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EXHIBIT 2.1
AGREEMENT OF PURCHASE AND SALE
By and Among
MISS XXXXX, INC.,
CERTAIN OF THE STOCKHOLDERS OF MISS XXXXX, INC.,
ME ACQUISITION CORP.
and
NORTON XXXXXXXXXX, INC.
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Table of Contents
SECTION I. PURCHASE AND SALE OF THE ASSETS...................... 2
1.01 Purchase and Sale of the Assets...................... 2
SECTION II. THE PURCHASE PRICE................................... 9
2.01 Purchase Price....................................... 9
2.02 Earn Out............................................. 10
2.03 Allocation of Purchase Price......................... 14
2.04 Registration Rights.................................. 15
SECTION III. REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS.................................. 21
3.01 Organization and Qualification....................... 22
3.02 Authority............................................ 22
3.03 No Legal Bar; Conflicts.............................. 23
3.04 Capitalization....................................... 23
3.05 Financial Statements; No Undisclosed Liabilities..... 23
3.06 Accounts Receivable; Inventories..................... 24
3.07 Accounts Payable, Etc................................ 25
3.08 Absence of Certain Changes........................... 25
3.09 Loans, Etc........................................... 26
3.10 Real Property Owned or Leased........................ 26
3.11 Title to Assets; Condition of Property............... 27
3.12 Taxes................................................ 27
3.13 Permits; Compliance with Applicable Law; Permits;
Environmental........................................ 28
3.14 Licenses............................................. 31
3.15 Contractual and Other Obligations; Customers and
Suppliers............................................ 31
3.16 Compensation......................................... 32
3.17 Employee Benefit Plans............................... 33
3.18 Labor Relations...................................... 34
3.19 Dividends, Transfers, Increases in Compensation or
Benefits............................................. 34
3.20 Insurance............................................ 35
3.21 Conduct of Business.................................. 35
3.22 Intellectual Property................................ 35
3.23 Use of Names......................................... 36
3.24 Power of Attorney; Bank Accounts, Etc................ 37
3.25 Books and Records.................................... 37
3.26 Litigation........................................... 37
3.27 Location of Business and Assets...................... 37
3.28 Insider Interests; Intercompany Transactions......... 37
3.29 Investment........................................... 38
SECTION IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS... 39
4.01 Stockholders......................................... 39
4.02 Non-Management Stockholders.......................... 41
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SECTION V. REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER..................................... 43
5.01 Organization......................................... 44
5.02 Authority............................................ 44
5.03 No Legal Bar; Conflicts.............................. 44
5.04 Norton Common Stock.................................. 45
5.05 SEC Documents........................................ 45
SECTION VI. CONDUCT OF THE BUSINESS.............................. 45
6.01 Operation of the Business............................ 45
6.02 Preservation of Organization and Employees........... 45
6.03 Contracts............................................ 45
6.04 Sales or Encumbrances................................ 46
6.05 Documents, Etc....................................... 46
6.06 Permits.............................................. 46
7.01 Company Acquisition Proposal......................... 46
7.02 Publicity............................................ 47
7.03 Further Assurances................................... 47
7.04 Correspondence, Funds, etc........................... 47
7.05 Discharge of Obligations............................. 48
7.06 Encumbrances......................................... 48
7.07 Confidential Information............................. 49
7.08 Employees............................................ 50
7.09 Insurance Policies; Consents......................... 52
7.10 HSR Filing........................................... 53
7.11 Taxes and Tax Returns................................ 53
7.12 Effective Time....................................... 53
7.13 Operation of the Purchaser After the Closing......... 54
7.14 Chase Indebtedness................................... 56
SECTION VIII. CLOSING.............................................. 56
8.01 Time and Place of Closing............................ 56
8.02 Termination.......................................... 56
8.03 Effect on Obligations................................ 57
8.04 Return of Documentation.............................. 58
8.05 Delivery of Assets................................... 58
8.06 Assumption of Liabilities............................ 58
8.07 Contracts and Books.................................. 58
8.08 Additional Steps..................................... 59
8.09 Change of Name....................................... 59
SECTION IX. CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE...... 59
9.01 Opinion of Counsel................................... 59
9.02 No Litigation........................................ 60
9.03 Representations and Warranties....................... 60
9.04 Other Certificates................................... 60
9.05 Xxxx-Xxxxx-Xxxxxx.................................... 60
9.06 Instruments of Assumption of the Assumed Liabilities. 60
9.07 Subordinated Pledge.................................. 61
9.08 Additional Closing Purchase Price.................... 61
9.09 Employment Agreements................................ 61
SECTION X. CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE.... 61
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10.01 Opinion of Counsel................................... 61
10.02 No Litigation........................................ 62
10.03 Representations and Warranties....................... 62
10.04 Other Certificates................................... 63
10.05 Sale of All the Assets............................... 63
10.06 Third Party Consents................................. 63
10.07 Xxxx-Xxxxx-Xxxxxx.................................... 63
10.08 Instruments of Conveyance of the Assets, Power of
Attorney, Etc........................................ 63
10.09 Regulation S-X and Consent of Price Waterhouse LLP... 64
10.10 Additional Closing Purchase Price.................... 64
10.11 Employment Agreements................................ 64
SECTION XI. INDEMNIFICATION...................................... 64
11.01 Indemnification by the Stockholders.................. 64
11.02 Indemnification by the Purchaser. .................. 66
11.03 Procedure for Indemnification........................ 66
11.04 Subrogation.......................................... 68
11.05 Validity............................................. 69
11.06 Limits on Indemnifications........................... 69
11.07 Set-Off.............................................. 72
11.08 Exclusive Remedy..................................... 72
SECTION XII. BROKERS AND FINDERS.................................. 73
12.01 The Company's and the Stockholders' Obligations...... 73
12.02 The Purchaser's and Norton's Obligations............. 73
SECTION XIII. MISCELLANEOUS........................................ 74
13.01 Notices.............................................. 74
13.02 Entire Agreement and Amendment....................... 75
13.03 Expenses............................................. 75
13.04 Injunctive Relief.................................... 76
13.05 Arbitration.......................................... 76
13.06 Invalidity........................................... 77
13.07 Successors and Assigns............................... 77
13.08 Governing Law........................................ 77
13.09 Counterparts......................................... 78
13.10 Assignment........................................... 78
13.11 Knowledge, Etc....................................... 78
13.12 Independence of Representations and Warranties....... 79
13.13 Interpretation....................................... 79
13.14 Action by the Stockholders........................... 80
SECTION XIV. DEFINITIONS.......................................... 81
14.01 Certain Definitions..................................... 81
SCHEDULES
A. PERCENTAGES
1.01(a)(ii) PROPERTY
1.01(a)(iii) WAREHOUSES
1.01(a)(vi) CONTRACTS
1.01(c)(iii) ACCRUED MANAGEMENT BONUSES
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2.03 ALLOCATION OF PURCHASE PRICE
3.01 ORGANIZATION
3.03 CONSENTS
3.04 CAPITALIZATION
3.05(b) EXCEPTIONS TO GAAP
3.05(c) LIABILITIES
3.06 ACCOUNTS RECEIVABLE; INVENTORIES
3.07 ACCOUNTS PAYABLE
3.08 CERTAIN CHANGES
3.09 COMPANY INDEBTEDNESS
3.10 REAL PROPERTY LEASED
3.11 CONDITION OF THE ASSETS
3.12(a) INCOME TAXES
3.12(b) NON INCOME TAXES
3.13(b) PERMITS
3.13(c) ENVIRONMENTAL
3.14 LICENSES
3.15 CONTRACTS; CUSTOMERS AND SUPPLIERS
3.16 COMPENSATION
3.17 EMPLOYEE BENEFIT PLANS
3.18 LABOR MATTERS
3.19 INCREASES IN COMPENSATION
3.20 INSURANCE
3.22 INTELLECTUAL PROPERTY
3.23 USE OF NAMES
3.24 POWERS OF ATTORNEY; BANK ACCOUNTS
3.26 LITIGATION
3.27 LOCATIONS
3.28 INSIDER INTERESTS; INTERCOMPANY TRANSACTIONS
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AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") made as of the 29th
day of August, 1997 by and among Miss Xxxxx, Inc., a Delaware corporation (the
"Company"); Terbem Limited, a British Virgin Islands corporation, Bobst
Investment Corp., a British Virgin Islands corporation, TCRI Offshore Partners
C.V., a Netherlands Antilles corporation and TCR International Partners L.P., a
Delaware limited partnership (collectively, "TCR"); Triumph Capital, X.X. XX, a
Delaware limited partnership ("Triumph"; TCR and Triumph sometimes are referred
to herein individually as a "Financial Stockholder" and collectively as the
"Financial Stockholders"); Xxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxxx Xxxxxxxx
("Xxxxxxxx") (individually, a "Management Stockholder" and collectively, the
"Management Stockholders"); Xxxxxx Xxxxxxxxx and Xxxxxxxxx Xxxxxxx
(individually, an "Other Stockholder" and collectively, the "Other
Stockholders"; the Financial Stockholders and the Other Stockholders sometimes
are referred to herein individually as a "Non-Management Stockholder" and
collectively as the "Non-Management Stockholders"; and the Management
Stockholders and the Non-Management Stockholders sometimes are referred to
herein individually as a "Stockholder" and collectively as the "Stockholders");
ME Acquisition Corp., a Delaware corporation (the "Purchaser"); and Norton
XxXxxxxxxx, Inc., a Delaware corporation ("Norton"). Capitalized terms used
herein and not defined above or in the Section in which they are used, shall
have the meanings assigned to such terms in Section 14.01 hereof.
W I T N E S S E T H :
WHEREAS, the Company is engaged in the businesses of the design,
importing, marketing, merchandising, distribution and sale of women's apparel
(such activities and all incidental or related businesses of the Company, and
all activities and businesses currently planned or under development (such
planned activities or activities under development collectively, the
"Development Projects") by the Company (other than in respect of Excluded Assets
and Excluded Liabilities) being referred to herein collectively as the
"Business");
WHEREAS, the Purchaser desires to acquire from the Company the Business
and all of the assets of the Company, other than those assets specifically
described in Section 1.01(b) hereof, and to assume only the liabilities of the
Company specifically described in Section 1.01(c) hereof, the Company intending
to retain and remain solely responsible for all liabilities not so assumed by
the Purchaser. The Company desires to sell, transfer and assign the Assets and
to assign the Assumed Liabilities to the Purchaser, all on the terms and subject
to the conditions hereinafter set forth;
WHEREAS, the Company has been given and has exercised the option of
receiving, in lieu of part of the contingent consideration payable for the
Assets hereunder, cash at Closing, which exercise is reflected in full in
Section II hereof; and
WHEREAS, to induce each of the Purchaser and Norton to enter into this
Agreement and perform its obligations hereunder, the Company and the
Stockholders have agreed to make the representations, warranties, covenants and
agreements (including, without limitation, the indemnification agreements) set
forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, and intending to be legally bound, the
parties hereto hereby agree as follows:
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SECTION I.
PURCHASE AND SALE OF THE ASSETS
1.1 Purchase and Sale of the Assets. (a).1 Subject to the terms
and conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements herein contained, at the Closing, the
Company shall sell, assign, convey and deliver to the Purchaser, and the
Purchaser shall purchase, acquire and accept from the Company, all of the
Company's right, title and interest in and to all of the Business and all of the
Company's assets, rights and properties of every kind and nature, whether real,
personal or mixed, tangible or intangible, whether identifiable or contingent,
wherever located, whether or not reflected on the books and records of the
Company, whether or not used or useful in or related to the Business, other than
the Excluded Assets, which Business, assets, rights and properties
(collectively, the "Assets") shall include, without limitation, all of the
following, except to the extent that any of the following are Excluded Assets:
(i) all assets shown or reflected on the Current Balance
Sheet except for changes made therein in the ordinary course of business
since the Current Balance Sheet Date and as otherwise permitted by the
terms hereof;
(ii) all of the fixed assets and other tangible personal
property, including without limitation, machinery, vehicles, tools,
equipment, furniture, fixtures, leasehold improvements, materials and
supplies, in each case other than Inventory (collectively, "Property") of
the Company wherever located, including without limitation, the Property
set forth on (with locations thereof) Schedule 1.01(a)(ii) hereto and
Property acquired by the Company through the Closing Date;
(iii) all work-in-process, finished goods and other inventory
whether on hand, on order, in transit or held by others on a consignment
or other basis (collectively, "Inventory") owned by the Company (including
without limitation, the Inventory located in any warehouses (the
"Warehouses") wherever located, including without limitation, the
Warehouses set forth on Schedule 1.01(a)(iii) hereto), including without
limitation, the Inventory shown or reflected on the Current Balance Sheet
and the Inventory acquired or created by the Company from the Current
Balance Sheet Date through the Closing Date, excluding only such Inventory
as shall have been sold by the Company from the Current Balance Sheet Date
through the Closing Date;
(iv) all tradenames, tradename rights, trademarks, trademark
rights, patents, patent rights, copyrights, copyright rights, service
marks, service xxxx rights, trade secrets, trade secret rights,
intellectual property, intellectual property rights, confidential
information, mailing lists, customer lists, supplier lists, market
studies, training and equipment manuals, trade dress, designs, patterns,
technology, know-how, processes, business opportunities and businesses,
projects and products planned or under development (including without
limitation, all goodwill associated with any of the foregoing, licenses in
respect of any of the foregoing, applications relating to any of the
foregoing and claims for infringement of or interference with any of the
foregoing) and other proprietary information owned or used by the Company,
in any case whether domestic or foreign, registered or common law,
including without limitation, the tradename "Miss Xxxxx" and the trademark
"Xxxxx" and the goodwill associated therewith and all variations,
simulations and derivations thereof;
(v) all receivables of the Company, including without
limitation, trade accounts receivable and other accounts receivable, notes
receivable, loans receivable and advances shown or reflected on the
Current Balance Sheet and all such acquired or created by the Company from
the Current Balance Sheet Date through the Closing Date (collectively, the
"Receivables"), excluding only such Receivables as shall have been
collected by the Company from the Current Balance Sheet Date through the
Closing Date;
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(vi) all of the Company's rights and entitlements under all
Contracts (other than Retained Contracts), including without limitation,
the Health Contract and the Contracts set forth on Schedule 1.01(a)(vi)
hereto;
(vii) all goodwill, other intangible property, and causes of
action, actions, claims and rights of any kind of the Company against
other Persons (whether by contract or otherwise) relating to any of the
Assets (including without limitation, the Intellectual Property, the
Contracts and the Receivables), the Assumed Liabilities or the Business;
(viii) all books and records (financial, accounting and other),
correspondence, and all sales, marketing, advertising, packaging,
promotional and other materials, files, data, drawings, designs,
engineering and manufacturing data and other technical information and
data (whether written, on disk, film, tape or other media, and including
without limitation, all computerized data), and all other business and
other records, in each case arising under or relating to the Assets (or
any of them), the Assumed Liabilities or the Business;
(ix) all Permits, to the extent legally transferable;
(x) all prepaid expenses, refunds in respect of payments made
prior to the Closing Date (other than Income Tax refunds, but including
insurance refunds), security and like deposits, securities, instruments
and investments of the Company;
(xi) all rights, remedies and benefits of the Company arising
under or relating to any of the Assets, the Assumed Liabilities or the
Business, including without limitation, rights, remedies and benefits
arising out of express or implied warranties from builders, manufacturers,
contractors or suppliers of Property, Inventory or other Assets (or
components thereof) or products sold or ordered by the Company prior to
the Closing Date (and in any case, any component thereof), and all causes
of action and claims arising therefrom;
(xii) all cash and cash equivalents (net of Outstanding Checks
for payments not prohibited by this Agreement), bank and investment
accounts and lockboxes (and their contents on the Closing Date) to which
payments to the Company may be sent by any customer or other Person
(collectively, the "Lockboxes") (together with the cash, securities and
other things held in all such accounts); and
(xiii) all products and proceeds of any of the foregoing.
(b) Excluded Assets. It is understood and agreed that the
Company is not selling, assigning or conveying to the Purchaser, the
Purchaser is not purchasing and the Assets shall not include any of the
right, title or interest of the Company in the following (collectively,
the "Excluded Assets"):
(i) Retained Contracts;
(ii) corporate minute books, stock transfer records and
corporate seal of the Company;
(iii) Income Tax refunds, prepaid Income Taxes and deferred
Income Tax assets;
(iv) cash to the extent of Outstanding Checks;
(v) subject to Section 11.04 hereof, all causes of action,
actions, claims and rights of any kind of the Company against other
Persons (whether by contract or otherwise), and other rights, remedies and
benefits of the Company relating to any of the Excluded Assets or any of
the Excluded Liabilities;
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(vi) insurance claims arising out of occurrences prior to the
Closing Date; and
(vii) all products and proceeds of any of the foregoing.
(c) Assumed Liabilities. Subject to the terms and conditions
of this Agreement and on the basis of the representations, warranties,
covenants and agreements herein contained, at the Closing, the Company
agrees to assign to the Purchaser and the Purchaser agrees to assume from
the Company, without duplication, the following (collectively, the
"Assumed Liabilities"):
(i) each of the Contracts (other than Retained Contracts, but
including the Health Contract, including without limitation, with respect
to Xxxxxx Xxxxxxxxx'x post-retirement medical benefits (but only in
respect of liabilities and obligations after the Closing Date));
(ii) all trade and other accounts payable of the Company, and
all ordinary course operating expenses, accrued expenses and liabilities
of the Company, including the payable due to P.S. Moon, in any case, that
are not Excluded Liabilities described in clauses (i) through (iv) of
Section 1.01(d);
(iii) all liabilities or obligations owing by the Company for
(a) accrued and unpaid salaries reflected on the Company's books and
records, (b) accrued management bonuses to the extent set forth on
Schedule 1.01(c)(iii) hereof (the "Management Bonuses"), (c) accrued
vacation pay in the ordinary course of business consistent with past
practices, and (d) reimbursement obligations for travel and entertainment
expenses incurred in the ordinary course of business consistent with past
practices;
(iv) severance obligations, if any, of the Company to
employees without written employment or severance contracts arising out of
the termination of such employees' employment with the Company pursuant to
Section 7.08;
(v) all obligations in respect of Products sold prior to the
Closing Date and returnable in the ordinary course of business after the
Closing Date;
(vi) Non Income Taxes payable by the Company in respect of
periods ending before the Closing Date, which are not Excluded
Liabilities; and
(vii) one half of any liability arising out of the matter
indicated with an asterisk on Schedule 3.26 hereto.
(d) No Other Liabilities. It is expressly agreed and understood
that, except as specifically provided in Section 1.01(c) hereof, the Purchaser
shall not assume or be deemed to assume and shall have no responsibility or
obligation with respect to, any liability or obligation of, or claim against,
the Company, or of or against any predecessor, director, officer, employee,
agent, stockholder or other affiliate of the Company of any kind or nature,
whether absolute, accrued, contingent or otherwise and whether due or to become
due and whether or not asserted, and whether known or unknown, and however
arising, all of which liabilities, obligations and claims the Company hereby
agrees to retain, remain solely responsible for, perform, pay and discharge
promptly as and when due.
Without limiting the generality of the foregoing, except as
specifically provided in Section 1.01(c) hereof, the Purchaser shall not assume
nor be deemed to assume and the Company hereby agrees to retain, remain solely
responsible for, perform, pay and discharge promptly as and when due each of the
following (collectively, the "Excluded Liabilities"):
(i) any and all liabilities or obligations owing by the Company
to, or claims against the Company by, any Stockholder (other than (a)
accrued and unpaid salaries reflected on the Company's books and records,
(b) Management Bonuses, (c) accruals for vacation pay in the
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ordinary course of business consistent with past practices, and (d)
reimbursement obligations for travel and entertainment expenses incurred
in the ordinary course of business consistent with past practices) or any
affiliate of the Company or of any Stockholder, including without
limitation, all liabilities and obligations arising out of or related to
the Subordinated Debt, the Preferred Stock and the Retained Contracts;
(ii) any and all liabilities, obligations or claims of any type
relating to, arising under or in respect of any Benefit Plan (other than
the Health Contracts in respect of liabilities, obligations or claims
after the Closing Date) or Multiemployer Plan, including without
limitation, (a) any and all liabilities, obligations or claims (including
without limitation costs and expenses incurred by employees of the Company
or by other participants on, prior to or after the Closing Date) relating
to, arising under or in respect of all health (including without
limitation post retirement health), medical, dental and similar plans in
which any employee or other participant of the Company participates or
otherwise covering any employee or other participant of the Company and
(b) any and all liabilities or obligations arising from or as a result of
(x) the operation of the Miss Xxxxx, Inc. Employee Profit Sharing Plan or
(y) the transfer of certain account balances therefrom, other than any
liability to pay a transferred account balance to a specific participant
entitled to such account balance to the extent assets have been
transferred in respect of such participant.
(iii) any and all liabilities, obligations or claims relating to,
arising under or in respect of product liability or warranty claims
(including without limitation for personal injury, damage to or loss of
property, or consequential or punitive damages) relating to, arising out
of or in respect of Products sold prior to the Closing;
(iv) any and all liabilities, obligations or claims to the extent
covered by the Company's insurance policies arising out of events
occurring on or prior to the Closing Date or conditions existing on or
prior to the Closing Date (including without limitation, workers'
compensation liabilities, obligations or claims);
(v) (1) any and all Income Taxes, imposed or claimed by the
United States or by any foreign country or by any state, municipality,
subdivision or instrumentality of the United States or of any foreign
country, or by any other taxing authority, and any and all interest and
penalties thereon, (a) which are or were at any time and from time to time
due or payable by the Company, (b) which relate to the Assets or the
operation or conduct of the Business on or prior to the Closing Date or
(c) which arise out of the sale of the Assets (and any of them) by the
Company; in any and all cases, including without limitation, Income Tax
liabilities, obligations and claims arising out of the Company's (or its
predecessor's) inclusion (if any) in any consolidated or affiliated group
or in any affiliate's combined group (including by reason of Treasury
Regulation Section 1.1502-6(a) or otherwise), and whether or not disputed
and (2) any and all liabilities, obligations or claims relating to,
arising out of or in respect of (x) the audit of the Company for New
Jersey State sales taxes for the 1991 through 1995 tax years (the "New
Jersey Audit") and (y) the desk audit of the Company for New York City
Taxes for fiscal year ended January 31, 1996 (the "New York Audit");
(vi) any and all liabilities, obligations and claims relating to,
arising out of or in respect of any and all checks and drafts of the
Company drawn or issued on or prior to the Closing Date (collectively, the
"Outstanding Checks"); and
(vii) all other liabilities and obligations of, or claims against,
the Company, or of any predecessor, stockholder or other affiliate of the
Company, and claims related to arising out of or in respect of the
ownership of the Assets (or any of them) or the conduct of the Business
prior to the Closing, of any kind or nature, whether absolute, accrued,
contingent or otherwise, whether due or to become due and whether or not
asserted, and whether known or unknown, and however arising, and, in each
case, which are not Assumed Liabilities.
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SECTION II.
THE PURCHASE PRICE
1.021 Purchase Price. The purchase price for the Assets (other than
the assumption the Assumed Liabilities) shall consist of the Closing Purchase
Price and the Earn Out Payment, if any (collectively, the "Purchase Price"). At
the Closing, the Purchaser shall pay (and Norton agrees to cause the Purchaser
to pay) an aggregate amount for the Assets equal to $24,000,000, plus the amount
determined pursuant to Sections 9.08 and 10.10 hereof (collectively, the
"Closing Purchase Price"). The Closing Purchase Price shall be paid at the
Closing in cash in immediately available funds by bank wire transfer to an
account designated by the Company at least two business days prior to the
Closing.
1.022 Earn Out. (a) In addition to the Closing Purchase Price, the
Company shall be entitled to the Earn Out Payment, if any, determined in
accordance with this Section 2.02. In Norton's sole discretion, the Purchaser
may elect to pay all or any portion of the Earn Out Payment (the "Stock Earn Out
Amount") by requesting Norton to issue (and if so requested Norton agrees to
issue) to the Company an aggregate number of shares of Norton's common stock
$0.01 par value ("Norton Common Stock"), equal to the Stock Earn Out Amount
divided by the Average Market Value per share of Norton Common Stock determined
on the third business day preceding the Earn Out Payment Date (the "Earn Out
Shares"). Notwithstanding the foregoing, (i) any amount by which the Final
EBITDA Payment exceeds the Initial EBITDA Payment, as determined by the
Independent Auditor pursuant to Section 2.02(b)(iv) below, shall be payable by
the Purchaser in accordance with the terms and conditions hereof in cash in
immediately available funds, (ii) in no event shall the number of Earn Out
Shares, in the aggregate, exceed the Stock Earn Out Cap and, in such case, the
excess of the Earn Out Payment over the aggregate Average Market Value of the
Stock Earn Out Cap, if any, shall be payable by the Purchaser in accordance with
the terms and conditions hereof in cash in immediately available funds, (iii) in
the event that the Norton Common Stock and the Earn Out Shares are not listed or
admitted to trading on a Securities Exchange on the Earn Out Payment Date, the
Earn Out Payment, if any, shall be payable in cash in immediately available
funds and not in Norton Common Stock, and (iv) the foregoing agreements and the
other matters set forth in this Section 2.02 are subject to the provisions set
forth in Section 7.13(d) hereof.
(b) (i) Norton shall give notice to the Company of its calculations
of EBITDA for the fiscal years ending October 31, 1998 and November 6, 1999, on
or prior to each of February 28, 1999 (the "1999 EBITDA Notice") and, unless a
Security Default shall have occurred and be continuing (in which case no 2000
EBITDA Notice shall be required to be delivered), February 28, 2000 (the "2000
EBITDA Notice," and each of the 0000 XXXXXX Notice and the 2000 EBITDA Notice
hereinafter collectively referred to as the "EBITDA Notice"), respectively. The
EBITDA Notice shall be accompanied by an unaudited consolidated balance sheet
and consolidated statement of income of the Purchaser and its subsidiaries for
the applicable fiscal year prepared by Norton. In addition, the 1999 EBITDA
Notice shall set forth the Purchaser's determination of the Initial Earn Out
Payment, if any, which would be payable if a Security Default were to occur and
the 2000 EBITDA Notice, if any, shall set forth the Purchaser's determination of
the Initial Earn Out Payment, if any.
(ii) On the Earn Out Payment Date, subject to the terms and
conditions of this Agreement, the Purchaser shall (i) pay to the Company (or its
permitted assigns) by bank wire transfer in cash in immediately available funds
to a bank account designated by the Company an amount, if any, equal to the
amount by which the Earn Out Payment exceeds the Stock Earn Out Amount and (ii)
deliver to the Company or to its stockholders as the Company's permitted assigns
in accordance with Section 13.10 hereof certificates representing, if any, the
Earn Out Shares (collectively, the "Initial Earn Out Payment"). In addition,
simultaneously with such delivery of the Initial Earn Out Payment, if any,
Norton shall cause its independent public accountants to deliver a written
statement to the Company stating that such accountants have reviewed each EBITDA
Notice and that EBITDA set forth in each EBITDA Notice was calculated in
accordance with the provisions of this Agreement. The Purchaser, Norton, the
Company and the Stockholders agree jointly to satisfy any reasonable request
from Norton's independent public accountants for indemnification and release of
liability in connection with such written statement. The Company and its
permitted assigns as aforesaid shall have reasonable access to all relevant
personnel of Norton and shall have the right to review all accounting books and
records of the Purchaser that the
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Company reasonably deems relevant to the applicable EBITDA Notice and to make
copies of relevant portions thereof, and Norton shall provide access to such
accounting books and records to the Company during normal business hours and
upon reasonable prior notice. Norton shall also request its independent public
accountants to permit the Company and its permitted assigns as aforesaid to
review and make copies of the relevant work papers with respect to the
applicable EBITDA Notice. The Purchaser, Norton, the Company and the
Stockholders agree jointly to satisfy any reasonable request from Norton's
independent public accountants for indemnification and release of liability in
connection with any grant of access to such work papers.
(iii) If the Company or the Stockholder Representative
disputes the amount of the Initial Earn Out Payment set forth in the 2000 EBITDA
Notice or, if a Security Default shall have occurred and be continuing, the
Initial Earn Out Payment set forth in the 1999 EBITDA Notice, the applicable
disputing person shall give written notice (the "Dispute Notice") to Norton
within 45 days after the Earn Out Payment Date. The Dispute Notice shall specify
in reasonable detail the matters and reasons for such dispute, which may include
a dispute as to the EBITDA determination in either or both the 0000 XXXXXX
Notice or the 2000 EBITDA Notice (if any), and the amount or amounts in dispute.
In the event that no such Dispute Notice is timely delivered to Norton, the 2000
EBITDA Notice or, if a Security Default shall have occurred and be continuing,
the 1999 EBITDA Notice shall be deemed a final determination of the Earn Out
Payment as of such forty-fifth (45th) day after the Earn Out Payment Date (the
"Final Determination of the Earn Out Payment").
