EXHIBIT 10.1
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CONTRIBUTION AGREEMENT
BY AND AMONG
THE XXXXXX GROUP INC.,
XXXXXXX SHOE COMPANY INC.
AND
XXXXXXX RETAIL INC.
APRIL 14, 1997
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions............................................................. 1
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1.2 Rules of Construction................................................... 10
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ARTICLE II FORMATION OF THE COMPANY;CLOSING; STORE TRANSFER CLOSINGS
2.1 Formation of the Company............................................... 10
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2.2 Actions to be Taken at the Closing..................................... 11
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2.3 Actions to be Taken at Each Store Transfer Closing..................... 13
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2.4 Additional Actions to be Taken on the Store Register Transfer Date..... 15
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2.5 No Assumption of Liabilities; Pro-Ration of Expenses................... 15
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2.6 Closing Dates and Place................................................ 16
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2.7 Further Assurances..................................................... 16
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXXX
3.1 Organization........................................................... 16
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3.2 Authority.............................................................. 16
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3.3 Title to Headquarters Assets and Store Assets.......................... 17
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3.4 Absence of Restrictions and Conflicts.................................. 17
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3.5 Governmental Consents.................................................. 18
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3.6 Litigation............................................................. 18
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3.7 Compliance with Laws................................................... 18
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3.8 Xxxxxx Employees; Union Contracts...................................... 18
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3.9 Headquarters Lease, Headquarters Telephone Lease,
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Store Leases and Store Register Agreements............................ 18
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3.10 No Brokers............................................................. 19
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3.11 No Misrepresentations.................................................. 19
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND XXXXXXX RETAIL
4.1 Organization........................................................... 19
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4.2 Authority.............................................................. 20
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4.3 Absence of Restrictions and Conflicts.................................. 21
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4.4 Governmental Consents.................................................. 21
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4.5 Litigation............................................................. 21
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4.6 Compliance with Laws................................................... 21
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4.7 Certain Xxxxxxx Agreements............................................. 22
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4.8 Trademarks............................................................. 23
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4.9 Restrictions on Imports................................................ 24
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4.10 Competing Interests.................................................... 24
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4.11 No Brokers............................................................. 24
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4.12 No Misrepresentations.................................................. 24
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ARTICLE V COVENANTS AND AGREEMENTS
5.1 Preservation of Assets by Xxxxxx....................................... 24
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5.2 Payment of Taxes by Xxxxxx............................................. 25
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5.3 Negotiation of Senior Credit Agreement and
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Subordinated Note Purchase Agreement................................... 25
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5.4 Preservation of Relationships by Xxxxxxx............................... 25
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5.5 Landlords' Consents.................................................... 26
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5.6 Store Conversion Activities by Xxxxxx.................................. 26
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5.7 Store Conversion Activities by Xxxxxxx................................. 27
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5.8 Development of MIS System.............................................. 27
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5.9 Initial Sourcing of S&L/JNY Products................................... 28
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5.10 Xxxxxxx Services....................................................... 28
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5.11 Trademarks............................................................. 28
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5.12 Employment and Benefit Matters......................................... 28
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5.13 Access and Information................................................. 30
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5.14 Supplemental Disclosure................................................ 31
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5.15 Governmental Filings................................................... 31
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5.16 Fulfillment of Conditions by Xxxxxx.................................... 31
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5.17 Fulfillment of Conditions by Xxxxxxx and Xxxxxxx Retail................ 31
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5.18 Xxxxxxx Subsidiaries; Liens............................................ 32
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5.19 Publicity.............................................................. 32
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5.20 Transaction Costs...................................................... 32
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ARTICLE VI CLOSING CONDITIONS
6.1 Conditions Precedent to the Closing.................................... 33
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6.2 Conditions Precedent to Each Store Transfer Closing.................... 36
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6.3 Additional Conditions Precedent on the Store Register Transfer Date.... 37
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ARTICLE VII INDEMNIFICATION
7.1 Indemnification of Xxxxxxx, Xxxxxxx Retail and the
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Company by Xxxxxx...................................................... 38
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7.2 Indemnification of Xxxxxx and the Company by
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Xxxxxxx and Xxxxxxx Retail............................................. 38
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7.3 Indemnification of Xxxxxx by the Company............................... 39
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7.4 Indemnification Procedures............................................. 39
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7.5 Survival............................................................... 40
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7.6 Limitations............................................................ 40
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ARTICLE VIII MISCELLANEOUS
8.1 Termination; Breakup Arrangements...................................... 40
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8.2 Assignment............................................................. 41
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8.3 Notices................................................................ 41
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8.4 Binding Effect......................................................... 42
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8.5 No Third Party Beneficiary............................................. 42
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8.6 Waiver................................................................. 42
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Table of Schedules and Exhibits
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Schedule 1.1A - Description of Store FF&E
Schedule 1.1B - List of Stores
Schedule 2.3 - Store Transfer Closings
Schedule 3.3 - Certain Liens
Schedule 3.6 - Xxxxxx Litigation
Schedule 4.3 - Xxxxxxx Restrictions and Conflicts
Schedule 4.5 - Xxxxxxx Litigation
Schedule 4.7 - Certain Xxxxxxx Agreements
Schedule 4.8A - Xxx & Xxxxx Domestic Trademarks
Schedule 4.8B - Xxx & Xxxxx Foreign Trademarks
Schedule 5.8 - Target Dates for Implementing MIS System
Exhibit A - Form of Certificate of Formation
Exhibit B - Form of Company Registration Rights Agreement
Exhibit C - Form of GE Capital Guaranty
Exhibit D - Form of Xxxxx New York Trademark Sublicense
Exhibit E - Form of Xxxxxxx Registration Rights Agreement
Exhibit F - Form of Non-Compete Agreement
Exhibit G - Form of Operating Agreement
Exhibit H - Form of Option Agreement
Exhibit I - Form of Retail Opportunity Agreement
Exhibit J - Form of Xxx & Xxxxx Trademark License
Exhibit K - Form of Services Agreement
Exhibit L - Form of Transitional Services Agreement
Exhibit M - Form of Opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP
Exhibit N - Form of Opinion of Xxxxxx and Neimark
Exhibit O - Form of Opinion of King & Spalding
Exhibit P - Form of Second Amendment to the Xxxxx New York License
Agreement
Exhibit Q - Form of Acknowledgment from Xxxx X. Xxxxxxx
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of April 14, 1997
by and among THE XXXXXX GROUP INC., a Delaware corporation ("Xxxxxx"), XXXXXXX
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SHOE COMPANY INC., a Delaware corporation ("Xxxxxxx"), and XXXXXXX RETAIL INC.,
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a Delaware corporation ("Xxxxxxx Retail").
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RECITALS
X. Xxxxxxx designs, develops and markets moderately priced casual and dress
footwear for women and children under the Xxx & Xxxxx,(R) Just Xxxxx(R) and
Xxxxx New York(R) brand names, among others. Xxxxxx operates a number of
women's retail footwear stores under the Dolcis(R) brand name, primarily in
California, Texas, the Southeast and the East. Xxxxxxx desires to enter the
women's retail footwear business utilizing the Xxx & Xxxxx,(R) Just Xxxxx(R)
and Xxxxx New York(R) brand names and Xxxxxx desires to reposition its
existing retail footwear business.
X. Xxxxxx and Xxxxxxx intend to realize these mutual goals by organizing a
limited liability company to engage in the business of owning and operating Mall
Specialty Footwear Stores and Retail Outlet Footwear Stores for the sale of
women's footwear and accessories, utilizing certain of Xxxxxx'x retail store
locations and the Xxx & Xxxxx,(R) Just Xxxxx(R) and Xxxxx New York(R)
brand names on the terms, and subject to the conditions, set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions. The following definitions will apply to the capitalized
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terms used in this Agreement for all purposes, unless otherwise clearly
indicated to the contrary:
"Affiliate" means, as to any Person, (i) any other Person that, directly or
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indirectly, controls, is controlled by or is under common control with such
Person; (ii) any Person who is a director and executive officer of such other
Person; and (iii) any trust or similar arrangement for the benefit of such other
Person. For purposes of this definition, (x) the term "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote securities having five per cent (5%) or more of
the voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or
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otherwise (other than solely by virtue of being outside directors); and (y)
Maxwell V. Xxxx, Xxxxx Xxx Xxxx, Xxxxxxxx X. Xxxx, Xxxxx Xxxxxxxx, as Trustee of
the Xxxxxxx X. Xxxx Trust and Xxxx X. Xxxxxxx shall be deemed to be Affiliates
of Xxxxxxx, Xxxxxxx Retail and the Company as of the Agreement Date.
"Agreement" means this Contribution Agreement, together with all Schedules
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and Exhibits attached hereto, as the same may be amended, modified, supplemented
or restated from time to time.
"Agreement Date" means the date on which this Agreement is executed by the
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parties hereto, as set forth above.
"Assumed Liabilities" means, (i) with respect to the Headquarters Assets to
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be assigned and delivered by Xxxxxx to the Company pursuant to Section 2.3(a)
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hereof, all liabilities and obligations of Xxxxxx of any kind or nature
whatsoever with respect to the occupancy and operation of the Headquarters
Premises accruing from and after the Closing Date with respect to the
Headquarters Premises, including all liabilities and obligations of Xxxxxx
accruing from and after the Closing Date with respect to the Headquarters Lease
and the Headquarters Telephone Lease; (ii) with respect to each Store to be
assigned and delivered by Xxxxxx to the Company pursuant to Section 2.3(a)
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hereof, all liabilities and obligations of Xxxxxx of any kind or nature
whatsoever with respect to the occupancy and operation of such Store accruing
from and after the Store Transfer Closing Date with respect to such Store,
including all liabilities and obligations of Xxxxxx accruing from and after each
such Store Transfer Closing Date with respect to the applicable Store Lease; and
(iii) with respect to the Store Register Agreements to be assigned and delivered
by Xxxxxx to the Company pursuant to Section 2.4(a) hereof, all liabilities and
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obligations of Xxxxxx of any kind or nature whatsoever accruing from and after
the Store Register Transfer Date with respect to the Store Register Agreements;
but excluding in the case of clause (i) or (ii) above any liability or
obligation to any employee of Xxxxxx accruing prior to such effective date, if
any, on which such employee becomes an employee of the Company pursuant to
Section 5.12 hereof, other than as specifically set forth in Section 5.12(h).
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"Bank of Boston" means The First National Bank of Boston.
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"Budget" has the meaning set forth in the Operating Agreement.
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"Xxxxxx Documents" means this Agreement, the Certificate of Formation, the
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Operating Agreement, the Transitional Services Agreement, the documents and
instruments contemplated by Sections 2.2(a), 2.3(a) and 2.4(a) hereof and all
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other agreements and instruments required to be executed and delivered by Xxxxxx
under Articles II and VI.
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"Buying Agent" means Universal Max Trading and such other buying agents as
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shall be selected by Xxxxxxx for the sourcing of S&L/JNY Products under the
Services Agreement.
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"Certificate of Formation" means the Certificate of Formation of the
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Company, substantially in the form of Exhibit A hereto.
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"Closing" means the consummation of the transactions contemplated to occur
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pursuant to Section 2.2 hereof.
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"Closing Date" means the date on which the conditions set forth in Section
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6.1 hereof are first satisfied, or such later date as shall be agreed to by
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Xxxxxx and Xxxxxxx.
"Company" means SLJ Retail LLC, a limited liability company to be formed by
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Xxxxxx and Xxxxxxx Retail under the laws of the State of Delaware.
"Company Documents" means the Xxxxxxx/Company Documents, the Option
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Agreement, the Transitional Services Agreement and all other agreements and
instruments required to be executed and delivered by the Company under Articles
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II and VI.
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"Company Registration Rights Agreement" means the Registration Rights
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Agreement to be entered into on the Closing Date among Xxxxxx, Xxxxxxx Retail
and the Company pursuant to Section 2.2 of this Agreement, substantially in the
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form attached as Exhibit B hereto.
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"Employment Agreement" means an employment agreement to be entered into
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pursuant to Section 5.12(a) hereof with the president of the Company in form and
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substance acceptable to Xxxxxx, Xxxxxxx and such employee.
"Employment Laws" means federal, state or local laws regulating the
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employment relationship between an employer and an employee, including, without
limitation, Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination In Employment Act, as amended, the Americans With Disabilities
Act, the Equal Pay Act, the Civil Rights Act of 1866, as amended, the National
Labor Relations Act, as amended, the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, the Worker Adjustment and Retraining Act and all
applicable state and local laws prohibiting discrimination in employment.
"Factories" means the factories used by Xxxxxxx or its Buying Agents to
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manufacture S&L/JNY Products sourced on behalf of the Company under the Services
Agreement.
"Former Xxxxxx Employee" has the meaning set forth in Section 5.12(e).
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"GE Capital" means General Electric Capital Corporation, a New York
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corporation.
"GE Capital Guaranty" means the guaranty of the Senior Term Loan to be
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issued on the Closing Date by GE Capital, substantially in the form attached as
Exhibit C hereto.
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"GE Capital Reimbursement and Security Agreement" means the reimbursement
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and security agreement to be entered into on the Closing Date between the
Company and GE Capital
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pursuant to which the Company will agree to reimburse GE Capital for any payment
made by GE Capital pursuant to the GE Capital Guaranty and to provide to GE
Capital certain security for such reimbursement obligations, on such terms and
conditions as shall be agreed to by GE Capital, the Company and the Senior
Agent.
"Governmental Body" means any governmental or quasi-governmental agency,
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authority, commission, board or other body.
"Headquarters Assets" means, collectively, the Headquarters Lease, the
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Headquarters Telephone Lease, the Headquarters FF&E and the Headquarters Related
Assets.
"Headquarters FF&E" means all of the furniture, fixtures and equipment
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owned by Xxxxxx and located at the Headquarters Premises as of the Agreement
Date.
"Headquarters Landlord's Consent" means the written consent of the landlord
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under the Headquarters Lease, in form and substance satisfactory to Xxxxxx and
Xxxxxxx, to (i) the assignment of the Headquarters Lease to the Company pursuant
to Section 2.2(c) hereof, (ii) the release of Xxxxxx from any further liability
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under the Headquarters Lease from and after the Closing Date, upon the
assumption by the Company of such liability; (iii) the subleasing by the Company
of such portion of the premises leased under the Headquarters Lease as shall not
be required by the Company for the conduct of its business; (iv) the letter of
credit substitution contemplated by Section 2.2(e)(xii) hereof; and (v) such
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other matters as shall be necessary or advisable in connection with the
consummation of the transactions contemplated hereby and the assignment and
delivery of the Headquarters Lease by Xxxxxx to the Company at the Closing.
"Headquarters Lease" means the Office/Warehouse Lease dated as of June 19,
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1995 between Xxxxxx, as tenant, and Rockdale Industries, Inc., as landlord, with
respect to the Headquarters Premises.
