ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as November 16, 2000 by and
among (i) Footstar Corporation, a Texas corporation (the "Buyer"), (ii) X.
Xxxxx, Inc., a Massachusetts corporation ("X. Xxxxx"), and (iii) JBI, Inc., a
Massachusetts corporation ("JBI"), Xxxxx Shoe, Inc., a Delaware corporation
("Xxxxx"), and those other subsidiaries of X. Xxxxx, if any, which after the
date hereof may be added as parties to this Agreement and identified as Selling
Subsidiaries on the signature page hereof (JBI, Xxxxx and each such other
subsidiary a "Selling Subsidiary," collectively, the Selling Subsidiaries," and
together with X. Xxxxx, the "Seller" or the "Selling Entities").
RECITALS
X. Xxxxx and its subsidiaries (together, "Xxxxx") operate several
different business segments. Xxxxx desires to dispose of its footwear businesses
(the "Business") in which it operates licensed footwear departments (the
"Footwear Departments") in discount, department, and specialty stores operated
by independent third parties at the store locations listed on Schedule A (the
"Stores"). This Agreement relates only to the Business and not to Xxxxx'x other
businesses, which includes, without limitation, its big and tall men's apparel,
workwear and loss prevention consulting service business (collectively, the
"Non-Footwear Businesses").
The Buyer desires to purchase substantially all of the assets of Xxxxx
that are used primarily in the Business, as further described below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the Buyer and the Seller agree as follows:
1. PURCHASE AND SALE.
1.1. Acquired Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing referred to in Section 4 hereof, the Seller shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, all of the assets (other than the
Excluded Assets specified in Section 1.2) owned by the Seller and used primarily
in the Business (all of which assets are hereinafter referred to collectively as
the "Acquired Assets"), including, without limitation, the assets identified in
paragraphs (a) through (k) below, but excluding any assets of the Non-Footwear
Businesses. For purposes of this Agreement, an asset is deemed to be owned by
the Seller if it is owned by X. Xxxxx or by any direct or indirect subsidiary of
X. Xxxxx, whether or not that subsidiary has been identified as a Selling
Subsidiary and made a party hereto.
(a) All of the Seller's rights under the contracts and
agreements described on Schedule 1.1(a) (the "Store License Contracts")
between the Seller and the licensor thereunder (such other party, whether
designated as licensor, lessor, or any other term in the Store License
Contract, is referred to herein as a "Licensor");
(b) All moveable trade fixtures and furnishings owned by
Seller and used primarily in the Business (but limited to those items used in
or located in the Stores), including, without limitation, those items
generally described on Schedule 1.1(b), with such additions thereto and
deletions therefrom as may hereafter arise in the ordinary course of business
prior to the Closing consistent with the Seller's obligations under Section 7
hereof (the "Furniture and Fixtures");
(c) All items of tangible personal property owned by the
Seller and either located at any of the Stores or otherwise used primarily in
the Business as described on Schedule 1.1(c), including, without limitation,
the store supplies, phones, ticketing machines, and packaging, marketing and
ticketing materials owned by the Seller and used primarily in the Business,
and the computer laptops and scanners owned by the Seller and used primarily
in the Business by the Seller's field personnel and the software associated
therewith (the "Miscellaneous Personal Property");
(d) All footwear merchandise held for sale in the ordinary
course of the Business, whether located at one of the Stores, in transit to
one of the Stores, or in Seller's distribution facility at Canton,
Massachusetts or any other distribution facility used in the Business
(together, the "Distribution Facility"), but excluding any merchandise which
the Buyer reasonably determines during the Inventory Count (as hereinafter
defined) is not usable or salable in the ordinary course of the Business by
virtue of being worn, damaged, defective, mismated (a pair of shoes that are
not the same size), and excluding the Closeout Inventory (as hereinafter
defined) (the "Inventory");
(e) All of the Seller's rights under the footwear purchase
orders described on Schedule 1.1(e), which Schedule shall be updated by the
Seller (subject to the Buyer's acceptance) three days prior to the scheduled
Closing Date to delete those purchase orders which have been completed prior
to the Closing Date and to include any additional purchase orders for footwear
entered into in the ordinary course of business prior to the Closing Date
consistent with the Seller's obligations under Section 7.4 hereof (the
"Purchase Orders");
(f) All of the Seller's transferable rights under the
contracts and agreements described on Schedule 1.1(f) (the "Other Contracts");
(g) All of the Seller's prepaid expenses for advertising,
packaging or other items listed on Schedule 1.1(g) (the "Transferred Prepaid
Expenses");
(h) The Seller's trademarks, service marks, registrations
thereof or applications for registration therefor, trade names, inventions,
patents, patent applications, trade secrets, copyrights, copyright
registrations, applications for copyright registration, drawings, designs, and
specifications, or other similar type of intellectual property right, in each
case which is used primarily in the Business and is owned or licensed or used or
held for use by Xxxxx, including, without limitation, those agreements by which
intellectual property is licensed to the Seller for use in the Business (the
"Intellectual Property Licenses") and the other intellectual property rights
described on Schedule 1.1(h) (all such items listed in this paragraph (h), the
"Intellectual Property");
(i) Copies of all of Xxxxx'x sales records, paid invoices,
cost and pricing information, historical profit and loss statements, accounting
books, records, ledgers, Purchase Orders outstanding on the Closing Date,
standard operating procedures for Stores and training manuals, which relate
exclusively to the Business or the Acquired Assets, and, with respect to items
of the type listed above which relate to the Business or the Acquired Assets and
to Xxxxx'x other businesses, copies of those portions of the items which relate
to the Business, and all other documents and records relating to the Acquired
Assets (the "Records");
(j) All of the Seller's title to, interest in and rights under
the leases of personal property used in the Business and described on Schedule
1.1(j), to the extent assignable (the "Personal Property Leases"); and
(k) Cash on hand, if any, to be left by the Seller in the cash
registers at the Spiegel Stores at the Effective Time, the amount of which (not
in excess of $50 per register) is to be designated by the Buyer to the Seller in
writing prior to the Closing Date (the "Remaining Cash").
1.2. Excluded Assets. Notwithstanding the foregoing nor any Schedule to
this Agreement, the Seller is not selling and the Buyer is not purchasing,
pursuant to this Agreement, and the term "Acquired Assets" shall not include,
any of the following assets (the "Excluded Assets"):
(a) the consideration to be received by the Seller pursuant to
this Agreement;
(b) the rights of the Seller under this Agreement;
(c) any amounts due to the Seller from retail customers for
products sold to retail customers prior to the Closing
(whether such amounts are due directly from retail
purchasers of products, from credit card processors, or
from a Licensor that has collected such amounts for
subsequent disbursement to the Seller pursuant to a Store
License Contract, or otherwise);
(d) any other amounts due to the Seller under License
Agreements with respect to all periods or events occurring
prior to Closing;
(e) any asset not specifically enumerated as an Acquired Asset
and used in or in support of the Non-Footwear Businesses,
including without limitation intellectual property,
software and hardware.
(f) any rights of the Seller with respect to any pension plans
and 401(k) plans and any other Benefit Plans (as defined
in Section 5.16 hereof);
(g) All cash and cash equivalents, such as bank deposits,
certificates of deposit and marketable securities,
including any cash used as collateral for letters of
credit or performance bonds, in each case held by the
Seller, other than Remaining Cash;
(h) The corporate names and marks "X. Xxxxx," "JBI," "Xxxxx
Shoe," and "Xxxxxxx Companies," and any variations or
deviations thereof (collectively, the "Corporate Names");
(i) All insurance policies, binders and related prepaid
expenses covering the Business or the Acquired Assets
other than Transferred Prepaid Expenses;
(j) All rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being
pursued by the Seller to the extent primarily related to
any Retained Liabilities or any Excluded Assets, whether
arising by way of counterclaim or otherwise; provided,
however, that the foregoing shall in no way limit Buyer's
right to indemnification pursuant to Section 11 of this
Agreement;
(k) All accounts receivable of the Seller, except those that
shall become the property of the Buyer pursuant to the
post-Closing adjustment provisions of Section 4.3;
(l) All assets disposed of by the Seller prior to Closing in a
manner not in breach of this Agreement;
(m) All rights to any refunds, rebates or similar claims for
taxes, duties, tariffs, and vendor credits for payments,
except to the extent the Buyer is entitled thereto
pursuant to Section 4.3 hereof;
(n) All footwear inventory of the Non-Footwear Businesses;
(o) All rights of the Seller with respect to the post-closing
obligations of the Buyer under this Agreement; and
(p) The Seller's rights and obligations under the Store
License Contract with Xxxx Department Stores, Inc.
("Xxxx") to operate the Footwear Departments in the 32
Stores which Xxxx announced on or about November 9, 2000
that it would close (the "Closeout Stores"), the Furniture
and Fixtures and Miscellaneous Personal Property in the
Closeout Stores on the Closing Date, and all footwear
merchandise in the Closeout Stores on the Closing Date
(the "Closeout Inventory").
2. LIMITED ASSUMPTION OF OBLIGATIONS. Anything in this Agreement to the
contrary notwithstanding, the Buyer shall not assume, and shall not be deemed to
have assumed, any liability or obligation whatsoever of any nature, fixed or
contingent or known or unknown, of the Seller or relating to the operation of
the Business or any other business operations of Xxxxx prior to the Effective
Time (as hereinafter defined) (with all such unassumed liabilities and
obligations referred to herein as the "Retained Liabilities"); except for those
obligations of the Seller accruing after the Effective Time under the following
contracts (the "Assumed Obligations"):
(a) The Store License Contracts described on Schedule 1.1(a),
excluding the Seller's contractual rights and obligations to operate the
Footwear Departments in the Closeout Stores;
(b) The Purchase Orders described on Schedule 1.1(e);
(c) The Other Contracts described on Schedule 1.1(f);
(d) the Intellectual Property Licenses described on Schedule
1.1(h); and
(e) The Personal Property Leases described on Schedule 1.1(j).
3. PURCHASE PRICE.
3.1. Purchase Price. The purchase price for the Acquired Assets (the
"Purchase Price") shall be equal to the amount calculated as follows (using
capitalized terms defined in Section 3.4):
(a) Wholesale Value of Inventory, plus (b) Fixed Asset Value,
minus (c) Purchase Price Adjustment, and minus (d) Inventory Aging Adjustment.
The parties currently estimate that the Purchase Price will be
Fifty-Seven Million, Seven Hundred Seventy-One Thousand Dollars ($57,771,000),
based upon the assumptions and calculations set forth on Schedule 3.1.
3.2. Estimated Purchase Price. At least three and not more than five
days prior to the scheduled Closing Date, the Seller shall deliver to Buyer a
good faith estimate, prepared and certified by its Chief Financial Officer (the
"Seller's Estimate"), of the Wholesale Value of Inventory (which shall be
calculated net of shrinkage for purposes of determining the Estimated Purchase
Price but not in determining the actual Purchase Price), the Inventory Aging
Adjustment, and the estimated Purchase Price, based on the foregoing two
estimates and the formula set forth in Section 3.1 (the "Estimated Purchase
Price"), together with a copy of the inventory records supporting such estimate.
The Seller's Estimate shall be computed based on the formula set forth in
Section 3.1 and the definitions set forth in Section 3.4, but in all other
respects in a manner consistent with past practices of the Seller.
3.3. Payments at the Closing. At the Closing, the Buyer shall pay to
the Seller, by wire transfer into an account or accounts designated in writing
by X. Xxxxx, that portion of the Purchase Price (the "Initial Payment") which is
equal to the Estimated Purchase Price minus Six Million Dollars ($6,000,000),
and shall pay Six Million Dollars ($6,000,000) (the "Escrow Payment") into
escrow in accordance with Section 3.8.
3.4. Definitions.
(a) The term "Wholesale Value of Inventory" means the aggregate
Inventory Retail Value of the Inventory on the Closing Date, multiplied by 49.3%
(the "Cost Complement").
(b) The term "Inventory Retail Value" for any item of Inventory means
the retail price (excluding point-of-sale markdowns) which the Seller is
charging to consumers for that item of Inventory at the time of the Inventory
Count, based on the Seller's retail price file maintained in the ordinary course
of business consistent with past practices, which price file is attached hereto
as Schedule 3.4 and which schedule shall be updated as close to the Effective
Time as practical.
(c) The term "Fixed Asset Value" means Eleven Million Dollars
($11,000,000).
(d) The term "Purchase Price Adjustment" means One Million Dollars
($1,000,000).
(e) The term "Inventory Aging Adjustment" means an amount calculated as
follows:
(i) When the Inventory Count is taken, Inventory will be aged
in the categories set forth below, and each such "Inventory Category" will be
assigned a "Retail Realization Percentage" as set forth below:
Inventory Category Last Receipt Date Last Receipt Date Retail Realization
Core/Budget Stores Better/Moderate Stores Percentage
------------------------- -------------------------- -------------------------------- ----------------------------
Current/Future Seasons On or after 12/1/00 On or after 11/1/00 100%
Aged One Season 6/1/00 through 11/30/00 6/1/00 through 10/31/00 50%
Aged Two Seasons 12/1/99 through 5/31/00 SCOA on order received from 30%
2/29/00 through 5/31/00
Aged Three Seasons 6/1/99 through 11/30/99 N/A 20%
Aged more than Three Received prior to 6/1/99 Prior to 2/29/00 0% for Core/Budget; 10%
Seasons for Better/Moderate
If the number of Stores scheduled to be operated by any
Licensor identified on Schedule 3.4(i) decreases by more than 20% during the
period (the "Interim Period") from the date hereof through the Closing Date,
when compared with the number of Stores actually operated by that Licensor on
the date hereof, then the Buyer shall have the right (which shall be its sole
remedy hereunder for such event), exercisable by written notice delivered to the
Seller prior to the Closing, and in any event no less than seven days after the
Seller notifies the Buyer in writing that there will be such a 20% decrease, to
elect that all stores of such Licensor which are scheduled to be closed but are
still operating on the Closing Date shall be deemed Closeout Stores hereunder.
