EXHIBIT 10.1
CONFORMED COPY
AGREEMENT dated as of June 10, 1999 (this "Agreement"), by
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and between XXXXX INVESTMENT CO., INC., a Delaware corporation
(the "Company"), XXXXX APPAREL GROUP, INC., a Pennsylvania
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corporation ("JNY"), and XXXXXXX SHOE COMPANY INC., a Delaware
corporation
("Xxxxxxx").
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WHEREAS, pursuant to the License Agreement dated as of July 1, 1993,
as amended by the First Amendment to License Agreement dated as of October 2,
1995, the Second Amendment to License Agreement dated as of April 14, 1997, the
Third Amendment to License Agreement dated as of March 16, 1998, and a letter
dated February 22, 1999, from the Company to Xxxxxxx (the "License Agreement"),
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the Company granted a license to Xxxxxxx to use the Marks (such term and each
other capitalized term used but not defined herein having the meaning given to
it in the License Agreement) in connection with, among other things, the
manufacture, sale and distribution of women's footwear; and
WHEREAS, on the terms and subject to the conditions set forth herein,
Xxxxxxx desires to sell and assign to the Company, and the Company desires to
purchase and assume from Xxxxxxx, certain of the assets of Xxxxxxx (including
all its rights, title and interest under the License Agreement, except as
provided in this Agreement) used in connection with the manufacture,
advertising, merchandising, promotion, sale and distribution of Xxxxx
Merchandise (the "Business").
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Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale of Acquired Assets
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SECTION 1.1. Purchase and Sale. On the terms and subject to the
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conditions of this Agreement, at the Closing (as defined in Section 2.1),
Xxxxxxx shall sell, assign, transfer, convey and deliver to the Company, and the
Company shall purchase and assume from Xxxxxxx, all the rights, title and
interest as of the Closing of Xxxxxxx in the Acquired Assets (as defined in
Section 1.2(a)), for an aggregate purchase price of $25,000,000 (the "Purchase
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Price"), payable as set forth in Section 2.2. The purchase
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and sale of the Acquired Assets is referred to in this Agreement as the
"Acquisition".
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SECTION 1.2. Acquired Assets and Excluded Assets. (a) The term
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"Acquired Assets" means all the rights, title and interest of Xxxxxxx or any of
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its subsidiaries of whatever kind and nature, tangible or intangible, on the
Closing Date (as defined in Section 2.1) in the following assets, other than the
Excluded Assets (as defined in Section 1.2(b)):
(i) the License Agreement;
(ii) all copyrights, copyright registrations, sketches, samples,
designs and all rights to any of the foregoing, of Xxxxxxx or any of its
subsidiaries that are used, or have been used, primarily in connection with
the Business;
(iii) all Packaging materials bearing the Marks in any form or that are
used, held for use or intended to be used primarily in connection with the
Business;
(iv) all guarantees, warranties, indemnities and similar rights in
favor of Xxxxxxx or any of its subsidiaries in respect of any Acquired
Asset or any asset referred to in Section 1.3 of this Agreement; and
(v) all customer and supplier lists and customer and supplier
correspondence since January 1, 1999 which in in any way amends or modifies
the terms of any Purchase Order or Sales Order (each as defined in Section
1.3(a)(i)) of Xxxxxxx or any of its subsidiaries that are used, held for
use or intended to be used primarily in, or that arise primarily out of,
the conduct or operation of the Business.
(b) The term "Excluded Assets" means:
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(i) all rights of Xxxxxxx or any of its subsidiaries under this
Agreement, the other agreements and instruments executed and delivered in
connection with this Agreement (the "Ancillary Agreements") and the License
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Agreement (to the extent such rights under the License Agreement are
retained pursuant to the terms of this Agreement or the License Agreement);
(ii) all records prepared solely for the purpose of the Acquisition;
(iii) all books of account, ledgers, general, financial and accounting
records and files, billing records, sales advertising and promotional
literature,
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manuals (in all cases, in any form or medium), of Xxxxxxx or any of its
subsidiaries; and
(iv) all other assets of Xxxxxxx or any of its subsidiaries.
SECTION 1.3. Other Transactions. (a) On the terms and subject to
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the conditions of this Agreement, at the Closing, Xxxxxxx shall sell, assign,
transfer, convey and deliver to the Company, and the Company shall purchase and
assume from Xxxxxxx, all the rights, title and interest of Xxxxxxx of whatever
kind and nature, tangible or intangible, on the Closing Date in the following
assets:
(i) all purchase orders ("Purchase Orders") submitted by Xxxxxxx or
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any of its subsidiaries for raw materials, supplies and other items
intended to be used in connection with the Business which have not been
delivered to Xxxxxxx'x Warehouse in Brockton, Massachusetts (the
"Warehouse"), prior to the Closing Date, and all sales orders ("Sales
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Orders" and, together with Purchase Orders, the "Acquired Orders")
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submitted to Xxxxxxx or any of its subsidiaries with respect to the
Business, which sales orders have not been fulfilled and shipped from the
Warehouse prior to the Closing Date; and
(ii) (A) 56,242 pairs of shoes identified on Schedule A hereto and (B)
all raw materials, work-in-progress, finished goods, supplies and other
inventories (the items set forth in clauses (A) and (B) of this Section
1.3(a)(ii) are referred to herein collectively as the "Acquired Inventory")
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of Xxxxxxx or any of its subsidiaries that: (1) are used, held for use or
intended to be used in connection with the Business; (2) were delivered to
the Warehouse on or after the date hereof and prior to the Closing Date;
and (3) are held in the Warehouse on the Closing Date.
(b) On the date hereof, Xxxxxxx shall have delivered to the Company
true and complete copies of:
(i) all Purchase Orders submitted to Xxxxxxx or any of its
subsidiaries as of the date that is two business days prior to the date
hereof (information on all such Purchase Orders are attached hereto, in a
form satisfactory to the Company, as Schedule B);
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(ii) all Sales Orders submitted by Xxxxxxx or any of its subsidiaries
as of the date that is two business days prior to the date hereof (copies
of all such Sales Orders are attached hereto, in a form satisfactory to the
Company, as Schedule C); and
(iii) all contracts, agreements or other arrangements as of the date
hereof (or, if any such contract, agreement or arrangement is not in
writing, a true and complete summary thereof) (collectively, "Specified
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Customer Contracts") between Xxxxxxx or any of its subsidiaries and each
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customer of the Business relating to the granting by Xxxxxxx of product
return credits or xxxx-down allowances in any form with respect to all
Xxxxx Merchandise (copies or summaries, as applicable, of all such
Specified Customer Contracts are attached hereto, in a form satisfactory to
the Company, as Schedule D).