"Headquarters Premises" means the premises utilized by Xxxxxx as its
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corporate headquarters as of the Agreement Date, located at 000 Xxxxxxxxxx
Xxxxx, Xxxxx X, Xxxxxx, Xxxxxxx 00000 and leased by Xxxxxx pursuant to the
Headquarters Lease.
"Headquarters Related Assets" means all of Xxxxxx'x books, records, files,
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ledgers, disks and other data relating to the Headquarters Lease, the
Headquarters Telephone Lease and the Headquarters FF&E.
"Headquarters Telephone Lease" means the Master Equipment Lease Agreement
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#620-000-4146-000 between Xxxxxx and Siemens, including Leasing Schedule #620-
0004147-000 thereto, with respect to the Rolm 9200 Model 230 telephone system
utilized by Xxxxxx at the Headquarters Premises.
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"Headquarters Telephone Lessor's Consent" means the written consent of
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Siemens, in form and substance satisfactory to Xxxxxx and Xxxxxxx, to (i) the
assignment of the Headquarters Telephone Lease to the Company pursuant to
Section 2.2(c) hereof; and (ii) the release of Xxxxxx from any further liability
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under the Headquarters Telephone Lease from and after the Closing Date, upon the
assumption by the Company of such liability.
"Immediate Family" means, as to any natural Person, the spouse, children,
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parents, brothers and sisters of such Person, their respective spouses,
children, parents, brothers and sisters, and any trust or similar arrangement
for the benefit of any of the foregoing.
"Indemnified Losses" has the meaning set forth in Section 7.1.
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"Indemnified Person" has the meaning set forth in Section 7.3.
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"Indemnifying Party" has the meaning set forth in Section 7.3.
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"Inter-Pacific Products" means (i) men's, women's and children's slippers
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intended for indoor and outdoor use and (ii) jellies, aqua socks, injection
molded slides and style 1892A and EVA sandals for beach and street wear to be
sold at a net price of $10.00 (wholesale) or less per pair, the rights to which
are licensed under the License Agreement dated January 8, 1997 between Xxxxxxx
and Inter-Pacific Trading Corporation, a California corporation.
"Xxxxx" means Xxxxx Investment Co., Inc., a Delaware corporation.
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"Xxxxx New York Trademark License" means the License Agreement dated July
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1, 1993 between Xxxxxxx and Xxxxx, as amended by the First Amendment to License
Agreement dated October 2, 1995 between Xxxxxxx and Xxxxx and the Second
Amendment to License Agreement between Xxxxxxx and Xxxxx referred to in Section
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6.1(c)(iv) hereof.
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"Xxxxx New York Trademark Sublicense" means the Trademark Sublicense
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Agreement to be entered into on the Closing Date between Xxxxxxx and the
Company, and consented to by Xxxxx, substantially in the form attached as
Exhibit D hereto.
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"Xxxxx New York Trademarks" means the trademarks, trade names, service
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marks, logos and common law and similar rights owned by Xxxxx, used and/or
registered in the United States and worldwide, and licensed to Xxxxxxx pursuant
to the Xxxxx New York Trademark License.
"Liens" means liens, mortgages, security interests, encumbrances or third
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party claims of any nature.
"Mall Anchor Stores" means department or general merchandise stores serving
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as anchor stores in enclosed regional shopping malls (such as the department
stores operated by Federated Department Stores, Inc. as of the date of this
Agreement and the department or general
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merchandise stores operated under the Marshalls, T.J. Maxx, Filene's Basement,
Xxxx Stores and Xxxxxxxx'x names as of the date of this Agreement).
"Mall Specialty Footwear Stores" means retail stores (excluding Mall Anchor
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Stores) which specialize in selling first-quality women's footwear and
accessories and which are located in enclosed regional shopping malls (such as
the stores operated under the 9 Xxxx, Xxxxxxx Xxxx and Rack Room names as of the
date of this Agreement).
"Manager" means Xxxxxxx Retail, in its capacity as limited liability
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company manager of the Company pursuant to the Operating Agreement.
"Xxxxxxx/Company Documents" means the Xxxxx New York Trademark Sublicense,
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the Services Agreement, the Non-Compete Agreement, the Retail Opportunity
Agreement and the Xxx & Xxxxx Trademark License.
"Xxxxxxx Documents" means this Agreement, the Operating Agreement, the
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Certificate of Formation, the Xxxxxxx/Company Documents, the Xxxxxxx
Registration Rights Agreement, the Option Agreement and all other agreements and
instruments required to be executed and delivered by Xxxxxxx or any of its
Affiliates under Articles II and IV.
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"Xxxxxxx Registration Rights Agreement" means the Registration Rights
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Agreement to be entered into on the Closing Date among Xxxxxx, Xxxxxxx and
certain Affiliates of Xxxxxxx, substantially in the form attached as Exhibit E
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hereto.
"Member Units" has the meaning set forth in the Operating Agreement.
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"MIS System" has the meaning set forth in Section 5.8(a).
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"Non-Compete Agreement" means the Non-Compete Agreement to be entered into
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on the Closing Date among Xxxxxxx, certain Affiliates of Xxxxxxx and the
Company, substantially in the form attached as Exhibit F hereto.
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"Operating Agreement" means the Operating Agreement with respect to the
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Company to be entered into on the Closing Date between Xxxxxx and Xxxxxxx
Retail, substantially in the form attached as Exhibit G hereto.
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"Option Agreement" means the Option Agreement to be entered into on the
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Closing Date among Butler, Maxwell, Xxxxxxx Retail and the Company,
substantially in the form attached as Exhibit H hereto.
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"Percentage Interest" has the meaning set forth in the Operating Agreement.
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"Person" means an individual, corporation, partnership, limited liability
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company, joint venture, trust, estate, unincorporated organization, association,
Governmental Body or other entity.
"Required Members" has the meaning set forth in the Operating Agreement.
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"Retail Outlet Footwear Stores" means retail stores which specialize in
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selling women's footwear and accessories and which are located in outlet malls
or centers.
"Retail Opportunity Agreement" means the Retail Opportunity Agreement to be
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entered into on the Closing Date among Xxxxxxx, certain Affiliates of Xxxxxxx
and the Company, substantially in the form attached as Exhibit I hereto.
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"S&L/JNY Products" means women's footwear products bearing the brand names,
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or intended to be sold at wholesale or retail under the brand names, "Xxx &
Xxxxx," "Just Xxxxx" and "Xxxxx New York;" provided, however, that S&L/JNY
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Products shall not include Inter-Pacific Products.
"S&L/JNY Retail Store Concepts" has the meaning set forth in Section 5.7.
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"Xxx & Xxxxx Domestic Trademarks" means the trademarks, trade names,
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service marks, logos and common law and similar rights owned by Xxxxxxx, used
and/or registered in the United States for footwear and described on Schedule
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4.8A hereto.
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"Xxx & Xxxxx Foreign Trademarks" means the trademarks, trade names, service
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marks, logos and common law and similar rights owned by Xxxxxxx, used and/or
registered worldwide (other than in the United States) for footwear and
described on Schedule 4.8B hereto.
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"Xxx & Xxxxx Trademarks" means, collectively, the Xxx & Xxxxx Domestic
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Trademarks and the Xxx & Xxxxx Foreign Trademarks.
"Xxx & Xxxxx Trademark License" means the Retail License Agreement with
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respect to the Xxx & Xxxxx Trademarks to be entered into on the Closing Date
between Xxxxxxx and the Company, substantially in the form attached as Exhibit J
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hereto.
"Security Deposits" means security or other deposits paid by Xxxxxx prior
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to the Agreement Date in respect of any of the Headquarters Assets or the Store
Assets, including any such deposits paid to utility companies in respect of the
Headquarters Premises or any of the Stores, or paid to the landlords under the
Headquarters Lease or any of the Store Leases.
"Senior Agent" means Bank of Boston, in its capacity as Agent under the
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Senior Credit Agreement.
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"Senior Credit Agreement" means the Credit Agreement to be entered into on
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the Closing Date among the Company, the Senior Lenders and the Senior Agent,
pursuant to which the Senior Lenders will make available to the Company a
revolving line of credit and letter of credit facility of not less than
$16,500,000 and a term loan of not less than $16,000,000, on such terms and
conditions as shall be agreed to by the Senior Agent, Xxxxxx and Xxxxxxx.
"Senior Lenders" means the lenders from time to time party to the Senior
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Credit Agreement.
"Senior Revolving Loan" means the $16,500,000 revolving credit facility
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referred to in the definition of Senior Credit Agreement.
"Senior Term Loan" means the $16,000,000 term loan referred to in the
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definition of "Senior Credit Agreement."
"Services Agreement" means the Services Agreement to be entered into on the
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Closing Date between Xxxxxxx and the Company, substantially in the form attached
as Exhibit K hereto.
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"Siemens" means Siemens Credit Corporation.
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"Xxxxxxx" means Xxxxxxx Company, a Delaware corporation and a wholly-owned
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subsidiary of Xxxxxxx.
"Store Assets" means, collectively, the Store Leases, the Store Register
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Agreements, the Store FF&E and the Store Related Assets.
"Store FF&E" means all leasehold improvements to the Stores, together with
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that portion of the furniture, fixtures and equipment owned by Xxxxxx and
located at the Stores as of the Agreement Date as has been designated by Xxxxxxx
for conveyance by Xxxxxx to the Company at the Store Transfer Closings, as more
particularly described on Schedule 1.1A hereto.
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"Store Landlord's Consent" means, with respect to each Store Lease to be
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assigned and transferred by Xxxxxx to the Company on a Store Transfer Closing
Date pursuant to Section 2.3(a) hereof, the written consent of the landlord
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under such Store Lease, in form and substance satisfactory to Xxxxxx and
Xxxxxxx, to (i) the assignment of such Store Lease to the Company, (ii) the
release of Xxxxxx from any further liability under such Store Lease from and
after the applicable Store Transfer Closing Date, upon the assumption by the
Company of such liability; (iii) the liquidation of Xxxxxx'x inventory and store
fixtures (other than Store FF&E) on the premises of such Store and the removal
of any remaining inventory and store fixtures (other than Store FF&E) from such
Store; (iv) the change in concept and name of such Store from "Dolcis" to "Xxx &
Xxxxx" and/or "Xxxxx New York"; (v) the construction of such improvements to
such Store as are specified by the Manager in connection with such change of
concept and name, (vi) the closing of such Store during the construction of the
contemplated improvements; and (vii)
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such other matters as shall be necessary or advisable in connection with the
consummation of the transactions contemplated hereby and the assignment and
delivery of such Store by Xxxxxx to the Company at such Store Transfer Closing.
"Store Leases" means the lease agreements (including all amendments
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thereto) with respect to the Stores.
"Store Register Agreements" means, collectively, the following agreements
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with respect to the Compuregister model 10 cash registers used in the Stores and
the related Compaq computer hardware and STR software: (i) the Master Agreement
(Lease No. 841903) dated as of June 27, 1994 between Xxxxxx and GE Capital,
together with Equipment Schedules No. 01, 02, 03 (CHG1) and 04 thereto and the
respective Purchase Options attached thereto; (ii) the Software License
Agreement dated as of June 29, 1994 between Xxxxxx and STR relating to the
INSTORELINK(TM) Software System for Retailers; and (iii) the Software License
Agreement dated as of June 29, 1994 between Xxxxxx and STR relating to the
INSTOREPLUS(TM) Software System for Retailers.
"Store Register Consents" means the written consent of each of the GE
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Rental/Lease unit of GE Capital and STR to (i) the assignment of the Store
Register Agreements to the Company pursuant to Section 2.4 hereof; and (ii) the
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release of Xxxxxx from any further liability under the Store Register Agreements
from and after the Store Register Transfer Date, upon the assumption by the
Company of such liability.
"Store Register Transfer Date" means the Store Transfer Closing Date
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nearest to August 1, 1997.
"Store Related Assets" means all of Xxxxxx'x books, records, files,
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ledgers, disks and other data relating to the Store Leases, the Store Register
Agreements and the Store FF&E.
"Store Reopening Date" means the date on which each Store is scheduled to
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reopen under the S&L/JNY Retail Store Concepts in accordance with Section 5.7(a)
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hereof, but in no event later than eight weeks following the Store Transfer
Closing Date with respect to such Store (or the actual date of the contribution
of such Store by Xxxxxx to the Company pursuant to the proviso to Section 2.3(a)
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hereof, if later).
"Store Transfer Closings" means the consummation of the transactions
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contemplated to occur pursuant to Section 2.3 hereof.
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"Store Transfer Closing Dates" means the respective dates set forth on
----------------------------
Schedule 2.3 or such other dates as shall be agreed to by Xxxxxx and Xxxxxxx.
------------
9
"Stores" means the 129 retail footwear store locations specified on
------
Schedule 1.1B hereto and operated by Xxxxxx as of the Agreement Date, or such
-------------
lesser number of such store locations as shall be agreed to by Xxxxxx and
Xxxxxxx.
"STR" means STR, Inc., an Ohio corporation.
---
"Subordinated Note Purchase Agreement" means the Subordinated Note Purchase
------------------------------------
Agreement to be entered into on the Closing Date between the Company and Xxxxxx,
pursuant to which Xxxxxx will agree to purchase the Subordinated Notes from the
Company on such terms and conditions as shall be agreed to by Xxxxxx, Xxxxxxx
and the Senior Agent.
"Subordinated Notes" means the $12,500,000 in principal amount of 8%
------------------
Subordinated Notes to be issued by the Company on and after the Closing Date
pursuant to the Subordinated Note Purchase Agreement.
"Trademark Licenses" means, collectively, the Xxxxx New York Trademark
------------------
Sublicense and the Xxx & Xxxxx Trademark License.
"Trademarks" means, collectively, the Xxxxx New York Trademarks and the Xxx
----------
& Xxxxx Trademarks.
"Transitional Services Agreement" means the Transitional Services Agreement
-------------------------------
to be entered into on the Closing Date between Xxxxxx and the Company,
substantially in the form attached as Exhibit L hereto.
---------
"Union Contract" means the Labor Agreement dated as of January 31, 1993 and
--------------
executed on May 18, 1993, by and between Xxxxxx and Retail, Wholesale and
Department Store Union, as amended by an Amendment Agreement dated February 28,
1996, with respect to certain of Xxxxxx'x warehouse employees.
"USPTO" means the United States Patent and Trademark Office and any
-----
successor thereto.
1.2 Rules of Construction.
---------------------
(a) All article, section and paragraph titles and captions in this
Agreement are for convenience only, will not be deemed part of this Agreement,
and in no way define, limit, extend, or describe the scope or intent of any
provisions of this Agreement. Except as specifically provided otherwise,
references to "Articles," "Sections," "Exhibits" and "Schedules" are to
-------- -------- -------- ---------
Articles, Sections, Exhibits and Schedules of or to this Agreement; and
(b) Whenever the context may require, any pronoun used in this
Agreement includes the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns
10
and verbs include the plural and vice versa. The locative adverbs "hereof,"
"herein," "hereafter," etc. refer to this Agreement as a whole.
