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EXHIBIT 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
AMONG
CLAIRE'S STORES, INC.,
VENATOR GROUP, INC.,
VENATOR GROUP SPECIALTY, INC.,
VENATOR GROUP CANADA INC.,
AFTERTHOUGHTS BOUTIQUES, INC.
AND
AFTERTHOUGHTS, INC.
DATED AS OF NOVEMBER 1, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I - SALE AND PURCHASE OF ASSETS...........................................................................1
1.01 Sale and Purchase of Assets.....................................................................1
1.02 Purchase Price..................................................................................4
1.03 Purchase Price Adjustment.......................................................................4
1.04 Purchase Price Allocation.......................................................................5
1.05 Prorations......................................................................................5
1.06 Post-Effective Time Amount......................................................................4
1.07 Disputes........................................................................................5
1.08 Payment of Post-Effective Time Amount...........................................................5
ARTICLE II - CLOSING..............................................................................................7
2.01 Closing.........................................................................................7
2.02 Deliveries by Seller............................................................................7
2.03 Deliveries by Buyer.............................................................................8
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER............................................................8
3.01 Corporate Existence and Qualification...........................................................8
3.02 Authority, Approval and Enforceability..........................................................9
3.03 No Default or Consents..........................................................................9
3.04 No Proceedings..................................................................................9
3.05 Absence of Litigation..........................................................................10
3.06 Brokers........................................................................................10
3.07 Environmental Matters..........................................................................10
3.08 Real Property..................................................................................10
3.09 Personal Property..............................................................................11
3.10 Contracts......................................................................................12
3.11 Compliance with Laws...........................................................................12
3.12 Tax Matters....................................................................................12
3.13 Personnel......................................................................................13
3.14 Permits........................................................................................14
3.15 Employee Benefit Plans.........................................................................14
3.16 Intellectual Property Rights...................................................................15
3.17 Financial Statements; Liabilities; No Material Adverse Change..................................16
3.18 Absence of Certain Changes.....................................................................16
3.19 Ownership of Division Assets...................................................................18
3.20 Inventory......................................................................................18
3.21 Suppliers; Sales...............................................................................18
3.22 Absence of Certain Business Practices..........................................................18
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................19
4.01 Organization and Qualification; Subsidiaries...................................................19
4.02 Authority, Approval and Enforceability.........................................................19
4.03 No Default or Consents.........................................................................19
4.04 No Proceedings.................................................................................20
4.05 Brokers........................................................................................20
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ARTICLE V - CONDUCT OF BUSINESS PENDING THE CLOSING..............................................................20
5.01 Conduct of Business by the Division Pending the Closing........................................20
ARTICLE VI- ADDITIONAL AGREEMENTS................................................................................23
6.01 Appropriate Action; Consents; Filings; Further Assurances......................................23
6.02 Access to Information; Confidentiality.........................................................24
6.03 Casualty Loss..................................................................................24
6.04 Additional Financial Statements................................................................25
6.05 Notification of Certain Matters................................................................25
6.06 Public Announcements...........................................................................25
6.07 Employment Matters.............................................................................26
6.08 Noncompetition; Nonsolicitation; Nondisclosure.................................................26
6.09 Representations................................................................................27
6.10 Bulk Transfers; Other Taxes....................................................................27
ARTICLE VII - CONDITIONS TO THE CLOSING..........................................................................28
7.01 Conditions to the Obligations of Each Party....................................................28
7.02 Conditions to the Obligations of Buyer.........................................................28
7.03 Conditions to the Obligations of Seller........................................................29
7.04 Material Adverse Affect........................................................................29
ARTICLE VIII - INDEMNIFICATION...................................................................................30
8.01 Indemnification of Buyer.......................................................................30
8.02 Indemnification of Seller......................................................................30
8.03 Third-Party Claims.............................................................................31
8.04 Indemnification Not Involving Third-Party Claims; Notice.......................................32
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER...................................................................33
9.01 Termination....................................................................................33
9.02 Method of Termination; Effect of Termination...................................................33
9.03 Fees and Expenses..............................................................................34
9.04 Amendment......................................................................................34
9.05 Waiver.........................................................................................34
ARTICLE X - DEFINITIONS..........................................................................................34
10.01 Affiliate......................................................................................34
10.02 Collateral Agreements..........................................................................34
10.03 Contract.......................................................................................34
10.04 Damages........................................................................................35
10.05 Financial Statements...........................................................................35
10.06 Governmental Authority.........................................................................35
10.07 Intellectual Property Rights...................................................................35
10.08 Knowledge of Seller............................................................................36
10.09 Legal Requirements.............................................................................36
10.10 Lien...........................................................................................36
10.11 Permits........................................................................................36
10.12 Person.........................................................................................36
10.13 Real Property..................................................................................36
10.14 Regulations....................................................................................36
10.15 Seller Material Adverse Effect.................................................................36
10.16 Tax or Taxes...................................................................................37
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10.17 Tax Return.....................................................................................37
10.18 Used...........................................................................................37
ARTICLE XI - GENERAL PROVISIONS..................................................................................37
11.01 Survival of Representations, Warranties and Agreements.........................................37
11.02 Notices........................................................................................38
11.03 Accounting Terms...............................................................................39
11.04 Severability...................................................................................39
11.05 Entire Agreement; Assignment...................................................................39
11.06 Parties in Interest............................................................................39
11.07 Specific Performance...........................................................................40
11.08 Governing Law..................................................................................40
11.09 Assignment of Contracts........................................................................40
11.10 Headings.......................................................................................40
11.11 Counterparts...................................................................................40
11.12 Construction...................................................................................41
11.13 Brokers........................................................................................41
11.14 Remedies.......................................................................................41
11.15 Waiver.........................................................................................41
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LIST OF SCHEDULES
Schedule 1.01(a).....................................Excluded Assets
Schedule 1.01(b).....................................Sublease Agreements
Schedule 1.01(c).....................................Assumed Obligations
Schedule 1.03(b).....................................Certain Leases
Schedule 1.04........................................Purchase Price Allocation
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of November
1, 1999, is entered into by and among Claire's Stores, Inc., a Delaware
corporation (the "Buyer"), and Venator Group, Inc., a New York corporation,
Venator Group Specialty, Inc., a New York corporation, Venator Group Canada
Inc., a Canadian federal corporation, Afterthoughts Boutiques, Inc., a Delaware
corporation, and AfterThoughts, Inc., a Delaware corporation (collectively,
"Seller"). Certain other capitalized terms used herein and not otherwise defined
shall have the meanings set forth in Article X.
RECITALS
Seller owns all the assets and properties (collectively, the "Assets")
owned or Used by the Afterthoughts division of Seller (the "Division"). Buyer
desires to purchase the business of the Division and the Assets, and Seller
desires to sell the business of the Division and the Assets, upon the terms and
subject to the conditions set forth herein. The Division operates approximately
750 stores throughout the United States and Canada that feature fashion jewelry,
accessories, cosmetics and gifts.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I - SALE AND PURCHASE OF ASSETS
1.01 SALE AND PURCHASE OF ASSETS.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01, Seller shall sell,
convey, assign, transfer and deliver to Buyer and Buyer shall purchase, acquire
and accept delivery of, the Assets described below, wherever located, effective
as of the Effective Time, except for those assets specifically listed on
Schedule 1.01(a) (such specifically listed assets being referred to as the
"Excluded Assets"):
(i) all accounts receivable attributable to the
Division's business and at least $250 of cash in each of the Division's
United States retail stores and at least $200 Canadian in each of the
Division's Canadian retail stores;
(ii) all inventories and other materials of the Division
wherever located and including all inventory in transit or on order and
not yet delivered, and all rights with respect to the processing and
completion of any work-in-process of the Division, including the right
to collect and receive charges for services performed by the Division
with respect thereto;
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(iii) all supplies, equipment, furniture, fixtures,
leasehold improvements and other tangible property Used by the Division
or acquired for Use by Seller solely for the Division in connection
with its business, and any right, title and interest of Seller, as
lessee, in any leases related to the business of the Division;
(iv) all of Seller's right, title and interest in and to
the Contracts listed or required to be listed on Section 3.10 of Seller
Disclosure Statement (as defined in Article III) and any Contract
entered into in the ordinary course of business solely relating to the
Division's business or the Assets that is not required to be set forth
in the Seller Disclosure Statement pursuant to Section 3.10;
(v) all proprietary knowledge, trade secrets, technical
information, quality control data, processes (whether secret or not),
methods, and other similar know-how or rights solely Used in the
conduct of the Division's business, including, but not limited to, the
areas of manufacturing, marketing, advertising and personnel training
and recruitment;
(vi) all utility, security and other deposits and prepaid
expenses attributable to the Division's business, except as provided in
Section 1.05;
(vii) the Division's business as a going concern and its
franchises, telephone numbers of the Leased Premises, customer lists,
vendor lists, advertising materials and data, restrictive covenants,
together with all books, computer software, files, papers, records and
other data of the Division relating to the assets, properties, business
and operations of the Division;
(viii) all Intellectual Property Rights and Permits (to
the extent such Permits are transferable without consent) solely Used
by the Division; and
(ix) all of Seller's right, title and interest in and to
the Leases listed or required to be listed on Section 3.08 of the
Seller Disclosure Statement.
(b) METHOD OF CONVEYANCE. The sale, transfer, conveyance,
assignment and delivery by Seller of the Assets to Buyer in accordance with
Section 1.01(a) shall be effected on the Closing Date (as defined in Section
2.01) by Seller's execution and delivery to Buyer of one or more bills of sale,
assignments, sublease agreements in form and substance reasonably satisfactory
to Buyer and Seller (which sublease agreements will contain the terms contained
in Schedule 1.01(b)) with regard to the retail stores of the Division listed on
Schedule 1.01(b) of the Seller Disclosure Statement and other conveyance
instruments with respect to Seller's transfer of Intellectual Property Rights,
Real Property interests, Leases, Contracts and other Assets in form and scope
reasonably satisfactory to Buyer (collectively the "Conveyance Documents."). At
the Closing, good title to all of the Assets shall be transferred, conveyed,
assigned and delivered by Seller to Buyer pursuant to the Conveyance Documents,
free and clear of any and all Liens (other than Liens specifically assumed by
Buyer in connection with Leases transferred to Buyer).