If such an election is made by the Buyer, the parties shall agree upon
reasonable mechanisms to accomplish that change, including proportionally
adjusting the Inventory Target to reflect the elimination from "Inventory" of
the footwear in the Stores of that Licensor which are to be deemed Closeout
Stores. (As used herein, the number of Stores scheduled to be operated by a
Licensor on a given date are those Stores actually operated by the Licensor,
less the number of Stores the Licensor has publicly announced it will close.)
(ii) Within each Inventory Category, the "Unrealized Inventory
Value" equals (ww) the aggregate Inventory Retail Value of the Inventory in that
Category on the Closing Date, minus (xx) the aggregate Inventory Retail Value of
the Inventory in that Category on the Closing Date multiplied by the Retail
Realization Percentage for that Category.
(iii) The "Inventory Aging Adjustment" is determined by adding
together the Unrealized Inventory Value for all Categories and multiplying that
sum by 40.5%.
(f) The term "Last Receipt Date" means the last date the merchandise
has actually been received at the Canton Distribution Facility.
3.5. Inventory Count.
(a) The Buyer and Seller shall cause to be taken a physical inventory
count by stock keeping unit ("SKU") of all Inventory held by the Buyer as of the
Effective Time (the "Inventory Count"). The Inventory Count shall be taken by
RGIS Inventory Services ("RGIS"), or if RGIS is unable to so serve, by an
independent inventory service designated jointly by the Seller and the Buyer
(the "Inventory Service"). The Seller shall pay the entire cost of the Inventory
Service. The instructions to be delivered to the Inventory Service with respect
to the conduct of the Inventory Count shall be mutually agreed upon by the Buyer
and the Seller and shall be delivered to the Inventory Service as promptly as
possible following execution of this Agreement; provided, that the Buyer and the
Seller shall each act reasonably in reaching an agreement on such instructions.
The parties currently contemplate that the Inventory Count shall be accomplished
by physical counts taken at each of the Stores and at the Distribution Facility
over a four week period beginning approximately two weeks before the Closing
Date and ending approximately two weeks after the Closing Date. The parties
currently contemplate that the physical counts will then be rolled forward or
backward, as the case may be, based on Gross Rings, as hereinafter defined. In
the event that the Inventory Count is conducted at any Store location on a date
that is before the Closing Date, then for the period from the completion of the
Inventory Count at such Store location until the Closing Date, the Seller shall
keep a count of units sold multiplied by the Inventory Retail Value ("Gross
Rings"). All such reports shall be made available by the Seller to the Buyer on
a daily basis. In the event that the Inventory Count is conducted at any Store
location on a date that is after the Closing Date, then for the period from the
Closing Date to the completion of the Inventory Count at such Store location,
the Buyer (or the Seller on the Buyer's behalf if such is called for under the
Transition Services Agreement) shall keep a count of the Gross Rings. All such
reports shall be made available by the Buyer to the Seller on a daily basis.
(b) The Inventory Service shall be additionally instructed by the Buyer
and the Seller to prepare and deliver to the Buyer and the Seller a final
certified report of Inventory Count immediately upon completion of the Inventory
Count, and in no event later than the earlier of (i) 30 calendar days after
Closing, or (ii) seven days after the Inventory Count of the last Store.
Promptly (and in no event later than seven calendar days) following the day on
which the Inventory Service shall have delivered the final report of Inventory
Count to Sellers and Buyer, Sellers and Buyer shall jointly calculate and agree,
each acting reasonably and in good faith, an actual Wholesale Value of Inventory
and Inventory Aging Adjustment as of the Closing Date based upon the principles
set forth in Section 3.1(a) above and the procedures described in Section
3.5(a). If the Buyer and the Seller are unable to reach an agreement regarding
the Wholesale Value of Inventory and Inventory Aging Adjustment on or prior to
14 calendar days following the delivery of the Inventory Count by the Inventory
Service, on the next Business Day thereafter the disagreement shall be presented
to a leading independent accounting firm to be mutually selected by the Buyer
and the Seller. Such accounting firm shall be instructed to render a written
decision as to the Wholesale Value of Inventory and Inventory Aging Adjustment
within 30 calendar days thereafter, and such decision shall be final and binding
upon each of the parties. The fees, costs and expenses incurred in connection
therewith shall be shared in equal amounts by the Buyer and the Seller. The date
on which the Buyer and the Seller jointly agree upon the Wholesale Value of
Inventory and Inventory Aging Adjustment, or the date on which the independent
accounting firm renders its written decision with respect to Wholesale Value of
Inventory and Inventory Aging Adjustment is the "Determination Date" hereunder.
3.6. Final Calculation of Purchase Price. Following the Determination
Date, if the Initial Payment is less than the Purchase Price as determined on
the Determination Date (the "Actual Purchase Price"), the Buyer will pay to the
Seller an amount in cash equal to the difference between the Initial Payment and
the Actual Purchase Price. If the Actual Purchase Price is less than the Initial
Payment, the Seller will pay to the Buyer an amount in cash equal to the
difference between the Initial Payment and the Actual Purchase Price. Payments
required to be made by the Buyer to the Seller under this Section 3.6 shall be
made first from the Escrow and then, if there is a deficiency, from the Buyer,
by wire transfer into the account or accounts designated in writing by X. Xxxxx
pursuant to Section 3.3, and in the same proportions as the payments under
Section 3.3, or otherwise as X. Xxxxx shall have notified Footstar in writing on
or before the Determination Date. Payments required to be made by the Seller to
the Buyer under this Section 3.6 shall be made first from the Escrow and then,
if there is a deficiency, from the Seller, by wire transfer into the account or
accounts designated in writing by Footstar to X. Xxxxx on or before the
Determination Date. All payments owing under this Section 3.6 shall be made not
later than the close of business on the fourth Business Day after the
Determination Date. If any such payments are not timely made, the amounts due
shall be paid with interest from the Closing Date through the payment date,
calculated at a rate per annum (based on a 365 day year and the actual number of
days elapsed) equal to the rate announced by Fleet National Bank as its "Prime
or Base Rate" (the "Prime Rate") plus two percent (2%). To the extent that any
interest has accrued under the Escrow, the parties shall be entitled to a pro
rata distribution thereof in accordance with their respective ultimate interest
in the Escrow.
3.7. Allocation.
(a) Within 90 days after the Closing Date, the Buyer shall provide to
the Seller copies of IRS Form 8594 and any required exhibits thereto (the "Asset
Acquisition Statement") with the Buyer's proposed allocation of the Purchase
Price. Within 30 days after the receipt of the Asset Acquisition Statement, the
Seller shall propose to the Buyer any changes to the Asset Acquisition Statement
(and in the event no such changes are proposed in writing to the Buyer within
that time period, the Seller shall be deemed to have agreed to, and accepted,
the Asset Acquisition Statement). The Buyer and the Seller shall endeavor in
good faith to resolve any differences with respect to the Asset Acquisition
Statement promptly after the Buyer's receipt of any written notice of objection
from the Seller.
(b) Subject to the provisions of the following sentence of this
paragraph (b), the Purchase Price shall be allocated in accordance with the
Asset Acquisition Statement provided by the Buyer to the Seller pursuant to
paragraph (a) above, and subject to the requirements of applicable Tax law, all
Tax Returns filed by the Buyer and the Seller shall be prepared consistently
with such allocation. If the Seller withholds its consent to the allocation
reflected in the Asset Allocation Statement, and the Buyer and the Seller are
unable, within 15 days after the Buyer's receipt of any written notice of
objection from the Seller, to resolve their differences with respect to those
objections, then the Buyer and the Seller shall submit all remaining disputed
matters for final and conclusive determination to an independent accounting firm
of recognized national standing (the "Allocation Arbiter") selected by the Buyer
and the Seller, which firm shall not be the regular accounting firm of either
the Buyer or the Seller, and the cost of which shall be split evenly between the
buyer and the Seller. The Allocation Arbiter shall be directed to determine
(based solely on presentations by the Seller and the Buyer and not by
independent review) only those matters in dispute and to render a written report
as to the disputed matters and the resulting allocation of Purchase Price, which
report shall be conclusive and binding upon the parties. The Allocation Arbiter
shall be instructed to make its determination and render its written report
promptly, but not later than 15 days after its acceptance of appointment
hereunder. The Buyer and the Seller shall, subject to the requirements of any
applicable Tax law or election, file all Tax Returns consistent with the
allocation provided in the Asset Acquisition Statement, or if applicable, the
determination of the Allocation Arbiter.
3.8. Escrow. At the Closing, the Buyer shall deposit the Escrow Payment
with Xxxxxxx, Procter & Xxxx LLP, or another law firm or bank upon which the
Seller and the Buyer mutually agree (the "Escrow Agent") to be held and applied
by the Escrow Agent in accordance with the provisions of an agreement (the
"Escrow Agreement") in a form and substance which shall be agreed upon by the
Buyer, the Seller and the Escrow Agent, and which will provide for the Escrow
Agent to hold the Escrow until the Actual Purchase Price has been finally
determined and to apply the Escrow as set forth herein.
4. CLOSING.
4.1. Time and Place. The closing of the transactions contemplated
hereby (the "Closing") shall take place on February 3, 2001 or such other date
as shall be agreed upon by the Seller and the Buyer, subject to satisfaction or
waiver of the conditions precedent in Sections 8 and 9 hereof. The day of
Closing is called the "Closing Date." The Closing shall be held at the executive
offices of the Buyer in Mahwah, New Jersey. The Closing shall not be deemed to
have occurred until all actions necessary to complete the Closing have occurred.
The Closing shall be deemed to have occurred at 12:01:01 a.m. on the Closing
Date (the "Effective Time"). If the Closing Date falls on a weekend or holiday,
then the parties shall close in escrow on the preceding business day, and
release escrowed funds on the following business day, with interest on such
funds going to the Seller.
4.2. Transactions and Deliveries at Closing. At the Closing, subject to
the satisfaction or waiver of each of the conditions specified in Sections 8 and
9:
(a) Asset Transfer Documents. The Seller shall duly execute
and deliver to the Buyer or its nominee or nominees such bills of sale and other
instruments of assignment and transfer with respect to the Acquired Assets as
the Buyer may reasonably request and as may be necessary to vest in the Buyer
good title to all of the Acquired Assets (the "Asset Transfer Documents"), in
each case subject to no Encumbrances (as hereinafter defined).
(b) Release of Encumbrances. The Seller shall deliver to the
Buyer lien discharges from all holders of liens on any Acquired Assets, or other
customary and usual evidence reasonably satisfactory to the Buyer that the
Acquired Assets are being sold, transferred or assigned to the Buyer, as the
case may be, free and clear of all security interests, liens, claims, charges,
options, mortgages, debts, leases (or subleases), conditional sales agreements,
title retention agreements, encumbrances of any kind, material defects as to
title or restrictions against the transfer or assignment thereof (collectively,
"Encumbrances"), other than restrictions on the transfer of Acquired Assets
contained within any Store License Contract, Personal Property Lease,
Intellectual Property License or Other Contract.
(c) Assumption Documents. The Buyer shall deliver to the
Seller such instruments of assumption as the Seller may reasonably request and
as may be necessary in order for the Buyer to assume the Assumed Obligations
(the "Assumption Documents").
(d) Initial Payment. The Buyer shall deliver the Initial
Payment to the Seller or to such other entity or entities as the Seller shall
designate to the Buyer.
(e) Escrow. The Buyer, the Seller and the Escrow Agent shall
execute and deliver the Escrow Agreement, and the Buyer shall deliver the Escrow
Payment to the Escrow Agent.
(f) Transition Services Agreement. The Seller and the Buyer
shall execute and deliver a transition services agreement (the "Transition
Services Agreement") covering those matters and including those terms set forth
on Schedule 4.2, and such other terms and conditions as are customary in
transactions of this nature or that the parties may otherwise agree upon.
(g) Technology License. The Seller shall execute and deliver
to the Buyer a non-exclusive, perpetual, worldwide, royalty-free, license
agreement (the "Software License") which will authorize the Buyer and its
Affiliates to use the Seller's proprietary ticketing software and the Seller's
custom software for capturing sales from Licensors, for flash sales reporting
and for connecting to Licensors for price and item master downloads, and the
Seller shall provide the Buyer with a copy of the source code relating to this
licensed software.
(h) Seller's Certificate. The Seller shall cause to be
delivered to the Buyer the certificate and required by Section 8.4 hereof.
(i) Opinion of Seller's Counsel. The Seller shall cause to be
delivered to the Buyer the written opinion of the Seller's counsel required by
Section 8.5 hereof.
(j) Consents of Third Parties. The Seller shall cause to be
delivered to the Buyer the consents required by Section 8.6 hereof.
(k) Buyer's Certificate. The Buyer shall cause to be delivered
to the Seller the certificate and required by Section 9.3 hereof.
(l) Opinion of Buyer's Counsel. The Buyer shall cause to be
delivered to the Seller the written opinion of the Buyer's counsel required by
Section 9.4 hereof.
(m) Other Documents. There shall be delivered to the Seller
and the Buyer such other documents and instruments as are provided to be
delivered under Sections 8 and 9 hereof.
4.3. Proration of Charges and Expenses; Credit for Employee Matters.
(a) Non-Employee Credits and Proration. At Closing, the
parties will calculate, settle and prorate between them any prepayments made or
amounts owed in conjunction with any of the Store License Contracts, the
Purchase Orders, the Intellectual Property Licenses, the Other Contracts and the
Personal Property Leases (except as hereinafter provided), utility charges (if
any) and other operating expenses. The parties will not prorate between them any
prepayments which are among the Transferred Prepaid Expenses listed on Schedule
1.1(g). In addition, at Closing the Buyer shall reimburse the Seller for the
Remaining Cash (if any). At Closing, the Buyer shall receive a credit against
the Purchase Price for the amount of outstanding merchandise credit vouchers (in
whatever form) issued to customers of the Footwear Departments other than the
Footwear Departments in the Closeout Stores (the "Purchased Footwear
Departments") and outstanding as of the Closing Date; provided, that if (i) the
form of merchandise credit voucher (such as a layaway or a gift certificate) was
issued by a Licensor, (ii) the Seller did not receive any consideration therefor
from the Licensor, and (iii) the Seller (or the Buyer after the Closing) would
be entitled to receive the consideration therefor from the Licensor upon
redemption of the voucher for merchandise, then the Buyer shall not receive a
credit against the Purchase Price for the amount of that merchandise credit
voucher; and provided, further, that if the Seller receives any consideration
from a Licensor for a layaway item, then the Buyer shall receive a credit
against the Purchase Price equal to the amount of such consideration, and the
layaway item shall be deemed "Inventory" hereunder which shall be purchased by
the Buyer at the Closing. At Closing, the Buyer shall also receive a credit of
$150,000 against the Purchase Price for estimated future merchandise returns.