ARTICLE II
FORMATION OF THE COMPANY;
CLOSING; STORE TRANSFER CLOSINGS
2.1 Formation of the Company. At or before the Closing, Xxxxxx and
------------------------
Xxxxxxx Retail will form the Company by executing the Certificate of Formation
and filing the Certificate of Formation with the Secretary of State of Delaware.
2.2 Actions to be Taken at the Closing. At the Closing:
----------------------------------
(a) Actions of Xxxxxx and Xxxxxxx Retail. Xxxxxx and Xxxxxxx Retail
------------------------------------
will enter into the Operating Agreement.
(b) Actions of Xxxxxxx. Xxxxxxx will:
------------------
(i) contribute, transfer and deliver to the Company the Xxxxx
New York Trademark Sublicense and the Services Agreement, duly executed by
Xxxxxxx, the Non-Compete Agreement and the Retail Opportunity Agreement,
duly executed by Xxxxxxx and certain of its Affiliates, and the Xxx & Xxxxx
Trademark License, duly executed by Xxxxxxx; and
(ii) deliver to Xxxxxx the Xxxxxxx Registration Rights Agreement,
duly executed by Xxxxxxx and certain of its Affiliates, and the Option
Agreement, duly executed by Xxxxxxx, Xxxxxxx Retail and the Company.
(c) Actions of Xxxxxx. Xxxxxx will:
-----------------
(i) execute and deliver to Xxxxxxx, Xxxxxxx Retail and the
Company, as appropriate, the Xxxxxxx Registration Rights Agreement, the
Company Registration Rights Agreement, the Option Agreement and the
Transitional Services Agreement;
(ii) execute and deliver the Subordinated Note Purchase
Agreement;
(iii) purchase that principal amount of Subordinated Notes from
the Company as is provided in paragraph (e)(viii) below, on the terms and
subject to the conditions set forth in the Subordinated Note Purchase
Agreement and this Agreement;
(iv) arrange for GE Capital to issue the GE Capital Guaranty and
execute and deliver the GE Capital Reimbursement and Security Agreement;
11
(v) contribute, transfer and deliver to the Company the
Headquarters Assets;
(vi) execute and deliver a lease assignment, in form and
substance reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail and
accompanied by the Headquarters Landlord's Consent, assigning the
Headquarters Lease to the Company;
(vii) execute and deliver a lease assignment, in form and
substance reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail and
accompanied by the Headquarters Telephone Lessor's Consent, assigning the
Headquarters Telephone Lease to the Company;
(viii) execute and deliver a xxxx of sale, in form and substance
reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, conveying the
Headquarters FF&E and Headquarters Related Assets to the Company; and
(ix) assign and convey to the Company all of its right, title and
interest in and to the MIS System developed by Xxxxxx pursuant to Section
-------
5.8 hereof and to all of the S&L/JNY Products purchased or ordered by
---
Xxxxxx pursuant to Section 5.9 hereof.
-----------
(d) Actions of the Manager. Xxxxxxx Retail, in its capacity as Manager,
----------------------
will obtain and deliver to the Company (A) certificates of qualification issued
by the Secretary of State of Georgia and the Secretary of State or other public
official of each other State or jurisdiction in which the transactions
contemplated by this Agreement make such qualification necessary or advisable as
of the Closing Date, to the effect that the Company is duly authorized,
qualified or licensed to transact business in such state or jurisdiction; (B)
good standing certificates from the Secretary of State of Georgia and the
Secretary of State or other public official of each such State or jurisdiction,
to the effect that the Company is in good standing in such state or
jurisdiction; (C) copies of fictitious name certificates or affidavits, duly
filed with the Clerk of Superior Court of Xxxx County, Georgia and the Secretary
of State or other public official of any other State or jurisdiction in which
the Company transacts business in any name other than its limited liability
company name and in which such filing is necessary or advisable as of the
Closing Date; and (D) such other permits, licenses, etc. from Governmental
Bodies as are necessary or advisable as of the Closing Date in order to permit
the Company to conduct the business contemplated to be conducted by it from and
after the Closing Date and prior to the initial Store Transfer Closing Date;
(e) Actions of the Company. Xxxxxxx Retail, in its capacity as Manager,
----------------------
will cause the Company to:
(i) execute and deliver the Xxxxxxx/Company Documents, the
Transitional Services Agreement and the Company Registration Rights
Agreement, all on the terms and subject to the conditions set forth in this
Agreement;
12
(ii) issue to Xxxxxx and Xxxxxxx Retail the respective Member
Units in the Company provided for in Section 4.2(b) of the Operating
--------------
Agreement;
(iii) execute and deliver the Senior Credit Agreement;
(iv) fulfill all conditions precedent to closing under the Senior
Credit Agreement (other than those to be satisfied by Xxxxxx pursuant to
paragraphs (a) or (c) above);
(v) execute and deliver the Subordinated Note Purchase
Agreement;
(vi) fulfill all conditions precedent to closing under the
Subordinated Note Purchase Agreement;
(vii) execute and deliver the GE Capital Reimbursement and
Security Agreement and comply with all covenants and agreements to be
complied with on the part of the Company thereunder on the Closing Date;
(viii) issue Subordinated Notes under the Subordinated Note
Purchase Agreement in an aggregate principal amount not less than
$3,000,000 (and such additional amount in increments of $250,000 as the
Manager deems necessary or appropriate), and use the proceeds thereof for
the purposes set forth in the Subordinated Note Purchase Agreement and in
Section 5.20(b) of this Agreement;
---------------
(ix) accept the Headquarters Assets and assume all of the Assumed
Liabilities with respect to the Headquarters Assets by the execution and
delivery of assumption agreements in form and substance reasonably
acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail;
(x) pay to Xxxxxx the amounts of the Security Deposits
previously paid by Xxxxxx to the landlord under the Headquarters Lease and
to any utility company in respect of the Headquarters Premises, to the
extent that the Company is credited with the amount of such Security
Deposits and such Security Deposits are not refunded to Xxxxxx;
(xi) assume all obligations of Xxxxxx and Xxxxxxx as are
contemplated by Section 5.20(b) hereof; and
---------------
(xii) arrange for Bank of Boston, as issuing bank, to issue
pursuant to the Senior Credit Agreement (i) a letter of credit in the
amount of $320,000 and available for drawing by the landlord under the
Headquarters Lease, in substitution for the letter of credit deposited by
Xxxxxx in accordance with paragraph 16 of the Special Stipulations attached
as Exhibit "C" to the Headquarters Lease; and (ii) letters of credit in
such
13
amounts as shall equal the respective amounts then available for drawing
under the letters of credit opened by NationsBank for the account of Xxxxxx
pursuant to Section 5.9 hereof, available for drawing by Xxxxxx in the
-----------
event that Xxxxxx is called upon to reimburse NationsBank for any drafts
under such letters of credit.
2.3 Actions to be Taken at Each Store Transfer Closing. At each of the
--------------------------------------------------
Store Transfer Closings:
(a) Actions of Xxxxxx. Xxxxxx will:
-----------------
(i) contribute, transfer and deliver to the Company the Store
Leases and the Store FF&E with respect to those Stores to be transferred
and delivered by Xxxxxx to the Company on such Store Transfer Closing Date,
as set forth on Schedule 2.3 hereto ;
------------
(ii) execute and deliver lease assignments, in form and substance
reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, assigning the
applicable Store Leases to the Company, accompanied by the Store Landlords'
Consents applicable to each such Store Lease; and
(iii) execute and deliver a xxxx of sale, in form and substance
reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, conveying the
applicable Store FF&E to the Company;
provided, however, that if the condition set forth in Section 6.2(c)(v) hereof
-------- ------- -----------------
cannot be satisfied with respect to any Store on or prior to the Store Transfer
Closing Date with respect to such Store, then the Store Transfer Closing shall
proceed with respect to all Stores as to which such condition and all other
conditions set forth in Section 6.2 have been satisfied and the transfer and
-----------
delivery of the Store Assets with respect to such Store shall be postponed until
such succeeding Store Transfer Closing Date as the parties may agree; provided
--------
that, if such conditions have not been satisfied with respect to any Store or
Stores on or before thirty days after such Store Transfer Closing Date, then
Xxxxxx'x obligations under Section 5.5 and this paragraph (a), Xxxxxxx'x
-----------
obligations under Section 5.5 and Xxxxxxx Retail's obligations under paragraph
-----------
(c) below shall terminate on such date with respect to such Store or Stores, and
such Store or Stores shall no longer be deemed to be "Stores" for any purpose of
this Agreement, unless Xxxxxx and Xxxxxxx otherwise agree.
(b) Actions of the Manager. Xxxxxxx Retail, in its capacity as Manager,
----------------------
will deliver to the Company (A) certificates of qualification issued by the
Secretary of State or other public official of each State or other jurisdiction
in which the transactions contemplated by this Agreement make such qualification
necessary or advisable as of such Store Transfer Closing Date, to the effect
that the Company is duly authorized, qualified or licensed to transact business
in such state or jurisdiction; (B) good standing certificates from each such
Secretary of State or other public official, to the effect that the Company is
in good standing in such State or
14
jurisdiction; (C) copies of fictitious name certificates or affidavits, duly
filed with the Secretary or other public official of any State or jurisdiction
in which the Company transacts business in any name other than its limited
liability company name and in which such filing is necessary or advisable as of
such Store Transfer Date; and (D) such other permits, licenses, etc. from
Governmental Bodies as are necessary or advisable as of such Store Transfer
Closing Date in order to permit the Company to conduct the business contemplated
to be conducted by it from and after such Store Transfer Date;
(c) Actions of the Company. Xxxxxxx Retail, in its capacity as Manager,
----------------------
will cause the Company to:
(i) accept the Store Leases and the Store FF&E and assume all of
the Assumed Liabilities with respect to the Store Leases and the Store FF&E
by the execution and delivery of assumption agreements in form and
substance reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail,
assuming all Assumed Liabilities of Xxxxxx with respect to the applicable
Store Leases and Store FF&E; and
(ii) pay to Xxxxxx the amounts of any Security Deposits
previously paid by Xxxxxx to any of the landlords under such Store Leases
and to any utility company in respect of such Stores, to the extent that
the Company is credited with the amount of such Security Deposits and such
Security Deposits are not refunded to Xxxxxx.
2.4 Additional Actions to be Taken on the Store Register Transfer Date.
------------------------------------------------------------------
On the Store Register Transfer Date, in addition to the actions to be taken
pursuant to Section 2.3:
-----------
(a) Actions of Xxxxxx. Xxxxxx will:
-----------------
(i) contribute, transfer and deliver to the Company the Store
Register Agreements and the Store Related Assets;
(ii) execute and deliver assignments, in form and substance
reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, assigning all
of the Store Register Agreements to the Company, accompanied by the Store
Register Consents; and
(iii) execute and deliver a xxxx of sale, in form and substance
reasonably acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, conveying the
Store Related Assets to the Company;
(b) Actions of the Company. Xxxxxxx Retail, in its capacity as Manager,
----------------------
will cause the Company to accept the Store Register Agreements and Store Related
Assets and assume all of the Assumed Liabilities with respect to the Store
Register Agreements and Store Related Assets by the execution and delivery of
assumption agreements in form and substance reasonably
15
acceptable to Xxxxxx, Xxxxxxx and Xxxxxxx Retail, assuming all Assumed
Liabilities of Xxxxxx with respect to the Store Register Agreements and Store
Related Assets so assigned.
2.5 No Assumption of Liabilities; Pro-Ration of Expenses. Except as
----------------------------------------------------
specifically provided in Sections 2.2, 2.3, 2.4 and 5.20(b) hereof, the Company
------------ --- --- -------
will not assume any liabilities of Xxxxxx or Xxxxxxx of any kind. The Company
will not assume the liabilities of any other Person without the written consent
of the Required Members. All liabilities of Xxxxxx that are assumed by the
Company pursuant to Section 2.2(e)(ix) will be assumed as of April 4, 1997,
------------------
provided that the Closing Date is not later than April 30, 1997, all liabilities
of Xxxxxx that are assumed by the Company pursuant to Sections 2.3(c)(i) and
------------------
2.4(b) hereof will be assumed as of the pertinent Store Transfer Closing Date
------
and all such liabilities will be pro-rated between Xxxxxx and the Company as of
each such date. In the event that Xxxxxx has prepaid any amount of such assumed
liabilities attributable to a period after the Closing Date or the pertinent
Store Transfer Closing Date or that, after such assumption, the Company pays any
liability of Xxxxxx attributable to a period before the Closing Date, then
Xxxxxx shall pay to the Company, or the Company shall pay to Xxxxxx, the net
amount owed to the other in order to effect such pro-ration.
2.6 Closing Dates and Place. The Closing will take place on the Closing
-----------------------
Date and each Store Transfer Closing will take place on the applicable Store
Transfer Closing Date; in each case at the offices of King & Spalding, 000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or at such other place as the
parties may agree.
2.7 Further Assurances. At and after the Closing and each of the Store
------------------
Transfer Closings, and without further consideration, Xxxxxx and Xxxxxxx will
execute and deliver to the Company such further instruments of assignment,
conveyance and transfer as either party or the Company may reasonably request in
order more effectively to assign, convey and transfer to the Company the assets
and agreements contemplated to be assigned hereby, and Xxxxxxx Retail, in its
capacity as Manager, will cause the Company to execute and deliver to Xxxxxx
such further instruments of assumption as Xxxxxx may reasonably request in order
more effectively to assume the liabilities contemplated to be assumed hereby.
Additionally, at the request of the Company, Xxxxxx will use reasonable efforts,
at no expense to Xxxxxx, to cooperate with the Company in the transfer to the
Company of any service or other contracts to which Xxxxxx is a party as of the
Closing Date, to the extent that such contracts are no longer necessary to the
conduct of Xxxxxx'x business and would be useful in the conduct of the Company's
business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to Xxxxxxx and Xxxxxxx Retail as follows:
III.1 Organization. Xxxxxx is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power to own its
16
properties and to conduct its business as presently conducted. Xxxxxx is duly
authorized, qualified or licensed to transact business and is in good standing
as a foreign corporation in the State of Georgia and in each other State or
jurisdiction in which the transactions contemplated by this Agreement make such
qualification necessary or advisable.