(iv) In the event that Norton timely receives a Dispute Notice
and Norton and the Company or the Stockholder Representative, as applicable, are
unable to resolve the disputed matters set forth in the Dispute Notice within 30
days after receipt by Norton thereof, all disputed matters raised in the Dispute
Notice and not resolved (the "Disputed Matters") shall be submitted to (i) the
New York office of KPMG Peat Marwick LLP, and if such firm refuses to accept
such engagement, (ii) the New York office of Xxxxxx Xxxxxxxx & Co., and if such
firm refuses to accept such engagement, (iii) such other nationally recognized
independent accounting firm as is chosen by mutual agreement of Norton, on the
one hand, and the Company or the Stockholder Representative, as applicable, on
the other hand, acting in good faith (the "Independent Auditor") for final
resolution in accordance with the terms of this Agreement. The Independent
Auditor shall follow such procedures as it deems reasonably appropriate for
obtaining the necessary information in considering the Disputed Matters and may,
if it deems reasonably appropriate, conduct an independent audit of the
Purchaser. The Independent Auditor shall have the right to review all of the
Purchaser's accounting books and records relevant to the applicable EBITDA
Notice. Norton and the Company or the Stockholder Representative, as applicable,
shall use their respective best efforts to cause the Independent Auditor to
render its determination on the Disputed Matters (the "Determination") within 60
days of submission of the Disputed Matters. The Determination shall be limited
to the Disputed Matters, shall be final, conclusive and binding upon all of the
parties hereto, and shall be reflected in a written report which shall be
delivered by the Independent Auditor to Norton and the Company or the
Stockholder Representative, as applicable. The 2000 EBITDA Notice (if any) or,
if a Security Default shall have occurred, the 1999 EBITDA Notice, as, when and
if adjusted to reflect the Independent Auditor's resolution of any Disputed
Matters shall be deemed the Final Determination of the Earn Out Payment on the
date that the Independent Auditor so delivers the Determination.
(v) By not later than the tenth (1Oth) business day after
there is a Final Determination of the Earn Out Payment in accordance with clause
(iv) above, if any, Norton shall deliver to the Company a calculation of the
Earn Out Payment (the "Final Earn Out Notice") calculated on the basis of the
Final Determination of the Earn Out Payment (the "Final Earn Out Payment"). If
the Final Earn Out Payment is greater than the Initial Earn Out Payment (if
any), then Norton shall, simultaneously with the delivery of the Final Earn Out
Notice, pay such excess amount (the "Excess Amount")(adjusted to reflect any
fees and expenses for which the Company is responsible pursuant to Section
2.02(b)(vi) below, but not below zero) to the Company or its permitted assigns
as aforesaid by bank wire transfer in cash in immediately available funds to a
bank account designated by the Company, together with interest accrued on the
Excess Amount paid at the prime rate per annum (as announced by NationsBank,
N.A.) from the date of delivery of the 2000 EBITDA Notice, if any (or February
28, 2000, if earlier), or, if a Security Default shall have occurred, the date
of delivery of the 1999 EBITDA Notice (or February 28, 1999, if earlier) to the
date of such payment.
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(vi) The fees and expenses of the Independent Auditor (i)
shall be paid by the Company and the Stockholders (on a several basis based upon
the percentages set forth opposite each Stockholder's name on Schedule A hereto,
each such percentage being hereinafter referred to as such Stockholder's "Pro
Rata Percentage")if the Excess Amount is equal to or less than 1% of the Initial
Earn Out Payment, (ii) shall be paid by Norton if the Excess Amount is equal to
or greater than 25% of the Initial Earn Out Payment, and (iii) shall be paid
one-half by the Company and the Stockholders (on a several basis based upon each
Stockholder's Pro Rata Percentage), on the one hand, and one-half by Norton, on
the other hand, if the Excess Amount is greater than 1% but less than 25% of the
Initial Earn Out Payment.
(vii) Notwithstanding any provisions contained herein to the
contrary, the determination pursuant to this Section 2.02 of the Final
Determination of the Earn Out Payment shall in no way limit or otherwise affect
the parties' rights and remedies in accordance with the terms and conditions
hereof for breach of the provisions contained in Section 7.13 hereof.
(viii)If the 1999 EBITDA Notice states that EBITDA for the
fiscal year ending October 31, 1998 is greater than $9,000,000 and if on the
date the 1999 EBITDA Notice is sent to the Company the product of the Average
Market Value and the number of issued and outstanding shares of Norton Common
Stock ("the Market Capitalization") is less than $30,000,000, then any
Stockholder having a Pro Rata Percentage greater than 25% may, by written notice
(the "Security Notice") delivered to Norton within 30 days of delivery of the
1999 EBITDA Notice, require Norton, within 45 days of Norton's receipt of the
Security Notice, either (a) to arrange for the issuance of a letter of credit
(the "Earn Out L/C") with a face amount equal to the Secured Earn Out Amount (as
defined below) by a bank or trust company with assets in excess of $50,000,000
for the benefit of the Stockholder Representative, in its capacity as such,
securing Norton's obligation to pay the cash portion, if any, of the Earn Out
Payment and containing such other terms and conditions as shall be reasonably
satisfactory to the Company or (b) to pay the Secured Earn Out Amount to the
Company as a prepayment to be credited against the Earn Out Payment. The
"Secured Earn Out Amount" shall mean the lesser of (A) $5,000,000 and (B) one
half of the product of (x) (i) four times the amount of EBITDA stated on the
1999 EBITDA Notice (ii) less $24,000,000, and (y) one minus a fraction (a) the
numerator of which is 13.64% of the Market Capitalization and (b) the
denominator of which is the excess of (i) four times the amount of EBITDA stated
in the 1999 EBITDA Notice over (ii) $24,000,000. All costs and expenses incurred
in obtaining the Earn Out L/C, including all fees and charges payable to the
issuer thereof, shall be paid one-half by the Company and each of the
Stockholders (severally on the basis of such Stockholder's Pro Rata Percentage)
and one-half by Norton.
1.023 Allocation of Purchase Price. The Purchase Price (including
the Assumed Liabilities) shall be allocated among the Assets as set forth in
Schedule 2.03 hereto. The parties hereto agree that the allocation of the total
Purchase Price is intended to comply with the allocation method required by
Section 1060 of the Code. The parties hereto shall cooperate to comply with all
substantive and procedural requirements of Section 1060 of the Code and any
regulations thereunder, and the allocation shall be adjusted or supplemented if,
and to the extent, necessary to comply with the requirements of Section 1060 of
the Code. None of the Purchaser, the Company, Norton or any Stockholder will
take, nor permit any affiliated Person to take, for Federal, state or local
income tax purposes, any position inconsistent with the allocation set forth in
Schedule 2.03 hereto, or, if applicable, such adjusted or supplemented
allocation. The Company and the Purchaser agree that each shall attach to its
tax returns for the tax year in which the Closing shall occur an information
statement on Form 8594, which shall be completed in accordance with the
allocations set forth in Schedule 2.03 hereto.
1.024 Registration Rights.
(a) If (i) Norton issues any Earn-Out Shares, (ii) at least 40
days prior to the issuance of such Earn Out Shares, the Stockholder
Representative delivers to Norton a list of Persons to whom Earn Out Shares, if
any, are to be issued and in what proportions and a letter from counsel
reasonably acceptable to Norton (Norton agreeing that the counsel set forth in
Section 13.01(b) hereof will be acceptable) to the effect that such counsel is
unable to opine that certain of the Earn Out Shares the Persons to whom such
shares are to be issued who are not "affiliates" (as defined in Rule 144) may
not be sold pursuant to subsection (k) of Rule 144 by such Persons on the Earn
Out Payment Date and (iii) at least
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10 days prior to the issuance of such Earn Out Shares, Norton does not deliver
to the Stockholder Representative an opinion of counsel reasonably acceptable to
the Stockholder Representative (the Stockholder Representative agreeing that
counsel set forth in Section 13.01(d) hereof will be acceptable) that all of the
Earn Out Shares subject to the letter delivered pursuant to clause (ii) above,
may be sold pursuant to subsection (k) of Rule 144 (all Earn Out Shares covered
by the letter delivered pursuant to clause (ii) but not covered by the opinion
delivered pursuant to clause (iii) are referred to herein as "Restricted
Shares", and all Persons to whom Norton issues Restricted Shares are referred to
herein as "Restricted Stockholders"), then Norton shall use its best efforts to
effect the registration under the Securities Act at its expense on or before the
Earn Out Payment Date (but failing that, as promptly as practicable following
the Earn Out Payment Date) of the offer and sale of all of the Restricted Shares
by the Restricted Stockholders and shall keep such registration in effect for a
period of 180 days following the effective date thereof and furnish to the
Restricted Stockholders at its expense such copies of the prospectus as shall be
reasonably required in connection with the offer and sale of their shares. The
Company and the Restricted Stockholders shall assist and cooperate with Norton
in the preparation of the registration statement covering the Restricted Shares.
Norton, at its sole cost and expense, shall also take any actions necessary to
register the offer and sale of the Restricted Shares by the Restricted
Stockholders under applicable state securities or "blue sky" laws (provided that
Norton shall not be required in connection therewith to qualify as a foreign
corporation or to execute general consent to service of process in any state).
Each of Norton and the Restricted Stockholders shall notify the other promptly
of the receipt of any comments from the Commission or its staff and of any
request by the Commission or its staff for amendments or supplements to the
registration statement or prospectus or for additional information and shall
supply the other with copies of all correspondence with the Commission or its
staff with respect to the registration statement or prospectus.
(b) In the event that, at any time or from time to time,
Norton proposes to register any shares of Norton Common Stock (the "Primary
Registration Shares"), under the Securities Act, other than pursuant to a
registration statement on Forms S-4 or S-8 or any successor to such Forms, for
the purpose of the sale or other transfer of the Primary Registration Shares by
Norton, Norton shall mail or deliver a written notice (a "Registration Notice")
of its intention so to register the Primary Registration Shares to the Company
and to each of the Stockholders to whom Earn Out Shares have been issued and who
continue to hold such Earn Out Shares on the day before such Registration Notice
is sent (the persons to whom such Registration Notice is given, collectively,
the "Supplemental Registration Investors", and together with the Restricted
Stockholders, the "Registration Investors") at least 20 days prior to the filing
of the registration statement covering the Primary Registration Shares.
(c) In the event that a Registration Notice shall have been so
mailed or delivered, the Supplemental Registration Investors, at their election,
may deliver to Norton a written notice or notices (each, a "Supplemental
Notice") (i) specifying the number of Earn Out Shares ("Supplemental
Registration Shares", and together with the Restricted Shares, the "Registration
Shares") proposed to be sold or otherwise transferred by the Supplemental
Registration Investors, (ii) describing the proposed manner of sale or other
transfer thereof and (iii) requesting the registration thereof under the
Securities Act; provided, however, that such Supplemental Notice shall be so
delivered not more than 15 days after the date of delivery to the Supplemental
Registration Investors of a Registration Notice.
(d) From and after receipt of a Supplemental Notice, Norton
shall, subject to the sale or other transfer of some or all of the Primary
Registration Shares, use its best efforts to cause the offer and sale of the
Supplemental Registration Shares in the manner specified in such Supplemental
Notice to be registered under the Securities Act and to effect and to comply
with all such qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including without limitation,
qualifications under the applicable "blue sky" or other state securities laws
(provided that Norton shall not be required in connection therewith to qualify
as a foreign corporation or to execute general consent to service of process in
any state); provided, however, that if (i) in the case of an underwritten public
offering of securities, the managing underwriter shall advise Norton that
inclusion of some or all of such Supplemental Registration Shares would, in such
managing underwriter's judgment, interfere with the proposed distribution of the
securities to be registered by Norton, in any case in respect of which
registration was originally to be effected, then Norton may, upon written notice
to the Supplemental Registration Investors, allocate the
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Supplemental Registration Shares to be included in the registration statement
(if and to the extent such allocation is stated by such managing underwriter as
necessary to eliminate such interference) pro rata among holders of Supplemental
Registration Shares on the basis of the number of shares of Norton Common Stock
held by such holders or (ii) any firm of counsel representing Norton in
connection with such registration shall advise Norton and the Supplemental
Registration Investors in writing that in their opinion one or more of the steps
contemplated hereby is not necessary to permit the sale of the Supplemental
Registration Shares in a transaction constituting a public offering within the
meaning of the Securities Act, then Norton shall not be required to take any
action with respect to such step or steps.
(e) If and whenever Norton is required by the provisions of
this Section 2.04 to use its best efforts to effect the registration under the
Securities Act of the offer and sale of Registration Shares, Norton will, as
promptly as reasonably possible:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to the offer and
sale of such Registration Shares by the Registration Investors and use its
best efforts to cause such registration statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period from the date of the effectiveness
thereof through the earlier of (1) the date which is six months after the
date of effectiveness thereof and (2) the date on which all Registration
Shares, as the case may be, included in such registration statement shall
have been sold by the Registration Investors, and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement
whenever the Registration Investors shall desire to sell or otherwise
dispose of the same within such period;
(iii) furnish to the Registration Investors such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as may
reasonably be requested thereby in order to facilitate the public sale or
other disposition of such securities owned thereby; and
(iv) notify the Registration Investors in writing, at any time when
a prospectus relating to such securities is required to be delivered under
the Securities Act within the appropriate period mentioned in clause (ii)
above, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of circumstances then existing, and promptly
prepare (and file with the Commission) and furnish to the Registration
Investors a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
(f) Each of the Registration Investors, severally and not
jointly, agrees to furnish Norton such information regarding itself or himself
and the proposed distribution of Registration Shares by such Registration
Investor as Norton may from time to time reasonably request in writing in order
to prepare a registration statement and prospectus or any supplement or
amendment thereto pursuant to the Securities Act and the rules and regulations
promulgated thereunder.
(g) Each of the Registration Investors, severally and not
jointly, agrees that, upon receipt of a written notice from Norton of the
happening of any event of the kind described in clause (iv) of subsection (e)
above, it or he will forthwith discontinue its or his disposition of
Registration Shares pursuant to the registration statement relating to such
Registration Shares until receipt of the copies
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of the supplemented or amended prospectus contemplated by clause (iv) of
subsection (e) above and, if so requested by Norton in writing, will deliver to
Norton (at Norton's expense) all copies then in its or his possession, other
than permanent file copies, of the prospectus relating to such Registration
Shares.
(h) Norton shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 2.04 (other
than underwriters' discounts and commissions and brokerage commission and fees,
if any, payable with respect to securities sold by the Registration Investors
and other than legal fees and expenses of counsel to any of the Registration
Investors), including without limitation, printing expenses, fees of the
Commission and The Nasdaq Stock Market, Inc., expenses of compliance with "blue
sky" and other state securities laws, and accounting and legal fees and expenses
of Norton.
(i) If the Primary Registration Shares or the Registration
Shares are to be distributed by or through one or more underwriter(s), as
determined by Norton in its sole discretion, Norton will have the sole right to
select the managing underwriter(s) to administer the offering.
(j) Each of the Registration Investors, severally and not
jointly, agrees that, in the event Norton files a registration statement under
the Securities Act with respect to an underwritten public offering of any shares
of its capital stock, none of the Registration Investors will effect any public
sale or distribution, including any sale pursuant to Rule 144 of the Securities
Act, of any shares of Norton Common Stock or any other equity securities of
Norton or any securities convertible into or exchangeable or exercisable for any
equity security of Norton (other than as part of such underwritten public
offering) during the seven days prior to or 90 days, or such longer period as
may be required by an underwriter (not to exceed in any event 180 days), after
the effectiveness of such registration statement; provided, however, that in the
event that any Persons, other than the Registration Investors, who have
similarly agreed not to effect any such sales are released from such agreements,
the Registration Investors shall also be so released to the extent and at the
time such other Persons are released.
(k) In the event of any registration pursuant to this Section
2.04 covering Registration Shares, Norton will indemnify and hold harmless each
of the Registration Investors whose Registration Shares are included in such
registration and each Person if any, who controls the applicable Registration
Investor (the "Registration Indemnitees") against any Damages which arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that Norton will not
be liable to a Registration Indemnitee in any such case to the extent that any
such Damage arises out of or is based upon (x) an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said prospectus, or any said amendment
or supplement, in reliance upon and in conformity with written information
furnished by such Registration Indemnitee specifically for use in the
preparation thereof or (y) such Registration Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the Person asserting any Damage.
(l) In the event of any registration pursuant to this Section
2.04 covering Registration Shares, each Registration Investor (if securities of
the applicable person are included in the subject registration statement) shall,
severally and not jointly, as to such person in the instances and to the extent
set forth in this subsection (l) indemnify and hold harmless Norton, each of its
directors and officers who has signed any registration statement, and each
Person, if any, who controls Norton within the meaning of the Securities Act,
against any Damages, to which Norton or any such director, officer, or
controlling Person may become subject, under the Securities Act or otherwise,
insofar as such Damages, arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in said registration statement,
said preliminary prospectus, said prospectus, or said amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in said registration statement, said
preliminary prospectus, said prospectus, or
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said amendment or supplement, in reliance upon and in conformity with written
information furnished by such Registration Investor specifically for use in the
preparation thereof.
(m) With respect to any underwritten offering, each of the
Registration Investors severally and not jointly (if it or he shall sell
securities owned in such offering) shall, in addition to the foregoing, provide
the underwriter of such offering with customary representations and warranties,
and indemnification, in each instance as shall be reasonably requested by the
underwriter, provided, however, that any such agreement to indemnify an
underwriter with respect to any preliminary prospectus shall not inure to the
benefit of any such underwriter to the extent that any Damage of any such
underwriter results solely from an untrue statement of material fact contained
in, or the omission of a material fact from, such preliminary prospectus which
untrue statement or omission was corrected in the final prospectus, if such
underwriter failed to send or give a copy of the final prospectus to the Person
asserting such loss, claim, damage or liability at or prior to the written
confirmation of the sale of such securities to such Person, and provided further
that any such agreement by any of the Registration Investors to indemnify an
underwriter shall be on a several (and not joint) basis in proportion to the
number of securities sold by each Registration Investor in such underwritten
offering and shall be limited in amount to the net proceeds received by such
Registration Investor in such underwritten offering.
SECTION III.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
The Management Stockholders and, solely with respect to (i) Sections
3.01, 3.02, 3.03, 3.04, 3.11(a), 3.12(a) and (c) (insofar as such subsection
deals with Income Taxes) and 3.29 (the foregoing Sections, collectively, the
"First Listed Sections"), (ii) Section 3.05(a) (the "Second Listed Section") and
(iii) Sections 3.13(b) (solely with respect to Permits relating to Environmental
Laws and Hazardous Substances) and 3.13(c) (the foregoing Section, the "Third
Listed Sections;" the First Listed Sections, the Second Listed Section and the
Third Listed Sections are referred to herein collectively as the "Listed
Sections"; all of the subsections of this Section III which are not Listed
Sections are referred to herein as the "Non-Listed Sections") the Non-Management
Stockholders, severally and not jointly, hereby represent and warrant to the
Purchaser and Norton, as of the date hereof and as of the Closing Date (provided
that no representation or warranty herein shall be deemed to refer to any
Excluded Asset or Excluded Liability), that:
1.031 Organization and Qualification. The Company is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company is in good standing and qualified to do business in New York and New
Jersey, which are the only jurisdictions in which the failure so to qualify has
not had and would not be reasonably expected to have, individually or in the
aggregate, a material adverse effect on the Assets, the Business (it being
understood and agreed that wherever used in this Agreement (other than in the
recitals and Section I hereof), the term Business shall not include the
Development Projects), the results of operations or the condition (financial or
other) of the Company (a "Material Adverse Effect"). Except as set forth on
Schedule 3.01 hereto, the Company has no subsidiaries and owns no capital stock
or other proprietary interest, directly or indirectly, in any other corporation,
association, trust, partnership, joint venture or other entity, nor does the
Company have any agreement with any Person to acquire any such capital stock or
other proprietary interest.
1.032 Authority. The execution and delivery by the Company of this
Agreement and each other instrument or document required to be executed and
delivered by the Company pursuant hereto, the performance by the Company of its
covenants and agreements hereunder and thereunder and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company,
including all board of director and stockholder approvals. This Agreement and,
when executed by the Company, each other instrument or document required to be
executed and delivered by the Company pursuant hereto, constitutes, or when
executed will constitute, a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency,
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reorganization and similar laws affecting creditors' rights and to general
principles of equity.
1.033 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement or any other instrument or document required to be executed and
delivered by the Company pursuant hereto, nor the consummation of the
transactions contemplated hereby or thereby, violates or violated any provision
of the certificate of incorporation or by-laws of the Company or, subject to the
satisfaction of Section 9.05 hereof and except as set forth on Schedule 3.03
hereto, any statute, ordinance, regulation, order, judgment or decree of any
Governmental Authority, or will result or resulted in any breach of any of the
terms of or constitute or constituted a default under or will result or resulted
in the termination of or the creation of any Lien pursuant to the terms of or
otherwise affect or affected the continuation, validity or effectiveness of any
Contract, except for such violations, breaches and defaults have not had and
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. Except with respect to the HSR Act or as set forth on
Schedule 3.03 hereto, no consents, approvals or authorizations of, or filings
with, any Governmental Authority are or were required in connection with the
execution and delivery of this Agreement or any other instrument or document
required to be executed and delivered by the Company pursuant hereto, or the
consummation of the transactions contemplated hereby or thereby, except where
the failure to obtain any such consents, approvals or authorizations, or make
such filings, has not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
1.034 Capitalization. All of the issued and outstanding shares of
capital stock of all classes of the Company, all warrants, options and rights to
purchase any such capital stock and all securities or other instruments
convertible into such capital stock are owned of record by the Stockholders as
set forth on Schedule 3.04 hereto.
1.035 Financial Statements; No Undisclosed Liabilities. (a) The
Company has delivered to the Purchaser the audited balance sheets of the Company
as at January 31, 1997 (the "1997 Balance Sheet"), January 31, 1996 and January
31, 1995 and the related statements of operations and retained earnings and of
cash flows for the 12-month periods then ended (collectively, the "Full Year
Financial Statements"). Except as set forth on Schedule 3.05(a) hereto, the Full
Year Financial Statements have been prepared from the books and records of the
Company and in accordance with GAAP consistently applied and maintained
throughout the periods indicated, and fairly present the financial condition of
the Company as at their respective dates and the results of its operations for
the periods covered thereby.
(b) The Company has delivered to the Purchaser the unaudited balance
sheet of the Company as at June 30, 1997 (the "Current Balance Sheet") and the
related statements of operations and retained earnings and of cash flows for the
five-month period then ended (together with the Current Balance Sheet,
collectively, the "Current Financial Statements"). Except as set forth on
Schedule 3.05(b), the Current Financial Statements have been prepared from the
books and records of the Company and in accordance with GAAP consistently
applied and maintained throughout the period indicated (except that the Current
Financial Statements do not include footnotes or normal year-end adjustments),
and fairly present the financial condition of the Company as at their date and
the results of its operations for the period covered thereby, subject to normal
year end adjustments.
(c) Except to the extent set forth in or reserved against in the
Current Balance Sheet or as identified in Schedule 3.05(c) hereto, except for
liabilities incurred in the ordinary course of business consistent with past
practices since the Current Balance Sheet Date, except for liabilities or
obligations which have not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect, and except for
liabilities and obligations under the Contracts and contracts entered into since
the Current Balance Sheet Date which would have been permitted under Section
6.03 had such Section been in effect since the Current Balance Sheet Date, the
Company does not have any liabilities or obligations of any nature, whether
accrued, absolute, or contingent, whether due or to become due, of a type which
would currently be required to be reflected under GAAP on a balance sheet as a
liability or a charge or reserve against an asset or equity account.
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1.036 Accounts Receivable; Inventories.
(a) All Receivables of the Company reflected on the Current
Balance Sheet and all Receivables which have arisen since the Current Balance
Sheet Date are valid and shall have arisen only from bona fide arm's-length
transactions in the ordinary course of the Business. To the knowledge of any of
the Management Stockholders except for returns, allowances, discounts and claims
in the ordinary course of business, no such Receivables are subject to any
counterclaim or set-off that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) The values at which items of Inventory are carried on the
Current Balance Sheet, or in the case of Inventory acquired or created following
the Current Balance Sheet Date on the books and records of the Company, reflect
the Inventory valuation policy of the Company set forth on Schedule 3.06 hereto,
which policy has been consistently applied.
1.037 Accounts Payable, Etc. Except as set forth on Schedule 3.07,
the accounts and notes payable and accrued expenses reflected on the Current
Balance Sheet or thereafter incurred by the Company arose in the ordinary course
of business and consistent with past practices. Since the Current Balance Sheet
Date, the accounts and notes payable and accrued expenses of the Company have
been maintained on a basis consistent with past practices, except where such
accounts or notes payable are subject to good faith, bona fide disputes. Except
as set forth on Schedule 3.07 hereto, since the Current Balance Sheet Date, the
Company has paid in full all required installments and other payments under each
of the Contracts, except where such payments are not material in amounts
(individually or in the aggregate) and except where any delays in payment that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
1.038 Absence of Certain Changes. Except as set forth in Schedule
3.08 hereto, subsequent to the 1997 Balance Sheet Date, with respect to the
Company or the Business, there has not been any (a) event or condition (other
than general economic conditions or conditions affecting the apparel industry in
general) which has had or would be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect; (b) damage or destruction (whether
or not insured) affecting any of the Assets (other than Inventory in transit) or
the Business or, to the knowledge of any of the Management Stockholders, any
Inventory in transit which had or would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect; (c) any work
stoppage or strike involving employees of the Company or material labor dispute
or, to the knowledge of any of the Management Stockholders, threatened labor
dispute; (d) changes in the methods or procedures for billing or collection of
customer accounts receivable or other receivables or recording of customer
accounts receivable or other receivables or reserves for doubtful accounts with
respect to the Business; (e) addition to or modification of any of the employee
benefit plans, arrangements or practices (including without limitation, those
listed on Schedule 3.17 hereto) other than contributions made in the ordinary
course of business consistent with past practices; (f) sale, assignment or
transfer of any of the Assets, except in the ordinary course of business and
consistent with past practices; (g) cancellation of any debts or waivers of any
claims or rights of substantial value to the Company; (h) commitments to make
capital expenditures (whether individually or in the aggregate) in excess of
$50,000 in the aggregate for repairs or additions to property, plant, equipment
or tangible capital assets; (i) change in any method of accounting or accounting
principles including without limitation with respect to Inventory valuation; (j)
material change in the methods of purchasing any of the Inventory, Property or
other Assets; (k) failure to replenish inventories or supplies of the Business
in a normal and customary manner consistent with its past practices which
failure has had or would be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect; (l) purchase commitments materially in
excess of the normal, ordinary and usual requirements of the Business or at any
price materially in excess of the current market price at the time of incurring
such purchase commitments; (m) mortgage, pledge, charge, security interest or
any other Lien with respect to any of the Assets or the Business (other than
Permitted Liens); or (n) agreement or commitment to do any of the foregoing.
1.039 Loans, Etc. Except as set forth on Schedule 3.09 hereto, the
Company does not have outstanding, any Company Indebtedness and is not a party
to any loan agreement or contract or obligation or arrangement for the payment
of borrowed money to any Person.
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3.10 Real Property Owned or Leased. A complete and accurate list of
all real property leased to the Company or in which the Company has any interest
is set forth on Schedule 3.10 hereto. The Company does not own and has never
owned any real property. All such leased real property is held subject to
written leases or other written agreements which are valid and effective in all
material respects in accordance with their respective terms against the Company
and, to the knowledge of each of the Management Stockholders, are valid and
effective in accordance with their respective terms against the other parties
thereto, subject in each case as to enforceability to applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights and to
general principles of equity. There are no existing defaults or events of
default, or events which with notice or lapse of time or both would constitute
defaults, thereunder on the part of the Company or, to the knowledge of any of
the Management Stockholders, any other party thereto, except for defaults which
have not had and would not reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect. The Company has not received any written
notice to the effect that any lease will not be renewed at the termination of
the term thereof or that any such lease will be renewed only at a substantially
higher rent.
3.11 Title to Assets; Condition of Property. (a) The Company has
good and valid title to all of the Assets, including without limitation, the
Assets reflected on the Current Balance Sheet (except for Assets sold, used or
consumed and Receivables collected or written off since the Current Balance
Sheet Date, in any case in the ordinary course of business consistent with past
practices), free and clear of all Liens, except for Permitted Liens. The Assets,
the Excluded Assets and the property leased by the Company constitute all of the
assets used in the operations of, and necessary to operate, the Business as
presently conducted. Assuming Norton and the Purchaser comply with Section 7.14,
except as set forth in Schedule 3.11 hereto, the Company has the right, power
and authority to sell and transfer all of the Assets to the Purchaser, and upon
such sale and transfer the Purchaser will acquire good and valid title to the
Assets, free and clear of all Liens, except for Permitted Liens.
(b) Except as set forth on Schedule 3.11 hereto, all of the material
tangible Assets (including without limitation, all material equipment, but
excluding Inventory) owned or leased by the Company are in good operating
condition and repair, normal wear and tear excepted, and are suitable for the
purposes for which they presently are being used.
3.12 Taxes. (a) The Company has filed or caused to be filed on a
timely basis all Income Tax Returns required to be filed by the Company and has
paid all Income Taxes shown to be due and payable on such Income Tax Returns.
There are no Income Tax or Non Income Tax Liens on any of the Assets other than
for Income Taxes and Non Income Taxes not due and payable. Schedule 3.12(a)
hereto sets forth a complete and accurate list of all jurisdictions in which
such Income Tax Returns are currently required to be filed. Except as set forth
on Schedule 3.12(a) hereto, no Income Tax Returns of the Company have ever been
audited and, to the knowledge of any of the Stockholders, no written inquiries
have been received by the Company from any taxing authorities with respect to
possible claims for Income Taxes or assessments which remain unresolved.