(c)(i) The consideration to be paid by the Company to Xxxxxxx for any
item of Acquired Inventory shall be an amount (the "Standard Cost") equal to the
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amount paid by Xxxxxxx to the person that originally manufactured such item,
together with all applicable import duties, agent's commissions, sample expense
and freight charges incurred by Xxxxxxx with respect to the transportation and
delivery of such item to the Warehouse. The aggregate amount of consideration
to be paid by the Company to Xxxxxxx with respect to the Acquired Inventory
shall be referred to as the "Inventory Amount".
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(ii) On the date that is two business days prior to the Closing Date,
Xxxxxxx shall give written notice to the Company, specifically identifying the
items constituting the Acquired Inventory and the Standard Cost of each such
item.
(d) Within two business days after the Closing Date, the Company
shall, at its cost and expense, load and transport the Acquired Inventory from
the Warehouse.
SECTION 1.4. Assumed Liabilities. (a) On the terms and subject to
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the conditions of this Agreement, the Company shall assume, effective as of the
Closing, and from and after the Closing the Company shall pay, perform and
discharge when due, all liabilities, obligations and commitments of Xxxxxxx and
its subsidiaries under the Acquired Orders, including all commissions to sales
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representatives who are not employed by Xxxxxxx or any of its subsidiaries, and
all commissions and overrides to employees of Xxxxxxx or any of its subsidiaries
who are hired by the Company or any of its affiliates within one year after the
Closing Date, in each case solely with respect to reconfirmed and shipped Sales
Orders and payable pursuant to the terms of any agreement between Xxxxxxx or any
of its subsidiaries and each such representative or employee (true and complete
copies of all such agreements are attached hereto as Schedule E) and all
commissions to agents with respect to all Purchase Orders (collectively, the
"Assumed Liabilities"). The term "Assumed Liabilities" shall also include the
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liabilities, obligations and commitments of the Company set forth in the
following four sentences. With respect to each Purchase Order, the Company
either will, with the consent of the supplier thereunder: (a) cause the items
covered by the Purchase Order to be shipped to the Company, at the Company's
sole cost and expense, and substitute a letter of credit against the Company's
account in place of the existing letter of credit against Xxxxxxx'x account
(which Xxxxxxx letter of credit will be immediately canceled and returned to
Xxxxxxx), or (b) permit the items covered by the Purchase Order to be shipped to
the Warehouse and make payment to Xxxxxxx in accordance with the following
sentence. Upon receipt at the Warehouse of items covered by a Purchase Order,
Xxxxxxx promptly shall segregate such items and give written notice to the
Company of the arrival of such items, which notice will identify such items and
state Xxxxxxx'x Standard Cost for such items. Not later than five business days
after the giving of such notice, the Company shall pay to Xxxxxxx, in
immediately available funds, an amount equal to Xxxxxxx'x aggregate Standard
Cost for such items, and, against such payment, the Company shall forthwith be
permitted to load and transport, at its sole cost and expense, such items from
the Warehouse. From and after the date of the giving of such notice, any loss
or damage to such items from fire, casualty or any other occurrence shall be the
sole responsibility of the Company, whether or not such items have been loaded
or transported from the Warehouse.
(b) Notwithstanding any other provision of this Agreement or any
Ancillary Agreement, the Company shall not assume any liability, obligation or
commitment of Xxxxxxx (including the Specified Customer Contracts) not described
in Section 1.4(a), all of which shall be retained and to the extent arising out
of the Business, shall be paid, performed and discharged when due by Xxxxxxx
unless a good faith
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dispute exists with respect to such liability, obligation or commitment
(collectively, the "Excluded Liabilities").
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SECTION 1.5. No Liens. The Company shall acquire all rights, title
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and interest in the Acquired Assets, the Acquired Orders and the Acquired
Inventory free and clear of all liabilities, obligations and commitments of
Xxxxxxx and its subsidiaries, other than (in the case of Acquired Orders and
Acquired Inventory) the Assumed Liabilities, and free and clear of all Liens (as
defined in Section 3.4).
SECTION 1.6. Effect of Purchase and Sale. (a) On the terms and
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subject to the conditions of this Agreement, the Company and Xxxxxxx hereby
agree that, effective as of the Closing, (i) subject to Section 1.6(b), the
License Agreement shall terminate and be of no further effect, (ii) each party
hereto shall release and discharge the other party from any and all obligations,
covenants and agreements arising out of, under or pursuant to, the License
Agreement, (iii) subject to Sections 1.4(a), 1.6(b) and 5.6, Xxxxxxx shall cease
to have any right, title or interest that it may have, or to which it may be
entitled, in, to or under the License Agreement, the Acquired Assets or the
assets referred to in Section 1.3 and (iv) subject to Section 1.6(b), the
Company shall cease to have any right, title or interest that it may have, or to
which it may be entitled, in, to or under the License Agreement.
(b) Notwithstanding the provisions of Section 1.6(a) or any other
provision of this Agreement, the provisions of the following sections of the
License Agreement shall remain in full force and effect following the Closing
and the Company and Xxxxxxx shall remain subject to their respective obligations
set forth therein: (i) Sections 3.1 and 3.3 (without reference to Section 3.2)
with respect to the obligation of Xxxxxxx to pay to the Company Royalties (A) in
an aggregate amount (the "Initial Royalties Amount") equal to five percent of
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Net Sales of all Xxxxx Merchandise for the period commencing on January 1, 1999,
and ending on June 30, 1999, and (B) in an aggregate amount (the "Subsequent
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Royalties Amount") equal to five percent of Net Sales of all Xxxxx Merchandise
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for the period commencing on July 1, 1999, and ending on the Closing Date (it
being understood and agreed that Xxxxxxx shall have no obligation to pay to the
Company any Royalties on Net Sales of Xxxxx Merchandise sold by Xxxxxxx or any
of its subsidiaries after the Closing Date); (ii) Section 4.6, with respect to
the obligation of Xxxxxxx to pay to the Company
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an amount equal to two percent of the amount (the "Advertising Amount") of the
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aggregate Net Sales for the period commencing on January 1, 1999, and ending on
the last day of the month ending immediately before the Closing Date; provided,
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however, that Xxxxxxx shall not have any obligation under the License Agreement
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to make the payments described in Section 4.6 thereof to the Company for the
Annual Period ended December 31, 1998; and (iii) Sections 7.2, 7.3.1 and 9.1.
ARTICLE II
The Closing
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SECTION 2.1. Closing Date. The closing of the Acquisition and the
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other transactions described in Section 1.3 (the "Closing") shall take place at
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the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m. on a business day to be reasonably agreed upon between the
parties hereto, which shall not be more than 10 days following the satisfaction
(or, to the extent permitted, the waiver) of the conditions set forth in Section
6.1, or, if on such day any condition set forth in Section 6.2 or 6.3 has not
been satisfied (or, to the extent permitted, waived by the party entitled to the
benefit thereof), on the second business day after all the conditions set forth
in Article VI have been satisfied (or, to the extent permitted, waived by the
parties entitled to the benefits thereof). The date on which the Closing occurs
is referred to in this Agreement as the "Closing Date". The Closing shall be
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deemed to be effective at 12:01 a.m., New York City time, on the Closing Date.