3.2 Authority. Xxxxxx has all requisite corporate power and authority
---------
to execute, deliver and perform under this Agreement and each of the other
Xxxxxx Documents. The execution, delivery and performance by Xxxxxx of each
Xxxxxx Document have been duly authorized by all necessary action, corporate or
otherwise, on the part of Xxxxxx. This Agreement has been, and at the Closing
and each Store Transfer Closing the other Xxxxxx Documents to be executed and
delivered on the respective dates thereof will be, duly executed and delivered
by Xxxxxx. This Agreement is, and upon execution and delivery by Xxxxxx at the
Closing and each Store Transfer Closing, each of the other Xxxxxx Documents to
be executed and delivered on the respective dates thereof will be, a legal,
valid and binding agreement of Xxxxxx enforceable against Xxxxxx in accordance
with their respective terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and to general principles of equity regardless
whether enforcement is considered in a proceeding at law or in equity.
3.3 Title to Headquarters Assets and Store Assets. The execution and
---------------------------------------------
delivery by Xxxxxx of the Xxxxxx Documents to be executed and delivered at the
Closing pursuant to Section 2.2(c) will convey to and vest in the Company all
--------------
right, title and interest of the lessee under the Headquarters Lease and the
Headquarters Telephone Lease, good and marketable title to the Headquarters FF&E
and all right, title and interest of Xxxxxx in and to the Headquarters Related
Assets, free and clear of any Liens created by Xxxxxx or arising out of the
ownership of the Headquarters Assets by Xxxxxx and, to Xxxxxx'x knowledge, any
other Liens (except as set forth below); the execution and delivery by Xxxxxx of
the Xxxxxx Documents to be executed and delivered at each Store Transfer Closing
pursuant to Section 2.3(a) will convey to and vest in the Company all right,
--------------
title and interest of the lessee under each of the Store Leases to be assigned
and conveyed at such Store Transfer Closing and good and marketable title to the
Store FF&E to be assigned and conveyed at such Store Transfer Closing; and the
execution and delivery by Xxxxxx of the Xxxxxx Documents to be executed and
delivered at the third Store Transfer Closing pursuant to Section 2.4(a) will
--------------
convey to and vest in the Company all right, title and interest of the lessee or
licensee under each of the Store Register Agreements and all right, title and
interest of Xxxxxx in and to the Store Related Assets; in each case free and
clear of any Liens created by Xxxxxx or arising out of the ownership of the
Store Assets by Xxxxxx and, to Xxxxxx'x knowledge, any other Liens; in each case
except for (i) Liens for current taxes payable by Xxxxxx and not yet past due;
(ii) statutory, contractual or possessory Liens in favor of the landlords party
to the Headquarters Lease and the Store Leases; (iii) Liens in favor of GE
Capital and STR with respect to the Store Register Agreements; (iv) Liens in
favor of Siemens with respect to the Headquarters Telephone Lease; (v) Liens
created by the Company or arising out of the ownership of the Headquarters
Assets or the Store Assets by the Company; and (vi) Liens disclosed on Schedule
--------
3.3.
---
17
3.4 Absence of Restrictions and Conflicts. Subject to the obtaining of
-------------------------------------
the Headquarters Landlord's Consent and the Headquarters Telephone Lessor's
Consent contemplated by Section 6.1(c) hereof, the Store Landlords' Consents
--------------
contemplated by Section 6.2(c) hereof and the Store Register Consents
--------------
contemplated by Section 6.3(c) hereof, the execution, delivery and performance
--------------
of this Agreement and the other Xxxxxx Documents, the consummation of the
transactions contemplated by this Agreement and the other Xxxxxx Documents and
the compliance by Xxxxxx with the terms and conditions of this Agreement and the
other Xxxxxx Documents do not and will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, (a) any term or provision of the
certificate of incorporation or bylaws of Xxxxxx, (b) any term or provision of
any material agreement to which Xxxxxx is a party, including, without
limitation, the Headquarters Lease, the Headquarters Telephone Lease or any of
the Store Leases or Store Register Agreements, (c) any judgment, decree or order
of any court or Governmental Body to which Xxxxxx is a party or by which Xxxxxx,
any of the Headquarters Assets or any of the Store Assets is bound or (d) any
statute, law, rule or regulation applicable to Xxxxxx, the Headquarters Assets
or the Store Assets.
3.5 Governmental Consents. No consent, approval, order or authorization
---------------------
of, or registration, qualification, designation, declaration or filing with, any
Governmental Body is required on the part of Xxxxxx in connection with the
transactions contemplated by this Agreement.
3.6 Litigation. Except as described in Schedule 3.6, there are not
---------- ------------
currently pending (or, to the knowledge of Xxxxxx, threatened in writing) any
lawsuits, administrative proceedings or reviews, or formal or informal
complaints or investigations by any Person against or relating to (i) Xxxxxx or
any of the officers of Xxxxxx (in their capacities as such); or (ii) the
Headquarters Assets or the Store Assets; in each case that, if resolved
adversely to Xxxxxx, would have a materially adverse effect on Xxxxxx'x
financial condition, on Xxxxxx'x ability to consummate the transactions
contemplated by this Agreement or on Xxxxxx'x ability to perform in all material
respects its obligations under any of the Xxxxxx Documents. Xxxxxx is not
subject to or bound by any currently existing judgment, order, writ, injunction
or decree.
3.7 Compliance with Laws. Xxxxxx'x use of the Headquarters Assets and
--------------------
the Store Assets complies in all material respects with, and is not in violation
or contravention in any material respect of, any applicable statutes, laws,
ordinances, decrees, orders, rules and regulations of any Governmental Body,
except for such violations or contraventions, if any, as would not have a
materially adverse effect on Xxxxxx'x financial condition, on Xxxxxx'x ability
to consummate the transactions contemplated by this Agreement or on Xxxxxx'x
ability to perform in all material respects its obligations under any of the
Xxxxxx Documents.
3.8 Xxxxxx Employees; Union Contracts.
---------------------------------
18
(a) Xxxxxx has provided to Xxxxxxx a list of all employees of Xxxxxx as
of the Agreement Date, including date of employment, current title or position
and current compensation.
(b) Other than the Union Contract, Xxxxxx has no collective bargaining,
union or labor agreements, contracts or other arrangements with any group of
employees, labor union or employee representative and does not know of any
organization effort currently being made or threatened by or on behalf of any
labor union with respect to employees of Xxxxxx.
3.9 Headquarters Lease, Headquarters Telephone Lease, Store Leases and
------------------------------------------------------------------
Store Register Agreements. Xxxxxx has delivered to Xxxxxxx a copy of the
-------------------------
Headquarters Lease, the Headquarters Telephone Lease, each Store Lease and each
Store Register Agreement and (i) the Headquarters Lease, the Headquarters
Telephone Lease, each Store Lease and each Store Register Agreement is valid,
binding and in full force and effect and enforceable against Xxxxxx in
accordance with its terms subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and to general principles of equity regardless whether
enforcement is considered in a proceeding at law or in equity; (ii) other than
payment arrearages that will have been cured prior to the Closing Date and each
Store Transfer Closing Date with respect to the applicable leases to be
contributed and assigned to the Company on each such date, Xxxxxx has performed
all of its material obligations under the Headquarters Lease, the Headquarters
Telephone Lease, each Store Lease and each Store Register Agreement; (iii) other
than such payment arrearages, to Xxxxxx'x knowledge there exists no material
breach or default (or event that with notice or lapse of time would constitute a
material breach or default) on Xxxxxx'x part under the Headquarters Lease, the
Headquarters Telephone Lease, any Store Lease or any Store Register Agreement;
and (iv) no consent of any Person is required in connection with the assignments
of the Headquarters Lease, the Headquarters Telephone Lease, the Store Leases
and the Store Register Agreements contemplated by this Agreement except the
Headquarters Landlord's Consent and the Headquarters Telephone Lessor's Consent
contemplated by Section 6.1(c) hereof, the Store Landlords' Consents
--------------
contemplated by Section 6.2(c) hereof and the Store Register Consents
--------------
contemplated by Section 6.3(c) hereof.
--------------
3.10 No Brokers. Xxxxxx has not incurred and will not incur any
----------
liability for brokerage fees or agents' commissions in connection with this
Agreement or the transactions contemplated hereby.
3.11 No Misrepresentations. The representations, warranties and
---------------------
statements made by Xxxxxx in or pursuant to this Agreement (including the
Schedules hereto) are true, complete and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make any such representation, warranty or statement,
under the circumstances in which it is made, not materially misleading.
19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
XXXXXXX AND XXXXXXX RETAIL
Xxxxxxx and Xxxxxxx Retail jointly and severally represent and warrant to
Xxxxxx as follows:
4.1 Organization.
------------
(a) Each of Xxxxxxx, Xxxxxxx Retail and Xxxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to own its properties and to
conduct its business as presently conducted. Xxxxxxx is a wholly-owned
subsidiary of Xxxxxxx and Xxxxxxx Retail is a wholly-owned subsidiary of
Xxxxxxx. Each of Xxxxxxx, Xxxxxxx Retail and Xxxxxxx is duly authorized,
qualified or licensed to transact business and is in good standing as a foreign
corporation in the Commonwealth of Massachusetts and is duly authorized,
qualified or licensed to transact business and is in good standing as a foreign
corporation in each other State or jurisdiction in which the transactions
contemplated by this Agreement make such qualification necessary or advisable;
and, at the Closing Date and for so long thereafter as Xxxxxxx Retail serves as
Manager under the Operating Agreement, Xxxxxxx Retail will be duly authorized,
qualified or licensed to transact business and in good standing as a foreign
corporation in the State of Georgia and in each other State or jurisdiction in
which the transactions contemplated by this Agreement and the Operating
Agreement (including, without limitation, Xxxxxxx Retail's duties in its
capacity as Manager under the Operating Agreement) make such qualification
necessary or advisable.
(b) The Company is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power to own its properties and to conduct its business as
presently conducted and as presently anticipated to be conducted by the
Contribution Agreement and the Operating Agreement. The Company is duly
authorized, qualified or licensed to transact business and is in good standing
as a foreign corporation in the States of Georgia and Massachusetts and each
other State or jurisdiction in which the transactions contemplated by the
Contribution Agreement and the Operating Agreement make such qualification
necessary or advisable.
4.2 Authority.
---------
(a) Each of Xxxxxxx, Xxxxxxx Retail and Xxxxxxx has all requisite
corporate power and authority to execute, deliver and perform under this
Agreement and the other Xxxxxxx Documents to which it is a party. The execution,
delivery and performance by Xxxxxxx, Xxxxxxx Retail and Xxxxxxx of each Xxxxxxx
Document to which it is a party have been duly
20
authorized by all necessary action, corporate or otherwise, on the part of
Xxxxxxx, Xxxxxxx Retail and Xxxxxxx, respectively. This Agreement has been, and
at the Closing and each Store Transfer Closing the other Xxxxxxx Documents to be
executed and delivered on the respective dates thereof will be, duly executed
and delivered by Xxxxxxx, Xxxxxxx Retail, Xxxxxxx and each other Affiliate of
Xxxxxxx party thereto, to the extent that each is a party thereto. This
Agreement is, and upon execution and delivery by Xxxxxxx, Xxxxxxx Retail,
Xxxxxxx and each other Affiliate of Xxxxxxx party thereto at the Closing and
each Store Transfer Closing, each of the other Xxxxxxx Documents to be executed
and delivered on the respective dates thereof will be, a legal, valid and
binding agreement of Xxxxxxx, Xxxxxxx Retail, Xxxxxxx and each other Affiliate
of Xxxxxxx party thereto, enforceable against each of Xxxxxxx, Xxxxxxx Retail,
Xxxxxxx and each other Affiliate of Xxxxxxx party thereto in accordance with
their respective terms, to the extent that each is a party thereto, subject as
to enforcement to bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally and to general
principles of equity regardless whether enforcement is considered in a
proceeding at law or in equity.
(b) The Company has all requisite power and authority to execute,
deliver and perform under the Company Documents. The execution, delivery and
performance by the Company of each Company Document to which it is a party have
been duly authorized by all necessary action, corporate or otherwise, on the
part of the Company. At the Closing and each Store Transfer Closing the Company
Documents to be executed and delivered on the respective dates thereof will be
duly executed and delivered by the Company. Upon the execution and delivery by
the Company thereto at the Closing and each Store Transfer Closing, each of the
Company Documents to be executed and delivered on the respective dates thereof
will be, a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with their respective terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally and to general
principles of equity regardless whether enforcement is considered in a
proceeding at law or in equity.
4.3 Absence of Restrictions and Conflicts. Except as described in
-------------------------------------
Schedule 4.3, the execution, delivery and performance of this Agreement and the
------------
other Xxxxxxx Documents by Xxxxxxx, Xxxxxxx Retail and Xxxxxxx, the consummation
of the transactions contemplated by this Agreement and the other Xxxxxxx
Documents and the compliance by Xxxxxxx, Xxxxxxx Retail and Xxxxxxx with the
terms and conditions of this Agreement and the other Xxxxxxx Documents, to the
extent that each is a party thereto, do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (a) any term or provision of
the certificate of incorporation or bylaws of Xxxxxxx, Xxxxxxx Retail or
Xxxxxxx, respectively, (b) any term or provision of any material agreement to
which Xxxxxxx, Xxxxxxx Retail or Xxxxxxx is a party, including, without
limitation, the Xxxxx New York Trademark License or any other agreement with
respect to the Trademarks, (c) any judgment, decree or order of any court or
Governmental Body to which Xxxxxxx, Xxxxxxx Retail
21
or Xxxxxxx, respectively, is a party or by which Xxxxxxx, Xxxxxxx Retail or
Xxxxxxx, respectively, or any of their respective material properties relating
to or to be used in connection with the transactions contemplated by the Xxxxxxx
Documents is bound or (d) any statute, law, rule or regulation applicable to
Xxxxxxx, Xxxxxxx Retail or Xxxxxxx, respectively, or to any of such properties.
4.4 Governmental Consents. No consent, approval, order or authorization
---------------------
of, or registration, qualification, designation, declaration or filing with, any
Governmental Body is required on the part of Xxxxxxx, Xxxxxxx Retail or Xxxxxxx
in connection with the transactions contemplated by this Agreement or the other
Xxxxxxx Documents.
4.5 Litigation. Except as described in Schedule 4.5, there are not
---------- ------------
currently pending (or, to the knowledge of Xxxxxxx or Xxxxxxx Retail, threatened
in writing) any lawsuits, administrative proceedings or reviews, or formal or
informal complaints or investigations by any Person against or relating to (i)
Xxxxxxx, Xxxxxxx Retail or Xxxxxxx or any of their respective officers (in their
capacities as such); (ii) the Trademarks, to the extent that Xxxxxxx, Xxxxxxx
Retail or Xxxxxxx is a party thereto or otherwise has actual knowledge thereof,
or (iii) S&L/JNY Products or Xxxxxxx'x activities in sourcing S&L/JNY Products
for its own account and on behalf of the Company; in each case that, if resolved
adversely to Xxxxxxx, Xxxxxxx Retail or Xxxxxxx, would have a materially adverse
effect on the financial condition of any of Xxxxxxx, Xxxxxxx Retail or Xxxxxxx,
on Xxxxxxx'x or Xxxxxxx Retail's ability to consummate the transactions
contemplated by this Agreement or on their abilities to perform in all material
respects their respective obligations under any of the Xxxxxxx Documents.