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(c) ASSUMED OBLIGATIONS. At the Closing, Buyer shall
assume, and shall agree to satisfy and discharge as the same shall become due,
(i) all trade accounts payable incurred in the ordinary course of the Division's
business in respect of inventory on order title to which has not passed to
Seller as of the Effective Time, (ii) Seller's and/or the Division's liabilities
and other obligations arising in respect of periods subsequent to the Effective
Time under (A) the Leases, (B) the Contracts listed on Section 3.10 of Seller
Disclosure Statement (other than the Contracts which are designated as
non-assumed Contracts on the Seller Disclosure Statement) and (C) any Contract
entered into in the ordinary course of business solely relating to the
Division's business or the Assets that is not required to be set forth in the
Seller Disclosure Statement pursuant to Section 3.10, and (iii) the obligations
listed on Schedule 1.01(c) (collectively the "Assumed Obligations"). Except as
expressly set forth in this paragraph (c), Buyer shall not assume or be
responsible at any time for any liability, obligation, debt or commitment of
Seller, whether absolute or contingent, accrued or unaccrued, asserted or
unasserted, or otherwise, including but not limited to any liabilities,
obligations, debts or commitments of Seller incident to, arising out of or
incurred with respect to, this Agreement and consummation of the transactions
contemplated hereby (including, subject to Section 6.10, any and all sales,
income or other Taxes arising out of the transactions contemplated hereby), and
Seller expressly acknowledges and agrees that Seller shall retain, and that
Buyer shall not assume or otherwise be obligated to pay, perform, defend or
discharge, (a) any liability of Seller that is not directly related to the
Division and any liability for Taxes, whether measured by income or otherwise,
including without limitation, any liability for Taxes related to the business of
the Division for periods ending prior to the Effective Time, (b) any liability
of Seller or the Division in connection with any Benefit Plans (as that term is
defined in Section 3.15), including, without limitation, any liability of Seller
or the Division under ERISA (as defined in Section 3.15), (c) any liability of
Seller and/or the Division under any federal, state or local law, rule,
regulation, ordinance, program, Permit, or other Legal Requirement relating to
health, safety, hazardous substances and environmental matters applicable to the
Division's business and/or the Assets (whether or not owned by Seller) that
accrued prior to the Closing Date, (d) any liability of Seller, the Division or
Buyer in connection with the sale of the Assets or any other aspect of the
Division's business under any Legal Requirements relating to bulk transfers, (e)
any product liability pertaining to products sold or manufactured by and/or on
behalf of the Division and/or Seller in connection with the Division's business
prior to the Closing Date, (f) any liabilities or obligations arising from or
caused by breach of contract, breach of warranty, tort, infringement or
violation of law that occurred prior to the Closing Date or (g) any liabilities
or obligations arising from or directly or indirectly related to the Division's
business that occurred prior to the Closing Date, including without limitation,
any obligations to employees of the Division (other than Assumed Obligations).
Seller further agrees to satisfy and discharge as the same shall become due all
obligations and liabilities of Seller and/or the Division not specifically
assumed by Buyer hereunder. Buyer's assumption of the Assumed Obligations shall
in no way expand the rights or remedies of third parties against Buyer as
compared to the rights and remedies which such parties would have had against
Seller or the Division had the transactions contemplated by this Agreement not
been consummated.
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(d) INTERIM OPERATIONS. Seller covenants and agrees that,
from the Effective Time to the Closing, except as otherwise expressly provided
for in this Agreement, Seller shall, and shall cause the Division to, operate
the business of the Division for the benefit of Buyer (provided that the
transactions contemplated by this Agreement are consummated) in the ordinary
course and in a manner consistent in all material respects with past practices,
unless Buyer shall otherwise agree in writing. At the Closing, in addition to
the sale of the Assets, Seller shall also be required to deliver to Buyer cash
received by Seller for the account of Buyer in an amount equal to all revenues
(including amounts received for gift certificates and gift cards) and amounts
received by Seller in connection with the business of the Division from the
Effective Time to the date immediately prior to the Closing Date, less (A)
$25,000 for each day after the Effective Time to the day immediately prior to
the Closing Date, (B) all expenses for periods incurred from and after the
Effective Time to the Closing Date and actually paid, or liable to be paid, by
Seller after the Effective Time in the ordinary course of the business of the
Division consistent with past practices and (C) the net amount of all expenses
actually paid prior to the Closing Date that are required to be prorated
pursuant to Section 1.05 (the "Post-Effective Time Amount").
1.02 PURCHASE PRICE. Subject to adjustment as provided in Section 1.03,
Buyer shall pay to Seller $250,000,000 (as adjusted, the "Purchase Price") by
wire transfer to an account specified by Seller. Seller shall specify such
account at least three business days prior to Closing.
1.03 PURCHASE PRICE ADJUSTMENT. In the event that the lessor of any
Lease set forth on Schedule 1.03(b) obtains a final, nonappealable order against
Buyer evicting Buyer from the retail store covered by such Lease as a result of
the breach of the Lease by Seller or Buyer in connection with the assignment of
the Lease from Seller to Buyer or Buyer's occupancy of the related Leased
Premises without lessor's consent, then in addition to Seller's obligations
under Section 6.01(e), Seller shall be required to reimburse to Buyer a portion
of the Purchase Price equal to the greater of (i) the minimum termination amount
for such Lease set forth on Schedule 1.03(b) or (ii) an amount equal to the
number of whole or partial calendar months (but in no event shall such number of
months exceed 48 for purposes of this calculation) from the date Buyer vacates
such retail store through the expiration date of such Lease as set forth on
Schedule 1.03(b) times the monthly termination amount set forth on Schedule
1.03(b) for such Lease (the "Purchase Price Adjustment"). The Purchase Price
Adjustment with respect to any Lease shall be payable by Seller to Buyer within
five business days after Buyer vacates the retail store covered by such Lease.
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1.04 PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the Assets in accordance with Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder. The
allocation of the Purchase Price shall be agreed upon by Seller and Buyer prior
to the Closing and shall be set forth on Schedule 1.04. Seller and Buyer agree
to file timely all returns required under Code Section 1060 and the regulations
promulgated thereunder based on the allocations set forth on Schedule 1.04 and
further agree that they will not take any position inconsistent therewith on any
Tax Return or other document of any kind in the course of any audit, examination
or other proceeding by any Governmental Authority.
1.05 PRORATIONS. All Lease related expenses of the Division's business
(including, without limitation, rent, real estate taxes, personal property
taxes, utilities, common area maintenance charges, deposits and prepaid
expenses) other than percentage rent and insurance shall be prorated between
Seller and Buyer as of the Effective Time. In the event that Buyer or Seller
shall receive invoices for such expenses that are required to be prorated
pursuant to this Section, then Buyer or Seller, as the case may be, shall
promptly notify the other party as to the amount of the expense subject to
proration and the responsible party shall pay its portion of such expense
without interest (or, in the event such expense has been paid on behalf of the
responsible party, reimburse the other party for its portion of such expense
without interest). Such expense shall be paid by the responsible party to the
other party at least five business days prior to the due date of such expense
(or, in the event such expense has been paid on behalf of the responsible party,
be reimbursed to the responsible party by the other party for its portion of
such expense within ten business days after receiving such notice). Without
limiting the generality of the foregoing, percentage rent payable in respect of
any Lease shall be allocated between Seller and Buyer based on net sales of the
Seller versus net sales of the Buyer during the applicable period. There shall
be no proration of the Division's insurance premiums. In determining the amount
of such expenses that either party is required to pay to the other pursuant to
this Section, the prorated Lease related expenses included in the calculation of
the Post-Effective Time Amount shall be taken into effect.
1.06 POST-EFFECTIVE TIME AMOUNT. As soon as practical (and in no event
later than 45 days after the Closing Date), Seller shall cause to be prepared
and delivered to Buyer a calculation of the Post-Effective Time Amount. Buyer
and its accountants shall be entitled to review Seller's calculations of the
Post-Effective Time Amount, and any working papers, trial balances and similar
materials relating to the Post-Effective Time Amount prepared by Seller or its
accountants. Each party shall provide the other party and its accountants with
timely access, during normal business hours, to personnel, properties, books and
records of such party to the extent related to the determination of the amount
of the Post-Effective Time Amount.
1.07 DISPUTES. The following clauses (i) and (ii) set forth the
procedures for resolving disputes among the parties with respect to the
determination of the amount of Post-Effective Time Amount:
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(i) Within 30 days after delivery to Buyer of Seller's
calculation of the amount of the Post-Effective Time Amount pursuant to
this Article I, Buyer may deliver to Seller a written report (a
"Buyer's Report") prepared by Buyer's accountants (the "Buyer's
Accountants") advising Seller either that the Buyer's Accountants (A)
agree with Seller's calculations of the amount of the Post-Effective
Time Amount, or (B) deem that one or more adjustments are required. The
costs and expenses of the services of the Buyer's Accountants shall be
borne by Buyer. If Seller shall concur with the adjustments proposed by
Buyer's Accountants, or if Seller shall not object thereto in a writing
delivered to Buyer within 15 days after Seller's receipt of Buyer's
Report, the calculations of the Post-Effective Time Amount set forth in
such Buyer's Report shall become final and shall not be subject to
further review, challenge or adjustment absent fraud. If Buyer does not
submit a Buyer's Report within the 30-day period provided herein, then
the amount of the Post-Effective Time Amount as calculated by Seller
shall become final and shall not be subject to further review,
challenge or adjustment absent fraud.
(ii) If Seller disagrees with one or more adjustments set
forth in Buyer's Report, the parties shall instruct the accountants
selected by Seller (the "Seller's Accountants") and Buyer' Accountants
to attempt to resolve such disagreements within 30 days after Seller
objects to Buyer's Report. In the event that Buyer's Accountants and
Seller's Accountants are unable to resolve such disagreements within
such 30 day period, then such disagreements shall be referred to a
nationally recognized firm of independent certified public accountants
experienced in auditing retail store companies and selected by mutual
agreement of the Seller's Accountants and Buyer's Accountants (the
"Settlement Accountants"), and the determination of the Settlement
Accountants shall be final and shall not be subject to further review,
challenge or adjustment absent fraud. Buyer and Seller shall use their
commercially reasonable efforts to cause the Settlement Accountants to
reach a determination not more than 45 days after such referral. The
costs and expenses of the services of the Settlement Accountants shall
be borne equally by Seller and Buyer.
1.08 PAYMENT OF POST-EFFECTIVE TIME AMOUNT. In the event that the
Post-Effective Time Amount as finally determined pursuant to Sections 1.06 and
1.07 is greater than the amount of the Estimated Post-Effective Time Amount
(hereinafter defined), then Seller shall pay Buyer the amount of such
difference. In the event that the Post-Effective Time Amount as finally
determined pursuant to Sections 1.06 and 1.07 is less than the amount of the
Estimated Post-Effective Time Amount, then Buyer shall refund to Seller the
amount of such difference. The difference shall be paid by Buyer or Seller, as
the case may be, within five business days of the final determination of the
amount of the Post-Effective Time Amount by wire transfer to an account
designated by the other party.
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ARTICLE II - CLOSING
2.01 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated hereby (the "Closing") shall take
place at the offices of Xxxxxxxxx Xxxxxxx, P.A., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m., local time, on December 1, 1999 or such other time,
date or place, as the parties hereto may agree in writing. Notwithstanding the
foregoing, unless the Agreement has been previously terminated pursuant to the
provisions of Section 9.01, the Closing shall be delayed until three business
days after all of the conditions set forth in Article VII have been satisfied or
such other time, date or place, as the parties hereto may agree in writing. The
term "Closing Date" shall mean the date on which the Closing occurs. The Closing
shall be deemed effective as of 11:59 p.m., local time, on November 30, 1999
(the "Effective Time").
