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SIRCO INTERNATIONAL CORP.
as Seller
and
INTERBRAND L.L.C.
as Buyer
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ASSET PURCHASE AGREEMENT
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Dated as of July 23, 1999
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TABLE OF CONTENTS
RECITALS.................................................................
1. DEFINITIONS..........................................................
2. PURCHASE AND SALE OF THE PURCHASED PROPERTY..........................
2.1. Transfer of Assets........................................
2.2. Sale at Closing Date......................................
2.3. Subsequent Documentation..................................
2.4. Assumed Liabilities.......................................
2.5. Excluded Liabilities......................................
2.6. Physical Inventory........................................
3. PURCHASE PRICE.......................................................
3.1. Purchase Price............................................
3.2. Payment of Purchase Price.................................
3.3. Receivables Holdback......................................
4. CLOSING..............................................................
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS........................
5.1. Corporate Organization....................................
5.2. Qualification to Do Business..............................
5.3. Authorization and Validity of Agreement...................
5.4. No Conflict or Violation..................................
5.5. Consents and Approvals....................................
5.6. Financial Statements......................................
5.7. Tax Matters...............................................
5.8. Absence of Undisclosed Liabilities........................
5.9. Leased Property...........................................
5.10. Intellectual Property....................................
5.11. Compliance with Law; Licenses............................
5.12. Litigation...............................................
5.13. Assigned Contracts.......................................
5.14. Receivables..............................................
5.15. Customers, Suppliers and Competitors.....................
5.16. Ownership of Purchased Property..........................
5.17. Survival 15
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................
6.1. Corporate Organization....................................
6.2. Authorization and Validity of Agreement...................
6.3. No Conflict or Violation..................................
6.4. Approvals and Consents....................................
6.5. Litigation................................................
6.6. Survival .................................................
7. COVENANTS OF THE SELLER..............................................
7.1. Conduct of Business Before the Closing Date...............
7.2. Access to Properties and Records..........................
7.3. Negotiations..............................................
7.4. Best Efforts..............................................
7.5. Covenant Not To Compete...................................
7.6. Notice of Breach..........................................
7.7. Assignment of Contracts and Warranties....................
7.8. Change of Name............................................
7.9. Liquidation of Inventory; Right of First Offer............
7.10. License Relationships....................................
7.11. Estoppel Certificates....................................
7.12. Files and Records........................................
7.13. Gold's Gym License.......................................
7.14. Subsequent Purchase Orders...............................
7.15. Account Numbers..........................................
8. COVENANTS OF THE BUYER...............................................
8.1. Best Efforts..............................................
8.2. Notice of Breach..........................................
8.3. Financing.................................................
9. EMPLOYEES............................................................
9.1. Offer of Employment.......................................
9.2. Liability ................................................
9.3. Rights ...................................................
10. TAXES...............................................................
10.1. Allocation of Purchase Price and Purchase Price
Allocation Forms ......................................