Neither Xxxxxxx, Xxxxxxx Retail nor Xxxxxxx is subject to or bound by any
currently existing judgment, order, writ, injunction or decree.
4.6 Compliance with Laws. Xxxxxxx, Xxxxxxx Retail, Xxxxxxx, the S&L/JNY
--------------------
Products, Xxxxxxx'x sourcing of S&L/JNY Products for its own account, on behalf
of Xxxxxx pursuant to Section 5.9 hereof and on behalf of the Company pursuant
-----------
to the Services Agreement, Xxxxxxx'x sublicensing of the Xxxxx New York
Trademarks under the Xxxxx New York Trademark Sublicense, Xxxxxxx Retail's
serving as Manager under the Operating Agreement and Xxxxxxx'x licensing of the
Xxx & Xxxxx Trademarks under the Xxx & Xxxxx Trademark License comply in all
material respects with, and are not in violation or contravention in any
material respect of, any applicable statute, law, ordinance, decree, order, rule
or regulation of any Governmental Body, including, without limitation, all
foreign, federal, state and local laws relating to foreign corrupt practices, to
the collection and payment of taxes, and to employment and labor matters, except
for such violations or contraventions, if any, as would not have a materially
adverse effect on the financial condition of any of Xxxxxxx, Xxxxxxx Retail or
Xxxxxxx, on Xxxxxxx'x or Xxxxxxx Retail's respective abilities to consummate the
transactions contemplated by this Agreement or on their respective abilities to
perform in all material respects their obligations under any of the Xxxxxxx
Documents.
4.7 Certain Xxxxxxx Agreements.
--------------------------
22
(a) Schedule 4.7 lists each written agreement and arrangement
------------
(including all amendments thereto) to which Xxxxxxx or any of its Affiliates is
a party or a beneficiary or by which Xxxxxxx or any of its Affiliates is bound
evidencing or relating to (i) any purchasing, brokerage or manufacturing
agreements or arrangements with Factories, Buying Agents or other Persons
pursuant to which Xxxxxxx or any of its Affiliates is entitled or obligated to
acquire S&L/JNY Products having an aggregate purchase price (at first cost) of
$2,500,000 or greater from or through a third party (other than routine purchase
orders for purchases from such third parties); (ii) any supply, distribution,
sales or other agreements pursuant to which Xxxxxxx or any of its Affiliates
distributes or sells S&L/JNY Products having an aggregate purchase price (at
first cost) of $2,500,000 or greater to any third party (other than routine
purchase orders for purchases by such third parties); (iii) any agreement
currently in effect with or for the benefit of any Affiliate of Xxxxxxx or any
member of the Immediate Family of an Affiliate of Xxxxxxx relating to S&L/JNY
Products; (iv) any agreement or arrangement pursuant to which Xxxxxxx or any of
its Affiliates has agreed not to compete with any other Person (other than
Xxxxxxx or its Affiliates); and (v) any agreement or arrangement pursuant to
which Xxxxxxx has agreed to register its stock of any class with the Securities
and Exchange Commission.
(b) Xxxxxxx has delivered to Xxxxxx a complete copy of each agreement
listed on Schedule 4.7, together with any amendments or modifications thereto.
------------
Except as described in Schedule 4.7, (i) each such agreement or arrangement is
------------
valid, binding and in full force and effect and enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
and to general principles of equity regardless whether enforcement is considered
in a proceeding at law or in equity; (ii) Xxxxxxx and its Affiliates and, to the
knowledge of Xxxxxxx, each other party to such agreement or arrangement, has
performed all of its material obligations thereunder; and (iii) there has been
no termination or, to the knowledge of Xxxxxxx, any threatened termination
thereof.
4.8 Trademarks.
----------
(a) Schedule 4.8A includes a schedule of all of the Xxx & Xxxxx
-------------
Domestic Trademarks, their registrations owned or utilized by Xxxxxxx and
pending applications therefor, together with the current status and a brief
description of each; and Schedule 4.8B includes a schedule of all of the Xxx &
-------------
Xxxxx Foreign Trademarks, their registrations conveyed to Xxxxxxx by Xxx &
Xxxxx, Inc., together with the current status (to Xxxxxxx'x and Xxxxxxx Retail's
knowledge) and a brief description of each.
(b) Each of the representations and warranties set forth in Section 7.1
of the Retail License Agreement with respect to the Xxx & Xxxxx Trademarks is
true and correct.
(c) Xxxxxxx has the full and unrestricted right pursuant to the Xxxxx
New York Trademark License to use the Xxxxx New York Trademarks in the
geographical area consisting of
23
the United States, its territories and possessions and Canada and, subject to
termination by Xxxxx, worldwide in other jurisdictions. Xxxxxxx'x rights under
the Xxxxx New York Trademark License are free and clear of any Liens created by
Xxxxxxx or arising out of the business conducted by Xxxxxxx and, to Xxxxxxx'x
knowledge, any other Liens except for (i) Liens for current taxes payable by
Xxxxxxx or Xxxxxxx and not yet past due; and (ii) Liens created by the Company
or arising out of the business conducted by the Company. To Xxxxxxx'x knowledge,
the Xxxxx New York Trademarks are valid, enforceable and subsisting, and have
not been abandoned or canceled and have not expired. Xxxxxxx has full rights
under the Xxxxx New York Trademark License to utilize the Xxxxx New York
Trademarks, and has the power, right and authority under the Xxxxx New York
Trademark License, as amended on the basis contemplated by Section 6.1(c)(iv)
------------------
hereof, to sublicense to the Company all of the Xxxxx New York Trademarks for
use in the Company's business pursuant to, and on the terms and conditions of,
the Xxxxx New York Trademark Sublicense, without any infringement of the rights
of others.
(d) Xxxxxxx has not received any communications from any Person
alleging that, nor is it otherwise aware that, Xxxxxxx has infringed upon or, by
conducting its respective business as currently conducted or by its sublicensing
of the Xxxxx New York Trademarks to the Company pursuant to the Xxxxx New York
Trademark Sublicense for use in the Company's business as now contemplated to be
conducted, would infringe upon any intellectual property right of any other
Person. Xxxxxxx is not aware of any infringement of the Xxxxx New York
Trademarks by third parties and Xxxxxxx will notify Xxxxx of any infringement of
the Xxxxx New York Trademarks by third parties on the basis set forth in Section
7.4 of the Xxxxx New York Trademark License. None of the Xxxxx New York
Trademarks is the subject of, or will be affected by, any existing action,
proceeding, claim, demand or judgment to which Xxxxxxx is a party or of which it
is otherwise aware, the outcome of which could impair the Company's ability to
use the Xxxxx New York Trademarks in an unrestricted fashion, (including,
without limitation, the sublicensing of the Xxxxx New York Trademarks to the
Company by Xxxxxxx under the Xxxxx New York Trademark Sublicense). Except for
the Xxxxx New York Trademark Sublicense and the Xxxxx New York Trademark
License, neither Xxxxxxx nor any of its Affiliates is a party to any license,
agreement or arrangement, whether as licensor, licensee, franchisor, franchisee
or otherwise, with respect to the Xxxxx New York Trademarks.
(e) The Xxx & Xxxxx Domestic Trademarks and the Xxxxx New York
Trademarks constitute all of the trademarks, trade names, service marks, logos
and common law and similar rights necessary for or to be used in the Company's
business of selling S&L/JNY Products in Mall Specialty Footwear Stores and
Retail Outlet Footwear Stores in the United States as now contemplated to be
conducted.
4.9 Restrictions on Imports. The information set forth under the
-----------------------
caption "Restrictions on Imports" in Xxxxxxx'x Annual Report on Form 10-K for
its fiscal year ending October 31, 1996 remains true and correct in all material
respects as of the Agreement Date.
24
4.10 Competing Interests. Except for investments constituting less than
-------------------
1% of the issued and outstanding capital stock of a publicly traded corporation,
neither Xxxxxxx nor any Affiliate of Xxxxxxx directly or indirectly (through any
member of the Immediate Family of such Affiliate or otherwise) owns an interest
in or has any investment in: (i) any Mall Specialty Footwear Store, Retail
Outlet Footwear Store or other Person that would be a competitor of the Company
upon the consummation of the transactions contemplated by this Agreement; (ii)
any customer of Xxxxxxx; (iii) any Buying Agent, Factory or other supplier of
Xxxxxxx or of the Company; or (iv) any other Person that otherwise has or, upon
consummation of the transactions contemplated by this Agreement, will have,
competing interests or material business dealings with the Company.
4.11 No Brokers. Neither Xxxxxxx nor Xxxxxxx Retail has incurred or will
----------
incur any liability for brokerage fees or agents' commissions in connection with
this Agreement or the transactions contemplated hereby.
4.12 No Misrepresentations. The representations, warranties and
---------------------
statements made by Xxxxxxx and Xxxxxxx Retail in or pursuant to this Agreement
(including the Schedules hereto) are true, complete and correct in all material
respects and do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make any such representation, warranty or
statement, under the circumstances in which it is made, not misleading.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Preservation of Assets by Xxxxxx.
--------------------------------
(a) Prior to the Closing Date, Xxxxxx will: (i) maintain the
Headquarters Lease in full force and effect; (ii) maintain the Headquarters
Telephone Lease in full force and effect; (iii) maintain the Headquarters FF&E
in substantially the same condition as on the Agreement Date, reasonable wear
and tear excepted; (iv) maintain in full force and effect insurance policies
with respect to the Headquarters Premises and the Headquarters FF&E providing
substantially the same coverage as is maintained on the Agreement Date; and (v)
maintain the Headquarters Related Assets in its customary manner, consistent
with past practices.
(b) Prior to each Store Transfer Closing Date, Xxxxxx will, with
respect to the Store Assets to be transferred and delivered to the Company on
such Store Transfer Closing Date: (i) maintain the Store Leases in full force
and effect; (ii) maintain the Store FF&E in substantially the same condition as
on the Agreement Date, reasonable wear and tear excepted; and (iii) maintain in
full force and effect insurance policies with respect to the Stores and the
Store FF&E providing substantially the same coverage as is maintained on the
Agreement Date; and, prior to the Store Register Transfer Date, Xxxxxx will (i)
maintain the Store Register Agreements
25
in full force and effect; and (ii) maintain the Store Related Assets in its
customary manner, consistent with past practices.
5.2 Payment of Taxes by Xxxxxx. Xxxxxx will pay prior to the
--------------------------
delinquency thereof all taxes payable by Xxxxxx that would otherwise constitute
a Lien on any of the Headquarters Assets or Store Assets after the contribution
thereof to the Company pursuant to Article II of this Agreement, other than
----------
taxes the payment of which is being actively contested by Xxxxxx, in good faith,
and as to which Xxxxxx maintains adequate reserves and will retain
responsibility for payment.
5.3 Negotiation of Senior Credit Agreement and Subordinated Note
------------------------------------------------------------
Purchase Agreement.
------------------
(a) Xxxxxx and Xxxxxxx will negotiate in good faith with each other and
with the Senior Agent with respect to the definitive terms and conditions of the
Senior Credit Agreement, the GE Capital Reimbursement and Security Agreement,
the Subordinated Note Purchase Agreement and all other documents, instruments
and agreements to be executed and delivered pursuant thereto or in connection
therewith (including, without limitation, any intercreditor or subordination
agreement that the Senior Agent reasonably deems to be necessary or desirable in
connection therewith), and Xxxxxx will arrange for GE Capital to participate in
such good faith negotiations, to the extent that they relate to the Senior Term
Loan, the GE Capital Guaranty, the GE Capital Reimbursement and Security
Agreement and all other documents, instruments and agreements to be executed and
delivered pursuant thereto or in connection therewith (including, without
limitation, any such intercreditor or subordination agreement).
(b) Prior to the Closing Date, Xxxxxx and Xxxxxxx will each advance one-
half of the amount of any underwriting deposit or commitment fee required to be
paid to the Senior Lenders in respect of the Senior Credit Agreement.
5.4 Preservation of Relationships by Xxxxxxx. Prior to the Closing
----------------------------------------
Date, Xxxxxxx will use its best efforts to preserve its relationships with (a)
the Buying Agents and Factories through which it currently sources S&L/JNY
Products for resale in the conduct of its own wholesale footwear business, so as
to enable Xxxxxxx to make the benefit of those relationships available to the
Company on the basis contemplated under the Services Agreement; and (b) Bank of
Boston, so as to enable the Company to negotiate favorable terms under the
Senior Credit Agreement.
5.5 Landlords' Consents.
-------------------
(a) Until the Closing Date, Xxxxxx will use all reasonable efforts
(subject to the provisions of paragraph (d) below) to obtain the Headquarters
Landlord's Consent.
26
(b) Until the last Store Transfer Closing Date (and thereafter to the
extent contemplated by the proviso to Section 2.3(a)), Xxxxxx will use all
reasonable efforts (subject to the provisions of paragraph (d) below) to obtain
Store Landlords' Consents in respect of each of the Store Leases on or before
the Store Transfer Closing Date with respect to such Store Lease.
(c) Xxxxxxx will have the right to participate in such efforts and to
engage a consultant of its choosing to advise it in connection with such
participation, and Xxxxxx will cooperate with Xxxxxxx and Xxxxxxx'x consultant
in all reasonable respects relating to Xxxxxx'x undertakings under paragraphs
(a) and (b) of this Section 5.5.
-----------
(d) Xxxxxxx will bear all expenses incurred by it in connection with
its rights and obligations under this Section 5.5 (including any expense
-----------
associated with the retaining by Xxxxxxx of the consultant contemplated by
paragraph (c) above). Xxxxxx will bear all expenses incurred by it in connection
with its obligations under this Section 5.5, will pay all state and local
-----------
transfer taxes payable in respect of the assignment of the Store Leases and, if
necessary to obtain the consent of any of such landlords, will pay or reimburse
to the respective landlords under the Headquarters Lease and the Store Leases
all reasonable fees, costs and expenses incurred by such landlords in connection
with the granting of the Headquarters Landlord's Consent and the Store
Landlords' Consents contemplated thereby, provided that the amount of any such
--------
transfer taxes, together with any such reasonable fees, costs and expenses
reimbursable to such landlords, does not exceed $1,000 with respect to the
Headquarters Lease, $1,000 with respect to any Store Lease or $100,000 in the
aggregate as to all such Store Leases.