2.02 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
deliver to Buyer:
(a) the Conveyance Documents;
(b) a certificate executed by a duly authorized executive officer
of Seller, on behalf of Seller, to the effect that the conditions set forth in
Section 7.02(a) and (c) have been satisfied;
(c) an opinion, dated on the Closing Date, of Skadden, Arps,
Slate, Xxxxxxx & Xxxx L.L.P., legal counsel to Seller, that contains the
opinions set forth on Exhibit A and an opinion, dated on the Closing Date, of
Osler, Xxxxxx & Harcourt, Canadian legal counsel to Seller, that contains the
opinions set forth on Exhibit B;
(d) a certificate issued by the appropriate government agency, as
of a date reasonably acceptable to Buyer, as to the corporate existence and
status of Seller in such jurisdiction;
(e) all consents obtained by Seller as of the Closing with
respect to Leases that require the consent of the landlord and any other
consents required in order for Buyer to obtain due and proper transfer or
assignment of any of the Assets (except that Seller shall not be required to
deliver at the Closing any landlord consents with respect to Leases that have
not been obtained prior to the Closing by Seller);
(f) possession of all originals of agreements, instruments,
documents, contracts, deeds, books, records, files, and other data and
information within the possession of Seller pertaining to the Division and
Assets and copies of all Tax Returns (other than any income Tax Returns) and
Employee records within the possession of the Seller pertaining to the Division
and the Assets (collectively, the "Records"); provided, however, that Seller may
retain copies of any Records that Seller is reasonably likely to need in order
to comply with any Legal Requirement or to perform its obligations under Article
VIII;
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(g) a transition services agreement (the "Transition Agreement"),
executed by Seller, that obligates Seller to provide Buyer with certain computer
systems and support, distribution, warehouse and storage facilities and such
other services that Seller currently provides to the Division for a period not
to exceed six months after the Closing Date and at a cost not to exceed the
pro-rated reasonable costs to Seller for such facilities and services and
otherwise in substance reasonably acceptable to Seller and Buyer; and
(h) the estimated amount of the Post-Effective Time Amount, which
estimate shall be performed in good faith by Seller immediately prior to the
Closing (the "Estimated Post-Effective Time Amount"). The Estimated
Post-Effective Time Amount shall be paid by Seller to Buyer at the Closing by
wire transfer to an account specified by Buyer at least three business days
prior to Closing.
2.03 DELIVERIES BY BUYER. At or prior to the Closing, Buyer shall
deliver to Seller.
(a) the Purchase Price in accordance with Section 1.02;
(b) a certificate executed by a duly authorized executive officer
of Buyer, on behalf of Buyer, to the effect that the conditions set forth in
Section 7.03(a) have been satisfied;
(c) an opinion, dated on the Closing Date, of Xxxxxxxxx Traurig,
P.A., legal counsel to Buyer, that contains the opinions set forth on Exhibit C;
and
(d) the Transition Agreement executed by Buyer, any Lease
consents, assignments or subleases that are necessary for Buyer to assume
Seller's rights and obligations under the Leases from and after the Effective
Time and one or more Tax resale certificates for all merchandise inventory
transferred by Seller to Buyer at the Closing.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in a separate disclosure statement referring to the
sections contained in this Agreement, which has been delivered by Seller to
Buyer prior to the execution of this Agreement (the "Seller Disclosure
Statement"), Seller hereby represents and warrants to Buyer that:
3.01 CORPORATE EXISTENCE AND QUALIFICATION. Except as set forth in
Schedule 3.01 of the Seller Disclosure Statement, Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority and all necessary governmental approvals to own, manage, lease and
hold the Assets and to carry on the Division's business as and where such Assets
are presently located and such business is presently conducted.
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3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by Seller, and Seller has all requisite corporate
power and legal capacity to execute and deliver this Agreement and all
Collateral Agreements executed and delivered or to be executed and delivered by
Seller in connection with the transactions provided for hereby, to consummate
the transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which Seller is a party constitutes,
or upon execution and delivery will constitute, the legal, valid and binding
obligation of Seller, enforceable against it in accordance with their respective
terms, except as such enforcement may be limited by general equitable principles
or by applicable bankruptcy, insolvency, moratorium, or similar laws and
judicial decisions from time to time in effect which affect creditors' rights
generally.
3.03 NO DEFAULT OR CONSENTS. Except as disclosed in Section 3.03 of
Seller Disclosure Statement, neither the execution and delivery of this
Agreement by Seller nor the consummation by Seller of the transactions
contemplated hereby will:
(a) violate or conflict with any of the terms, conditions or
provisions of the organizational documents of Seller;
(b) violate any Legal Requirements applicable to Seller or the
Division or the Assets;
(c) violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any Contract or Permit binding upon or
applicable to Seller or the Division or the Assets;
(d) result in the creation of any Lien on any of the Assets; or
(e) require Seller or the Division to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
Governmental Authority, except for applicable requirements of the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act") and
of comparable Canadian antitrust or competition statutes.
3.04 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to the Knowledge of Seller, threatened before any Governmental Authority seeking
to restrain Seller or prohibit Seller's entry into this Agreement or prohibit
the Closing, or seeking Damages against Seller or the Assets as a result of the
consummation of the transactions contemplated by this Agreement.
3.05 ABSENCE OF LITIGATION. Except as disclosed in Section 3.05 of
Seller Disclosure Statement, there is no claim, action, proceeding or
investigation pending or, to Seller's Knowledge, threatened against Seller with
respect to the Assets or the Division's business, before any court, arbitrator
or Governmental Authority. As of the date hereof, neither Seller nor any of the
Assets is subject to any order, writ, judgment, injunction, decree,
determination or award.
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3.06 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the execution
and delivery of this Agreement by Seller and/or consummation of the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller.
3.07 ENVIRONMENTAL MATTERS.
(a) With respect to the Leased Premises (as defined in Section
3.08(a)), Seller has not caused or allowed the generation, treatment, storage or
disposal of hazardous wastes or substances (as such terms are defined in any
applicable Legal Requirements with respect to environmental matters) at such
location other than materials incidental to the operation of the Division's
business that have been and are currently used in compliance with applicable
Legal Requirements.
(b) Seller with respect to the Assets is in compliance with all
applicable Legal Requirements with respect to environmental matters.
(c) Since January 1, 1998, Seller has not received any written
notice from any Governmental Authority alleging that Seller by virtue of
conducting the Division's business is liable under or in breach of any
applicable Legal Requirements with respect to environmental matters.
(d) Except pursuant to the terms of any Lease, to Seller's
Knowledge, Seller has not expressly or by operation of law, assumed, undertaken
or otherwise become subject to any liability of any other Person under
applicable Legal Requirements with respect to environmental matters, including
without limitation any obligation for corrective or remedial action, relating
the Division's business.
3.08 REAL PROPERTY.
(a) Section 3.08 of Seller Disclosure Statement identifies by
store number, street address and, where applicable, shopping mall or center, all
store locations leased, subleased, occupied or otherwise Used by the Division
pursuant to an agreement (the "Leases") by Seller (the "Leased Premises"). The
Leased Premises are leased to Seller pursuant to written leases, true and
correct copies (including all amendments) of which have been delivered to Buyer.
With respect to each Lease: (i) Seller has a good and valid leasehold interest
in and to the Leased Premises, and such leasehold interest is subject to no
Liens other than those disclosed on Section 3.08 of Seller Disclosure Statement;
(ii) such Lease is in full force and effect and is enforceable in accordance
with its terms and Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in such Lease and (iii) except as
set forth in Section 3.08(a) of Seller Disclosure Statement, there currently
exists no default by Seller or condition which, with the giving of notice, the
passage of time or both, could become a default by Seller under any Lease.
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(b) Except as disclosed in Section 3.08(b) of the Seller
Disclosure Statement, the Leased Premises are in good condition and repair
(subject to normal wear and tear) and are sufficient and appropriate for the
conduct of business by the Division as currently conducted. There exists no
violation by Seller of any material covenant, condition, restriction, easement,
agreement or order affecting any portion of the Leased Premises. All facilities
located on the Leased Premises are supplied with adequate utilities and other
services necessary for the conduct of the Division's business as currently
conducted. There is no pending or, to the Knowledge of Seller, threatened
condemnation proceeding, or lawsuit or administrative action affecting any
portion of the Leased Premises to which Seller is a named party.
(c) Except for the Leased Premises listed on Schedule 1.03(b),
there are no currently open Leased Premises of Seller listed on Schedule 1.03(a)
that generated operating profits (excluding any corporate and divisional
overhead allocations and any non-recurring fixed asset write-offs, but including
management information systems allocated expenses) greater than $50,000 during
the fiscal year ended January 30, 1999.
3.09 PERSONAL PROPERTY.
(a) Seller has good title to all personalty of any kind or nature
which are included in the Assets, including without limitation the Intellectual
Property Rights, free and clear of all Liens, except for (i) Liens disclosed on
Section 3.09 of Seller Disclosure Statement (which Liens will be released as of
the Closing); (ii) Liens for non-delinquent Taxes and non-delinquent statutory
liens arising other than by reason of default; and (iii) statutory Liens of
landlords, Liens created pursuant to any Leases and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due. Seller and Division, as lessees, have the right
under valid and subsisting leases to use, possess and control all personalty
leased by and material to the Division's business as now Used, possessed and
controlled by Seller or Division, as applicable. The Assets, together with the
Excluded Assets, and the assets of Seller or its affiliates that are used to
provide the types of services and facilities to be provided pursuant to the
Transition Agreement, taken as a whole, are sufficient to operate the business
of the Division in the ordinary course as currently being conducted by Seller.
(b) All machinery, equipment and other tangible assets (other
than Inventory) currently being Used by the Division which are owned or leased
by Seller have been maintained in operating condition consistent with past
practices, are usable in the ordinary course of business and are reasonably
adequate and suitable for the uses for which they are being Used.
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3.10 CONTRACTS. Section 3.10 of Seller Disclosure Statement is a
complete list of all Contracts of Seller (other than the Leases) that are
currently in effect (except for those set forth in clause (x) below), that
relate to the business or employees of the Division or the Assets and that are
(i) Contracts which provide for the receipt or expenditure after the date of
this Agreement, of more than $50,000 other than inventory purchases in the
ordinary course of business; (ii) Contracts for capital expenditures or
acquisitions in excess of $50,000 for one project or set of related projects or
$200,000 in the aggregate; (iii) Contracts relating to guarantees of third party
obligations; (iv) Contracts (including non competition agreements) which
restrict the kinds of businesses in which the Division may engage or the
geographical area in which it may conduct its business; (v) Contracts relating
to the borrowing of money, the granting of Liens or lines of credit, in each
case, involving an amount in excess of $50,000, individually, or $200,000 in the
aggregate; (vi) Contracts relating to collective bargaining; (vii) Contracts
(whether as licensor or licensee, assignor or assignee) relating to any
Intellectual Property Rights; (viii) Contracts relating to brokerage or finder's
agreements; (ix) Contracts relating to joint venture agreements, partnership
agreements or similar agreements; (x) Contracts relating to stock purchase
agreements, asset purchase agreements or other acquisition or divestiture
agreements; (xi) Contracts relating to employment, consulting or management
agreements; or (xii) Contracts with the Seller or any of its Affiliates that
relate to the Assets or the business of the Division. True and correct copies of
all the Contracts (including all amendments) have been delivered to Buyer,
except as noted in Section 3.10 of Seller Disclosure Statement. Except as
disclosed in Section 3.10 of Seller Disclosure Statement, (i) all Contracts are
valid and subsisting and in full force and effect, and Seller has duly performed
its obligations thereunder in all material respects to the extent such
obligations have accrued; and (ii) no breach or default by Seller, or, to
Seller's Knowledge, by any other party thereto, has occurred. Following the
Closing, Buyer will be entitled to all of the benefits that Seller was otherwise
entitled to under each Contract listed or required to be listed on Section 3.10
of Seller Disclosure Statement.
3.11 COMPLIANCE WITH LAWS. Except for matters relating to environmental
matters (which are the subject of Section 3.07), Seller is in compliance in all
material respects with all Legal Requirements applicable to the Division or the
Assets.
3.12 TAX MATTERS.
(a) Seller has filed all Tax Returns (other than those that are
not material or are based on income) with respect to the Division or its Assets
that it was required to file prior to the date hereof. All such Tax Returns were
correct and complete in all respects. All Taxes owed by Seller (whether or not
shown on any Tax Return) have been paid. There are no security interests on any
of the Assets that arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid by applicable Legal Requirements with respect to the Division
or the Assets.
