Exhibit 2.1
AGREEMENT
THIS AGREEMENT (this "Agreement") is dated as of July 10,
2001 by and between K&M ASSOCIATES L.P., a Rhode Island limited
partnership having an office at 000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxx Xxxxxx 00000 ("Buyer"), and SWANK, INC., a Delaware
corporation having an office at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Seller").
WHEREAS, Seller is presently engaged in, among other things,
the marketing, distribution and sale of men's and women's
accessories, including, without limitation, women's costume
jewelry; and
WHEREAS, Seller and Xxxx Xxxxx, a Division of Xxxxxx A.S.L.,
Ltd. ("Xxxx Xxxxx"), are parties to a License Agreement effective
as of January 1, 2000 (as amended and supplemented to date, the
"Xxxx Xxxxx License Agreement") providing, among other things,
for the manufacture, promotion and sale by Seller of certain
items of women's costume jewelry; and
WHEREAS, Seller and Guess Licensing, Inc. ("Guess") are
parties to a License Agreement effective August 15, 2000 (the
"Guess License Agreement") providing, among other things, for the
manufacture, promotion and sale by Seller of, among other
products, certain items of women's costume jewelry (the Xxxx
Xxxxx License Agreement and the Guess License Agreement are
sometimes hereinafter referred to as the "License Agreements");
and
WHEREAS, Seller is also engaged in the manufacture and sale
of private label women's costume jewelry products under private
label programs of Sears Xxxxxxx and Co. (with regard to women's
costume jewelry products under the trade name "Apostrophe") and
Shopko Department Stores (with regard to women's costume jewelry
products under the trademarks "90 Park" and "Tivoli")
(collectively, the "Private Label Programs"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller all of Seller's right, title and interest
in and to Seller's inventory (including, without limitation,
finished goods, supplies, labels and sales and promotional
materials and brochures) relating to women's costume jewelry
products under the License Agreements and relating to the Private
Label Programs, including, without limitation, all such inventory
that is on order or in transit at the time of the Closing (as
hereinafter defined) but has not yet been delivered to Seller,
but excluding all such inventory located at Seller's factory
retail outlet stores (collectively, the "Inventory"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller all of Seller's accounts receivable
arising from sales of women's costume jewelry products under the
License Agreements and the Private Label Programs occurring prior
to the Closing Date (as hereinafter defined) and that are unpaid
at the Closing, other than the Pre-Closing Chargebacks (as
hereinafter defined) (the "Accounts Receivable").
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller
and Buyer hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01 Purchase and Sale. At the Closing, and subject to
the terms and conditions hereof, Seller shall sell, transfer,
assign and convey to Buyer, and Buyer shall purchase, acquire and
accept from Seller, Seller's entire right, title and interest in
and to the following properties as they exist at the Closing
(collectively, the "Transferred Assets"), free and clear of any
and all liens, charges, security interests, options, claims,
pledges, encumbrances or other restrictions on title or transfer
of any nature whatsoever (collectively, "Liens"):
(A) the Inventory;
(b) all of Seller's manufacturing molds and models
used in the design and manufacture of women's costume jewelry
under the License Agreements (the "Other Assets");
(c) the Accounts Receivable; and
(d) the Assumed Contracts (as hereinafter defined).
Section 1.02 Assumed Liabilities; Excluded Seller
Liabilities .
(A) At the Closing and pursuant to this Agreement and the
Assignment and Assumption Agreement (as hereinafter defined),
Seller shall assign to Buyer and Buyer shall agree to pay,
perform and discharge when due and payable, in accordance with
their respective terms, all liabilities and obligations (i)
solely and to the extent attributable to periods after the
Closing under the Xxxx Xxxxx License Agreement (the "AK
Liabilities") and the Buyer Guess License Agreement (as
hereinafter defined) (the "Guess Liabilities"); and (ii) under
all open customer orders for women's costume jewelry products
under the License Agreements and the Private Label Programs (the
"Customer Orders") as of the Closing Date and listed in a
certificate certified by the Chief Financial Officer of Seller
and delivered by the Seller to Buyer at the Closing (the "Order
Certificate") (collectively, the "Assumed Liabilities"). The
Buyer Licenses (as hereinafter defined) and the Customer Orders
are sometimes collectively referred to as the "Assumed
Contracts".
(B) The assignment by Seller to Buyer and assumption by Buyer of
the Assumed Liabilities and the Assumed Contracts shall be
evidenced by execution and delivery by Buyer and Seller of an
assignment and assumption agreement substantially in the form
attached hereto as Exhibit A (the "Assignment and Assumption
Agreement").
(C) Buyer shall not assume, or in any way be liable or
responsible for, any liability or obligation of Seller which is
not an Assumed Liability (whether fixed, contingent, disputed,
undisputed, legal, equitable, secured or unsecured), including,
without limitation, (i) any liability or obligation of Seller
under (A) the License Agreements solely and to the extent
attributable to periods prior to the Closing and (B) Seller's
arrangements and agreements with the Foreign Distributors (as
hereinafter defined) and the Foreign Representative (as defined
in Schedule 3.4) with respect to any foreign market
(collectively, the "Foreign Distribution Arrangements"); (ii)
subject to Section 6.2(b), (A) any and all liabilities of Seller
related to any employee benefit plans of Seller; (B) any and all
liabilities of Seller relating to the employment or termination
(or deemed termination) of employment of any employee of Seller,
including, without limitation, any severance liability arising
from any Severance Arrangements (as hereinafter defined) or
pursuant to any United States or foreign statute; and (C) any
other liability of Seller relating to any current or former
employee of Seller arising on or prior to the Closing Date; and
(iii) any liability or obligation of Seller for any and all
taxes, charges, fees, levies or other assessments of any kind
(together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) by any
federal, state, local or foreign taxing authority, including,
without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, tax recapture,
gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment
compensation or net worth, any state and local recording fees and
taxes which may arise upon the consummation of the transactions
contemplated herein, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added, in each case
attributable to the Transferred Assets and related to any time
period prior to the Closing Date (collectively, the "Excluded
Seller Liabilities").
Section 1.03 Certain Agreements. Seller and Buyer agree that
as conditions to the consummation of the transactions
contemplated by this Agreement (collectively, the "Section 1.3
Conditions"), on or prior to the Closing Date,
(A) Seller shall have assigned to Buyer, and Buyer shall have
assumed, the Xxxx Xxxxx License Agreement and the AK Liabilities.
The Xxxx Xxxxx License Agreement as assigned to and assumed by
Buyer in accordance with this Agreement is sometimes referred to
as the "Buyer Xxxx Xxxxx License Agreement";
(B) Seller and Xxxx Xxxxx shall have entered into an agreement
in form and substance mutually acceptable to such parties
releasing Seller from all further liabilities and obligations
under the Xxxx Xxxxx License Agreement (the "Xxxx Xxxxx
Termination Agreement");
(C) Seller and Guess shall have entered into amendments to the
Guess License Agreement to, among other things, eliminate women's
costume jewelry from the definition of "Products" contained
therein, releasing Seller from all further liabilities and
obligations in connection therewith, and to make all related
economic and other changes therein, all on terms and conditions
mutually acceptable to Seller and Guess (the "Guess Amendments");
and
(D) Seller shall have assigned to Buyer, and Buyer shall have
assumed, the portion of the Guess License Agreement relating to
the manufacture, promotion and sale of women's costume jewelry
and the Guess Liabilities, all on terms and conditions mutually
acceptable to Buyer and Guess. The portion of the Guess License
Agreement assigned to and assumed by Buyer in accordance with
this Agreement is sometimes referred to as the "Buyer Guess
License Agreement".
The Buyer Xxxx Xxxxx License Agreement and the Buyer Guess
License Agreement are sometimes collectively referred to as the
"Buyer Licenses." The Buyer Licenses, together with the Xxxx
Xxxxx Termination Agreement and the Guess Amendments are
sometimes hereinafter collectively referred to as the "Section
1.3 Agreements".
Section 1.04 Purchase Price. The aggregate purchase price for
the Transferred Assets shall consist of (i) the purchase price of
the Inventory determined in accordance with Schedule 1.4, which
shall be paid by wire transfer in immediately available funds on
the Closing Date in accordance with wire transfer instructions
provided by Seller to Buyer prior to the Closing (the "Inventory
Purchase Price"), (ii) seventy percent (70%) of the gross face
value of the Accounts Receivable less all deductions and credits
in respect of women's costume jewelry products under the License
Agreements and Private Label Programs authorized or issued by
Seller prior to the Closing, other than deductions and credits
for markdowns and returns, but which deductions and credits have
not been deducted from the Accounts Receivable by the obligors
thereof prior to Closing (the "Seller Authorized Deductions"),
(the "Accounts Receivable Payment"), which shall be calculated
and paid in accordance with Section 1.5 and (iii) the assumption
of the Assumed Liabilities. The Inventory Purchase Price, the
Accounts Receivable Payment and the assumption of the Assumed
Liabilities are sometimes hereinafter referred to collectively as
the "Purchase Price."
Section 1.05 Accounts Receivable Payment. The Accounts
Receivable Payment shall be calculated and paid as follows:
(A) On the date that is three (3) business days prior to the
Closing Date, Seller's Chief Financial Officer shall deliver to
Buyer a preliminary calculation (the "Initial AR Calculation") of
the amount of the Accounts Receivable outstanding as of the close
of business on the date that is five (5) business days prior to
the Closing Date, less all Seller Authorized Deductions as of
such date. On the Closing Date, Buyer shall pay to Seller by
wire transfer in immediately available funds in accordance with
wire transfer instructions provided by Seller to Buyer prior to
the Closing, an amount equal to 70% of the Initial AR Calculation
(the "Initial Accounts Receivable Payment").
(B) No later than ten (10) days after the Closing Date, Seller's
Chief Financial Officer shall deliver to Buyer a final
calculation (the "Final AR Calculation") of the Accounts
Receivable outstanding as of the close of business on the date
immediately preceding the Closing Date, less all Seller
Authorized Deductions as of such date. In the event that the
Final AR Calculation shall be greater than the Initial AR
Calculation, then, (i) if Buyer does not deliver an Objection
Notice (as hereinafter defined) as provided in Section 1.5(d),
within ten (10) days after receipt by Buyer of the Final AR
Calculation, or (ii) if Buyer delivers an Objection Notice as
provided in Section 1.5(d), on the fifth business day following
the earlier of (A) the resolution by Seller and Buyer of the
objections in the Objection Notice or (B) receipt by Seller and
Buyer of the report of the independent accounting firm as
described in Section 1.5(d), Buyer shall pay to Seller by wire
transfer of immediately available funds in accordance with wire
transfer instructions provided by Seller to Buyer, the difference
between (iii) 70% of the Final AR Calculation less (iv) the
Initial Accounts Receivable Payment. In the event that the Final
AR Calculation shall be less than the Initial AR Calculation,
then, (v) if Buyer does not deliver an Objection Notice as
provided in Section 1.5(d), within ten (10) days after receipt by
Buyer of the Final AR Calculation, or (vi) if Buyer delivers an
Objection Notice as provided in Section 1.5(d), on the fifth
business day following the earlier of (A) the resolution by
Seller and Buyer of the objections in the Objection Notice or (B)
receipt by Seller and Buyer of the report of the independent
accounting firm as described in Section 1.5(d), Seller shall pay
to Buyer by wire transfer of immediately available funds in
accordance with wire transfer instructions provided by Buyer to
Seller, the difference between (vii) the Initial Accounts
Receivable Payment less (viii) 70% of the Final AR Calculation.