5.6 Store Conversion Activities by Xxxxxx. Xxxxxx will retain
-------------------------------------
possession of each of the Stores from the Agreement Date until the Store
Transfer Closing Date for such Store (as set forth on Schedule 2.3), and
------------
thereafter to the extent contemplated by the proviso to Section 2.3(a) hereof.
--------------
Prior to each such Store Transfer Closing Date, Xxxxxx and its agents will
conduct liquidation sales (to the extent permitted by the Store Leases and the
Store Landlords' Consents) and otherwise take such actions as shall be necessary
to remove all existing inventory from each such Store; to liquidate or otherwise
remove all other personal property of Xxxxxx (other than Store FF&E and cash
registers and related computer hardware subject to Store Register Agreements)
from each such Store; and to prepare each Store for assignment and delivery of
possession to the Company on a "broom clean" basis; in each case on the relevant
Store Transfer Closing Date.
5.7 Store Conversion Activities by Xxxxxxx.
--------------------------------------
(a) Xxxxxxx will (i) engage on behalf of the Company a firm of retail
store design consultants reasonably acceptable to Xxxxxxx to assist Xxxxxxx in
designing the Xxx & Xxxxx and Xxxxx New York retail specialty store concepts to
be utilized in the conduct of the Company's business (the "S&L/JNY Retail Store
--------------------
Concepts"); (ii) obtain estimates from one or more building contractors
--------
reasonably acceptable to Xxxxxxx for the remodeling of each of the Stores to
incorporate the S&L/JNY Retail Store Concepts; (iii) work with its design
consultants to revise
27
the S&L/JNY Retail Store Concepts as necessary in the event that the estimated
construction costs exceed the amounts reflected in the Budget or, alternatively,
recommend revisions to the Budget in accordance with Section 7.6(b) of the
Operating Agreement so as to reflect such excess costs; (iv) cause the Company,
on or after the Closing Date, to enter into fixed price construction contracts
with the building contractors selected by Xxxxxxx for the remodeling of the
Stores so as to incorporate the S&L/JNY Retail Store Concepts; (v) cause such
building contractors to commence such construction on or as soon as is
practicable after the Store Transfer Closing Date for each of the Stores; and
(vi) monitor the progress of such construction and otherwise use its best
efforts to cause each of the Stores to reopen under the S&L/JNY Retail Store
Concepts on or before the Store Reopening Date for each such Store;
(b) Prior to the Closing Date, Xxxxxxx will advance the amount of any
fee, retainer or other sum required to be paid to the design consultants
contemplated by clause (i) of paragraph (a) above.
5.8 Development of MIS System.
-------------------------
(a) Xxxxxx will retain Lake West Group as management information
consultants to advise Xxxxxx and Xxxxxxx with respect to the development and
implementation of a merchandising and financial management information system
("MIS System") to be used by the Company in the conduct of its business. This
----------
MIS System will replace in its entirety the MIS System used by Xxxxxx in the
conduct of its business (other than the point of sale inventory system provided
under the Store Register Agreements), and Xxxxxx will not contribute or assign
to the Company any hardware, software or data comprising Xxxxxx'x current MIS
System (other than through the assignment of the Store Register Agreements).
Working with such consultant, Xxxxxx will select vendors mutually acceptable to
Xxxxxx and Xxxxxxx for the hardware and software components of such MIS System
and will enter into purchase contracts and license agreements for the hardware
and software components of such MIS System with the goal of making such MIS
System available to the Company on the timetable set forth on Schedule 5.8.
------------
Xxxxxxx and Xxxxxxx Retail acknowledge, however, that Xxxxxx does not represent,
warrant or covenant that such MIS System can be made available to the Company on
such timetable.
(b) Prior to the Closing Date, Xxxxxx will advance the amount of any
deposit, fee or expense reimbursement required to be paid to the management
information consultants and the equipment and software vendors contemplated by
paragraph (a) above.
5.9 Initial Sourcing of S&L/JNY Products.
------------------------------------
(a) Prior to the Closing Date, Xxxxxx will place purchase orders for
approximately 900,000 pairs of S&L/JNY Products for delivery during the period
May 30 to September 30, 1997 and Xxxxxx will open letters of credit in an amount
and payable on the terms specified in such purchase orders not later than 45
days before the shipment of S&L/JNY Products pursuant to each such purchase
order. Prior to the Closing Date, Xxxxxxx will serve as sourcing manager
28
for Xxxxxx in accordance with the Sourcing Manager Agreement dated as of
February 13, 1997 between Xxxxxxx and Xxxxxx, xxxx notify Xxxxxx in writing in
advance of submitting any purchase order for S&L/JNY Products on behalf of the
Company, specifying the S&L/JNY Products to be ordered pursuant to such purchase
order, the price payable for such S&L/JNY Products under such purchase order and
the identity of the Factory manufacturing such S&L/JNY Products and the Buying
Agent, if any, through which such purchase order is to be submitted, and will
obtain the written consent of Xxxxxx'x footwear buyer, general merchandise
manager and chief financial officer to each such purchase order before
submitting it. Xxxxxxx agrees that all such purchase orders placed by Xxxxxxx on
behalf of Xxxxxx shall be placed with the same Factories, and on the same terms
and conditions (including shipment dates and cost for similar quantities so
ordered), as purchase orders from time to time placed by Xxxxxxx for its own
wholesale business for the same or similar product.
(b) Prior to the Closing Date, Xxxxxx will be fully responsible for the
payment of all sums due in respect of the letters of credit opened by it under
paragraph (a) above.
5.10 Xxxxxxx Services. Prior to the Closing Date, Xxxxxxx will undertake
----------------
such activities as are reasonably necessary to permit it, from and after the
Closing Date, to perform on behalf of the Company the services contemplated by
the Services Agreement.
5.11 Trademarks. Prior to the Closing Date, Xxxxxxx will (a) cause
----------
Xxxxxxx to preserve the Xxx & Xxxxx Domestic Trademarks as trademarks or
servicemarks registered under the laws of the United States and process all
documents with the USPTO as are reasonably necessary to preserve the
registrations thereof, and not abandon any of such registrations; (b) comply in
all material respects with the Xxxxx New York Trademark License.
5.12 Employment and Benefit Matters.
------------------------------
(a) President. Xxxxxxx will commence an executive search to identify
---------
and recruit one or more highly qualified individuals not presently employed by
Xxxxxx or Xxxxxxx, and satisfactory to both Xxxxxx and Xxxxxxx, as candidates to
serve as president of the Company. If deemed necessary by Xxxxxxx, such search
will include the engaging of a reputable executive search firm reasonably
satisfactory to Xxxxxxx. Xxxxxx and Xxxxxxx will cooperate in good faith,
working with any such executive search firm, to interview such candidates and to
offer employment to, and to negotiate mutually acceptable terms of employment
with, one of such candidates, and will use all reasonable efforts to cause the
Company to enter into an Employment Agreement with such candidate incorporating
such terms of employment as soon as is reasonably possible, but with the goal of
entering into an Employment Agreement by May 1, 1997. Xxxxxx acknowledges,
however, that Xxxxxxx and Xxxxxxx Retail do not represent, warrant or covenant
that an Employment Agreement can be entered into by that date.
(b) Headquarters Employees of Xxxxxx. On or before April 15, 1997 (or
--------------------------------
the next succeeding pay period of Xxxxxx, if the Closing Date occurs after April
11, 1997), but in any event
29
effective as of April 4, 1997 (provided that the Closing Date is not later than
April 30, 1997), Xxxxxxx Retail will cause the Company to offer employment with
the Company to substantially all employees of Xxxxxx who are employed at the
Headquarters Premises (including senior management employees other than Xxxxxxx
X. Xxxxxxx, but excluding district managers) for such positions with the
Company, and on such terms of employment (subject to the provisions of this
Section 5.12), as are mutually agreeable to the Company and each such employee.
------------
Prior to such effective date, Xxxxxx shall be solely responsible for the payment
of all wages, bonuses, employment taxes, insurance, benefits and other expenses
relating to the employment by it of such employees and, after such effective
date, the Company shall be responsible for payment of such expenses. To the
extent that Xxxxxx pays any such expense attributable to any period after such
effective date, or the Company pays any such expense attributable to any period
before such effective date, Xxxxxx will reimburse the Company, or Xxxxxxx Retail
will cause the Company to reimburse Xxxxxx, as appropriate, within five business
days after a request made by the other for such reimbursement.
(c) Other Employees of Xxxxxx. Xxxxxx will continue to employ its
-------------------------
district managers until May 11, 1997 and will continue to employ all of its
store-level employees until the Store Transfer Closing Date with respect to the
Store in which each such employee works, in each case subject to earlier
termination by such employees for any reason or by Xxxxxx pursuant to Xxxxxx'x
customary policies. During such periods, Xxxxxx shall be solely responsible for
the payment of all wages, bonuses, employment taxes, insurance, benefits and
other expenses relating to the employment by it of such employees. Effective May
11, 1997, Xxxxxxx Retail will cause the Company to offer employment to
substantially all of Xxxxxx'x district managers, on such terms of employment
(subject to the provisions of this Section 5.12), as are mutually acceptable to
------------
the Company and such district managers. At such time as the store-level
employees' employment with Xxxxxx terminates, the Company may (but shall have no
obligation to) offer employment to any such employee on such terms of employment
(subject to the provisions of this Section 5.12) as the Company deems
------------
appropriate. It is not contemplated that the Company will offer employment to
any of the warehouse employees of Xxxxxx, but that Xxxxxx will provide
warehousing services to the Company on the basis, and for the period,
contemplated by the Transitional Services Agreement.
(d) Other Employees of the Company. Xxxxxxx Retail will cause the
------------------------------
Company to recruit and employ such additional employees (other than the chief
executive officer provided for in paragraph (a) above and the current employees
of Xxxxxx provided for in paragraphs (b) and (c) above), as shall reasonably be
necessary for the Company to commence its operations and to conduct its business
on an efficient and effective basis, on such terms of employment as the Company
deems appropriate.
(e) Company Group Health Plan. As of the Closing Date, Xxxxxxx Retail
-------------------------
will cause the Company to sponsor or otherwise make available to its employees a
group health plan (the "Company Health Plan") providing medical and dental
-------------------
benefit coverage. The Company Health Plan shall provide coverage to each
employee of Xxxxxx who becomes an employee of the
30
Company (a "Former Xxxxxx Employee") and his or her dependents immediately upon
----------------------
employment with the Company, without regard to any preexisting condition
exclusion or limitation. Any expenses incurred by a Former Xxxxxx Employee that
would have been applied towards satisfaction of such employee's (or his or her
dependents') copayment or deductible under the medical and dental benefit
coverage offered by Xxxxxx under its group health plan in effect on the
Agreement Date, as described in The Xxxxxx Group Inc. Summary Plan Description
Master Health Plan and The Xxxxxx Group Inc. Summary Plan Description Master
Dental Plan, will be applied towards satisfaction of such employee's (or such
dependents') copayment or deductible under the Company Health Plan for the
calendar year in which such employee is first employed by the Company.
(f) Company Retirement Plan. As of the Closing Date, Xxxxxxx Retail
-----------------------
will cause the Company to sponsor or otherwise make available to Former Xxxxxx
Employees a qualified defined contribution retirement plan (the "Company
-------
Retirement Plan") and shall cause the Company Retirement Plan to accept a plan
---------------
to plan transfer of assets and liabilities of the Xxxxxx 401(k) plan
attributable to Former Xxxxxx Employees, including plan loans, in accordance
with such terms and conditions of transfer as are mutually acceptable to the
Company and Xxxxxx.
(g) Prior Service Credit. Xxxxxxx Retail will cause any employee
--------------------
benefit plan offered by the Company, including, without limitation, the Company
Retirement Plan, to provide that employment with Xxxxxx shall be treated as
employment by the Company for eligibility and vesting purposes under the plan.
(h) Accrued Vacation. Xxxxxxx Retail will cause the Company to assume, as
----------------
of the Closing Date (or, if later, the effective date of any Former Xxxxxx
Employee's employment by the Company), all liability of Xxxxxx to Former Xxxxxx
Employees as of such date for accrued but unused vacation days with respect to
Xxxxxx'x fiscal year beginning February 2, 1997, and will either make available
to such Former Xxxxxx Employees all vacation days not yet taken as of such date
during the Company's fiscal year ending January 31, 1998 or pay to them the cash
value of all unused vacation days at the conclusion of such fiscal year.
5.13 Access and Information. Prior to the Closing and each Store
----------------------
Transfer Closing:
(a) Xxxxxx will permit Xxxxxxx and its representatives to have
reasonable access to Xxxxxx'x directors, officers, employees, agents, assets and
properties and all relevant books, records and documents of or relating to the
transactions contemplated hereby during normal business hours and will furnish
to Xxxxxxx such information, financial records and other documents relating to
Xxxxxx and its operations and business and relevant to the transactions
contemplated hereby as Xxxxxxx may reasonably request.
(b) Xxxxxxx will permit Xxxxxx and its representatives to have
reasonable access to Xxxxxxx'x directors, officers, employees, agents, assets
and properties and all relevant books, records and documents of or relating to
the transactions contemplated hereby during normal
31
business hours and will furnish to Xxxxxx such information, financial records
and other documents relating to Xxxxxxx and its operations and business and
relevant to the transactions contemplated hereby as Xxxxxx may reasonably
request.
(c) Each of Xxxxxx, Xxxxxxx and Xxxxxxx Retail agrees that it will hold
in confidence all information furnished to it pursuant to this Section 5.13,
------------
unless otherwise required by law.
5.14 Supplemental Disclosure. Xxxxxx, Xxxxxxx and Xxxxxxx Retail will
-----------------------
promptly supplement or amend each of the Schedules hereto with respect to any
matter that arises or is discovered prior to the Closing or any Store Transfer
Closing that, if existing or known at the date hereof, would have been required
to be set forth or listed in the Schedules hereto; provided, that, for purposes
-------- ----
of determining the rights and obligations of the parties under Articles VI or
-----------
VII hereof, any such supplemental or amended disclosure will not be deemed to
---
have been disclosed to any party unless the other parties otherwise expressly
consent in writing.
5.15 Governmental Filings. Xxxxxx and Xxxxxxx will each furnish to the
--------------------
other all information concerning it as is required for inclusion in any
application or filing made by the other to any Governmental Body in connection
with the transactions contemplated by this Agreement.
5.16 Fulfillment of Conditions by Xxxxxx. Xxxxxx agrees not to take any
-----------------------------------
action that would cause the conditions precedent to the obligations of the
parties to effect the transactions contemplated hereby not to be fulfilled,
including without limitation by taking or causing to be taken any action that
would cause the representations and warranties made by Xxxxxx herein not to be
true and correct in all material respects as of the Closing Date or any Store
Transfer Closing Date. Xxxxxx will take all reasonable steps within its power
and consistent with the terms and conditions of this Agreement to cause to be
fulfilled the conditions precedent to the obligations of Xxxxxxx, Xxxxxxx Retail
and Xxxxxx to consummate the transactions contemplated hereby that are dependent
on the actions of Xxxxxx.