SECTION 2.2. Transactions To Be Effected at the Closing. At the
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Closing:
(a) Xxxxxxx shall deliver to the Company (i) payment, by wire transfer
to a bank designated in writing by the Company (such designation to be made at
least two business days prior to the Closing Date), of immediately available
funds in an amount equal to the sum of the Advertising Amount and the Initial
Royalties Amount, (ii) such appropriately executed assignments and other
instruments of transfer relating to the Acquired Assets and the Acquired Orders
and the Acquired Inventory to be assumed by the Company on the Closing Date
pursuant to Section 1.3(a), in each case in form and substance
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reasonably satisfactory to the Company and its counsel and (iii) such other
documents as the Company or its counsel may reasonably request to demonstrate
satisfaction of the conditions and compliance with the covenants set forth in
this Agreement; and
(b) the Company shall deliver to Xxxxxxx (i) payment, by wire transfer
to a bank account designated in writing by Xxxxxxx (such designation to be made
at least two business days prior to the Closing Date), of immediately available
funds in an amount equal to the sum of the Purchase Price and the Inventory
Amount and (ii) such documents as Xxxxxxx or its counsel may reasonably request
to demonstrate satisfaction of the conditions and compliance with the covenants
set forth in this Agreement.
SECTION 2.3. Subsequent Royalties Amount. On August 13, 1999, Xxxxxxx
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shall deliver to the Company payment, by wire transfer to a bank designated in
writing by the Company (such designation to be made by at least August 11,
1999), of immediately available funds in an amount equal to the Subsequent
Royalties Amount.
SECTION 2.4. Risk of Loss. Until the Closing, any loss of or damage
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to the Acquired Assets from fire, casualty or any other occurrence as and to the
extent not covered by insurance payable to the Company shall be the sole
responsibility of Xxxxxxx. From and after the Closing, any such loss or damage
shall be the sole responsibility of the Company, whether or not the Acquired
Assets have been loaded or transported from the Warehouse pursuant to Section
1.3(d).
ARTICLE III
Representations and Warranties of Xxxxxxx.
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Xxxxxxx hereby represents and warrants to the Company, with respect to
Sections 3.1, 3.2, 3.3, 3.4, 3,5(b), 3.5(c), 3.6, 3.7, 3.8 and 3.9, as of the
date of this Agreement, and, with respect to Sections 3.1, 3.2, 3.3, 3.4,
3.5(a), 3.5(c), 3.8 (with respect to representations and warranties made as of
the Closing Date) and 3.9, as of the Closing Date, as follows:
SECTION 3.1. Organization, Standing and Power. Each of Xxxxxxx and
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its subsidiaries is duly organized,
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validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has full corporate power and authority and possesses
all material permits, authorizations and approvals necessary to enable it to
conduct the Business.
SECTION 3.2. Authority; Execution and Delivery; Enforceability.
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Xxxxxxx has full power and authority to execute this Agreement and the Ancillary
Agreements to which it is, or is specified to be, a party and to consummate the
Acquisition and the other transactions contemplated hereby and thereby. The
execution and delivery by Xxxxxxx of this Agreement and the Ancillary Agreements
to which it is, or is specified to be, a party and the consummation by Xxxxxxx
of the Acquisition and the other transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action. Xxxxxxx has duly
executed and delivered this Agreement and prior to the Closing Xxxxxxx will have
duly executed and delivered each Ancillary Agreement to which it is, or is
specified to be, a party, and this Agreement constitutes, and each Ancillary
Agreement to which it is, or is specified to be, a party will after the Closing
constitute, its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 3.3. No Conflicts; Consents. The execution and delivery by
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Xxxxxxx of this Agreement do not, the execution and delivery by Xxxxxxx of each
Ancillary Agreement to which it is, or is specified to be, a party will not, and
the consummation of the Acquisition and the other transactions contemplated
hereby and thereby and compliance by Xxxxxxx with the terms hereof and thereof,
as applicable, will not conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any material obligation or
to loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of Xxxxxxx or any of its
subsidiaries under, any provision of (a) the certificate of incorporation or by-
laws of Xxxxxxx or any of its subsidiaries, (b) any material contract (other
than any Sales Order) to which Xxxxxxx or any of its subsidiaries is a party or
by which any of their respective properties or assets is bound or (c) any
judgment, order or decree ("Judgment") or statute, law, ordinance, rule or
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regulation
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("Applicable Law") applicable to Xxxxxxx or any of its subsidiaries
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or their respective properties or assets. No material consent, approval,
license, permit, order or authorization ("Consent") of, or registration,
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declaration or filing with, any Federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required to be obtained or made by or with respect to
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Xxxxxxx or any of its subsidiaries in connection with the execution, delivery
and performance of this Agreement or any Ancillary Agreement or the consummation
of the Acquisition or the other transactions contemplated hereby and thereby,
other than (i) filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and (ii) such filings under the Securities
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Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby.
SECTION 3.4. Acquired Assets. Xxxxxxx has good and valid title to
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all the Acquired Assets, the Acquired Inventory and the Acquired Orders (except
to the extent items of such Acquired Inventory and Acquired Orders become such
between the date hereof and the Closing Date, in which event the representation
and warranty contained in this Section 3.4 shall be true and correct with
respect to such items only as of the Closing Date), in each case free and clear
of all liens, security interests, charges, covenants, options, claims,
restrictions or encumbrances of any kind (collectively, "Liens").
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SECTION 3.5. Acquired Orders; Acquired Inventory; Specified Customer
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Contracts. (a) The Acquired Orders will represent all the purchase orders and
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sales orders to which Xxxxxxx or any of its subsidiaries is a party with respect
to the Business on the Closing Date.
(b) Attached as Schedule B hereto are true and complete copies of all
Purchase Orders as of the date that is two business days prior to the date
hereof. Attached as Schedule C hereto are true and complete copies of all Sales
Orders as of the date that is two business days prior to the date hereof.
Attached as Schedule D hereto are true and complete copies of all Specified
Customer Contracts as of the date hereof.
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(c) Each item of Acquired Inventory (a) is free of any material
defect or deficiency and (b) is in good, usable and currently marketable
condition in the ordinary course of the Business (subject, in the case of raw
materials and work-in-process, to the completion of the production process).
SECTION 3.6. Absence of Changes or Events. (a) Since October 31,
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1998 through the date hereof, Xxxxxxx has caused the Business to be conducted in
the ordinary course and in substantially the same manner as previously conducted
and has made all reasonable efforts consistent with past practices to preserve
the relationships of the Business with customers, suppliers and others with whom
the Business deals.