(c) Except as shown in Section 3.12(c) of the Seller Disclosure
Statement, to Seller's Knowledge, there is no dispute or claim concerning any
Tax liability of Seller with respect to the Division or the Assets.
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(d) Seller has not waived with respect to the Division or the
Assets any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
3.13 PERSONNEL.
(a) Section 3.13 of the Disclosure Statement sets forth of the
names and annual rates of compensation of the officers, the district managers,
merchandise buyers, marketing and advertising executives and other senior
managers of the Division (the "Executives"). Section 3.13 of the Disclosure
Statement also summarizes the bonus, profit sharing, percentage compensation,
automobile, club membership, and other benefits, if any, provided, paid, payable
or otherwise provided by or on behalf of Seller to, or for the benefit of, the
employees (including the Executives) of the Division (the "Employees") from
January 1, 1998 through the date hereof. Section 3.13 of the Disclosure
Statement also contains a brief description of all material terms of employment
agreements and confidentiality agreements with the Executives. Section 3.13 of
the Disclosure Statement also contains a brief description of all material terms
of all severance benefits which any Employee is or may be entitled to receive.
Seller has delivered to Buyer true, correct and complete copies of all such
employment agreements, confidentiality agreements, and all other agreements,
plans, and other instruments to which Seller is a party and under which the
Employees are entitled to receive benefits of any nature.
(b) Except as set forth in Section 3.13 of the Disclosure
Statement, Seller is not a party to or bound by any and, to Seller's Knowledge
there are no, agreements or arrangements on behalf of any Employee providing for
severance payments, accelerated vesting or similar benefits following
termination of their employment with Seller or for any payment, accelerated
vesting or other benefits to such person contingent upon the execution of this
Agreement or the Closing. There are no collective bargaining agreements to which
Seller is a party related to the Employees.
(c) Except as set forth in Section 3.13 of the Seller Disclosure
Statement, Seller has not failed to pay when due any wages, bonuses,
commissions, taxes, penalties or assessments, owed to, or arising out of the
employment of, any Employee.
(d) Seller is in material compliance with all applicable Legal
Requirements respecting employment and employment practices, terms and
conditions of employment, wages and hours, occupational safety and health, and
is not engaged in any unfair labor or unfair employment practices related to the
Employees.
(e) There is no unfair labor practice charge or complaint or any
other matter against (or to Seller's Knowledge, involving) Seller relating to
the Employees or the Division pending or, to Seller's Knowledge, threatened
before any Government Entity.
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(f) Except as set forth in Section 3.13 of the Seller Disclosure
Statement, there are no investigations, administrative proceedings or formal
complaints of discrimination (including discrimination based upon sex, age,
marital status, race, national origin, sexual preference, handicap or veteran
status) pending or, to Seller's Knowledge, threatened before the Equal
Employment Opportunity Commission or any other Government Entity against or
involving Seller relating to the Employees or the Division.
(g) There are no Legal Proceedings involving violations of local,
state or federal occupational safety and health laws pending or, to Seller's
Knowledge, threatened before the Occupational Safety and Health Review
Commission or any other Government Entity against or involving Seller relating
to the Employees or the Division.
(h) No agreement, arbitration or court decision or governmental
order to which Seller is a party or by which it or any of the Assets are bound
or subject in any way limits or restricts Seller from relocating or closing the
business of the Division.
(i) The employment of each Employee, except as set forth in
Section 3.13 of the Seller Disclosure Statement, is terminable at the will of
Seller. Except as set forth in Section 3.13 of the Seller Disclosure Statement,
Seller (not including the Executives) is not aware that any Executive, or that
any group of Employees, intends to terminate their employment with Seller, and
Seller does not have a present intention to terminate the employment of any of
the foregoing, except as contemplated by this Agreement.
3.14 PERMITS. Seller has all Permits related to the Assets and the
business of the Division, except for those Permits the failure to have would
not, individually or in the aggregate, have a Seller Material Adverse Effect. To
the Knowledge of Seller, all of the Permits are in full force and effect and are
properly posted, except where the failure to be so in effect or posted would not
have a Seller Material Adverse Effect. No outstanding notice of cancellation or
termination has been delivered to Seller in connection with any such Permit nor,
to the Knowledge of Seller, has any such cancellation or termination been
threatened. To the Knowledge of Seller, no application, action or proceeding for
the modification of any such Permit is pending or threatened that may result in
the revocation, modification, nonrenewal or suspension of any Permit. Seller has
filed when due all documents required to be filed with any Governmental
Authority in connection with such Permits and, at the time of the filing
thereof, all such filings were accurate and complete in all material respects.
3.15 EMPLOYEE BENEFIT PLANS.
(a) Section 3.15 of Seller Disclosure Statement contains a list
of each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and each plan,
program, policy, practice, arrangement or contract (whether group or individual)
providing for payments, deferred compensation or benefits or reimbursements to
employees or former employees (or their beneficiaries or dependents) of the
Division.
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(b) Each Benefit Plan in which Employees or former employees (or
their respective beneficiaries or dependents) of the Division participate
(collectively, the "Division Participants") and any related trust, insurance
contract or fund has been maintained, funded and administered in compliance in
all material respects with its respective terms and in compliance in all
material respects with all applicable laws and regulations, including, but not
limited to, ERISA and the Code, and there are no pending or, to the Knowledge of
Seller, threatened claims or disputes involving the Benefit Plans made by any
Division Participant (other than claims for benefits in the ordinary course of
business).
(c) Buyer shall not incur any liability or obligation under any
Benefit Plan as result of the consummation of the transactions contemplated by
this Agreement.
3.16 INTELLECTUAL PROPERTY RIGHTS.
(a) Seller owns exclusively, or has the exclusive right and
license to use, and to transfer to Buyer, the right and license to use, all
Intellectual Property Rights necessary and incidental to the conduct of the
business of the Division as presently conducted and as presently proposed to be
conducted and such exclusive ownership rights and rights to use are sufficient
for such conduct of the business of the Division. Section 3.16 of the Seller
Disclosure Statement contains an accurate, current and complete list of the
United States and Canadian trademarks, service marks, patents and registered
copyrights Used by the Seller in the conduct of the business of the Division
(the "Scheduled Intellectual Property Rights").
(b) The Scheduled Intellectual Property Rights are valid and
subsisting, unrevoked and uncancelled and Seller is the sole and exclusive owner
and the owner of record thereof or the exclusive licensee thereof.
(c) Except as set forth in Section 3.16 of the Seller Disclosure
Statement, the Intellectual Property Rights are free and clear of, or upon the
Closing Date will be free and clear of, all Liens (other than statutory
restrictions or limitations generally affecting the foregoing).
(d) To the Knowledge of Seller, no other person or entity who has
the right to use the Scheduled Intellectual Property Rights in the U.S. and/or
Canada either in the identical form shown on the Schedule attached to Section
3.16 or in such near resemblance thereto as may be likely to cause confusion or
mistake or to deceive consumers as to the source or sponsorship of the goods or
services so marked.
(e) To the Knowledge of Seller, Seller's use of the Intellectual
Property Rights in the U.S. and Canada does not infringe or otherwise violate
the intellectual property rights or contract rights of any third-party and,
except as set forth in Section 3.16 of the Seller Disclosure Statement, Seller
is not aware of any claims, threatened or actual, that its use of the
Intellectual Property Rights infringes upon or violates any third-party's rights
or of any basis for such claims.
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3.17 FINANCIAL STATEMENTS; LIABILITIES; NO MATERIAL ADVERSE CHANGE.
(a) Seller has delivered to Buyer true and complete copies of
audited Financial Statements as of and for the fiscal years ended January 25,
1997, January 31, 1998 and January 30, 1999, and unaudited Financial Statements
as of and for the eight months ended October 2, 1999, and said Financial
Statements are attached hereto as Section 3.17(a) of Seller Disclosure
Statement. All of such Financial Statements present fairly the financial
condition and results of operations of the Division as at and for the dates or
periods indicated thereon. Except for the omission of certain notes and the
absence of year-end adjustments (consisting only of normal recurring
adjustments) in the unaudited Financial Statements, all of such Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods indicated.
(b) Except as disclosed in Section 3.17(b) of Seller Disclosure
Statement, since January 30, 1999, there has been no material adverse change in
the Assets or the Division's financial position, results of operations,
prospects or business.
3.18 ABSENCE OF CERTAIN CHANGES.
(a) Except as disclosed in Section 3.18(a) of Seller Disclosure
Statement, since January 30, 1999, there has not been:
(i) any change in circumstances that had or might have a
Seller Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered
by insurance) that had or might have a Seller Material Adverse Effect;
or
(iii) any adverse change in the sales patterns or pricing
policies of the Division, taken as a whole.
(b) Except as disclosed in Section 3.18(b) of Seller Disclosure
Statement, since January 30, 1999, the Division (which, for purposes hereof,
shall also include Seller, but only to the extent of the Division's business)
has not done any of the following:
(i) merged into or with or consolidated with, any other
corporation or acquired the business or assets of any Person;
(ii) purchased any securities of any Person;
(iii) created, incurred, assumed, guaranteed or otherwise
become liable or obligated with respect to any indebtedness, or made
any loan or advance to, or any investment in, any Person, except in
each case in the ordinary course of business;
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(iv) made any change in any existing election, or made any
new election, with respect to any Tax law in any jurisdiction which
election could have an effect on the tax treatment of the Division or
the Division's business operations;
(v) entered into, amended or terminated any material
agreement;
(vi) sold, transferred, leased, mortgaged, encumbered or
otherwise disposed of, or agreed to sell, transfer, lease, mortgage,
encumber or otherwise dispose of, any Assets except (i) in the ordinary
course of business, or (ii) pursuant to any agreement specified in
Section 3.10 of Seller Disclosure Statement;
(vii) settled any claim or litigation, or filed any
settlement agreements in any proceeding before any Governmental
Authority or any arbitrator;
(viii) incurred or approved, or entered into any agreement
or commitment to make, any expenditures in excess of $10,000 (other
than (x) those required pursuant to any agreement specified in Section
3.10 of Seller Disclosure Statement, (y) those related to the purchase
of inventory in the ordinary course of business and (z) those for the
purchase of furniture, fixtures and equipment for retail stores that
are currently open or scheduled to be opened by the Division or which
the Seller has committed to purchase pursuant to the provisions of any
Contract);
(ix) maintained its books of account other than in the
usual, regular and ordinary manner in accordance with GAAP and on a
basis consistent with prior periods or made any change in any of its
accounting methods or practices that would be required to be disclosed
under GAAP;
(x) revalued any of the Assets, including without
limitation, writing down the value of inventory or writing off notes or
accounts receivable, except as consistent with past practices;
(xi) engaged in any one or more activities or transactions
outside the ordinary course of business; or
(xii) committed to do any of the foregoing.
3.19 OWNERSHIP OF DIVISION ASSETS.
(a) Except as provided under the provisions of the Contracts,
Seller has and will have as of the Closing Date legal and beneficial ownership
of the Assets. The Assets will be free and clear of any and all Liens as of the
Closing.
(b) Except as set forth in Section 3.19(b) of the Disclosure
Statement, since January 30, 1999, none of Seller's Affiliates has directly or
indirectly acquired any interests in any of the assets of the Division or any
assets, rights or interests related to any of such assets of the Division.