(b) Employee-Related Credits and Proration. At Closing, the
Buyer shall receive a credit against the Purchase Price for the dollar amounts
the Seller would have been obligated to pay in severance to those of its
employees whose employment is terminated by the Seller as of the Effective Time
and who are employed by the Buyer or its Affiliates as of the Effective Time,
had the employment of those Persons been so terminated by the Seller and had
they not thereafter been employed by the Buyer or its Affiliates or any other
employer. At Closing, the Buyer shall also receive a credit against the Purchase
Price for any amount the Buyer has agreed in writing to pay in respect of any
obligation or liability arising in connection with the employment or termination
of employment of any Persons in the Business on or before the Closing Date,
(such as but not limited to liabilities for accrued vacation or bonuses which
the Buyer may agree to assume in accordance with Section 12.2(b)). Nothing
herein shall obligate the Buyer to credit any former employee of the Seller
hired by Buyer or one of its affiliates (whether at the Effective Time or
thereafter) (each a "Former JBI Employee") with employment service beyond that
which would have otherwise been required under any employee benefit plan
affiliated with the Buyer or any employment policy of the Buyer ("Buyer Plan or
Policy"). Notwithstanding the above, should the Buyer choose in its sole
discretion to offer any Former JBI Employee years of employment service beyond
that which it would have otherwise been required under any Buyer Plan or Policy,
the Seller shall have no obligation to: (1) pay any sum to the Buyer, or
contribute to any of the Buyer's plans, on behalf of, or with respect to, such
Former JBI Employee as a result thereof or (2) reimburse the Buyer for any of
its payments or contributions made to, on behalf of, or with respect to such
Former JBI Employee under any such Buyer Plan or Policy as a result thereof.
(c) Procedure for Credits and Proration. If any amounts
pursuant to this Section 4.3 are not known as of the Closing Date, the parties
shall reasonably estimate such amounts, and as soon as the actual amount(s) can
be computed and determined, there shall be an appropriate settlement thereof
between the Seller and the Buyer so that the Seller will pay for its pro rata,
proportionate share of such charges up to and including the Effective Time and
the Buyer will pay for its pro rata proportionate share of such amounts after
the Effective Time. Any subsequent payments to be made after Closing by one
party to the other hereunder shall be promptly made as soon as such amounts due
are determined, but in no event later than ten days after the determination of
any such amounts by the parties. The amount of any items to be prorated which
are payable in arrears and have not been paid by the Seller on or prior to the
Closing Date shall be credited to the Buyer. Schedule 4.3 sets forth certain
matters upon which the Buyer and the Seller have agreed regarding the method of
determining and calculating the prorations called for by this Section 4.3.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. Each of the Selling
Entities jointly and severally represents and warrants to the Buyer as follows:
5.1. Organization; Authority. Each Selling Entity is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction set forth next to its name on Schedule 5.1. Each Selling Entity is
duly qualified and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by the Business
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified will not have a material adverse effect on the
Business. Each Selling Entity has all requisite power and authority to own and
hold the Acquired Assets owned or held by it, to carry on the Business as such
business is now conducted and to execute and deliver this Agreement and the
other documents, instruments and agreements contemplated hereby or thereby
(collectively, the "Transaction Documents") to which it is a party and to carry
out all actions required of it pursuant to the terms of the Transaction
Documents.
5.2. Corporate Approval; Binding Effect. Each Selling Entity has
obtained all necessary authorizations and approvals from its Board of Directors
and shareholders required for the execution and delivery of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby. No consent or approval of the shareholders of
X. Xxxxx is required for the execution and delivery of this Agreement or any
Transaction Documents or for the consummation of the transactions contemplated
hereby and thereby. Each of the Transaction Documents to which any Selling
Entity is a party has been duly executed and delivered by that Selling Entity
and constitutes the legal, valid and binding obligation of that Selling Entity
enforceable against it in accordance with its terms, except that the
enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity.
5.3. Non-Contravention. The execution and delivery by each Selling
Entity of the Transaction Documents to which it is a party and the consummation
by that Selling Entity of the transactions contemplated hereby and thereby will
not (a) violate or conflict with any provision of the Certificate of
Incorporation, Articles of Incorporation, By-Laws or other governing documents,
each as amended to date (the "Governing Documents"), of that Selling Entity; or
(b) constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any Encumbrance upon
any property of that Selling Entity (including, without limitation, any of the
Acquired Assets) pursuant to (i) any agreement, contract, indenture or
instrument to which that Selling Entity is a party or by which that Selling
Entity or any of its properties (including, without limitation, any of the
Acquired Assets) is bound or to which that Selling Entity or any of such
properties is subject, or (ii) any statute, judgment, decree, code, writ, award,
order, regulation or rule of any court or governmental or regulatory authority.
5.4. Governmental Consents; Transferability of Licenses, Etc. Except
for filings and submissions required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "Xxxx-Xxxxx-Xxxxxx Act") and
expiration or termination without objection of the applicable waiting period
thereunder, and except as set forth on Schedule 5.4, no consent, approval or
authorization of, or registration, declaration, qualification or filing with,
any governmental agency or authority is required for the execution and delivery
of this Agreement by any Selling Entity or the consummation by any Selling
Entity of the transactions contemplated hereby. The Selling Entities have and
maintain all licenses, permits and other authorizations from all governmental
authorities as are reasonably necessary or desirable for the conduct of the
Business or in connection with the ownership or use of the Acquired Assets.
5.5. Financial Statements. The Seller has delivered to the Buyer the
income and loss statements of the Business on a per Licensor basis for the eight
month period ended September 30, 2000, and the balance sheet of the Business as
of July 29, 2000, each attached as Schedule 5.5 (the "Financial Statements").
The Financial Statements present fairly the financial condition of the Seller as
of the dates of such statements and the results of operation for such periods,
and have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
thereby, subject to the lack of footnotes and other presentation items.
5.6. Absence of Certain Changes. Except as set forth on Schedule 5.6,
or, with respect to periods after the date hereof and prior to the Closing Date,
as permitted by Section 7.2, since July 29, 2000, the Seller has carried on the
Business only in the ordinary course, consistent with past practices including,
without limitation, with respect to pricing of products, the mix and amount of
inventory and (subject to changes in advertising practices permitted pursuant to
Section 7.2 hereof) advertising practices, and there has not been (a) any
particular change in the assets, liabilities or sales of the Seller, in
connection with the Business, or in its relationships with Licensors, other than
changes which were (i) either in the ordinary course of business or related to
the United States economy in general, general market conditions of the footwear
business, or market prices for products sold by the Business, and (ii) either in
any case or in the aggregate, materially adverse; (b) any acquisition or
disposition by the Seller of any material asset or property relating to the
Business other than in the ordinary course of business; (c) any damage,
destruction or loss, whether or not covered by insurance, materially adversely
affecting the Business or the Acquired Assets (other than Inventory); (d) any
increase in the compensation, pension or other benefits payable or to become
payable by the Seller to any of its officers or employees, in connection with
the Business, or any bonus payments or arrangements made to or with any of the
Selling Entities (other than pursuant to pre-existing contractual obligations),
provided that non-material increases, bonus payments or arrangements not
involving Specified Field Employees (as hereinafter defined) need not be
disclosed; (e) any forgiveness or cancellation of any corporate debt or claim by
the Seller, in connection with the Business, or any waiver of any right of
material value other than compromises of accounts receivable or payable in the
ordinary course of business; (f) any entry by the Seller, in connection with the
Business, into any transaction other than in the ordinary course of business; or
(g) any change in any method of accounting or accounting practice by the Seller
except for any such change required by reason of a concurrent change in GAAP.
5.7. Litigation, Etc. Except as set forth on Schedule 5.7, no action,
suit, proceeding or investigation is pending or, to the actual knowledge of any
Selling Entity, threatened, relating to or affecting any of the Acquired Assets
or the Business, or which questions the validity of the Transaction Documents or
challenges any of the transactions contemplated hereby or thereby, nor, to the
best knowledge of any Selling Entity, is there any basis for any such action,
suit, proceeding or investigation.
5.8. Conformity with Law. Except as set forth on Schedule 5.8, each
Selling Entity has complied with, and is in compliance with all Laws applicable
to the Business or any of the Acquired Assets (including, without limitation,
any labor, environmental, occupational health, zoning, customs or other Law).
Except as set forth in Schedule 5.8, to the best knowledge of any Selling
Entity, no Selling Entity has committed, been charged with, or been under
investigation with respect to, nor does there exist, any violation of any
provision of any Law in respect of the Business or any of the Acquired Assets.
Except as set forth in Schedule 5.8, no Selling Entity is a party to any
outstanding orders, judgments, injunctions, awards or decrees which affect the
Acquired Assets or the operation of the Business. As used in this Agreement, the
capitalized terms "Law" and "Laws" means any and all laws, statutes, rules,
regulations, ordinances, judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands or pronouncements having the
effect of law of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision or of any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
5.9. Title to Acquired Assets. The Seller is the lawful owner of and
has good title to all of the Acquired Assets, and has the full right to sell,
convey, transfer, assign and deliver the Acquired Assets, without the need to
obtain the consent or approval of any third party other than the third parties
listed on Schedule 5.9. Except for Encumbrances generally described on Schedule
5.9, all of the Acquired Assets are entirely free and clear of any Encumbrances.
5.10. Intellectual Property. Schedule 1.1(h) sets forth a complete and
accurate list of all Intellectual Property used by the Seller primarily in the
Business, specifying as to each, as applicable: (i) the nature of such
Intellectual Property; (ii) the owner of such Intellectual Property; and (iii)
the respective registration or application numbers. Subject to the information
listed on Schedule 1.1(h), the Seller owns such Intellectual Property or has the
right to use such Intellectual Property pursuant to a license agreement or
permission which is in full force and effect. To the best knowledge of the
Selling Entities, no charge, complaint, claim or notice of interference,
infringement, misappropriation, or violation has been asserted, or is pending,
by any individual, corporation, association, partnership, organization, business
or other type of entity (each, a "Person") regarding the use of any Intellectual
Property or challenging or questioning the validity or effectiveness of the
Intellectual Property Licenses or any other license or agreement relating to the
Intellectual Property. The Seller's use of the Intellectual Property does not
interfere with, infringe upon, misappropriate or otherwise conflict with the
rights of any other Person.
5.11. Furniture and Fixtures; Personal Property. Schedule 1.1(b) sets
forth a general list of all of the Furniture and Fixtures used primarily in the
Business (but limited to those items used in or located in the Stores) other
than (a) items acquired by X. Xxxxx or any of its direct or indirect
subsidiaries in connection with the Business in the ordinary course of business
during the Interim Period, and (b) items disposed of by the Seller in the
ordinary course of business during the Interim Period. The Personal Property
Leases listed on Schedule 1.1(j) include all leases by X. Xxxxx or any of its
direct or indirect subsidiaries of any item of personal property used primarily
in the Business. All the Purchased Footwear Departments are equipped and
complete with all fixtures, leasehold improvements, furnishings, machinery,
equipment, signs and other tangible personal property necessary for the
operation of the Purchased Footwear Departments in accordance with the Seller's
customary business practices. All Furniture and Fixture items required to be
repaired and maintained by the Seller pursuant to the terms of any Store License
Contract are in the condition required under such Store License Contract and
shall be in the same condition on the Closing Date subject to ordinary wear and
tear.
5.12. Inventory Records. The Seller's Inventory records accurately
reflect retail price and seasonality of the Inventory identified therein.
5.13. Insurance. The policies of fire, liability, worker's
compensation, property and casualty and other insurance owned or held by X.
Xxxxx or any of its direct or indirect subsidiaries in connection with the
Business are maintained with financially sound and reputable insurance
companies, funds or underwriters and are of the kinds and cover such risks and
are in such amounts and with such deductibles and exclusions as are consistent
with the Seller's past practice. All such policies (a) are in full force and
effect, (b) are sufficient for compliance by the Seller with all applicable
requirements of Law and all agreements to which the Seller is a party in
connection with the Business, and (c) provide that they will remain in full
force and effect through the Closing Date. Neither X. Xxxxx nor any of its
direct or indirect subsidiaries is in default with respect to its obligations
under any of such insurance policies nor has any of them received any
notification of cancellation of any such insurance policies.
5.14. Material Contracts. Schedule 5.14 sets forth a complete and
accurate list of all contracts relating primarily to the Business to which X.
Xxxxx or any of its direct or indirect subsidiaries is a party or by which any
of them is bound or to which the Business or any Selling Entity or any of the
Acquired Assets is subject, except (a) contracts entered into in the ordinary
course of business after the date hereof and prior to the Closing, which will be
identified to the Buyer in writing prior to the Closing, (b) contracts
terminable by the Seller upon 30 days' notice or less without the payment of any
termination fee or penalty, and (c) contracts listed in other Schedules hereto.
As used in this Section 5.14, the word "contract" means and includes every
written agreement or understanding of any kind whatsoever which is legally
enforceable by or against X. Xxxxx or any of its direct or indirect subsidiaries
relating to the Business and involves the receipt or payment by any of them of
more than $5,000, and specifically includes (a) contracts and other agreements
with any current officer, director, employee, consultant or shareholder or any
partnership, corporation, joint venture or any other entity in which any such
Person has an interest; (b) agreements with any labor union or association
representing any employee; (c) contracts and other agreements for the provision
of services by any Selling Entity in connection with the Business; (d) contracts
and other agreements for the sale of any assets or properties of X. Xxxxx or any
of its direct or indirect subsidiaries relating to the Business other than in
the ordinary course of business, or for the grant to any Person of any
preferential rights to purchase any of their assets or properties relating to
the Business; (e) joint venture agreements relating to the assets, properties or
business of X. Xxxxx or any of its direct or indirect subsidiaries in connection
with the Business or by or to which it or any assets or properties used
primarily in the Business are bound or subject; or (f) any other contract or
other agreement whether or not made in the ordinary course of business. The
Seller has delivered to the Buyer true, correct and complete copies of all such
contracts, together with all modifications and supplements thereto. Each of the
contracts listed or required to be listed on Schedule 5.14 or any of the other
Schedules hereto (including, without limitation, each Store License Contract,
Other Contract, Purchase Order, Intellectual Property License and Personal
Property Lease) (each of the foregoing is a "Material Contract") is in full
force and effect, no Selling Entity is in breach in any material respect of any
of the provisions (other than insignificant provisions) of any such Material
Contract (a "default"), nor, to the best knowledge of any Selling Entity, is any
other party to any such Material Contract in default thereunder, nor does any
event or condition exist which with notice or the passage of time or both would
constitute a default by either party thereunder. Without limiting the foregoing,
each Selling Entity is in compliance with each Store License Contract
performance standard identified on Schedule 5.14(a) which is applicable to it.