(b) Since October 31, 1998 through the date hereof, each of Xxxxxxx
and its subsidiaries has continued all pricing, sales, receivables and payables
practices of the Business substantially in accordance with their past practices
and, with respect to the Business, has not engaged in (i) any trade loading
practices or any other promotional sales or discount activity with any customers
or distributors with the effect of accelerating to pre-Closing periods sales to
the trade or otherwise that would otherwise be expected (based on recent past
practice) to occur in post-Closing periods or (ii) any other promotional sales,
discount activity or inventory overstocking or understocking in a manner outside
the ordinary course of business or contrary to their past practices.
SECTION 3.7. Effect of Acquisition. To the actual knowledge of
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senior management of Xxxxxxx or any of its subsidiaries, from March 2, 1999
through the date hereof, no customer of the Business has informed Xxxxxxx or any
of its subsidiaries that it is discontinuing or phasing out any Xxxxx
Merchandise because of the Acquisition or the consummation of any other
transaction contemplated hereby.
SECTION 3.8. Disclosure. The representations and warranties of
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Xxxxxxx or any of its subsidiaries contained in this Agreement and in the
Ancillary Agreements and the statements contained in the documents, certificates
and Schedules furnished or to be furnished by or on behalf of Xxxxxxx or any of
its subsidiaries to the Company or any of its representatives pursuant to this
Agreement (including any document listed on Schedule F hereto that has been
provided by Xxxxxxx to the Company), taken as a whole, do
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not contain and will not contain any untrue statement of a material fact, and do
not omit and will not omit to state any material fact necessary, in light of the
circumstances under which they were or will be made, in order to make the
statements herein or therein, taken as a whole, not materially misleading or
necessary in order to fully and fairly provide the material information required
to be provided in such documents, certificates or Schedules, taken as a whole.
SECTION 3.9. Conduct of The Business. The Business is being
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conducted and has been conducted solely by Xxxxxxx and it is not being nor has
it been conducted through any subsidiaries or affiliates of Xxxxxxx.
ARTICLE IV
Representations and Warranties of the Company
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The Company hereby represents and warrants to Xxxxxxx, as of the date
of this Agreement and as of the Closing Date, as follows:
SECTION 4.1. Organization. The Company is duly organized, validly
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existing and in good standing under the laws of the jurisdiction in which it is
organized.
SECTION 4.2. Authority; Execution and Delivery; and Enforceability.
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The Company has full power and authority to execute this Agreement and the
Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Acquisition and the other transactions contemplated hereby and
thereby. The execution and delivery by the Company of this Agreement and the
Ancillary Agreements to which it is, or is specified to be, a party and the
consummation by the Company of the Acquisition and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. The Company has duly executed and delivered this Agreement
and prior to the Closing will have duly executed and delivered each Ancillary
Agreement to which it is, or is specified to be, a party, and this Agreement
constitutes, and each Ancillary Agreement to which it is, or is specified to be,
a party will after the Closing constitute, its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
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SECTION 4.3. No Conflicts; Consents. The execution and delivery by
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the Company of this Agreement do not, the execution and delivery by the Company
of each Ancillary Agreement to which it is, or is specified to be, a party will
not, and the consummation of the Acquisition and the other transactions
contemplated hereby and thereby and compliance by the Company with the terms
hereof and thereof will not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any material
obligation or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, any provision of (a) the certificate of incorporation or by-
laws of the Company or any of its subsidiaries, (b) any contract to which the
Company or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (c) any Judgment or Applicable Law
applicable to the Company or any of its subsidiaries or their respective
properties or assets. No Consent of or registration, declaration or filing with
any Governmental Entity is required to be obtained or made by or with respect to
the Company or any of its subsidiaries in connection with the execution,
delivery and performance of this Agreement or any Ancillary Agreement or the
consummation of the Acquisition or the other transactions contemplated hereby
and thereby, other than compliance with and filings under the HSR Act.
ARTICLE V
Covenants
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SECTION 5.1. Covenants of Xxxxxxx Relating to Conduct of Business. (a)
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It is the understanding of the parties hereto that the public announcement of
this Agreement and the transactions contemplated hereby may have an adverse
effect on potential sales efforts with respect to Xxxxx Merchandise and on
efforts to preserve the relationships of the Business with customers, suppliers,
distributors and others with whom the Business deals, between the date of such
announcement and the Closing Date. Accordingly, Xxxxxxx'x duties and
obligations to the Company with respect to the conduct of the Business between
the date hereof and the Closing Date shall be limited to the following:
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(i) Xxxxxxx shall not, and shall instruct its employees not to, make
derogatory statements to customers, suppliers, distributors or others with
whom the Business deals, with respect to the quality, stylishness,
attractiveness or marketability of shoes bearing the Marks or with respect
to JNY, its affiliates or Nine West Group Inc.;
(ii) Xxxxxxx shall use all reasonably efforts, in accordance with its
past practices, with respect to the maintenance and custody of the Acquired
Inventory, corporate documents and other items to be delivered to the
Company at the Closing;
(iii) Xxxxxxx shall not, nor shall it permit any of its subsidiaries,
to enter into or execute any purchase orders for raw materials, supplies or
other items intended to be used in connection with the Business;
(iv) Xxxxxxx shall inform any person who submits a sales order to
Xxxxxxx or any of its subsidiaries for Xxxxx Merchandise that such order
will be immediately forwarded to and fulfilled by the Company or its
affiliates, and Xxxxxxx shall promptly forward such order to the Company or
to such affiliate of the Company as the Company shall designate by notice
to Xxxxxxx; provided, however, that Xxxxxxx shall have no obligation under
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this Agreement to attempt to generate sales orders for Xxxxx Merchandise,
and the failure of Xxxxxxx to secure such sales orders between the date
hereof and the Closing Date shall not constitute or be evidence of a breach
of this Agreement by Xxxxxxx; and
(v) Xxxxxxx shall perform its other duties and obligations under this
Section 5.1.
(b) From the date of this Agreement to the Closing, Xxxxxxx shall
not, nor shall it permit any of its subsidiaries to, take any action that would,
or that could reasonably be expected to, result in any of the conditions to the
purchase, sale, assumption or assignment of the Acquired Assets, the Acquired
Inventory and the Acquired Orders set forth in Article VI not being satisfied.
(c) From the date of this Agreement to the Closing, with respect to
the Business Xxxxxxx shall not, nor shall it permit any of its subsidiaries to,
engage in (i) any trade loading practices or any other promotional
15
sales or discount activity with any customers or distributors with the effect of
accelerating to pre-Closing periods sales to the trade or otherwise that would
otherwise be expected (based on recent past practice) to occur in post-Closing
periods or (ii) any other promotional sales or discount activity in a manner
outside the ordinary course of business or contrary to generally accepted
industry practices.