(b) The Company has filed or caused to be filed on a timely basis
all Federal, state, local, foreign and other Non Income Tax Returns required to
be filed by the Company, except where the failure to file has not had and would
not reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect and has paid or withheld all Non Income Taxes shown to be due and
payable on such Non Income Tax Returns. Schedule 3.12(b) hereto sets forth a
complete and accurate list of all jurisdictions in which such Non Income Tax
Returns are currently required to be filed and the type of such Non Income Tax
Return. Except as set forth on Schedule 3.12(b) hereto, no Non Income Tax
Returns of the Company have ever been audited and, to the knowledge of any of
the Management Stockholders, no written inquiries have been received by the
Company from any taxing authorities with respect to possible claims for Non
Income Taxes or assessments.
(c) Except with respect to the New Jersey Audit and the New York
Audit, adequate charges, accruals and reserves have been made in the Current
Financial Statements and the books and records of the Company for the payment of
all accrued and unpaid Income Taxes and Non Income Taxes for the periods through
the respective dates thereof and through July 31, 1997, whether or not yet due
and payable and whether or not disputed by the Company and nothing has occurred
subsequent to the date of
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such Financial Statements and which makes such charges, accruals or reserves
inadequate.
(d) The Company is not a foreign person within the meaning of
Section 897 or Section 1445 of the Code.
3.13 Permits; Compliance with Applicable Law; Permits;
Environmental.
(a) General. The Company is not in default under, nor has the
Company failed to comply with, any existing Law (other than Environmental Laws,
as to which clauses (b) and (c) below shall be applicable) or any order,
judgment or decree of any Governmental Authority, and the Premises are in
compliance with all existing Laws (other than Environmental Laws) and all
orders, judgments and decrees of any Governmental Authority, except where the
failure to be in compliance has not had and would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. Except as set
forth on Schedule 3.13(a), to the knowledge of any of the Management
Stockholders, since July 31, 1996 the Company has not received any written
notification of any asserted present or past failure to comply with any of the
foregoing which has not been satisfactorily responded to in the time period
required thereunder.
(b) Permits. Set forth in Schedule 3.13(b) hereto, is a complete and
accurate list of all Federal, state, local and foreign permits, licenses,
approvals, franchises and authorizations issued by Governmental Authorities
(collectively the "Permits"), held by the Company that are material to the
conduct of the Business or the ownership any of the Assets. The Permits set
forth in Schedule 3.13(b) hereto are all the Permits required for the Company to
conduct the Business or own any of the Assets (including without limitation, any
Permits relating to (A) air emissions, (B) discharges to surface water or ground
water, (C) noise emissions, (D) solid or liquid waste disposal, (E) the use,
generation, storage, transportation or disposal of toxic or hazardous substances
or wastes (intended hereby and hereafter to include any and all such materials
listed in any Law as hazardous or potentially hazardous (including, without
limitation, (1) any chemical, compound, material or substance that is defined,
listed in, or otherwise classified pursuant to, any of the Environmental Laws as
a "hazardous substance", "hazardous material", "hazardous waste", "toxic
substance" or "toxic pollutant", and (2) petroleum, natural gas, natural gas
liquids, liquified natural gas, synthetic gas usable for fuel and drilling
fluids, produced waters, and other wastes associated with the exploration,
development or production), or (F) other environmental, health and safety
matters (collectively, "Hazardous Substances")), except where the failure to
have any such Permits has not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 3.13(b), all of the Permits set forth in Schedule 3.13(b) hereto are
in full force and effect, and the Company has not engaged in any activity which
would cause or permit revocation or suspension of any such Permit, except where
such revocations or suspensions have not had and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect,
and no action or proceeding looking to or contemplating the revocation or
suspension of any such Permit is pending or, to the knowledge of any of the
Management Stockholders, threatened. Except as set forth in Schedule 3.13(b)
hereto, there are no existing defaults or events of default or events or states
of facts which with notice or lapse of time or both would constitute a default
by the Company under any such Permit, except for such defaults which have not
had and would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) Environmental.
Except as set forth on Schedule 3.13(c) hereto:
(i) The Company duly complied with, the Business is being
conducted and has been conducted in compliance with, and, to the knowledge of
each of the Management Stockholders or the Non-Management Stockholders, the real
property subject to the leases listed on Schedule 3.10 hereto, and improvements
thereon, (all such leased real property, and improvements thereon, is herein
referred to collectively as the "Premises"), are in compliance with, all
applicable Environmental Laws, except where the failure to be in compliance has
not had and would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect;
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(ii) To the knowledge of any of the Management Stockholders,
the Company has not received written notice of any Environmental Claim made or
threatened against the Company;
(iii) Neither the Company nor, to the knowledge of any of the
Management Stockholders or the Non-Management Stockholders, any other Person has
generated, treated, transported, stored, recycled, discharged, emitted, disposed
of or released any Hazardous Substances, arranged for the generation, treatment,
transport, storage, recycling, discharge, emission, disposal or release of any
Hazardous Substances, or exposed any employee or other individual to any
Hazardous Substances or condition so as to give rise to any liability or
corrective or remedial obligation under any Environmental Laws, in each case, at
or under the Premises and the Company has not done any of the foregoing at or
under any other real property, whether or not presently or formerly owned or
leased by the Company;
(iv) To the knowledge of any of the Management Stockholders or
the Non-Management Stockholders, none of the Premises, nor any property to which
the Company has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances, is listed on the National Priorities
List promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), on CERCLIS (as
referred to in CERCLA) or on any similar Federal, state or foreign list of sites
requiring investigation or clean-up;
(v) Other than the Premises, the Company has never leased any
real property.
3.14 Licenses. Except as set forth on Schedule 3.14 and other than
pursuant to Permits listed on Schedule 3.13, the Company does not produce or
distribute any Product nor does it perform any service, under a license granted
by another Person (other than any Governmental Authority and other than private
label merchandise orders) and the Company has not licensed its rights in any
Intellectual Property, current Products, designs or services to any other
Person.
3.15 Contractual and Other Obligations; Customers and Suppliers. (a)
Except for contracts and agreements entered into after the date hereof and not
prohibited by Section 6.03 hereof and except for the Debt Documents, set forth
in Schedule 1.01(a)(vi) hereto is a complete and accurate list of each contract,
agreement, license, lease, guarantee or instrument (or other agreement relating
to contingent obligations of the Company with respect to the Assets, the Assumed
Liabilities or the Business) to which the Company is a party or by which the
Company, the Assumed Liabilities, the Business or any of the Assets is bound or
subject, without duplication (i) with respect to which the outstanding
obligation of any party thereto is in excess of $50,000, (ii) with respect to
which the Company leases any personal property used in the conduct of the
Business the aggregate lease payments for which are in excess of $5,000 or any
real property, (iii) with customers of the Company (which listing may set forth
the names of the customers and the aggregate dollar amount of all open purchase
orders and other contracts with each such customer by season), and (iv) in
respect of obligations and liabilities of the Company pursuant to uncompleted
orders or agreements for the purchase by the Company of Inventory, Property or
services for the requirements of the Business with respect to which the
remaining obligation of the Company arising under any such uncompleted order or
agreement is, or in the next year could reasonably be expected to be, in excess
of $50,000; all of the foregoing described under clauses (i) through (iv) above,
together with all other contracts, agreements, purchase orders, or other
instruments or documents to which the Company or any of the Assets, Assumed
Liabilities or Business is subject or bound, other than Retained Contracts,
being herein collectively referred to as the "Contracts" and singularly referred
to as a "Contract".
(b) Except as set forth on Schedule 3.15 hereto, the Company
is not in default in the performance of any covenant or condition under any
Contract and, to the knowledge of any of the Management Stockholders, no written
claim of such a default has been made and no event has occurred which with the
giving of notice or the lapse of time would constitute such default under any
covenant or condition under any Contract, except for defaults which have not had
and would not be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. Except as set forth on Schedule 3.15 hereto, all of
the Contracts have been entered into in the ordinary course of business of the
Company, at arm's length and on commercially reasonable terms and conditions.
The Company has delivered or made available to the Purchaser true and complete
copies of each written Contract set forth on Schedule 1.01(a)(vi). Each of the
Contracts is a legal, valid and binding obligation of the Company and, to
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the knowledge of each of the Management Stockholders, each other party thereto,
subject as to enforceability to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights and to general
principles of equity.
(c) The names of each of the 20 largest customers and 15
largest purchasing agents and of the suppliers of the Company are set forth on
Schedule 3.15 hereto. Since July 31, 1996, the Company has experienced no
material difficulties in obtaining in a timely manner consistent with industry
norms (including the recent strike by United Parcel Service employees) and at
market prices materials, goods and supplies used in the Business.
3.16 Compensation. Set forth in Schedule 3.16 hereto, is (a) a
complete and accurate list of all agreements, plans, arrangements or commitments
maintained, entered into or contributed to by the Company, or by which the
Company is bound pursuant to which the Company is obligated to pay to any
current or former employees, directors, officers or consultants, or any of their
respective family members or affiliates, any compensation, bonus, incentive,
stock option, stock purchase, severance pay, or other benefits or perquisites,
other than any agreements, plans, arrangements or commitments listed in Schedule
3.17 hereto; and (b) a complete and accurate list of all employees of the
Company with current annual salaries of $50,000 or more and their respective
positions, job categories and salaries. Except as set forth in Schedule 3.16
hereto, neither the execution of this Agreement, nor the consummation of the
transactions contemplated hereby, will result in any liability or obligation of
the Purchaser, for a bonus payment, severance pay or similar payment or other
compensatory requirements to any employee, salesman, independent contractor,
consultant, distributor, agent, stockholder or affiliate of the Company.
3.17 Employee Benefit Plans. Except as set forth in Schedule 3.17
hereto, the Company does not maintain or sponsor, nor is it required to make
contributions to, any employee benefit plan within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (hereinafter
referred to as "ERISA") (such plans and related trusts, insurance and annuity
contracts, funding media and related agreements and arrangements, other than any
"multiemployer plan" (within the meaning of Section 3(37) or Section 4001(a)(3)
of ERISA), being herein referred to as the "Benefit Plans" and such
multiemployer plans being hereinafter referred to as the "Multiemployer Plans").
Each Benefit Plan complies with all requirements of the Department of Labor and
the Internal Revenue Service, and with all other existing applicable Laws,
including but not limited to, ERISA and the Code and any rules or regulations
promulgated thereunder, except where the failure to be in compliance has not had
and would not be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect, and neither the Company nor any affiliate has taken
or failed to take any action with respect to the Benefit Plans (including the
failure to timely and completely file all required reports, returns and similar
documents with applicable Governmental Authorities) which could create any
material liability on the part of the Purchaser. Each "fiduciary" (within the
meaning of Section 3(21)(A) of ERISA) as to each Benefit Plan has complied with
the requirements of ERISA and the Code, including any rules or regulations
promulgated thereunder and all other applicable Laws in respect of each Benefit
Plan.
(b) Benefit Plans that are intended to be qualified under Section
401(a) of the Code have received any and all appropriate favorable determination
letters from the Internal Revenue Service as to such qualification and, to the
knowledge of any of the Management Stockholders, nothing has occurred since the
most recent determination letter to adversely affect the qualified status of any
such Benefit Plan;
(c) The Company does not maintain, sponsor or contribute to (nor is
it required to contribute to), and, to the knowledge of any of the Management
Stockholders, has never maintained, sponsored, contributed to (nor has it been
required to contribute to) or withdrawn from any Multiemployer Plan; and
(d) The Company is not a party to any agreement, contract or
arrangement that would result, separately or in the aggregate, in the payment
(whether or not in connection with any termination of employment or otherwise)
of any "excess parachute payment" within the meaning of Section 280G of the
Code. The Company has complied with the notice and continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder.
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3.18 Labor Relations. Except as set forth on Schedule 3.18 hereto,
to the knowledge of each of the Management Stockholders, the Company has
complied with all Laws with respect to the employment of individuals by, or the
employment practices or work conditions of, the Company, or the terms and
conditions of employment, wages and hours, except where any failure to be in
compliance has not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedules 3.18 and 3.26, the Company has not received notice of any charges
of unfair labor practices or other employee-related complaints which are pending
nor, to the knowledge of any of the Management Stockholders, have any such
charges been threatened against the Company before the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Occupational Safety and
Health Review Commission, the Department of Labor or any other Governmental
Authority. There is currently no strike, picketing, slowdown or work stoppage or
organizational attempt pending or, to the knowledge of any of the Management
Stockholders, threatened against or involving the Company or the Business. No
union or collective bargaining unit or other labor organization has ever been
certified or recognized by the Company as the representative of any of the
employees of the Company.
3.19 Dividends, Transfers, Increases in Compensation or Benefits.
Except as set forth on Schedule 3.19 hereto, subsequent to the 1997 Balance
Sheet Date, there have been no (i) dividends or other distributions or payments
made or declared (whether payable in cash or other property) with respect to any
class of capital stock of the Company, (ii) sales, assignments or other payments
or transfers of any of the Company's assets (including without limitation, cash)
to any Stockholder or to any related or affiliated Persons thereof (other than
payments of salaries, bonuses and benefits to employee Stockholders of the
Company in the ordinary course of business and in accordance with the applicable
rate of salary set forth for each such individual on Schedule 3.16 hereof and
management fees payable to certain Financial Stockholders pursuant to an
agreement as in effect prior to the 1997 Balance Sheet Date), (iii) payments in
respect of the Subordinated Debt other than interest accrued on the 1997 Balance
Sheet and other than interest paid since the 1997 Balance Sheet Date as required
by the terms of the documents governing the Subordinated Debt, (iv) increases in
the rate of compensation or other amounts payable or to become payable to any
Stockholder, (v) increases in the rate of compensation or other amounts payable
or to become payable to any salesman, distributor, independent contractor,
consultant, agent, director or employee of the Company except in the ordinary
course of business consistent with past practice and (vi) payments under or
provisions (including accruals) for any awards, bonuses, stock options, loans,
profit sharing, pension, retirement or welfare plans or similar arrangements for
or on behalf of any Stockholder, Xxxxxxx Xxxxxx or Xxxxxxxxx Xxxxx (or Persons
related by blood or marriage to or controlled, directly or indirectly, by any
such Persons) other than pursuant to the Company's existing plans and agreements
in the ordinary course of business consistent with past practices; provided,
however, that in no event was any such increase in the rate of compensation or
any such payment or provision made with respect to any such employee earning or
paid in excess of $50,000 per annum except as specifically indicated on Schedule
3.16 or 3.19 hereto other than regular annual increases in the ordinary course
of business consistent with past practices.
3.20 Insurance. A complete and accurate list and brief description
of the insurance policies held by or on behalf of the Company that relate to the
Business, the Premises or the Assets is set forth in Schedule 3.20 hereto,
including a complete and accurate list of all deductibles and self insured
levels applicable to such policies. Such policies are in full force and effect
and all premiums due thereon have been paid in full.
3.21 Conduct of Business. The Company is not party to any contract
or agreement restricting it from conducting the Business in any manner or
location which restriction has had or would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect nor is the Company
subject to any court order or decree restricting it from conducting the Business
in any manner or location.
3.22 Intellectual Property. Set forth on Schedule 3.14 and 3.22 is a
complete and accurate list of the Company's patents, registered and common law
trademarks, service marks, tradenames and copyrights, and other similar rights
and applications for and all contracts, agreements, licenses or other rights
licensing, granting rights over or restricting the use of each of the foregoing,
in any case whether
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domestic or foreign (collectively, together with all of the other Assets
referred to in Section 1.01(a)(iv) hereof, the "Intellectual Property"). The
Company owns all right, title and interest in and to all of its Intellectual
Property listed on Schedule 3.22 free and clear of all Liens (except for
Permitted Liens and all restrictions and covenants contained in contracts,
agreements and licenses set forth on Schedule 1.01(a)(vi) hereto relating to the
Intellectual Property). Schedule 3.22 sets forth which of the Intellectual
Property is duly, validly and properly registered with, as applicable, the U.S.
Patent and Trademark Office, the Registrar of Copyrights and applicable foreign
Governmental Authorities in foreign jurisdictions. Except as set forth on
Schedule 3.22, to the knowledge of any of the Management Stockholders, (i) the
Intellectual Property constitutes all such rights necessary to the conduct of
the Business as currently conducted; (ii) no adverse claims have been made
against the Company and no disputes have arisen with respect to the registered
trademarks for "Xxxxx", "Ricki" and "Sugar Blues" listed on Schedule 3.22 and no
adverse claims have been made and no disputes have arisen with respect to the
other Intellectual Property on Schedule 3.22 which has had or would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect; and (iii) the operation of the Company and the Business and the
use by the Company of its Intellectual Property do not involve infringement or
violation of any patent, trademark, service xxxx, tradename, copyright,
agreement, license or similar right, except for infringements and violations
which have not had and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Except as set forth on Schedule
3.22 hereto, the execution and delivery of this Agreement, and the consummation
of the transactions contemplated by this Agreement (including the transfer of
the Assets to the Purchaser), will not affect the continuation, validity or
effectiveness of any Intellectual Property listed on Schedule 3.22 or require
the consent, waiver, approval, authorization of, notice to, or designation,
registration, declaration or filing with, any Governmental Authority, other than
the U.S. Patent and Trademark Office or the U.S. Registrar of Copyrights, or
other Person in respect of any Intellectual Property.
3.23 Use of Names. Except as set forth on Schedule 3.23 hereto, to
the knowledge of any of the Management Stockholders, in the conduct of an
apparel business, there are no other Persons using the names "Miss Xxxxx" or
"Xxxxx" or any variants thereof, and no Person has ever attempted to restrain
the Company from using or contested the Company's right to use, such names,
marks or any variants thereof.
3.24 Power of Attorney; Bank Accounts, Etc. Except as set forth on
Schedule 3.24 hereto and except in favor of the lenders under Debt Documents
evidencing the Chase Indebtedness (in any case, which powers of attorney will
not affect the Purchaser or the Business after the Closing), the Company has not
granted any power of attorney (revocable or irrevocable) to any Person for any
purpose whatsoever. Set forth on Schedule 3.24 hereto (i) is each Lockbox, (ii)
is the name of each institution in which the Company has a bank account,
securities account, safe-deposit box or any other similar account relating to
the Business, and (iii) are all marketable securities and negotiable promissory
notes.
3.25 Books and Records. Except as set forth on Schedules 3.05(a),
3.05(b) and 3.05(c), the books and records of the Company have been maintained
in accordance with good business practices and fairly reflect in all material
respects the basis for the financial position and results of operations of the
Company set forth in the Full Year and Current Financial Statements. All such
books and records have been made available for inspection by the Purchaser and
its representatives.
3.26 Litigation. Except as set forth in Schedule 3.26 hereto, there
are no actions or suits, and there are no investigations or proceedings by or
before any Governmental Authority, pending (for which service has been made) or,
to the knowledge of any of the Management Stockholders, threatened, against or
by the Company, against any of the Assets or, to the knowledge of any of the
Management Stockholders, against or affecting any of the Premises; and, to the
knowledge of any of the Management Stockholders, there are no existing facts
which are reasonably likely to result in any such action, suit, investigation or
proceeding, which if adversely determined, would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
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3.27 Location of Business and Assets. Set forth in Schedule 3.27
hereto is each and every location (specifying state, city and street address)
(each a "Company Location") where the Company (a) has a place of business, (b)
leases real property or (c) owns, leases, maintains or stores any of the Assets,
including Inventory (including on consignment but excluding Inventory in
transit) or Property.
3.28 Insider Interests; Intercompany Transactions. Except as set
forth in Schedules 3.04 and 3.28 hereto, to the knowledge of any of the
Management Stockholders, no present or former affiliate, officer, director or
employee of the Company, or family member of any of the foregoing, or any
corporation, partnership, trust or other entity in which any such individual is
an officer, director, employee, partner or stockholder (a) is presently a party
to any transaction or arrangement with the Company relating to the Business
(other than for services as officers, directors or employees of the Company),
(b) owns any interest in, controls or is an employee, officer, director, partner
or stockholder or agent of, or consultant to any other entity which is a
competitor, supplier or customer or which is a landlord or tenant of the Company
with respect to any aspect of the Business, (c) is indebted or liable to, owns
any interest in, or owns, holds or has guaranteed any obligation or debt of the
Company relating to the Business other than compensation and reimbursement
obligations arising in the normal course of employment, (d) has acquired from or
sold to the Company any assets or properties owned or leased by the Company
relating to the Business or (e) has any right to or interest in the Business or
any of the Assets (other than in such Person's capacity as a stockholder of the
Company or a holder of Subordinated Debt).
3.29 Investment.
(i) The Company has had access to Norton's Annual Report on
Form 10-K for the fiscal year ended November 2, 1996, Norton's Quarterly Reports
on Form 10-Q for the quarters ended February 3, 1997 and May 3, 1997, Norton's
1996 Proxy Statement and Norton's Current Report on Form 8-K dated May 6, 1997
(collectively, the "SEC Documents") and such other information relating to the
business and affairs of Norton which the Company has reasonably requested, and
all additional information which the Company has considered necessary to verify
the accuracy of the information so received. The Company has had the opportunity
to ask questions of and receive answers from Norton concerning the business and
condition (financial and other) of Norton and concerning the terms and
conditions of the transactions contemplated by this Agreement.
(ii) The Company understands and agrees that, subject to
certain restrictions set forth in Section 2.02 hereof, Norton has the option to
issue and deliver to the Company the Earn Out Shares, if any, to be delivered in
connection with any Earn Out Payment pursuant to this Agreement, all in a
transaction exempt from the registration requirements of the Securities Act;
that for such purpose the Purchaser and Norton will rely upon the
representations and warranties of the Company and the Stockholders contained in
this Section 3.29 and in Section 4.01(iv) below; and that such exception from
registration may not be available unless such representations and warranties are
correct. The Company is an "accredited investor" as such term is defined in Rule
501 under the Securities Act.
(iii) The Company understands and agrees that, under existing
rules of the Commission, a holder may be unable to sell its, his or her shares
of Norton Common Stock, if any, except to the extent that its, his or her shares
of Norton Common Stock may be sold (i) pursuant to an effective registration
statement covering such shares pursuant to the Securities Act, (ii) in
transactions exempt from the registration requirements of the Securities Act or
(iii) subject to the restrictions contained in Rule 144 under the Securities Act
("Rule 144").
(iv) The Company is familiar with the provisions of Rule 144
under the Securities Act and the limitations upon the availability and
applicability of such rule.
(v) The Company is a sophisticated investor familiar with the
type of risks inherent in the acquisition of restricted securities such as
shares of Norton Common Stock and the Company's financial position is such that
it can afford to retain its shares of Norton Common Stock for an indefinite
period of time without realizing any direct or indirect cash return on the
investment.
(vi) The Company intends to acquire any shares of Norton
Common Stock
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payable as part of the Earn Out Payment for its own account and not with a view
to, or for sale in connection with, the distribution thereof within the meaning
of the Securities Act; provided, however, that the Company intends to assign its
rights to any Earn Out Shares pursuant to Section 13.10.
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
1.041 Stockholders. Each of the Stockholders, severally but not
jointly, hereby represents and warrants to the Purchaser and Norton, as of the
date hereof and as of the Closing Date, that as to himself or itself:
(i) Qualification. Such Stockholder has full power,
authority and legal right and all necessary approvals, permits, licenses and
authorizations to enter into and consummate the transactions contemplated under
this Agreement and under each other instrument and document required to be
executed and delivered by such Stockholder pursuant hereto.
(ii) Enforceability. This Agreement and, when executed by such
Stockholder, each other instrument or document required to be executed and
delivered by such Stockholder pursuant hereto constitutes, or when executed will
constitute, a valid and legally binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization and similar
laws affecting creditors' rights and to general principles of equity.
(iii) No Legal Bar; Conflicts. Subject to the satisfaction of
Section 9.05 hereof, neither the execution and delivery by such Stockholder of
this Agreement nor any other instrument and document required to be executed and
delivered by such Stockholder pursuant hereto, nor the consummation by such
Stockholder of the transactions contemplated hereby or thereby, violates or
violated, any Law, or will result or resulted in any breach of any of the terms
of or constitute or constituted a default under or will result or resulted in
the termination of or the creation of any Lien pursuant to the terms of or
otherwise affect or affected the continuation, validity or effectiveness of any
material contract or agreement to which such Stockholder (or any affiliate
thereof) is a party or by which such Stockholder (or such affiliate) or any of
such Stockholder's (or such affiliate's) assets or properties is bound. Except
with respect to the HSR Act or as set forth on Schedule 3.03 hereto, no material
consents, approvals or authorizations of, or filings with, any Governmental
Authority are or were required in connection with the execution and delivery by
such Stockholder of this Agreement or any other instrument or document required
to be executed and delivered by such Stockholder pursuant hereto or the
consummation of the transactions contemplated hereby by such Stockholder.
(iv)Investment.
A. Such Stockholder has had access to the SEC Documents and such
other information relating to the business and affairs of Norton which such
Stockholder has reasonably requested, and all additional information which such
Stockholder has considered necessary to verify the accuracy of the information
so received. Such Stockholder has had the opportunity to ask questions of and
receive answers from Norton concerning the business and condition (financial and
other) of Norton and concerning the terms and conditions of the transactions
contemplated by this Agreement.
B. Such Stockholder understands and agrees that, subject to certain
restrictions set forth in Section 2.02 hereof, Norton has the option to issue
and deliver to such Stockholder, as assignee of the Company, the Earn Out
Shares, if any, to be delivered in connection with any Earn Out Payment pursuant
to this Agreement, all in a transaction exempt from the registration
requirements of the Securities Act; that for such purpose the Purchaser and
Norton will rely upon the representations and warranties of the Company and the
Stockholders contained in this Section 4.01(iv) and in Section 3.29 above; and
that such exemption from registration may not be available unless such
representations and warranties are
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correct. Such Stockholder is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act.
C. Such Stockholder understands and agrees that, under existing
rules of the Commission, a holder may be unable to sell its, his or her shares
of Norton Common Stock, if any, except to the extent that its, his or her shares
of Norton Common Stock may be sold (i) pursuant to an effective registration
statement covering such shares pursuant to the Securities Act, (ii) in
transactions exempt from the registration requirements of the Securities Act or
(iii) subject to the restrictions contained in Rule 144.
D. Such Stockholder is familiar with the provisions of Rule 144 and
the limitations upon the availability and applicability of such rule.
E. Such Stockholder is, or has been advised by a financial
representative who is, a sophisticated investor familiar with the type of risks
inherent in the acquisition of restricted securities such as shares of Norton
Common Stock and such Stockholder's financial position is such that it can
afford to retain its shares of Norton Common Stock for an indefinite period of
time without realizing any direct or indirect cash return on the investment.
F. Such Stockholder intends to acquire any shares of Norton Common
Stock payable as part of the Earn Out Payment for its own account and not with a
view to, or for sale in connection with, the distribution thereof within the
meaning of the Securities Act.
1.042 Non-Management Stockholders. Each of the Financial
Stockholders, as to clauses (i) through (vi) below, each of the Other
Stockholders solely with respect to clauses (iv) through (vi) below, in any case
severally but not jointly, hereby represents and warrants to, and covenants and
agrees with, the Purchaser and Norton, as of the date hereof and as of the
Closing Date, that as to himself or itself:
(i) Organization. Such Financial Stockholder is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
(ii) Authority. The execution and delivery by such Financial
Stockholder of this Agreement and each other instrument or document required to
be executed and delivered by such Financial Stockholder pursuant hereto, the
performance by such Financial Stockholder of its covenants and agreements
hereunder and thereunder, and the consummation by such Financial Stockholder of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary action.
(iii) Conflicts. Neither the execution and delivery by such
Financial Stockholder of this Agreement and the other instruments and documents
required to be executed and delivered by such Financial Stockholder pursuant
hereto, nor the consummation by Financial Stockholder of the transactions
contemplated hereby or thereby violates or violated any provision of the
organizational documents of such Financial Stockholder.
(iv) Litigation. To the knowledge of such Stockholder, except
as set forth in Schedule 3.26 hereto, there are no actions or suits, and there
are no investigations or proceedings by or before any Governmental Authority,
pending (for which service has been made) or threatened, against or by the
Company, or against or affecting any of the Premises, any of the Assets owned or
leased by the Company, in any case which has had or would be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect.
(v) Insider Interests; Intercompany Transactions. Except as
set forth in Schedules 3.04 and 3.28 hereto, to the knowledge of such
Stockholder, neither such Stockholder nor any present or former affiliate,
officer, director or employee of such Stockholder, or family member of any of
the foregoing, or any corporation, partnership, trust or other entity in which
any such Person is an officer, director, employee, partner or stockholder (a) is
presently a party to any transaction or arrangement with the Company relating to
the Business (other than for services as officers, directors or employees of the
Company), (b) owns any interest in, controls or is an employee, officer,
director, partner or stockholder or
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agent of, or consultant to any other entity which is a competitor, supplier or
customer or which is a landlord or tenant of the Company with respect to any
aspect of the Business, (c) is indebted or liable to, owns any interest in, or
owns, holds or has guaranteed any obligation or debt of the Company relating to
the Business, (d) has acquired from or sold to the Company any assets or
properties owned or leased by the Company relating to the Business or (e) has
any right to or interest in the Business or in the Assets (other than in such
Stockholders capacity as a stockholder of the Company or a holder of
Subordinated Debt).