5.17 Fulfillment of Conditions by Xxxxxxx and Xxxxxxx Retail. Xxxxxxx
-------------------------------------------------------
and Xxxxxxx Retail agree not to take any action that would cause the conditions
precedent to the obligations of the parties to effect the transactions
contemplated hereby not to be fulfilled, including without limitation by taking
or causing to be taken any action that would cause the representations and
warranties made by Xxxxxxx and Xxxxxxx Retail herein not to be true and correct
in any material respects as of the Closing Date or any Store Transfer Closing
Date. Xxxxxxx and Xxxxxxx Retail will take all reasonable steps within its power
and consistent with the terms and conditions of this Agreement to cause to be
fulfilled the conditions precedent to the obligations of Xxxxxx, Xxxxxxx and
Xxxxxxx Retail to consummate the transactions contemplated hereby that are
dependent on the actions of Xxxxxxx and Xxxxxxx Retail.
5.18 Xxxxxxx Subsidiaries; Liens. Xxxxxxx agrees that, for so long as
---------------------------
Xxxxxxx Retail serves as Manager under the Operating Agreement and for so long
as the Option Agreement and
32
the Xxx & Xxxxx Trademark License are in effect, it will cause Xxxxxxx Retail
and Xxxxxxx to maintain their separate corporate existences; will maintain
Xxxxxxx Retail and Xxxxxxx as wholly-owned subsidiaries of Xxxxxxx; will neither
cause nor permit Liens to exist on the capital stock or assets of Xxxxxxx Retail
or Xxxxxxx, including, without limitation, the Xxx & Xxxxx Trademarks (other
than Liens for current taxes not yet past due and, with respect to the
Trademarks, other than Liens subordinated to the rights of the Company under the
Trademark Licenses pursuant to an agreement in which the holder of any such Lien
agrees to recognize all such rights and not to take any action that would
disturb any of such rights); and will cause Xxxxxxx Retail to perform all of its
obligations under the Operating Agreement and the Option Agreement and will
cause Xxxxxxx to perform all of its obligations under the Xxx & Xxxxx Trademark
License.
5.19 Publicity. Xxxxxx, Xxxxxxx and Xxxxxxx Retail will cooperate with
---------
each other in the development and distribution of all news releases and other
public disclosures relating to the transactions contemplated by this Agreement.
Neither Butler, Maxwell, Xxxxxxx Retail or the Company will issue or make, or
allow to have issued or made, any press release or public announcement
concerning the transactions contemplated by this Agreement without the advance
approval in writing of the form and substance thereof by the other parties,
unless otherwise required by law.
5.20 Transaction Costs.
-----------------
(a) The expenses contemplated by Section 5.5(d) will be paid by Xxxxxxx
--------------
and Xxxxxx, respectively, on the basis set forth therein. Prior to the Closing
Date, the expenses contemplated by Sections 5.3(b), 5.7(b), 5.8(b) and 5.9(b)
--------------- ------ ------ ------
will be paid by the parties specified therein, subject to the provisions of
those Sections and to the provisions of this Section 5.20.
------------
(b) On the Closing Date, Xxxxxxx Retail will cause the Company to (i)
assume all obligations of Xxxxxx and Xxxxxxx contemplated by Section 5.3 hereof;
-----------
(ii) assume all obligations of Xxxxxxx with respect to the retail store design
consultants retained by Xxxxxxx pursuant to Section 5.7 hereof; (iii) assume all
-----------
obligations of Xxxxxx with respect to the MIS System developed by Xxxxxx
pursuant to Section 5.8 hereof, including without limitation all consulting
-----------
agreements, purchase contracts and license agreements entered into by Xxxxxx
pursuant to Section 5.8 hereof; and (iv) assume all obligations of Xxxxxx with
-----------
respect to the S&L/JNY Products ordered by Xxxxxx pursuant to Section 5.9 hereof
-----------
(including, without limitation, all financing costs actually paid or payable to
NationsBank in respect of the letters of credit opened by Xxxxxx in connection
with such purchase orders). To the extent that Xxxxxx or Xxxxxxx have incurred
expenses prior to the Closing Date in respect of the obligations so assumed,
Xxxxxxx Retail will cause the Company to reimburse Xxxxxx and Xxxxxxx for such
expenses within five business days after the Closing Date.
(c) In the event that this Agreement is terminated prior to the Closing
Date pursuant to Section 8.1(a) hereof, Xxxxxx will bear all of the expenses
--------------
contemplated by Section 5.8(b) and
33
5.9(b) and each party shall pay to the other such amount as is necessary so that
------
each party bears one-half of the expenses contemplated by Sections 5.3(b) and
---------------
5.7(b), upon presentation of paid invoices or other evidence of the payment of
------
such expenses.
(d) Except as set forth in paragraphs (a), (b) and (c) above, each
party will pay all fees, costs and expenses incurred by it in connection with
the preparation, negotiation, execution and performance of this Agreement or any
of the transactions contemplated by this Agreement, including, without
limitation, all fees and expenses of attorneys, accountants and consultants
retained by each party and all due diligence expense incurred by each party.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions Precedent to the Closing.
-----------------------------------
(a) Conditions to the Obligations of Xxxxxx. The obligations of Xxxxxx
---------------------------------------
under Section 2.2 of this Agreement are subject to the satisfaction at or prior
-----------
to the Closing Date of the following conditions, but compliance with any such
conditions may be waived by Xxxxxx in writing:
(i) All representations and warranties of Xxxxxxx and Xxxxxxx
Retail contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties were made on and as of the
Closing Date;
(ii) Xxxxxxx and Xxxxxxx Retail shall have performed and complied
with all the covenants and agreements and satisfied the conditions required
by this Agreement to be performed, complied with or satisfied by it on or
prior to the Closing Date, including without limitation the taking of all
actions required to be taken by Xxxxxxx and Xxxxxxx Retail and the delivery
of all items required to be delivered by Xxxxxxx and Xxxxxxx Retail
pursuant to Section 2.2 and Article V;
----------- ---------
(iii) Xxxxxxx and Xxxxxxx Retail shall have delivered to Xxxxxx a
closing certificate, dated the Closing Date and generally to the effect set
forth in clauses (i) and (ii) above;
(iv) Xxxxxxx, Xxxxxxx Retail and Xxxxxxx shall have delivered to
Xxxxxx a certificate of their respective secretaries with respect to
corporate resolutions adopted by their respective boards of directors
authorizing, and the incumbency of their respective officers executing, the
Xxxxxxx Documents, together with copies of the corporate resolutions and
other documents referred to therein;
34
(v) Xxxxxxx and Xxxxxxx Retail shall have delivered to Xxxxxx a
copy of the certificate of incorporation of each of Xxxxxxx, Xxxxxxx Retail
and Xxxxxxx, together with all amendments thereto, duly certified by the
Secretary of State of Delaware, and good standing certificates with respect
to Xxxxxxx, issued as of a current date by the Secretaries of State of
Delaware and Massachusetts; Xxxxxxx Retail, issued as of a current date by
the Secretaries of State of Delaware, Massachusetts and Georgia; and
Xxxxxxx issued as of a current date by the Secretaries of State of Delaware
and Massachusetts; and
(vi) Xxxxxxx and Xxxxxxx Retail shall have delivered to Xxxxxx a
legal opinion of their counsel, Xxxxxx, Xxxx & Xxxxxxxx LLP, substantially
in the form of Exhibit M hereto, and a legal opinion of their special
---------
trademark counsel, Xxxxxx & Neimark, substantially in the form of Exhibit N
---------
hereto.
(b) Conditions to the Obligations of Xxxxxxx and Xxxxxxx Retail. The
-----------------------------------------------------------
obligations of Xxxxxxx and Xxxxxxx Retail under Section 2.2 of this Agreement
-----------
are subject to the satisfaction on or prior to the Closing Date of the following
conditions, but compliance with any such conditions may be waived by Xxxxxxx and
Xxxxxxx Retail in writing:
(i) All representations and warranties of Xxxxxx contained in
this Agreement shall be true and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties were made on and as of the Closing Date;
(ii) Xxxxxx shall have performed and complied with the covenants
and agreements and satisfied the conditions required by this Agreement to
be performed, complied with or satisfied by it on or prior to the Closing
Date, including without limitation the taking of all actions required to be
taken by Xxxxxx and the delivery of all items required to be delivered by
Xxxxxx pursuant to Section 2.2 and Article 5;
----------- ---------
(iii) Xxxxxx shall have delivered to Xxxxxxx and Xxxxxxx Retail a
closing certificate, dated the Closing Date and generally to the effect set
forth in clauses (i) and (ii) above;
(iv) Xxxxxx shall have delivered to Xxxxxxx and Xxxxxxx Retail a
certificate of its secretary with respect to corporate resolutions adopted
by its board of directors authorizing, and the incumbency of its officers
executing, the Xxxxxx Documents, together with copies of the corporate
resolutions and other documents referred to therein;
(v) Xxxxxx shall have delivered to Xxxxxxx and Xxxxxxx Retail a
copy of its certificate of incorporation, together with all amendments
thereto, duly certified by the Secretary of State of Delaware, and good
standing certificates with respect to Xxxxxx, issued as of a current date
by the Secretaries of State of Delaware and Georgia; and
35
(vi) Xxxxxx shall have delivered to Xxxxxxx and Xxxxxxx Retail a
legal opinion of its counsel, King & Spalding, substantially in the form of
Exhibit O hereto.
---------
(c) Conditions to the Obligations of Xxxxxx, Xxxxxxx and Xxxxxxx
------------------------------------------------------------
Retail. The obligations of each of Xxxxxx, Xxxxxxx and Xxxxxxx Retail under
------
Section 2.2 of this Agreement are subject to the satisfaction on or prior to the
-----------
Closing Date of the following conditions, but compliance with any such
conditions may be jointly waived by Xxxxxx, Xxxxxxx and Xxxxxxx Retail in
writing:
(i) All necessary consents, approvals, orders or authorizations
of Governmental Bodies shall have been obtained and all necessary notices
to Governmental Bodies shall have been given;
(ii) There shall be no pending or threatened litigation in any
court or any proceeding before or by any Governmental Body against Butler,
Maxwell, Xxxxxxx Retail, Xxxxxxx or the Company to restrain or prohibit or
obtain damages or other relief with respect to this Agreement or the
consummation of the transactions contemplated hereby;
(iii) Xxxxxxx shall have obtained and delivered to the Company the
consent from Bank of Boston, Xxxxxxx'x lender, necessary to reconcile the
conflict noted on Schedule 4.3.
------------
(iv) Xxxxxxx shall have obtained and delivered to the Company a
Second Amendment to the Xxxxx New York License Agreement, substantially in
the form of Exhibit P hereto, together with the consent of Xxxxx to the
---------
Xxxxx New York Trademark Sublicense;
(v) Xxxxxxx shall have obtained and delivered to the Company an
agreement from Bank of Boston of the kind contemplated by Section 5.18
------------
hereof with respect to any Liens that Bank of Boston might now or hereafter
have with respect to the Trademarks;
(vi) Xxxxxx shall have obtained and delivered to the Company the
Headquarters Telephone Lessor's Consent;
(vii) Xxxxxx shall have obtained and delivered to the Company the
Headquarters Landlord's Consent;
(viii) Xxxxxxx shall have obtained and delivered to the Company an
acknowledgment from Xxxx X. Xxxxxxx in substantially the form of Exhibit Q
---------
hereto;
36
(ix) Xxxxxx shall have obtained and delivered to the Company
Store Landlords' Consents with respect to not less than 120 of the Stores;
and
(x) The Senior Lenders and the Senior Agent shall have entered
into the Senior Credit Agreement and any and all other documents
contemplated thereby to be entered into by the Senior Lenders or the Senior
Agent; shall have accepted the GE Capital Guaranty; Bank of Boston shall
have issued the letters of credit contemplated by Section 2.2(e)(xi); the
------------------
Senior Lenders shall be prepared to issue other letters of credit, subject
to no conditions other than customary conditions relating to the absence of
defaults and accuracy of representations and warranties; and the Senior
Lenders shall be prepared to make the Senior Revolving Loan and Senior Term
Loan, subject to no conditions other than the funding in full of the
Subordinated Loan and customary conditions relating to the absence of
defaults and accuracy of representations and warranties.
6.2 Conditions Precedent to Each Store Transfer Closing.
---------------------------------------------------
(a) Conditions to the Obligations of Xxxxxx. The obligations of Xxxxxx
---------------------------------------
under Section 2.3(a) of this Agreement are subject to the satisfaction on or
--------------
prior to each Store Transfer Closing Date of the following conditions, but
compliance with any such conditions may be waived by Xxxxxx in writing:
(i) Xxxxxxx and Xxxxxxx Retail shall have performed and complied
with all the covenants and agreements and satisfied the conditions required
by this Agreement to be performed, complied with or satisfied by each of
them on or prior to such Store Transfer Closing Date, including without
limitation the taking of all actions required to be taken by Xxxxxxx and
Xxxxxxx Retail and the delivery of all items required to be delivered by
Xxxxxxx and Xxxxxxx Retail pursuant to Section 2.3 and Article V; and
----------- ---------
(ii) Xxxxxxx and Xxxxxxx Retail shall have delivered to Xxxxxx a
closing certificate, dated such Store Transfer Closing Date and generally
to the effect set forth in clause (i) above.
(b) Conditions to the Obligations of Xxxxxxx and Xxxxxxx Retail. The
-----------------------------------------------------------
obligations of Xxxxxxx and Xxxxxxx Retail under Sections 2.3(b) and (c) of this
--------------- ---
Agreement are subject to the satisfaction on or prior to each Store Transfer
Closing Date of the following conditions, but compliance with any such
conditions may be waived by Xxxxxxx and Xxxxxxx Retail in writing:
(i) Xxxxxx shall have performed and complied with all the
covenants and agreements and satisfied the conditions required by this
Agreement to be performed, complied with or satisfied by it on or prior to
such Store Transfer Closing Date, including without limitation the taking
of all actions required to be taken by Xxxxxx and the delivery of all items
required to be delivered by Xxxxxx pursuant to Section 2.3 and Article V;
----------- ---------
and
37
(ii) Xxxxxx shall have delivered to Xxxxxxx and Xxxxxxx Retail a
closing certificate, dated such Store Transfer Closing Date and generally
to the effect set forth in clause (i) above.
(c) Conditions to Obligations of Xxxxxx, Xxxxxxx and Xxxxxxx Retail.