(d) From the date of this Agreement until the Closing, Xxxxxxx shall,
and shall cause its subsidiaries to, (i) make its employees reasonably available
to the Company and its affiliates and use reasonable efforts to cause its
employees to reasonably cooperate with and to reasonably assist the Company and
its affiliates in connection with any sales or marketing efforts relating to the
Business during such period and (ii) at the Company's expense, take any other
action reasonably requested by the Company or any of its affiliates with a view
towards creating an orderly transfer of the Acquired Assets, the Acquired Orders
and the Acquired Inventory from Xxxxxxx and its subsidiaries to the Company.
(e) From the date of this Agreement to the Closing, Xxxxxxx shall
promptly advise the Company in writing of the occurrence of any matter or event
that is material to the Business of which Xxxxxxx has actual knowledge.
SECTION 5.2. Confidentiality. Each of the parties hereto
----------------
acknowledges that the information provided or to be provided to it in connection
with the transactions contemplated by this Agreement is subject to the terms of
confidentiality agreements dated March 2, 1999, and May 7, 1999, between the
Company and Xxxxxxx, the terms of which are incorporated herein by reference.
SECTION 5.3. Reasonable Best Efforts. On the terms and subject to
------------------------
the conditions of this Agreement, each of the parties hereto shall use its
reasonable best efforts to cause the Closing to occur, including using its
reasonable best efforts to obtain all material consents, permits, authorizations
and approvals of, and to make all necessary filings, notifications or
registrations with, all Governmental Entities which are necessary for the
consummation of the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, each of the parties hereto shall use
its
16
reasonable best efforts to cause the Closing to occur on or prior to July 9,
1999.
SECTION 5.4. Antitrust Matters. Without limiting the generality of
------------------
Section 5.3, each of the parties hereto shall (a) as promptly as practicable,
but in no event later than June 14, 1999, make any filing required under the HSR
Act with respect to the transactions contemplated by this Agreement, (b) as
promptly as practicable, make or cause their affiliates to make any filing or
notice required under any other antitrust or competition law or regulation
applicable to this Agreement or the transactions contemplated hereby and (c)
promptly provide any supplemental information requested in connection with the
HSR Act or such other antitrust or competition laws or regulations as promptly
as practicable after such request is made. Each of the parties hereto shall,
and shall cause their affiliates to, furnish to the other such information and
assistance as the other may reasonably request in connection with its
preparation of any filing or submission which is necessary under the HSR Act or
such other antitrust or competition laws or regulations or which is otherwise
requested by any Governmental Entity in the course of any review of the
transactions contemplated by this Agreement. Each of the parties hereto shall
keep each other apprised of the status of any communications with, and inquiries
or requests for additional information from, any Governmental Entity. Without
limiting the generality of Section 5.3, each of the parties hereto shall use its
reasonable best efforts to obtain any clearance or approvals required under the
HSR Act or such other antitrust or competition laws or regulations for the
consummation of the transactions contemplated by this Agreement.
SECTION 5.5. Publicity. No public release or announcement concerning
----------
the Acquisition and the other transactions contemplated hereby shall be issued
by either party hereto or any of its affiliates or any other representative
without the prior consent of the other party, other than such release or
announcement which may be required by law or the rules or regulations of any
United States securities exchange, in which case the party required to make the
release or announcement shall allow the other party reasonable time to comment
on such release or announcement in advance of such issuance.
17
SECTION 5.6. Xxxxxxx Sale Period; Company Option to Purchase
-----------------------------------------------
Inventory. (a) Within 180 days following the Closing Date (the "Sale Period"),
---------- -----------
Xxxxxxx and its subsidiaries may sell any Inventory that was not acquired by the
Company on the Closing Date only to retail stores that are described in the
footwear and apparel business as "off-price retailers"; provided, however, that
-------- -------
neither Xxxxxxx nor any of its subsidiaries shall sell any such Inventory to
better department stores (including any department store listed on Schedule G
hereto). Following the Sale Period, neither Xxxxxxx nor any of its subsidiaries
shall sell any Inventory to any person.
(b) The Company may purchase from Xxxxxxx or any of its subsidiaries
from time to time after the date hereof any complete styles (all colors and all
pairs) of Inventory at a price equal to the Standard Cost of any such Inventory
that is not sold by Xxxxxxx or any of its subsidiaries to any person other than
the Company pursuant to Section 5.6(a).
SECTION 5.7. No Solicitation. (a) For a period ending two years
----------------
after the Closing Date, Xxxxxxx shall not, and shall not permit any of its
subsidiaries to, directly or indirectly, recruit, hire or otherwise seek to
induce any employee of the Company or any of its subsidiaries to terminate such
employee's employment or to violate any agreement with the business of the
Company and its subsidiaries.
(b) Prior to the issuance of a press release by each of the Company
and Xxxxxxx in connection with this Agreement, the Company shall not, and shall
not permit any of its subsidiaries to, directly or indirectly, recruit, hire or
otherwise seek to induce any employee of Xxxxxxx'x Xxxxx Division to terminate
such employee's employment or to violate any agreement with the business of
Xxxxxxx'x Xxxxx Division. After the issuance of a press release by each of the
Company and Xxxxxxx in connection with this Agreement, the Company may hire any
employee of Xxxxxxx'x Xxxxx Division; provided that such employment shall not
--------
commence until the Closing Date.
SECTION 5.8. Spring 2000 Collection. On or after the Closing Date,
-----------------------
Xxxxxxx shall deliver to the Company all Spring 2000 samples of Xxxxx
Merchandise owned or held by Xxxxxxx or any of its subsidiaries, at no expense
or cost to the Company.
18
SECTION 5.9. License Agreement. Except as provided in Section 1.4(a)
------------------
or 5.6, Xxxxxxx agrees that, effective as of the Closing, it shall (a)
discontinue all use of the Marks, and agrees that it shall no longer have any
right to use the Marks or any variation or simulation thereof in any manner or
for any purposes whatsoever, and (b) comply in all respects with all covenants,
agreements and obligations that would be imposed upon Xxxxxxx, or to which
Xxxxxxx would be subject, under the License Agreement if the License Agreement
expired or had been terminated for any reason whichsoever.
SECTION 5.10. Acquired Orders; Specified Customer Contracts. (a)
----------------------------------------------
Within two business days prior to the Closing Date, Xxxxxxx agrees to deliver to
the Company true and complete copies of:
(i) all Purchase Orders submitted by Xxxxxxx or any of its
subsidiaries during the period commencing on the business day immediately
preceding the date hereof and ending on the date that is two business days
prior to the Closing Date;
(ii) all Sales Orders submitted to Xxxxxxx or any of its subsidiaries
during the period commencing on the business day immediately preceding the
date hereof and ending on the date that is two business days prior to the
Closing Date; and
(iii) all Specified Customer Contracts entered into by Xxxxxxx or any
of its subsidiaries during the period commencing on the date hereof and
ending on the date that is two business days prior to the Closing Date.