10.2. Indemnification Payments.................................
11. INDEMNIFICATION AND ARBITRATION.....................................
11.1. Indemnification by the Seller............................
11.2. Procedures for Indemnification by the Seller.............
11.3. Indemnification by the Buyer.............................
11.4. Procedures for Indemnification by the Buyer..............
11.5. Successors and Assigns...................................
11.6. Arbitration..............................................
12. CONDITIONS TO OBLIGATIONS OF THE SELLER.............................
12.1. Representations and Warranties of the Buyer..............
12.2. Performance of the Obligations of the Buyer..............
12.3. Consents and Approvals...................................
12.4. No Violation of Orders...................................
12.5. Buyer Closing Documents..................................
12.6. Legal Matters............................................
13. CONDITIONS TO THE OBLIGATIONS OF THE BUYER..........................
13.1. Representations and Warranties of the Seller.............
13.2. Performance of the Obligations of the Seller.............
13.3. Consents and Approvals...................................
13.4. No Violation of Orders...................................
13.5. No Material Adverse Change...............................
13.6. State Taxes..............................................
13.7. Seller Closing Documents.................................
13.8. Legal Matters............................................
13.9. Buyer Financing..........................................
13.10. Employment Agreements...................................
14. TERMINATION.........................................................
14.1. Conditions of Termination................................
14.2. Effect of Termination....................................
15. MISCELLANEOUS.......................................................
15.1. Successors and Assigns...................................
15.2. Governing Law; Jurisdiction..............................
15.3. Expenses ................................................
15.4. Broker's and Finder's Fees...............................
15.5. Severability.............................................
15.6. Notices .................................................
15.7. Amendments; Waivers......................................
15.8. Public Announcements.....................................
15.9. Entire Agreement.........................................
15.10. Parties in Interest.....................................
15.11. Scheduled Disclosures...................................
15.12. Section and Paragraph Headings..........................
15.13. Counterparts............................................
Exhibits:
Exhibit A Assigned Contracts
Exhibit B Xxxx of Sale, Assignment and Assumption Agreement
Exhibit C Assigned Trademarks
Exhibit D License Agreements
Exhibit E Trademark Assignment Agreement
Exhibit F Services Agreement
Index To Schedules:
5.2 Qualification
5.5 Consents, Waivers, Authorizations and Approvals
5.8 Undisclosed Liabilities
5.9(a) Leased Property
5.10 Intellectual Property
5.11 Exceptions to Compliance with Law
5.15 Customers, Suppliers and Competitors
6.4 Consents, Waivers, Authorizations and Approvals
7.14 Open Purchase Orders
9.1 Employees to Be Offered Employment
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of July 23, 1999
between SIRCO INTERNATIONAL CORP., a New York corporation (the "Seller"), and
INTERBRAND L.L.C., a Delaware limited liability company (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of the
manufacture, distribution and sale of luggage; and
WHEREAS, the Buyer desires to purchase certain assets of the
Seller's luggage business and the Seller desires to sell such assets to the
Buyer, in each case upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements hereinafter contained, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement (including the recitals and
Schedules hereto), the following terms shall have the following meanings (such
meanings to be applicable equally to both singular and plural forms of the terms
defined):
"Accounts Receivable" shall mean all accounts and notes
receivable (including without limitation amounts due from vendors whether
recorded as accounts receivable or reductions in accounts payable) of the Seller
relating to the Business existing on the Closing Date;
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise) of such
Person;
"Allocation Statement" shall have the meaning set forth in
Section 10.1 hereof;
"Assigned Contracts" shall mean the rights of the Seller, as
the case may be, under the contracts listed on Exhibit A hereto;
"Assignment and Assumption Agreement" means the Xxxx of Sale,
Assignment and Assumption Agreement to be executed at Closing for the Assigned
Contracts, in substantially the form attached hereto as Exhibit B;
"Assumed Liabilities" shall have the meaning set forth in
Section 2.4 hereof;
"Book Value" shall mean the Closing Date book value of
Equipment and Machinery, net of depreciation and related reserves, less any
Assumed Liabilities, as is reflected on Seller's Financial Statements in
accordance with GAAP;
"Business" shall mean all the business activities and
operations of the Seller relating to the manufacture and wholesale distribution
and sale of luggage in the United States;
"Business Day" shall mean days other than Saturdays, Sundays
and other legal holidays or days on which the principal office of Citibank, N.A.
is closed;
"Business Locations" means the LaMirada Facility and the
Stamford Facility;
"Buyer" shall have the meaning set forth in the Preamble
hereto;
"Buyer Events of Breach" shall have the meaning set forth in
Section 11.3 hereof;
"Buyer Indemnitees" shall have the meaning set forth in
Section 11.1 hereof;
"Buyer Losses" shall have the meaning set forth in Section
11.1 hereof;
"Claimant" shall have the meaning set forth in Section 11.6
hereof;
"Closing" shall have the meaning set forth in Section 4
hereof;
"Closing Date" shall have the meaning set forth in Section 4;
"Code" shall mean the Internal Revenue Code of 1986, as
amended;
"Demand" shall have the meaning set forth in Section 11.6
hereof;
"Eligible Inventory" means all items of Seller's luggage