Subject to obtaining any necessary consents by the other party or parties to any
Material Contract (the requirement of any such consent being reflected on
Schedule 5.14), no Material Contract includes any provision the effect of which
may be to enlarge or accelerate any obligations of the Buyer to be assumed
thereunder or give additional rights to any other party thereto or will in any
other way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
5.15. Compensation of and Contracts with Employees. Schedule 5.15 sets
forth a complete and accurate list of each employee of the Business and the
current rate of compensation paid to such employee. Except as listed in Schedule
5,15, no Selling Entity has any written employment agreement with any currently
active employee, including any agreement to provide any bonus or benefit to any
such employee of the Business.
5.16. Employee Benefit Plans. Schedule 5.16 is a complete and accurate
list of all of Xxxxx'x "employee pension benefit plans" as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), "welfare benefit plans" as defined in Section 3(1) of ERISA,
executive plans and any other written arrangements or agreements to provide
employee benefits currently maintained/provided and/or contributed to by Xxxxx
including, but not limited to, insurance coverage (including any self-insured
arrangements), retirement benefits, disability, workers' compensation, profit
sharing, supplemental unemployment, hospitalization and major medical, dental,
group insurance plans, vacation, holidays, severance, sick pay, bonuses, stock
options, stock appreciation or other forms of incentive compensation, deferred
compensation or fringe benefit plans applicable to officers, employees or other
person of the Business (each a "Benefit Plan" and collectively, the "Benefit
Plans"). The X. Xxxxx 401(k) Plan (the "Seller's ss. 401(k) Plan") has received
a favorable determination letter from the Internal Revenue Service regarding its
qualification and the Seller knows of no reason for Seller's ss. 401(k) Plan to
lose such qualification. Schedule 5.16 also identifies each and every
"multiemployer plan" (within the meaning of ERISA Section 3(37)) to which the
Seller or any of its ERISA Affiliates is obligated to contribute as of the
Closing Date for any of its employees whose employment is terminated by the
Seller as of the Effective Time and who are employed by the Buyer or its
Affiliates as of the Effective Time ("Multiemployer Plans").
With respect to each Multiemployer Plan; (A) neither the Seller nor any
of its ERISA Affiliates have received any notice that any such Multiemployer
Plan is in reorganization, or that any such Multiemployer Plan is for may become
insolvent; and (B) neither the Seller nor any of its ERISA Affiliates have
received any notice that any such Multiemployer Plan is in reorganization, or
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, or that any such Multiemployer
Plan is or may become insolvent. "ERISA Affiliates" means with respect to the
Seller, each other trade or business (whether or not incorporated) that is a
member of the "controlled group" of which the Seller is a member or under
"common control" with the Seller within the meaning of Section 414(b) and (c) of
the Internal Revenue Code of 1986, as amended (the "Code") or Section 4001 of
ERISA.
5.17. Labor Relations. Except as set forth on Schedule 5.17, there is
no charge pending or, to the best knowledge of any Selling Entity, threatened
against any Selling Entity in relation to the Business, alleging unlawful
discrimination in employment practices before any court or agency. There is no
charge of or proceeding with regard to any unfair labor practice, in relation to
the Business, against any Selling Entity pending before the National Labor
Relations Board. There is no labor strike, dispute, slow-down or work stoppage
actually pending or, to the best knowledge of any Selling Entity, threatened
against or involving the Business. To the knowledge of the Seller, based on
inquiry of the General Counsel and the Vice President of Human Resources of X.
Xxxxx, except as set forth on Schedule 5.17, no one has petitioned within the
last three (3) years, and no one is now petitioning, for union representation of
any employees of any Selling Entity that are employed in the Business. Except as
set forth on Schedule 5.17, no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is pending against any Selling
Entity in relation to the Business and no claim therefor has been asserted.
Except as described on Schedule 5.17, none of the employees of the Business is
covered by any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by any Selling Entity. Except as fully
described on Schedule 5.17, the Business has not experienced any work stoppage
during the last five years.
5.18. Suppliers. Schedule 5.18 sets forth the 20 largest suppliers (by
dollar volume) of inventory to the Business during fiscal year 2000, and the 20
largest suppliers (by dollar volume) of inventory to the Business during fiscal
year 2001 to date. To the best of Seller's knowledge, the relationships of the
Seller with such suppliers are good commercial working relationships and, except
as set forth on Schedule 5.18, no supplier of material importance to the
Business has cancelled or otherwise terminated, or threatened to cancel or
otherwise to terminate, its relationship with the Seller or has during the last
twelve (12) months decreased materially, or threatened to decrease or limit
materially, its services, supplies or materials for use in the Business. The
Seller has no knowledge that any such supplier intends to cancel or otherwise
substantially modify its relationship with the Seller with respect to the
Business or to decrease materially or limit its services, supplies or materials
to the Seller with respect to the Business.
5.19. Taxes; Tax Returns.
(a) The Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party
for services performed for, or on behalf of, the Business.
(b) There are outstanding no liens for Taxes (other than Taxes
not yet due and payable) upon the Acquired Assets.
(c) As used in this Agreement, the term "Tax" or "Taxes" means
any federal, state, local, foreign or other income, profits, capital, franchise,
sales, use, excise, gross receipts, value added, transfer, ad valorem, property,
lease, occupancy, unemployment insurance, social security, disability, workers
compensation, occupational, withholding, payroll, employment, severance,
production, windfall profits, estimated, minimum, alternative minimum, add-on
minimum, premium, real and personal property, import, export, customs, duties,
tariffs or other taxes (including, without limitation, any fee, assessment, or
other charge in the nature of or in lieu of any tax), fees, assessments or
charges of any kind whatsoever, including any interest and any penalties or
additional amounts with respect thereto. The term "Tax Return" or "Tax Returns"
means all returns (including, without limitation, information returns),
declarations, reports, statements, and other documents required to be filed with
respect to Taxes or with any governmental agency charged with the collection of
any Tax.
5.20. Purchase Orders. Schedule 1.1(e) sets forth a complete and
accurate list of all Purchase Orders outstanding on the date hereof, and upon
Schedule 1.1(e) being updated in accordance with Section 1.1(e) hereof, Schedule
1.1(e) will set forth a complete and accurate list of all Purchase Orders
outstanding immediately prior to the Closing Date. All Purchase Orders were
entered into by the Sellers in the ordinary course of business and consistent
with past practices.
5.21. Environmental Matters. Xxxxx has never manufactured footwear in
the United States. Without limiting the generality of Section 5.8, to the best
knowledge of any Selling Entity, no Selling Entity has received any written or
oral notice, report or other information regarding any liabilities or
investigatory, remedial or corrective obligations, relating to the Business and
arising under Environmental and Safety Requirements. As used herein,
"Environmental and Safety Requirements" means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law, in each case concerning public
health and safety, worker health and safety and pollution or protection of the
environment (including all those relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release, control,
or cleanup of any hazardous substance).
5.22. Broker. No Selling Entity has retained, utilized or been
represented by any broker, agent, finder or intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to each of the Selling Entities as follows:
6.1. Organization; Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Texas. The
Buyer has all requisite power and authority to execute and deliver the
Transaction Documents to which it is a party and to carry out all actions
required of it pursuant to the terms of the Transaction Documents.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby. Each of the Transaction Documents to which the
Buyer is a party has been duly executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer enforceable
against it in accordance with its terms, except that the enforceability thereof
may be limited by any applicable bankruptcy, reorganization, insolvency or other
Laws affecting creditors' rights generally or by general principles of equity.
6.3. Non-Contravention. The execution and delivery by the Buyer of the
Transaction Documents to which it is a party and the consummation by the Buyer
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provision of the Governing Documents of the Buyer; or (b)
constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any lien upon any
property of the Buyer pursuant to (i) any agreement, contract, indenture or
instrument to which the Buyer is a party or by which the Buyer or any of its
properties is bound or to which the Buyer or any of such properties is subject,
or (ii) any statute, judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority.
6.4. Governmental and Third Party Consents. Except for filings and
submissions required under the Xxxx-Xxxxx-Xxxxxx Act and expiration or
termination without objection of the applicable waiting period thereunder, and
except as set forth on Schedule 6.4, no consent, approval or authorization of,
or registration, qualification or filing with, any governmental agency or
authority, or any non-governmental Person, is required for the consummation by
the Buyer of the transactions contemplated hereby.
6.5. Litigation, Etc. Except as set forth on Schedule 6.5, no action,
suit, proceeding or investigation is pending or, to the best knowledge of Buyer,
threatened, which questions the validity of the Transaction Documents or
challenges any of the transactions contemplated hereby or thereby, nor, to the
best knowledge of Buyer, is there any basis for any such action, suit,
proceeding or investigation.
6.6. Broker. The Buyer has not retained, utilized or been represented
by any broker, agent, finder or intermediary in connection with the negotiation
or consummation of the transactions contemplated by this Agreement.
7. CONDUCT OF BUSINESS BY THE SELLER PENDING CLOSING. Each Selling
Entity covenants and agrees, from and after the date of this Agreement and until
the Closing, except as otherwise specifically consented to or approved by
Footstar in writing, as follows:
7.1. Full Access. Each Selling Entity shall afford to the Buyer and its
authorized representatives full access during normal business hours upon
reasonable notice to all properties, books, records, contracts and documents of
the Selling Entity relating to the Business and a full opportunity to make such
reasonable investigations as the Buyer shall desire to make of the Business or
with respect to the Acquired Assets, and each Selling Entity shall furnish or
cause to be furnished to the Buyer and its authorized representatives all such
information with respect to the affairs and businesses of the Business and with
respect to the Acquired Assets as the Buyer may reasonably request. The Seller
shall facilitate meetings, as the Buyer may request, between the Buyer and
representatives of the licensors and others having significant relationships
with the Business. The Buyer acknowledges the Seller's policy of not releasing
personnel files to a third party in the absence of the express written consent
of the employee. Accordingly, the Buyer shall not request access to, or copies
of, such files unless and until such consent has been voluntarily obtained. The
Seller hereby agrees that it will not object if the Buyer makes the provision of
such consent a condition to its willingness to interview any employee of the
Seller for a position with the Buyer.
7.2. Carry on in Regular Course. Each Selling Entity shall conduct its
business operations in the Stores in the ordinary course consistent with past
practices, except for taking such steps as may be necessary or proper to carry
out and consummate their obligations under this Agreement. Each Selling Entity
shall maintain its space within each Store in accordance with the terms of the
Store License Contract for that Store. In all other respects, each Selling
Entity shall maintain the Acquired Assets in good operating condition and
repair, reasonable wear and tear excepted, and make all necessary renewals,
additions and replacements thereto, and shall carry on its business diligently
and substantially in the same manner as heretofore and shall not make or
institute any unusual or novel methods of purchase, sale, lease, management,
accounting or operation. Notwithstanding anything to the contrary herein, prior
to the Effective Time, the Seller shall be entitled, in all cases subject to
Article 3 and Section 8.10 hereof: (i) to sell any inventory from the Purchased
Footwear Departments to liquidators at prices it determines to be in its best
interest, (ii) to sell any inventory from the Purchased Footwear Departments to
customers of the Stores pursuant to promotions in the ordinary course of
business consistent with past practices, and (iii) to sell any inventory from
the Purchased Footwear Departments to customers of the Stores pursuant to
promotions outside the ordinary course of business, with the Seller's prior
consent which shall not unreasonably be withheld.
7.3. No General Increases. Except as required by pre-existing
contractual obligations, no Selling Entity shall grant any general or uniform
increase in the rates of pay of employees of the Business, nor grant any general
or uniform increase in the benefits under any bonus or pension plan or other
contract or commitment to, for or with any such employees; and no Selling Entity
shall increase the compensation payable or to become payable to officers,
salaried employees or agents of any Selling Entity or the Business, or increase
any bonus, insurance, pension or other benefit plan, payment or arrangement made
to, for or with any such officers, key salaried employees or agents of any
Selling Entity or the Business.
7.4. Contracts and Commitments. Without the prior consent of the Buyer,
no Selling Entity shall enter into any contract or commitment, or engage in any
discussion or negotiation for the purpose of securing any new contract or
commitment, with respect to the Business or engage in any transaction with
respect to the Business not in the usual and ordinary course of business and
consistent with the prior business practices of the Business. In no event shall
any Selling Entity, without the Buyer's prior consent, enter into any contract
or commitment, or engage in any discussion or negotiation for the purpose of
securing any new contract or commitment, under which the Selling Entity would
provide footwear to, or service the footwear department of, any entity other
than the current Licensors. In furtherance and not in limitation of the
foregoing, the Seller shall not enter into any of the agreements or agreement
modifications referred to in Schedule 7.4 without the Buyer's prior consent.
7.5. Merchandising Activities. The Seller shall consult in good faith
with the Buyer and obtain the prior consent (which consent shall not
unreasonably be withheld or delayed) of the Buyer's merchandising representative
responsible for the substantive category in question (who shall be made known to
the Seller in writing by an officer of the Buyer) before issuing any order for
merchandise after the date hereof (each, a "Subsequent Purchase Orders"). If the
Seller, in writing, notifies the Buyer about and seeks the Buyer's prior consent
to, a Subsequent Purchase Order which the Seller reasonably believes to be in
the best interests of the Business, and the Buyer does not respond within five
business days thereafter, the Buyer shall be deemed to have consented to that
Subsequent Purchase Order. Neither (i) Seller's issuance of any Subsequent
Purchase Order if such order was issued in accordance with the provisions hereof
nor (ii) Seller's failure to issue a Subsequent Purchase Order that was not
consented to by the Buyer's merchandising representative, shall be used as
grounds for any claim by the Buyer that Seller has breached any provision of
this Agreement.
