of the sale by M&L International
to the Alternate Bidder, Amerex shall reassign to the Alternate Bidder all of
the Contracts and Additional Contracts and Supplier Purchase Orders and
Additional Supplier Purchase Orders previously assigned to Amerex together with
the rights to use the Intellectual Property and the licenses with respect to the
goods.
3.5 Two (2) business days prior to the hearing to approve the Asset
Purchase Agreement, Amerex shall deliver to M&L a certified statement of its
Chief Financial Officer which shall identify: (i) all Amerex Open L/Cs, (ii) all
Contracts and Additional Contracts and (iii) the amount of the Service Fee and
Expenses. M&L International and the Alternate Bidder may rely on such
certificate to establish the amounts due and obligations pursuant to Section 3.3
above.
Section 4. Indemnification of Amerex Against Loss.
M&L International hereby absolutely, irrevocably and unconditionally
agrees to indemnify and hold Amerex harmless from and against any and all loss,
cost and expense of Amerex whatsoever in connection with its opening of the L/Cs
and manufacture and the sale of
8
<PAGE> 9
the goods to fulfill the Contracts and Additional Contracts, provided that, any
claim for indemnification hereunder is delivered to M&L International no later
than March 31, 2000. Amerex shall use its best efforts to mitigate its losses by
the sale of such goods to the customers under the Contracts or, on canceled or
refused orders, to other customers. From time to time, Amerex shall present to
M&L International its detailed statement of any loss it suffers and shall
provide a written accounting upon request by M&L International. Notwithstanding
the foregoing, M&L International shall not be liable to Amerex for any
unrealized profit on the sale of goods. In determining the amount of loss, cost,
or expense, the Contracts and Additional Contracts shall be treated as a whole
such that any profit, gain or benefit from any specific Contract or Additional
Contract shall offset any loss or damage from other Contracts or Additional
Contracts. Amerex shall maintain appropriately detailed records which shall be
sufficient to enable the parties to determine the profit, loss, gain, benefit or
expense or cost attributable to the Contracts or Additional Contracts. The
provisions of this Section 4 shall terminate (i) upon entry by the Bankruptcy
Court of the Order (as defined in the Asset Purchase Agreement), unless M&L
International is in default under the Asset Purchase Agreement, or (ii) if,
pursuant to the Order, M&LIG closes the purchase of the assets and business of
M&L International despite any default by M&L International, or, (iii) if the
assets and business of M&L International are sold to an Alternate Bidder and the
Bankruptcy Court enters an order containing the provisions set forth in Section
3.3. If M&LIG terminates the Asset Purchase Agreement due to a default by M&L
International, the provisions of this Section 4 shall continue in effect in
accordance with its terms.
9
<PAGE> 10
Section 5. Conditions.
The provisions of this Agreement, the obligations of M&L International
hereunder, and the obligations of Amerex to open L/Cs for the manufacture of
goods to fulfill the Contracts is at all times conditioned upon (i) the issuance
by the Bankruptcy Court of an emergency order on or before February 9, 1999
approving (x) this Interim Agreement and all of the terms, conditions and
provisions hereof, and (y) the opening of L/Cs by Amerex to fulfill some or all
of the Contracts, and (ii) the consent of the Licensors to Amerex and M&LIG
obtaining licenses and/or sub-licenses from the Licensors or an order of the
Bankruptcy Court authorizing use by Amerex or M&LIG of the trademarks and trade
names of Licensors. Notwithstanding anything herein to the contrary, if the
initial emergency order does not approve the opening of L/Cs to fulfill all of
the Contracts and Additional Contracts, then Amerex shall only be required to
open L/Cs to the extent approved by the Bankruptcy Court in the initial
emergency order and, thereafter, if, when and as approved by the Bankruptcy
Court in subsequent orders.
Section 6. General and Miscellaneous
6.1 No party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect.
6.2 This Agreement shall be construed, performed and enforced in
accordance with, and governed by, the laws of the State of New York, without
giving effect to the principles of conflicts of laws thereof. The parties hereto
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent to the
jurisdiction of, the Bankruptcy Court.