(C) Contemporaneously with the delivery by Seller to Buyer of
the Initial AR Calculation, Seller will deliver to Buyer in
reasonable detail Seller's estimate of deductions and credits for
markdowns and returns authorized by Seller in writing prior to
the Closing in respect of the Accounts Receivable (the "Markdown
Estimate").
(D) Subject to the confidentiality provisions contained in
Section 10.1(b), Seller shall provide Buyer and its
Representatives (as hereinafter defined) full access to Sellers'
books and records relating to Seller's calculations contemplated
by Sections 1.5(a), (b) and (c), and Seller shall cooperate, and
use its commercially reasonable efforts to cause its
Representatives to cooperate, with Buyer and its Representatives
in connection with Buyer's review of such calculations and
estimates and Seller's books and records relating to such
calculations and estimates.
(E) Buyer may object to the determination of the Initial AR
Calculation or the Final AR Calculation and the Accounts
Receivable Payment based upon Seller's calculations contemplated
by Sections 1.5(a) and (b) by written notice to Seller (the
"Objection Notice") no later than ten (10) days after receipt by
Buyer of the Final AR Calculation. Each of Buyer and Seller
shall, in good faith, use reasonable efforts to resolve any
disputes regarding such calculations. If a final resolution is
not reached within thirty (30) days after Buyer has submitted its
Objection Notice, Buyer and Seller shall submit any unresolved
objections for resolution to a nationally recognized independent
accounting firm mutually acceptable to Seller and Buyer, who
shall, within thirty (30) days of such submission, determine and
report to Buyer and Seller upon the remaining objections. Such
report shall be final, binding and conclusive on Buyer and
Seller, and the Initial AR Calculation, the Final AR Calculation
and/or the Accounts Receivable Payment based upon such
calculations, as the case may be, shall be adjusted accordingly.
The fees and expenses incurred by such firm shall be borne
equally by both parties.
(F) In the event that the deductions and credits for markdowns
and returns authorized by Seller in writing prior to the Closing
in respect of the Accounts Receivable exceed the amount of such
deductions and credits as set forth in the Markdown Estimate by
more than five percent (5%) (the "Markdown Excess"), then, no
later than ninety (90) days after the delivery to Buyer of the
Markdown Estimate, Buyer shall so inform Seller and shall provide
Seller its calculations, in reasonable detail, in respect
thereof. Within ten (10) days of being informed by Buyer of any
such Markdown Excess and receiving such calculations without
objection by Seller, Seller shall pay to Buyer an amount equal to
such Markdown Excess (the "Markdown Payment"). Seller, however,
may object to such amount and Buyer's calculation of the Markdown
Excess by written notice to Buyer within ten (10) days of being
so informed by Buyer of any such Markdown Excess and receiving
such calculations. Each of Buyer and Seller shall, in good
faith, use reasonable efforts to resolve any disputes regarding
Seller's objections. If a final resolution is not reached within
thirty (30) days after Seller has submitted its objections, Buyer
and Seller shall submit any unresolved objections for resolution
to a nationally recognized independent accounting firm mutually
acceptable to Seller and Buyer, who shall, within thirty (30)
days of such submission, determine and report to Buyer and Seller
upon the remaining objections. Such report shall be final,
binding and conclusive on Buyer and Seller, and the Markdown
Excess and the Markdown Payment shall be adjusted accordingly.
The fees and expenses incurred by such firm shall be borne
equally by both parties. Notwithstanding the foregoing, in the
event that the deductions and credits for markdowns and returns
authorized by Seller in writing prior to the Closing in respect
of the Accounts Receivable exceed the amount of such deductions
and credits as set forth in the Markdown Estimate by five percent
(5%) or less, then Seller shall not be required to pay to Buyer
any amounts in respect thereof and Seller shall have no liability
or obligation with respect to such excess.
Section 1.06 Certain Royalty and Advertising Payment
Allocations. The obligations of the parties hereto with regard
to royalty and advertising payments paid or payable, and certain
other matters, under the License Agreements shall be determined
in accordance with Schedule 1.6, which is incorporated by
reference herein and made a part hereof.
Section 1.07 Allocation of the Purchase Price. The Purchase
Price shall be allocated among the Transferred Assets in
accordance with Schedule 1.7, which has been arrived at by arm's
length negotiation. Unless otherwise required by applicable law,
Seller and Buyer agree to report the allocation of the Purchase
Price in accordance with Schedule 1.7 for all purposes, and
neither Seller nor Buyer will take any position inconsistent
therewith with respect to any tax return, audit or examination by
any taxing authority, litigation, proceeding or otherwise. In
this regard, and without limiting the foregoing, Buyer and Seller
agree to act, and cause their respective affiliates to act, in
accordance with the computations and allocations contained in
such schedule in any forms or reports required to be filed
pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended, or the Treasury Regulations promulgated thereunder
("1060 Forms"), to cooperate in the preparation of any 1060 Forms
and to file such 1060 Forms in the manner required by applicable
law.
Section 1.08 Inventory Count; Physical Inventory Review.
(A) The Inventory shall be counted and the Inventory Purchase
Price shall be determined in accordance with Schedule 1.4, which
is incorporated by reference herein and made a part hereof.
(B) Seller and Buyer acknowledge and agree that Seller has had
an opportunity to review the Inventory. THE INVENTORY IS BEING
PURCHASED BY BUYER IN "AS IS" CONDITION, WHERE IS AND WITH ALL
FAULTS. EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 3 AND Section
6.13 BELOW, SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR
GUARANTEES OF ANY KIND OR NATURE WHATSOEVER, EITHER EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, REGARDING THE INVENTORY,
INCLUDING, WITHOUT LIMITATION, SALEABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. BUYER HEREBY WAIVES, RELEASES AND RENOUNCES
ALL WARRANTIES (EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 3 BELOW),
OBLIGATIONS (EXCEPT AS EXPRESSLY PROVIDED IN Section 6.13 BELOW)
AND LIABILITIES (EXCEPT AS EXPRESSLY PROVIDED IN Section 9.1
BELOW) OF SELLER, EXPRESS OR IMPLIED, ARISING BY LAW, OR
OTHERWISE, WITH RESPECT TO THE INVENTORY.
Section 1.09 Delivery of the Inventory. The Inventory will be
considered delivered to the Buyer at the Closing, notwithstanding
that such Inventory shall remain at the Taunton, Massachusetts
warehouse or other location of Seller during the Transition
Period (as hereinafter defined). Title to and risk of loss
(including risk of damage, theft, shortages, destruction and
other similar items) of the Inventory, wherever located, shall
pass to Buyer on the close of business on the Closing Date.
ARTICLE II
CLOSING
Section 2.01 Closing. The closing of the sale and purchase of
the Transferred Assets and the assumption of the Assumed
Liabilities (the "Closing") shall be held at 10:00 A.M. on July
16, 2001 (the "Closing Date") at the offices of Jenkens &
Xxxxxxxxx Xxxxxx Xxxxxx LLP, The Chrysler Building, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time and place
upon which the parties may agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer on and as of the
date hereof as follows:
Section 3.01 Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and
authority to enter into this Agreement, the Xxxx of Sale (as
hereinafter defined), each On Order Goods Xxxx of Sale (as
hereinafter defined), the Assignment and Assumption Agreement and
each officer's certificate required by this Agreement, and to
consummate the transactions contemplated hereby and thereby. The
Agreement, the Xxxx of Sale, the On Order Goods Bills of Sale,
the Assignment and Assumption Agreement and such officer's
certificates are sometimes collectively hereinafter referred to
as the "Seller Documents".
Section 3.02 Execution, Delivery and Performance. Except as
set forth on Schedule 3.2, the authorization, execution, delivery
and performance by Seller of this Agreement and the other Seller
Documents, and the consummation by Seller of the transactions
contemplated hereby and thereby, will not (i) conflict with or
result in a breach of Seller's certificate of incorporation or
bylaws, (ii) violate or conflict with any laws, statutes or
regulations (collectively, "Laws") to which Seller is subject or
by which Seller or its properties or assets, including the
Transferred Assets, are bound, (iii) violate any order, writ,
injunction, judgment, award, arbitration or decree of any court,
governmental body, administrative agency, arbitrator or other
competent authority (collectively, "Orders") to which Seller or
its properties or assets, including, without limitation, the
Transferred Assets, are subject, (iv) violate, conflict with,
result in or constitute (with the giving of notice, the lapse of
time, or both) a breach or default under, or result in the
termination or acceleration of, any agreement, mortgage,
indenture, or other instrument to which Seller is a party or by
which Seller or any of its properties or assets, including,
without limitation, the Transferred Assets, are bound
(collectively, the "Seller's Contracts") which would materially
adversely affect Seller's ability to perform its obligations
hereunder or under the Seller Documents or to consummate the
transactions contemplated hereby or thereby, or (v) result in the
creation of any Liens on any of the Transferred Assets. Except
as set forth on Schedule 3.2, no consent, approval or
authorization of, notice to, or filing or registration with, any
court, governmental body, administrative agency, arbitrator or
other competent authority, or any other person or entity
(collectively, the "Seller Consents and Filings"), is required to
be made or obtained by Seller in connection with the execution,
delivery and performance by Seller of this Agreement or the other
Seller Documents and the consummation of the transactions
contemplated hereby and thereby.
Section 3.03 Authority. Seller has full corporate power and
authority to execute and deliver each of the Seller Documents
and to consummate the transactions contemplated by this
Agreement. Seller's Board of Directors has duly authorized the
execution, delivery and performance of this Agreement and the
other Seller Documents to which Seller is or will be a party and
the consummation of the transactions contemplated by this
Agreement. No other corporate action on the part of Seller is
necessary to authorize the execution and delivery by Seller of
the Seller Documents or the consummation by it of the
transactions contemplated by this Agreement. No vote of, or
consent by, the holders of any class or series of capital stock
of Seller is necessary to authorize the execution and delivery by
Seller of the Seller Documents or the consummation of the
transactions contemplated by this Agreement. This Agreement
constitutes, and each of the other Seller Documents, when duly
executed and delivered by Seller, will constitute, the legally
valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, transfer, reorganization or
other similar laws affecting any rights, powers, privileges,
remedies and interests of creditors generally, or rules or
principles (of equity, public policy or otherwise) affecting the
enforcement of obligations generally.