inventory in the "Dunlop," Xxxxx Xxxxx," and "Action/Cherokee" divisions, in
good and salable condition, owned by Seller and on hand at the Business
Locations on the Closing Date;
"Eligible Inventory Value" means the value for the Eligible
Inventory as set forth on the Seller's Inventory Availability Report as of the
last Business Day prior to the Closing Date, which report shall be prepared in a
manner consistent with past practice and provided to the Buyer prior to the
Closing Date;
"Eligible Receivables" means the Accounts Receivable qualified
to the satisfaction of the Buyer (in its sole discretion) and/or by Century
Credit Corp.;
"Equipment and Machinery" shall mean (i) all the equipment,
machinery, furniture, fixtures and improvements, supplies and other assets owned
by the Seller on the Closing Date, used by the Seller in connection with the
Business on the Closing Date (including, without limitation, all such items as
set forth on the November Balance Sheet with additions thereto (net of
dispositions) in the ordinary course of business), excluding any such items
which are not in good working order on the Closing Date, (ii) all the
replacements for any of the foregoing owned by the Seller, (iii) any rights of
the Seller under express or implied warranties (to the extent assignable) and
licenses received from manufacturers and sellers of the aforesaid items and (iv)
any related claims, credits, rights of recovery and set-off with respect
thereto; provided, however, that the following items located in the Stamford
Facility shall be excluded, subject to the Buyer's right to use such equipment
and machinery during the period in which it operates out of the Stamford
Facility: (a) any and all furniture located therein; (b) the private branch
exchange (i.e., the telephone system) located therein; (c) the local area
network (LAN), including the router, server, hubs and switches, located therein;
and (d) the color copier machine located in the Stamford Facility; provided,
further, that all stuffing paper, corrugated packing materials and other
packaging materials, wherever located, shall also be excluded;
"Excluded Inventory" means Inventory not in the "Dunlop,"
"Xxxxx Xxxxx" or "Action/Cherokee" Divisions, including, without limitation, all
"X.X. Xxxxxxx" inventory and all stuffing paper, corrugated packing materials
and other packaging materials;
"Excluded Liabilities" shall have the meaning set forth in
Section 2.5 hereof;
"Files and Records" shall mean all files and records, whether
in hard copy or magnetic format, of the Seller specifically relating to the
Business or the Purchased Property, including, without limitation, the following
types of files and records specifically relating to the Business: customer and
supplier files, equipment maintenance records, equipment warranty information,
plant plans, specifications and drawings, trade secrets and customer
specifications and all correspondence with federal, state and local governmental
agencies relating to the operation of the Business;
"Financial Statements" shall have the meaning set forth in
Section 5.6 hereof;
"Final Inventory Schedule" has the meaning set forth in
Section 2.6;
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date on which the document or calculation to
which it refers relates, applied on a consistent basis throughout the periods
covered thereby;
"Government" shall mean any agency, division, subdivision,
audit group or procuring office of the Government of the United States, any
state of the United States or any foreign government, including the employees or
agents thereof;
"Hired Employees" shall have the meaning set forth in Section
9.1 hereof;
"Intangible Assets" shall mean all intangible personal
property rights, including, without limitation, all vendor numbers and other
customer account numbers, and all goodwill of the Seller relating to the
Business, but excluding any and all rights of the Seller under the license
agreements relating to "Koosh," "MTV", "Golds Gym" and "Maui & Sons" products
and the "X.X. Xxxxxxx" trademark;
"Intellectual Property" shall have the meaning set forth in
Section 5.10 hereof;
"In-transit Inventory" means luggage inventory (other than
Excluded Inventory) subject to open purchase orders (excluding back orders) of
Seller as of the Closing Date, an estimated list of which In-transit Inventory
as of the Closing Date is to be delivered to the Buyer three Business Days prior
to Closing Date;
"Inventory" shall mean (i) all the finished goods, raw
materials, work in progress and inventoriable supplies relating to the Business
and owned by the Seller and on hand at the Business Locations on the Closing
Date (including, without limitation, all such items as set forth on the November
Balance Sheet with additions thereto (net of dispositions) in the ordinary
course of business) specifically for use in the operations of the Business and
(ii) any and all rights of the Seller to the warranties received from its
suppliers with respect to such inventory (to the extent assignable) and related
claims, credits, rights of recovery and set-off with respect thereto;
"LaMirada Facility" means the Seller's business location at
00000 Xxxxx Xxxxxx, XxXxxxxx, Xxxxxxxxxx 00000-0000;
"Licensors" shall mean Xxxxx Xxxxx International Inc. and
Dunlop Maxfli Sports Corporation, collectively;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement;
"Material Adverse Effect" shall mean a material adverse affect
on the business, operations, assets, properties, condition (financial or
otherwise) or prospects of the Seller, taken as a whole;
"November Balance Sheet" shall have the meaning set forth in
Section 5.6 hereof;
"Person" shall mean and include any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, any other unincorporated organization or Government;
"Purchase Price" shall have the meaning set forth in Section
3.1 hereof;
"Purchased Property" means:
(i) the Inventory, other than the Excluded Inventory;
(ii) the Equipment and Machinery;
(iii) the In-transit Inventory;
(iv) the Assigned Contracts;
(v) the Eligible Receivables and the right to receive
and retain mail, Eligible Receivable payments and other communications
relating to the Business;
(vi) the Intellectual Property (other than the "X.X.