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3.20 INVENTORY. The inventories (collectively referred to as
"inventory" or "inventories") of the Division acquired subsequent to January 30,
1999 have been acquired in the ordinary course of business consistent with the
past practices of the Division, the seasonal nature of the Division's business
and the growth of the Division's sales during 1999 compared to the prior year.
As of the Closing, the inventory will consist of items of quality, quantity and
type consistent with past practices of the Division as modified by the trends in
the business of the Division. Since January 30, 1999, inventory markdowns have
only been taken in the ordinary course of the Division's business consistent
with past practices. To the Knowledge of Seller as of the date of this
Agreement, there is no reason to believe that the Division will experience in
the foreseeable future any difficulty in obtaining, in the desired quantity and
quality, the inventory necessary to conduct its business in the manner now
conducted, including, without limitation, inventory which historically has been
imported. All items included in the inventories are the property of the Division
and no items included in the inventories have been pledged as collateral or are
held by the Division on consignment from others.
3.21 SUPPLIERS; SALES. No later than five business days after the
execution of this Agreement, Seller shall deliver to Buyer Section 3.21 of
Seller Disclosure Statement, which will set forth the 20 principal suppliers of
the Division during each of calendar 1998 and the eight months ended October 2,
1999, together with the dollar amount of goods purchased by the Division from
each such supplier during each such period. Except as may be set forth in
Section 3.21 of the Seller Disclosure Statement, the Division maintains good
relations with all suppliers listed or required to be listed in Section 3.21 of
Seller Disclosure Statement as well as with governments, partners, financing
sources and other parties with whom the Division has significant relations, and
no such party has canceled, terminated or made any threat to either Seller or to
the Division to cancel or otherwise terminate its relationship with the Division
or to materially decrease its services or supplies to the Division.
3.22 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Seller nor any of
its Affiliates, or any other Person acting on behalf of or associated with
Seller, acting alone or together, has with respect to the Division's business,
including the Assets: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier, employee or
agent of any customer or supplier, official or employee of any Governmental
Authority, or any political party or candidate for office (domestic or foreign)
or other Person; or (b) directly or indirectly, given or agreed to give any
money, gift or similar benefit to any customer, supplier, employee or agent of
any customer or supplier, official or employee of any Governmental Authority, or
any political party or candidate for office (domestic or foreign) or other
Person who was, is or may be in a position to help or hinder the business of the
Division (or assist Seller and/or the Division in connection with any actual or
proposed transaction) which, in the case of (a) or (b), (i) may subject Seller
and/or the Division to any material Damages in any criminal or governmental
litigation or proceeding, (ii) if not given in the past, may have had a Seller
Material Adverse Effect, or (iii) if not, continued in the future, may have a
Seller Material Adverse Effect.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted.
4.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by Buyer and Buyer has all requisite corporate power
and legal capacity to execute and deliver this Agreement and all Collateral
Agreements executed and delivered or to be executed and delivered by Buyer in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which Buyer is a party constitutes,
or upon execution and delivery will constitute, the legal, valid and binding
obligation of Buyer, enforceable in accordance with their respective terms,
except as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.
4.03 NO DEFAULT OR CONSENTS. Neither the execution and delivery of this
Agreement by Buyer nor the consummation by Buyer of the transactions
contemplated hereby will:
(i) violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of Buyer;
(ii) violate any Legal Requirements applicable to Buyer,
except for such violations or conflicts that, individually or in the
aggregate, would not have a Buyer Material Adverse Effect; or
(iii) require Buyer to obtain or make any waiver, consent,
action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
Governmental Authority, except for applicable requirements of the
pre-merger notification requirements of the HSR Act and any comparable
Canadian antitrust statutes.
4.04 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking damages against Buyer or its properties as a result of the
consummation of the transactions contemplated by this Agreement.
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4.05 BROKERS. Other than Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx"), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the execution and delivery of this
Agreement by Buyer and/or consummation of the transactions contemplated hereby
based upon arrangements made by or on behalf of Buyer.
ARTICLE V - CONDUCT OF BUSINESS PENDING THE CLOSING
5.01 CONDUCT OF BUSINESS BY THE DIVISION PENDING THE CLOSING. Seller
covenants and agrees that, from the date of this Agreement to the Closing,
except as otherwise expressly provided for in this Agreement, unless Buyer shall
otherwise agree in writing, Seller shall, and shall cause the Division to,
conduct its business in the ordinary course and in a manner consistent in all
material respects with past practice. Seller shall, and shall cause the Division
to, use all commercially reasonable efforts to (i) preserve intact its business
organization, (ii) keep available the services of the current officers,
Employees and consultants of the Division, (iii) preserve the current
relationships of the Division with customers, distributors, suppliers,
licensors, licensees, contractors and other persons with which the Division has
significant business relations, (iv) maintain all Assets in good repair and
condition (except for ordinary wear and tear) other than those disposed of in
the ordinary course of business, (v) maintain all insurance necessary to the
conduct of the Division's business as currently conducted; provided, however,
that Buyer shall cooperate with Seller to cause termination as of the Closing
Date of the insurance coverage identified in writing for this purpose by Seller
to Buyer and Seller shall take all actions necessary to discharge any and all
liabilities or obligations of the Division arising with respect to any such
coverage that is to be terminated hereunder, (vi) maintain its books of account
and records in the usual, regular and ordinary manner, and (vii) maintain and
protect all of its Intellectual Property Rights in a manner consistent in all
material respects with past practice. By way of amplification and not
limitation, except as contemplated by this Agreement, Seller shall not, and
shall cause the Division not to, between the date of this Agreement and the
Closing Date, directly or indirectly do, or propose to do, any of the following
relating to the Assets, the Employees or the business of the Division, without
the prior written consent of Buyer:
(a) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (i)
any options, warrants, convertible securities or other rights of any kind to
acquire any ownership interest (including, without limitation, any phantom
interests), of the Division or (ii) any Assets, except for sales in the ordinary
course of business consistent with past practice and other asset sales for
consideration or having a fair market value aggregating not more than $50,000;
(b) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) or agree to acquire any
corporation, partnership, limited liability company, or other business
organization or division thereof;
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(c) (i) incur or agree to incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans, advances, or capital contributions to or investments in, any
other Person, except in the ordinary course of business consistent with past
practice and in an amount not in excess of $50,000; or (ii) authorize capital
expenditures which are, in the aggregate, in excess of $50,000 (except capital
expenditures related to the purchase of furniture, fixtures and equipment for
retail stores that are currently opened or scheduled to be opened by the
Division or which the Seller has committed to purchase pursuant to the
provisions of any Contract);
(d) acquire, or agree to acquire, sell, lease or dispose of any
Assets, other than sales or leases of fixed assets (other than Leased Premises)
or sales of inventory, in each case, in the ordinary course of business
consistent with past practice;
(e) enter into, establish, adopt, amend or renew any material
employment, consulting, severance or similar agreement or arrangements with any
director, officer, or employee, or grant any salary or wage increase (other than
in the ordinary course consistent with past practice);
(f) establish, adopt, amend or increase benefits under any
Benefit Plan, stock option or stock purchase plan or arrangement (other than as
may be required by applicable Legal Requirements);
(g) enter into any labor or collective bargaining Contract,
memorandum of understanding, grievance settlement or any other agreement or
commitment to or relating to any labor union;
(h) discharge or satisfy any Lien or pay or satisfy any material
obligation or liability (fixed or contingent) except in the ordinary course of
business consistent with past practice or to effectuate the transactions
contemplated by this Agreement, or commence any voluntary petition, proceeding
or action under any bankruptcy, insolvency or other similar Legal Requirements;
(i) take any action that, if taken prior to the date hereof,
would have been required to be disclosed in Section 3.18 of Seller Disclosure
Statement;
(j) enter into any Contract with any director, officer, employee
or stockholder of the Division or any Affiliate of the foregoing, except in the
ordinary course of business consistent with past practice;
(k) enter into any Contract, except for non-material Contracts in
the ordinary course of business consistent with past practice and enter into any
leases or subleases for real property;
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(l) make or change any election, file any amended Tax Return,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to the Division, fail to timely file any Tax
Return, take a position on a Tax Return not in keeping with prior practice or
take any other similar action, or omit to take any action relating to the filing
of any Tax Return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action or omission
could have the effect of increasing the present or future Tax liability or
decreasing any present or future Tax asset of the Division;
(m) take any action or omit to take any action which would result
in a violation of any applicable Legal Requirements or would cause a breach of
any Contract, which violation or breach would have a Seller Material Adverse
Effect;
(n) license, assign or otherwise transfer to any Person any
rights to any Intellectual Property Rights, except in the ordinary course of
business consistent with past practice;
(o) fail to maintain or enforce any Intellectual Property Rights,
except in the ordinary course of business consistent with past practice; or
(p) authorize or propose, or agree to take, any of the foregoing
actions prohibited under this Section 5.01.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 APPROPRIATE ACTION; CONSENTS; FILINGS; FURTHER ASSURANCES.
(a) Seller shall, and shall cause the Division to, use their
commercially reasonable efforts, and Buyer shall use its commercially reasonable
efforts, to (i) take, or cause to be taken, all appropriate action and do, or
cause to be done, all things necessary, proper or advisable under applicable
Legal Requirements or otherwise to consummate the transactions contemplated
hereby as promptly as practicable, (ii) obtain expeditiously from any
Governmental Authority any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Seller, the Division
or Buyer in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
transactions contemplated hereby required under (A) the HSR Act and any related
governmental request thereunder and (B) any other applicable Legal Requirements;
PROVIDED, that Seller and Buyer shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing. From the
date of this Agreement until the Closing, each party shall promptly notify the
other party in writing of any pending or, to the knowledge of the first party,
threatened action, proceeding or investigation by any Governmental Authority or
any other Person seeking to restrain or prohibit the consummation of the
transactions or otherwise limit the right of Buyer to own or operate all or any
portion of the Assets, which would have a Seller Material Adverse Effect prior
to or after the Closing.
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(b) Seller shall promptly provide notice to each landlord with
respect to obtaining its consent with respect to any Lease that in accordance
with its terms requires the consent of such landlord and Seller and Buyer shall
otherwise use their commercially reasonable efforts both prior to and after the
Closing to obtain such landlord consent to the valid assignment of any Lease by
Seller to Buyer.
(c) Seller and Buyer shall furnish to each other all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Legal Requirements in connection with the
transactions contemplated by this Agreement.
(d) Each of Seller and Buyer shall give any notices to third
parties and use their commercially reasonable efforts to obtain any third party
consents, (A) necessary, proper or advisable to consummate the transactions
contemplated hereby, (B) disclosed or required to be disclosed in Seller
Disclosure Statement or (C) required to prevent a Seller Material Adverse Effect
from occurring prior to or after the Closing Date.
(e) If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, including
the execution of additional documents, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
6.02 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Seller and Buyer shall comply with, and shall cause their
respective Representatives (as defined below) to comply with, to the extent
permitted by applicable Legal Requirements, all of their respective obligations
under the Confidentiality Agreement dated August 19, 1999 (the "Confidentiality
Agreement") between Seller and Buyer. Notwithstanding the Confidentiality
Agreement, Seller acknowledges that Buyer may cause an information memorandum to
be prepared and used in connection with the consummation of its financing of the
transactions contemplated hereby; PROVIDED, that any recipient of such
information memorandum shall be subject to customary confidentiality
requirements.