Section 3.04 Title to Transferred Assets. Except as set forth
on Schedule 3.4 and except with respect to On Order Goods (as
defined in Schedule 1.4 hereto), Seller has good and valid title
to the Transferred Assets free and clear of all Liens. The
Seller Documents will effectively vest in Buyer good and valid
title to the Transferred Assets (other than On Order Goods) free
and clear of all Liens, except the Assumed Liabilities. Except
as set forth on Schedule 3.4, upon payment by Seller for the On-
Order Goods and receipt of such On Order Goods by Seller at its
facility in Taunton, Massachusetts, Seller will have good and
valid title to such On Order Goods free and clear of all Liens
and, upon the execution by Seller and delivery by Seller to Buyer
of a xxxx of sale, substantially in the form attached to this
Agreement as Exhibit B-1A, relating to such On Order Goods,
(each, an "On Order Goods Xxxx of Sale" and collectively, the "On
Order Goods Bills of Sale"), such xxxx of sale will effectively
vest in Buyer good and valid title to such On Order Goods free
and clear of all Liens, except the Assumed Liabilities.
Section 3.05 Accounts Receivable. Schedule 3.5 sets forth a
complete and correct list and amount (the gross face amount
thereof, as reflected on Seller's books and records, less all
Seller Authorized Deductions) of Accounts Receivable as of the
close of business on June 25, 2001. All Accounts Receivable
represent valid obligations of the respective obligors thereof
arising from bona fide arm's length sales actually made in the
ordinary course of Seller's business and are reflected on
Seller's books and records in accordance with generally accepted
accounting principles, consistently applied.
Section 3.06 Litigation. Except as set forth on Schedule 3.6,
there are no actions, suits, arbitrations, claims or proceedings
pending against Seller, or, to the best knowledge of Seller,
threatened against Seller, at law or in equity, involving or
affecting any of the Transferred Assets, the Assumed Liabilities,
or any of the transactions contemplated by this Agreement.
Section 3.07 Assumed Contracts; Foreign Distribution
Arrangements. All of the Assumed Contracts, complete and correct
copies of which have been delivered to Buyer, are valid, binding
and enforceable against the Seller and, to Seller's knowledge,
the other parties thereto and are in full force and effect on the
date hereof; provided, that each of the Customer Orders are
cancelable by the respective customers thereof at any time and
from time to time in such customers' respective sole discretion.
Except as set forth on Schedule 3.2, each of the Assumed
Contracts may be assigned by Seller to Buyer without the consent
of any person or entity. Set forth on Schedule 3.7 is a complete
and correct list as of the date hereof of all of Seller's foreign
distributors of women's costume jewelry products under the
License Agreements (the "Foreign Distributors").
Section 3.08 Personnel. Schedule 3.8 sets forth a true and
complete list of (i) the names and current salaries of all
employees of Seller whose duties solely relate to the operation
of Seller's women's costume jewelry business (other than hourly
employees of Seller whose work location is at Seller's facility
located in Taunton, Massachusetts and other than part-time in-
store merchandisers and counters), (ii) all of Seller's group
insurance programs and other benefit programs in effect for such
employees and (iii) all plans, programs, arrangements and
agreements relating to or providing for severance or similar
benefits covering such employees (the "Severance Arrangements"),
true and complete copies of which have been provided by Seller to
Buyer. Seller is not a party to any collective bargaining
agreement with any labor union.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 4.01 Organization. Buyer is a limited partnership duly
formed, validly existing and in good standing under the laws of
the State of Rhode Island and has all requisite power and
authority to enter into this Agreement, the Assignment and
Assumption Agreement and each officer's certificate required by
this Agreement and to consummate the transactions contemplated
hereby and thereby. The Agreement, the Assignment and
Assumption Agreement and such officer's certificates are
sometimes collectively hereinafter referred to as the "Buyer
Documents".
Section 4.02 Execution, Delivery and Performance. Except as
set forth on Schedule 4.2, the authorization, execution, delivery
and performance by Buyer of this Agreement and the Buyer
Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, will not (i) conflict with or
result in a breach of Buyer's Amended and Restated Agreement of
Limited Partnership, (ii) violate or conflict with any Laws to
which Buyer is subject or by which Buyer or its assets are bound,
(iii) violate any Order to which Buyer or its assets is subject,
or (iv) violate, conflict with, result in or constitute (with the
giving of notice, the lapse of time, or both) a breach or default
under, or result in the termination or acceleration of, any
agreement, mortgage, indenture, or other instrument to which
Buyer is a party or by which Buyer or any of its properties or
assets is bound which would materially adversely affect Buyer's
ability to perform its obligations hereunder or under the Buyer
Documents or to consummate the transactions contemplated hereby
or thereby. Except as provided on Schedule 4.2, no consent,
approval or authorization of, notice to, or filing or
registration with, any court, governmental body, administrative
agency, arbitrator or other competent authority, or any other
person or entity, is required to be made or obtained by Buyer in
connection with the execution, delivery and performance by Buyer
of this Agreement or the other Buyer Documents and the
consummation of the transactions contemplated hereby and thereby.
Section 4.03 Authority. Buyer has full limited partnership
power and authority to execute and deliver each of the Buyer
Documents and to consummate the transactions contemplated by this
Agreement. Buyer's General Partner has authorized the execution,
delivery and performance of this Agreement and the other Buyer
Documents to which Buyer will be a party and the consummation of
the transactions contemplated by this Agreement. No other
partnership action on the part of Buyer, other than by Buyer's
General Partner, is necessary to authorize the execution and
delivery by Buyer of the Buyer Documents or the consummation by
it of the transactions contemplated by this Agreement. No vote
of, or consent by, any partner or holder of any partnership
interest (or economic interest) of Buyer other than Buyer's
General Partner is necessary to authorize the execution and
delivery by Buyer of the Buyer Documents or the consummation of
the transactions contemplated by this Agreement. This Agreement
constitutes, and each of the other Buyer Documents, when duly
executed and delivered by Buyer, will constitute, the legally
valid and binding obligations of Buyer, enforceable against Buyer
in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, transfer, reorganization or
other similar laws affecting any rights, powers, privileges,
remedies and interests of creditors generally, or rules or
principles (of equity, public policy or otherwise) affecting the
enforcement of obligations generally.
Section 4.04 Litigation. Except as set forth on Schedule 4.4,
there are no actions, suits, arbitrations, claims or proceedings
pending against Buyer, or, to the best knowledge of Buyer,
threatened against Buyer, at law or in equity, involving or
affecting any of the Transferred Assets, the Assumed Liabilities,
or any of the transactions contemplated by this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING AND OTHER OBLIGATIONS
Section 5.01 Conditions Precedent to Buyer's Obligations. All
obligations of Buyer to consummate the Closing shall be subject,
at the option of Buyer, to fulfillment of each of the following
conditions at or prior to the Closing:
(A) Representations and Warranties. All representations and
warranties of Seller contained herein that are qualified as to
materiality shall be true and correct on and as of the Closing
Date, except with respect to those representations and warranties
specifically made as of an earlier date, in which case such
representations and warranties shall be true and correct as of
such earlier date, and all representations and warranties of
Seller contained herein that are not so qualified shall be true
and correct in all material respects on and as of the Closing
Date, except with respect to those representations and warranties
specifically made as of an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date.
(B) Covenants. All covenants, agreements and obligations
required by the terms of this Agreement or any document delivered
pursuant hereto, to be executed or performed by Seller at or
before the Closing, shall have been duly and properly executed
and performed in all material respects.
(C) Officers' Certificates. There shall have been delivered to
Buyer (i) a certificate executed by the President or a Vice
President and the Secretary or an Assistant Secretary of Seller
or such other duly authorized representatives of Seller
reasonably acceptable to Buyer, dated as of the Closing Date and
certifying that the applicable conditions set forth in Sections
5.1(a) and (b) have been fulfilled and (ii) the Order
Certificate.
(D) Assignment and Assumption Agreement. Seller shall have
executed and delivered to Buyer the Assignment and Assumption
Agreement.
(E) Xxxx of Sale. Seller shall have executed and delivered to
Buyer a Xxxx of Sale substantially in the form attached hereto as
Exhibit B-2 (the "Xxxx of Sale").
(F) Documentation. Seller shall have delivered all such other
documents and agreements with respect to Seller as Buyer may
reasonably request to carry out the intent and purpose of this
Agreement.
(G) No Orders. There shall not be in effect any injunction or
order restraining, enjoining, prohibiting or invalidating this
Agreement or the consummation of the transactions contemplated
hereby and no action, suit, arbitration or proceeding shall be
pending or threatened in writing before any court, governmental
body, administrative agency, arbitrator or other competent
authority which seeks to restrain or prohibit this Agreement or
the consummation of the transactions contemplated hereby.
(H) Consents. The consents and approvals set forth on Schedules
3.2 and 4.2 shall have been obtained.
(I) Lien Releases. Buyer shall have received Uniform Commercial
Code termination statements (which statements shall be delivered
to Buyer by or on behalf of Seller at the Closing for filing) and
other releases of Liens evidencing the termination and release of
all Liens by PNC Bank, National Association (the "PNC Bank
Liens"), on the Transferred Assets (the "PNC Bank Lien
Releases").
(J) The Section 1.3 Conditions. The Section 1.3 Conditions of
Buyer and Seller shall have been fulfilled by Buyer and Seller,
respectively.
(K) Legal Opinion. Seller shall have delivered to Buyer at the
Closing an opinion of Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP,
counsel to Seller, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, covering the topics set forth
on Schedule 5.1(k).
(L) Status of Certain Inventory. The Inventory counted at the
physical inventory count contemplated by Schedule 1.4, to the
extent not sold or otherwise disposed of by Seller in the
ordinary course of Seller's business, shall be in substantially
the same condition at Closing as at the time of such physical
count.
(M) Sublease. Seller and Buyer shall have entered into a
sublease for Seller's premises located on the 16th floor at 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Subleased Premises")
containing such terms and conditions as shall be mutually
acceptable to the parties and consistent with the required
written consent of Seller's landlord to such sublease (the
"Sublease").
(N) Private Label License. Seller and Buyer shall have entered
into a license agreement on terms mutually acceptable to Seller
and Buyer pursuant to which Seller shall grant in favor of Buyer
an exclusive license to manufacture, promote, distribute and sell
women's costume jewelry products under the trademarks "90 Park"
and "Tivoli" in connection with the Private Label Program with
Shopko Department Stores (the "Private Label License").
Section 5.02 Conditions Precedent to Seller's Obligations. All
obligations of Seller to consummate the Closing shall be subject,
at the option of Seller, to fulfillment of each of the following
conditions at or prior to the Closing:
(A) Representations and Warranties. All representations and
warranties of Buyer contained herein that are qualified as to
materiality shall be true and correct on and as of the Closing
Date except with respect to those representations and warranties
specifically made as of an earlier date, in which case such
representations and warranties shall be true and correct as of
such earlier date, and all representations and warranties of
Buyer contained herein that are not so qualified shall be true
and correct in all material respects on and as of the Closing
Date, except with respect to those representations and warranties
specifically made as of an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date.
(B) Covenants. All covenants, agreements and obligations
required by the terms of this Agreement, or any document
delivered pursuant hereto, to be executed or performed by Buyer
at or before the Closing, shall have been duly and properly
executed and performed in all material respects.