Xxxxxxx" trademark);
(vii) the Files and Records, subject to the Seller's
right to retain a copy thereof in accordance with the terms of Section
7.12;
(viii) the Intangible Assets relating to the
Business; and
(ix) to the extent transferable, all telephone
numbers (other than (000) 000-0000), fax numbers and similar numbers or
addresses relating to the Business;
"Proceeding" shall have the meaning set forth in Section 11.2
hereof;
"Receivables Overpayment" shall have the meaning set forth in
Section 3.3 hereof;
"Receivables Problems" shall have the meaning set forth in
Section 3.3 hereof; "Receivables Underpayment" shall have the meaning set forth
in Section 3.3 hereof;
"Respondent" shall have the meaning set forth in Section 11.6
hereof;
"Restricted Period" shall have the meaning set forth in
Section 7.5(a) hereof;
"Seller Indemnitees" shall have the meaning set forth in
Section 11.3 hereof;
"Seller Losses" shall have the meaning set forth in Section
11.3 hereof;
"Seller" shall have the meaning set forth in the Preamble
hereto;
"Seller Events of Breach" shall have the meaning set forth in
Section 11.1 hereof;
"Services Agreement" means the Services Agreement
substantially in the form of Exhibit F attached hereto, to be entered into on
the Closing Date by the Buyer and the Seller, pursuant to which Services
Agreement the Buyer will, among other things, provide packing, shipping and
other administrative services with respect to inventory shipped by the Buyer
from the LaMirada Facility after the Closing Date;
"Stamford Facility" means the Seller's business location at 00
Xxxxxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxxx 00000;
"Taxes" shall mean all federal, state, local or foreign taxes,
including, but not limited to, income, gross income, gross receipts, capital,
production, excise, employment, sales, use, transfer, transfer gain, ad valorem,
premium, profits, license, capital stock, franchise, severance, stamp,
withholding, Social Security, employment, unemployment, disability, worker's
compensation, payroll, utility, windfall profit, custom duties, personal
property, real property, environmental, registration, alternative or add-on
minimum, estimated and other taxes, governmental fees or like charges of any
kind whatsoever, including any interest, penalties or additions thereto whether
disputed or not;
"Tax Returns" shall mean any return, report, information
return or other document (including any related or supporting information) filed
or required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes;
"Trademarks" means the trademarks and service marks
(registered or unregistered) and tradenames, and all goodwill associated
therewith, listed on Exhibit C attached hereto;
"Trademark Assignment Agreement" means the agreement,
substantially in the form attached hereto as Exhibit E, pursuant to which the
Seller will, on the Closing Date, sell and assign all of its right, title and
interest in and to the Trademarks to the Buyer; and
"Transaction Documents" shall mean this Agreement, the
Trademark Assignment Agreement, the Services Agreement, the Escrow Agreement,
the Assignment and Assumption Agreement, the exhibits and schedules hereto, and
all other agreements, instruments, certificates and other documents to be
entered into or delivered by any party in connection with the transactions
contemplated to be consummated pursuant to any of the foregoing.
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.
SECTION 2.1. Transfer of Assets. Subject to the terms and
conditions herein set forth, the Seller shall sell, convey, transfer, assign and
deliver to the Buyer, free and clear of any Lien, and the Buyer shall purchase
and accept from the Seller, on the Closing Date, all right, title and interest
of the Seller in and to the Purchased Property.
SECTION 2.2. Sale at Closing Date. The sale, transfer,
assignment and delivery by the Seller of the Purchased Property to the Buyer, as
herein provided, shall be effected on the Closing Date by deeds, bills of sale,
endorsements, assignments and other instruments of transfer and conveyance
satisfactory in form and substance to counsel for the Buyer.