10
<PAGE> 11
6.3 The parties agree that, from time to time, each of them shall
forthwith execute and deliver such documents as the other parties hereto or
their respective counsel may reasonably request to effectuate the purposes of
this Agreement.
6.4 In the event that any part of this Agreement is declared by any
court or other judicial or administrative body to be null, void or
unenforceable, said provision shall survive to the extent it is not so declared,
and all of the provisions of this Agreement shall remain in full force and
effect only if, after excluding the portion deemed to be unenforceable, the
remaining terms shall provide for the consummation of the transactions
contemplated hereby in substantially the same manner as originally set forth at
the later of the date this Agreement was executed or last amended.
6.5 All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given: (i)
on the date of service if served personally on the party to whom notice is to be
given; (ii) on the day of transmission if sent via facsimile transmission to the
facsimile number given below, and electronic confirmation of receipt is obtained
promptly after completion of the transmission; (iii) on the date after delivery
to Federal Express or similar overnight courier or the Express Mail service
maintained by the United States Postal Service; or (iv) on the fifth day after
mailing, if mailed to the party to whom notice is given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party at
its address or telecopier number set forth below:
If to M&L International:
M&L International, Inc.
c/o Trivest
2665 South Bayshore Drive
Suite 800
Miami, Florida 33133-5301
Attn.: Peter Vandenberg, Jr.
Telecopier No.: (305) 285-0102
11
<PAGE> 12
With a copy to:
Greenberg Traurig
Met Life Building
200 Park Ave., 15th Floor
New York, NY 10166
Attn.: Richard N. Tilton, Esq.
Telecopier No.: (212) 801-6400;
Salomon Green & Ostrow, P.C.
919 Third Avenue
15th Floor
New York, New York 10022
Attn.: Nicholas F. Kajon, Esq.
Telecopier No.: (212) 319-8505;
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Attn.: Mark F. Liscio, Esq.
Telecopier No.: (212) 309-6273;
and, if a committee is appointed in the Reorganization Case,
to counsel for such committee at the address specified by M&L
International in written notice to Amerex given in the manner
set forth herein.
If to Amerex or M&LIG:
Amerex (USA) Inc.
350 Fifth Ave.
New York, NY 10018
Attn.: Fred R. Shvetz
Chairman
Telecopier No. (212) 967-3352
With a copy to:
Rosen & Reade, LLP
757 Third Ave.
New York, NY 10017
Attn.: Lawrence A. Blatte, Esq.
Telecopier No. (212) 755-5600
12
<PAGE> 13
Any party may change its address for the purpose of this Section by giving the
other party written notice of its new address in the manner set forth above.
6.6 This Agreement may be amended or modified, and any of the terms,
covenants, representations, warranties or conditions hereof may be waived, only
by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. Any waiver by any party of any
condition, or of the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall not be
deemed to be nor construed as a further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
6.7 This Agreement contains the entire understanding among the parties
hereto with respect to the transactions contemplated hereby and supersedes and
replaces all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All schedules hereto and any
documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement as fully as though completely set forth
herein.
6.8 The section headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
6.9 Any reference in this Agreement to a day shall mean a Business Day.
If the day on which any action is required to be performed or to take place is
not a Business Day in New York, New York, then such action shall not be
required, or shall not take place, until the next Business Day thereafter.
6.10 This Agreement may be executed in two or more counterparts each of
which shall be an original and all of which, taken together, shall be deemed one
and the same document.
13
<PAGE> 14
6.11 Amerex, M&LIG and M&L International shall each be entitled to
specific performance of the terms and provisions of this Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the day and year first above written.
M&L International, Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Amerex (USA) Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
M&L International Group LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Mackintosh of New England Co.
(as to Section 2.1 only)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
15
<PAGE> 16
List of Schedules
Schedule 1.1 Customer Purchase Orders
Schedule 1.3 Supplier Purchase Orders
Schedule 2.1 Trademarks
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT:
PETER VANDENBERG, JR.