(C) General Partner's Certificate. There shall have been
delivered to Seller a certificate executed by the General Partner
of Buyer, or other duly authorized representatives of Buyer
reasonably acceptable to Seller, dated as of the Closing Date,
certifying that the conditions set forth in Sections 5.2(a) and
(b) have been fulfilled.
(D) Assignment and Assumption Agreement. Buyer shall have
executed and delivered to Seller the Assignment and Assumption
Agreement.
(E) Xxxx of Sale. Buyer shall have executed and delivered to
Seller the Xxxx of Sale.
(F) Documentation. Buyer shall have delivered all such other
documents and agreements with respect to Buyer as Seller may
reasonably request to carry out the intent and purpose of this
Agreement.
(G) No Orders. There shall not be in effect any injunction or
order restraining, enjoining, prohibiting or invalidating this
Agreement or the consummation of the transactions contemplated
hereby and no action, suit, arbitration or proceeding shall be
pending or threatened in writing before any court, governmental
body, administrative agency, arbitrator or other competent
authority which seeks to restrain or prohibit this Agreement or
the consummation of the transactions contemplated hereby.
(H) Consents. The consents and approvals set forth on Schedules
3.2 and 4.2 shall have been obtained.
(I) The Section 1.3 Conditions. The Section 1.3 Conditions of
Buyer and Seller shall have been fulfilled by Buyer and Seller,
respectively.
(J) Legal Opinion. Buyer shall have delivered to Seller at the
Closing an opinion of Xxxxx Xxxxxxxxx, General Counsel to ABI (as
hereinafter defined), dated the Closing Date, in form and
substance reasonably satisfactory to Seller, covering the topics
set forth on Schedule 5.2(j), and an opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, special counsel to Buyer, dated the
Closing Date, in form and substance reasonably satisfactory to
Seller, covering the topics set forth on Schedule 5.2(j).
(K) Sublease. Seller and Buyer shall have entered into the
Sublease.
(L) Private Label License. Seller and Buyer shall have entered
into the Private Label License.
ARTICLE VI
CERTAIN AGREEMENTS OF THE PARTIES
Section 6.01 Responsibility for Returns and Similar Items;
Excluded Buyer Liabilities
(A) Commencing on the Closing Date and for all periods
thereafter, Buyer shall be responsible for and shall accept for
its own account all returns of women's costume jewelry products
manufactured and/or sold by or on behalf of Seller under the
License Agreements and, except as provided in Sections 6.1(b),
(c) and (d), shall be responsible for, and shall indemnify,
defend and hold Seller and the Seller Indemnified Parties
harmless from, all charge backs, set-offs, discounts, markdowns,
allowances, adjustments and similar items in respect of the
Accounts Receivable (each, a "Chargeback", and collectively,
"Chargebacks"). Except as otherwise expressly provided in this
Agreement, Seller shall not assume, or in any way be liable or
responsible for, any liability or obligation of Buyer (whether
fixed, contingent, disputed, undisputed, legal, equitable,
secured or unsecured), whether in respect of the matters set
forth in the immediately preceding sentence, or otherwise (the
"Buyer Excluded Liabilities").
(B) If at any time after the Closing any customer of Seller
shall take a Chargeback, other than with respect to markdowns and
returns, that was authorized by Seller prior to Closing in
respect of women's costume jewelry products under the License
Agreements and such Chargeback was not included in the Seller
Authorized Deductions in calculating the Accounts Receivable
Payment (as adjusted pursuant to this Agreement), then Buyer
shall provide Seller with written notice thereof, which notice
shall include the amount of the Chargeback, the Account
Receivable to which the Chargeback relates and the applicable
advertisement. Within (i) ten (10) days after receipt by Seller
of such notice without objection by Seller pursuant to a
Chargeback Objection Notice (as hereinafter defined), or (ii) the
fifth business day following the earlier of (A) the resolution by
Seller and Buyer of the objections in the Chargeback Objection
Notice or (B) receipt by Seller and Buyer of the report of the
independent accounting firm as described in Section 6.1(g),
Seller shall promptly reimburse Buyer for the amount of such
Chargeback.
(C) The parties acknowledge that customers of Seller may have
taken Chargebacks against accounts receivable of Seller prior to
the Closing, whether authorized or unauthorized (the "Pre-Closing
Chargebacks"). To the extent that Pre-Closing Chargebacks may
otherwise constitute Accounts Receivable or Transferred Assets
under the terms of this Agreement, the parties agree that they
shall be excluded from the Accounts Receivable or the Transferred
Assets, and shall remain, along with any payment or right to
receive payment thereon, the property of the Seller. In the
event that at any time after Closing, any such customer shall pay
the amount of a Pre-Closing Chargeback, or any portion thereof,
to Buyer, Buyer shall provide Seller with written notice thereof.
Within (i) ten (10) days after receipt by Seller of such notice
without objection by Seller pursuant to a Chargeback Objection
Notice, or (ii) the fifth business day following the earlier of
(A) the resolution by Seller and Buyer of the objections in the
Chargeback Objection Notice or (B) receipt by Seller and Buyer of
the report of the independent accounting firm as described in
Section 6.1(g), Buyer shall promptly deliver to Seller the amount
of such payment, or portion thereof.
(D) If at any time after Closing, any customer of Seller shall
take a Chargeback in respect of items of women's costume jewelry
products which (i) were actually returned by such customer to and
received by Seller and (ii) were included in the Inventory for
which Buyer shall have paid the Inventory Purchase Price, then
Buyer shall provide Seller written notice thereof. Within (iii)
ten (10) days after receipt by Seller of such notice without
objection by Seller pursuant to a Chargeback Objection Notice, or
(iv) the fifth business day following the earlier of (A) the
resolution by Seller and Buyer of the objections in the
Chargeback Objection Notice or (B) receipt by Seller and Buyer of
the report of the independent accounting firm as described in
Section 6.1(g), Seller shall promptly pay to Buyer the amount of
such Chargeback. Notwithstanding the foregoing, in the event
that such Chargeback is at any time reversed, in whole or in
part, and the amount of such reversed Chargeback, in whole or in
party, is paid to and received by Buyer, Buyer shall promptly pay
to Seller such received amount. All such returned women's
costume jewelry products shall constitute Inventory under this
Agreement
(a) In the event that after the Closing any customer of Seller
shall return women's costume jewelry products sold by Seller
prior to the Closing, but as to which such customer shall have
taken a Chargeback prior to Closing, such products shall
constitute the property of Seller. Buyer shall purchase such
Products from time to time after Closing from Seller at the
applicable Inventory Purchase Price of such products calculated
in accordance with Schedule 1.4. The returned products shall be
categorized as Out-of-Line Goods (as contemplated by Schedule
1.4) for purposes of such calculation. The party to whom the
products shall be returned shall provide the other party with
notice of such return within three (3) business days of such
return. Within ten (10) days after receipt by any party of such
notice without objection by the other party pursuant to a
Chargeback Objection Notice, or (iv) the fifth business day
following the earlier of (A) the resolution by Seller and Buyer
of the objections in the Chargeback Objection Notice or (B)
receipt by Seller and Buyer of the report of the independent
accounting firm as described in Section 6.1(g), Seller shall
execute and deliver to Buyer a xxxx of sale, substantially in the
form of Exhibit B-1B hereto, and attached to which shall be a
list of the products that shall have been returned (and the party
to whom the products shall have been returned shall provide a
true and correct list of such products for attachment to such
xxxx of sale) and Buyer shall contemporaneously therewith pay to
Seller the applicable purchase price for such products.
(b) Subject to the confidentiality provisions contained in
Section 10.1(b), each party shall provide the other party and its
Representatives full access to the disclosing party's books and
records relating to the matters contemplated by Sections 6.1(b),
(c), (d) and (e), and each party shall reasonably cooperate, and
use its commercially reasonable efforts to cause its
Representatives to cooperate, with the other party and its
Representatives in connection with any such review of books and
records.
(E) Each party may object to any other party's determinations or
actions in connection with the matters contemplated by Sections
6.1(b), (c), (d) and (e), by written notice to the other party
(each, a "Chargeback Objection Notice") no later than ten (10)
days after receipt by it of written notice from the other party
of any determination or action. Each of Buyer and Seller shall,
in good faith, use reasonable efforts to resolve any disputes
regarding such determination. If a final resolution is not
reached within thirty (30) days after a party has submitted its
Chargeback Objection Notice, Buyer and Seller shall submit any
unresolved objections for resolution to a nationally recognized
independent accounting firm mutually acceptable to Seller and
Buyer, who shall, within thirty (30) days of such submission,
determine and report to Buyer and Seller upon the remaining
objections. Such report shall be final, binding and conclusive
on Buyer and Seller, and the amount of the payment, if any, made
by one party to the other party pursuant to this Section 6.1
shall be adjusted accordingly. The fees and expenses incurred by
such firm shall be borne equally by both parties.
Section 6.02 Employee Matters.
(A) Buyer shall have the right, but shall not be obligated, to
hire or otherwise establish an employment, independent
contractor, consultant or other business relationship with
(collectively "Hire") any employees of Seller employed in the
operation of Seller's women's costume jewelry business and listed
on Schedule 6.2 hereof, but shall have no right to Hire any
employees of Seller unless and until the Closing shall have
occurred and Buyer shall have complied with the terms and
conditions of this Section 6.2. Buyer shall provide to Seller
reasonable advance written notice of any employee of Seller with
whom Buyer intends to initiate contact or to whom Buyer intends
to extend an offer to Hire, and Buyer and shall keep Seller
informed from time to time of the status of each such offer.
Buyer shall only make offers to Hire Seller's employees that are
conditioned on the consummation of the Closing. Notwithstanding
the foregoing or anything else contained in this Agreement to the
contrary, Buyer agrees that it will not, without the prior
written consent of Seller (which consent shall not be
unreasonably withheld, but which may be revoked at any time and
from time to time by Seller upon written notice to Buyer),
initiate or maintain contact with, or solicit for the purpose of
Hiring, or Hire, any officer, director or other employee of
Seller.
(B) If Buyer Hires any employee of Seller during the four (4)
month period from and after the Closing Date and Seller shall
have paid or committed to pay to such employee severance in
accordance with the terms and conditions of any Severance
Arrangement or practice of Seller prior to the date such employee
shall have been Hired by Buyer, Buyer shall, within five (5)
business days after written notice by Seller to Buyer of the
actual payment of such severance, reimburse Seller in cash (or,
at the election of Seller, by wire transfer of immediately
available funds in accordance with wire transfer instructions
provided by Seller to Buyer from time to time) for such severance
payments; provided, that Buyer shall not be required to reimburse
Seller for any severance payment paid by Seller to any employee
of Seller who Buyer shall Hire as a replacement for another
former employee of Seller who Buyer shall have Hired within such
four (4) month period and who shall have voluntarily left the
employ of Buyer after the Closing. Buyer and Seller shall consult
with each other in an effort to minimize any required severance
payments by Seller and/or Buyer to Seller's women's costume
jewelry division's employees hired by Buyer during the four (4)
month period from and after the Closing Date.