7.6. Insurance. The Seller shall, in connection with the Business,
maintain with financially sound and reputable insurance companies, funds or
underwriters adequate insurance of the kinds, covering such risks and in such
amounts and with such deductibles and exclusions as are consistent with that
heretofore maintained by the Seller in connection with the Business.
7.7. Preservation of Organization.
(a) The Selling Entities acknowledge that the preservation of the
Business during the Interim Period is an integral part of the transactions
contemplated by this Agreement and that, without assurances that the Business
would be adequately staffed and operated during the Interim Period, the Buyer
would not have entered into this Agreement. Accordingly, each Selling Entity
shall use reasonable efforts, which shall be deemed to include those bonus and
retention efforts described on Schedule 7.7, to preserve the Business's business
organization intact, to keep available to the Buyer substantially all
strategically important employees of each Selling Entity relating to the
Business, to facilitate an orderly transition from the Seller's operations with
respect to the Business to those contemplated by the Buyer of certain employees
to be hired by Buyer, and to preserve for the Buyer to the extent practical and
within the control of the Seller the present relationships of each Selling
Entity's suppliers and others having business relations with any Selling Entity
in connection with the Business.
(b) Using the definitions set forth below, if the Field Employee
Differential is more than ten percent (10%) of the Number of Original Field
Employees, then Buyer shall be entitled to a credit against the Purchase Price
equal to (x) $1,500 multiplied by the number by which the Field Employee
Differential exceeds ten percent (10%) of the Number of Original Field
Employees, up to the point at which the Field Employee Differential exceeds
twenty percent (20%) of the Number of Original Field Employees, plus (y) $2,500
multiplied by the number by which the Field Employee Differential exceeds twenty
percent (20%) of the Number of Original Field Employees. The following
definitions are used in this Section: The "Field Employee Differential" is the
number (if positive) obtained by subtracting the Number of Remaining Field
Employees from the Number of Original Field Employees. The "Number of Original
Field Employees" means the number of Specified Field Employees on the date
hereof, multiplied by the Closed Store Fraction. The "Closed Store Fraction" is
the number of Stores whose business is actually transferred to the Buyer on the
Closing Date, divided by the number of Stores whose business would be
transferred to the Buyer hereunder if the Closing Date were to occur immediately
following the date hereof. The "Number of Remaining Field Employees" means (x)
the number of persons who are employed in the Business on the day prior to the
Closing Date in Stores whose business will be transferred to the Buyer on the
Closing Date and who hold positions at that time which are held on the date
hereof by the Specified Field Employees, plus (y) the Number of Disqualified
Reductions. The "Number of Disqualified Reductions" means the number of persons,
if any, who meet each of the following three tests: (i) the person is a
Specified Field Employee on the date hereof, (ii) the person holds a position on
the date hereof in a Store whose business is actually transferred to the Buyer
on the Closing Date, and (iii) the person leaves the Seller's employ after the
date hereof and Buyer contributes to his or her attrition in a material way
including, without limitation, failing to offer the person comparable benefits
and a salary which is the same or better than that to which he or she is
entitled as an employee of the Seller, or failing to provide the person with
information regarding the employee benefits of the Buyer or other information
customarily supplied to newly hired or prospective employees. When used in this
subsection (b) the term "Employee" means only full-time employees, and the term
"Store" means only those Stores for which the Store License Contract requires
that the Seller have one or more full-time employees work in the Store.
7.8. No Default. No Selling Entity shall do any act or omit to do any
act, or permit any act or omission to act, which will cause a material breach of
any contract, commitment or obligation of any Selling Entity relating to the
Business, including, without limitation, any of the Store License Contracts,
Personal Property Leases, Intellectual Property Licenses, Purchase Orders or
Other Contracts.
7.9. Compliance with Laws. Each Selling Entity shall comply in all
material respects with all Laws applicable to the Business or the Acquired
Assets or as may be required for the valid and effective transfer of the
Acquired Assets.
7.10. Advice of Change. The Seller will promptly advise the Buyer in
writing of: (i) any notice or other communications from any Person that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communications from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to the best of Seller's knowledge,
threatened against, relating to or otherwise involving any Selling Entity, the
Acquired Assets or the Business that, if pending on the date of this Agreement,
would have been required to have been disclosed in a schedule hereto or that
relate to the consummation by the Seller of the transactions contemplated by
this Agreement; (iv) any fact or circumstance of which the Seller has knowledge
which would make any representation or warranty set forth herein untrue or
inaccurate in any material respect as of the Closing Date; and (v) any planned
or threatened labor dispute, organization efforts, strike or work stoppage
affecting the Seller's employees at the Stores.
7.11. Exclusivity. X. Xxxxx shall not, and shall cause each of its
Affiliates and Representatives not to, directly or indirectly, (i) solicit,
initiate, or encourage, or take any other action knowingly to facilitate, any
Competing Proposal, or (ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, or assist or participate in, or facilitate or cooperate with,
in any other manner, any effort or attempt by any Person to make a Competing
Proposal or otherwise do or seek a Competing Transaction. X. Xxxxx shall
immediately terminate, or cause to be terminated, any and all discussions,
negotiations and provision of information with respect to a possible Competing
Proposal or Competing Transaction which are now occurring or have previously
occurred, and shall immediately request the prompt return of all confidential
information relating to the Business previously furnished to any third parties
with respect thereto. Subject to pre-existing contractual obligations of
confidentiality, the Seller shall (i) notify the Buyer immediately both orally
and in writing if any Person makes any Competing Proposal or makes any inquiry
to or communication with the Seller or any Representative of X. Xxxxx which the
Seller reasonably believes could lead to a Competing Proposal, the terms and
conditions of such Competing Proposal, inquiry or communication (including any
subsequent amendment or other modification thereof), and the identity of the
Person making such Competing Proposal, inquiry or communication and (ii) keep
the Buyer informed in all material respects of the status and the details
(including any subsequent amendment or other modification thereof), of any
Competing Proposal, inquiry or communication. As used in this Agreement, an
"Affiliate" of any Person means any corporation, individual or other entity
directly or indirectly in control of, controlled by, or under common control
with, such Person. Each of the following shall be deemed a "Representative" of
X. Xxxxx hereunder: any director, officer or employee of X. Xxxxx or any of its
subsidiaries or any investment banker, attorney, accountant or other advisor or
representative of X. Xxxxx or any of its subsidiaries. A "Competing Proposal"
means any inquiry, proposal or offer from any Person other than the Buyer
relating to, or that is reasonably likely to lead to, any direct or indirect
acquisition, in one transaction or a series of transactions (including, without
limitation, by way of any asset sale, merger, consolidation, tender offer,
exchange offer, business combination, recapitalization, liquidation,
dissolution, joint venture, or similar transaction), of all or any significant
portion of the Business or the Acquired Assets (a "Competing Transaction").
Notwithstanding the foregoing, an inquiry, proposal or offer from any Person
other than the Buyer relating to, or that is reasonably likely to lead to, any
direct or indirect acquisition, in one transaction or a series of transactions
(including, without limitation, by way of any asset sale, merger, consolidation,
tender offer, exchange offer, business combination, recapitalization,
liquidation, dissolution, joint venture, or similar transaction), of all or
substantially all the assets or securities of X. Xxxxx, including both the
Business and the Non-Footwear Business, under circumstances in which the
potential acquiror is bound to honor the terms of this Agreement and consummate
(or cause the Seller to consummate) the transactions contemplated hereby, shall
not be deemed a Competing Proposal, and the resulting transaction (if any) shall
not be deemed a Competing Transaction.
7.12. Consents of Third Parties. Each Selling Entity will employ
reasonable efforts to secure, before the Closing Date, the consent, in form and
substance reasonably satisfactory to the Buyer and the Buyer's counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any of the Store License Contracts, Personal Property Leases, Purchase Orders,
Intellectual Property Licenses, Other Contracts under which such transactions
would constitute a default, would accelerate obligations of any Selling Entity
in connection with the Business or would permit cancellation of any such
contract.
7.13. Satisfaction of Conditions Precedent. Each Selling Entity will
use reasonable efforts to cause the satisfaction of the conditions precedent
contained herein.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions (to the extent noncompliance
is not waived in writing by Footstar):
8.1. Representations and Warranties True at Closing. The
representations and warranties made by each Selling Entity in or pursuant to
this Agreement shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though such representations and
warranties had been made or given at and as of the Closing Date.
8.2. Compliance with Agreement. Each Selling Entity shall have
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it on or prior to the
Closing Date.
8.3. Adverse Change. The business, assets or properties of each Selling
Entity relating to the Business and the Acquired Assets shall not have been, and
shall not be threatened to be, materially adversely affected in any way as a
result of fire, explosion, earthquake, disaster, any action by the United States
or any other governmental authority, flood, drought, embargo, riot, civil
disturbance, uprising, activity of armed forces or act of God or public enemy.
In addition, none of the following shall have occurred:
(a) at any time during the Interim Period there is pending any
proceeding (a "Insolvency Proceeding") which is instituted by or against either
Xxxx or Xxxxx Mart, Inc. (each a "Key Licensor") or any Affiliate of a Key
Licensor (i) seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or (ii) seeking appointment of a receiver, trustee, or similar official
for it or for any substantial part of its property, or any Key Licensor or any
Affiliate of any Key Licensor takes any action to authorize or consent to any
Insolvency Proceeding, or
(b) the number of Stores scheduled to be operated by any of the Key
Licensors decreases by more than 20% during the Interim Period, when compared
with the number of Stores actually operated by that Licensor on the date hereof.
(As used herein, the number of Stores scheduled to be operated by a Licensor on
a given date are those Stores actually operated by the Licensor, less the number
of Stores the Licensor has publicly announced it will close.)
8.4. Seller's Certificate. The Seller shall have delivered to the Buyer
in writing, at and as of the Closing, a certificate duly executed by each
Selling Entity, in form and substance reasonably satisfactory to the Buyer and
the Buyer's counsel, certifying that the conditions in each of Section 8.1, 8.2
and 8.3 have been satisfied.
8.5. Opinion of Counsel. Xxxxxxx, Procter & Xxxx LLP, counsel to the
Seller, shall have delivered to the Buyer a written opinion, addressed to the
Buyer and dated the Closing Date, substantially in the form of Exhibit 8.5.
8.6. Agreements with Licensors. The Seller shall have obtained and
delivered to the Buyer agreements from the Licensors identified on Schedule
8.6(a), in the form set forth on Schedule 8.6(a). The Seller shall have obtained
and delivered to the Buyer agreements from the Licensors identified on Schedule
8.6(b), substantially in the form set forth on Schedule 8.6(b), or, in the
absence of any such agreement, the Purchase Price shall be reduced by an amount
determined in the manner set forth on Schedule 8.6(b) with respect to such
agreement.
8.7. Xxxx-Xxxxx-Xxxxxx; No Litigation. The parties shall have made all
filings and submissions required under the Xxxx-Xxxxx-Xxxxxx Act and the
applicable waiting period thereunder shall have expired or been terminated
without objection, or the Federal Trade Commission (the "FTC") or the Antitrust
Division of the United States Department of Justice United (the "DOJ") shall
have otherwise consented to the transactions contemplated by this Agreement. No
restraining order or injunction shall prevent the transactions contemplated by
this Agreement and no action, suit or proceeding shall be pending or threatened
before any court or administrative body in which it will be or is sought to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
8.8. Other Agreements. Each Selling Entity shall have executed and
delivered all other Transaction Documents to which it is a party, and such
agreements shall be in full force and effect.
8.9. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Buyer and the Buyer's counsel, and the Buyer shall
have received the originals or certified or other copies of all such records and
documents (including corporate organizational documents) as the Buyer may
reasonably request.
8.10. Inventory Target. The Buyer shall have determined, in its
reasonable judgment, that it is likely that as of the Closing Date: (a) the
aggregate Inventory Retail Value at Closing will equal or exceed One Hundred
Sixteen Million Dollars ($116,000,000) (the "Inventory Target"), and (b) at
least 70% of the aggregate Inventory (measured by Inventory Retail Value) will
be in the Inventory Categories "Current / Future Seasons" or "Aged One Season."
9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by X. Xxxxx):
9.1. Representations and Warranties True at Closing. The
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties had been made or given at
and as of the Closing Date.
9.2. Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement that are to be performed or complied with by it at or prior to the
Closing.
9.3. Closing Certificate. The Buyer shall have delivered to the Seller
in writing, at and as of the Closing, a certificate duly executed by Buyer, in
form and substance satisfactory to the Seller and the Seller's counsel, to the
effect that the conditions in each of Sections 9.1 and 9.2 have been satisfied.
9.4. Opinion of Counsel. Pitney, Xxxxxx, Xxxx & Xxxxx LLP, counsel to
the Buyer, shall have delivered to the Seller a written opinion, dated the
Closing Date and addressed to the Seller, substantially in the form of Exhibit
9.4.
9.5. Xxxx-Xxxxx-Xxxxxx; No Litigation. The parties shall have made all
filings and submissions required under the Xxxx-Xxxxx-Xxxxxx Act and the
applicable waiting period thereunder shall have expired or been terminated
without objection, or the FTC or the DOJ shall have otherwise consented to the
transactions contemplated by this Agreement. No restraining order or injunction
shall prevent the transactions contemplated by this Agreement and no action,
suit or proceeding shall be pending or threatened before any court or
administrative body in which it will be or is sought to restrain or prohibit or
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
9.6. Agreements. The Buyer shall have executed and delivered the
Transaction Documents to which it is a party, and such agreements shall be in
full force and effect.
9.7. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Seller in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Seller and its counsel, and the Seller shall have
received the originals or certified or other copies of all such records and
documents as the Seller may reasonably request.