(b) Subject to the Confidentiality Agreement, from the date
hereof to the Closing Date, Seller shall, and shall cause the Division to,
provide to Buyer (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively the
"Representatives"), access to all information and documents which Buyer may
reasonably request regarding the Assets and other aspects of the Division.
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(c) From the date hereof to the Closing Date, Seller shall, and
shall cause the Division to, (i) provide to Buyer and its Representatives access
at reasonable times, upon prior notice, to the officers, employees, agents,
properties, offices and other facilities of the Division and to the books and
records thereof and (ii) furnish promptly such information concerning the Assets
and other aspects of the Division as Buyer or its Representatives may reasonably
request.
(d) No investigation by Buyer, whether prior to the execution of
this Agreement or pursuant to this Section 6.02, shall affect any representation
or warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
6.03 CASUALTY LOSS. If, between the date of this Agreement and the
Closing Date, any of the Assets shall be destroyed or damaged in whole or in
part by fire, earthquake, flood, other casualty or any other cause, then Seller
shall, at Buyer's election, (i) cause such Assets to be repaired or replaced
prior to the Closing Date with Assets of substantially the same condition and
function, but only if such repair or replacement is commercially practicable
prior to the Closing Date, (ii) deposit in a separate account an amount
sufficient to cause such Assets to be so repaired or replaced, or (iii) enter
into contractual arrangements satisfactory to Buyer so that the Assets will have
at the Closing Date the same economic value as if such casualty had not
occurred.
6.04 ADDITIONAL FINANCIAL STATEMENTS. Seller shall cause KPMG Peat
Marwick, LLP ("KPMG"), Seller's and Buyer's independent auditors, to prepare any
and all additional audited financial statements and unaudited financial
information with respect to the Division that KPMG deems to be necessary to
satisfy Buyer's obligations under the Exchange Act as well as any other Legal
Requirements (collectively the "Additional Financial Statements"), all of which
Additional Financial Statements shall be in conformity with GAAP and Regulation
S-X as promulgated under the Securities Act of 1933, as amended.
6.05 NOTIFICATION OF CERTAIN MATTERS. From and after the date of this
Agreement until the Closing Date, each party hereto shall promptly notify the
other parties hereto of:
(a) the occurrence, or non-occurrence, of any event the
occurrence or non-occurrence of which would be reasonably likely to cause any
(i) representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any material covenant or any
condition to the obligations of any party to effect the transactions
contemplated by this Agreement not to be complied with or satisfied;
(b) the failure of any party hereto to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it pursuant
to this Agreement;
(c) the receipt of any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
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(d) the receipt of any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement; and
(e) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the party, threatened against, relating to or
involving or otherwise affecting Seller or the Division or Buyer, which relates
to the consummation of the transactions contemplated by this Agreement;
in each case, to the extent such event or circumstance is or becomes known to
the party required to give such notice; PROVIDED, HOWEVER, that the delivery of
any notice pursuant to this Section 6.05 shall not be deemed to be an amendment
of this Agreement or any Section in Seller Disclosure Statement or Buyer
Disclosure Statement and shall not cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement.
6.06 PUBLIC ANNOUNCEMENTS. Buyer and Seller shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or any of the transactions contemplated hereby.
Prior to the Closing, Buyer and Seller shall not issue any such press release or
make any such public statement without the prior consent of the other (which
consent shall not be unreasonably withheld), except as may be required by Legal
Requirements or any listing agreement with any national securities exchange to
which Buyer or Seller is a party and, in such case, shall use reasonable effects
to consult with all the parties hereto prior to such release or statement being
issued.
6.07 EMPLOYMENT MATTERS.
On the Closing Date, Seller shall terminate as of the Effective Time,
and Buyer shall offer to hire as of the Effective Time, all of the Employees of
the Division (other than the Executives) at a comparable job and for comparable
compensation as each such Employee was employed by Seller immediately prior to
the Closing Date. No later than five business days prior to the Closing Date,
Buyer shall designate to Seller which Executives Buyer intends to offer to hire,
and on the Closing Date, Seller shall terminate as of the Effective Time, and
Buyer shall offer to hire as of the Effective Time, all such designated
Executives. Buyer shall have no obligation in respect of, and assume no
responsibility for, accrued employment benefits of any kind claimed to belong or
belonging to any such employee of the Division, including but not limited to
pension or retirement benefits, stock, profit sharing, bonus or other incentive
compensation plans, vacation pay, severance pay and benefits, payroll
withholding, medical or dental plans or insurance plans and Seller shall remain
liable for all such accrued employment benefits. Seller shall not be obligated
for any period from and after the Effective Time under the Seller's store
associate bonus program.
6.08 NONCOMPETITION; NONSOLICITATION; NONDISCLOSURE. For a period of
five years from and after the Closing Date, neither Seller nor any of its
Affiliates shall, directly or indirectly, (i) own, manage, operate, join,
control or participate in the ownership, management, operation or control of, as
stockholder or partner or any other similar capacity with any business which is
in competition with the business of the Division as conducted in the United
States and Canada immediately prior to the Closing, except that the current
merchandising concepts of Seller and its Affiliates to the extent that they
currently compete with the business of the Division in the United States and
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Canada shall be excluded from the restrictions set forth in this Section, (ii)
solicit, employ, retain as a consultant, interfere with or attempt to entice
away from the Division or Buyer (or their Affiliates), or any successor to any
of the foregoing, any Executive that received an offer of employment from Buyer
pursuant to the terms of this Agreement, (iii) solicit through direct contact or
any other means of solicitation targeted directly at Employees, interfere with
or attempt to entice away from the Division or Buyer (or their Affiliates), or
any successor to any of the foregoing, any Employee (including only those
Executives covered by (ii) above), (iv) disclose, directly or indirectly, to any
Person, any confidential information relating to the Assets or any aspect of the
Division or its business or relating to Buyer or its Affiliates, or any
information concerning their respective financial condition, customers,
suppliers and business strategy or the methods generally of doing and operating
their respective businesses, except to the extent that such information is a
matter of public knowledge or is required to be disclosed by applicable Legal
Requirements. Ownership of not more than two percent of the outstanding stock of
any publicly traded company shall not, in and of itself, be a violation of this
Section 6.08.
The restrictive covenant contained in this Section 6.08 is a covenant
independent of any other provision of this Agreement, and the existence of any
claim which Seller may allege against Buyer, the Division or any of their
Affiliates, whether based on this Agreement or otherwise, shall not prevent the
enforcement of this covenant. Seller agrees that a breach of this Section 6.08
shall cause irreparable harm to Buyer, the Division and their Affiliates, that
Buyer's and the Division's remedies at law for any breach or threat of breach of
the provisions of this Section 6.08 shall be inadequate, and that Buyer and/or
the Division shall be entitled to an injunction or injunctions to prevent
breaches of this Section 6.08 and to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which Buyer and/or the
Division may be entitled at law or in equity. The five year period shall be
tolled during any period of violation of this Section 6.08 and during any other
period required for litigation during which Buyer and/or the Division seeks to
enforce this covenant. In the event that this Section 6.08 shall be determined
by an court of competent jurisdiction to be unenforceable by reason of its
extending for too long a period of time or over too large a geographical area or
by reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the longest period of time for which it may be
enforceable, and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court in such action.
6.09 REPRESENTATIONS. Each of Seller and Buyer (a) will use
commercially reasonable efforts to take all action necessary to render true and
correct as of the Closing its respective representations and warranties
contained in this Agreement, (b) will refrain from taking any action that would
render any such representation or warranty untrue or incorrect as of such time
and (c) will perform or cause to be satisfied each agreement or covenant to be
performed or satisfied by it.
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6.10 BULK TRANSFERS; OTHER TAXES. Buyer and Seller each hereby
acknowledge that Seller and Buyer do not intend to comply with any Legal
Requirements relating to bulk transfers in connection with the execution,
delivery and performance of this Agreement and the agreements contemplated
hereby and the consummation of the transactions contemplated hereby and thereby.
Seller shall, in accordance with Section 8.01, indemnify and hold Buyer (and its
Affiliates) harmless from any loss, liability or expense resulting from Seller's
failure to comply therewith. Each party shall be liable (and shall indemnify the
other party) with respect to any United States or Canadian sales, transfer or
other similar Taxes imposed on such party arising out of or in connection with
the sale of the Assets by Seller to Buyer. At Closing, Buyer shall provide
Seller with appropriate resale certificates for all merchandise inventory
transferred by Seller to Buyer.
6.11 INTELLECTUAL PROPERTY RIGHTS. From and after the Closing Date,
Seller shall immediately discontinue any use or exploitation of the U.S. and
Canadian Intellectual Property Rights and shall not thereafter use, or exploit
in any manner for any purpose whatever, the Intellectual Property Rights or any
word, symbol, phrase or marking confusingly similar thereto in the U.S. or
Canada; or in electronic commerce in or with the U.S. or Canada; or for direct
mail catalog sales or advertising directed to the U.S. or Canada; or for
products sold through channels of trade or to traders outside of the U.S. and
Canada who are known to be diverters of merchandise to the U.S. and Canada.
Seller shall execute such other additional documents as may, in the opinion of
Buyer's counsel, he required or desirable in order to effectuate the good and
valid absolute transfer of Seller's U.S. and Canadian Intellectual Property
Rights to Buyer, to document Buyer's ownership of said statutory U.S. and
Canadian Intellectual Property Rights with the appropriate government agencies,
and to procure the executed and notarized Releases required to void and release
any and all Liens granted and/or recorded against the U.S. and Canadian
Intellectual Property Rights and to enable Buyer to acquire and establish good,
valid, unencumbered title to said Rights free of such Liens.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Buyer and Seller to consummate the transactions contemplated by this Agreement
are subject to the satisfaction (or, if permitted by applicable Legal
Requirements, waiver by the party for whose benefit such condition exists) of
the following conditions:
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(a) any applicable waiting period under the HSR Act or any
similar Canadian statute relating to the transactions contemplated by this
Agreement shall have expired or been terminated;
(b) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Authority or a court of competent
jurisdiction which has the effect of making the transactions contemplated by
this Agreement illegal or otherwise prohibiting consummation of such
transactions or of limiting or restricting Buyer's conduct or operation of the
business of the Division after the Closing; and
(c) all other necessary and material governmental and regulatory
clearances, consents, or approvals shall have been received.
7.02 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction or, if permitted by applicable Legal Requirements, waiver by Buyer
of the following further conditions:
(a) (i) Seller shall have performed all of its obligations
hereunder required to be performed by it at or prior to the Closing; and (ii)
each of the representations and warranties of Seller contained in this Agreement
shall be true and correct, in each case as of the Closing Date as if made at and
as of such time, (except for representations or warranties that are made as of a
specific date);
(b) Buyer shall have received from Seller the items specified in
Section 2.02 of this Agreement; and
(c) Seller shall have obtained all consents, authorizations,
approvals and waivers from third parties, in form reasonably acceptable to
Buyer, which are necessary in order to enable (i) the consummation of the
transactions, (ii) the transfer or assignment of all Assets, Contracts and
Leases to Buyer, and (iii) Buyer to conduct the business of the Division in all
material respects after the Closing Date on the same basis as conducted prior to
the date hereof. Notwithstanding the foregoing, Seller shall not be obligated as
a condition to Closing to obtain landlord consents with respect to any Lease
that cannot be assigned without the consent of the Landlord, but Seller shall
remain obligated to use its commercially reasonable efforts to obtain such
consents after the Closing as provided in Section 6.01(b).