(vi) Dividends, Transfers, Increases in Compensation or
Benefits. Except as set forth on Schedule 3.19 hereto, subsequent to the 1997
Balance Sheet Date, there have been no (i) dividends or other distributions or
payments made or declared (whether payable in cash or other property) to such
Stockholder with respect to any class of capital stock of the Company held by
such Non-Management Stockholder, (ii) sales, assignments or other payments or
transfers of any of the Company's assets (including without limitation, cash) to
such Non-Management Stockholder or to any related or affiliated Persons thereof
(other than management fees payable to certain Financial Stockholders pursuant
to an agreement as in effect prior to the 1997 Balance Sheet Date), (iii)
payments in respect of Subordinated Debt to such Non-Management Stockholder
other than interest accrued on the 1997 Balance Sheet and other than interest
paid since the 1997 Balance Sheet Date as required by the terms of the documents
governing the Subordinated Debt, (iv) increases in the compensation or other
amounts payable or to become payable to such Non-Management Stockholder and (v)
payments under or provisions (including accruals) for any awards, bonuses, stock
options, loans, profit sharing, pension, retirement or welfare plans or similar
arrangements for or on behalf of such Non-Management Stockholder (or related or
affiliated Persons thereof).
SECTION V.
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND NORTON
The Purchaser and Norton, jointly and severally, hereby represent
and warrant to the Company and each of the Stockholders, as of the date hereof
and as of the date of the Closing, that:
1.051 Organization. Each of the Purchaser and Norton is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to purchase
the Assets.
1.052 Authority. The execution and delivery of this Agreement and
the Employment Agreements by the Purchaser and/or Norton, as applicable, the
performance by the Purchaser and/or Norton, as applicable, of their respective
covenants and agreements hereunder and thereunder and the consummation by the
Purchaser and Norton of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and this Agreement and the
Employment Agreements constitute valid and legally binding obligations of the
Purchaser and/or Norton, as applicable, enforceable against the Purchaser and/or
Norton, as applicable, in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization and similar
laws affecting creditors' rights and to general principles of equity.
1.053 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement or any of the Employment Agreements by the Purchaser or Norton,
as applicable, nor the consummation of the transactions contemplated hereby or
thereby by the Purchaser or Norton, as applicable, violates any provision of the
certificate of incorporation or by-laws of the Purchaser or Norton,
respectively, or, subject to the satisfaction of Section 10.07, any statute,
ordinance, regulation, order, judgment or decree of any Governmental Authority,
or will result in any breach of any of the terms of or constitute a default
under or result in the termination of or the creation of any Lien pursuant to
the terms of or otherwise affect the continuation, validity or effectiveness of
any contract or agreement to which the Purchaser or Norton is a party or by
which the Purchaser or Norton or any of their respective assets is bound. Except
with respect to the HSR Act, the Securities Act (with respect to the matters set
forth in Section 2.04 hereof) and the listing on the applicable Securities
Exchange of any shares of Norton Common Stock issued as the Earn Out
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Payment, no consents, approvals or authorizations of, or filings with, any
Governmental Authority or any other Person are required in connection with the
execution and delivery of this Agreement or any other instrument or document
required to be executed and delivered by the Purchaser or Norton pursuant
hereto, or the consummation of the transactions contemplated hereby or thereby
by the Purchaser or Norton.
1.054 Norton Common Stock. Any shares of Norton Common Stock issued
pursuant to this Agreement will be duly authorized, validly issued, fully paid
and non-assessable shares of Norton Common Stock.
1.055 SEC Documents. As of their respective dates, the SEC Documents
complied as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. As of their respective dates,
except to the extent that information contained therein has been revised or
superseded by a later filed SEC Document, none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Subsequent to the date of the latest balance sheet included in the
SEC Documents, there has not been any event or condition (other then general
economic conditions or conditions affecting the apparel industry in general)
which has had or would reasonably be likely to have a material adverse effect on
the business, assets, results of operations or condition (financial or other) of
Norton.
SECTION VI.
CONDUCT OF THE BUSINESS
The Company hereby covenants and agrees with the Purchaser and
Norton that, from and after the date of this Agreement and until the Closing,
the Company shall not:
1.061 Operation of the Business. Operate or otherwise conduct its
business other than in the ordinary course of business and in a manner
consistent with past practices, including make a purchase, sale or lease, or
introduce any method of management, accounting or operation other than in the
ordinary course of business and in a manner consistent with past practices.
1.062 Preservation of Organization and Employees. Fail to use all
reasonable efforts to preserve the present business organization of the Company
intact and keep available the services of the present key employees of the
Company.
1.063 Contracts. Enter into any contract, agreement, license, lease
or other document involving the purchase or sale of inventory (or component or
attendant goods or services) other than in the ordinary cause of business and
consistent with past practices, or enter into any other contract, agreement or
other document in which the obligation of any party thereto is in excess of
$50,000.
1.064 Sales or Encumbrances. Sell, assign or otherwise transfer any
of the Assets, other than sales of Inventory in the ordinary course of business.
Permit any Lien on or against any of the Assets, other than Permitted Liens and
other than Liens securing the Chase Indebtedness prior to the Closing.
1.065 Documents, Etc. Fail to furnish to the Purchaser, its counsel,
accountants and authorized representatives, such financial, legal and other
documents, records and information relating to the Company, the Business and the
Assets as the Purchaser or its counsel, accountants or authorized
representatives may from time to time reasonably request.
1.066 Permits. Fail to maintain through the Closing Date all Permits
required for the conduct of the Business or the ownership of the Assets, except
where the failure to maintain any such Permits would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect, or fail to
use its best efforts to obtain on or prior to the Closing Date all required
consents to make
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available to the Purchaser the full benefits of such Permits as of the Closing
Date.
SECTION VII.
ADDITIONAL COVENANTS OF THE
COMPANY AND THE PURCHASER
1.071 Company Acquisition Proposal. The Company and each Stockholder
severally covenants and agrees that, from and after the date of this Agreement
and until the earlier to occur of the Closing and the termination of this
Agreement pursuant to Section 8.02 hereof, no such Person shall directly or
indirectly (a) take any action to solicit, initiate or encourage any Company
Acquisition Proposal or (b) engage in negotiations with, or disclose any
nonpublic information relating to the Company (other than to employees of the
Company in the ordinary course of business), or afford access to the properties,
books or records of the Company to, in any case, any Person that the Company
believes may be considering making, or has made, a Company Acquisition Proposal.
The Company and each Stockholder severally shall promptly notify the Purchaser
after receipt by the Company or such Stockholder of a Company Acquisition
Proposal or any indication known to the Company or any Stockholder that any
Person is considering making a Company Acquisition Proposal or any request for
nonpublic information relating to the Company or for access to the properties,
books or records of the Company by any Person that the Company or such
Stockholder believes may be considering making, or has made, a Company
Acquisition Proposal. For purposes of this Agreement, "Company Acquisition
Proposal" means any offer or proposal for, or any indication of interest in, or
any negotiations or discussions concerning, a merger or other business
combination involving the Company, the acquisition of any equity interest in the
Company (whether from the Company or from any of the Stockholders), or the
acquisition of all or a substantial portion of the assets of the Company, other
than the transactions contemplated by this Agreement and other than sales of
inventory in the ordinary course of Business.
1.072 Publicity. Except as specifically contemplated by this
Agreement, the Company and each Stockholder severally covenants and agrees that
any and all publicity (whether written or oral) and notices to or other
communications with third parties (including any securities analysts or other
public announcements) concerning the Company, the sale of the Assets and other
transactions contemplated by this Agreement shall be subject to the prior
written approval of Norton, which approval shall not be unreasonably withheld or
delayed. Norton and the Purchaser will consult with the Stockholder
Representative prior to issuing any press release relating to this Agreement.
1.073 Further Assurances. Subject to the terms and conditions of
this Agreement, prior to and after the Closing, the Purchaser, Norton, the
Company and each Stockholder at the request of the applicable party severally
shall use its or his respective best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable,
including under applicable Laws and including to obtain all necessary consents
and approvals, to consummate and otherwise give effect to the transactions
contemplated by this Agreement.
1.074 Correspondence, Funds, etc. The Company and each Stockholder
severally covenants and agrees that, subsequent to the Closing, the Company
shall deliver to the Purchaser, promptly after the receipt thereof and in the
form received, all inquiries, correspondence and other items and materials
received by the Company or, such Stockholder, as applicable, from any Person
relating to the Business (other than the Excluded Assets or the Excluded
Liabilities), any of the Assets or the Assumed Liabilities. Without limiting the
generality of the foregoing, subsequent to the Closing, the Company and each
Stockholder severally covenants and agrees to mail on a weekly basis any funds
and any checks, notes, drafts and other instruments for the payment of money,
duly endorsed to the Purchaser, received by the Company or, such Stockholder, as
applicable, comprising payment of any accounts, notes or other Receivables of,
or other amounts owed to, the Company (except with respect to payments made by
the Purchaser or Norton to the Company), or
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otherwise constituting part of the Assets. From and after the Closing, the
Purchaser shall have the right and authority to endorse, without recourse, the
name of the Company on any check, note, draft, instrument or any other evidence
of indebtedness received by the Purchaser on account of any account, note or
other Receivable, or other amounts owed to, the Company, or otherwise
constituting part of the Assets, and the Company shall deliver to the Purchaser
at the Closing such documents (including powers of attorney) as may reasonably
be requested by the Purchaser to permit the Purchaser to negotiate, cash or
otherwise deposit in bank accounts in the name of the Purchaser each such check,
note, draft, instrument or other evidence of indebtedness.
1.075 Discharge of Obligations. (a) The Company and each Stockholder
severally covenants and agrees, subsequent to the Closing, that the Company
shall promptly and timely pay and otherwise fulfill and discharge all
obligations and liabilities of the Company and the Business which are Excluded
Liabilities hereunder, in all cases when due and payable and otherwise prior to
the time at which any of such obligations or liabilities could in any way result
in or give rise to a claim against any of the Assets, the Business or the
Purchaser (or any of its employees, officers, directors, stockholders or other
affiliates), result in any Lien on any of the Assets, or adversely affect the
Purchaser's title to or use of any of the Assets.
(b) The Purchaser and Norton covenant and agree, subsequent to the
Closing, that the Purchaser shall promptly and timely pay and otherwise fulfill
and discharge all Assumed Liabilities, in all cases when due and payable and
otherwise prior to the time at which any of such obligations or liabilities
could in any way result in or give rise to a claim against the Company or any of
the Stockholders.
1.076 Encumbrances. Upon the fulfillment by Norton and the Purchaser
of the obligations under Section 7.14 and the repayment and effectiveness of the
other assignments set forth therein, the Company and each Stockholder severally
covenants and agrees to cause, at the sole expense of the Stockholders (on a
several basis based upon each Stockholder's Pro Rata Percentage), any and all
Liens of any kind whatsoever which affect the Assets or the Business, including
without limitation, those arising under the Debt Documents and all other Liens
which affect the Premises, except for Permitted Liens and any and all
restrictions and covenants in the Contracts relating to the Premises, but
including without limitation, Liens securing the Chase Indebtedness, to be
released, discharged and terminated in full on or prior to the Closing or, at
the Closing, will provide the Purchaser with such termination statements,
releases and other documents, all in recordable form, as are necessary or
reasonably requested by the Purchaser to effect the foregoing.
1.077 Confidential Information. The Company and each Stockholder
severally acknowledges and agrees that after the Closing the Purchaser could be
irreparably damaged if the Company's or any of such Stockholder's confidential
knowledge of or information concerning any aspect of the Business was disclosed
to or utilized on behalf of any Person other than the Purchaser or its
affiliates, and the Company and each Stockholder severally covenants and agrees
that it or he will not, following the Closing, without the prior written consent
of the Purchaser, disclose (or permit to be disclosed) or use in any way any
such confidential knowledge or information other than in the good faith exercise
of their respective rights and remedies hereunder and, as applicable, other than
in the conduct of the Business after the Closing pursuant to the Employment
Agreements, unless (a) compelled to disclose such by judicial or administrative
process or, in the written opinion of its counsel, by other requirements of law,
(b) such is available to the public or to the apparel industry in general
through no fault of the Company or such Stockholder, or (c) such becomes
available to the Company or such Stockholder from a third party who, to the
knowledge of the Company or such Stockholder, is under no confidential or
fiduciary obligation to the Purchaser or the Company (with respect to the
Business) with respect to such knowledge or information. Except in the good
faith exercise of their respective rights and remedies hereunder or under the
Employment Agreements, as applicable, Norton and the Purchaser covenant and
agree that they will not, following the Closing, without the prior written
consent of the applicable Stockholder, disclose (or permit to be disclosed) or
use in any way any confidential knowledge or information concerning such
Stockholder unless any of the circumstances in respect of Norton or the
Purchaser set forth in clauses (a), (b) and (c) above shall exist.
1.078 Employees. (a) As of the Closing Date, the Purchaser shall
offer employment to all those individuals employed as of the Closing Date by the
Company in the Business (all such employees, the "Employees") on such terms and
conditions which, as a whole, are no less favorable than those in effect prior
to the Closing, provided that it is understood and agreed that nothing herein
shall require the Purchaser to maintain any defined benefit pension plan for the
benefit of Employees, and, to the extent the
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Purchaser determines to continue to employ any Employee, to maintain such terms
and conditions through the end of the Purchaser's 1997 fiscal year. As of the
Closing Date the Company shall terminate all of the Employees. For purposes of
the Purchaser's or Norton's employee benefit plans and policies, as applicable,
to the extent permitted or contemplated by such plans and policies, the
Purchaser shall give credit to Employees who accept such offer for their
respective periods of employment with the Company. Subject to the foregoing,
nothing herein, including in any subsection of this Section 7.08, shall be
deemed either to affect or to limit in any way the management prerogatives of
the Purchaser with respect to the Employees who accept such offer of employment
(including without limitation, the right of the Purchaser to modify compensation
or the right of the Purchaser to terminate the employment of any Employee), or
to create or to grant to such Employees any third-party beneficiary rights or
claims or causes of action of any kind or nature against the Purchaser or its
affiliates. Nothing herein shall prevent the Purchaser from terminating any such
Employee at any time for any reason as determined by the Purchaser in its sole
discretion.
(b) Pursuant to Treasury Reg. Section 31.3121(a)(1)-1(b), for
purposes of FICA tax withholding, the Purchaser shall treat all wages (within
the meaning of Section 3121(a) of the Code) paid by the Company in 1997 to each
Employee employed by the Purchaser immediately after the Closing Date as paid by
the Purchaser. Pursuant to Section 5 of Rev. Proc. 84-77, 1984-2 C.B. 753, the
Purchaser and the Company agree that the Form W-2 (Employee's Wage and Tax
Statement) furnished by the Purchaser to each Employee employed by the Purchaser
immediately after the Closing shall include wages and other compensation paid,
and taxes withheld, during 1997 by the Company and the Purchaser. At or prior to
the Closing, the Company shall transfer to the Purchaser a current Form W-4
(Employee's Withholding Allowance Certificate) for each Employee employed by the
Purchaser immediately after the Closing. The Company and the Purchaser agree to
include a statement (with the relevant information described in Section 5 of
Rev. Proc. 84-77) with their respective Forms 941 (Employer's Quarterly Tax
Return) for the calendar quarter during which the Closing occurs, apprising the
Internal Revenue Service of the foregoing arrangements.
(c) The Company and the Stockholders severally covenant and agree
that the Company shall (i) as of the Closing Date, fully vest all Employees in
their accrued benefits under the Miss Xxxxx, Inc. Pension Plan, (ii) cooperate
with the Purchaser and Norton in connection with roll-overs, if any, of accrued
benefits under the Miss Xxxxx, Inc. Pension Plan to employee benefit plans, if
any, maintained or to be maintained by the Purchaser or Norton, (iii) on or as
soon as practicable after the Closing Date issue a Notice of Intent to Terminate
(the "NIT") the Miss Xxxxx, Inc. Pension Plan as of 60 days after the date of
the NIT in accordance with applicable law, including but not limited to Section
4041 of ERISA and the regulations thereunder, (iv) after the Closing Date, take
all necessary actions, in accordance with the terms of the Miss Xxxxx, Inc.
Pension Plan and all applicable Law, to effectuate such termination of the Miss
Xxxxx, Inc. Pension Plan, all without liability to the Purchaser or Norton, and
(v) as soon as reasonably practicable after the Closing Date, cause the trustee
of the Miss Xxxxx, Inc. Employee Profit Sharing Plan to transfer all account
balances (whether or not vested) of Employees in cash or in kind or as evidenced
by a loan document which is in accordance with the terms of the Miss Xxxxx, Inc.
Profit Sharing Plan, as determined in the sole discretion of the Purchaser or
Norton (except with respect to any loans referenced above which shall be
transferred in kind), to the profit sharing plan to be established by the
Purchaser pursuant to Section 7.08(d) (or, if no such plan is established, to a
tax-qualified defined contribution plan of Purchaser or Norton in which such
Employees are eligible to participate).
(d) As soon as reasonably practicable following the Closing Date, to
the extent it legally is able to do so, the Purchaser shall adopt, and shall use
its best efforts to continue in effect for the lesser of (i) four full fiscal
years or (ii) for so long as any Management Stockholder remains employed by the
Purchaser or any successor, a tax-qualified profit sharing plan applicable to
its employees, which profit sharing plan shall (i) contain terms and conditions
substantially similar to those provided pursuant to the Miss Xxxxx, Inc. Profit
Sharing Plan and such other terms and conditions as shall be reasonably
acceptable to the Purchaser and the Management Stockholders and (ii) as soon as
reasonably practicable after its establishment be submitted to the Internal
Revenue Service for a determination letter regarding its tax-qualified status
(unless such plan is a standardized prototype plan for which no further
determination letter is required). Purchaser or Norton shall cause the trustee
of such profit sharing plan (or such other tax qualified defined contribution
plan of Purchaser or Norton) to accept the transfer of account balances from the
Miss Xxxxx, Inc. Employees Profit Sharing Plan as described in Section 7.08(c).
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1.079 Insurance Policies; Consents. (a) The Company and the
Stockholders severally covenant and agree that the Company shall promptly after
the date hereof apply for or otherwise seek and use its respective best efforts
to obtain, at the sole expense of the Company, all necessary amendments,
modifications, consents, approvals and endorsements (collectively, the
"Endorsements"), effective at the Closing, to insurance policies covering the
Company and covering occurrences which have taken place within a period of six
years prior to the Closing (other than in respect of product liability claims),
all in order to add the Purchaser and Norton as a named insured thereon and
thereunder and/or, as specified by the Purchaser, to name the Purchaser and
Norton as an additional insured with an indemnity thereunder.
(b) To the extent that any consent or approval relating to any
Contract requiring consent or approval as disclosed on Schedule 3.03 hereto or
any other consent or approval necessary to assign to the Purchaser any other
Contract or other Asset is not obtained on or before the Closing Date (all such
Contracts or other Assets for which such consent or approval is not obtained on
or before the Closing Date are hereinafter referred to collectively as the
"Designated Agreements"), and, without limiting the Purchaser's rights under
Section 10.06, the Closing occurs, the Company covenants and agrees to use its
best efforts to obtain each such consent and approval that the Purchaser
reasonably requests the Company to obtain, in form and substance reasonably
satisfactory to the Purchaser, promptly following the Closing Date. The Company
covenants and agrees, at the request of the Purchaser, to provide to and enforce
on behalf of the Purchaser all of the Company's rights, benefits, entitlements
and interest in, to and under each Designated Agreement and the Purchaser agrees
to provide the Company with all personnel and other support reasonably necessary
therefor and, subject to Sections 11.01 and 11.02, the Purchaser shall reimburse
the Company for all obligations and liabilities paid by the Company at the
Purchaser's request and arising after the Closing Date under each such
Designated Agreement for which it receives the benefit as provided above;
provided, however, that in the event any such third party refuses or is
otherwise unwilling to consent to an assignment of any Designated Agreement on
terms acceptable to the Purchaser, then upon notice from the Purchaser to the
Company of any such event, such obligation of the Company to obtain such consent
shall cease, and in such event, nothing contained herein shall prohibit or be
deemed to prohibit the Purchaser from entering into a new agreement with such
third party.
7.10 HSR Filing. The parties hereto recognize that a pre-merger notification
must be filed with the Federal Trade Commission (the "FTC") and the Department
of Justice (the "DOJ") pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and the Company and the Stockholders, on
the one hand, and the Purchaser, on the other hand, hereby agree to fully
cooperate with each other in all reasonable respects to supply and file the
required documentation. The parties hereto agree that, promptly following the
execution of this Agreement by all parties (but in no event later than five (5)
business days following such execution), the Purchaser and the Company will
prepare and file with the FTC and the DOJ all required documents under the HSR
Act, including a complete notification and report form, will seek early
termination of the HSR Act waiting period in connection with such filing, will
fully cooperate with each other in connection with the preparation and filing of
such documents, and will use their respective best efforts to promptly comply
with all formal or informal requests for additional information by the FTC or
the DOJ in respect of such filing.
7.11 Taxes and Tax Returns. After the Closing, the Company and each
Stockholder severally covenants and agrees that the Company shall file or cause
to be filed on a timely basis any and all Tax Returns (including without
limitation, final sales and employment Tax Returns and any real property
transfer Tax Returns required to be filed on account of the assignment to the
Purchaser by the Company of any leases) required to be filed in respect of any
and all periods, including up to and including the Closing Date, and shall pay
on a timely basis all Taxes due and payable with respect to the periods covered
by all such Tax Returns.
7.12 Effective Time. The parties hereto understand, intend and agree
that, notwithstanding the actual Closing Date, the closing of the transactions
contemplated hereby shall be deemed to occur on the opening of business on date
hereof.
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7.13 Operation of the Purchaser After the Closing. (1) From the
Closing Date and continuing until November 7, 1999, Norton and the Purchaser,
covenant and agree, and the Company and the Stockholders acknowledge and
understand as follows:
(a) As between the Purchaser and Norton, the Purchaser (and not
Norton) will conduct the business in which the Company is currently engaged and
all businesses developed by the Purchaser after the Closing Date, and Norton
(and not the Purchaser, without the consent of Xxxxxxx and Xxxxxxxx to the
extent they continue in the employ of the Purchaser) will conduct the business
in which Norton is currently engaged. Accordingly, for purposes of calculating
EBITDA, all revenues and expenses arising from the conduct of business by the
Purchaser after the Closing, including the use of the Intellectual Property
currently used by the Company and constituting part of the Assets or developed
by the Purchaser subsequent to the Closing Date, will belong to and be the
responsibility of the Purchaser and will be accounted for in determining EBITDA.
(b) Xxxxxxx and Xxxxxxxx, for so long as each of them is employed by
the Purchaser and subject to the terms and conditions of their respective
Employment Agreements, (i) shall serve as the Chief Executive Officer and
President, respectively, of the Purchaser and (ii) subject to the ultimate
control of the Chairman of the Board of Norton and/or the Purchaser (presently
Xxxxxxx Xxxxxxxxx), the Vice Chairman of the Board of Norton and/or the
Purchaser (presently Xxxxx Xxxxxxxxx), and the Board of Directors of the
Purchaser, Xxxxxxx and Zwilling shall have day-to-day management control over
the Purchaser's business and operations, including without limitation, sales
practices, pricing of merchandise, inventory matters, xxxx-down allowances,
customer discounts, and the hiring, firing and compensation of other employees
of the Purchaser, all with authority and discretion consistent with past
practices of the Company. In the event that either Xxxxxxx or Zwilling are not
serving in the foregoing capacities of the Purchaser, for whatever reason,
including as a result of a termination under their respective Employment
Agreement, subject to the Purchaser's good faith business discretion,
replacement(s) shall be selected by the Purchaser (including from Norton's or
Purchaser's management ranks) and, for purposes of the calculation of EBITDA,
such replacement(s)' compensation and benefits shall not exceed the amounts paid
or payable pursuant to Xxxxxxx'x or Xxxxxxxx'x respective Employment Agreement.
(c) Subject to availability on commercially reasonable terms and
subject to the terms and conditions set forth in any credit documentation
entered into in good faith, Norton shall use its best efforts to make available
to the Purchaser from bank or other financial institution sources working
capital (including but not limited to letters of credit) at levels sufficient to
effectuate the Purchaser's business plans developed jointly and in good faith by
Norton, on the one hand, and Xxxxxxx and Xxxxxxxx (for so long has they are
employed by the Purchaser), on the other hand.
(d) Norton shall not sell the capital stock of the Purchaser
(including by merger) and the Purchaser shall not sell or transfer all or
substantially all of its assets unless the purchaser or transferee thereof shall
assume the Purchaser's obligations under, and in accordance with, Section 2.02
hereof and this Section 7.13. It being understood and agreed by the parties
hereto that in the event of any such sale or transfer, notwithstanding Section
2.02 hereof, any Earn Out Payment shall be payable by the Purchaser (or in the
case of a sale or transfer of all or substantially all of the assets of the
Purchaser, the transferee thereof) in cash in immediately available funds unless
otherwise agreed by the Stockholders Representative and the Management
Stockholders.
(e) Without limiting the provisions of Section 2.02(b) hereof, the
Stockholders Representative and the Management Stockholders shall, through the
Earn Out Payment Date, if any, have reasonable access to the accounting books
and records and personnel of the Purchaser, including the Purchaser's regularly
prepared budget and operations reports. The Company and each Stockholder
severally acknowledges and agrees that Norton and the Purchaser could be
irreparably damaged if any of the information obtained by the Stockholders
Representative, the Company or such Stockholder as a result of the foregoing
access or as a result of the disclosure of the information provided pursuant to
Section 2.02(b) hereof were disclosed (other than to each other and their
respective advisors) or used in any way (other than to assess the calculation of
EBITDA), and the Company and each Stockholders severally
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covenants and agrees that it or he will not, without the prior written consent
of Norton, disclose (or permit to be disclosed) (other than to each other and
their respective advisors) or use in any way (other than to assess the
calculation of EBITDA) any such information unless (i) compelled to disclose
such by a judicial or administrative process or, in the written opinion of their
counsel, by any requirement of law, (ii) such is available to the public or the
apparel industry in general through no fault of the Company, the Stockholder
Representative or such Stockholder, or (iii) such becomes available to the
Company, the Stockholder Representative or Stockholder from a third-party who is
under no confidential or fiduciary obligation to the Purchaser or Norton with
respect to such information.
(2) The Company and each of the Stockholders acknowledge and agree
that neither Xxxxxxx nor Xxxxxxxx shall have any liability for Damages or
otherwise to the Company or such Stockholder related to or arising out of their
conduct of Purchaser's business after the Closing.
7.14 Chase Indebtedness. Norton and the Purchaser covenant and agree
with the Company, at the Closing, to arrange for the repayment of then
outstanding indebtedness for borrowed money constituting Chase Indebtedness and
to arrange for the issuance of letters of credit or other arrangements to
support then outstanding letters of credit constituting Chase Indebtedness, on
terms and conditions acceptable to the Company, The Chase Manhattan Bank, N.A.
and the Purchaser, subject to the terms and conditions of the commitment letter
dated August 20, 1997 from NationsBanc Commercial Corporation and The CIT
Group/Commercial Services Inc. to Norton and the Purchaser heretofore delivered
to the Company.
SECTION VIII.
CLOSING
1.081 Time and Place of Closing. Subject to the terms and conditions hereof, the
closing of the purchase and sale of the Assets as set forth herein (the
"Closing") shall be held at 10:00 A.M. at the offices of Xxxxxx & Xxxxxx, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the fifth business day after the later
of the termination or expiration of the applicable waiting period (and any
extension thereof) under the HSR Act or the satisfaction or waiver of all other
conditions precedent set forth in Sections IX and X hereof, or such other time,
date and place as the parties shall mutually agree (such date upon which the
Closing occurs is herein referred to as the "Closing Date").
1.082 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by written agreement of the
Company and the Purchaser or at any time after November 15, 1997 by written
notice from the Company or the Purchaser to the other;
(b) at any time before the Closing, by the Purchaser or the Company
in writing in the event that any Governmental Authority shall have issued an
order, decree, 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 shall have become final and nonappealable;
(c) at any time after October 15, 1997 (the "Termination Date"), by
the Purchaser or the Company in writing, if the transactions contemplated by
this Agreement have not been consummated on or before the Termination Date and
such terminating party is not (and, in the case of the Company, none of the
Stockholders is) then in material breach of this Agreement; provided that the
Termination Date shall be extended, but not beyond November 15, 1997, in the
event that the Company or the Purchaser shall receive a second request for
information under the HSR Act;
(d) at any time before the Closing, by the Purchaser in writing
pursuant to Section 10.03 hereof; and
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(e) at any time before the Closing, by either the Purchaser or the
Company in writing if such terminating party (and, in the case of the Company,
each of the Stockholders) is not then in material breach of this Agreement and
the nonterminating party (and, in the case of the Company, any of the
Stockholders) shall (i) fail to timely perform its or his agreements contained
herein required to be performed on or prior to the Closing Date and such failure
shall have had or would be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect or (ii) subject to Section 10.03 hereof,
breach any of its or his representations or warranties contained herein, which
breach shall have had or would be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.
1.083 Effect on Obligations. Termination of this Agreement pursuant
to Section 8.02 shall terminate all obligations and liabilities of the parties
to each other hereunder, except for the rights and obligations under Sections
8.04, XII, 13.03 and 13.04 and, provided, however, that, notwithstanding the
foregoing, in the event of a termination of this Agreement pursuant to clauses
(c) or (e) of Section 8.02 above, Norton in the event the terminating party is
the Company, or the Company, in the event the terminating party is the
Purchaser, agrees promptly to reimburse the Company or Norton, as applicable,
for all reasonable out-of-pocket costs and expenses incurred by such terminating
party in connection with the transactions contemplated hereby (including all
reasonable legal fees and expenses).