SECTION 2.3. Subsequent Documentation. The Seller shall, at
any time and from time to time after the Closing Date, upon the request of the
Buyer and at the expense of the Seller, do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, all such further deeds,
assignments, transfers and conveyances as may be required for the better
assigning, transferring, granting, conveying and confirming to the Buyer or its
successors and assigns, or for aiding and assisting in collecting and reducing
to possession, any or all of the Purchased Property. The Seller hereby
constitutes and appoints, effective as of the Closing Date, the Buyer, its
successors and assigns as the true and lawful attorney of the Seller with full
power of substitution in the name of the Buyer or in the name of the Seller but
for the benefit of the Buyer (a) to collect for the account of the Buyer all
Eligible Accounts Receivable and any other item of Purchased Property and (b) to
institute and prosecute all proceedings which the Buyer may in its discretion
deem proper in order to collect the Eligible Accounts Receivable or to assert or
enforce any right, title or interest in, to or under the Purchased Property and
to defend or compromise (subject to Section 11 hereof, if applicable) any and
all actions, suits or proceedings in respect of any of the Purchased Property.
The Buyer shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest in
respect thereof.
SECTION 2.4. Assumed Liabilities. On the terms and subject to
the conditions set forth in this Agreement, from and after the Closing, the
Buyer will assume and pay, perform, discharge and be responsible for all
obligations and liabilities of the Seller under the Assigned Contracts
(excluding breaches thereof prior to the Closing Date) which accrue from and
after the Closing Date (the "Assumed Liabilities").
SECTION 2.5. Excluded Liabilities. Notwithstanding the
provisions of Section 2.4, or any other provision of this Agreement or any
schedule or exhibit hereto and regardless of any disclosure to the Buyer, the
Buyer shall not assume any liabilities, obligations or commitments of the Seller
relating to or arising out of the operation of the Business or the ownership of
the Purchased Property prior to or on the Closing Date other than the Assumed
Liabilities (such unassumed liabilities, the "Excluded Liabilities"). Excluded
Liabilities shall include without limitation: (i) liabilities relating to any
lawsuits arising from the sale or delivery of any Inventory prior to or on the
Closing Date or relating to any other claims, litigation, suits, proceedings or
arbitrations in existence with respect to the Business prior to or on the
Closing Date, (ii) liabilities for (a) income taxes of the Seller, (b) all Taxes
relating to or arising out of the Business accruing, or with respect to any
event or time period occurring, prior to or on the Closing Date, and (c) any
liabilities relating to Taxes retained by the Seller pursuant to this Agreement,
(iii) liabilities in respect of any of Seller's employees, including Hired
Employees, (iv) obligations under the leases in respect of the Business
Locations, and (v) intercompany accounts payable.
SECTION 2.6. Physical Inventory .
The Seller and the Buyer will appoint a mutually acceptable
independent accounting firm (the "Inventory Firm") to conduct a physical
inventory count of, or other testing procedures for, the Inventory at the
Business Locations, in accordance with physical inventory procedures generally
used in the industry and agreed to in writing by the Seller and the Buyer, which
physical inventory shall commence at the close of business on Friday, July 30,
1999 or on such other date as may be mutually acceptable to the Buyer and the
Seller, and shall continue over the following two days. Each of the Buyer and
the Seller shall be entitled to have up to two representatives present during
such physical inventory. Prior to Closing, the Inventory Firm shall prepare a
written, itemized list of all inventory at the Business Locations (the "Final
Inventory Schedule"), which Final Inventory Schedule shall designate items of
inventory as Eligible Inventory or Excluded Inventory. The Final Inventory
Schedule shall be final and binding upon both parties hereto in the absence of
manifest error. The costs and expenses associated with the physical inventory
taken and the preparation of schedules pursuant to this Section 2.6 shall be
borne equally by the Buyer and the Seller.
SECTION 3. PURCHASE PRICE.
SECTION 3.1. Purchase Price. Upon the terms and subject to the
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the Seller contained herein, the
purchase price (the "Purchase Price") for the sale and transfer of the Purchased
Property to be delivered at Closing by the Buyer to the Seller shall consist of
(a) an aggregate amount equal to the sum of the following (the
"Cash Purchase Price"):
(i) forty-five percent (45.0%) of the Eligible
Inventory Value of the Eligible Inventory as evidenced by the Final
Inventory Schedule; and
(ii) ninety-four percent (94%) of the face amount of
the Eligible Receivables; and
(b) the assumption by the Buyer of the Assumed Liabilities.