7.03 CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction or, if permitted by applicable Legal Requirements, waiver by Seller
of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Closing Date; and (ii) each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects,
in each case as of the Closing Date as if made at and as of such time; and
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(b) Seller shall have received from Buyer the items specified in
Section 2.03 of this Agreement.
7.04 MATERIAL ADVERSE AFFECT. Notwithstanding the other provisions of
Article VII, the Buyer shall be required to consummate the transactions
contemplated by this Agreement even if a condition to the Closing (other than
the condition set forth in Section 7.01(a)) has not been fully satisfied, unless
the failure of such condition is or is reasonably likely to be materially
adverse to the Assets, business, properties, results of operations, prospects or
condition (financial or otherwise) of the Division, taken as a whole, but
excluding any material adverse change that is demonstrated to be primarily
caused by the announcement or pendency of the transactions contemplated by this
Agreement. The consummation of the transactions contemplated by this Agreement
despite Seller's failure to satisfy one or more conditions set forth in Section
7.01 or 7.02 shall not be construed as a waiver of Buyer's rights against Seller
for the breach by Seller of any of its representations, warranties, covenants or
agreements set forth in this Agreement and Buyer shall retain all such rights
from and after the Closing.
ARTICLE VIII - INDEMNIFICATION
8.01 INDEMNIFICATION OF BUYER. (a) Seller shall indemnify, save and
hold harmless Buyer and its Affiliates, and their respective Representatives,
from and against any and all Damages incurred in connection with or arising out
of or resulting from (i) any breach of any covenant or agreement, or the
inaccuracy of any representation or warranty, made by Seller in or pursuant to
this Agreement, (ii) any Taxes related to Seller or the business of the
Division; provided, however, that such indemnity shall exclude the liability for
Taxes relating to any period beginning on or after the Closing Date, (iii) any
liability, obligation, debt or commitment of Seller described in Section 1.01(c)
(other than Assumed Obligations), and (iv) any liability or obligation, whether
accrued, absolute, contingent, reasonably known, existing or arising out of any
transaction or state of facts existing prior to the Closing Date, unless such
liability or obligation is an Assumed Obligation or relates to the operation of
the business of the Division after the Effective Time. Notwithstanding the
foregoing, Seller shall not have any obligation to indemnify Buyer and its
Affiliates, and their respective Representatives, from and against any and all
Damages resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or alleged breach) of any representation or warranty of Seller
(excluding any materiality exception that may be contained in such
representation or warranty) contained in this Agreement until Buyer and its
Affiliates, and their respective Representatives, have suffered in the aggregate
Damages by reason of all such breaches (or alleged breaches) in excess of
$500,000 (at which point Seller will be obligated to indemnify Buyer and its
Affiliates, and their respective Representatives, from and against all such
Damages in excess of $500,000). For the purposes of the foregoing sentence, only
Damages with respect to any individual breach (or alleged breach), including all
other breaches arising out of the same facts or circumstances, which exceed
$5,000 will be included in determining whether such $500,000 threshold has been
reached; provided, that the full amount of any such Damages shall be included in
such calculation.
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8.02 INDEMNIFICATION OF SELLER. Buyer shall indemnify, save and hold
harmless Seller and its Affiliates, and their respective Representatives, from
and against any and all Damages incurred in connection with or arising out of or
resulting from (i) any breach of any covenant or agreement, or the inaccuracy of
any representation or warranty, made by Buyer in or pursuant to this Agreement,
(ii) any Taxes related to Buyer or the operation of the business of the Division
from and after the Closing Date, (iii) any Assumed Obligation, or (iv) the
operation of the business of the Division from and after the Effective Time.
Notwithstanding the foregoing, Buyer shall not have any obligation to indemnify
Seller and its Affiliates, and their respective Representatives, from and
against any and all Damages resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or alleged breach) of any representation or
warranty of Buyer (excluding any materiality exception that may be contained in
such representation or warranty) contained in this Agreement until Seller and
its Affiliates, and their respective Representatives, have suffered in the
aggregate Damages by reason of all such breaches (or alleged breaches) in excess
of $500,000 (at which point Buyer will be obligated to indemnify Seller and its
Affiliates, and their respective Representatives, from and against all such
Damages in excess of $500,000). For the purposes of the foregoing sentence, only
Damages with respect to any individual breach (or alleged breach), including all
other breaches arising out of the same facts or circumstances, which exceed
$5,000 will be included in determining whether such $500,000 threshold has been
reached; provided, that the full amount of any such Damages shall be included in
such calculation.
8.03 THIRD-PARTY CLAIMS.
(a) For purposes of this Section, a party making a claim for
indemnity under this Agreement is hereinafter referred to as an
"Indemnified Party" and the party against whom such claim is asserted
is hereinafter referred to as the "Indemnifying Party." An Indemnified
Party shall give prompt written notice to an Indemnifying Party of the
commencement or assertion of any third-party action in respect of which
such Indemnified Party shall seek indemnification hereunder. Any
failure to so notify an Indemnifying Party shall not relieve an
Indemnifying Party from any liability that it may have to such
Indemnified Party under this Article unless the failure to give such
notice materially and adversely prejudices an Indemnifying Party.
Neither Buyer nor Seller will have any indemnification obligation under
this Agreement unless notice is given of any claim for indemnification
prior to the end of the period during which representations,
warranties, covenants and agreements survive as provided in Section
11.01. An Indemnifying Party shall have the right to assume control of
the defense of, settle, or otherwise dispose of such third-party action
on such terms as they deem appropriate; provided, however, that:
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(i) the Indemnified Party shall be entitled, at his, her,
or its own expense, to participate in the defense of such third-party
action;
(ii) an Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of
such third-party action or any liability in respect thereof if,
pursuant to or as a result of such settlement, compromise, admission,
or acknowledgment, injunctive or other equitable relief would be
imposed against the Indemnified Party or if, in the opinion of the
Indemnified Party, such settlement, compromise, admission, or
acknowledgment would have a Material Adverse Effect on its business or,
in the case of an Indemnified Party who is a natural person, on his or
her assets or interests;
(iii) an Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to each Indemnified Party of a release from all liability in
respect of such third-party action; and
(iv) an Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the
defense of), and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement, compromise, admission, or
acknowledgment of any third-party action (i) as to which an
Indemnifying Party fails to assume the defense within a reasonable
length of time or (ii) to the extent the third-party action seeks an
Order against the Indemnified Party which, if successful, would have a
Material Adverse Effect on the business, operations, assets, or
financial condition of the Indemnified Party; PROVIDED, HOWEVER, that
the Indemnified Party shall make no settlement, compromise, admission,
or acknowledgment which would give rise to liability on the part of the
Indemnifying Party without the prior written consent of the
Indemnifying Party.
(b) An Indemnifying Party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this
Section to or for the account of the Indemnified Party from time to
time promptly upon receipt of bills or invoices relating thereto or
when otherwise due and payable, provided that the Indemnified Party has
agreed in writing to reimburse the Indemnifying Party for the full
amount of such payments if the Indemnified Party is ultimately
determined not to be entitled to such indemnification.
(c) The parties hereto shall extend reasonable cooperation in
connection with the defense of any third-party action pursuant to this
Article and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably
requested.
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8.04 INDEMNIFICATION NOT INVOLVING THIRD-PARTY CLAIMS; NOTICE. If an
Indemnified Party intends to seek indemnification hereunder, other than in
connection with the commencement or assertion of any action, proceeding, demand,
or claim by a third-party, the Indemnified Party shall notify the Indemnifying
Party in writing within 60 days after the Indemnified Party's discovery of facts
upon which it intends to base its claim for indemnification hereunder, but the
failure to or delay so to notify the Indemnifying Party shall not relieve the
Indemnifying Party, except to the extent that the Indemnifying Party
demonstrates that its ability to defend or resolve such claim has been adversely
affected by the failure or delay.
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER
9.01 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by written consent of Seller and Buyer;
(b) by Buyer or Seller if (i) the waiting period applicable to
the consummation of the Merger under the HSR Act shall not have expired or been
terminated prior to January 31, 2000, (ii) any court of competent jurisdiction
in the United States or other United States Governmental Authority shall have
issued an order (other than a temporary restraining order), decree or ruling, or
taken any other action, restraining, enjoining or otherwise prohibiting the
transactions (provided, however, that neither party may terminate this Agreement
pursuant to this Section 9.01(b) prior to January 31, 2000 if the party subject
to such order, decree or ruling is using its commercially reasonable efforts to
have such order, decree or ruling removed, unless such order, decree or ruling
shall have become final and non-appealable), or (iii) the Closing Date shall not
have occurred on or before January 31, 2000; provided, that the right to
terminate this Agreement under this Section 9.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Closing Date to occur on or
before such date;
(c) by Seller, upon a breach by Buyer of any representation,
warranty, or agreement set forth in this Agreement such that the condition set
forth in Section 7.03(a) would not be satisfied; provided, however, that, if
such breach is curable by Buyer through the exercise of its commercially
reasonable efforts and Buyer continues to exercise such best efforts, Seller may
not terminate this Agreement under this Section 9.01(c) for a period of 30 days
from the date on which Buyer delivers to Seller written notice setting forth in
reasonable detail the circumstances giving rise to such breach; or
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(d) by Buyer, upon a breach by Seller of any representation,
warranty, or agreement set forth in this Agreement such that the condition set
forth in Section 7.02(a) would not be satisfied so that under the provisions of
Section 7.04 Buyer would not be required to close; PROVIDED, HOWEVER, that, if
such breach is curable by Seller through the exercise of its commercially
reasonable efforts and Seller continues to exercise such best efforts, Buyer may
not terminate this Agreement under this Section 9.01(d) for a period of 30 days
from the date on which Buyer delivers to Seller written notice setting forth in
reasonable detail the circumstances giving rise to such breach.
9.02 METHOD OF TERMINATION; EFFECT OF TERMINATION. Any such right of
termination hereunder shall be exercised by written notice of termination given
by the terminating party to the other parties hereto in the manner hereinafter
provided in Section 11.02. Any such right of termination shall not be an
exclusive remedy hereunder but shall be in addition to any other legal or
equitable remedies that may be available to any non-defaulting party hereto
arising out of any default hereunder by any other party hereto.
9.03 FEES AND EXPENSES. All expenses incurred by the parties hereto
shall be borne solely and entirely by the party which has incurred the same;
provided, however, that (i) Buyer and Seller shall bear equally all expenses
incurred by the parties hereto and their respective Affiliates, if applicable,
in connection with any filing under the HSR Act due to the transactions
contemplated herein, and (ii) Seller shall bear all expenses of KPMG for the
preparation of the Additional Financial Statements.
9.04 AMENDMENT. This Agreement may be amended by the parties hereto at
any time prior to the Closing. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
9.05 WAIVER. At any time prior to the Closing, any party hereto may (a)
extend the time for the performance of any obligation or other act of any other
party hereto, (b) waive any inaccuracy in the representations and warranties of
the other party contained herein or in any document, certificate or writing
delivered by the other party pursuant hereto and (c) waive compliance with any
agreement or condition to its obligations (other than the condition set forth in
paragraph (a) of Section 7.01) contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE X - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article X or elsewhere in this Agreement.
10.01 AFFILIATE. The term "Affiliate" means, with respect to any
Person, any other Person controlling, controlled by or under common control with
such Person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any Person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person.
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10.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements" means any
or all agreements, instruments or documents required or expressly provided under
this Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement.