1.084 Return of Documentation. Following a termination in accordance
with Section 8.02, the Purchaser and Norton shall use their respective best
efforts to return all agreements, documents, contracts, instruments and other
books and records of the Company provided by the Company to the Purchaser or any
representatives of the Purchaser in connection with the transactions
contemplated by this Agreement and the Company and each of the Stockholders
shall use their respective best efforts to return all agreements, documents,
contracts, instruments and other books and records of the Purchaser and Norton
provided by the Purchaser or any representative of the Purchaser in connection
with the transactions contemplated by this Agreement.
1.085 Delivery of Assets. Without limiting Section 10.08 hereof, the
Company and each Stockholder severally covenants and agrees that delivery of the
Assets shall be made by the Company to the Purchaser at the Closing by
delivering such bills of sale, endorsements, assignments and other good and
sufficient instruments of sale, assignment, conveyance and transfer, and such
powers of attorney, as shall be effective fully to vest in the Purchaser good
and valid title to, and the right to full custody and control of, all of the
Assets, free and clear of all Liens (except for Permitted Liens and restrictions
and covenants in the Contracts), in each case in form and substance reasonably
satisfactory to the Purchaser and its counsel.
1.086 Assumption of Liabilities. Without limiting Section 9.06
hereof, at the Closing, the Purchaser shall deliver to the Company such
instruments of assumption as shall be sufficient fully to effect the assumption
by the Purchaser of the Assumed Liabilities in form and substance reasonably
satisfactory to the Company and its counsel.
1.087 Contracts and Books. At the Closing, the Company and each
Stockholder severally covenants and agrees that the Company shall deliver to the
Purchaser the Contracts and the books and records of the Business constituting a
part of the Assets, excluding those constituting Excluded Assets.
1.088 Additional Steps. At the Closing, the Company and each
Stockholder severally covenants and agrees that it or he shall take all steps
required to put the Purchaser in actual possession and control of all of the
Assets.
1.089 Change of Name. On or prior to the Closing Date, the Company
and each Stockholder severally covenants and agrees that the Company shall take
all necessary steps to deliver, and shall execute and deliver, to the Purchaser
(including an amendment to the Company certificate of incorporation in form for
filing with the Secretary of State of Delaware and such other documents in form
for filing in all states where the Company is qualified or licensed to do
business as a foreign corporation) all documents necessary to change the
Company's corporate name to a name other than "Miss Xxxxx" or "Xxxxx" (or any
variant or derivation thereof) in the Company's state of incorporation and in
all other states in which the Company is qualified or licensed to do business as
a foreign corporation, and to terminate any
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and all d/b/a's with respect to such name, in each case in form and substance
reasonably satisfactory to the Purchaser. If requested by the Purchaser, on and
after the Closing Date, the Company and each Stockholder severally covenants and
agrees that the Company shall execute and deliver to the Purchaser such other
consents, waivers, approvals and other documents and shall take such other
actions as shall be necessary to permit the Purchaser or any designee to use the
names "Miss Xxxxx" and "Xxxxx" (and any variant or derivation thereof),
including as its corporate name.
SECTION IX.
CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE
The obligations of the Company to sell the Assets and otherwise
consummate the transactions contemplated by this Agreement at the Closing are
subject to the following conditions precedent, any or all of which, other than
Section 9.09 (which may be waived only in the sole discretion of the Management
Stockholders), may be waived by the Company in its sole discretion, and each of
which the Purchaser hereby agrees to use its best efforts (and Norton hereby
agrees to cause the Purchaser to use its best efforts) to satisfy at or prior to
the Closing:
1.091 Opinion of Counsel. The Company shall have received an opinion
of Xxxxxx & Xxxxxx, counsel for the Purchaser and Norton, delivered to the
Company and the Stockholders pursuant to the instructions of the Purchaser and
Norton dated the Closing Date, in form and substance reasonably satisfactory to
the Company and its counsel, covering the matters set forth in Sections 5.01,
5.02, 5.03 and 5.04.
1.092 No Litigation. No action, suit or proceeding against the
Company, any Stockholder, the Purchaser or Norton relating to the consummation
of any of the transactions contemplated by this Agreement or any governmental
action seeking to delay or enjoin any such transactions shall be pending. No
action, suit or proceeding against Norton shall be pending, which if determined
adversely to Norton could reasonably be expected to have a material adverse
effect on the business, assets, results of operations or condition (financial or
other) of Norton.
1.093 Representations and Warranties. The representations and
warranties made by the Purchaser and Norton herein shall be correct at and as of
the date of the Closing with the same force and effect as though such
representations and warranties had been made at and as of the date of the
Closing (except to the extent that any of such representations and warranties
are, by their express terms, made as of another date), and on the date of the
Closing, the Purchaser and Norton shall deliver to the Company a certificate
dated the date of the Closing to such effect. All the terms, covenants and
conditions of this Agreement to be complied with and performed by the Purchaser
and Norton on or before the date of the Closing shall have been duly complied
with and performed, and on the date of the Closing, the Purchaser and Norton
shall deliver to the Company a certificate dated the date of the Closing to such
effect.
1.094 Other Certificates. The Company shall have received such
additional certificates, instruments and other documents, in form and substance
reasonably satisfactory to it and its counsel, as it shall have reasonably
requested in connection with the transactions contemplated hereby.
1.095 Xxxx-Xxxxx-Xxxxxx. All waiting periods applicable to the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated.
1.096 Instruments of Assumption of the Assumed Liabilities. The
Purchaser shall have delivered to the Company the instruments required to be
delivered by the Purchaser pursuant to Section 8.06 hereof.
1.097 Subordinated Pledge. Norton shall have delivered to the
Company a subordinated pledge agreement pursuant to which Norton will grant to
the Company a subordinated security interest in the capital stock of the
Purchaser to secure any Earn Out Payment payable in cash in
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accordance with the terms and conditions of Section 2.02 hereof, which
subordinated pledge agreement will contain such other terms and conditions as
are reasonably satisfactory to Norton and the Company. It is understood and
agreed by the Company and the Stockholders that Norton's and the Purchaser's
lenders will have a first priority security interest in the capital stock of the
Purchaser and that the Company will be required to enter into a subordination
and intercreditor agreement with such lenders, which among other items, will
prohibit the Company from exercising its rights as pledgee under the
subordinated pledge agreement without the consent of such lenders.
1.098 Additional Closing Purchase Price. The Purchaser and the
Company shall have agreed on an amount to be payable to the Company on the
Closing Date, which amount shall constitute a portion of the Closing Purchase
Price as specified in Section 2.01 and which amount shall equal a mutually
agreed upon amount of accrued and unpaid Income Taxes of the Company as of the
Closing Date.
1.099 Employment Agreements. The Purchaser shall not have terminated
either of the Employment Agreements with the Management Stockholders.
SECTION X.
CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE
The obligation of the Purchaser to purchase the Assets and otherwise
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be waived
by the Purchaser in its sole discretion, and each of which the Company and each
Stockholder severally hereby agree to use its or his respective best efforts to
satisfy at or prior to the Closing:
1.101 Opinion of Counsel. The Purchaser and Norton shall have received (a) an
opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, counsel for the Company and
the Financial Stockholders and Xxxxxxxxx Xxxxxxx, delivered to the Purchaser and
Norton pursuant to the instructions of the Company and the Financial
Stockholders dated the Closing Date, in form and substance reasonably
satisfactory to the Purchaser and its counsel, covering the matters set forth in
Sections 3.01, 3.02 and 3.03 and Sections 4.01 (i), (ii) and (iii) (as to the
Financial Stockholders and Xxxxxxxxx Xxxxxxx) and 4.02 (i), (ii) and (iii) and
(b) an opinion of Xxxxxx, Xxxxx & Bockius LLP, counsel for the Management
Stockholders and Xxxxxx Xxxxxxxxx, delivered to the Purchaser and Norton
pursuant to the instructions of the Management Stockholders and Other
Stockholders dated the Closing Date, in form and substance reasonably
satisfactory to the Purchaser and its counsel, covering the matters set forth in
Sections 4.01(i) and (ii) (as to the Management Stockholders and Xxxxxx
Xxxxxxxxx).
1.102 No Litigation. No action, suit or proceeding against the
Company, any Stockholder, Norton or the Purchaser relating to the consummation
of any of the transactions contemplated by this Agreement nor any governmental
action seeking to delay or enjoin any such transactions shall be pending.
1.103 Representations and Warranties. (a) Subject to the next two
sentences, the representations and warranties made by the Company and each
Stockholder herein shall be correct at and as of the date of the Closing with
the same force and effect as though such representations and warranties had been
made at and as of the date of the Closing (except to the extent that any of such
representations and warranties are, by their express terms, made as of another
date), and on the date of the Closing, the Company and each Stockholder shall
deliver to the Purchaser and Norton a certificate dated the date of the Closing
to such effect. The Company and the Stockholders shall be entitled to notify the
Purchaser on or before the date which is one business day prior to the Closing
Date, which notification (each, an "Update Notice") may disclose the occurrence
of events which have not occurred on or prior to the date hereof, the occurrence
of which does or may result in a breach of the Company's and the Stockholders'
representations and warranties contained in Sections III and IV hereof. Upon
delivery of the Update Notice, the applicable representations and warranties
(and any applicable Schedules), for all purposes of this Agreement, shall be
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deemed to be amended consistent with the such Update Notice. In the event that
the Purchaser receives an Update Notice which sets forth the occurrence of
events which have had or would be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect, the Purchaser shall have no
obligation to complete the Closing of the transactions contemplated by this
Agreement and may terminate this Agreement pursuant to Section 8.02(d) above.
(b) All the terms, covenants and conditions of this Agreement to be
complied with and performed by the Company and each Stockholder on or before the
date of the Closing shall have been duly complied with and performed, and on the
date of the Closing, the Company and each Stockholder shall deliver to the
Purchaser and Norton a certificate dated the date of the Closing to such effect.
1.104 Other Certificates. The Purchaser shall have received such
other certificates, instruments and other documents, in form and substance
reasonably satisfactory to the Purchaser and counsel for the Purchaser, as it
shall have reasonably requested in connection with the transactions contemplated
hereby.
1.105 Sale of All the Assets. All of the Assets shall be sold and
delivered to the Purchaser (or its designee) at the Closing free and clear of
all Liens (other than Permitted Liens) as provided in Section 7.06.
1.106 Third Party Consents. The Purchaser shall have received
evidence satisfactory to the Purchaser of receipt by the Company of the
consents, approvals and authorizations of Governmental Authorities and of third
parties to the consummation of the transactions contemplated hereby as set forth
with the designation of an asterisk on Schedule 1.01(a)(vi) or Schedule 3.03
hereto, which consents shall not provide for the acceleration of any liabilities
or any other detriment to the Purchaser or any of the Assets and shall be in
form and substance reasonably satisfactory to the Purchaser.
1.107 Xxxx-Xxxxx-Xxxxxx. All waiting periods applicable to the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated.
1.108 Instruments of Conveyance of the Assets, Power of Attorney,
Etc. (a) The Company shall have delivered to the Purchaser, at the Company's
sole expense (i) the documents described in Section 8.05 (including Intellectual
Property assignments in form for filing with the U.S. Patent and Trademark
Office, the U.S. Registrar of Copyrights and in appropriate foreign
jurisdictions where Intellectual Property is registered) and (ii) executed
releases and other documents necessary to comply with Section 7.06 (including
without limitation, all necessary UCC-3 Termination Statements and all releases
in respect of Liens on Intellectual Property in form for filing with the U.S.
Patent and Trademark Office, the Registrar of Copyrights and all appropriate
foreign authorities).
(b) The Company shall have delivered to the Purchaser the documents
(including powers of attorney and the Endorsements) required to be delivered by
Sections 7.04 and 7.09(a).
1.109 Regulation S-X and Consent of Price Waterhouse LLP. Norton and
its independent public accountants shall have received from the Company copies
of the Full Year Financial Statements, and the Current Financial Statements and
any later interim period financial statements, in each case together with
comparative financial statements for the corresponding period in the prior
fiscal year, all presented in conformity with the requirements of Regulation S-X
of the Commission under the Securities Act. In addition, Norton shall have
received a letter from Price Waterhouse LLP ("PW") stating that PW understands
and agrees that the Full Year Financial Statements and the related audit reports
of PW will be included in Exchange Act and Securities Act registration
statements, reports and other filings by Norton and that PW will, promptly
following the request of Norton, deliver to Norton written consents to such
inclusion and originally executed copies of such audit reports, all for
inclusion in such registration statements, reports and other filings.
10.10 Additional Closing Purchase Price. The Purchaser and the Company shall
have agreed on an amount to be payable to the Company on the Closing Date, which
amount shall constitute a portion of the
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Closing Purchase Price as specified in Section 2.01 and which amount shall equal
a mutually agreed upon amount of accrued and unpaid Income Taxes of the Company
as of the Closing Date.
10.11 Employment Agreements. Neither of the Management Stockholders
shall have terminated their respective Employment Agreement.
SECTION XI.
INDEMNIFICATION
1.111 Indemnification by the Stockholders. (a) From and after the Closing Date,
each Stockholder, severally on the basis of such Stockholder's Pro Rata
Percentage and not jointly, shall indemnify and hold harmless the Purchaser,
Norton and each of their respective directors (collectively, the "Purchaser
Indemnified Parties") from and against any and all Damages which are sustained
or incurred by any of the Purchaser Indemnified Parties in connection with or by
reason of (i) the breach by the Company or such Stockholder of any of its or his
respective covenants, agreements or obligations herein, or under any of the
other certificates, agreements or other documents entered into and delivered by
the Company or such Stockholder pursuant hereto (other than a breach of
representations and warranties herein or in other certificates, agreements or
documents entered into and pursuant hereto, all of which breaches are the
subject of clauses (ii), (iii) and (iv) below, and other than a breach of the
covenants and agreements of such Stockholder in Sections 7.02, 7.04 and 7.07
hereof, all of which breaches are the subject of subsection (c) below), (ii) the
breach of any of the representations or warranties made by such Stockholder in
any of the First Listed Sections (including in any Schedule hereto with respect
to any of the First Listed Sections) or in any certificate, agreement or other
document entered into and delivered pursuant hereto by the Company or such
Stockholder with respect to any of the representations and warranties set forth
in the First Listed Sections, (iii) the breach of any of the representations or
warranties made by such Stockholder in the Second Listed Section (including in
any Schedule hereto with respect to the Second Listed Section) or in any
certificate, agreement or other document entered into and delivered pursuant
hereto by the Company or such Stockholder with respect to any of the
representations and warranties set forth in the Second Listed Section (iv) the
breach of any of the representation or warranties made by such Stockholder in
the Third Listed Sections (including in any Schedule hereto with respect to the
Third Listed Sections) or in any certificate, agreement or any document entered
into and delivered pursuant hereto by the Company or such Stockholder with
respect to any of the representations and warranties set forth in the Third
Listed Sections, or (v) any and all Excluded Liabilities. Subject to the
additional limitations set forth in this Agreement (including, without
limitation, Section 11.06), it is understood and agreed that the obligation of
any Stockholder to make any indemnification payment pursuant to this Section
11.01 is limited to such Stockholder's Pro Rata Percentage of the Damages which
are sustained or incurred by any of the Purchaser Indemnified Parties in
connection with or by reason of the matters referred to in clauses (i) through
(v) of this Section 11.01.
(b) From and after the Closing Date, each of the Management
Stockholders, severally on the basis of such Management Stockholder's Pro Rata
Percentage and not jointly, shall indemnify and hold harmless each of the
Purchaser Indemnified Parties from and against any and all Damages which are
sustained or incurred by any of the Purchaser Indemnified Parties in connection
with or by reason of the breach of any of the representations and warranties
made by such Management Stockholder in the Non-Listed Sections (including in any
Schedule thereto) or in any certificate, agreement or other document entered
into and delivered pursuant hereto by the Company or such Management Stockholder
with respect to the representations and warranties made by the Management
Stockholders in the Non-Listed Sections.
(c) From and after the Closing Date, each of the Stockholders,
severally but not jointly, as to such Stockholder only, shall indemnify and hold
harmless each of the Purchaser Indemnified Parties from and against any and all
Damages which are sustained or incurred by any of the Purchaser Indemnified
Parties in connection with or by reason of (i) the breach of any of the
representations and warranties made by such
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Stockholder in Section IV hereof (including in any Schedule thereto) or in any
certificate, agreement or other document entered into and delivered pursuant
hereto by such Stockholder with respect to such representations and warranties
or (ii) the breach of any of such Stockholder's covenants, agreements or
obligations under Sections 7.02, 7.04 or 7.07 hereof.
1.112 Indemnification by the Purchaser. From and after the Closing
Date, Norton and the Purchaser shall, jointly and severally, indemnify and hold
harmless the Company, each Stockholder and, if applicable, each of their
respective directors (collectively, the "Seller Indemnified Parties") from and
against any and all Damages sustained or incurred by any of the Seller
Indemnified Parties in connection with or by reason of (a) the breach by the
Purchaser or Norton of any of their respective covenants, agreements or
obligations hereof, or under any of the other certificates, agreements or other
documents delivered by the Purchaser or Norton in connection herewith, in any
case, other than a breach of representations and warranties herein or in other
certificates, agreements or documents delivered in connection herewith all of
which breaches are the subject of clause (b) below), (b) the breach of any of
the representations or warranties made by the Purchaser or Norton herein or in
any certificate, agreement or other document delivered pursuant hereto by the
Purchaser or Norton or (c) any and all Assumed Liabilities.
1.113 Procedure for Indemnification. (a) In the event that any
Seller Indemnified Party, on the one hand, or any Purchaser Indemnified Party,
on the other hand, shall sustain or incur any Damages in respect of which
indemnity may be sought by such party pursuant to this Section XI or Section XII
hereof (each, an "Indemnification Matter"), the party indemnified hereunder (the
"Indemnitee") shall notify the parties providing indemnification (collectively,
the "Indemnitor") by sending written notice to the Indemnitor stating a
reasonable detail the basis for the Indemnification Matter (each, an "Indemnity
Notice"). In the case of an Indemnification Matter involving a third party
claim, which, if successful, could result in any liability under this Section XI
or Section XII hereof, an Indemnity Notice shall be given as soon as practicable
following the discovery by an Indemnitee of the filing or assertion of any claim
against the Indemnitee stating the nature and basis of such claim; provided,
however, that any delay or failure to notify any Indemnitor of any claim shall
not relieve it from any liability except to the extent that the defense of such
action is materially prejudiced or materially adversely affected by such delay
or failure to notify.
(b) In the case of third party claims, the Indemnitor shall have the
right (i) to conduct any proceedings or negotiations in connection therewith and
necessary or appropriate to defend the Indemnitee, (ii) to take all other
reasonable steps or proceedings to settle or defend any such claims, provided
that the Indemnitor shall not settle any such claim which is solely for money
damages without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld or delayed, and shall not settle any other such
third party claim without the prior written consent of the Indemnitee (including
without limitation, if such claim seeks or such settlement imposes equitable
remedies or injunctive relief on the Indemnitee), and (iii) to employ counsel
designated by the Indemnitor (which counsel shall not be an employee of the
Indemnitor or any affiliate thereof) and reasonably satisfactory to the
Indemnitee to contest any such claim or liability in the name of the Indemnitee
or otherwise. The parties hereto agree that the respective counsel to the
Financial Stockholders, the Management Stockholders and the Other Stockholders,
and the Purchaser and Norton are satisfactory for purposes of clause (iii) of
the preceding sentence. The Indemnitor shall, within 20 days of receipt of an
Indemnity Notice of such claim (the "Indemnity Notice Period"), give written
notice to the Indemnitee of its intention to assume the defense of such claim.
If defendants in any action include any Indemnitee and any Indemnitor and any
Indemnitee shall have been advised by its counsel that there may be legal
defenses available to such Indemnitee which are different from or in addition to
those available to any Indemnitor, or if a conflict of interest exists between
any Indemnitee and any Indemnitor, then in either case, the Indemnitee shall
have the right to employ its own counsel in such action, and, in such event (or
in the event that the Indemnitor does not timely assume the defense within the
Indemnity Notice Period as provided in the immediately succeeding sentence), the
reasonable fees and expenses of the Indemnitee's counsel shall be borne by the
Indemnitor and shall be paid by the Indemnitor from time to time within 20 days
of receipt of appropriate invoices therefor. If the Indemnitor does not deliver
to the Indemnitee within the Indemnity Notice Period written notice that the
Indemnitor shall assume the defense of any such claim or litigation resulting
therefrom pursuant to and in accordance with the provisions of this Section XI,
the Indemnitee
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may defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such terms
as it may deem appropriate, all at the expense of the Indemnitor. In the event
that the Indemnitor does timely assume the defense as provided above, the
Indemnitee shall have the right to fully participate in such defense (including
without limitation, with counsel of its choice), at its sole expense (except as
otherwise provided herein), and the Indemnitor shall reasonably cooperate with
the Indemnitee in connection with such participation, and in all cases the
Indemnitor shall keep the Indemnitee fully informed as to all matters concerning
each third party claim and shall promptly notify the Indemnitee in writing of
any and all significant developments relating thereto. Subject to the other
provisions of this Agreement (including without limitation, Section 11.06),
within five (5) business days after the occurrence of a final, non-appealable
order or other final determination with respect to each third party claim by any
court, panel of arbitrator(s) or Governmental Authority having jurisdiction
thereof, the Indemnitor shall pay the Indemnitee the amount of Damages sustained
or incurred by the Indemnitee which have not theretofore been paid to the
Indemnitee as provided above.
(c) Subject to the other provisions of this Agreement (including
without limitation, Section 11.06), in the event that an Indemnification Matter
does not involve a third party claim, the Indemnitor shall within 30 days after
the date of an Indemnity Notice pay to the Indemnitee the amount of Damages
payable pursuant to Section 11.01 hereof and which are at the time sustained or
incurred by the Indemnitee and shall thereafter pay any other Damages payable
pursuant to Section 11.01 hereof and related to the same Indemnity Notice on
demand.
1.114 Subrogation. Neither the Company nor any of the Non-Management
Stockholders shall assert any rights of any Purchaser Indemnified Party(s) to
which any of them have been subrogated against any customer, supplier or
purchasing agent of the Company (or the Purchaser) with respect to any Damages
for which the Purchaser Indemnified Party(s) has been indemnified by the Company
or any of the Stockholders hereunder without the prior written consent of both
Management Stockholders. Without limiting the other provisions of this Section
XI, no Purchaser Indemnified Party shall be required to make any claim against
any other Person or to take any other action in order to pursue any claim
against the Company or any of the Stockholders.
1.115 Validity. The indemnification agreements provided for in this
Section XI, Section XII and Section 13.05 shall apply notwithstanding any
investigation made at any time by or on behalf of any party hereto and
notwithstanding the knowledge of any of the Purchaser Indemnified Parties other
than the actual knowledge on the date hereof of Xxxxx Xxxxxxxxx and Xxxxxx X.
Xxxxxx.
1.116 Limits on Indemnifications. (a) Subject to the terms hereof,
the aggregate liability of each Stockholder on any date is, and from time to
time shall be, limited as follows:
(i) for Damages under Section 11.01(a)(iii) the product of (A)
$10,000,000 and (B) such Stockholder's Pro Rata Percentage; and
(ii) for Damages under Section 11.01(a)(iv) hereof, or Section
11.01(c) hereof (but, in the case of Section 11.01(c), only in respect of the
representations and warranties set forth in Section 4.02(iv) hereof), the
product of (A) $4,000,000 and (B) such Stockholder's Pro Rata Percentage.
Notwithstanding anything to the contrary contained herein,
(1) no Non-Management Stockholder's aggregate liability for Damages
on any date under Sections 11.01(a)(i) (but other than in respect of the
covenant set forth in Section 7.05 hereof, as to which the provisions of this
clause (1) shall not be applicable), 11.01(a)(ii), (a)(iii) and (a)(iv) shall
exceed the product of (A) the Purchase Price and (B) such Non-Management
Stockholder's Pro Rata Percentage;
(2) no Management Stockholder's aggregate liability for Damages on
any date under Sections 11.01(a)(i) (but other than in respect of the covenant
set forth in Section 7.05 hereof, as to which the provisions of this clause (2)
shall not be applicable), 11.01(a)(ii), (a)(iii), (a)(iv) and 11.01(b) shall
exceed the product of (A) $480,000 and (B) such Management Stockholder's Pro
Rata Percentage; and
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(3) if an Earn Out Payment is payable under Section 2.02 (without
taking into account any set off under Section 11.07), to the extent that the
recovery of any Damages prior to the Earn Out Payment Date has been limited by
reason of the fact that the Earn Out Payment has not been included in the amount
of the Purchase Price for purposes of clause (A) of paragraph (1) immediately
above, the amount of any Damages not so recovered shall become recoverable from
the applicable Stockholder(s) (including pursuant to Section 11.07 hereof) on
and after the Earn Out Payment Date (subject to Section 11.06(e)), but only to
the extent that such Damages would have been recoverable had the Earn Out
Payment been included in the amount of the Purchase Price for purposes of clause
(A) of paragraph (i) immediately above from and after the Closing Date.
(b) Subject to the terms hereof, the aggregate liability of
the Purchaser and Norton for Damages under Sections 11.02 (a) and (b) is, and
shall be, limited to the Purchase Price.
(c) Subject to the final sentence of this Section 11.06(c), no
Purchaser Indemnified Party and no Seller Indemnified Party shall be entitled to
indemnification pursuant to Sections 11.01(a)(ii), 11.01(a)(iii), 11.01(a)(iv),
11.01(b) or 11.01(c) hereof (other than with respect to a breach of any
representation and warranty contained in Sections 3.11(a), 3.12, 3,29, 4.01(iv)
or 4.02(vi) hereof with respect to which the limitation in this Section 11.06(c)
shall not apply) or Section 11.02(b), respectively, hereof unless and until the
aggregate amount of all Damages sustained or incurred by all Purchaser
Indemnified Parties and all Seller Indemnified Parties, as the case may be, to
which the indemnity set forth in Sections 11.01(a)(ii), 11.01(a)(iii),
11.01(a)(iv), 11.01(b) or 11.01(c) hereof, on the one hand, or Section 11.02(b),
on the other hand, relates exceeds an aggregate amount (the "Deductible Amount")
equal to $250,000. Subject to Sections 11.06(a) and 11.06(b) above, if such
Damages exceed the Deductible Amount, then the Purchaser's and Norton's
liability for indemnification under Section 11.02(b) and the Stockholders'
liability for indemnification under Sections 11.01(a)(ii), 11.01(a)(iii),
11.01(a)(iv), 11.01(b) or 11.01(c) hereof (other than as aforesaid), as the case
may be, shall be limited to the amount of such Damages sustained or incurred
which exceeds the Deductible Amount.
(d) Subject to the final sentence of this Section 11.06(d), no
Purchaser Indemnified Party shall be entitled to indemnification pursuant to
Section 11.01(a)(v) hereof (other than with respect to Damages in respect of
Income Taxes and the New Jersey Audit with respect to which this Section
11.01(d) shall not apply) unless and until the aggregate amount of all Damages
sustained or incurred by all Purchaser Indemnified Parties to which the
indemnity set forth in Section 11.01(a)(v) hereof relates (other than with
respect to Damages in respect of Income Taxes and the New Jersey Audit with
respect to which this Section 11.01(d) shall not apply) exceeds an aggregate
amount (the "Basket Amount") equal to $100,000. Subject to Section 11.06(a)
above, if such Damages exceed the Basket Amount, then the Stockholders'
liability for indemnification under Section 11.01(a)(v) hereof shall be the full
amount of such Damages sustained or incurred notwithstanding such Basket Amount.
(e) The representations and warranties contained in or made
pursuant to this Agreement shall survive until the close of business on January
31, 1999, provided that (i) the representations and warranties contained in
Sections 3.29 and 4.01(iv) hereof shall survive indefinitely, (ii) the
representations and warranties contained in Sections 3.12 and 3.17 hereof shall
survive until the date of expiration of the applicable statute of limitations
(and all extensions thereof) with respect thereto, (iii) the representations and
warranties contained in Section 3.11(a) hereof shall survive for two (2) years
after the Closing Date and (iv) the representations and warranties contained in
Sections 3.13(b) (as such Section relates to Permits required under
Environmental Laws), 3.13(c), 3.26 and 4.02(iv) (as such Sections relates to
Environmental Claims) hereof shall survive for three (3) years after the Closing
Date, and provided further that if written notice is properly given under this
Section XI with respect to any alleged breach of a representation or warranty to
which a party or other indemnified Person is entitled to be indemnified
hereunder prior to the applicable expiration date, such representation or
warranty shall continue indefinitely until the applicable claim is finally
resolved, including by giving effect to Section 11.06(a)(3) above. The covenants
and agreements of the parties hereto set forth herein shall survive
indefinitely, except (i) the provisions of Sections 6.04, 7.06 and 8.05 shall
survive for two (2) years after the Closing Date and (ii) the provisions of
Sections 6.01, 6.02, 6.03, 6.05, 6.06 and 7.01 which shall not survive the
Closing.
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(f) The amount of any Damages for which indemnification is
provided under this Section XI shall be net of any amounts recovered by the
Indemnitee under insurance policies with respect to such Damages. The Indemnitee
agrees to make claims under applicable insurance policies (or the Endorsements,
as the case may be) in respect of Damages which are otherwise covered by such
insurance policies (or Endorsements) and to use its reasonable efforts to
prosecute such claims; provided, however, that the foregoing shall not restrict
the right of the Indemnitee to take any and all actions it deems necessary or
desirable in order to preserve its indemnification rights against any Indemnitor
under this Section XI.