(b) From and after the date hereof, Xxxxxxx shall, and shall cause its
subsidiaries to, comply in all respects with all the terms, provisions,
agreements, covenants and obligations under each Specified Customer Contract.
SECTION 5.11. Further Assurances. From time to time after the
-------------------
Closing, and for no further consideration, each of the parties hereto shall, and
shall cause its subsidiaries to, execute, acknowledge and deliver such
assignments, transfers, consents and other documents and instruments and take
such other actions as may reasonably be requested to more effectively convey to,
transfer to or vest in the Company or its subsidiaries the Acquired Assets
19
contemplated by this Agreement to be transferred on the Closing Date.
SECTION 5.12. Like-Kind Exchange. The Company shall take any action
-------------------
reasonably requested by Xxxxxxx to cause the transfer of all or a portion of the
Acquired Assets (as determined by Xxxxxxx) by Xxxxxxx to the Company (or a
wholly owned subsidiary of the Company, if requested by Xxxxxxx) to qualify for
nonrecognition treatment pursuant to Section 1031 of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder (and corresponding
provisions of applicable state, local and foreign law); provided that Xxxxxxx
--------
shall indemnify the Company (or any such subsidiary) and its officers,
directors, employees, agents and representatives against, and agrees to hold
them harmless from, any Loss, as incurred, for or on account of or arising from,
in connection with or otherwise with respect to, compliance by the Company with
this Section 5.12.
SECTION 5.13. Collection of Receivables. (a) From and after the
--------------------------
Closing, Xxxxxxx or the Company may retain for its own account any payment
received by it that by its terms (typically, by identification of the invoice(s)
being paid) is expressly intended to be for its own account.
(b) From and after the Closing, with respect to any payment received
by Xxxxxxx or the Company that by its terms is not expressly intended to be for
the account of the recipient thereof, such recipient shall request the relevant
account debtor to determine whether such payment is for the account of Xxxxxxx
or the Company. If the account debtor determines that such payment is not for
the account of the recipient thereof, the recipient shall promptly pay over to
the other person the amount of such payment due to it.
(c) Each of Xxxxxxx and the Company agrees to cooperate with each
other with respect to the foregoing provisions of this Section 5.13.
SECTION 5.14. Information. The Company agrees to provide Xxxxxxx
------------
with information on a monthly basis which will enable Xxxxxxx to calculate the
amount of any sales commission it may be required to pay with respect to any
Sales Orders.
20
SECTION 5.15. Payment of Sales Commissions to Xxxxxxx. With respect
----------------------------------------
to any sales commission otherwise due and payable directly to any third party
sales representative or any former employee of Xxxxxxx or any of its
subsidiaries who has received an advance payment against such commission from
Xxxxxxx or any of its subsidiaries at the time such sales commission is
scheduled to be paid to such representative or former employee, the Company
agrees, upon the advice of Xxxxxxx, to pay all or a portion of such sales
commission to Xxxxxxx up to the amount of such advance payment; provided that
--------
Xxxxxxx shall indemnify the Company and its officers, directors, employees,
agents and representatives against, and agrees to hold them harmless from, any
Loss, as incurred, for or on account of or arising from, in connection with or
otherwise with respect to, compliance by the Company with this Section 5.15.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.1. Conditions to Each Party's Obligation. The obligation
--------------------------------------
of each party hereto to consummate the transactions to occur on the Closing Date
is subject to the satisfaction or waiver on or prior to the Closing of the
following conditions:
(a) HSR Act. Any waiting period applicable to the consummation of
--------
the Acquisition under the HSR Act shall have expired or been terminated.
(b) Nine West Merger. The merger of Nine West Group Inc., a Delaware
-----------------
corporation, with and into Xxxx Acquisition Sub Inc., a Delaware corporation
that is a wholly owned subsidiary of JNY, shall have been consummated.
21
SECTION 6.2. Conditions to Obligation of the Company. The obligation
----------------------------------------
of the Company to consummate the transactions to occur on the Closing Date is
subject to the satisfaction (or waiver by the Company) on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of Xxxxxxx made in this Agreement that are qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, as of the date hereof and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date). The Company shall have
received a certificate dated the Closing Date and signed by an authorized
officer of Xxxxxxx confirming the foregoing.
(b) Performance of Obligations of Xxxxxxx. Xxxxxxx shall have
--------------------------------------
performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by Xxxxxxx
by the time of the Closing. The Company shall have received a certificate dated
the Closing Date and signed by an authorized officer of Xxxxxxx confirming the
foregoing.
(c) Consents. The Company shall have received all material written
---------
consents from all third parties necessary or appropriate to effect the
Acquisition (other than with respect to any Acquired Order).
(d) Other Documents. Xxxxxxx shall have furnished to the Company
----------------
such other documents relating to this Agreement or the transactions contemplated
hereby as the Company or its counsel may reasonably request.
SECTION 6.3. Conditions to Obligation of Xxxxxxx. The obligation of
------------------------------------
Xxxxxxx to consummate the transactions to occur on the Closing Date is subject
to the satisfaction (or waiver by Xxxxxxx) on or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of the Company made in this Agreement that are qualified as to
materiality shall be true and correct, and those not so qualified shall be true
22
and correct in all material respects, as of the date hereof and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date). Xxxxxxx shall have received
a certificate dated the Closing Date and signed by an authorized officer of the
Company confirming the foregoing.
(b) Performance of Obligations of the Company. The Company shall
------------------------------------------
have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by the
Company by the time of the Closing. Xxxxxxx shall have received a certificate
dated the Closing Date and signed by an authorized officer of the Company
confirming the foregoing.
(c) Other Documents. The Company shall have furnished to Xxxxxxx
----------------
such other documents relating to this Agreement or the transactions contemplated
hereby as Xxxxxxx or its counsel may reasonably request.
SECTION 6.4. Frustration of Closing Conditions. Neither the Company
----------------------------------
nor Xxxxxxx may rely on the failure of any condition set forth in this Article
VI to be satisfied if such failure was caused by such party's failure to act in
good faith or to use its reasonable best efforts to cause the Closing to occur,
as required by Section 5.3.
ARTICLE VII
Termination
-----------
SECTION 7.1. This Agreement may be terminated at any time prior to
the Closing by either the Company or Xxxxxxx if the Closing shall not have been
consummated on or before July 31, 1999, unless the failure to consummate the
Closing prior to such date is the result of a material breach of this Agreement
by the party seeking to terminate this Agreement.