Section 6.03 Transfer Tax Filings. Buyer and Seller shall each
pay fifty percent (50%) of all sales, use, transfer, stamp, value-
added, motor vehicle transfer or registration, documentary,
registration, recording, excise, real estate transfer or similar
taxes or fees ("Transfer Taxes") required to be paid to any
relevant taxing authority in connection with the transactions
contemplated by this Agreement. Each tax return (and any
exemption, clearance or similar filing or certificate) with
respect to any Transfer Taxes required to be paid to any relevant
taxing authority (or for which an exemption is being sought) in
connection with the transactions contemplated by this Agreement
shall be timely filed by the party legally obligated to file such
tax return (or exemption, clearance or similar filing or
certificate) with respect thereto. In this regard, Seller and
Buyer agree to cooperate, and to cause their respective
affiliates to cooperate, with each other in the making of all
such filings required in connection with any such Transfer Taxes.
Buyer shall deliver to Seller prior to the Closing Date all
exemption, clearance, resale or similar certificates which would
under applicable law enable the transactions contemplated by this
Agreement to be exempt from any Transfer Taxes (or to be subject
to any Transfer Tax at a reduced rate).
Section 6.04 Section 1.3 Conditions. Buyer and Seller each
agrees to negotiate in good faith with Xxxx Xxxxx and Guess and
to use its commercially reasonable efforts to enter into the
Section 1.3 Agreements to which it is contemplated by Section 1.3
that it shall be a party at or prior to Closing.
Section 6.05 Communications. On the Closing Date, each of
Buyer and Seller, with the consent of the other party, such
consent not to be unreasonably withheld, shall inform in writing
the customers, suppliers, vendors and other appropriate third
parties that the transactions contemplated by this Agreement have
been consummated, including, without limitation, that Seller has
transferred to Buyer the Accounts Receivable.
Section 6.06 Further Assurances. Consistent with the terms and
conditions hereof, each party hereto shall use their respective
commercially reasonable efforts to cooperate with each other and
execute and deliver any and all agreements and documents
(including, without limitation, On Order Goods Bills of Sale) or
cause to be taken, any and all other actions, and to do, or cause
to be done, any and all other things, either before or after the
Closing, as applicable, which may be necessary, proper or
advisable to effect or evidence the provisions of this Agreement
and to consummate the Closing and the other transactions
contemplated hereby as promptly as practicable. In addition, no
party hereto shall take any action after the date hereof that
could reasonably be expected to materially delay the obtaining of
or result in not obtaining, any permission, approval or consent
from any third party required to be obtained prior to the Closing
including, without limitation, the consents set forth on
Schedules 3.2 and 4.2.
Section 6.07 Actions with Respect to the Closing. Seller and
Buyer agree to use their respective commercially reasonable
efforts to bring about the satisfaction of the conditions to the
Closing set forth in Article 5 of this Agreement as promptly as
practicable and to cause the covenants and agreements contained
in this Agreement to be satisfied and performed hereunder by each
of them.
Section 6.08 No Solicitation. From and after the date of this
Agreement until the earlier of the Closing Date or the
termination of this Agreement pursuant to Section 8, Seller will
not, and Seller will use its commercially reasonable efforts to
cause Seller's Representatives not to, (a) directly or
indirectly, encourage, solicit or initiate discussions with, or
(b) enter into negotiations or agreements with, or furnish any
information that is not publicly available to, any person or
group (other than Buyer and its Representatives) concerning any
sale, lease, transfer or other disposition of all or
substantially all of the Transferred Assets in a single
transaction or series of related transactions (each, an
"Alternative Transaction"); provided, that (i) none of Seller or
any of its Representatives shall be prohibited from taking any of
the actions described in clause (b) above if Seller's Board of
Directors determines, in the exercise of its good faith judgment,
after consultation with outside counsel, as to its fiduciary
duties under applicable law, that to fail to take such action
would be contrary to such fiduciary duties; (ii) nothing in this
Section 6.8 shall prohibit Seller from acting in any manner
whatsoever in connection with an Alternative Transaction to the
extent required by any Law or Order in connection with the
matters set forth on Schedule 3.2; and (iii) none of Seller or
any of its Representatives shall be prohibited from discussing or
furnishing information regarding the transactions contemplated by
this Agreement with or to any of Seller's bank lenders, licensors
and customers in connection with obtaining or making, as the case
may be, the Seller Consents and Filings, or taking any actions in
connection with the operation of Seller's business in the
ordinary course with such persons. Seller shall promptly notify
Buyer upon becoming aware (A) of any inquiries or proposals to
enter into an Alternative Transaction, (B) of the request for non-
public information from Seller or its Representatives in
connection with an Alternative Transaction, and (C) that any
person or entity is seeking to initiate negotiations with regard
to an Alternative Transaction and, with respect to each such
proposal, the person or entity who shall have made the proposal
and the material terms and conditions thereof. In addition, each
time, if any, that the Board of Directors of Seller shall
determine that it must take any of the actions described in
clause (b) above, it shall promptly notify Buyer of such
determination, and, to the extent consistent with its fiduciary
duties under applicable law and permitted by any Law or Order in
connection with the matters set forth on Schedule 3.2, shall
cause its Representatives, including its financial and legal
advisors, to negotiate with Buyer to make such adjustments in the
terms and conditions of this Agreement as would enable Seller to
proceed with the transactions contemplated herein on such
adjusted terms.
Section 6.09 No Assumption of Labor Liabilities. Buyer shall
not assume any labor agreements to which Seller is a party or any
liabilities thereunder or the benefit plans or any other
liabilities which Seller may have with respect to any union or,
except as provided in Section 6.2(a), any employees of Seller
(including former employees) either on the date hereof or the
date of the Closing, including liabilities of Seller with respect
to the payment of wages or pensions to any such employees which
may have accrued, vested or been earned prior to the Closing and
liabilities of Seller to contribute to pension or other fringe
benefit plans with respect to any such employees on account of
service to Seller by such employees prior to the Closing.
Section 6.10 Seller's Non-Compete. Without the express written
consent of Buyer, neither Seller nor any of its subsidiaries
shall, at any time during the three-year period immediately
following the Closing Date, directly or indirectly, own, manage,
or participate in the ownership or management of any business,
entity or enterprise engaged in, or participate or engage in, the
manufacture, distribution and sale of women's costume jewelry
products; provided; that the foregoing shall not prohibit Seller
from (i) owning as a passive investment 5% or less of the
outstanding equity or debt interests of any publicly traded
entity, (ii) the manufacture, distribution and sale of women's
costume jewelry products pursuant to (A) the License Agreement
dated as of July 1, 1998 between Seller and K.C.P.L., Inc., as
amended to date, and as the same may be amended (except that
there shall be no extension of the term thereof), and (B) the
License Agreement dated April 12, 1999 between Seller and Xxxxx
Karan Studio, as amended to date, and as the same may be amended
(except that there shall be no extension of the term thereof),
and (iii) the distribution and sale of women's costume jewelry
products in Seller's retail factory outlets stores. Seller
further agrees that the terms and conditions of this Section 6.10
are reasonable and necessary for the protection of the legitimate
interests of Buyer and to prevent loss or damage to Buyer as a
result of action taken by Seller or its subsidiaries. Seller
agrees that neither Seller nor any of its subsidiaries will, for
a period of two years after the Closing Date, solicit the
employment of any person now employed by Seller if such Person is
then employed by Buyer, American Biltrite Inc. ("ABI"), or any
subsidiary of ABI; provided, that ABI or such subsidiary, as
applicable, shall have succeeded to Buyer's right, title and
interest in and to, and ABI or such entity, as applicable, is
engaged in the ownership and operation of the Transferred Assets;
and provided further, that the foregoing shall not prevent Seller
from hiring any such employee who approaches Seller on his or her
own initiative in response to a general newspaper, magazine or
similar solicitation by Seller (and such solicitation shall not
constitute a prohibited solicitation under this Section 6.10).
The parties do not intend this Section 6.10 to prohibit Seller
from, in any manner whatsoever, owning, managing, or
participating in the ownership or management of, any business,
entity or enterprise engaged in, or participating or engaging in,
the manufacture, distribution or sale of any products other than
women's costume jewelry products, including, without limitation,
the sale of such other products to its past, present and future
customers.
Section 6.11 Waiver of Bulk Sales Requirement. Each of the
parties waives compliance with any applicable bulk sales laws,
including, without limitation, any applicable Uniform Commercial
Code Bulk Transfer provisions. Seller agrees to indemnify and
save harmless Buyer from and against all claims made by creditors
of Seller, including reasonable out-of-pocket expenses and
attorneys' fees incurred by Buyer in defending against such
claims, except those expressly assumed by Buyer pursuant hereto.
Section 6.12 No Change to Severance Arrangements. From and
after the date of this Agreement and through the earlier of the
Closing or the termination of this Agreement pursuant to Section
8, Seller shall not, without the prior written consent of Buyer,
adopt or enter into any plan, program, arrangement or agreement
relating to or providing for severance or similar benefits
covering any employee of Seller whose duties solely relate to the
operation of Seller's women's costume jewelry business, or amend,
alter or modify or amend any of the Severance Arrangements in any
manner that would increase the severance or similar benefits
provided for therein.
Section 6.13 Treatment of Inventory. From and after the date
of this Agreement and through the earlier of the Closing or the
termination of this Agreement pursuant to Section 8, Seller shall
use its commercially reasonable efforts to maintain the Inventory
counted at the physical count provided for in Schedule 1.4 and
not shipped to customers from time to time in the ordinary course
of business in substantially the same condition of such Inventory
at the time of the physical count provided for in Schedule 1.4.
Section 6.14 Bills of Sale for On Order Goods. No later than
three (3) business days after any On Order Goods shall have been
delivered to Seller at its facility located in Taunton,
Massachusetts, Seller shall execute and deliver to Buyer a On
Order Goods Xxxx of Sale, and attached to which shall be a list
of the On Order Goods that shall have been delivered to Seller.
Section 6.15 Shrink.
(a) As of the last day of the Transition Period, the
Seller shall (i) conduct a physical count of (A) the items of
Inventory, including On Order Goods, and all items of women's costume
jewelry products returned by customers that are physically
located at the Seller's Taunton, Massachusetts warehouse
(including, without limitation, those items of women's costume
jewelry purchased by Buyer pursuant to Section 6.1(e)) and (B)
all other items of women's costume jewelry that shall have been
purchased by Buyer from vendors and delivered to the Taunton,
Massachusetts warehouse that shall not have been shipped to
customers during the Transition Period, and (ii) develop a list
of such items by stock keeping unit (SKU). Such list shall also
include those of the foregoing items that are located at a
facility of a manufacturing, packaging or other subcontractor,
import broker, or other third party facility. Seller shall
categorize such items as Xxxx Xxxxx goods, AK II goods, Guess
goods and Private Label Program goods. Buyer shall have the
opportunity to be present at such physical count. Seller shall
assign to each of the items on the list referred to in clause
(ii) above a value equal to Swank's standard cost, Swank's
manufactured cost or Swank's closeout cost (as each such term is
defined in Schedule 1.4), as applicable, of such item and shall
calculate an aggregate of Swank's standard cost, Swank's
manufactured cost and Swank's closeout cost, as applicable, of
all such items (the "Aggregate Physical Count Value"). Seller
shall deliver to Buyer the list referred to in clause (ii) above
within ten (10) business days after the end of the physical
count.