SECTION 3.2. Payment of Purchase Price. On the Closing Date,
the Buyer shall (i) pay the Cash Purchase Price by wire transfer of immediately
available funds to the account of the Seller at such account as Seller may
designate to the Buyer in writing at least three (3) Business Days prior to the
Closing and (ii) execute and deliver to the Seller an instrument of assumption
of liabilities with respect to the Assumed Liabilities.
SECTION 3.3. Receivables Holdback. The Seller agrees that it
shall be responsible for any advertising allowances, markdowns, shipping
violations, margin guaranties, illegal substitutions, servicing agreements,
shortages, overages, misticketing or damaged goods (collectively, "Receivables
Problems") relating to the Eligible Receivables or the goods provided in respect
thereof relating to or arising out of the actions of the Seller prior to the
Closing Date. The Buyer agrees to deliver to the Seller on or before December 6,
1999 a written statement indicating (i) the aggregate amount collected as of
November 30, 1999 in respect of the Eligible Receivables and (ii) any
Receivables Problems. In the event that the Buyer receives written notification
from any Eligible Receivable obligor stating the existence of a Receivables
Problem, the Buyer shall forward a copy of such notification to the Seller
within three (3) Business Days of receipt thereof. To the extent that the amount
that the Buyer is unable to collect in respect of the Eligible Receivables due
to Receivables Problems exceeds six percent (6%) of the face amount of the
Eligible Receivables (the "Receivables Overpayment"), the Seller shall pay to
the Buyer an amount equal to the Receivables Overpayment by wire transfer of
immediately available funds on or before December 15, 1999. To the extent that
the amount that the Buyer is unable to collect in respect of the Eligible
Receivables due to Receivables Problems is less than six percent (6%) of the
face amount of the Eligible Receivables (the "Receivables Underpayment"), the
Buyer shall pay to the Seller an amount equal to the Receivables Underpayment by
wire transfer of immediately available funds on or before December 15, 1999.
SECTION 4. CLOSING. The closing of the sale and purchase of
the Purchased Property and the assumption of the Assumed Liabilities (the
"Closing") shall take place at the offices of Xxxxxxx Xxxx & Xxxxxxxxx at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 at 10:00 a.m. on August 2, 1999,
or at such other place and time as may be mutually agreed to by the parties
hereto (the "Closing Date").
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller hereby represents and warrants to the Buyer as follows:
SECTION 5.1. Corporate Organization. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted. Copies of the Certificate of Incorporation and By-laws of the Seller,
with all amendments thereto to the date hereof, have been furnished to the Buyer
or its representatives, and such copies are accurate and complete as of the date
hereof.
SECTION 5.2. Qualification to Do Business. The Seller is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect. Schedule 5.2 sets forth all
jurisdictions in which the Seller is qualified to do business.
SECTION 5.3. Authorization and Validity of Agreement. The
Seller has all requisite corporate power and authority to enter into the
Transaction Documents and to carry out its obligations thereunder. The execution
and delivery of the Transaction Documents and the performance of the Seller
obligations thereunder have been duly authorized by all necessary corporate
action by the Board of Directors and stockholders of the Seller, and no other
corporate proceedings on the part of the Seller are necessary to authorize such
execution, delivery and performance. The Transaction Documents have been duly
executed by the Seller and constitute its valid and binding obligations,
enforceable against it in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, moratorium or similar laws of
general application relating to or affecting creditors' rights generally and
except for the limitations imposed by general principles of equity.
SECTION 5.4. No Conflict or Violation. The execution, delivery
and performance by the Seller of the Transaction Documents do not and will not
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of the Seller and do not and will not violate any provision of law, rule
or regulation, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate nor will result in a breach of
or constitute (with due notice or lapse of time or both) a default under, or
give rise to any acceleration of remedies or any right of termination or
repossession under, any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Seller
is a party or by which it is bound or to which any of its properties or assets
is subject, nor will result in the creation or imposition of any Lien upon any
of the Purchased Property, nor will result in the cancellation, modification,
revocation or suspension of any material licenses, franchises, permits,
authorizations or approvals of any federal, state or local government or any
department, agency, board, regulatory authority, commission, bureau or
instrumentality of any of the foregoing.
SECTION 5.5. Consents and Approvals. Schedule 5.5 sets forth a
true and complete list of each consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
Person, and each declaration to or filing or registration with any such
governmental or regulatory authority, that is required in connection with the
execution and delivery of the Transaction Documents by the Seller or the
performance by the Seller of its obligations thereunder.