---------------------------------------------------------------
The obligations of Xxxxxx, Xxxxxxx and Xxxxxxx Retail under Section 2.3 of this
-----------
Agreement are subject to the satisfaction on or prior to each Store Closing Date
of the following conditions, but compliance with any such conditions may be
waived by Xxxxxx, Xxxxxxx and Xxxxxxx Retail in writing:
(i) Each of the conditions set forth in Section 6.1 above shall
-----------
have been satisfied or waived, and the Closing shall have occurred on the
Closing Date;
(ii) All necessary consents, approvals, orders or authorizations
of Governmental Bodies shall have been obtained and all necessary notices
to Governmental Bodies shall have been given;
(iii) There shall be no pending or threatened litigation in any
court or any proceeding before or by any Governmental Body against Butler,
Maxwell, Xxxxxxx Retail or the Company to restrain or prohibit or obtain
damages or other relief with respect to this Agreement or the consummation
of the transactions contemplated hereby;
(iv) No default or event of default shall have occurred and be
continuing under the Senior Credit Agreement or the Subordinated Note
Purchase Agreement;
(v) The Company shall have delivered to Xxxxxx and Xxxxxxx
Retail a certificate, dated such Store Transfer Closing Date and generally
to the effect set forth in clause (iv) above; and
(vi) Xxxxxx shall have obtained and delivered to the Company a
Store Landlord's Consent from each landlord under the Store Leases to be
assigned by Xxxxxx to the Company at such Store Transfer Closing.
6.3 Additional Conditions Precedent on the Store Register Transfer
--------------------------------------------------------------
Date.
----
(a) Conditions to the Obligations of Xxxxxx. The obligations of Xxxxxx
---------------------------------------
under Section 2.4(a) of this Agreement are subject to the satisfaction on or
--------------
prior to the Store Register Transfer Date of the condition that Xxxxxxx and
Xxxxxxx Retail shall have taken all actions required to be taken by Xxxxxxx and
Xxxxxxx Retail and delivered all items required to be delivered by Xxxxxxx and
Xxxxxxx Retail pursuant to Section 2.4(b), but compliance with such condition
--------------
may be waived by Xxxxxx in writing.
38
(b) Conditions to the Obligations of Xxxxxxx and Xxxxxxx Retail. The
-----------------------------------------------------------
obligations of Xxxxxxx and Xxxxxxx Retail under Section 2.4(b) of this Agreement
--------------
are subject to the satisfaction on or prior to the Store Register Transfer Date
of the condition that Xxxxxx shall have taken all actions required to be taken
by Xxxxxx and delivered all items required to be delivered by Xxxxxx pursuant to
Section 2.4(a), but compliance with such condition may be waived by Xxxxxxx and
--------------
Xxxxxxx Retail in writing.
(c) Conditions to Obligations of Xxxxxx, Xxxxxxx and Xxxxxxx Retail.
---------------------------------------------------------------
The obligations of Xxxxxx, Xxxxxxx and Xxxxxxx Retail under Section 2.4 of this
-----------
Agreement are subject to the satisfaction on or prior to the Store Register
Transfer Date of the following conditions, but compliance with such conditions
may be waived by Xxxxxx, Xxxxxxx and Xxxxxxx Retail in writing:
(i) Each of the conditions set forth in Section 6.2 above shall
-----------
have been satisfied with respect to the Store Register Transfer Date; and
(ii) Xxxxxx shall have obtained and delivered to the Company each
of the Store Register Consents.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Xxxxxxx, Xxxxxxx Retail and the Company by
-------------------------------------------------------------
Xxxxxx. Xxxxxx shall indemnify and hold Xxxxxxx, Xxxxxxx Retail, the Company and
------
their respective Affiliates, members, directors, officers, employees and agents
harmless from any and all liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all court costs and reasonable attorneys'
fees (collectively, "Indemnified Losses") that any of the foregoing may suffer
------------------
or incur as a result of or relating to: (a) the inaccuracy of any of the
representations and warranties made by Xxxxxx in this Agreement; (b) the breach
of any of the covenants and agreements made by Xxxxxx in this Agreement; (c) the
failure of Xxxxxx, its officers or employees to comply with any Employment Laws
(other than a failure to comply with any actual or alleged severance pay
program, practice or plan, except to the extent specifically provided in clause
(d) below) with respect to (i) a Former Xxxxxx Employee at any time during the
period that such individual is an employee of Xxxxxx, or (ii) a Former Xxxxxx
Employee while such Former Xxxxxx Employee is providing services to Xxxxxx under
the direction and control of Xxxxxx pursuant to the Transitional Services
Agreement, in each case including, without limitation, any Indemnified Losses
arising under any theory of joint employer status, alter ego or successor
----- ---
employer status; and (d) with respect only to the 23 Former Xxxxxx Employees of
Xxxxxx previously identified by Xxxxxx and Xxxxxxx, the failure of Xxxxxx to
comply with any actual or alleged severance pay program, practice or plan of
Xxxxxx; provided, however, that Xxxxxx shall not be required by virtue of this
-------- -------
Section 7.1 to indemnify any officer or employee of the Company who is a Former
-----------
Xxxxxx Employee with respect to any matter specified in clauses (c) and (d)
hereof.
39
7.2 Indemnification of Xxxxxx and the Company by Xxxxxxx and Xxxxxxx
----------------------------------------------------------------
Retail. Xxxxxxx and Xxxxxxx Retail shall jointly and severally indemnify and
------
hold Xxxxxx, the Company and their respective Affiliates, members, directors,
officers, employees and agents harmless from any and all Indemnified Losses that
any of the foregoing may suffer or incur as a result of or relating to: (a) the
inaccuracy of any of the representations and warranties made by Xxxxxxx or
Xxxxxxx Retail in this Agreement; or (b) the breach of any of the covenants and
agreements made by Xxxxxxx or Xxxxxxx Retail in this Agreement.
7.3 Indemnification of Xxxxxx by the Company. Xxxxxxx Retail shall
----------------------------------------
cause the Company to indemnify and hold Xxxxxx, its Affiliates, directors,
officers, employees and agents harmless from any and all Indemnified Losses that
any of the foregoing may suffer or incur as a result of or relating to the
failure of the Company, the Manager or their respective officers or employees to
comply with any Employment Laws with respect to (i) a Former Xxxxxx Employee
during the period that such individual is an employee of the Company, or (ii) a
current Xxxxxx employee during any time while such employee is providing
services to the Company under the direction and control of the Company pursuant
to the Transitional Services Agreement, in each case including, without
limitation, any Indemnified Losses arising under any theory of joint employer
status, alter ego or successor employer status.
----- ---
7.4 Indemnification Procedures.
--------------------------
(a) A Person entitled to indemnification pursuant to Sections 7.1, 7.2
------------ ---
or 7.3 (an "Indemnified Person") shall give prompt notice to the party from whom
--- ------------------
such indemnification is sought (the "Indemnifying Party") of the assertion of
------------------
any claim, or the commencement of any action, suit or proceeding, by a third
party in respect of which indemnity may be sought hereunder (a "Third Party
-----------
Claim") and will give the Indemnifying Party such information with respect
-----
thereto as the Indemnifying Party may reasonably request. The Indemnifying Party
shall have the right, exercisable by written notice to the Indemnified Person
within fifteen (15) days after receipt of notice from the Indemnified Person of
the commencement of or assertion of any Third Party Claim, to assume the defense
of such Third Party Claim with counsel selected by the Indemnifying Party and
reasonably acceptable to the Indemnified Person, provided that such Indemnifying
Party thereafter prosecutes such defense with reasonable diligence and in a
professional manner. Any Indemnified Person shall have the right to employ
counsel in any such proceeding separate from that employed by the Indemnifying
Party on behalf of the Indemnified Person or Persons against whom such Third
Party Claim has been made, but the fees and expenses of such separate counsel
shall be solely at the expense of such Indemnified Person.
(b) The Indemnifying Party, if it shall have assumed the defense of any
Third Party Claim, shall have the right to consent to the entry of judgment with
respect to, or otherwise settle, such Third Party Claim provided that the
Indemnified Person shall have consented thereto, which consent shall not be
unreasonably withheld. In the event that any Indemnified Person withholds such
consent for any reason, the liability of the Indemnifying Party under this
Article VII with
-----------
40
respect to such Third Party Claim shall not exceed the amount of the proposed
judgment or settlement for which such consent was sought.
(c) The parties hereto shall cooperate in all reasonable respects in
the defense of any such Third Party Claim and shall furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may reasonably be requested by any other party
hereto in connection therewith.
7.5 Survival. The representations and warranties of Xxxxxx, Xxxxxxx and
--------
Xxxxxxx Retail made in or pursuant to this Agreement will survive the execution
and delivery of this Agreement, the Closing and each Store Transfer Closing and
thereafter through and including the last day of the Company's fiscal year
ending on January 30, 1999.
7.6 Limitations. Notwithstanding anything to the contrary set forth in
-----------
this Article 7, (a) the rights of the parties under Sections 7.1 and 7.2 (but
--------- ------------ ---
not 7.3) shall terminate on January 31, 1999 as to any claim for indemnification
---
not asserted in writing before such date; and (b) from and after the Closing
Date the recourse of each party with respect to any claim for indemnification
shall be limited solely to, and any judgment shall be enforced solely against,
the Member Interest held by the other party or its Affiliates, and not to or
against any other assets of such other party; provided, however, that each party
-----------------
hereto shall be fully liable (without regard to the limitation set forth in this
Section 7.6(b)) at law and in equity for damages resulting from (i) the wilful
--------------
breach of any representation, warranty or covenants made by it herein or in the
other Xxxxxx Documents or Xxxxxxx Documents to which it is a party, or (ii)
fraud, bad faith or willful misconduct on its part hereunder.
ARTICLE VIII
MISCELLANEOUS
8.1 Termination; Breakup Arrangements.
---------------------------------
(a) This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time prior to the Closing (i) by mutual written
consent of Xxxxxx and Xxxxxxx; or (ii) by either Xxxxxx or Xxxxxxx if a
condition to performance by the terminating party hereunder at the Closing has
not been satisfied or waived prior to April 30, 1997.
(b) In the event of the termination of this Agreement pursuant to
paragraph (a) above:
(i) the obligations of Xxxxxx, Xxxxxxx and Xxxxxxx Retail under
Section 5.20 and Article VII will survive such termination;
------------ -----------
(ii) Xxxxxx will retain, and Xxxxxx and Xxxxxxx Retail will cause
the Company to assign to Xxxxxx, any and all rights to the MIS System being
developed for use by the
41
Company pursuant to Section 5.8(a); and Xxxxxx will assume any obligations
--------------
of the Company to the consultant and hardware and software vendors
referenced in Section 5.8(b) with respect to such MIS System;
--------------
(iii) Xxxxxx will retain all rights to the inventory purchased or
ordered by Xxxxxx pursuant to Section 5.9(a); and Xxxxxx will relabel at
--------------
its expense all such inventory (or at its option may pay to the Factories
such reasonable additional sum as the Factories shall request to relabel
such inventory) from the "Xxx & Xxxxx," "Just Xxxxx" or "Xxxxx New York"
brands to such other brand or brands as Xxxxxx shall specify; and
(iv) Xxxxxx will not, for a period of two years after such
termination, source new inventory from the Factories used by Xxxxxxx to
manufacture S&L/JNY Products ordered by Xxxxxx in accordance with Section
-------
5.9 hereof, provided that Xxxxxxx has identified such Factories and Xxxxxx
--- --------
has specifically consented to the purchase orders specifying such Factories
on the basis contemplated by Section 5.9 (but the provisions of this clause
-----------
(iv) shall not apply with respect to any Factories that have previously
been used by Xxxxxx or Xxxxxx'x buying agents to manufacture Dolcis or
other inventory).
8.2 Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations of the parties hereunder can be assigned or delegated by Xxxxxx,
on the one hand, or by Xxxxxxx and Xxxxxxx Retail, on the other, without the
prior written consent of the other party or parties; provided, however, that (i)
-------- -------
Xxxxxx may assign and delegate any of its rights, interests, duties or
obligations hereunder to its parent company in conjunction with its liquidation
for corporate or federal income tax purposes, as may any such assignee of Xxxxxx
or assignee of such an assignee, and the assignor in any such assignment and
delegation shall be relieved of any further liability hereunder upon the
assumption of such liability by an assignee permitted hereunder; and (ii)
Xxxxxxx may delegate to Xxxxxxx those duties or obligations which, by the
express terms of this Agreement, Xxxxxxx is to cause Xxxxxxx to perform.
8.3 Notices. All notices that are required or may be given pursuant to
-------
this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this Section
-------
8.3):
---
If to Xxxxxx:
------------
c/o GE Capital Equity Capital Group, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
42
With copies to:
--------------
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel -- Equity Capital Group
Facsimile: (000) 000-0000
and
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxxx or Xxxxxxx Retail:
-------------------------------
Xxxxxxx Shoe Company Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxxx 00000
(or, if by mail, X.X. Xxx 00
Xxxxxxxxx, Xxxxxxxxxxxxx 00000)
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
--------------
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
8.4 Binding Effect. This Agreement will be binding upon and inure to
--------------
the benefit of the parties hereto and their successors, legal representatives,
and permitted assigns.
8.5 No Third Party Beneficiary. This Agreement is made solely and
--------------------------
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns
43
subject to the express provisions hereof relating to successors and assigns, and
(except as specifically set forth in Article VII) no other Person whatsoever
-----------
will have any rights, interest, or claims hereunder or be entitled to any
benefits under or on account of this Agreement as a third party beneficiary or
otherwise.
8.6 Waiver. No failure by any party to insist upon the strict
------
performance of any covenant, duty, agreement, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof will constitute
a waiver of any such breach or any other covenant, duty, agreement, or
condition.
8.7 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which together will constitute one agreement binding on all
the parties hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart.
8.8 Entire Agreement. This Agreement and the documents contemplated hereby
----------------
contain the entire understanding of the parties relating to the subject matter
hereof and supersede all prior written or oral and all contemporaneous oral
agreements and understandings relating to the subject matter hereof (including,
without limitation, the letter agreements between Xxxxxx and Xxxxxxx dated
December 23, 1996 and February 13, 1997). This Agreement cannot be modified or
amended except in writing signed by the party against whom enforcement is
sought. The Exhibits and Schedules to this Agreement are incorporated by
reference into and made a part of this Agreement for all purposes.
8.9 Governing Law. Any action that Xxxxxxx Retail is to cause the Company
-------------
to take pursuant to any provision of this Agreement will be deemed to be taken
by the Company under the Operating Agreement and all rights, duties and
responsibilities of the parties with respect thereto will be governed by and
construed and interpreted in accordance with the Operating Agreement (including
Section 13.12 thereof). In all other respects, this Agreement will be governed
by and construed and interpreted in accordance with the laws of the State of New
York applicable to contracts made and to be performed in that State.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first above written.
THE XXXXXX GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
Executive Vice President
XXXXXXX SHOE COMPANY INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
Executive Vice President
XXXXXXX RETAIL INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
Chairman
44