(b) Within ten (10) business days after the end of the physical
count, Seller shall prepare and deliver to Buyer a list by SKU of
the items described in clauses (i) and (ii) of the first sentence
Of Section 6.15(a) as reflected on Seller's books and records.
Seller shall assign to each of the items on the list referred to
in this Section 6.15(b) a value equal to Swank's standard cost of
such item and shall calculate an aggregate of Swank's standard
cost, Swank's manufactured cost and Swank's closeout cost of all
such items (the "Aggregate Book Value").
(c) In the event that the Aggregate Book Value exceeds the
Aggregate Physical Count Value (the "Excess") by more than five
percent (5%), then, Seller shall, within ten (10) days of the
delivery of the lists referred to in Sections 6.15(a) and (b),
pay to Buyer an amount equal to one-half of the Excess. In the
event that the Excess shall be five percent (5%) or less, then
Seller shall not be required to pay to Buyer any amounts in
respect thereof and Seller shall have no liability or obligation
with respect to such excess.
(d) Buyer may object to Seller's determinations or actions in
connection with the matters contemplated by this Section 6.15 by
written notice to Seller (a "Shrink Objection Notice") no later
than ten (10) days after receipt by Buyer of the lists referred
to in Sections 6.15(a) and (b). Each of Buyer and Seller shall,
in good faith, use reasonable efforts to resolve any disputes
regarding such determinations or actions. If a final resolution
is not reached within thirty (30) days after Buyer has submitted
a Shrink Objection Notice, Buyer and Seller shall submit any
unresolved objections for resolution to a nationally recognized
independent accounting firm mutually acceptable to Seller and
Buyer, who shall, within thirty (30) days of such submission,
determine and report to Buyer and Seller upon the remaining
objections. Such report shall be final, binding and conclusive
on Buyer and Seller, and the amount of the payment with respect
to any Excess, if any, shall be adjusted accordingly. The fees
and expenses incurred by such firm shall be borne equally by both
parties.
(e) From the date hereof until the last day of the Transition
Period (as hereinafter defined), Seller shall maintain its books
and records as to the matters contemplated by this Section 6.15
complete and correct in all material respects consistent with its
past practices.
Section 6.16 Certain Sublease Procedures. Seller and Buyer
shall use their respective commercially reasonable efforts to
agree upon the terms and conditions of the Sublease as promptly
as practicable after the date hereof. Seller and Buyer
acknowledge that the landlord of the Subleased Premises may
require, as a condition to its consent to the Sublease (as
contemplated by Schedule 3.2), that Seller and Buyer execute the
Sublease and provide such landlord with a signed copy thereof.
In such event, Seller and Buyer shall use their commercially
reasonable efforts to do so; provided, that any such signed
Sublease shall provide that it is conditional upon the receipt of
the written consent of the landlord to the Sublease; and further,
provided, that such Sublease shall not be effective or be deemed
fully delivered, notwithstanding such landlord's written consent,
unless and until the transactions contemplated by this Agreement
shall have been consummated in accordance with the terms hereof.
ARTICLE VII
TRANSITION PERIOD
Section 7.01 Transition Services. Buyer shall retain Seller,
and Seller shall accept the retention, as an independent
contractor, to provide the services set forth on Schedule 7.1
(collectively, the "Transition Services"), commencing on the
Closing Date and ending on December 31, 2001, or on such earlier
date as determined in accordance with Schedule 7.1 (the
"Transition Period").
Section 7.02 Consideration. As consideration for rendering the
Transition Services, Buyer shall pay to Seller, in accordance
with Schedule 7.1, by wire transfer in immediately available
funds in accordance with wire transfer instructions provided by
Seller to Buyer, the amounts determined in accordance with
Schedule 7.1 (the "Transition Services Consideration").
Section 7.03 Personnel.
(A) Seller shall use its employees to provide the Transition
Services and such Transition Services shall be provided solely
during the normal business hours of Seller. Buyer may request,
in writing, that overtime be provided in connection with the
Transition Services and Seller shall use its commercially
reasonable efforts to comply with such request. Buyer shall
reimburse Seller for any and all expenses arising from any
overtime services provided by Seller.
(B) Each of Buyer and Seller shall designate responsible contact
persons who shall have the authority to deal with and resolve
operational issues arising hereunder on such party's behalf.
(C) All employees and Representatives of Seller or its
affiliates providing services to Buyer under this Article 7 shall
be deemed for purposes of all compensation and employee benefits
to be employees or Representatives solely of Seller or its
affiliates and not to be employees or Representatives of Buyer or
its affiliates. Seller shall have sole responsibility for
compliance with all laws relating to the employer/employee
relationship between Seller and its employees providing the
services, including, but not limited to, state and/or local laws
on hours of labor, wages, worker's compensation, unemployment
compensation, insurance and social and health security benefits.
Section 7.04 Insurance. During the Transition Period, Buyer
shall maintain property damage, fire, casualty and theft
insurance with respect to the Inventory.
Section 7.05 Expenses. Buyer shall be responsible for all
insurance, freight, taxes and other charges relating to the
Inventory during the Transition Period. If Seller is required to
pay any such expenses on behalf of Buyer, Buyer shall, within
five (5) days of receiving written notice of such charge,
reimburse Seller for such expenses by wire transfer in
immediately available funds in accordance with wire transfer
instructions provided by Seller to Buyer.
Section 7.06 Business Practices. Unless otherwise agreed to in
writing by Buyer and Seller, all Transition Services provided by
Seller pursuant to this Article 7 shall only require Seller to
use its commercially reasonable efforts to perform such services
using the ordinary business practices of Seller consistent with
Seller's past practices in performing such services.
7.7 No Liability of Seller. None of Seller or any of the
Seller Indemnified Parties (as hereinafter defined) shall be
liable or responsible to Buyer or any other person or entity in
respect of any Claims (as hereinafter defined) based on, arising
out of, or otherwise in respect of the Transition Services
("Transition Services Liabilities"), other than Claims caused
solely by Seller's gross negligence or willful misconduct or by
Seller's breach of Section 7.6 hereof (the "Indemnifiable
Transition Services Liabilities").
ARTICLE VIII
TERMINATION
Section 8.01 Termination. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may be
terminated and the transactions contemplated hereby abandoned at
any time prior to Closing as follows:
(A) by mutual consent of Buyer and Seller;
(B) by either Buyer or Seller if the Closing shall not have
occurred on or before August 10, 2001, or such later date as may
be agreed upon by Buyer and Seller in writing.
Section 8.02 Effect of Termination. If this Agreement is
terminated and the transactions contemplated hereby are not con
summated as described above, this Agreement shall become void and
of no further force and effect, except that (a) the provisions of
Section 10.1 relating, among other things, to confidentiality,
shall survive the termination of this Agreement and (b) in the
event of a termination pursuant to Section 8.1(b), neither party
hereto shall be relieved from any liabilities or damages arising
out of any breach by any such party of Section 6.4 or Section
6.7.
ARTICLE IX
INDEMNIFICATION; FINDERS
Section 9.01 Indemnification by Seller. Subject to Section 7.7
and Section 9.4, Seller shall indemnify, defend and hold Buyer
and its affiliates and its and their respective members,
partners, officers, directors, employees, affiliates and agents
(the "Buyer Indemnified Parties") harmless from and against any
and all losses, liabilities, claims, demands, investigations,
damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) of every kind,
nature and description, and whether in respect of a third party
claim or otherwise (collectively, "Claims") to which any of the
Buyer Indemnified Parties becomes subject based upon, or arising
out of or otherwise in respect of (a) any breach of any
representation, warranty, covenant or agreement of Seller
contained in this Agreement or the other Seller Documents, (b)
the Excluded Seller Liabilities and (c) the Indemnifiable
Transition Services Liabilities; provided, that the Buyer
Indemnified Parties shall be entitled to indemnification under
this Agreement in respect of clause (a) above only in the event
and to the extent that losses, liabilities, damages, costs and
expenses incurred by them with respect to all Claims exceed, in
the aggregate, $60,000; and further, provided, that the total
liability of Seller hereunder in respect of clauses (a) and (c)
above shall not exceed the sum of the Inventory Purchase Price
and the Accounts Receivable Purchase Price (as adjusted pursuant
to the terms of this Agreement).
Section 9.02 Indemnification by Buyer. Subject to Section 9.4,
Buyer shall indemnify, defend and hold Seller and its affiliates
and its and their respective members, partners, officers,
directors, employees, affiliates and agents (the "Seller
Indemnified Parties") harmless from and against any and all
Claims to which any of the Seller Indemnified Parties becomes
subject, based upon, arising out of or otherwise in respect of
(a) any breach of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement or the other Buyer
Documents, (b) the Assumed Liabilities, (c) the Buyer Licenses,
(d) the Buyer Excluded Liabilities and (e) the Transition
Services Liabilities other than the Indemnifiable Transition
Services Liabilities.
Section 9.03 Notice and Opportunity to Defend. Promptly after
receipt by either party hereto of notice of the commencement or
assertion of any Claim, such party (the "Indemnified Party")
shall give the other party who may become obligated to provide
indemnification hereunder (the "Indemnifying Party") written
notice describing such Claim (including the amount, if known and
quantifiable) in reasonable detail; provided, however, that any
delay or failure by an Indemnified Party to provide such notice
shall not impair or affect its rights hereunder or the obligation
of the Indemnifying Party with respect to such Claim, except and
solely to the extent the Indemnifying Party can demonstrate that
it was prejudiced by the Indemnified Party's delay in giving or
failure to give such notice. Such Indemnifying Party shall have
the right, at its option, to compromise or defend, at its own
expense and by its own counsel reasonably acceptable to the
Indemnifying Party (provided, that Jenkens & Xxxxxxxxx Xxxxxx
Xxxxxx LLP and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall be
counsel reasonably acceptable to all Indemnified Parties), any
such matter involving the asserted liability of the Indemnified
Party; provided, however, that no Indemnifying Party shall
compromise or settle any asserted Claim (except a Claim that is
settled or compromised for monetary consideration or damages only
payable solely by other than the Indemnified Party, such
compromise or settlement provides for a full and unconditional
release of the claims asserted against the Indemnified Party and
its affiliates and there is no finding or admission of any
violation of Law or any violation of the rights of any person and
no effect on any other Claim that may be made against the
Indemnified Party) without the prior written consent of the
Indemnified Party (such consent not to be unreasonably withheld).