10.03 CONTRACT. The term "Contract", when described as being those of
or applicable to any Person, means any and all, whether written or oral,
contracts, agreements, franchises, understandings, arrangements, leases,
licenses, registrations, authorizations, easements, servitudes, rights of way,
mortgages, bonds, indentures, notes, guaranties, Liens, indebtedness, approvals
or other instruments or undertakings to which such Person is a party or to which
or by which such Person or the property of such Person is subject or bound,
excluding any Permits and Leases.
10.04 DAMAGES. The term "Damages" means any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements).
10.05 FINANCIAL STATEMENTS. The term "Financial Statements" means any
or all of the financial statements, including balance sheets and related
statements of income and statements of cash flow and the accompanying notes
thereto, of the Division's business prepared in accordance with GAAP
consistently applied, except as may be otherwise provided herein.
10.06 GOVERNMENTAL AUTHORITY. The term "Governmental Authority" means
any nation or country (including but not limited to the United States) and any
state, province, commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
10.07 INTELLECTUAL PROPERTY RIGHTS. The term "Intellectual Property
Rights" means, collectively, all worldwide industrial and intellectual property
and associated rights, including, without limitation, patents, patent
applications, rights to file for patent applications (including but not limited
to continuations, continuations-in-part, divisionals and reissues), trademarks,
logos, confidential documentation, service marks, trade names and service names
(in each case whether or not registered) and applications for and the right to
file applications for registration thereof, Internet domain name or application
for an Internet domain name, Internet and World Wide Web URLs or addresses,
copyrights (whether or not registered) and applications for and the right to
file applications for registration thereof, moral rights, mask work rights, mask
work registrations and applications therefor, franchises, licenses, license or
lease rights with respect to software or hardware, inventions, trade secrets,
trade dress, know-how, customer lists, supplier lists, proprietary processes and
formulae, software source code and object code, algorithms, net lists,
architectures, structures, screen displays, layouts, inventions, development
tools, designs, blueprints, specifications, technical drawings (or similar
information in electronic or digital format), publicity and privacy rights and
any other intellectual property rights arising under the laws of the United
States of America, any state thereof, Canada or any province thereof or any
other country or province thereof, and all documentation and media (in whatever
form) constituting, describing or relating to the foregoing, including, without
limitation, manuals, programmers' notes, memoranda and records.
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10.08 KNOWLEDGE OF SELLER. The term "Knowledge of Seller" or the
"Seller's Knowledge" means the actual knowledge of Seller or any of its officers
or directors or of the president, the vice president of merchandising/logistics,
vice president of operations, vice president of stores, vice president of human
resources and the chief financial officer of the Division with respect to the
matter in question, and such knowledge Seller or any of its officers or
directors or the president, any vice president listed above and the chief
financial officer of the Division reasonably should have obtained upon diligent
investigation and inquiry into the matter in question.
10.09 LEGAL REQUIREMENTS. The term "Legal Requirements", when described
as being applicable to any Person, means any and all domestic or foreign laws
(statutory, judicial or otherwise), ordinances, rules, regulations, judgments,
orders, directives, injunctions, writs, decrees or awards of, and any Contracts
with, any Governmental Authority, in each case as and to the extent applicable
to such Person or such Person's business, assets, operations or properties.
10.10 LIEN. The term "Lien" means, with respect to any property or
asset, any mortgage, pledge, security interest, lien (statutory or other),
charge, encumbrance or other similar restrictions or limitations of any kind or
nature whatsoever on or with respect to such property or asset.
10.11 PERMITS. The term "Permits" means all franchises, licenses,
authorizations, approvals, permits, consents or other rights granted by an
Governmental Authority and all certificates of convenience or necessity,
immunities, privileges, licenses, concessions, consents, grants, ordinances and
other rights, of every character whatsoever required for the conduct of business
and the use of properties by the Division as currently conducted or Used.
10.12 PERSON. The term "Person" means an individual, corporation,
limited liability company, partnership, limited partnership, syndicate, person,
trust, association or entity or Governmental Authority.
10.13 REAL PROPERTY. The term "Real Property" means the retail stores
leased by Seller and/or the Division and Used by the Division in the conduct of
its business.
10.14 REGULATIONS. The term "Regulations" means any and all regulations
promulgated by the Department of the Treasury pursuant to the Code.
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10.15 SELLER MATERIAL ADVERSE EFFECT. The term "Seller Material Adverse
Effect" means when used in connection with Seller, any change, effect, event,
occurrence, condition or development that is or is reasonably likely to be
materially adverse to (i) the Assets, business, properties, results of
operations, prospects or condition (financial or otherwise) of the Division,
taken as a whole (excluding industry and general economic conditions), or (ii)
the ability of Seller to perform its obligations under this Agreement, but
excluding any change, effect, event, occurrence, condition or development that
is demonstrated to be primarily caused by the announcement or pendency of the
transactions contemplated by this Agreement.
10.16 TAX OR TAXES. The term "Tax" or "Taxes" means federal, state,
county, local, foreign or other income, gross receipts, ad valorem, franchise,
profits, sales or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license, payroll, wage
or other withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind whatsoever
(including deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
10.17 TAX RETURN. The term "Tax Return" means any return, information
report or filing with respect to Taxes, including any schedules attached thereto
and any amendment thereof.
10.18 USED. The term "Used" means, with respect to the Assets,
Contracts, Leased Premises, Intellectual Property Rights, Real Property, or
Permits of the Division, those owned, leased, licensed or otherwise held by
Seller or the Division which were acquired for use or held for use by Seller or
the Division in connection with the Division's business and operations as
currently conducted, whether or not reflected on Seller's or the Division's
books of account.
ARTICLE XI - GENERAL PROVISIONS
11.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All of
the terms and conditions of this Agreement, together with the representations,
warranties and covenants contained herein or in any instrument or document
delivered or to be delivered pursuant to this Agreement, shall survive the
execution of this Agreement and the Closing Date notwithstanding any
investigation heretofore or hereafter made by or on behalf of any party hereto;
provided, however, that (a) the agreements and covenants (other than the
indemnification provisions set forth in Article VIII, which shall survive as
provided below) set forth in this Agreement shall survive and continue until all
obligations set forth therein shall have been performed and satisfied; and (b)
all representations and warranties set forth in this Agreement and the
indemnification provisions set forth in Article VIII, shall survive and continue
for, and all claims with respect thereto shall be made prior to June 1, 2001,
except for (i) the representations and warranties set forth in Sections 3.01,
3.02, 3.09(a), 3.12, 4.01 and 4.02 (including all indemnification obligations
related to such sections set forth in this Agreement) which shall survive until,
and all claims with respect thereto shall be made, within 60 days after the
expiration of the applicable statute of limitations, and (ii) representations,
warranties and indemnities for which an indemnification claim shall be pending
as of the end of the applicable period referred to above, in which event such
indemnities shall survive with respect to such claim until the final disposition
thereof.
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11.02 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
or by a nationally recognized overnight courier service to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11.02):
If to Buyer:
Claire's Stores, Inc.
0 X.X. 000xx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with copies to:
Xxxxxxxxx Traurig, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to Seller:
Venator Group, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Secretary
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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11.03 ACCOUNTING TERMS. All accounting terms used herein which are not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with GAAP.
11.04 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Legal Requirement, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
11.05 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Schedules, Buyer Disclosure Statement and Seller Disclosure Statement, which are
hereby incorporated herein by reference and made a part hereof for all purposes
as if fully set forth herein) and the Confidentiality Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise without the
prior written consent of the other parties, except that Buyer may assign all or
any of its rights and obligations hereunder to any Affiliate of Buyer, and Buyer
may assign its rights and obligations hereunder as collateral security to any
Person providing financing to Buyer; PROVIDED, that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations. Notwithstanding the foregoing, Buyer shall not
have the right to assign any particular Lease to any Person, if the assignment
of such Lease would, in accordance with the terms of such Lease, adversely
affect Seller's ability to obtain any required landlord consent of the
assignment of such Lease.
11.06 PARTIES IN INTEREST. Except as otherwise provided in Section
11.05, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
11.07 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to specific performance of the terms hereof, in addition to any other remedy
at law or in equity.
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11.08 GOVERNING LAW. The provisions of this Agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Delaware (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the state courts of the State
of Delaware located in New Castle County, in any action or proceeding that is
otherwise permitted under this Agreement or any other Collateral Agreement
executed in connection with this Agreement, and each party hereby irrevocably
agrees that all claims in respect of any such action or proceeding must be
brought and/or defended in such court; provided, however, that matters which are
under the exclusive jurisdiction of the Federal courts shall be brought in the
Federal District Court for the District of Delaware. Each party hereto consents
to service of process by any means authorized by the applicable law of the forum
in any action brought under or arising out of this Agreement, and each party
irrevocably waives, to the fullest extent each may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
11.09 ASSIGNMENT OF CONTRACTS. At the option of Buyer, and
notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an assignment of any Contract or Intellectual Property Rights, if
an attempted assignment thereof without the consent of a third party thereto
would constitute a breach thereof or in any way adversely affect the rights of
Buyer thereunder. If such consent is not obtained, or if any attempt at an
assignment thereof would be ineffective or would affect the rights of Seller
thereunder so that Buyer would not in fact receive all such rights, Seller shall
cooperate with Buyer to the extent necessary (i) to collect payments for (less
expenses of collection), and then remit such payment to, Buyer under such
Contract or Intellectual Property Rights, and (ii) to enforce Seller's rights
under such Contract or Intellectual Property Rights, including enforcement for
the benefit of Buyer of any and all rights of Seller against a third party
thereto arising out of the breach or cancellation by such third party or
otherwise.
11.10 HEADINGS. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
11.11 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
11.12 CONSTRUCTION. This Agreement and any documents or instruments
delivered pursuant hereto or in connection herewith shall be construed without
regard to the identity of the party who drafted the various provisions of the
same. Each and every provision of this Agreement and such other documents and
instruments shall be construed as though all of the parties participated equally
in the drafting of the same. Consequently, the parties acknowledge and agree
that any rule of construction that a document is to be construed against the
drafting party shall not be applicable either to this Agreement or such other
documents and instruments.
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11.13 BROKERS. Regardless of whether the Closing shall occur, (i)
Seller shall indemnify and hold harmless Buyer from and against any and all
liability for any brokers or finders' fees arising with respect to brokers or
finders retained or engaged by Seller in respect of the transactions
contemplated by this Agreement, and (ii) Buyer shall indemnify and hold harmless
Seller from and against any and all liability for Bear Xxxxxxx and any other
brokers' or finders' fees arising with respect to brokers or finders retained or
engaged by Buyer in respect of the transactions contemplated by this Agreement.
11.14 REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute, or otherwise.
11.15 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall any such waiver constitute a continuing
waiver unless otherwise expressly so provided.
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IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the date first written above by their respective officer
thereunto duly authorized.
BUYER:
CLAIRE'S STORES, INC.
By: _______________________________________
Xxxxxxx Xxxxxxxx, Chairman of the Board
SELLER:
VENATOR GROUP, INC.
By: _______________________________________
Xxxx X. Xxxxxx, Vice President
VENATOR GROUP SPECIALTY, INC.
By: _______________________________________
Xxxx X. Xxxxxx, Vice President
VENATOR GROUP CANADA INC.
By: _______________________________________
Xxxx X. Xxxxxx, Vice President
AFTERTHOUGHTS, INC.
By: _______________________________________
Xxxx X. Xxxxxx, Vice President
AFTERTHOUGHTS BOUTIQUES, INC.
By: _______________________________________
Xxxx X. Xxxxxx, Vice President
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