SECTION 7.2. Effect of Termination. In the event of a termination of
----------------------
this Agreement by either the Company or Xxxxxxx as provided in Section 7.1, this
Agreement shall
23
forthwith become void and there shall be no liability or obligation on the part
of the Company or Xxxxxxx or their respective directors or officers, except with
respect to any breach of any representation, warranty, covenant or agreement
contained in this Agreement prior to such termination and except that Section
5.2 shall continue in effect.
ARTICLE VIII
Indemnification
---------------
SECTION 8.1. Indemnification by Xxxxxxx. Xxxxxxx shall indemnify the
---------------------------
Company and its affiliates and each of their respective officers, directors,
employees, stockholders, agents and representatives against, and hold them
harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) ("Losses"), as incurred (payable promptly
------
upon written request), arising from, in connection with or otherwise with
respect to:
(a) any breach of any representation or warranty of Xxxxxxx contained
in this Agreement, in any Ancillary Agreement or in any document delivered
in connection herewith;
(b) any breach of any covenant of Xxxxxxx contained in this Agreement
or in any Ancillary Agreement; and
(c) any Excluded Liability;
provided, however, that Xxxxxxx shall have no obligation under this Section 8.1
-------- -------
unless and until the aggregate amount of Losses so incurred exceeds $125,000,
whereupon Xxxxxxx shall be liable to indemnify all Losses over $125,000.
SECTION 8.2. Indemnification by the Company. The Company shall
-------------------------------
indemnify Xxxxxxx and its affiliates and each of their respective officers,
directors, employees, stockholders, agents and representatives against, and
agrees to hold them harmless from, any Loss, as incurred (payable promptly upon
written request), for or on account of or arising from or in connection with or
otherwise with respect to:
24
(a) any breach of any representation or warranty of the Company
contained in this Agreement, or in any Ancillary Agreement or in any
document delivered in connection herewith;
(b) any breach of any covenant of the Company contained in this
Agreement or in any Ancillary Agreement; and
(c) any Assumed Liability;
provided, however, that the Company shall have no obligation under this Section
-------- -------
8.2 unless and until the aggregate amount of Losses so incurred exceeds
$125,000, whereupon the Company shall be liable to indemnify all Losses over
$125,000.
SECTION 8.3. Calculation of Losses. The amount of any Loss for which
----------------------
indemnification is provided under this Article VIII shall be net of any amounts
actually recovered by the indemnified party under insurance policies with
respect to such Loss and shall be (a) increased to take account of any net tax
cost incurred by the indemnified party arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (b) reduced to take
account of any net tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
tax cost or tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss.
SECTION 8.4. Termination of Indemnification. The obligations to
-------------------------------
indemnify and hold harmless any party, (a) pursuant to Section 8.1(a)(i) or
8.2(a) shall terminate when the applicable representation or warranty terminates
pursuant to Section 8.6 and (b) pursuant to the other clauses of Sections 8.1
and 8.2 shall not terminate; provided, however, that such obligations to
-------- -------
indemnify and hold harmless shall not terminate with respect to any item as to
which the person to be indemnified shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice of such claim
(stating in reasonable detail the basis of such claim) pursuant to Section 8.5
to the party to be providing the indemnification.
25
SECTION 8.5. Procedures. (a) Third Party Claims. In order for a
----------- -------------------
party (the "indemnified party"), to be entitled to any indemnification provided
-----------------
for under this Agreement in respect of, arising out of or involving a claim made
by any person against the indemnified party (a "Third Party Claim"), such
-----------------
indemnified party must notify the indemnifying party in writing (and in
reasonable detail) of the Third Party Claim within 10 business days after
receipt by such indemnified party of notice of the Third Party Claim; provided,
--------
however, that failure to give such notification shall not affect the
-------
indemnification provided hereunder except to the extent the indemnifying party
shall have been actually and materially prejudiced as a result of such failure.
Thereafter, the indemnified party shall deliver to the indemnifying party,
within five business days after the indemnified party's receipt thereof, copies
of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim.
(b) Assumption. If a Third Party Claim is made against an
-----------
indemnified party, the indemnifying party shall be entitled to participate in
the defense thereof and, if it so chooses and acknowledges in writing its
liability to indemnify the indemnified party for the amounts, if any, awarded to
the claimant pursuant to such Third Party Claim, or agreed to be paid to the
claimant pursuant to a settlement of such Third Party Claim, to assume the
defense thereof with counsel selected by the indemnifying party; provided,
--------
however, that such counsel is not reasonably objected to by the indemnified
-------
party. Should the indemnifying party so elect to assume the defense of a Third
Party Claim, the indemnifying party shall not be liable to the indemnified party
for any legal expenses subsequently incurred by the indemnified party in
connection with the defense thereof. If the indemnifying party assumes such
defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel (not reasonably objected to by the
indemnifying party), at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying party shall
control such defense. The indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof. If the
indemnifying party chooses to defend or prosecute a Third Party Claim, all the
indemnified parties shall cooperate in the defense or prosecution
26
thereof. Such cooperation shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the indemnifying party assumes the defense of a Third Party Claim, the
indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably withheld). If the
indemnifying party assumes the defense of a Third Party Claim, the indemnified
party shall agree to any settlement, compromise or discharge of a Third Party
Claim that the indemnifying party may recommend and that by its terms obligates
the indemnifying party to pay the full amount of the liability in connection
with such Third Party Claim, which releases the indemnified party completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the indemnified party. Notwithstanding the foregoing, the indemnifying
party shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the reasonable fees and expenses of counsel incurred by the
indemnified party in defending such Third Party Claim) if the Third Party Claim
seeks an order, injunction or other equitable relief or relief for other than
money damages against the indemnified party that the indemnified party
reasonably determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages. If such equitable relief or
other relief portion of the Third Party Claim can be so separated from that for
money damages, the indemnifying party shall be entitled to assume the defense of
the portion relating to money damages.
(c) Other Claims. In the event any indemnified party should have a
-------------
claim against any indemnifying party under Section 8.1 or 8.2 that does not
involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the indemnified party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. Subject to Sections
8.4 and 8.6, the failure by any indemnified party so to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have to such indemnified party under Section 8.1 or 8.2, except to the extent
that the indemnifying party demonstrates that it has been
27
materially prejudiced by such failure. If the indemnifying party does not notify
the indemnified party within 10 calendar days following its receipt of such
notice that the indemnifying party disputes its liability to the indemnified
party under Section 8.1 or 8.2, such claim specified by the indemnified party in
such notice shall be conclusively deemed a liability of the indemnifying party
under Section 8.1 or 8.2 and the indemnifying party shall pay the amount of such
liability to the indemnified party on demand or, in the case of any notice in
which the amount of the claim (or any portion thereof) is estimated, on such
later date when the amount of such claim (or such portion thereof) becomes
finally determined.