1.117 Set-Off. Subject to the other provisions of this Agreement
(including without limitation, Section 11.06), it is understood and agreed by
the Company and each of the Stockholders that the Purchaser and Norton may (but
shall not be required to, unless and to the extent that an Earn Out Payment is
payable hereunder and on the Earn Out Payment Date Damages shall be the subject
of an unsatisfied judgment which is not appealable against the Company or any
Stockholder or a written agreement between the Company or any Stockholder, on
the one hand, and the Purchaser and Norton, on the other hand, as to the amount
of and their liability for Damages theretofore claimed by a Purchaser
Indemnified Party, and without limiting or affecting any other right or remedy
which it may have) satisfy any claims made against the Company or any of the
Stockholders for Damages under this Section XI, Section XII or Section 13.05
below by offsetting amounts owed to any of the Purchaser Indemnified Parties as
Damages pursuant to this Section XI, Section XII or Section 13.05 against any
Earn Out Payment due under Section 2.02 hereof. Subject to the other provisions
of this Agreement (including without limitation, Section 11.06), it is
understood and agreed that nothing contained in this Section 11.07 shall in any
way relieve any of the parties hereto of their indemnification obligations, or
otherwise limit their indemnification obligations pursuant to this Section XI,
Section XII or Section 13.05 below.
1.118 Exclusive Remedy. Notwithstanding anything to the contrary set
forth herein, in the event that the Closing does not occur none of the parties
hereto shall have any liability, whatsoever hereunder, whether based on
misrepresentation or breach of any representation, warranty, covenant or
agreement or otherwise except as set forth in Section 8.03. Except for Damages
for fraud, from and after the Closing Date, subject to Section 13.04 hereof,
each party hereto acknowledges and agrees that such party's sole remedy with
respect to a claim for Damages (other than a dispute arising under Section 2.02
hereof, which shall be resolved in the manner and with the effect set forth in
Section 2.02 hereof) shall be in accordance with, and limited by (to the extent
of any limitations expressly set forth in this Section XI), the provisions set
forth in this Section XI, Section XII and Section 13.05. Notwithstanding the
foregoing, nothing herein shall limit the rights and remedies of any party
hereto for matters involving fraudulent conduct.
SECTION XII.
BROKERS AND FINDERS
1.121 The Company's and the Stockholders' Obligations. The
Stockholders shall be solely responsible for payment of all fees and expenses of
Financo, Inc. arising in connection with the transactions contemplated hereby.
Neither the Company nor any of the Purchaser Indemnified Parties shall have any
obligation to pay any financial advisory, finder's fee or other compensation to
any Person claiming by, through or under the Company, any Stockholder or any
affiliate thereof in connection with this Agreement and the transactions
contemplated hereby (including without limitation, Financo, Inc.), and the
Company, and each of the Stockholders severally on the basis of such
Stockholder's Pro Rata Percentage, hereby agree to indemnify and save the
Purchaser Indemnified Parties harmless from any and all Damages sustained or
incurred by any of the Purchaser Indemnified Parties by reason of any such claim
for or payment of any such fee or other compensation.
1.122 The Purchaser's and Norton's Obligations. Neither of the
Company nor any of the Stockholders shall have any obligation to pay any fee or
other compensation to any Person claiming by, through or under the Purchaser or
Norton or any affiliate thereof in connection with this Agreement and the
transactions contemplated hereby, and the Purchaser and Norton, jointly and
severally, hereby agree to
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indemnify and save the Company and each Stockholder harmless from any and all
Damages sustained or incurred by the Company or such Stockholder by reason of
any such claim for or payment of any such fee or other compensation.
SECTION XIII.
MISCELLANEOUS
1.131 Notices. All notices, requests or instructions hereunder shall
be in writing and delivered personally, sent by telecopy, sent by registered or
certified mail, postage prepaid, or sent by Federal Express or any other
nationally recognized overnight courier service, as follows:
(a) If to the Company, to any Stockholder or to the Stockholder
Representative prior to the Closing:
0000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
with a copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
and
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxxx Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to the Company, to any Stockholder or to the Stockholder
Representative after the Closing: to Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx as set forth in clause (a) above
(c) If to any Management Stockholder after the Closing: to Xxxxxx, Xxxxx
& Bockius LLP as set forth in clause (a) above
(d) If to the Purchaser or Norton:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
00
00
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied, sent by Federal Express or any other recognized
overnight courier service, or mailed by certified mail, return receipt
requested.
1.132 Entire Agreement and Amendment. This Agreement (including the
Exhibits and Schedules hereto) and the other certificates, agreements and
documents referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby and supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral, of the parties, including, without limitation, the letter dated July 3,
1997 from Norton to Financo, Inc. and the Confidentiality Agreement dated
February 22, 1997 between the Company and Norton, and no amendment or
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
1.133 Expenses. Except as otherwise provided herein, including in
Section XII hereof, each of the parties hereto shall bear such party's own costs
and expenses in connection with this Agreement and the transactions contemplated
hereby whether or not the Closing occurs; provided that if the Closing shall
occur (i) the Purchaser shall be responsible for any real estate transfer and
other transfer, sales, documentary, stamp or similar taxes payable by the
Company by reason of the sale of the Assets to the Purchaser in accordance with
the terms hereof, (ii) the Stockholders severally on the basis of their
respective Pro Rata Percentages shall be responsible for (and shall pay or,
prior to the Closing, reimburse the Company for all such costs and expenses paid
by the Company prior to the Closing) any and all costs and expenses of the
Company in connection with this Agreement and the transactions contemplated
hereby, whether incurred prior to, at or after the Closing and (iii) the
Purchaser shall be responsible for one-half and the Stockholders severally on
the basis of their respective Pro Rata Percentages shall be responsible for one
half of any legal costs and expenses charged to the Company by The Chase
Manhattan Bank, N.A. in connection with the matters contemplated by Section 7.14
hereof.
1.134 Injunctive Relief. Notwithstanding the provisions of Section
13.05 hereof, in the event of a breach or threatened breach by the Company, any
Stockholder, the Purchaser or Norton of any of their respective obligations
hereunder, including without limitation, their respective obligations to close
the transactions contemplated hereby, the Company, each Stockholder, the
Purchaser and Norton hereby consent and agree that the applicable Person(s)
shall be entitled to an injunction or similar equitable relief restraining the
Company, such Stockholder, the Purchaser or Norton from committing or continuing
any such breach or threatened breach or granting specific performance of any act
required to be performed by the Company, such Stockholder, Purchaser or Norton
under any such provision, without the necessity of showing any actual damage or
that money damages would not afford an adequate remedy and without the necessity
of posting any bond or other security. The parties hereto hereby consent to the
jurisdiction of the Federal courts for the Southern District of New York for any
proceedings under this Section 13.04, and the Company, each Stockholder, the
Purchaser and Norton further agree that the service of process or of any other
papers upon them or any of them by registered mail, return receipt requested, at
their respective addresses set forth herein shall be deemed good, proper and
effective service upon them. The parties hereto agree that the availability of
arbitration in Section 13.05 hereof shall not be used by any party as grounds
for the dismissal of any injunctive actions or other equitable relief instituted
by the Purchaser pursuant to this Section 13.04. Nothing in this Section 13.04
shall be construed as prohibiting any party hereto from pursuing any other
remedies which it may have under Section XI hereof.
1.135 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or any breach hereof, shall, except as provided in
Section 2.02(b) and Section 13.04 hereof, be settled by arbitration in New York,
New York by a panel of three arbitrators in accordance with the rules of the
American Arbitration Association then in effect. Judgment upon the award
rendered by the foregoing arbitrators and judgment upon the Determination by the
Independent Auditor may be entered in any court
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having jurisdiction thereof, and the parties hereto hereby consent to the
jurisdiction of the New York courts for this purpose.
1.136 Invalidity. Should any provision of this Agreement be held by
a court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by the court or arbitration panel shall be
binding upon and enforceable against each of them. In any event, should one or
more of the provisions of this Agreement be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, and if such provision or
provisions are not modified as provided above, this Agreement shall be construed
as if such invalid, illegal or unenforceable provisions had never been set forth
herein.
1.137 Successors and Assigns. Subject to Section 13.10 hereof, this
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of the Company, the Stockholders, the Purchaser and Norton,
respectively.
1.138 Governing Law. The validity of this Agreement and of any of
its terms or provisions, as well as the rights and duties of the parties under
this Agreement, shall be construed pursuant to and in accordance with the laws
of the State of New York, without regard to conflict of laws principles.
1.139 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
13.10 Assignment. This Agreement shall not be assignable by the
Purchaser or Norton, except pursuant to a writing executed by all of the parties
hereto, and except that the Purchaser's rights or interests under this Agreement
(but not its obligations) may be assigned (i) to any member of the Purchaser
Group, (ii) in connection with a sale of all or substantially all of the assets
of the Purchaser or Norton or any of their respective direct or indirect
consolidated subsidiaries or (iii) as collateral security to any financial
institution which extends credit to any member of the Purchaser Group; provided
that in the case of each such assignment, the assignee shall accept such rights
or interests subject to the terms of this Agreement. This Agreement shall not be
assignable by the Company or any of the Stockholders except that (i) the Company
may assign its rights under this Agreement to one or more of the Stockholders or
to the Stockholder Representative; provided that as a condition to any such
assignment, including without limitation, any assignment as a result of a
dissolution of the Company, the Company, Norton and each of the Stockholders
hereby agree that if Norton elects to pay a portion of the Earn Out Payment in
shares of Norton Common Stock pursuant to Section 2.02, (a) Norton shall have
the right to require that up to and not more than 50% of the portion of the Earn
Out Payment payable to each of the Management Stockholders and to Xxxxxx
Xxxxxxxxx be paid in shares of Norton Common Stock and (b) Norton shall not have
the right to require that any of the Earn Out Payment be payable other than in
cash to each of Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxx Xxx or Xxxxxxx Xxxxxxx,
so long as the aggregate Earn Out Payment shall equal the amount determined in
accordance with Section 2.02 and (ii) any Management Stockholder or other
Stockholder may assign his right to the Earn Out Payment, if any, to the spouse
or any lineal descendant (including by adoption and stepchildren) of such
person, or any trust of which such person is the trustee and which is
established for the benefit of any of the foregoing persons or any partnership,
limited liability company or other entity all of the general partner(s), limited
partner(s) or member(s) of which are one or more of the foregoing persons. Any
attempted assignment in violation of this Section 13.10 shall be null and void.
13.11 Knowledge, Etc.. Whenever used in this Agreement, the words
"to the knowledge of any Management Stockholder" or "to the knowledge of such
Stockholder" (when referring to a Management Stockholder) or similar words shall
mean the actual knowledge or awareness of such Management Stockholder, together
with the knowledge or awareness such Management Stockholder would
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obtain after consultation by such Management Stockholder with the other
Management Stockholder and with Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx and Xxxxxx
Xxxxxx, including a review of the representations and warranties contained in
Section III and IV hereof (and related Schedules) with each such individual.
Whenever used in this Agreement, the words "to the knowledge of any
Non-Management Stockholder", "to the knowledge of such Stockholder" (when
referring to a Non-Management Stockholder) or similar words shall mean the
actual knowledge or awareness of such Non-Management Stockholder, together with
the knowledge or awareness such Non-Management Stockholder would obtain after
consultation by such Non-Management Stockholder with Xxxxxxx and Zwilling,
including a review of the representations and warranties contained in Sections
III and IV hereof (and related Schedules) with Xxxxxxx and Xxxxxxxx.
13.12 Independence of Representations and Warranties, Schedules,
Etc. All representations and warranties hereunder shall be given independent
effect so that if a particular representation or warranty proves to be incorrect
or is breached, the fact that another representation or warranty concerning the
same or similar subject matter is correct or is not breached will not affect the
incorrectness of or a breach of a representation and warranty hereunder. The
Exhibits and Schedules attached hereto are hereby made part of this Agreement in
all respects. Section references in the Schedules refer to the specific Section
of the Agreement with respect to which the Company and the Stockholders are
making a disclosure. A disclosures under any Schedule hereto shall be deemed to
be a disclosure under all of the Schedules hereto whether or not specifically
referenced in any other Schedule; provided that any disclosure pursuant to
Section 3.08(a), 3.17, 3.22 or 3.26 shall be specifically referenced on Schedule
3.08, 3.22 or 3.26, respectively. The fact that a particular matter is reflected
in the Schedules hereto shall not have any bearing on the issue of whether such
matter is material for the purposes of this Agreement.
13.13 Interpretation. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem.
13.14 Action by the Stockholders. (a) Any action to be taken by the
Stockholders or the Company, notices to be given by the Stockholders or the
Company or any matters requiring the Stockholders or the Company to act or
refrain from acting hereunder may be undertaken with the concurrence of the
Stockholder named in the next sentence (such Stockholder in its capacity as
representative of the Stockholders and of the Company hereinafter, the
"Stockholder Representative") and, for all purposes, it is expressly understood
and agreed that any action so taken, notice so given or other matter acted upon
or refrained from shall be deemed to constitute the action of all of the
Stockholders on a joint and several basis, on the one hand, and the Company, on
the other hand, and shall be binding on all of the Stockholders and the Company.
It is understood and agreed that Xxxxxxx X. Xxxxxx shall act as the Stockholder
Representative. In addition, subject to subsection (c) below, the Purchaser and
Norton shall be entitled (i) conclusively to rely upon the direction, notice,
request or other communication received from the Stockholder Representative
without the need to confirm such or otherwise communicate with any other
Stockholders or the Company, and (ii) to give any direction, notice, request or
other communication to any of the Stockholders or the Company without the need
to confirm or otherwise communicate with any other Stockholders or the Company,
and any such direction, notice, request or other communication (whether from or
to any of the Stockholder Representative) shall be conclusive, binding and
enforceable against all Stockholders and the Company.
(b) The Stockholder Representative shall not be liable to the
Stockholders or any third party for any action taken by any of the Stockholder
Representative except with regard to actions involving (i) a breach of such
Stockholder Representative's duty of loyalty to the Stockholders and the
Company, (ii) any acts by such Stockholder Representative not in good faith or
involving a known violation of law or (iii) transactions from which such
Stockholder Representative derived an improper personal benefit.
(c) The Purchaser and Norton shall be entitled to rely on any
and all communications from the Stockholder Representative as being authorized
by all of the Stockholders and the Company as provided hereunder with respect to
the subject matter of this Agreement and the Stockholders, jointly and
severally, on the one hand, and the Company, on the other hand, agree to hold
the
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Purchaser and Norton harmless from any and all Damages sustained or incurred
by any of the Purchaser Indemnified Parties by reason of any claim that such
actions were not properly authorized. The Purchaser and Norton shall be entitled
to send all communications with respect to the subject matter of this Agreement
to the Stockholder Representative at the address indicated herein and to no
other parties.
13.15 LIMITATION OF REPRESENTATIONS AND WARRANTIES. OTHER THAN THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY HEREIN OR IN ANY OTHER
CERTIFICATES, AGREEMENTS OR OTHER DOCUMENTS ENTERED INTO AND DELIVERED PURSUANT
HERETO, NO PARTY HERETO MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, REPRESENTATIONS OR WARRANTIES OF
MERCHANTABILITY OF FITNESS.
13.16 Several Obligations. With respect to any representation,
warranty, agreement, covenant or undertaking in this Agreement made by one or
more Stockholders, any Stockholder making any such representation, warranty,
agreement, covenant or undertaking is doing so only as to itself or himself and
it or he shall have no liability hereunder in the event of a breach thereof by
any other Stockholder.
13.17 No Third Party Beneficiaries. Except as specifically set forth
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon any Person other than the parties hereto and their successors or
permitted assigns any rights or remedies under or by reason of this Agreement.
SECTION XIV.
DEFINITIONS
1.141 Certain Definitions. The following terms when used herein
shall have the meanings assigned to them below (certain other terms are defined
elsewhere herein):
"Assets" shall have the meaning set forth in Section 1.01(a) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section
1.01(c) hereof.
"Average Market Value" shall mean, for any day, the last sale price
for the Norton Common Stock on the New York Stock Exchange or the American Stock
Exchange, as applicable, on which the Norton Common Stock is listed or admitted
to trading, or, if not so listed or admitted to trading on any such securities
exchange, the last sale price for the Norton Common Stock on the Nasdaq National
Market or the Nasdaq SmallCap Market (but only if at the time Norton would
otherwise qualify for listing on the Nasdaq National Market in accordance with
the listing requirements in effect on the date hereof) (any such securities
exchange, the Nasdaq National Market and, under the foregoing circumstances, the
Nasdaq SmallCap Market, each a "Securities Exchange"), in each such case,
averaged over a period of 30 consecutive business days prior to the day as of
which Average Market Value is being determined.
"Basket Amount" shall have the meaning set forth in Section 11.06(d)
hereof.
"Benefit Plans" shall have the meaning set forth in Section 3.17(a)
hereof.
"Best Efforts" or "best efforts" shall mean diligently, promptly and
in good faith taking all actions which are reasonable, necessary and appropriate
to accomplish the objective requiring the use of best efforts, but shall not
include any obligation (a) to make any payment, incur any costs, commit
available resources or forego the receipt of any payment, which in any case is
material in amount in light of the required objective, (b) to initiate any
lawsuit or other proceeding to achieve the required objective, or (c) to take
any action which is unlawful; provided, however, that neither of the Management
Stockholders nor Xxxxxx Xxxxxxxxx shall have in any case any obligation to make
any payment, incur any costs, commit available resources or forgo the receipt of
payment.
"Business" shall have the meaning set forth in the recitals hereof,
as modified in Section
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III.
"Chase Indebtedness" shall mean all Company Indebtedness arising
under that certain Credit Agreement dated as of December 31, 1991 by and among
Miss Xxxxx Holding Corporation, Miss Xxxxx, Inc., as borrower, The Chase
Manhattan Bank, N.A., as bank, National Westminster Bank, N.A. as bank, The Bank
of Tokyo Trust Company, as bank, ABN Anro Bank, N.V., as bank, and The Chase
Manhattan Bank, N.A., as agent, as amended, and all collateral documents
executed in connection thereof.
"Closing" shall have the meaning set forth in Section 8.01 hereof.
"Closing Date" shall have the meaning set forth in Section 8.01
hereof.
"Closing Purchase Price" shall have the meaning set forth in Section
2.01 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall have the meaning set forth in Section 2.04
hereof.
"Company" shall have the meaning set forth in the recitals hereof.
"Company Acquisition Proposal" shall have the meaning set forth in
Section 7.01 hereof.
"Company Indebtedness" shall mean all obligations and liabilities of
the Company for borrowed money, including without limitation, the Chase
Indebtedness, the Subordinated Debt and all other bank and other loans, notes
payable, capital lease obligations, guarantees of indebtedness of others,
obligations in respect of letters of credit, and all principal, interest, fees,
prepayment penalties or amounts due or owing with respect thereto, but excluding
endorsements of instruments in the ordinary course of business.
"Company Location" shall have the meaning set forth in Section 3.29
hereof.
"Contracts" or "Contract" shall have the meaning set forth in
Section 3.15(a) hereof.
"Current Balance Sheet" shall have the meaning set forth in Section
3.05 hereof.
"Current Balance Sheet Date" shall mean the date of the Current
Balance Sheet.
"Current Financial Statements" shall have the meaning set forth in
Section 3.05 hereof.
"Damages" shall mean any and all losses, claims, assessments,
demands, damages, liabilities, obligations, costs and expenses (including
without limitation, reasonable fees and disbursements of counsel sustained or
incurred by the Purchaser Indemnified Parties (or any of them) or the Seller
Indemnified Parties (or any of them), as the case may be, in any action,
dispute, claim or proceeding between any of the Purchaser Indemnified Parties,
on the one hand, and any of the Seller Indemnified Parties, on the other hand,
or involving a third-party claim against any of the Purchaser Indemnified
Parties or any of the Seller Indemnified Parties, as the case may be) and other
out-of-pocket costs and expenses incurred in connection with investigating,
preparing or defending any action, suit or proceeding, commenced or threatened,
or any claim whatsoever, in each case net of tax benefits actually realized.
"Debt Documents" shall mean all agreements, promissory notes,
security instruments and other documents to which the Company or any of the
Assets is bound and which evidence, govern or relate to Company Indebtedness.
"Deductible Amount" shall have the meaning set forth in Section
11.06(c) hereof.
"Determination" shall have the meaning set forth in Section 2.02(b)
hereof.
"Development Projects" shall have the meaning set forth in the
recitals to this Agreement.
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"Dispute Notice" shall have the meaning set forth in Section 2.02(b)
hereof.
"Disputed Matters" shall have the meaning set forth in Section
2.02(b) hereof.
"Earn Out Payment" shall mean an aggregate amount equal to the
amount, if any, by which (x) the product of (a) four (4) multiplied by (b)
either (i) if no Security Default shall have occurred and be continuing, the
1998/1999 EBITDA or (ii) on and after the occurrence and during the continuance
of a Security Default, EBITDA for the fiscal year ending October 31, 1998,
exceeds (y) $24,000,000.
"Earn Out Payment Date" shall mean either (x) if no Security Default
shall have occurred, the date on which the 2000 EBITDA Notice is delivered or
(y) the date on which a Security Default shall have occurred.
"Earn Out Shares" shall have the meaning set forth in Section
2.02(a) hereof.
"EBITDA" shall mean the aggregate amount of consolidated net income
or loss of the Purchaser and its subsidiaries for the applicable fiscal year
determined in accordance with GAAP (except as otherwise expressly stated below)
after deducting all amounts provided for in the Employment Agreements and, with
respect to all employees and other participants of the Purchaser and its
subsidiaries, pursuant to all benefits, profit sharing, bonus, incentive,
deferred compensation, health, medical, dental, life insurance or other welfare
or employee benefit plans or programs in which any employee or other participant
of the Purchaser or any of its subsidiaries participates, or otherwise covering
any employee or other participant of the Purchaser or any of its subsidiaries,
and before (A) the deduction of interest expenses and factoring expenses for
interest paid or accrued by the Purchaser and its subsidiaries with respect to
such year, (B) the deduction of taxes based upon income, howsoever computed or
denominated, paid or accrued by the Purchaser and its subsidiaries with respect
to such year, and (C) the deduction by the Purchaser and its subsidiaries of
depreciation and amortization for such year, with all items referred to in
subsections (A) through (C) in this definition determined in accordance with
GAAP (except as otherwise stated below). In determining EBITDA:
(a) The Purchaser's books and records will be maintained in accordance
with GAAP. EBITDA and its components will be derived from those
books and records in accordance with the adjustments set forth
below. GAAP will be applied on a consistent basis in the preparation
of balance sheets of the Purchaser and its subsidiaries as at
November l, 1997, October 31, 1998 and November 6, 1999 and in the
related calculation of EBITDA for the years ended October 31, 1998
and November 6, 1999.
(b) The calculation of EBITDA will be unaffected by GAAP first
applicable to the Purchaser after January 31, 1997.
(c) EBITDA shall without duplication:
(i) Exclude any and all acquisition costs and other costs related
to this Agreement, including, but not limited to, extra
accounting and auditing fees, legal fees and due diligence
costs.
(ii) Compute inventory cost using FIFO.
(iii) Exclude any and all debt costs (other than those relating to
anticipation or sales discounts, letter of credit availability
and commitment fees and letter of credit commissions),
including without limitation, interest expense, amortization
of capitalized debt costs, debt restructuring costs, debt
acquisition costs, commitment fees (other than letter of
credit commitment fees), reimbursement of attorney or due
diligence fees, availability fees (other than letter of credit
availability fees), prepayment fees, prepayment penalties and
any other debt related fees and penalties of any kind.
(iv) Exclude any hedging gains or losses.
(v) Exclude expense reimbursement and fees paid to members of the
Purchaser's
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Board of Directors.
(vi) Exclude the effects of extraordinary or unusual items as
defined in accordance with GAAP.
(vii) Exclude any foreign exchange gains or losses.
(viii) Exclude any and all expense allocations from Norton or any
Norton affiliate, other than as set forth in (d) below.
(ix) Exclude all factoring expenses of any kind.
(x) Exclude all management or other fees charged by Norton or any
Norton affiliate.
(xi) Exclude gains or losses from the sale of any fixed assets or
investments.
(d) If Norton or any affiliate charges the Purchaser for its ratable
share, based upon sales, number of employees or other appropriate
measure, of any expense for unaffiliated third party services (e.g.,
insurance expenses, legal and accounting expenses and payroll
services), EBITDA shall be calculated by taking into account such
ratable share, provided that (i) on or before October 1, 1997,
Norton shall provide to the Company information concerning estimated
rates of expense for unaffiliated third party services provided to
the Purchaser, and (ii) in the event that the Company determines in
good faith on or before November 1, 1997 by notice to Norton that,
based upon historical cost analysis, the Purchaser could have
arranged for such commensurate services with the Company's existing
service suppliers, as adjusted for any increase or decrease in
sales, number of employees or other appropriate circumstances, at
rates of expense that are lower than those obtainable by the
Purchaser, then in such event, such rates of expense shall be
utilized for the calculation of EBITDA on the basis of such Company
determined cost, adjusted annually for the foregoing increases or
decreases and as further adjusted for the change in the Consumer
Price Index for the applicable period.
(e) Neither the anticipated nor the actual Earn Out Payment will affect
the preparation of balance sheets of the Purchaser and its
subsidiaries as at November 1, 1997, October 31, 1998 and November
6, 1999 or the related calculation of EBITDA for the years ended
October 31, 1998 and November 6, 1999.
(f) Only sales returns of goods shipped prior to year end actually
received within 90 days after the end of the period will affect the
calculation of EBITDA for such period. No additional reserve for
returns will be recorded on the balance sheets of the Purchaser and
its subsidiaries as at November 1, 1997, October 31, 1998 or
November 6, 1999 for purposes of calculating the related EBITDA for
the years ended October 31, 1998 and November 6, 1999.
(g) Credits for overbillings on shipments preceding the end of a period
will be expensed for purposes of calculating the related EBITDA for
the years ended October 31, 1998 and November 6, 1999.
(h) The maximum balance of accounts receivable or other assets in
respect of chargebacks relating to overbillings for shipments after
the end of a period shall be $250,000 at the end of the fiscal years
ended October 31, 1998 and November 6, 1999. Any chargebacks
relating to overbillings in excess of such amount taken either prior
to the end of the period or in the 90 day period after a fiscal year
end will be fully expensed for purposes of calculating the related
EBITDA for the years ended October 31, 1998 and November 6, 1999.
(i) Trade discounts available to customers on shipments preceding the
end of a period shall be accrued in full on the balance sheets of
the Purchaser and its subsidiaries as at
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November 1, 1997, October 31, 1998 or November 6, 1999 for purposes
of calculating the related EBITDA for the years ended October 31,
1998 and November 6, 1999.
(j) A reserve for allowances shall be recorded in the amount of total
chargebacks taken by customers within 90 days after the end of the
period in payment of invoices for goods shipped prior to the end of
the period for purposes of calculating the related EBITDA for the
years ended October 31, 1998 and November 6, 1999. It shall be
understood that chargebacks disputed in good faith shall remain as
accounts receivable until such dispute is resolved.
(k) No sales reserves other than those described in paragraphs (f), (g),
(h), (i), (j) and (q) shall be recorded on the balance sheets of the
Purchaser and its subsidiaries as at November 1, 1997, October 31,
1998 or November 6, 1999 for purposes of calculating the related
EBITDA for the years ended October 31 1998 and November 6, 1999.
(l) Only total direct costs, which include f.o.b. origin merchandise
cost, ocean or air freight, duty, custom, tariffs, brokerage and
agent commission, shall be recorded as inventory on the balance
sheets of the Purchaser and its subsidiaries as at November 1, 1997,
October 31, 1998 or November 6, 1999 for purposes of calculating the
related EBITDA for the years ended October 31, 1998 and November 6,
1999. No other costs shall be capitalized into inventory on the
balance sheets of the Purchaser and its subsidiaries as at November
1, 1997, October 31, 1998 or November 6, 1999 for purposes of
calculating the related EBITDA for the years ended October 31, 1998
and November 6, 1999.
(m) A year end markdown equal to 20% of the adjusted perpetual inventory
cost of non-current goods valued as described in (l) above less
outstanding orders for such goods shall be included in the balance
sheets of the Purchaser and its subsidiaries as at November 1, 1997,
October 31, 1998 or November 6, 1999 for purposes of calculating the
related EBITDA for the years ended October 31, 1998 and November 6,
1999. Noncurrent goods at the end of any year are Fall and prior
goods. Non-current goods do not include goods which are or are
intended to be offered consistent with past practices at original
selling price in future collections.
(n) No inventory reserves other than those described in (m) above shall
be recorded on the balance sheets of the Purchaser and its
subsidiaries as at November 1, 1997, October 31, 1998 or November 6,
1999 for purposes of calculating the related EBITDA for the years
ended October 31, 1998 and November 6, 1999.
(o) The reserves for bad debts existing at the Closing Date will be
maintained through November 5, 1999 to cover the potential write-off
of non-collectable accounts receivable which exist at the Closing
Date in preparing the balance sheets of the Purchaser and its
subsidiaries as at November 1, 1997 or October 31, 1998 for purposes
of calculating the related EBITDA for the year ended October 31,
1998. Unless a Security Default shall have occurred and be
continuing, this reserve will be reduced through November 5, 1999
only by actual write-offs of accounts receivable which exist at the
Closing Date. This reserve will be reduced to zero (i) if a Security
Default shall not have occurred and be continuing, at November 6,
1999 for purposes of calculating the related EBITDA for the year
ending November 6, 1999 and (ii) if a Security Default shall have
occurred and be continuing, at October 31, 1998 for purposes of
calculating the related EBITDA for the year ending October 31, 1998.