If any Indemnifying Party shall undertake to compromise or defend
any such asserted Claim, it shall promptly notify the Indemnified
Party of its intention to do so, and shall diligently defend
against such claims with counsel reasonably acceptable to the
Indemnified Party. The Indemnified Party agrees to reasonably
cooperate with the Indemnifying Party and its counsel in the
compromise of, or defense against, any such asserted Claim. No
Indemnified Party shall compromise or settle any asserted Claim
(except a Claim settled or compromised for monetary consideration
or damages only payable solely by other than the Indemnifying
Party, such compromise or settlement provides for a full and
unconditional release of the claims asserted against the
Indemnifying Party and its affiliates and there is no finding or
admission of any violation of Law or any violation of the rights
of any person and no effect on any other Claims that may be made
against the Indemnified Party) without the prior written consent
of the other Indemnifying Party. In any event, the Indemnified
Party shall have the right at its own expense and by its own
counsel to participate in the defense of such asserted liability;
provided, however, that if after having notified the Indemnified
Party of its intention to assume the defense of a Claim or
asserted liability as aforesaid, the Indemnifying Party fails to
do so in a reasonably prompt and diligent manner or the
Indemnified Party is advised in writing by counsel reasonably
satisfactory to the Indemnifying Party that there probably is a
conflict between the interests of the Indemnified Party and the
Indemnifying Party with respect to such defense, then in either
such case the Indemnifying Party shall be responsible for the
reasonable fees and expenses of one firm of separate counsel for
the Indemnified Party.
Section 9.04 Finders. Each of the parties hereto represents to
the other that no finder, broker, agent or other intermediary has
acted on behalf of such party in connection with the introduction
or bringing together of the parties hereto, or the negotiation or
consummation of the transactions contemplated by this Agreement
(except for the financial advisors of each party identified on
Schedule 9.4 hereto), and each party shall indemnify the other
and hold it harmless against all fees, losses, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities
and damages, if any, arising from the employment or other
engagement by such party or services rendered to such party (or
any allegation having a reasonable basis of any such employment
or other engagement or services) of any finder, broker, agent or
other intermediary (except for the financial advisors of each
party identified on Schedule 9.4 hereto) in such connection.
Section 9.05 Survival. The representations and warranties of
the parties contained in this Agreement and the parties'
indemnification obligations under this Article 9 shall survive
for a period of two (2) years after the Closing Date. The
covenants and agreements of Seller and Buyer contained in this
Agreement shall survive the Closing and shall be fully effective
and enforceable for the periods therein indicated or where not
indicated, for a period of two (2) years after the Closing Date,
and the parties' indemnification obligations under this Article 9
with respect thereto shall survive for a period of two (2) years
after the Closing Date (or such longer period for which such
covenant or agreement shall be effective). With respect to any
other matters for which an Indemnified Party may seek
indemnification under this Article 9, an Indemnifying Party will
have liability (for indemnification or otherwise) for a period of
two (2) years after the Closing Date. Notwithstanding the
foregoing, that if any Indemnified Party shall have given to an
Indemnifying Party any notice on or prior to the expiration date
of such Indemnifying Party's indemnification obligations under
this Article 9 of the commencement or assertion of any Claim or
discovery of any facts upon which an Indemnified Party expects in
good faith to make a claim for indemnification under this
Agreement as contemplated by the first sentence of Section 9.3,
the limitations set forth in this Section 9.5 shall not be
applicable in respect of the matters set forth in such notice.
Section 9.06 Exclusive Remedy. The provisions of Article 9 of
this Agreement contain the exclusive remedies of the parties
hereto and the Buyer Indemnified Parties and Seller Indemnified
Parties with respect to any breach or alleged breach of any
representation, warranty or covenant contained herein and with
respect to any claim otherwise arising from or relating to the
transactions contemplated by this Agreement.
ARTICLE X
MISCELLANEOUS COVENANTS AND AGREEMENTS
Section 10.01 Confidentiality; Disclosure.
(A) In connection with the transactions contemplated by this
Agreement, each of Seller, Buyer and their respective
Representatives have been or will be furnished with or have
access to certain Proprietary Information (as hereinafter
defined) relating to the other parties. Except as expressly
provided herein, each party hereby agrees with regard to the
Proprietary Information of the other party, unless otherwise
expressly consented to in each case in advance in writing by
President of Seller, with regard to Seller, and President of ABI,
with regard to Buyer, (i) to keep, and cause its Representatives
to keep, all oral or written information, documentation and
materials (regardless of the medium in which maintained or
stored), that heretofore have been, or contemporaneously herewith
or hereafter are furnished to Buyer, Seller, or any of their
respective Representatives, together with all analyses,
compilations, studies or other documents, records or data
prepared by Buyer, Seller or any of their respective
Representatives which contain or otherwise reflect, or are
generated from, such information and documents ("Proprietary
Information"), confidential and not disclose or reveal any
Proprietary Information to any person other than its
Representatives who are involved in the transactions contemplated
by this Agreement and (ii) not use the Proprietary Information
for any purpose other than in connection with the transactions
contemplated by this Agreement. For purposes hereof, Proprietary
Information includes all analyses, compilations, studies,
summaries or extracts of any information or materials which
contain, are derived from or otherwise reflect Proprietary
Information, whether prepared by any party hereto or its
Representatives. Each party shall be responsible for any breach
of this Section 10.1(a) by any of its Representatives. For
purposes hereof, the term "Proprietary Information" shall not
include information which (i) is presently available to the
public, or hereafter shall become available to the public other
than as a result of a disclosure by a party or its
Representatives in breach of this Agreement, or (ii) becomes
available to Seller, on the one hand, or Buyer, on the other
hand, from a source other than the other parties or their
respective Representatives; provided, that such source does not
provide such information in violation of a confidentiality
obligation with respect to such information, which
confidentiality obligation is known to the party receiving the
information after making reasonable inquiry as to the existence
of such confidentiality obligation at the time such information
is disclosed.
(B) From and after the date hereof to the Closing, each of Buyer
and Seller and their respective Representatives will not, without
the prior written consent of the other party, (i) make any
release to the press or other public disclosure, or (ii) make any
statement with regard to this Agreement or the transactions
contemplated hereby, to any competitor, customer, client,
licensor, licensee or supplier or other person or entity, other
than to the parties' respective Representatives. Each party
shall be responsible for the breach of the foregoing by any of
its Representatives. As used in this Agreement, the term
"Representatives" means a party's financial advisors, counsel,
independent public accountants, bankers, financiers, and other
representatives (with respect to Buyer, employees of ABI shall be
considered Representatives of Buyer for purposes of this
Agreement).
(C) The restrictions in Section 10.1(b) shall not prohibit the
disclosure of any information by Buyer or Seller, in connection
with obtaining the consents, approvals, agreements,
authorizations, notices, filings or registrations to be obtained
by Buyer or Seller, as the case may be, pursuant to this
Agreement, or the disclosure by Buyer or Seller of information
required by law, rule or regulation (including, without
limitation, the rules and regulations of the Securities and
Exchange Commission and any stock exchange (including, without
limitation, The American Stock Exchange, Inc. and The Nasdaq
Stock Market, Inc.) upon which any of the securities of Buyer or
Seller are listed), or legal process; provided, that with respect
to any information which is disclosed to a third party in
accordance with these provisions, the disclosing party,
consistent with its legal obligations, shall use its commercially
reasonable efforts to obtain assurances from the recipient of
such information that such information will be treated as
confidential.
Section 10.02 Notices. Any and all notices or other
communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been
duly given if given by personal delivery, by certified or
registered mail, postage prepaid, return receipt requested, or by
facsimile with verified answer back or verified receipt, or by a
recognized major overnight delivery service. Any such notice
shall be deemed given when personally delivered against written
receipt therefor, three (3) Business Days after posting, postage
prepaid, in the mails of the United States of America, upon
receipt of verified answer back with respect to transmission by
facsimile with verified answer back, or upon sending with respect
to delivery by facsimile with verified receipt (in each case with
the original sent postage prepaid by first class mail), or, with
respect to delivery by major overnight delivery service, upon its
receipt against written receipt therefor, at the following
addresses or to such other address or to such other addressee as
any party may from time to time specify by notice to the other
party given as aforesaid:
If to Buyer:
K&M Associates L.P.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx, President
AIMPAR, Inc.
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Seller:
Swank, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxx, President
Facsimile No.: (000) 000-0000
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Section 10.03 Access. Subject to the terms of Section 10.1,
until the Closing, Seller shall (a) give to Buyer and its
Representatives reasonable access during normal business hours
and upon reasonable notice to all of the records, plants,
properties and personnel of Seller relating to the Transferred
Assets and (b) will furnish all such information as Buyer or its
Representatives shall reasonably request relating to the
Transferred Assets and to cooperate with Buyer and its
Representatives in connection with their respective review of
such information.
Section 10.04 Miscellaneous.
(A) Entire Agreement. This Agreement and the Schedules and
Exhibits hereto, constitute the entire agreement and set forth
the entire understanding of the parties with respect to the
subject matter hereof, supersede all prior agreements, covenants,
arrangements, letters, communications, representations or
warranties, whether oral or written, by any officer, employee or
representative of either party, relating to the subject matter
hereof, and may not be modified or amended, except by a written
agreement specifically referring to this Agreement signed by the
parties hereto and any other party to be charged.
(B) No Waiver. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar
nature. No failure on the part of any party to exercise, and no
delay in exercising any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
(C) Assignment. Neither party may transfer or assign this
Agreement or its rights hereunder or delegate its performance
hereunder without the prior written consent of the other party,
and any purported assignment without such consent shall be void
and of no effect; provided, that Buyer may assign any and all of
its rights hereunder to ABI or any subsidiary of ABI upon prior
written notice to Seller in accordance with Section 10.2, but
without the prior written consent of Seller; provided, that if
Buyer assigns its rights hereunder to a subsidiary of ABI, then
ABI shall enter into a guarantee, in form and substance
satisfactory to Seller, which shall provide that ABI will
guarantee all of the liabilities and obligations hereunder of
such subsidiary. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
permitted successors and assigns.
(D) Headings. The Section and paragraph headings contained
herein are for the purposes of convenience only and are not
intended to define or limit the contents of any Section or
paragraph.
(E) Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, all legal and other costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, except as otherwise specifically
provided herein or therein.
(F) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same
instrument.
(G) Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the
laws of the State of New York, without regard to principles of
conflicts of law (other than Section 5-1401 of the New York
General Obligations Law). Seller and Buyer each hereby submits
to the jurisdiction of any court of the State of New York sitting
in New York County or the United States District Court for the
Southern District of New York for the purpose of any suit,
action, or other proceeding arising out of this Agreement or any
of the transactions contemplated hereby, which is brought by or
against it, and (i) irrevocably agrees that all claims in respect
of any such suit, action or proceeding may be heard and
determined in any such court, (ii) to the extent that it has
acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein,
such immunity is hereby waived to the fullest extent permitted by
law and (iii) agrees not to commence any action, suit or
proceeding relating to this Agreement or any transaction except
in such court. Seller and Buyer hereby waives, and agrees not to
assert in any such suit, action or proceeding, in each case, to
the fullest extent permitted by applicable law, any claim that
(a) it is not personally subject to the jurisdiction of any such
court, (b) it is immune from any legal process (whether through
service or notice, attachment prior to judgment attachment in aid
of execution, execution or otherwise) with respect to it or its
property (and further irrevocably agrees that service of process
and all other legal process may be delivered in accordance with
the provisions of Section 10.2 above and that such service shall
be sufficient for all purposes of applicable law), or (c)
jurisdiction or venue for any such suit, action or proceeding is
improper or that any such suit, action or proceeding is brought
in an inconvenient forum.