10. CONFIDENTIAL INFORMATION. Any and all information disclosed by the
Buyer to the Seller or by the Seller to the Buyer as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Seller or to the Buyer,
as the case may be, shall remain confidential to the Seller and the Buyer. Each
of the Seller and the Buyer agree not to further divulge or disclose or use for
its benefit or purposes any such information at any time in the future unless it
has otherwise become public. The information intended to be protected hereby
shall include, but not be limited to, financial information, customers, sales
representatives, and anything else having an economic or pecuniary benefit to
the Buyer or the Seller, respectively. If the Closing occurs hereunder, any and
all information disclosed by the Seller to the Buyer and relating to the
Business or the Acquired Assets shall thereafter be deemed the confidential
information of the Buyer, rather than of the Seller, and the Seller agrees not
to further divulge or disclose or use for its benefit or purposes any such
information at any time in the future unless it has otherwise become public. The
confidentiality letter agreement (the "Confidentiality Letter") dated September
5, 2000 between the X. Xxxxx and Footstar, Inc., is incorporated herein by
reference and shall continue in force and effect after the date hereof, except
that (a) the Buyer, rather than Footstar, Inc., shall be deemed the "Recipient"
as that term is used in the Confidentiality Letter, (b) to the extent that any
terms of the Confidentiality Letter are inconsistent with any terms of this
Agreement (not including the Confidentiality Agreement), the terms of this
Agreement shall govern, (c) until the Closing occurs or this Agreement has been
validly terminated, paragraph 8 of the Confidentiality Letter shall not restrict
actions by the Buyer in furtherance of its acquisition of the Business, and (d)
paragraph 4 of the Confidentiality Letter shall not survive the Closing
hereunder.
11. INDEMNIFICATION; SURVIVAL.
11.1. Indemnity by the Seller. Subject to the terms and conditions of
this Section 11, each Selling Entity jointly and severally agrees to indemnify,
defend and hold the Buyer and its Affiliates (collectively, for purposes of this
Section 11, the "Buyer Indemnified Parties") harmless from and with respect to
any and all claims, liabilities, losses, damages, costs and expenses (whether
made or incurred before or after the Closing Date), including, without
limitation, the reasonable fees and disbursements of counsel (collectively, the
"Losses"), to the extent such Losses result directly or indirectly from any of
the following:
(i) the inaccuracy of any representation or warranty
made by any Selling Entity in or pursuant to this Agreement (including
the Schedules and Exhibits hereto) or any other statement, certificate
or other instrument delivered pursuant hereto; provided, however, that
the Selling Entities shall be liable under this Section 11.1(i) in
respect of Losses only to the extent the aggregate of such Losses
exceeds $100,000 in which case the Selling Entities shall be liable
under this 11.1(i) for the amount of such Losses in excess of $100,000.
(ii) any failure or any breach by any Selling Entity
of any covenant, obligation or undertaking made by the Selling Entity
in or pursuant to this Agreement (including the Schedules and Exhibits
hereto) or any other statement, certificate or other instrument
delivered pursuant hereto;
(iii) any claim, liability, obligation or damage with
respect to the Retained Liabilities, including, without limitation, any
claim, obligation or liability arising in connection with a Benefit
Plan of the Seller or the employment or termination of employment of
any Persons in the Business on or before the Closing Date, including
any worker's compensation claims, any employee grievances, any
liabilities with respect to pension, medical or other employment
benefits and any liabilities for accrued vacation, bonus or severance
payments arising as a result of the consummation of the transactions
contemplated by this Agreement, except to the extent that the Buyer has
agreed in writing to be responsible for such payments and has received
a credit therefor in accordance with Section 4.3.
(iv) any claim or liability arising under the bulk
sales laws of any jurisdiction in connection with transactions
contemplated by this Agreement to the extent that such claim or
liability does not arise pursuant to a Purchase Order outstanding at
the Effective Time or another Assumed Obligation (in view of such
indemnification obligation the Buyer hereby waives the Seller's
compliance with any such bulk sales laws as a condition to the Closing
hereunder);
(v) any claim that any Inventory violates or
infringes upon the intellectual property rights of a Person, or any
product liability claim with respect to any Inventory;
(vi) any claims against, or debts, liabilities or
obligations of any of the Selling Entities, whether or not relating to
the Acquired Assets or the Business, and whether or not disclosed on
any of the Schedules attached hereto, unless such debt, liability or
obligation is an Assumed Obligation;
(vii) any claim for any brokerage commissions asserted
by any broker as a result of any action by any Selling Entity;
(viii) any Tax liabilities of the Seller, including,
without limitation, any Tax liabilities of the Seller that arose before
the Closing Date, any Tax liabilities of the Seller not assumed by the
Buyer hereunder but transferred to the Buyer under any transferee
liability Laws, and any Tax liability of the Seller arising from the
sale of the Acquired Assets;
(ix) the Seller's complete or partial withdrawal from
any Multiemployer Plan on or prior to the Closing Date, or the Seller's
failure to make contributions or a withdrawal liability payment,
including, but not limited to, any exit fees, security deposits, claim
costs, or any other similar type expenses ("Withdrawal Liability
Payment"), to each Multiemployer Plan that have been assessed to the
Seller or which may be assessed to the Seller at any time in the future
by such Multiemployer Plan; and
(x) the Buyer's complete or partial withdrawal from
any of the Multiemployer Plans within the relevant Multiemployer Plan
plan year in which the Closing Date occurs and the five consecutive
plan years of each respective Multiemployer Plan beginning on or after
the Closing Date, but, the indemnified portion of complete or partial
withdrawal liability will only be the portion of such Withdrawal
Liability Payment that exceeds the amount that the Buyer would
otherwise incur without any attribution to it of any portion of the
contribution history of the Seller with respect to the relevant
Multiemployer Plan, or to the extent taken into account by the relevant
Multiemployer Plan as permitted by section 4211(c)(4) of ERISA, other
history of the Seller including the service of any Specified Employee
with the Seller. Notwithstanding any provision of this Section 11 to
the contrary, the indemnification provisions of this Subsection 11.1(x)
shall survive the Closing and shall continue in full force and effect
without limit until the last day of the fifth full plan year of any
Multiemployer Plan that begins on or after the Closing, or if earlier
with respect to any Multiemployer Plan, the date the Buyer completely
withdraws from any such respective Multiemployer Plan. Further
provided, the amount of any indemnification payment by Seller to Buyer
under this Subsection 11.1(x) with respect to any Multiemployer Plan
shall be reduced by the amount of the same type Withdrawal Liability
Payment made by Seller either as an indemnification payment to Buyer
under Subsection 11.1(ix) above, or as a direct payment by Seller with
respect to the same such Multiemployer Plan.
11.2. Indemnity by the Buyer. Subject to the terms and conditions of
this Section 11, the Buyer agrees to indemnify, defend and hold each Selling
Entity and its Affiliates (collectively, for purposes of this Section 11, the
"Seller Indemnified Parties") harmless from and with respect to any and all
Losses, to the extent such Losses result directly or indirectly from any of the
following:
(i) the inaccuracy of any representation or warranty
made by the Buyer in or pursuant to this Agreement (including the
Schedules and Exhibits hereto) or any other statement, certificate or
other instrument delivered pursuant hereto; provided, however, that the
Buyer shall be liable under this Section 11.2(i) in respect of Losses
only to the extent the aggregate of such Losses exceeds $100,000 in
which case the Buyer shall be liable under this 11.2(i) for the amount
of such Losses in excess of $100,000;
(ii) any failure or any breach by the Buyer of any
covenant, obligation or undertaking made by the Buyer in or pursuant to
this Agreement (including the Schedules and Exhibits hereto) or any
other statement, certificate or other instrument delivered pursuant
hereto, including any breach of the Buyer's agreement to assume the
Assumed Obligations pursuant to Section 2;
(iii) any claims against, or debts, liabilities or
obligations of the Buyer, whether or not relating to the Acquired
Assets or the operation of the Business after the Closing, unless such
debt, liability or obligation is one for which the Seller has agreed to
indemnify Buyer hereunder; and
(iv) any claim for any brokerage commissions asserted
by any broker as a result of any action by the Buyer.
11.3. Claims.
(a) Notice. Any party seeking indemnification hereunder (the
"Indemnified Party") shall promptly notify the other party hereto (the
"Indemnifying Party") in writing of any action, suit, proceeding, demand, breach
or assertion of right for payment and/or offset (a "Claim") with respect to
which the Indemnified Party claims indemnification hereunder, provided that
failure of the Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 11 except to the
extent, if at all, that such Indemnifying Party shall have been prejudiced
thereby. The notice shall include the amount of and circumstances surrounding
such claim, and the basis for the indemnification obligation.
(b) Third Party Claims. If such Claim relates to any action,
suit, proceeding or demand instituted against the Indemnified Party by a third
party (a "Third Party Claim"), the Indemnifying Party shall be entitled to
participate in the defense of such Third Party Claim after receipt of notice of
such claim from the Indemnified Party. Within thirty (30) days after receipt of
notice of a particular matter from the Indemnified Party, the Indemnifying Party
may assume the defense of such Third Party Claim, in which case the Indemnifying
Party shall have the authority to negotiate, compromise and settle such Third
Party Claim, if and only if the Indemnified Party shall not have given the
Indemnifying Party written notice that it has determined, in the exercise of its
reasonable discretion, that a conflict of interest makes separate representation
by the Indemnified Party's own counsel advisable. The Indemnified Party shall
retain the right to employ its own counsel and to participate in the defense of
any Third Party Claim, the defense of which has been assumed by the Indemnifying
Party pursuant hereto, but the Indemnified Party shall bear and shall be solely
responsible for its own costs and expenses in connection with such
participation.
11.4. Method and Manner of Paying Claims. In the event of any claims
under this Section 11, the claimant shall advise the party or parties who are
required to provide indemnification therefor in writing of the amount and
circumstances surrounding such claim in reasonable detail. With respect to
liquidated claims, if within thirty days the other party has not contested such
claim in writing, the other party will pay the full amount thereof within ten
days after the expiration of such period. Any amount owed by an Indemnifying
Party hereunder with respect to any Claim may be set-off by the Indemnified
Party against any amounts owed by the Indemnified Party to any Indemnifying
Party. The unpaid balance of a Claim shall bear interest at the Prime Rate from
the date notice thereof is given by the Indemnified Party to the Indemnifying
Party.
11.5. Shared Liability. To the extent, if any, the same factual bases
give rise both to a claim for indemnification by the Buyer against the Seller
under Section 11.1, and a claim for indemnification by the Seller against the
Buyer under Section 11.2, each party shall bear a proportion of the Losses
resulting from such factual bases equal to such party's proportionate
responsibility for such factual bases.
11.6. Insurance. In the event that the Indemnified Party is at anytime
paid for any Losses by an insurance company under a policy owned by, and with
the respect to which the premiums are paid by, the Indemnifying Party, and (i)
if the Indemnified Party has previously received payment from the Indemnifying
Party with respect to such Losses, the Indemnified Party shall pay to the
Indemnifying Party the amount by which the amount paid by the Indemnifying Party
and the insurance proceeds exceeds the Losses, or (ii) the Indemnified Party has
not previously received payment from the Indemnifying Party with respect to such
Losses, the Indemnifying Party shall receive a credit in the amount of such
insurance proceeds against the amount otherwise payable to the Indemnified
Party.
11.7. Representative of Selling Entities. Wherever in this Section 11
reference is made to multiple parties as Indemnifying or Indemnified Parties,
Xxxxx shall be deemed the representative of all the Selling Entities. Notices to
or from such representative shall be deemed notice to or from all parties so
represented, and the decisions of such representative regarding defense of
claims and other matters arising under this Section 11 shall be deemed the
decisions of all parties so represented, in each case unless the context clearly
indicates otherwise.
11.8. Survival.
(a) Seller's Representations, Warranties, Covenants and
Indemnities. All of the representations and warranties of the Seller (except for
those contained in Section 5.1 (Organization), 5.2 (Corporate Approval) and 5.9
(Title to Acquired Assets), contained herein or in any document, certificate or
other instrument required to be delivered hereunder shall survive the Closing
and continue in full force and effect for 12 months following the Closing Date.
The representations and warranties of the Seller contained in Sections 5.1, 5.2
and 5.9 shall survive the Closing and shall continue in full force and effect
without limit as to time (subject to any applicable statutes of limitations).
All covenants and indemnities of the Seller in this Agreement or in any document
or certificate delivered hereunder shall, unless otherwise specifically provided
therein, shall survive the Closing and shall continue in full force and effect
without limit as to time (subject to any applicable statutes of limitations).
(b) Buyer's Representations, Warranties, Covenants and
Indemnities. All of the representations and warranties of the Buyer contained in
Section 6 (except for those contained in Section 6.1 (Organization) and 6.2
(Corporate Approval), or in any document, certificate or other instrument
required to be delivered hereunder shall survive the Closing and shall continue
in full force and effect for 12 months following the Closing Date. The
representations and warranties of the Buyer contained in Sections 6.1 and 6.2
shall survive the Closing and shall continue in full force and effect without
limit as to time (subject to any applicable statutes of limitations). All
covenants and indemnities of the Buyer in this Agreement or in any document or
certificate delivered hereunder shall, unless otherwise specifically provided
therein, shall survive the Closing and shall continue in full force and effect
without limit as to time (subject to any applicable statutes of limitations).
12. OTHER COVENANTS OF THE PARTIES. The parties hereto covenant and
agree as follows:
12.1. Xxxx-Xxxxx-Xxxxxx Act. Each of the parties hereto shall cooperate
with each other and promptly file any notification and report forms and related
material that it may be required to file with the FTC and the DOJ under the
Xxxx-Xxxxx-Xxxxxx Act, shall use reasonable efforts to obtain an early
termination of the applicable waiting period, and shall make any further filings
or information submissions pursuant thereto that may be necessary.