No write off of an account receivable which exists at the Closing
Date will affect the calculation of EBITDA unless the sum of all
such write-offs exceeds the amount of the accounts receivable
reserve at the Closing Date.
(p) A reserve for bad debts equal to 100% of accounts receivable at year
end arising after the Closing Date and not factored, which are 90
days past due (excluding accounts which are current on a payment
plan) subject to any additional reserve amount required by the
application of (r) below, will be maintained in preparing the
balance sheets of the Purchaser and its subsidiaries as at November
1, 1997, October 31, 1998 or November 6, 1999 for purposes of
calculating the related EBITDA for the years ended October 31,
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1998 and November 6, 1999.
(q) No reserves for accounts receivable other than those described in
(k), (o) and (p) above shall be recorded on the balance sheets of
the Purchaser and its subsidiaries as at November 1, 1997, October
31, 1998 or November 6, 1999 for purposes of calculating the related
EBITDA for the years ended October 31, 1998 and November 6, 1999.
(r) No account shall be written off unless and until all collection
efforts have ceased (in accordance with the Company's past
practices), unless write off of all or a portion of such account is
warranted as a result of any bankruptcy filing or other insolvency
proceeding by such account, without duplication, for purposes of
preparing the balance sheets of the Purchaser and its subsidiaries
as of November 1, 1997, October 31, 1998 and November 6, 1999 and
calculating EBITDA for the years ended October 31, 1998 and November
6, 1999.
(s) No expense reserves, accruals for expense contingencies or other
general expense accruals, other than (i) normal expense accruals for
services or goods provided in the period, (ii) accruals in
accordance with GAAP under FASB 5, or (iii) those described in (f),
(g), (h), (i), (j), (m), (o) and (p) above shall be recorded on the
balance sheets of the Purchaser and its subsidiaries as at November
1, 1997, October 31, 1998 or November 6, 1999 for purposes of
calculating the related EBITDA for the years ended October 31, 1998
and November 6, 1999.
(t) No accruals for fees for professional services to be rendered after
the end of a period shall be recorded on the balance sheets of the
Purchaser and its subsidiaries as at November 1, 1997, October 31,
1998 or November 6, 1999 if there is already one full year of such
expense included within each period, for purposes of calculating the
related EBITDA for the years ended October 31, 1998 and November 6,
1999.
(u) No accruals for travel and entertainment expenses to be incurred
after the end of a period shall be recorded on the balance sheets of
the Purchaser and its subsidiaries as at November 1, 1997, October
31, 1998 or November 6, 1999 for purposes of calculating the related
EBITDA for the years ended October 31, 1998 and November 6, 1999.
(v) In computing pension and OPEB liabilities, the same assumptions,
including assumptions regarding interest rates, discount rates,
mortality and retention shall be used in preparing the balance
sheets of the Purchaser and its subsidiaries as at November 1, 1997,
October 31, 1998 and November 6, 1999 for purposes of calculating
the related EBITDA for the years ended October 31, 1998 and November
6, 1999.
(w) No accruals for Christmas bonuses to be paid after the end of a
period shall be recorded on the balance sheets of the Purchaser and
its subsidiaries as at November 1, 1997, October 31, 1998 or
November 6, 1999 if there is already one full year of such expense
included within each period, if applicable to such period, for
purposes of calculating the related EBITDA for the years ended
October 31, 1999 and November 6, 1999.
(x) If (A) the Management Stockholders shall have requested that a
documentary letter of credit be issued by the Purchaser's primary
lender for the payment of amounts which would become due pursuant to
a bona fide proposed purchase order (which purchase order is
included in the Purchaser's business plan, as approved by the Board
of Directors of Norton) for Inventory from one of the Purchaser's
suppliers, (B) at the time such letter of credit is so requested
both of the Management Stockholders certify to Norton in writing
that they in good faith believe that such Inventory would be
saleable in the ordinary course of business at substantially the
same gross profit margin as the other Inventory being ordered during
that Spring/Transition or Fall/Holiday Season (as used in the books
and records of the Purchaser, each, a "Season"), (C) the issuance of
such letter of credit is denied by such primary lender and (D) such
lender confirms in writing that such letter of credit would be
issuable but for the failure of Norton and its subsidiaries
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(other than the Purchaser and its subsidiaries) to meet the
requirements for the issuance thereof under applicable credit
agreements, then there shall be added to EBITDA for that fiscal year
an amount equal to the product of (i) the total cost of such
Inventory which would have been incurred had such letter of credit
been issued, (ii) a fraction (1) the numerator of which shall be the
total cost of goods sold related to Inventory purchased for such
Season, calculated in accordance with paragraph (l) above, and (2)
the denominator of which shall be the total cost of Inventory
purchased for such Season, calculated in accordance with paragraph
(l) above, and (iii) a fraction (1) the numerator of which shall be
the EBITDA for that fiscal year, without taking into account this
paragraph (x), and (2) the denominator of which is the total net
sales during such fiscal year, without taking into account this
paragraph (x), calculated in accordance with paragraph (l) above.
"Employee" shall have the meaning set forth in Section 7.08 hereof.
"Employment Agreements" shall mean the employment agreements dated
as of the date hereof between the Purchaser and each of Xxxxxx Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxx Xxx and Xxxxxx Xxxxxx.
"Endorsements" shall have the meaning set forth in Section 7.09(b)
hereto.
"Environmental Claim" means any notice or claim by any Person
alleging potential liability (including potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the generation, treatment, storage, transportation or
recycling of any Hazardous Substance or the presence, or release, discharge,
disposal or emission into the environment, of any Hazardous Substance at the
Premises or any other real property, whether or not presently or formerly owned
or leased by the Company or (B) any violation, or alleged violation, of any
Environmental Laws.
"Environmental Laws" means all Laws relating to environmental,
health and safety matters, the pollution or protection of the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata) or the protection of human health and safety from environmental and
other hazards, including existing Laws relating to emissions, discharges,
releases or threatened releases of Hazardous Substances, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"ERISA" shall have the meaning set forth in Section 3.17(a) hereof.
"Exchange Act" shall have the meaning set forth in Section 5.05
hereof.
"Excluded Assets" shall have the meaning set forth in Section
1.01(b) hereof.
"Excluded Liabilities" shall have the meaning set forth in Section
1.01(d) hereof.
"Final Earn Out Payment" shall have the meaning set forth in Section
2.02(b)(v) hereof.
"First Listed Sections" shall have the meaning set forth in the
introductory paragraph of Section III hereof.
"Full Year Financial Statements" shall have the meaning set forth in
Section 3.05 hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Authority" shall mean the collective reference to any
court, tribunal, government, or governmental agency, authority or
instrumentality, Federal, state or local, or domestic or foreign.
"Hazardous Substance" shall have the meaning set forth in Section
3.13(c).
00
00
"XXX Xxx" shall have the meaning set forth in Section 7.10 hereof.
"Health Contract" shall mean, collectively, the Company's Blue
Select Benefit Program (policy no. 00-89660) from Blue Cross and Blue Shield of
New Jersey, Inc., the Company's group life insurance policy no. J00189-001
(Class I) issued by Medical Life Insurance Company and the Company's dental
insurance policy no. 0022103 issued by Prudential Health Care Group.
"Income Taxes" shall mean all Federal, state, local, foreign and
other income or gains taxes, howsoever computed or denominated, and all
estimated payments, interest, penalties, fines, costs and assessments in respect
thereof.
"Income Tax Returns" shall mean all Federal, state, local, foreign
and other Income Tax returns, reports and declarations.
"Indemnification Matter" shall have the meaning set forth in Section
11.03(a) hereof.
"Indemnitee" shall have the meaning set forth in Section 11.03(a)
hereof.
"Indemnitor" shall have the meaning set forth in Section 11.03(a)
hereof.
"Indemnity Notice" shall have the meaning set forth in Section
11.03(a).
"Indemnity Notice Period" shall have the meaning set forth in
Section 11.03(b) hereof.
"Independent Auditor" shall have the meaning set forth in Section
2.02(b) hereof.
"Initial Earn Out Payment" shall have the meaning set forth in
Section 2.02(b)(ii) hereof.
"Intellectual Property" shall have the meaning set forth in Section
3.22.
"Inventory" shall have the meaning set forth in Section 1.01(a)(iii)
hereof.
"Laws" shall mean all currently existing Federal, state, local and
foreign laws, statutes, ordinances, regulations, rules, directives and executive
orders.
"Lien" shall mean any mortgage, pledge, charge, security interest,
easement or other encumbrance of any kind or nature whatsoever and however
arising.
"Listed Sections" shall have the meaning set forth in the
introductory paragraph of Section III hereof.
"Lockbox" shall have the meaning set forth in Section 1.01(a)(xii)
hereof.
"Management Bonuses" shall have the meaning set forth in Section
1.01(c) hereof.
"Material Adverse Effect" shall have the meaning set forth in
Section 3.01 hereof and shall mean a Material Adverse Effect on the Purchaser in
the conduct of the Business (other than in respect of Development Projects)
after the Closing.
"Multiemployer Plan" shall have the meaning set forth in Section
3.17(a) hereof.
"New Jersey Audit" shall have the meaning set forth in Section
1.01(d)(v)(2) hereof.
"New York Audit" shall have the meaning set forth in Section
1.01(d)(v)(2) hereof.
"1997 Balance Sheet" shall have the meaning set forth in Section
3.05 hereof.
"1997 Balance Sheet Date" shall mean the date of the 1997 Balance
Sheet.
52
58
"1998/1999 EBITDA" shall mean (A) the sum of (x) EBITDA for the
fiscal year ending October 31, 1998 and (y) EBITDA for the fiscal year ending
November 6, 1999, divided by (B) two.
"Non Income Taxes" shall mean all Federal, state, local, foreign and
other taxes which are not Income Taxes, and all interest, penalties, fines,
costs and assessments in respect thereof.
"Non Income Tax Returns" shall mean all Federal, state, local,
foreign and other Non Income Tax returns, reports and declarations.
"Non Listed Sections" shall have the meaning set forth in the
introductory paragraph of Section III hereof.
"Norton Common Stock" shall have the meaning set forth in Section
2.02(a) hereof.
"Outstanding Checks" shall have the meaning set forth in Section
1.01(d)(vi) hereof.
"Permits" shall have the meaning set forth in Section 3.13(b)
hereof.
"Permitted Liens" shall mean (a) Liens for Income Taxes and Non
Income Taxes not yet due and payable or being contested in good faith by
appropriate proceedings and for which adequate reserves have been established on
the books and records of the Company, (b) mechanics', materialmen's, shippers',
suppliers', vendors' or similar Liens arising by operation of law and in the
ordinary course of business securing amounts which are not delinquent, (c)
deposits made in compliance with workers compensation, unemployment insurance
and social security laws, (d) deposits to secure the performance of bids, trade
agreements, leases, statutory obligations and surety and appeal bonds, (e) any
provision of any Contract pursuant to which the Premises are leased or any such
Contract which might constitute or give rise to a Lien, (f) minor imperfections
of title to any Asset which do not materially affect the use or value of such
Asset, and (g) prior to the Closing, "Permitted Liens" shall include Liens
securing the Chase Indebtedness, but in connection with and after the Closing,
"Permitted Liens" shall not include such Liens.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a Governmental Authority.
"Preferred Stock" shall mean all issued and outstanding shares of
10% Cumulative Preferred Stock, $.01 par value per share, of the Company.
"Premises" shall have the meaning set forth in Section 3.13(c)
hereof.
"Products" shall mean any and all products and merchandise of the
Company.
"Property" shall have the meaning set forth in Section 1.01(a)(ii).
"Pro Rata Percentage" shall have the meaning set forth in Section
2.02(b)(vi) hereof.
"Purchase Price" shall have the meaning set forth in Section 2.01
hereof.
"Purchaser Group" shall mean the Purchaser, Norton and the
Purchaser's and Norton's subsidiaries, affiliates and parent entities.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 11.01 hereof.
"Receivables" shall have the meaning set forth in Section 1.01(a)(v)
hereof.
"Retained Contracts" shall mean, without duplication, (i) all of the
Company's (or any affiliate's) insurance policies, (ii) except for the Health
Contract which shall be a "Contract" for purposes hereof, all agreements,
instruments and other documents evidencing, governing or in respect of Benefit
Plans, Multiemployer Plans and all of the Company's (or any affiliate's) other
retirement, employee benefit, health (including post-retirement health), dental,
medical, welfare, severance, bonus, profit sharing and similar plans or
programs, (iii) all Debt Documents evidencing, governing or in respect of
Company
53
59
Indebtedness, (iv) all other Contracts evidencing, governing or in respect of
Excluded Liabilities, (v) this Agreement, including all rights and entitlements
hereunder, (vi) all agreements with any of the Stockholders and (vii) the
Severance Contract, dated April 4, 1997, between the Company and Xxxxxx Xxxxxx.
"Rule 144" shall have the meaning set forth in Section 3.29(iii)
hereof.
"Schedules" shall mean the Schedules attached hereto and made a part
of this Agreement.
"Second Listed Section" shall have the meaning set forth in the
introductory paragraph of Section III hereof.
"Security Default" shall mean the failure of Norton to have the Earn
Out L/C issued or to pay the Secured Earn Out Amount if and when required
pursuant to Section 2.02(b)(viii).
"SEC Documents" shall have the meaning set forth in Section 3.29(i)
hereof.
"Secured Earn Out Amount" shall have the meaning set forth in
Section 2.02(b)(viii).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange" shall have the meaning set forth in the
definition of Average Market Value.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 11.02 hereof.
"Stock Earn Out Amount" shall have the meaning set forth in Section
2.02(a) hereof.
"Stock Earn Out Cap" shall mean a number of shares of Norton Common
Stock which, after giving effect to their issuance, does not exceed a number of
shares of Norton Common Stock constituting 12% of the aggregate number of
outstanding shares of Norton Common Stock determined on the third business day
preceding the Earn Out Payment Date.
"Stockholders Representative" shall have the meaning set forth in
Section 13.14 hereof.
"Subordinated Debt" shall mean all Company Indebtedness arising
under (i) the 20% Subordinated Note, dated December 31, 1991, in the original
principal amount of $3,185,470 issued by Miss Xxxxx Holding Corporation in favor
of Terold, N.V., due in full on December 31, 1999, (ii) the 20% Subordinated
Note, dated December 31, 1991, in the original principal amount of $3,000,000
issued by Miss Xxxxx Holding Corporation in favor of Triumph Capital L.P., II,
due in full on December 31, 1999, and (iii) the 20% Subordinated Note, dated
December 31, 1991, in the original principal amount of $814,530 issued by Miss
Xxxxx Holding Corporation in favor of TCR International Partners, due in full on
December 31, 1999.
"Taxes" shall mean Income Taxes and Non Income Taxes.
"Tax Returns" shall mean Income Tax Returns and Non Income Tax
Returns.
"Third Listed Sections" shall have the meaning set forth in the
introductory paragraph of Section III hereof.
"Warehouses" shall have the meaning set forth in Section
1.01(a)(iii) hereof.
* * *
54
60
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
MISS XXXXX, INC.
By: /s/ XXXXXX XXXXXXX
----------------------
Name: Xxxxxx Xxxxxxx
Title:Chairman/CEO
ME ACQUISITION CORP.
By: /s/ XXXXX XXXXXXXXX
----------------------
Name: Xxxxx Xxxxxxxxx
Title:Vice Chairman
NORTON XXXXXXXXXX, INC.
By: /s/ XXXXX XXXXXXXXX
-----------------------
Name: Xxxxx Xxxxxxxxx
Title:President
TRIUMPH CAPITAL, X.X. XX
By Triumph Management, L.P., its general partner
By: /s/ XXXXXXX X. XXXXXX
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title:General Partner
TERBEM LIMITED
By: /s/ XXXX XXXXX
---------------------------
Name: Xxxx Xxxxx
Title:Attorney-in-Fact
BOBST INVESTMENT CORP.
By: /s/ XXXX XXXXX
--------------------------
Name: Xxxx Xxxxx
Title:Attorney-in-Fact
TCRI OFFSHORE PARTNERS C.V.
By Three Cities Management Partners, L.P., its
general partner
By Three Cities Research, Inc., its
general partner
55
61
By: /s/ XXXXXX XX XXXXX
------------------------------
Name: Xxxxxx Xx Xxxxx
Title: President
TCR INTERNATIONAL PARTNERS L.P.
By Three Cities Management Partners, L.P., its
general partner
By Three Cities Research, Inc., its
general partner
By: /s/ XXXXXX XX XXXXX
-------------------------
Name: Xxxxxx Xx Xxxxx
Title: President
/s/ XXXXXX XXXXXXX
--------------------
Xxxxxx Xxxxxxx
/s/ XXXXXX XXXXXXXX
----------------------
Xxxxxx Xxxxxxxx
/s/ XXXXXX XXXXXXXXX
-----------------------
Xxxxxx Xxxxxxxxx
/s/ XXXX XXXXX
---------------------------
Xxxxxxxxx Xxxxxxx
Attorney-in-Fact
56
62
Schedule 1.01A
Lenders and Lenders' Commitments
Revolving
Credit Term Loan
Lender Commitment Commitment Percentage
------ ---------- ---------- ----------
NationsBanc Commercial $62,500,000 $7,500,000 50%
Corporation
The CIT Group/Commercial $62,500,000 $7,500,000 50%
Services, Inc.
63
SCHEDULE 1.01B
FISCAL YEAR, FISCAL MONTH, FISCAL QUARTER
PART A: "FISCAL YEAR"
Each fiscal year end for the Company and its Consolidated
Subsidiaries is October 31st, if such date falls on a
Saturday, or the first Saturday following October 31st. The
Company and its Consolidated Subsidiaries operate on a 52 or
53-week fiscal year.
See below for examples of actual fiscal years.
PART B: "FISCAL MONTH"
Each fiscal month end for the Company and its Consolidated
Subsidiaries is the 30th or 31st of such month, if such date
falls on a Saturday, or the first Saturday following the 30th
or 31st.
See below for examples of actual fiscal months.
PART C: "FISCAL QUARTER"
Each fiscal quarter end for the Company and its Consolidated
Subsidiaries is January 31st, April 30th, July 31st and
October 31st, if such date falls on a Saturday, or the first
Saturday following January 31st, April 30th, July 31st and
October 31st. The Company and its Consolidated Subsidiaries
operate on a 13-week quarter (4 weeks, 4 weeks, 5 weeks).
See below for examples of actual fiscal quarters.
FY PERIOD ENDING DATES FOR:
------------------------------------------------
1997 1998 1999 2000
QUARTER PERIOD # MONTH # WKS/MTH 96-97 97-98 98-99 99-00
------- -------- ----- --------- ----- ----- ----- -----
1 November 4 11/29/97 11/28/98 12/04/99
1st 2 December 4 12/27/97 12/26/98 01/01/00
3 January 5 01/31/98 01/30/99 02/05/00
4 February 4 02/28/98 02/27/99 03/04/00
2nd 5 March 4 03/28/98 03/27/99 04/01/00
6 April 5 05/02/98 05/01/99 05/06/00
7 May 4 05/30/98 05/29/99 06/03/00
3rd 8 June 4 06/27/98 06/26/99 07/01/00
9 July 5 08/02/97 08/01/98 07/31/99 08/05/00
10 August 4 08/30/97 08/29/98 08/28/99 09/02/00
4th 11 September 4 09/27/97 09/26/98 09/25/99 09/30/00
12 October 5 11/01/97 10/31/98 11/06/99 11/04/00
Note: Fiscal 1999 is a 53-wk year
1
64
SCHEDULE 1.01C
PRIOR SEASON INVENTORY
------------------------------------------------------------------------------------------------------
DATE ELIGIBLE % INELIGIBLE
---- ---------- ----------
------------------------------------------------------------------------------------------------------
1. July 1 - Sept.30 Year 2 - 75% Fall Year 1 without - All Prior Season inventory
confirmed purchase order not set forth in Eligible
Amount column
- 50% Holiday, Spring and
Transition Year 1 without
confirmed purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
2. Oct. 1 - Nov. 30 Year 2 - 75% Fall and Holiday - All Prior Season Inventory
Year 1 without confirmed not set forth in Eligible
purchase order Amount column
- 50% Spring and Transition
Year 1 without confirmed
purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
3. Dec. 1 - Dec.31 Year 2 - 75% Holiday Year 1 - All Prior Season Inventory
without confirmed not set forth in Eligible
purchase order Amount column
- 50% Spring, Transition
and Fall Year 1 without
confirmed purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
65
------------------------------------------------------------------------------------------------------
4. Jan. 1 - Mar. 31 Year 2 - 75% Spring Year 1 - All Prior Season Inventory
without confirmed not set forth in Eligible
purchase order Amount column
- 50% Transition, Fall and
Holiday Year 1 without
confirmed purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
5. Apr. 1 - May 31 Year 2 - 75% Spring and Transition - All Prior Season Inventory
Year 1 without confirmed not set forth in Eligible
purchase order Amount column
- 50% Fall and Holiday
Year 1 without confirmed
purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
6. Jun. 1 - Jun. 30 Year 2 - 75% Transition Year 1 - All Prior Season Inventory
without confirmed not set forth in Eligible
purchase order Amount column
- 50% Fall, Holiday and
Spring Year 1 without
confirmed purchase order
- 100% Prior Season
Inventory with confirmed
purchase order
------------------------------------------------------------------------------------------------------
66
SCHEDULE 5.01(d)(v)
ADDITIONAL PLEDGED STOCK
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
None
Norty's Inc.
None
MISS XXXXX, INC.
1. X.X. Xxxxxxx Company 859 shares of common stock
2. Xxxxxxx Gordman 1/2-Price Stores, Inc. 55,449 shares of common stock
3. Xxxxxx Corporation 2,675 shares of common stock
4. Xxxxxxx Holdings, Ltd. 354 shares of common stock
5. Xxxx Xxxxxx Stores, Inc. 2,267 shares of common stock
1
67
SCHEDULE 5.01(d)(xxi)
CONTRACTORS
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
Cutting Edge Services, Inc. 0000 Xxxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
Railroad Enterprises, Inc. 0 Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
G.A.G.U. Inc. 000 Xxxxxx Xxxx Xxxxxxx/
00-00 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Major/Newmark Trucking 0000 Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
NORTY'S INC.
None
MISS XXXXX, INC.
None
1
68
SCHEDULE 6.01(e), PART A
INVENTORY LOCATIONS
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
VDR # CONTRACTOR VDR # CONTRACTOR
----- ---------- ----- ----------
703 Nerely (Nova Sportswear) 748 Fancy Inc. #2
0000 Xxxxx Xxxxxx 0000 00xx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
705 Pure Gold 757 Tan Fashion, Inc.
(formerly Lees H, Pretty H) 00-00 Xxxxxxx Xxxxx Xxxx.
00-00 00xx Xxxxxx Xxxxxxxx, XX 00000
Xxxxxx, XX 00000
707 Evertop Fashions 759 Grandex Inc. (A.G. Royal)
(Formerly Xxxxx) 00-00 Xxxxxx Xxxxxx
0000 Xxxxx Xxxxxx Xxxxxxxx, XX 00000
000 Xxxxxx Corp (H&K) 775 Whitehorse (Winner)
00-00 00xx Xxxxxx 000 00xx Xxxxxx
XXX, XX 00000 Xxxxxxxx, XX 00000
712 J&N (Xxxxx) 780 Milano Fashions
00-00 00xx Xxx., 0xx Xxx 000 00xx Xxxxxx
XXX, XX 00000 Brooklyn, NY
714 K-11 (SKK) 782 Supreme
000 00xx Xx. 000 X. 00xx Xx., 0xx Xxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
719 Ado Fashions 000 Xxxxxxxx
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx 00-00 00xx Xxxxx, 0xx Xxx
Xxx Xxxx, XX Xxxxxx, XX 00000
727 Advance 786 K.A.K.
0000 Xxxxxxx Xxxxxx 00-00 Xxxxxxx Xxxxx Xxxx
XXX 000 00xx Xxxxxx Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000
747 Qiao Jing (Cosmo) 000 Xxx Xxxxxxx (Xxxx & Xxxxxx)
000 00xx Xx 00-00 Xxxxx Xx., 0xx Xxx
Xxxxxxxx, XX XXX, XX 00000
See Parts B, C and D of Exhibit 6.01(e) for additional Inventory locations.
1
69
SCHEDULE 6.01(e), PART A
INVENTORY LOCATIONS
NORTY'S INC.
See Parts B, C and D of Exhibit 6.01(e) for additional Inventory locations.
MISS XXXXX, INC.: CONSIGNED INVENTORY W/ XXXXXX XXXX, INC. STORES
STORE # LOCATION TRADENAME
------- -------- ---------
000 Xxxxxx Xxxxxxxxx Xxxxxxxx Xxxxx
Xxx 00 & Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
000 Xxxx Xxxxxx Xxxx #2 Xxxxxxxx Xxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxx #00
Xxxxxxx, XX 00000
000 Xxxxxxxx Xxxxxx Store #2 Xxxxxxxx Xxxxx
Lincoln Highway East
00 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
000 Xxxx Xxxxxxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx
000 Xxxxxx Xxx - Xxxxx #00
Xxxxxxxxx, XX 00000
251 000 Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Family Discount Apparel
Xxxxxxxxx, XX 00000
276 The Crossings Factory Stores Xxxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
277 Grove City Factory Shops Xxxxxxxx Xxxxx
Xxxxxxxxxx #00 & XX Xxxxx #000
Xxxxx Xxxx, XX 00000
278 000 Xxxxx 0xx Xxxxxx Xxxxxx'x
Xxxxxx, XX 00000
See Parts B, C and D of Exhibit 6.01(e) for additional Inventory locations.
2
70
SCHEDULE 6.01(e), PART B
INVENTORY LOCATIONS
Company Legal Name Address
------- ---------- -------
Norton XxXxxxxxxx of Xxxxxx, Inc. Norton XxXxxxxxxx of Xxxxxx, Inc. 0000 Xxxxxx Xxxx
(Piece Goods Warehouse) Xxxx Xxxxxxxxxx, XX 00000
Norton XxXxxxxxxx of Xxxxxx, Inc. Cutting Edge Services, Inc. 0000 Xxxxxx Xxxx
(Xxxxxxx) Xxxx Xxxxxxxxxx, XX 00000
Norton XxXxxxxxxx of Xxxxxx, Inc. Railroad Enterprises, Inc. 0 Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Norton XxXxxxxxxx of Xxxxxx, Inc. G.A.G.U. Inc. 000 Xxxxxx Xxxx Xxxxxxx/
00-00 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Norton XxXxxxxxxx of Xxxxxx, Inc. Major/Newmark Trucking 0000 Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Norton XxXxxxxxxx of Xxxxxx, Inc. Dynamic Distribution Center 00 Xxxxx Xxxxx
Xxxxxx Xxxx, XX
Norty's Inc. Norty's Inc. 00 Xxxxxx Xx.
Xxxxxxxx, XX 00000
Miss Xxxxx, Inc. Miss Xxxxx, Inc. 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
1
71
SCHEDULE 6.01(e), PART C
INVENTORY LOCATIONS
CHIEF EXECUTIVE OFFICES AND PLACES OF BUSINESS
NORTON XXXXXXXXXX, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(Chief Executive Office)
NORTON XXXXXXXXXX OF XXXXXX, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(Chief Executive Office)
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
(Showroom)
NORTY'S INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(Chief Executive Office)
See Schedule 6.01(e) Part D for Norty's retail locations
MISS XXXXX, INC.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
(Chief Executive Office/Showroom)
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(Accounting Office)
1
72
SCHEDULE 6.01(e), PART D
INVENTORY LOCATIONS
COMPANY STATE LEASE LOCATION LESSOR/PAYEE
------- ----- -------------- ------------
Norty's Inc. PA 00 X. Xxxxxxxxxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 X.X. Xxx 00000
Telephone (000)000-0000 Xxxxxxxxx, XX 00000-0000
Norty's Inc. GA Tanger Factory Outlet Tanger Properties L.P.
800 Xxxxxx X. Xxxxxx Blvd. X.X. Xxx 00000
Xxxxx 000 Xxxxxxxxxx, XX 00000
Xxxxxxxx, XX 00000 Telephone (000) 000-0000
Telephone (000) 000-0000
Norty's Inc. PA Reading Liquidation Center Xxxx Realty Company
000 Xxxx Xxxxxx 000 Xxxxx 0xx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone (000)000-0000
Norty's Inc. GA 0000 Xxxxxx Xxxxx Tanger Properties L.P.
Xxxxxx Xxxxx, XX 00000 X.X. Xxx 00000
Telephone (000) 000-0000 Xxxxxxxxxx, XX 00000
Telephone (000) 000-0000
Norty's Inc. TN Five Oaks Factory Stores Five Oaks Outlet Center
1645 Parkway, Suite 440 Epoch Projects Inc.
Xxxxxxxxxxx, XX 00000 000 Xxxxxxx Xxxxxx
Telephone (000) 000-0000 Xxxxxxxxx, XX 00000
Norty's Inc. OH 0000 Xxxxxxx Xxxxx Xxxx. Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxxxx, XX 00000 X.X. Xxx 000000
Telephone (000) 000-0000 Xxxxxxxxx, XX 00000-0000
Norty's Inc. PA 000 Xxxxxx Xxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000 Factory Stores at Hershey
Telephone (000) 000-0000 Xxxx 0000
Xxxxxxx, XX 00000-0000
Norty's Inc. TN 000 Xxxxxx Xxxxxx Xxxxx Music Valley Partners
Xxxxxxxxx, XX 00000 X.X. Xxx 0000
Telephone (000) 000-0000 Xxxxxxxxxx, XX 00000
Norty's Inc. FL St. Augustine Outlet Center New Plan Realty
2700 SR. 16, Suite 907 1120 Ave. of the Americas
St. Augustine, FL 32092 Xxx Xxxx, XX 00000
Telephone (000) 000-0000
Norty's Inc. PA I79 & US Route 208, Suite 000 Xxxxx Xxxx Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000 000 X. Xxxxx Xxxxxx 19th Floor
Telephone (000) 000-0000 Xxxxxxxxx, XX 00000
1
73
SCHEDULE 6.01(e), PART D
INVENTORY LOCATIONS
COMPANY STATE LEASE LOCATION LESSOR/PAYEE
------- ----- -------------- ------------
Norty's Inc. FL Orlando Shopping Center Xxxx Enterprises
0000 Xxxxxxxxxxxxx Xxxxx 000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone (000) 000-0000
Norty's Inc. SC Outlet Park at Waccamaw Mall Xxxx Enterprises
0000 Xxxxxxx Xxxx 000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000 Xxxxxxx, XX 00000
Norton XxXxxxxxxx NY 000 Xxxxxxx Xxxxxx The Arsenal Co.
of Squire, Inc. 9th and 10th Floors c/o Adams & Co. Real Estate, Inc.