SECTION 8.6. Survival of Representations. The representations,
----------------------------
warranties, covenants and agreements contained in this Agreement and in any
document delivered in connection herewith shall survive the Closing solely for
purposes of this Article VIII and shall terminate at the close of business at
the end of the eighteenth month following the Closing Date.
SECTION 8.7. Limitation on Indemnification. The maximum aggregate
------------------------------
liability of Xxxxxxx or the Company under Section 8.1 or Section 8.2,
respectively, shall in no event exceed $5,000,000.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1. No Third Party Beneficiaries. Except as provided in
-----------------------------
Article VIII, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such
permitted assigns, any legal or equitable rights hereunder, whether as third
party beneficiaries or otherwise.
28
SECTION 9.2. Notices. All notices or other communications required
--------
or permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand or facsimile, or if mailed, three days after mailing
(one business day in the case of express mail or overnight courier service), as
follows (or at such other address for a party as shall be specified by notice
given in accordance with this Section 9.2):
(a) if to the Company,
Xxxxx Investment Co., Inc.
000 Xxxx 0xx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Vice President
Facsimile: (000) 000-0000
with copies to:
Xxxxx Apparel Group, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to Xxxxxxx,
Xxxxxxx Shoe Company Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with copies to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
29
SECTION 9.3. Entire Agreement. This Agreement, including the
-----------------
schedules, exhibits, annexes and attachments thereto, together with the
Ancillary Agreements and the Confidentiality Agreement, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior or contemporaneous
agreements and understandings relating to such subject matter.
SECTION 9.4. Enforcement. The parties hereto agree that irreparable
------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any Federal
court located in the State of New York or in any New York state court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.5. Assignment. Neither this Agreement nor any rights or
-----------
obligations hereunder may be assigned or otherwise transferred by either party
hereto (including by operation of law) without the prior written consent of the
other party, except that the Company may assign or transfer, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to any of its affiliates. Any purported assignment or transfer in
violation of this Section 9.5 shall be null and void and of no effect.
SECTION 9.6. Expenses. Whether or not the Acquisition is
---------
consummated, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees or expenses.
SECTION 9.7. Amendments. No amendment to this Agreement shall be
-----------
effective unless it shall be in writing and signed by each of the parties
hereto.
SECTION 9.8. Waivers. No failure or delay of any party in exercising
--------
any right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise
30
thereof or the exercise of any other right or power. The rights and remedies of
the parties under this Agreement are cumulative and are not exclusive of any
rights or remedies which they would otherwise have under this Agreement. This
Agreement (or any provision hereof) may not be waived except pursuant to a
writing executed by the waiving party.
SECTION 9.9. Exhibits and Schedules; Interpretation. (a) The
---------------------------------------
headings contained in this Agreement or in any Exhibit or Schedule hereto and in
the table of contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Any matter set forth in any provision, subprovision, section or subsection of
any Schedule shall, unless the context otherwise manifestly requires, be deemed
set forth for all purposes of the Schedules. All Exhibits and Schedules annexed
to this Agreement or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit to this Agreement but not otherwise defined
herein, shall have the meaning as defined in this Agreement or in the Licence
Agreement. When a reference is made in this Agreement to a Section, Article,
Exhibit or Schedule, such reference shall be to a Section or Article of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. For all
purposes hereof, the terms "include", "includes" and "including" shall be deemed
followed by the words "without limitation".
(b) For all purposes hereof:
"affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"person" means any individual, firm, corporation, partnership, limited
------
liability company, trust, joint venture, Governmental Entity or other entity.
"subsidiary" of any person means another person, an amount of the
----------
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) and which is
31
owned directly or indirectly by such first person or by another subsidiary of
such person.
SECTION 9.10. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties hereto and delivered to the other party.
SECTION 9.11. Severability. If any provision of this Agreement or
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the application of any such provision to any person or circumstance shall be
held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision thereof.
SECTION 9.12. Consent to Jurisdiction. Each of the parties hereto
------------------------
irrevocably submits to, and agrees to cause its subsidiaries to irrevocably
submit to, the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County, and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and each agrees that no such action, suit or proceeding relating to this
Agreement shall be brought by it or any of its Affiliates except in such
courts). Each of the parties hereto further agrees, and agrees to cause its
subsidiaries to agree, that service of any process, summons, notice or document
by U.S. registered mail to such person's respective address set forth above
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of the parties
hereto irrevocably and unconditionally waives (and agrees not to plead or
claim), and agrees to cause its subsidiaries to irrevocably and unconditionally
waive (and not to plead or claim), any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (a) the Supreme Court of the State of New York, New York
County, or (b) the United States District Court for the Southern District of New
York or that any such action, suit or proceeding brought in any such court has
been brought in an inconvenient forum.
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SECTION 9.13. Governing Law. This Agreement shall be governed by,
--------------
and construed in accordance with, the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
SECTION 9.14. Waiver of Jury Trial. Each of the parties hereto
---------------------
hereby waives, and agrees to cause each of its Affiliates to waive, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each of the parties hereto (a) certifies
that no representative of any other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to
enforce the foregoing waiver and (b) acknowledges that it and the other parties
thereto have been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications in this Section 9.14.
33
SECTION 9.15. Permitted Communications. After the date hereof, the
-------------------------
Company shall be permitted to contact (a) any member of senior management of
Xxxxxxx'x Xxxxx Division and (b) any retail customer of Xxxxxxx'x Xxxxx
Division, in each case, regarding the subject matter of this Agreement and the
transactions contemplated hereby.
SECTION 9.16. Xxxxxxx Employees. Notwithstanding any other provision
------------------
of this Agreement, Xxxxxxx shall have the right without any liability to the
Company (or any of its affiliates or any Indemnified Party) at any time to
terminate the employment of, or transfer to another Xxxxxxx division, any
employee of Xxxxxxx, including any employee of the Xxxxx New York division of
Xxxxxxx.
SECTION 9.17. JNY Guaranty. JNY hereby unconditionally guarantees
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the performance by the Company (or its assignee or transferee, as applicable) of
all of the Company's (or its assignee or transferee, as applicable) obligations
pursuant to this Agreement and the Ancillary Agreements.
IN WITNESS WHEREOF, the Company, JNY and Xxxxxxx have duly executed
this Agreement as of the date first written above.
XXXXX INVESTMENT CO., INC.,
by
/s/ Xxx X. Xxxxxx
--------------------
Name: Xxx X. Xxxxxx
Title: President
34
XXXXX APPAREL GROUP, INC.,
/s/ Xxx X. Xxxxxx
--------------------
Name: Xxx X. Xxxxxx
Title: General Counsel
XXXXXXX SHOE COMPANY INC.,
/s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice
President