12.2. Employees of Seller.
(a) The Buyer may, with reasonable notice to the Seller,
contact such of Seller's employees engaged primarily in the Business as the
Buyer may determine for the purpose of discussing the employment of such
employees by the Buyer after the Closing, and the Seller will reasonably
cooperate with the Buyer in such regard. The Buyer shall offer employment to
the "Specified Field Employees," which term means the Seller's employees at
the local store, dual manager, group manager, district merchandiser, district
manager, senior district merchandiser and senior district manager levels who
are employed by the Seller up to the day prior to the Closing, except (i)
those employed at any of the Closeout Stores and (ii) any temporary or
seasonal employees. The Buyer shall have no obligation to employ any other
employees of the Seller, and shall have no other obligation or liability to
any employees arising out of the termination by the Seller of the employment
of any such employees as a result of the transactions contemplated by this
Agreement, all of which obligations and liabilities, if any, shall be the sole
responsibility of the Seller. Without limiting the generality of the
foregoing, each Selling Entity shall jointly and severally indemnify and save
harmless the Buyer from and against any and all liabilities and obligations of
Xxxxx or any Selling Entity to its current or former employees, consultants,
salesmen and others providing services to Xxxxx or any Selling Entity relating
to their services prior to the Closing or arising as a consequence of the
Closing, including, without limitation, (w) wages, salaries, bonuses and any
other direct compensation, (x) Xxxxx or any Selling Entity's obligations and
liabilities under any retirement, deferred compensation, pension,
profit-sharing or other employee benefit plan (including, without limitation,
the Benefit Plans and Multiemployer Plans in accordance with Section 11.1),
(y) any severance or termination pay or benefit arrangement or agreement, any
accrued vacation pay, any life, health, or disability insurance or benefits,
worker's compensation and any other employee benefits or other liabilities
relating to Xxxxx or any Selling Entity `s current or former employees or
other service providers, and (z) any and all liabilities and obligations
arising out of the Worker Adjustment and Retraining Notification Act ("WARN")
or any similar state Law, the Comprehensive Omnibus Budget Reconciliation Act
("COBRA"), and any other Laws. The Buyer's continued employment of the
Specified Employees who cease employment with the Seller in accordance with
this Subsection 12.2(a) shall not cause such Specified Employees to change or
modify any continuing employment relationship that may exist between such
Specified Employees and a Licensor.
(b) The Seller will terminate, as of the Effective Time, the
employment of all of its employees who are engaged in the Business, and
provide on a timely basis to such employees and representatives any notices
required, if any, under WARN, COBRA and/or ERISA. The Seller will fully pay
all such employees (within normal pay periods or as otherwise required by Law)
for all sums due them from the Seller including but not limited to all
commissions, bonuses, accrued vacation pay and other employee benefits, except
to the extent that the Buyer has agreed in writing to be responsible for such
payments and has received a credit therefor in accordance with Section 4.3.
The Seller shall also fully pay all sums which are due with respect to the
Seller's employment of such persons for state and federal income tax
withholding, medical insurance payments, social security and Medicare (both
employee and employer shares), workers' compensation premiums,
unemployment/disability compensation payments, and any and all other amounts
which are due or which may become due as a result of the terminations
contemplated by this section. At or prior to the time of such termination, the
Seller shall remind all terminated employees of their obligations with respect
to the confidential information of the Seller, which obligations continue
beyond the Closing Date and will be enforceable by the Buyer after the Closing
Date. The Seller shall make, or cause to be made, all payments now or in the
future required to be made, and shall provide, or cause to be provided, all
benefits now or in the future required to be provided, to Persons who retire
from employment with the Seller, and the Buyer shall have no responsibility
therefor. This termination by Seller is not intended to have any impact on the
continuing employment relationship that may exist between any union employee
and a Licensor who had been treated as a joint employer with Seller.
(c) All of the non-union employees who are engaged in the
Business and whose employment will be terminated in connection with the
transactions contemplated by this Agreement and who will be hired by the Buyer
shall cease to participate in any of the Benefit Plans in accordance with the
terms of such Benefit Plans and as required by applicable Law.
(d) Notwithstanding the foregoing, the Seller will transfer to
the Buyer, and include as an Acquired Asset, or enforce on behalf of the Buyer
if non-transferable, all interests of the Seller in any confidentiality
agreement which it has entered into with (x) any of its employees engaged in
the Business and whose employment will be terminated in connection with the
transactions contemplated by this Agreement, or (y) any consultants whose
consulting services have been used by the Business and whose consulting
arrangement is not being assigned to the Buyer in connection with the
transactions contemplated by this Agreement.
12.3. Non-Competition. In consideration for, and as a condition to,
Buyer's agreement to enter into this Agreement, the Buyer and each of the
Selling Entities agree as follows:
(a) Scope of Agreement. Each of the Selling Entities agrees
that during the period beginning on the Closing Date and ending on the fifth
anniversary of the Closing Date (the "Non-Competition Period"), it will not, and
will cause each of its subsidiaries not to, directly or indirectly, either for
themselves or for any other Person, permit their names to be used by or
participate in any business or enterprise identical to or similar to the
Business as the same is engaged in as of the date of this Agreement and which is
located in North America. In furtherance and not in limitation of the foregoing,
any one or more of the following actions shall be deemed to be the operation of
a "business or enterprise identical to or similar to the Business:" operation of
stand-alone footwear stores, operation of licensed footwear departments in
stores operated by independent third parties, acting as a supplier of footwear
to stores operated by independent third parties, or bidding for or negotiating
for the right to do any of the foregoing. For purposes of this Agreement, the
term "participate" includes any direct or indirect interest in any enterprise,
whether as an officer, director, employee, partner, sole proprietor, agent,
representative, independent contractor, consultant, franchisor, franchisee,
creditor, owner, investor or otherwise; provided, that the term "participate"
shall not include ownership of less than two percent of the stock of a
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market. Notwithstanding the foregoing, this
covenant shall not restrict the Seller's continued operation of its Casual Male
Big & Tall, B&T Factory Stores and Xxxx Big & Tall businesses, its Work `n Gear
business, or the Footwear Departments at the Closeout Stores, in each case as
the same are currently being operated. Each of the Selling Entities agrees that
this covenant is reasonable with respect to its duration, geographical area and
scope.
(b) Tolling of Non-Competition Period. In the event of an
alleged breach or violation by any such Persons of any of the provisions of this
Section 12.3, the Non-Competition Period described above will be tolled until
such alleged breach or violation is resolved. Each Selling Entity agrees that
these restrictions are reasonable.
(c) Reasonableness. If, at the time of enforcement of any of
the provisions of this Section 12.3, a court holds that the restrictions stated
therein are unreasonable under the circumstances then existing, the Parties
hereto agree that the maximum period, scope or geographical area reasonable
under such circumstances will be substituted for the stated period, scope or
area.
(d) Independent Agreement. Each Selling Entity agrees that, if
the Closing occurs hereunder, the covenants made in Section 12.3(a) shall be
construed as an agreement independent of any other provision of this Agreement
and shall survive any order of a court of competent jurisdiction terminating any
other provision of this Agreement.
12.4. Disclosure Supplements. From time to time prior to the Effective
Time, each party hereto will promptly supplement or amend (by written notice to
the other) its respective Disclosure Schedules delivered pursuant hereto with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement would have been required to be set forth or
described in such Schedules or which is necessary to correct any information in
such Schedules which has been rendered materially inaccurate thereby. If the
disclosure contained in any such supplement (i) relates to events occurring
before execution of this Agreement or (ii) alone or together with other
supplements or amendments materially adversely affects the representation to
which the amendment or supplement relates, the party receiving the amendment or
supplement may determine not to accept it as a modification of the relevant
representation. Notice of such determination, if made, shall be given by the
receiving party to the other party not later than 15 days after it received the
disclosure in question. If such notice is not timely given, or if the disclosure
in question did not contain any matter of the nature specified in clause (i) or
(ii) of the second preceding sentence, the relevant representation shall be
deemed modified by the disclosure in the amendment or supplement with the same
effect as though that disclosure had been included in the relevant Disclosure
Schedule as furnished prior to execution of this Agreement.
12.5 Tax Clearances. Between the date hereof and the Closing Date, the
Seller shall obtain and provide to the Buyer all clearance certificates or
similar documents that are required by any state, local or other Tax authority
in order to relieve the Buyer of any obligation to withhold or escrow any
portion of the Purchase Price or otherwise be subject to transferee liability
for any Tax liabilities of the Seller.
12.6 Precautionary Filings. The Seller has: (i) filed certain Uniform
Commercial Code Financing Statements (the "Precautionary Filings"), designating
one of the Selling Entities as owner of footwear inventory in the Stores of
certain Licensors, which are more particularly described on Schedule 12.6. The
Buyer acknowledges that the Seller has neither made such Precautionary Filings
with respect to the inventory in all Stores, not sent notification letters to
the secured parties of any Licensor. The Seller shall: (i) execute and deliver
to the Buyer assignments of the Precautionary Filings assigning the Seller's
interest in the Precautionary Filings to the Buyer, utilizing uniform commercial
code assignment forms prepared by the Buyer or the Buyer's counsel, and in form
and substance reasonably satisfactory to the Seller and the Buyer; and (ii)
cooperate with and assist Buyer, either before or after the Closing, in
notifying each of the Licensors' secured parties of the Buyer's interest in the
inventory, furniture, fixtures, proceeds and other collateral identified in the
Precautionary Filings in order to protect such inventory, furniture, fixtures,
proceeds and other assets owned by the Buyer from the creditors of the
Licensors' secured parties.
12.7 Disposition of Furniture and Fixtures. The Seller shall identify
in writing to the Buyer, prior to the Closing, each item of Furniture or Fixture
acquired or disposed of during the Interim Period which has a value of $100 or
more; provided, that an item disposed of for no consideration (i.e., discarded)
need not be identified unless it had a value in excess of $500.
12.8 Special Provision Regarding Insolvency. If prior to the Closing,
there is pending with respect to any Licensor identified on Schedule 3.4(i) an
Insolvency Proceeding pursuant to Chapter 0, Xxxxx 00, Xxxxxx Xxxxxx Code or any
comparable state law provision, the Buyer shall have the right (which shall be
its sole remedy hereunder for such event), exercisable by written notice
delivered to the Seller prior to the Closing, and in any event no less than
seven days after public announcement of the Insolvency Proceeding, to remove
from the Acquired Assets those assets relating to that Licensor, in which event
the parties shall agree upon reasonable mechanisms to accomplish that change,
including proportionally adjusting the Inventory Target to reflect the
elimination from "Inventory" of the footwear in the Stores of that Licensor.
13. GENERAL.
13.1 Termination. This Agreement may be terminated:
(a) at any time prior to the Closing by mutual agreement of
the Buyer and the Seller;
(b) by either the Buyer or the Seller by written notice to the
other if the Closing has not occurred by February 28, 2001 (the "Cutoff Date");
provided, that the right to terminate this Agreement under this Section 13.1(b)
shall not be available to any party whose failure to fulfill in any material
respect any obligation or closing condition under this Agreement has caused or
resulted in the failure of the Closing to occur on or before the Cutoff Date;
(c) by the Buyer, at any time when the Seller is in breach of
any of its material covenants pursuant to this Agreement or if any
representation or warranty of the Seller is false or misleading in any material
respect; and such default is not capable of being cured; provided that the Buyer
shall not have the right to terminate hereunder based solely on a breach of
Section 5.6; or
(d) by the Seller, at any time when the Buyer is in breach of
any of its material covenants pursuant to this Agreement or if any
representation or warranty of the Buyer is false or misleading in any material
respect; and such default is not capable of being cured.
If this Agreement is terminated pursuant to this Section 13.1,
this Agreement shall become void and of no effect with no liability on the part
of any party hereto, except that (a) the agreements contained in this Section
13.1, in Section 13.2, and in Section 10 shall survive the termination hereof,
and (b) no such termination shall relieve any party of any liability or damages
resulting from any willful breach or default of any representation, warranty,
covenant, agreement, provision or term in any Transaction Document which exists
at the time of such termination.
13.2. Expenses; Termination Fee.
(a) All transfer and sales Taxes payable with respect to the sale and
conveyance of the Acquired Assets to the Buyer shall be paid by the Seller. All
fees and expenses incurred in connection with the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby,
including, without limitation, attorneys', accountants' and outside advisers'
fees and disbursements, shall be borne by the party incurring such expenses,
except as otherwise provided in Section 3.5, whether or not the transactions
contemplated hereby are consummated. Without limiting the foregoing, each party
shall pay its own costs, in connection with preparing the Xxxx-Xxxxx-Xxxxxx
filings referenced herein, it being understood that the Buyer, as the acquiring
party, shall be solely responsible for paying the Xxxx-Xxxxx-Xxxxxx filing fees.
(b) Notwithstanding subsection (a) above, in the event that (i) a
Competing Proposal shall have been made after the date hereof, (ii) thereafter
this Agreement is terminated (x) by the Seller prior to June 1, 2001 pursuant to
Section 13.1(b), or (y) by the Buyer pursuant to either Section 13.1(b) or
Section 13.1(c) (other than where the Buyer relies, as the basis for its
termination or its failure to close by the Cutoff Date, solely on (ww) breaches
of material covenants with which the Seller could not have complied through the
exercise of commercially reasonable efforts and/or (xx) the failure of
representations and warranties, which were true in all material respects on the
date hereof, to be true in all material respects at or near an anticipated
closing date so as to satisfy Section 8.1, where the Seller could not have
caused such initially true representations and warranties to satisfy Section 8.1
through the exercise of commercially reasonable efforts), and (iii) prior to, or
within 12 months after, such termination any Selling Entity (x) enters into any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (an "Acquisition Agreement")
which constitutes a Competing Proposal, or is related to, or which is intended
to or is reasonably likely to lead to, a Competing Transaction, or (y)
consummates a Competing Transaction; then immediately after all conditions (i),
(ii) and (iii) above are met, the Seller shall pay to the Buyer a fee equal to
Four Million Dollars ($4,000,000) (the "Termination Fee") by wire transfer of
same day funds to an account designated by the Buyer.
(c) The parties acknowledge that the agreements contained in Section
13.2(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the parties would not enter into this
Agreement; accordingly, the Buyer shall be entitled to its reasonable
out-of-pocket legal fees and expenses incurred to enforce the payment of the
Termination Fee and if the Seller fails promptly to pay the Termination Fee when
due, the Seller shall be required to pay to the Buyer interest on the
Termination Fee from the due date through the payment date at the Prime Rate
plus 2%.
13.3. Notices. All notices, demands and other communications hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or if sent by overnight courier, as follows:
If to the Seller or to any Selling Entity, to:
X. Xxxxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy sent contemporaneously to the same address,
Attention: General Counsel
If to the Buyer, to:
Footstar Corporation
000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Chairman, President and Chief Executive Officer
with a copy sent contemporaneously to the same address,
Attention: General Counsel
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, and (c) if
mailed, three (3) days after being mailed as described above.