Xxx Xxxx, XX 00000 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Norton XxXxxxxxxx NY 1407 Broadway Xxxxxxxxx Associates, LLP
of Squire, Inc. 26th Floor 0000 Xxxxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Miss Xxxxx, Inc. NY 1407 Broadway Xxxxxxxxx Associates, LLP
4th Floor 0000 Xxxxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Norty's Inc. PA 00 Xxxxxx Xx. Xxxxxx
Xxxxxxxx, XX 00000 00 Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Norton XxXxxxxxxx NJ 0000 Xxxxxx Xxxx Xxxxxxxxx:
of Squire, Inc. Xxxx Xxxxxxxxxx, XX 00000 Cutting Edge (formerly Xxxx
Xxxxx Productions)
0 Xxxxxx Xxxx.
Xxxxx Xxxxxxxxxx, XX 00000
Lessor:
Xxxxx Management Inc.
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Miss Xxxxx, Inc. NJ 000 Xxxxx Xxxxxx Xxxxxxxxx Xxxxxxxxxx
Xxxxxxxxx, XX 00000 00 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx XxXxxxxxxx XX 0000 Broadway Sublessee:
of Squire, Inc. Xxx Xxxx, XX 00000 Orient Consulting
0000 0xx Xxxxxx
Xxx Xxxx, XX 00000
2
74
SCHEDULE 6.01(f)
SUBSIDIARIES
NAME OWNERSHIP STATE OF INCORP.
---- --------- ----------------
Miss Xxxxx, Inc. 100% of the capital stock Delaware
(f/k/a ME Acquisition Corp.) owned by Norton
XxXxxxxxxx, Inc.
Norton XxXxxxxxxx of Xxxxxx, 100% of the capital stock New York
Inc. owned by Norton
XxXxxxxxxx, Inc.
Norty's Inc. 100% of the capital stock Delaware
owned by Norton
XxXxxxxxxx of Xxxxxx, Inc.
1
75
SCHEDULE 6.01(g)
LITIGATION
NORTON XXXXXXXXXX, INC.
TAX AUDITS
See Schedule 6.01(k)
NORTON XXXXXXXXXX OF XXXXXX, INC.
TAX AUDITS
See Schedule 6.01(k)
SILK INDIA, INC., vs. NORTON XXXXXXXXXX OF XXXXXX, INC.
Supreme Court of the State of New York - County of New York Index No.
97-602695 (complaint alleges Norton improperly rejected fabric and refused to
pay and is demanding a judgment in the sum of $38,131.88 with interest since
1/2/97, costs and disbursements.
NORTY'S INC.
TAX AUDITS
See Schedule 6.01(k)
MISS XXXXX, INC.
TAX AUDITS
See Schedule 6.01(k)
YEILDINGS, INC.; XXX X. XXXX, TRUSTEE v. MISS XXXXX
United States Bankruptcy Court - Northern District of Alabama, Case No.
96-07068-BGC-7 (complaint alleges a preferential transfer in the amount of
$24,397.60 from Yeildings, Inc. to Miss Xxxxx).
VIOLATION OF THE STATE UNIFORM CONSTRUCTION CODE ACT AND REGULATIONS
Notice of Violation and Order to Terminate and Notice of Order of Penalty
issued August 19, 1997, for occupation of adjacent storage space at warehouse
and for having opened a wall without securing permits.
ALLEGED COPYRIGHT INFRINGEMENT
Pursuant to a letter to Miss Xxxxx, Inc. dated March 20, 1997, By-Design,
L.L.C. alleged that a sweater appearing at X.X. Penney and purportedly
infringing By-Design's copyright in a fabric design was being promoted and/or
sold by Miss Xxxxx, Inc. Miss Xxxxx, Inc. denies that the sweater design in
question has ever been promoted or sold by Miss Xxxxx, Inc. No further
correspondence from By-Design has been received and the matter is considered
closed.
ORAL CLAIM BY EMPLOYEE
A former employee of Miss Xxxxx, Inc. whose employment terminated on August
15, 1997, has made an oral claim of harassment which is currently under
investigation by Miss Xxxxx, Inc.
1
76
SCHEDULE 6.01(j)
ERISA
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
Norton XxXxxxxxxx of Xxxxxx, Inc. 401(k) Savings Plan administered by Mass
Mutual, effective as of January 1, 1995.
Norton XxXxxxxxxx of Xxxxxx, Inc. Group Dental administered by First Fortis
Insurance Co., effective as of November 1, 1996.
Norton XxXxxxxxxx of Xxxxxx, Inc. Group Health administered by Oxford Health
Plans, Inc., effective as of July 1, 1995.
Norton XxXxxxxxxx of Xxxxxx, Inc. Group Health administered by HIP, effective as
of November 1, 1995. As of September 10, 1997 there are only 3 participating
members, therefore it is not necessary to complete a Form 5500 Series for this
plan.
Norton XxXxxxxxxx of Xxxxxx, Inc. Group Long Term Disability/Short Term
Disability administered by First Fortis effective as of April 1, 1995.
Norton XxXxxxxxxx of Xxxxxx, Inc. Cafeteria Plan - Section 125, effective as of
January 1, 1994. This Plan includes a Flexible Spending Account and its
administration is handled by PayPro Inc.
Medical insurance covered for life for Xxx Xxxxxxxxx under the Separation
Agreement between Xxx Xxxxxxxxx and Xxxxxx XxXxxxxxxx of Xxxxxx, Inc dated as
of May 1, 1997.
Medical insurance covered for life for Norton Xxxxxxxx under the Separation
Agreement between Norton Xxxxxxxx and Xxxxxx XxXxxxxxxx of Xxxxxx, Inc dated
as of May 3, 1997.
1
77
SCHEDULE 6.01(j)
ERISA
NORTY'S INC.
None
MISS XXXXX, INC.
Miss Xxxxx, Inc. Employees' Pension Trust, effective as of March 31, 1970, as
amended. This plan will terminate after the closing of the transactions
contemplated by the Acquisition Agreement.
Miss Xxxxx, Inc. Employees' Deferred Profit Sharing Plan and Trust, effective as
of January 1, 1989, as amended. This plan will terminate after the closing of
the transactions contemplated by the Acquisition Agreement.
Miss Xxxxx, Inc. Health & Welfare Plan, effective May 1, 1992, held by Blue
Cross Blue Shield of New Jersey, Inc.
Group Dental Plan for Miss Xxxxx, Inc., control number 0022103, held by The
Prudential Insurance Co.
Group Life Insurance Plan, insured by Medical Life Insurance Company
Medical insurance covered for Xxxxxx Xxxxxxxxx pursuant to section 1.01(c)(i) of
the Agreement of Purchase and Sale by and among Miss Xxxxx, Inc., Certain of
the Stockholders of Miss Xxxxx, Inc., ME Acquisition Corp. and Norton
XxXxxxxxxx, Inc.
2
78
SCHEDULE 6.01(k)
TAXES, ETC.
NORTON XXXXXXXXXX, INC.
TAX AUDITS
New York City Income Tax for Norton XxXxxxxxxx, Inc. and Subsidiaries for 1995
tax return - in process by the City of New York
Federal Income Tax for Norton XxXxxxxxxx, Inc. and Subsidiaries for the fiscal
year ended 11/4/95 (1994 tax return) - received notice from the Internal
Revenue Service ("IRS")
NORTON XXXXXXXXXX OF XXXXXX, INC.
TAX AUDITS
Federal Income Tax for Norton XxXxxxxxxx of Xxxxxx, Inc. and Subsidiaries for
the fiscal year ended 11/6/92 (1991 tax return) - in process by the IRS
Federal Income Tax for Norton XxXxxxxxxx of Xxxxxx, Inc. and Subsidiaries for
the fiscal year ended 11/5/93 (1992 tax return) - in process by the IRS
Federal Income Tax for NM Acquisition for the period 7/17/91 to 11/1/91 - in
process by the IRS
See 'Tax Audits' under Norton XxXxxxxxxx, Inc.
NORTY'S INC.
TAX AUDITS
Federal Income Tax for Norton XxXxxxxxxx of Xxxxxx, Inc. and Subsidiaries for
the fiscal year ended 11/6/92 (1991 tax return) - in process by the IRS
See 'Tax Audits' under Norton XxXxxxxxxx, Inc.
MISS XXXXX, INC.
TAX AUDITS
State of New Jersey - pending tax audit for Sales and Use Tax
New York City Income Tax - pending desk audit
1
79
SCHEDULE 6.01(s)
OPERATING LEASE OBLIGATIONS
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
See Schedule 6.01(e), Part D for list of Real Property Leases
See attached Schedule of Lease Commitments
See attached Schedule of Leased Automobiles
NORTY'S INC.
See Schedule 6.01(e), Part D for list of Real Property Leases
MISS XXXXX, INC.
See Schedule 6.01(e), Part D for list of Real Property Leases
See attached Schedule of Leased Automobiles
Copy equipment contract, dated 2/11/96 between Xerox Corporation and Miss Xxxxx,
Inc., expiring 2/11/99, for equipment at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
Copy equipment contract, dated 8/30/94 between Xerox Corporation and Miss Xxxxx,
Inc., expiring 8/30/99, for equipment at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
Copy equipment contract, dated 12/31/96 between Xerox Corporation and Miss
Xxxxx, Inc., expiring 12/31/00, for equipment at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx
Telephone equipment contract, (undated) between Miss Xxxxx, Inc. and Precision
Interconnect Conversions Corp. for Toshiba telephone/voicemail equipment at
Teterboro office
Equipment contract, dated as of 4/24/96, between Miss Xxxxx, Inc. and
Caterpillar Financial Services Corporation for Caterpillar Lift Truck
1
80
LEASE
TYPE OF LEASE REFERENCE PAYEE/PREMISES LEASE TERM ANNUAL RENT MONTHLY RENT
-----------------------------------------------------------------------------------------------------------------------------------
MACHINE LEASES:
Toshiba 4550 copier w/20 bin sorter M - 1 Scriptex (X. Xxxxxxxxxx) 6/96-6/00 $ 11,422 $ 952
Toshiba 5540 copier M - 2 Scriptex (Xxxxxx) 8/96-7/00 8,873 739
CANON COLOR COPIER M - 3 Copelco (463 Seventh Avenue) 12/95-11/98 19,848 1,654
PITNEY XXXXX CREDIT CORP M - 4 Postage Machine (E580 E510-463 7th) 3/20/97-6/20/01 2,741 228
PITNEY XXXXX - CARLSTADT M - 5 Model #'s G305 & 5976 + Other Month to Month 12,466 1,039
Toshiba 5540 copier w/20 bin sorter M - 6 AT&T (L#605426 - Ace. Dept) 1/97-12/99 13,588 1,132
Toshiba 2550 w/20 bin sorter & stand M - 7 Scriptex (DPS 10th floor 463 office) 9/1/95-12/11/98 6,760 563
Toshiba 3550 w/20 bin sorter & stand X - 0 Xxxxxxxx (Xxxx 000-00xx xxxxx - Xxx) 9/11/95-1/11/98 9,167 764
Toshiba 2550 w/20 bin sorter & stand M - 9 Scriptex (Cutting 463-10th floor Casanova) 9/13/95-12/13/98 7,750 646
Toshiba 2550 w/20 bin sorter & stand M - 10 Scriptex (XX Xxxxxx Studio Copier) 9/13/95-12/13/98 7,748 646
Panas 1307 Copier M - 11 Tokai (X. Xxxxxxxxxx) Month to Month 999 83
Canon NP 6050 M - 12 Danka (Design) 4/97-4/00 8,766 730
Kodak 2085 M - 13 Danka (463 Seventh Avenue) 7/97-7/02 15,960 1,330
Panasonic EP 4080 & FP 7113 M - 14 Panasonic Lease Program - X. Xxxxxxxxxx 12/7/95-3/7/99 3,844 320
Town Lift Truck - 50FCTT M - 15 Crown Credit Company - X. Xxxxxxxxxx 7/28/94-6/99 5,657 471
Town Lift Truck - 60 PE M - 16 Crown Credit Company - X. Xxxxxxxxxx 3/21/94-2/99 1,779 000
Xxxx Xxxx Xxxxx - XX0000 M - 17 Crown Credit Company - X. Xxxxxxxxxx 7/28/94-6/99 7,143 595
---------------------------
TOTAL EQUIPMENT LEASE COMMITMENTS $144,511 $12,043
===========================
00
XXXXXX XxXXXXXXXX OF XXXXXX, INC.
SCHEDULE OF LEASED AUTOMOBILES
ATTACHMENT FOR SCHEDULE 6.01(s)
EMPLOYEE AUTOMOBILE REF # PAYEE/LESSOR SEC. DEP. LEASE TERM
-------- ---------- ----- ------------ --------- ----------
1 Xxxxxx, Xxxxxx 1997 BMW 740IL 3775 Country Imported Car Corp 1,055* 1/28/97 - 4/20/99
2 Xxxxxxxxx, Xxxxx 1997 Audi A8 Quattro 4583 VW Credit 1,225 5/10/97 - 5/10/00
3 Xxxxxxxx, Xxxx 1997 Nissan Pathfinder 5177 Xxxxxx Pontiac 0 12/5/96 - 12/5/99
4 Xxxxxx, Xx 1997 Jeep Grand Cherokee 3607 UB Leasing 575 12/16/96 - 12/16/99
5 Xxxxxxx, Xxxxxx 1998 BMW 740IL 9615 Wide World of Cars, Inc. 1,153* 7/08/97 - 7/08/00
6 Xxxxxxxxx, Xxxxx 1995 BMW 540I 4121 BMW Financial Services 1,050 10/27/95 - 4/27/98
7 Xxxxxxxxx, Xxxxxx 1997 BMW 7401A 5602 BMW Financial Services 1,024* 7/25/96 - 7/25/99
8 Xxxxxxxxx, Xxxxx 1997 Mercedes S 500V 5958 Mercedes Benz Credit Corp. 0 11/26/96 - 11/24/98
9 Xxxxxx, Xxxxxx 1995 Grand Jeep Cherokee 5322 Chase 525 11/22/94 - 11/21/97
10 Xxxxxxxxx, Xxxxx 1996 Jeep Grand Cherokee 5411 Westbury Jeep 650 2/8/96 - 2/8/99
11 Xxxxxxx, Xxxxx 1997 Jeep Grand Cherokee 3671 U.B. Vehicle Leasing 525 12/05/96 - 12/05/99
12 Xxxxxx, Xxxxxx 1997 Land Rover 9518 Land Rover Xxxx Cove 900 1/31/97 - 1/31/00
13 Xxxxxxxx, Xxxx 1997 Ford Expedition 0366 First Union 625 1/27/97 - 1/27/00
14 Xxxxxxxx, Xxxxx 1997 Mercedes S 500 3892 Mercedes Benz Credit Corp. 0 9/31/96 - 9/30/98
15 Xxxxxxxx, Xxxx 1995 Porsche 993 0894 Champion Leasing Group 0 5/23/96 - 4/22/00
TOTAL
* Security Deposit is actually Last Monthly Payment
82
D.O.B. DRIVER MAKE/MODEL VEHICLE ID#s VALUE GARAGED
--------------------------------------------------------------------------------------------------------------
3/30/37 Xxxxxx Xxxxxxx 1995 BMW 7401 XXXXX000XXXX00000 63,740 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
3/26/52 Xxxxxx Xxxxxx 1997 Jeep Grand Cherokee IJ4GZ78Y2VC725543 36,815 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
9/19/45 Xxxxxxx Xxxxxxxxxx 1992 Volvo 964 XX0XX0000X0000000 32,000 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
5/6/46 Xxxx Xxxxx 1995 Lexus LS400 XXXXX00X000000000 55,553 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
8/13/52 Xxxxx Xxx 1996 Mercedes 320 WDBJF557TJ011331 47,000 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
0/0/00 Xxxxxx XX Xxxxx-XX 0000 Dodge Van Cargo 000XX00X0XX000000 18,435 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
1/11/55 Xxxxxx Xxxxxxxx 1994 BMW 740l XXXXX0000XXX00000 57,400 New York, NY
--------------------------------------------------------------------------------------------------------------
9/19/45 Xxxxx Xxxxxxx 1996 Jeep Grand Cherokee 0XXXX00X0XX000000 35,700 Telerboro, NJ
--------------------------------------------------------------------------------------------------------------
MONTHLY
LEASE
D.O.B. COLLISION COMP LICENSE# AMOUNT EXPIRES
----------------------------------------------------------------------
3/30/37 500 500 B181894991227249337 889.02 Sep-97
----------------------------------------------------------------------
3/26/52 500 500 X00000000000000 472.00 Apr-00
----------------------------------------------------------------------
9/19/45 500 500 K66315447309452 280.67 Jun-98
----------------------------------------------------------------------
5/6/46 500 500 172107707 760.00 Jun-98
----------------------------------------------------------------------
8/13/52 500 500 X00000000000000 763.00 Mar-99
----------------------------------------------------------------------
4/5/47 500 500 X0000000000000000 47 328.49 Sep-98
----------------------------------------------------------------------
1/11/55 500 500 X0000000000000000 55 882.67 Aug-97
----------------------------------------------------------------------
9/19/45 500 500 X0000000000000000 45 539.02 Jan-98
----------------------------------------------------------------------
Page 1
83
SCHEDULE 6.01(y)
TRADENAMES
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
Norton XxXxxxxxxx Xxxxxxxx Xxxxx
Norton XxXxxxxxxx Petite D.P.S.
Xxxxxx XxXxxxxxxx D.P.S. Woman
Xxxxxx XxXxxxxxxx Petite Norton Studio
Pant-Her Norton Studio Woman
Pant-Her Woman Xxxxxxxxx Xxxxx
Pant-Her Petite Xxxxxxxxx Xxxxx Petite
Xxxxxxx Xxxxxxxxx Xxxxx Woman
Xxxxxxx Woman Norty's
Modiano Petite
XxXxxxxxxx Wear
NORTY'S INC.
None
MISS XXXXX, INC.
Alyssa Xxxxxx
Xxxxx
Xxxxx Dimensions
Private Party
Return to Nature
Ricki
Sugar Blues
Sugar Co. Ltd.
White Mountain College
1
84
SCHEDULE 6.01(aa)
MATERIAL CONTRACTS
NORTON XXXXXXXXXX, INC.
1 Split Dollar Agreement dated March 8, 1994 between Norton XxXxxxxxxx,
Inc. and Northwestern Mutual Life Insurance Company for Xxxxxxx
Xxxxxxxxx.
2 Split Dollar Agreement dated March 8, 1994 between Norton XxXxxxxxxx,
Inc. and Northwestern Mutual Life Insurance Company for Norton
Xxxxxxxx.
3 Split Dollar Agreement dated March 8, 1994 between Norton XxXxxxxxxx,
Inc. and Northwestern Mutual Life Insurance Company for Xxx Xxxxxxxxx.
NORTON XXXXXXXXXX OF XXXXXX, INC.
1 Amended and Restated Factoring Agreement dated September 25, 1997
between NationsBanc Commercial Corporation and Norton XxXxxxxxxx of
Squire, Inc.
2 Agreement dated March 17, 1993 between Norton XxXxxxxxxx of Xxxxxx,
Inc. and Xxxx-Xxxxx Productions, Inc. (now known as Cutting Edge
Services, Inc.), as amended December 15, 1993 and November 7, 1995.
3 Agreement dated January 7, 1993 between Norton XxXxxxxxxx of Xxxxxx,
Inc. and Railroad Enterprises, Inc.
4 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxxxxxx Xxxxxxxxx dated as of November 5, 1993 payable to Norton
XxXxxxxxxx of Xxxxxx, Inc. in the original principal amount of
$920,000, as amended July 15, 1994 and March 27, 1995.
5 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Norton Xxxxxxxx dated as of November 5, 1993 payable to Norton
XxXxxxxxxx of Xxxxxx, Inc. in the original principal amount of
$920,000, as amended July 15, 1994 and March 27, 1995.
6 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxx Xxxxxxxxx dated as of November 5, 1993 payable to Norton XxXxxxxxxx
of Squire, Inc. in the original principal amount of $920,000, as
amended July 15, 1994 and March 27, 1995.
7 Letter Agreement dated February 1, 1993 between Norton XxXxxxxxxx of
Squire, Inc. and The May Department Stores Company for "Pant-Her".
8 License Agreement effective as of June 1, 1995 between Norton
XxXxxxxxxx of Xxxxxx, Inc. and Federated Merchandising for "Lauren
Alexandra".
9 See Schedule 6.01(e), Part D for the list of real property leases.
10 See Schedule 7.02(c)(iii) for the list of Guaranties.
11 See Schedule 7.02(m) for the Employment Agreements for Xxxxxxx
Xxxxxxxxx and Xxxxx Xxxxxxxxx.
1
85
SCHEDULE 6.01(aa)
MATERIAL CONTRACTS
NORTY'S INC.
None
MISS XXXXX, INC.
1 Factoring Agreement dated September 25, 1997 between NationsBanc
Commercial Corporation and Miss Xxxxx, Inc.
2 Consignment Agreement dated June 20, 1997 between Miss Xxxxx, Inc. and
Xxxxxx Xxxx, Inc.
3 See Schedule 6.01(e), Part D for the list of real property leases.
2
86
SCHEDULE 7.02(a)(ii)
LIENS
NORTON XXXXXXXXXX, INC.
See attached schedule of Liens
NORTON XXXXXXXXXX OF XXXXXX, INC.
Interest recorded on February 16, 1990 by Wilmington Trust Company for the
'Pant-Her' Trademark (does not secure any obligations).
Deposits made to landlords in connection with the leases set forth on Schedule
6.01(e), Part D.
See items 1, 2, 4, 5, 6, 7, 9, 10, 11, 12, 13 of Schedule 6.01(s) for Leased
Automobiles holding a security deposit.
See attached schedule of Liens
NORTY'S INC.
See attached schedule of Liens
MISS XXXXX, INC.
See attached schedule of Liens
See Schedule 6.01(s) for Leased Automobiles. All automobiles, except the
auto for Xxxxx Xxx, have a security deposit.
1
87
SCHEDULE 7.02(b)(ii)
INDEBTEDNESS
NORTON XXXXXXXXXX, INC.
See Schedule 7.02(c)(iii) for Guaranties.
NORTON XXXXXXXXXX OF XXXXXX, INC.
See Schedule 7.02(c)(iii) for Guaranties.
NORTY'S INC.
None
MISS XXXXX, INC.
None
1
88
SCHEDULE 7.02(c)(iii)
GUARANTIES
NORTON XXXXXXXXXX, INC.
Guaranty by Norton XxXxxxxxxx, Inc. of Miss Xxxxx, Inc. under the lease
for the premises located at 333 Xxxxxxxxx, XX 00000.
NORTON XXXXXXXXXX OF XXXXXX, INC.
Limited Guaranty dated December 30, 1993 made by Norton XxXxxxxxxx of
Xxxxxx, Inc. in favor of Xxxxx Management Inc. for Xxxx-Xxxxx Productions,
Inc. (now known as Cutting Edge Services, Inc.), as amended November 7,
1995 (6 months' rent, currently approximately $250,000).
Guaranty dated May 19, 1992 made by Norton XxXxxxxxxx of Xxxxxx, Inc. in
favor of 0 Xxxxxx Xxxxxxxxx Associates for Railroad Enterprises, Inc.
(currently approximately $500,000).
NORTY'S INC.
None
MISS XXXXX, INC.
None
1
89
SCHEDULE 7.02(f)(ii)
INVESTMENTS
NORTON XXXXXXXXXX, INC.
1 Norton XxXxxxxxxx, Inc. owns all of the issued and outstanding capital
stock of each of Norton XxXxxxxxxx of Xxxxxx, Inc. and Miss Xxxxx, Inc.
NORTON XXXXXXXXXX OF XXXXXX, INC.
1 Norton XxXxxxxxxx of Xxxxxx, Inc. owns all of the issued and
outstanding capital stock of Norty's Inc.
2 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxxxxxx Xxxxxxxxx dated as of November 5, 1993 payable to Norton
XxXxxxxxxx of Xxxxxx, Inc. in the original principal amount of
$920,000, as amended July 15, 1994 and March 27, 1995.
3 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Norton Xxxxxxxx dated as of November 5, 1993 payable to Norton
XxXxxxxxxx of Xxxxxx, Inc. in the original principal amount of
$920,000, as amended July 15, 1994 and March 27, 1995.
4 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxx Xxxxxxxxx dated as of November 5, 1993 payable to Norton XxXxxxxxxx
of Squire, Inc. in the original principal amount of $920,000, as
amended July 15, 1994 and March 27, 1995.
5 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxxxxx Xxxxxx dated as of November 5, 1993 payable to Norton XxXxxxxxxx
of Squire, Inc. in the original principal amount of $120,000, as
amended July 15, 1994 and March 27, 1995.
6 Amended and Restated Non-Negotiable Limited Recourse Promissory Note of
Xxxxxx Xxxxxxxxx dated as of November 5, 1993 payable to Norton
XxXxxxxxxx of Xxxxxx, Inc. in the original principal amount of
$120,000, as amended July 15, 1994 and March 27, 1995.
7 Promissory Note of Railroad Enterprises, Inc. in favor of Norton
XxXxxxxxxx of Xxxxxx, Inc. for the original principal amount of
$300,000.
1
90
SCHEDULE 7.02(f)(ii)
INVESTMENTS
NORTY'S INC.
None
MISS XXXXX, INC.
1 Miss Xxxxx, Inc. has acquired the following securities of the following
companies in the following amounts as a result of the bankruptcy or
liquidation of such company:
1. X.X. Xxxxxxx Company 859 shares of common stock
2. Xxxxxxx Gordman 1/2-Price Stores, Inc. 55,449 shares of common stock
3. Xxxxxx Corporation 2,675 shares of common stock
4. Xxxxxxx Holdings, Ltd. 354 shares of common stock
5. Xxxx Xxxxxx Stores, Inc. 2,267 shares of common stock
6. Xxxx Xxxxxx Stores, Inc. 11.375% Note due January 21, 2000 in
the amount of $4,800
7. Xxxx Xxxxxx Stores, Inc. 11.375% Note due January 21, 2000 in
the amount of $300
2
91
SCHEDULE 7.02(k)(ii)
PROMISSORY NOTES
NORTON XXXXXXXXXX, INC.
None
NORTON XXXXXXXXXX OF XXXXXX, INC.
See Schedule 7.02(f)(ii), items 2 through 6 under the heading "Norton XxXxxxxxxx
of Xxxxxx, Inc."
NORTY'S INC.
None
MISS XXXXX, INC.
None
1
92
SCHEDULE 7.02(m)
TRANSACTIONS WITH AFFILIATES
NORTON XXXXXXXXXX, INC.
Norton XxXxxxxxxx, Inc. 1994 Stock Option Plan
NORTON XXXXXXXXXX OF XXXXXX, INC.
Amended and Restated Employment Agreement dated as of December 15, 1995 between
Xxxxxxx Xxxxxxxxx and Norton XxXxxxxxxx of Xxxxxx, Inc.
Employment Agreement dated as of April 30, 1997 between Xxxxx Xxxxxxxxx and
Norton XxXxxxxxxx of Xxxxxx, Inc.
Amended and Restated Employment Agreement dated as of November 5, 1993 between
Xxxxxx Xxxxxx and Norton XxXxxxxxxx of Xxxxxx, Inc.
Amended and Restated Employment Agreement dated as of November 5, 1993 between
Xxxxxx Xxxxxxxxx and Norton XxXxxxxxxx of Xxxxxx, Inc.
Employment Agreement dated as of November 5, 1993 between Xxxxxx X. Xxxxxx and
Norton XxXxxxxxxx of Xxxxxx, Inc., as amended April 1, 1995.
Consulting arrangements as per the Separation Agreement dated as of May 3, 1997
between Norton Xxxxxxxx and Xxxxxx XxXxxxxxxx of Xxxxxx, Inc.
See items 4, 5 and 6 of Schedule 6.01(aa).
NORTY'S INC.
None
1
93
SCHEDULE 7.02(m)
TRANSACTIONS WITH AFFILIATES
MISS XXXXX, INC.
ME Acquisition Corp. Executive Bonus Plan for Senior Executives.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxxx Xxxxxxx.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxxx Xxxxxxxx.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxxxx Xxxxxx.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxxxxxx Xxxxx.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxx Xxx.
Employment Agreement dated as of August 29, 1997 between ME Acquisition
Corp. and Xxxxxx Xxxxxx.
2