(H) No Third Party Beneficiaries. Nothing herein, express or
implied, is intended to or shall confer upon any person or entity
including, without limitation, any employee, contractor, vendor
or distributor of either Seller or Buyer, or any labor
organization, other than the parties hereto, the Buyer
Indemnified Parties and Seller Indemnified Parties, any legal or
equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.
[Signatures appear on next page]
IN WITNESS WHEREOF, the parties have signed this
Agreement to be duly executed as of the day and year first above
written.
SWANK, INC.
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: President
K&M ASSOCIATES L.P.
By: AIMPAR, INC., its general partner
By:/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
SCHEDULE 1.4
Inventory Purchase Price
Seller has conducted a physical count of the Inventory
(other than items of Inventory and packaging and displays (as
hereinafter defined) that are on order or in transit
(collectively, "On Order Goods")) as of June 4, 2001. Seller
shall (i) develop a list of such Inventory by stock keeping unit
(SKU) for all goods other than items of Inventory that have been
classified by Seller on its books and records as closeout
inventory (which shall be categorized by Seller's closeout codes,
as reflected on Seller's books and records in accordance with its
past practices) ("Closeout Goods") and (ii) prepare an initial
calculation based, among other things, upon such list (the
"Initial Inventory Purchase Price"). Buyer has had the
opportunity to be present at such physical count.
Seller shall categorize the Inventory as Sourced Goods,
Manufactured Goods (in each case, excluding Closeout Goods) and
Closeout Goods and, within each such category, shall
subcategorize the Inventory (including On Order Goods) as Xxxx
Xxxxx goods, AK II goods, Guess goods and Private Label Program
goods. Seller shall further subcategorize such Inventory within
the Sourced Goods and Manufactured Goods categories as In-Line
and Out-of-Line, in each case as reflected on Seller's books and
records in accordance with past practices. All On Order Goods
shall be categorized as Sourced Goods and In Line. Discontinued
goods shall be categorized as Out-of-Line. Packaging and
displays shall be categorized as Sourced Goods.
The Inventory Purchase Price (subject to adjustment as set
forth below) shall be the sum of the following amounts:
For Sourced Goods
1. 47.5% of Swank's standard cost (as hereinafter defined) of
In Line Xxxx Xxxxx goods; plus
2. 38.0% of Swank's standard cost of Out-of-Line Xxxx Xxxxx
goods; plus
3. 47.5% of Swank's standard cost of On Order Xxxx Xxxxx goods;
plus
4. 20.0% of Swank's standard cost of Xxxx Xxxxx packaging and
displays; plus
5. 66.5% of Swank's standard cost of In-Line AK II goods; plus
6. 38.0% of Swank's standard cost of Out-of-Line AK II goods;
plus
7. 66.5% of Swank's standard cost of On Order AK II goods; plus
8. 30.0% of Swank's standard cost of AK II packaging and
displays; plus
9. 66.5% of Swank's standard cost of In-Line Guess goods; plus
10. 38.0% of Swank's standard cost of Out-of-Line Guess goods;
plus
11. 66.5% of Swank's standard cost of On Order Guess goods; plus
12. 30.0% of Swank's standard cost of Guess packaging and
displays; plus
13. 66.5% of Swank's standard cost of In-Line Private Label
Program goods; plus
14. 38.0% of Swank's standard cost of Out-of-Line Private Label
Program goods.
For Manufactured Goods
1. 47.5% of Swank's manufactured cost (as hereinafter defined)
of In Line Xxxx Xxxxx goods; plus
2. 38.0% of Swank's manufactured cost of Out-of-Line Xxxx Xxxxx
goods; plus
3. 66.5% of Swank's manufactured cost of In-Line AK II goods;
plus
4. 38.0% of Swank's manufactured cost of Out-of-Line AK II
goods;
5. 66.5% of Swank's manufactured cost of In-Line Guess goods;
plus
6. 38.0% of Swank's manufactured cost of Out-of-Line Guess
goods; plus
7. 66.5% of Swank's manufactured cost of In-Line Private Label
Program goods; plus
8. 38.0% of Swank's manufactured cost of Out-of-Line Private
Label Program goods.
For Closeout Goods.
38.0% of Swank's closeout cost of Xxxx Xxxxx goods, AK II
goods, Guess goods and Private Label Goods.
The term "Swank's standard cost" shall mean, for each SKU of
Inventory categorized as Sourced Goods Inventory, the sum of (a)
the purchase price of goods charged by the vendors from which
Seller acquires the goods, (b) freight, duty, import and similar
charges, (c) costs of packaging the goods, including, without
limitation, direct labor costs and the costs of packaging
(packaging includes, without limitation, earring cards and
similar items), and (d) indirect costs associated with the goods,
including sourcing, inspections and other personnel, facility and
maintenance costs, as reflected on Seller's books and records,
including, without limitation, accounting books and records, in
accordance with past practices; provided, that the term "Swank's
standard cost," when used in reference to On Order Goods, shall
not include the costs described in clause (c) above in this
paragraph. The average amount of indirect costs included the
portion of the Inventory Purchase Price calculated with reference
to Sourced Goods Inventory does not exceed 10% of the total
landed cost of the Sourced Goods Inventory. After giving effect
to the percentage discounts set forth above in the calculation of
the portion of the Inventory Purchase Price based on Sourced
Goods Inventory, the average amount of indirect costs included in
the portion of the Inventory Purchase Price shall not exceed 5%
of the total landed cost of such Sourced Goods Inventory. Landed
cost shall mean and include the purchase price of the applicable
goods charged by vendors plus all other costs associated with
landing the goods in the United States. Prior to the Closing,
Seller will reflect a standard cost for On Order goods in
accordance with past practices. The term "packaging and
displays" shall include, without limitation, all packaging,
fixtures, labels, sales and promotional materials, and other
supplies.
The term "manufactured cost" shall mean, for each SKU of
Inventory manufactured by Seller, the sum of (a) direct costs of
raw materials, (b) direct labor costs, including, without
limitation, costs of packaging the goods (packaging includes,
without limitation, earring cards and similar items), and (c)
overhead costs, all as determined by Seller using a standard cost
method of inventory valuation consistent with its past practices,
as reflected on Seller's books and records, including, without
limitation, accounting books and records..
The term "closeout cost" shall mean, for each item of
Closeout Inventory, the closeout value placed on such item (in
each case at a reduction from the original standard cost or
manufactured cost of such item), all as determined by Seller
using a standard cost method of inventory valuation consistent
with its past practices, as reflected on Seller's books and
records, including, without limitation, accounting books and
records.
The Inventory Purchase Price shall be reduced by the
applicable percentage of Swank's standard cost of items of
Inventory that shall have been counted during the physical count
but that shall have been shipped by Seller to its customers prior
to the Closing Date.
Seller shall provide Buyer full access to Sellers' books and
records, including, without limitation, accounting books and
records, relating to Seller's calculations contemplated by this
Schedule 1.4.
At the Closing, Seller shall deliver to Buyer a certificate
certified by the Chief Financial Officer of Seller setting forth
in reasonable detail Seller's calculation of the Initial
Inventory Purchase Price, including, without limitation, the
calculation of any reductions in the estimated Inventory Purchase
Price based upon the shipment of items of Inventory after the
physical count. At the Closing, Seller's calculation of the
Initial Inventory Purchase Price shall be paid to Seller pursuant
to Section 1.4.
No later than ten business days after the Closing Date,
Seller's Chief Financial Officer shall deliver to Buyer a final
calculation of Inventory Purchase Price as of the close of
business on the date immediately preceding the Closing Date. In
the event that the final calculation of the Inventory Purchase
Price shall be greater than the Initial Inventory Purchase Price,
then, unless Buyer has delivered an Inventory Objection Notice
(as hereinafter defined) as provided below, within fifteen (15)
days of delivery of the final calculation of the Inventory
Purchase Price, Buyer shall pay to Seller an amount equal to the
difference between the final calculation of the Inventory
Purchase Price and the Initial Inventory Purchase Price by wire
transfer of immediately available funds in accordance with wire
transfer instructions provided by Seller to Buyer, an amount
equal to such excess. In the event that the final calculation of
the Inventory Purchase Price shall be less than the Initial
Inventory Purchase Price, then unless Buyer has delivered an
Inventory Objection Notice as provided below, within fifteen (15)
days of delivery of the final calculation of the Inventory
Purchase Price, Seller shall pay to Buyer an amount equal to the
difference between the Initial Inventory Purchase Price and the
final calculation of the Inventory Purchase Price by wire
transfer of immediately available funds in accordance with wire
transfer instructions provided by Buyer to Seller.
However, Buyer may object to the calculation of the Initial
Inventory Purchase Price and/or the Inventory Purchase Price (in
each case, including, without limitation, the categorization by
Seller of any item of Inventory into any category or subcategory)
by written notice to Seller (the "Inventory Objection Notice") no
later than fifteen (15) days after the delivery by Seller to
Buyer of the final calculation of the Inventory Purchase Price.
Each of Buyer and Seller shall, in good faith, use reasonable
efforts to resolve any disputes regarding such determination. If
a final resolution is not reached within thirty (30) days after
Buyer has submitted its Inventory Objection Notice, Buyer and
Seller shall submit any unresolved disputes for resolution to a
nationally recognized independent accounting firm mutually
acceptable to Seller and Buyer, who shall, within thirty (30)
days of such submission, determine and report to Buyer and Seller
upon the remaining objections and the Inventory Purchase Price
shall be adjusted accordingly. Such report shall be final,
binding and conclusive on Buyer and Seller. The fees and
expenses incurred by such firm shall be borne equally by both
parties. If the Initial Inventory Purchase Price and/or the
Inventory Purchase Price are adjusted after the delivery of an
Inventory Objection Notice (as so adjusted, the "Adjusted
Inventory Purchase Price"), then (A) if the Inventory Purchase
Price exceeds the Adjusted Inventory Purchase Price, then within
three (3) business days of the determination of the Adjusted
Inventory Purchase Price (as described above) Seller shall pay
Buyer an amount equal to the difference between the Inventory
Purchase Price and the Adjusted Inventory Purchase Price by wire
transfer of immediately available funds in accordance with wire
transfer instructions provided by Buyer to Seller, or (B) if the
Inventory Purchase Price is less than the Adjusted Inventory
Purchase Price, then within three (3) business days of the
determination of the Adjusted Inventory Purchase Price (as
described above), Buyer shall pay to Seller an amount equal to
the difference between the Adjusted Inventory Purchase Price and
the Inventory Purchase Price by wire transfer of immediately
available funds in accordance with wire transfer instructions
provided by Seller to Buyer.