13.4. Governing Law. The validity and construction of this Agreement
shall be governed by and construed in accordance with the internal laws (and not
the choice-of-law rules) of the State of Delaware.
13.5. Sections and Section Headings. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
13.6. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; provided, however, that nothing
contained in this Section 13.6 shall prevent the Buyer, without the consent of
the Seller, from transferring or assigning all or part of this Agreement or all
or any part of its rights or obligations hereunder to an Affiliate of the Buyer,
but no such transfer or assignment shall relieve the Buyer of its obligations
under this Agreement.
13.7. Severability. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.
13.8. Further Assurances. The parties agree to take such reasonable
steps and execute such other and further documents as may be necessary or
appropriate to cause the terms and conditions contained herein to be carried
into effect.
13.9. Absence of Third Party Beneficiary Rights. Except as otherwise
expressly provided herein, no provision of this Agreement is intended, nor will
any provision be interpreted, to provide or to create any third party
beneficiary rights or any other rights of any kind in any Person other than the
Seller and the Buyer.
13.10. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11. Satisfaction of Conditions Precedent. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use reasonable
business efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to Closing and to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, using reasonable business efforts to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated by this Agreement and using
reasonable business efforts to prevent the breach of any representation,
warranty, covenant or agreement of such party contained or referred to in this
Agreement and to promptly remedy the same. Each party will promptly inform the
other of any facts applicable to it that would be likely to prevent or
materially delay completion of the Agreement. Nothing in this section shall be
construed to require any party to waive any right or condition under this
Agreement.
13.12. Business Records. The Buyer acknowledges that certain business
records of the Seller relating to the Business prior to the Closing will be
conveyed to the Buyer as part of the Acquired Assets, and that the Seller may
from time to time require access to or copies of such records in connection with
Tax matters and claims arising with respect to their operations prior to the
Closing or the winding up of their affairs, and the Buyer agrees that upon
reasonable prior notice from the Seller, it will, during normal business hours,
provide the Seller with either access to or, at the Buyer's option, copies of
such records for such purposes. The Seller agrees to hold any confidential
information so provided in confidence and to use such information only for the
purposes described above. The Buyer agrees that it will not within six (6) years
after the Closing Date destroy any business records prepared prior to the
Closing without first notifying the Seller and affording it the opportunity to
remove or copy them. For purposes of the preceding sentence, any notice from the
Buyer delivered in accordance with Section 13.3 shall be deemed to be adequate
notice if not responded to in writing by the Seller within thirty (30) days.
The Seller acknowledges that the Buyer, in connection with Tax matters
and claims arising with respect to its operations after the Closing, may from
time to time require access to or copies of certain records which the Seller
does not convey to the Buyer hereunder (whether by mistake or because such
records are intertwined with the Seller's records relating to its other
businesses and the portions relating solely to the Business cannot readily be
conveyed). The Seller agrees that upon reasonable prior notice from the Buyer,
it will, during normal business hours, provide the Buyer with either access to
or, at the Seller's option, copies of such records for such purposes. Without
limiting the foregoing, the Seller shall upon the Buyer's request provide to the
Buyer access to or, at the Seller's option, copies of employment Tax returns and
records, including state unemployment insurance records and returns, sales and
use Tax returns and personal property renditions, to the extent related to the
Business. The Buyer agrees to hold any confidential information so provided in
confidence and to use such information only for the purposes described above.
The Seller agrees that it will not within six (6) years after the Closing Date
destroy any business records prepared prior to the Closing and relating in any
way to the Business without first notifying the Buyer and affording it the
opportunity to remove or copy them. For purposes of the preceding sentence, any
notice from the Seller delivered in accordance with Section 13.3 shall be deemed
to be adequate notice if not responded to in writing by the Buyer within thirty
(30) days.
13.13. Press Releases. No press release, announcement, report or filing
with respect to the transactions contemplated by this Agreement (other than
those required by law) shall be issued, made, delivered or filed without the
prior mutual agreement of the parties, and any such legally required action
shall be taken only after consultation with the other party.
13.14. Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and understandings
relating to the subject matter hereof and shall not be amended except by a
written instrument hereafter signed by all of the parties hereto.
13.15. Risk of Loss. The risk of loss or damage by fire or other
casualty to the Acquired Assets until the Closing Date shall be upon the Seller.
In the event of such loss or damage prior to the Closing Date, the Seller shall
promptly restore, replace or repair the damaged property to its condition
immediately prior to such loss or damage at its own cost or expense. In the
event such loss or damage shall not be restored, replaced or repaired by the
Closing Date, the Buyer shall, at its option (a) defer the Closing Date until
such restorations, replacements, or repairs are made, or (b) receive the damaged
assets and all insurance proceeds to which the Seller would be entitled as a
result of such loss or damage plus an amount equal to the applicable deductible,
or (c) reject such damaged assets, excluding such damaged assets from the
Acquired Assets and, to the extent such damaged assets would otherwise have
constituted Inventory, excluding such damaged assets from the definition of
Inventory for purposes of the purchase price calculation in Section 3 hereof.
13.16 Additional Parties. X. Xxxxx has endeavored to identify each of
its direct or indirect subsidiaries that own any assets which are used primarily
in the Business, and has caused each of them to execute and deliver this
Agreement as a Selling Subsidiary. If it is subsequently determined that any
direct or indirect subsidiary of X. Xxxxx owns any assets used primarily in the
Business and is not a party hereto, X. Xxxxx shall promptly cause each such
subsidiary to become a party hereto as a Selling Subsidiary. Until such time, X.
Xxxxx shall be deemed to have made all representations, warranties and covenants
with respect to such assets as though X. Xxxxx were the owner thereof.
13.17 Construction. When this Agreement refers to an asset which is
"used primarily in the Business" (or words of similar import), the intent is to
refer to (a) those assets which are used exclusively in the Business, and (b)
those assets which are used almost exclusively in the Business but which may
have some minimal connection with, or minimal use in the Non-Footwear
Businesses, such that the transfer of those assets would be expected by any
reasonable purchaser of the Business and would have no effect or an
insignificant effect on the Non-Footwear Business.
13.18. Exhibits and Schedules. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
Disclosure of a particular item on one Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made in a different
Schedule if such disclosure identifies the exception with reasonable
particularity.
13.19. Specific Performance; Remedies. Each party hereto acknowledges
that the Business is unique and that the Buyer's opportunity to acquire the
Business is a unique business opportunity for Buyer. Each party hereto
acknowledges that the other parties will be irreparably harmed and that there
will be no adequate remedy at law for any violation by any of them of any of the
covenants or agreements contained in this Agreement, including, without
limitation, the covenants or agreements contained in Section 12.3 and the
confidentiality obligations set forth in Section 10. It is accordingly agreed
that, in addition to any other remedies which may be available upon the breach
of any such covenants or agreements, each party hereto shall have the right to
obtain injunctive relief to restrain a breach or threatened breach of, or
otherwise to obtain specific performance of, the covenants and agreements
contained in this Agreement. Notwithstanding the foregoing, if the transactions
contemplated hereby are consummated on the Closing Date, then the parties' sole
remedy and recourse following the Closing Date for a breach of any
representation, warranty, covenant or agreement contained herein (other than a
breach of the covenants or agreements contained in Section 12.3 and the
confidentiality obligations set forth in Section 10) shall be the
indemnification provisions of Section 11.
13.20. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER THE SELLER NOR THE BUYER MAKES
ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
13.21. Non-waiver. Any party's failure to exercise any right or remedy
hereunder or to require compliance with any duty, obligation, or responsibility
of any party under this Agreement shall not be a waiver or an estoppel of the
right to exercise such right or remedy or to insist on such compliance at any
other time or on any other occasion.
13.22. Cumulative Remedies. Except as expressly provided to the
contrary herein, no remedy herein conferred upon or reserved to the Buyer or the
Seller is intended to be exclusive of any other remedy and each such remedy
shall be cumulative, and shall be in addition to every other remedy given under
this Agreement, or now or hereafter existing at law or in equity or by statute.
13.23. Representations and Warranties not Modified by Due Diligence.
Each party intends to, and is entitled to, rely on the representations and
warranties of the other herein, and no representation or warranty made hereunder
shall be deemed limited or diminished in any way by virtue of any information
which the party to whom that representation or warranty obtained or had access
to, as part of its due diligence in connection with the transactions
contemplated by this Agreement, or otherwise.
13.24. Mutual Drafting. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed and delivered as a
sealed instrument as of the date and year first above written.
THE BUYER:
FOOTSTAR CORPORATION
By: XXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
THE SELLER:
X. XXXXX, INC.
By: XXXX X. XXXXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
THE SELLING ENTITIES:
JBI, INC.
By: XXXX X. XXXXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
XXXXX SHOE, INC.
By: XXXX X. XXXXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Exhibit 8.5
FORM OF CLOSING OPINION
OF SELLER'S COUNSEL
[Date]
To the Buyer
Ladies and Gentlemen:
We are furnishing this opinion to you pursuant to Section ___ of the
Asset Purchase Agreement dated as of ___________, 2000 (the "Purchase
Agreement") among Footstar Corporation, a Texas corporation (the "Buyer"), X.
Xxxxx, Inc., a Massachusetts corporation (the "Company"), JBI, Inc., a
Massachusetts corporation ("JBI"), Xxxxx Shoe, Inc., a Delaware corporation
("Xxxxx") and the other subsidiaries of the Company, JBI and Xxxxx who are
identified on the signature page thereto. Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement.
We have examined such documents and made such other investigation as we
have deemed appropriate to render the opinions set forth below. As to matters of
fact material to our opinions, we have relied, without independent verification,
on representations made in the Transaction Documents and certificates and other
inquiries of officers of the Company and the Selling Subsidiaries. We also have
relied on certificates of public officials.
Based upon the foregoing and subject to the additional qualifications
set forth below, we are of the opinion that:
1. The Company and each Selling Subsidiary is validly existing as a
corporation and in good standing under the law of its jurisdiction of
incorporation and has the corporate power to execute and deliver the Transaction
Documents to which it is a party and to perform its obligations thereunder.
2. Each of the Company and the Selling Subsidiaries has duly
authorized, executed and delivered the Transaction Documents to which it is a
party, and such Transaction Documents constitute its valid and binding
obligations enforceable against it in accordance with their terms.
3. The execution and delivery by each of the Company and the Selling
Subsidiaries of the Transaction Documents to which it is a party do not and the
performance by it of its obligations thereunder will not (i) violate
Massachusetts , Delaware or federal law or any court order, judgment or decree
listed on Schedule __ to the to the Purchase Agreement , (ii) result in a
violation of or constitute a default under or breach of, or result in the
creation of a Lien or a right of acceleration under, any of the agreements or
instruments listed on Schedule ___ to the Purchase Agreement or (iii) violate
its charter or by-laws.
Our opinions above are subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws of general
application affecting the rights and remedies of creditors and to general
principles of equity.
This opinion shall be interpreted in accordance with the Legal Opinion
Principles issued by the Committee on Legal Opinions of the American Bar
Association's Business Law Section as published in 53 Business Lawyer 831 (May
1998).
This opinion is being furnished only to you in connection with the
transaction described above and may not be relied on without our prior written
consent for any other purpose or by anyone else other than your participants and
assignees permitted by the Purchase Agreement.
Very truly yours,
Exhibit 9.4
FORM OF CLOSING OPINION
OF BUYER'S COUNSEL
[Date]
To the Seller
Ladies and Gentlemen:
We are furnishing this opinion to you pursuant to Section ___ of the
Asset Purchase Agreement dated as of ___________, 2000 (the "Purchase
Agreement") among Footstar Corporation, a Texas corporation (the "Buyer"), X.
Xxxxx, Inc., a Massachusetts corporation (the "Company"), JBI, Inc., a
Massachusetts corporation ("JBI"), Xxxxx Shoe, Inc., a Delaware corporation
("Xxxxx") and the other subsidiaries of the Company, JBI and Xxxxx who are
identified on the signature page thereto. Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement.
We have examined such documents and made such other investigation as we
have deemed appropriate to render the opinions set forth below. As to matters of
fact material to our opinions, we have relied, without independent verification,
on representations made in the Transaction Documents and certificates and other
inquiries of officers of the Buyer. We also have relied on certificates of
public officials.
Based upon the foregoing and subject to the additional qualifications
set forth below, we are of the opinion that:
1. The Buyer is validly existing as a corporation and in good standing
under the law of its jurisdiction of incorporation and has the corporate power
to execute and deliver the Transaction Documents to which it is a party and to
perform its obligations thereunder.
2. The Buyer has duly authorized, executed and delivered the
Transaction Documents to which it is a party, and such Transaction Documents
constitute its valid and binding obligations enforceable against it in
accordance with their terms.
3. The execution and delivery by the Buyer of the Transaction Documents
to which it is a party do not and the performance by it of its obligations
thereunder will not (i) violate Texas or federal law or any court order,
judgment or decree listed on Schedule __ to the to the Purchase Agreement , (ii)
result in a violation of or constitute a default under or breach of, or result
in the creation of a Lien or a right of acceleration under, any of the
agreements or instruments listed on Schedule ___ to the Purchase Agreement or
(iii) violate its charter or by-laws. [Those portions of this opinion governed
by Texas law shall be given by the Buyer's General Counsel or Assistant General
Counsel, relying solely on a review of corporate records. Such counsel is not
admitted to the Texas bar.]
Our opinions above are subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws of general
application affecting the rights and remedies of creditors and to general
principles of equity.
This opinion shall be interpreted in accordance with the Legal Opinion
Principles issued by the Committee on Legal Opinions of the American Bar
Association's Business Law Section as published in 53 Business Lawyer 831 (May
1998). [Alternatively, counsel's opinion may contain assumptions and exceptions
which are not materially inconsistent with those contained in the
above-references Legal Opinion Principles.]
This opinion is being furnished only to you in connection with the
transaction described above and may not be relied on without our prior written
consent for any other purpose or by anyone else other than your participants and
assignees permitted by the Purchase Agreement.
Very truly yours,