PRESIDENT AND CHIEF OPERATING OFFICER
(973)473-3240 X15
FEBRUARY 5, 1999
BISCAYNE APPAREL FILES FOR PROTECTION
UNDER CHAPTER 11 BANKRUPTCY
AND ANNOUNCES PENDING SALE OF M&L INTERNATIONAL, INC.
CLIFTON, NJ - (February ,1999) Biscayne Apparel, Inc. ("the Company,") or
"BISCAYNE"), (NASDAQ over-the-counter (OTC) bulletin board: BISD) today
announced that it and its subsidiary, M&L International, Inc. ("M&L") filed for
protection under Chapter 11 of the Bankruptcy Code. The Chapter 11 petitions
were filed with the United Sates Bankruptcy Court for the Southern District of
New York.
Concurrent with the Chapter 11 filings, Biscayne announced that M&L has entered
into an Asset Purchase Agreement and an Interim Agreement and Security Agreement
(collectively "the Agreements") with a subsidiary of Amerex (USA) Inc. ("NEWCO")
to purchase a substantial portion of M&L's assets and operations, subject to the
approval of the Bankruptcy Court.
As previously announced, the Company did not make the interest payment due on
December 15, 1998 relating to its 13% Subordinated Notes due December 15, 1999
(the "Subordinated Notes"). Pursuant to the Indenture for the Subordinated
Notes, the Company's non-payment of interest became an Event of Default. Once an
Event of Default occurs and is continuing, the Trustee by notice to the Company,
or the holders of a majority in principal amount of the Securities then
outstanding by notice to the Company and the Trustee, may declare to be due and
payable immediately on all outstanding Subordinated Notes an amount equal to the
sum of the outstanding principal balance of the Subordinated Notes and any
accrued interest. If the Subordinated Notes, and accrued interest thereon, were
accelerated, the Company would not be able to operate without immediate
alternative financing becoming available.
Additionally, the Company has not been in compliance with certain requirements
of its Loan Agreement, relating to collateral coverage and levels of tangible
net worth. The Company's lenders have allowed the Company to remain in violation
of its Loan Agreement. However, a Reservation of Rights and Waiver agreement was
entered into whereby the company's bank lenders agreed to extend credit at their
discretion without waiving any rights that arose upon the events of default.
The Company had discussed its continuing financing needs for 1999 with its
existing lenders and other lenders. Neither existing lenders or any such lenders
agreed to fund such needs or otherwise to provide working capital financing that
would permit the company to operate as it has in the past.
Without immediate financing available for M&L, the company was faced with the
alternative of a sale or liquidation of M&L. If M&L were unable to open letters
of credit on a timely basis, the value of M&L's assets and operations, as a
going concern, would rapidly diminish. Therefore, the company entered into the
agreements, which provide that NEWCO would open letters of credit for M&L and in
turn receive an assignment of related customer order backlog against such goods,
and a second lien on M&L's assets, subordinated to M&L's current bank lenders.
The Agreements are subject to the approval of the Bankruptcy Court.
Therefore, in order to effect an orderly sale of M&L, the Company and M&L filed
for protection under Chapter 11 of the Bankruptcy Code. M&L anticipates that the
net proceeds from finalization of the sale and liquidation of its assets shall
be sufficient to ultimately repay its liabilities, however, such sale is
contingent upon the approval of the Bankruptcy Court and various terms and
conditions within the agreements being satisfied.
Previously, Biscayne announced that it had retain the investment banking arm of
Kurt Salmon Associates, an Atlanta-based consultant to retailers and consumer
products companies, to advise the Company on strategic alternatives. As a result
of this process, the Company determined to dispose of the majority of the assets
of its subsidiaries' Biscayne Apparel International, Inc. ("BAII") and
Mackintosh of New England Co. ("Mackintosh"). The Company is in the process of
finalizing the sale and liquidation of the remaining assets of these
subsidiaries.
This news release contains certain forward-looking statements which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward looking statements involve risks and
uncertainties that could cause actual results to differ materially from these
forward-looking statements. Disposition of some or all of the remaining
operating units and/or assets of the Company may not be completed within the
foreseeable future. All forward-looking statements should be considered in light
of these risks and uncertainties.