SECTION 5.6. Financial Statements. The audited balance sheets
of the Seller as of November 30, 1998 (the "November Balance Sheet") and
November 30, 1997 and the unaudited balance sheet of the Company as of May 31,
1999 (collectively, the "Financial Statements") were prepared in accordance with
GAAP and are complete, correct and in accordance with the books of account and
records of the Seller.
SECTION 5.7. Tax Matters. All Taxes of the Seller required by
law to have been paid have been paid or adequately provided for, there are no
Liens for Taxes upon the Purchased Property and the Seller knows of no proposed
Tax assessment against it.
SECTION 5.8. Absence of Undisclosed Liabilities. Except as set
forth on Schedule 5.8, the Seller has no indebtedness or liability, absolute or
contingent, known or unknown, relating to the Purchased Property or which could
adversely affect the Purchased Property or Seller's rights to occupy the
Business Locations which is not shown or provided for on the November Balance
Sheet other than liabilities as shall have been incurred or accrued in the
ordinary course of business since March 31, 1999.
SECTION 5.9. Leased Property.
(a) Lease Obligations. True, complete and accurate copies of
the leases for the Business Locations have been delivered to the Buyer, and each
of such leases is in full force and effect without modification or amendment
from the form delivered. No option has been exercised under any of such leases,
except options whose exercise has been evidenced by a written document, a true,
complete and accurate copy of which has been delivered to the Buyer with the
corresponding lease. Except as identified on Schedule 5.9(a), neither the
execution of the Services Agreement nor the consummation of the transactions
contemplated thereby requires the consent or approval of the other party or
parties to the leases for the Business Locations. Neither the Seller nor, to
Seller's knowledge, any of the other parties to such leases, is in material
default under any of such leases, and no material amount due under such leases
remains unpaid, no material controversy, claim, dispute or disagreement exists
between the parties to such leases, and no event has occurred which with the
passage of time or giving of notice, or both would constitute a material default
thereunder.
(b) Insurance Notices. The Seller has received no notice from
any insurance carrier regarding defects or inadequacies in the Business
Locations, which, if not corrected, would result in termination of the insurance
coverage therefor or an increase in the cost thereof.
SECTION 5.10. Intellectual Property. "Intellectual Property"
shall mean all of the following: (i) the Trademarks; (ii) trade secrets relating
to the Purchased Property, including confidential and other non-public
information, and the right in any jurisdiction to limit the use or disclosure
thereof; (iii) licenses, immunities, remedies against infringement, covenants
not to xxx and the like relating to any of the foregoing under the laws of all
jurisdictions; (iv) books and records describing or used in connection with any
of the foregoing; and (v) claims or causes of action arising out of or related
to infringement or misappropriation of any of the foregoing. Schedule 5.10 sets
forth a complete list of all applications and registrations for Intellectual
Property in the Seller's name in all jurisdictions. Except as set forth on
Schedule 5.10, the Seller owns or has the valid right to use the names
(including the Sirco International tradename and variations thereof), service
marks, logos, trademarks and other Intellectual Property currently used by it in
the conduct of the Business. Except as set forth in Schedule 5.10, the Seller is
not in violation in any material respect of any licenses, sublicenses or other
agreements to which it is a party and pursuant to which it is authorized to use
third party Intellectual Property ("Third Party Intellectual Property Rights").
No claims with respect to the Intellectual Property, any trade secret material
to Business, or any Third Party Intellectual Property Rights to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by the Seller, are currently pending or, to the
knowledge of the Seller, threatened by any Person. To the knowledge of the
Seller, there is no material infringement or misappropriation of any
Intellectual Property by any third party, including any employee or former
employee of the Seller. Seller has no Internet Web sites or domain names
relating to the Business.
SECTION 5.11. Compliance with Law; Licenses. Except as set
forth in Schedule 5.11, the operations of the Business have been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of all courts and other governmental or regulatory authorities having
jurisdiction over the Seller and its assets, properties and operations, except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect. Except as set forth in Schedule 5.11, the Seller has not
received notice of any violation of any such law, regulation, order or other
legal requirement in the context of its operation of the Business, and the
Seller is not in default with respect to any order, writ, judgment, award,
injunction or decree of any federal, state or local court or governmental or
regulatory authority or arbitrator, domestic or foreign, applicable to the
Business or any of its assets, properties or operations relating to the
Business. The Seller does not have knowledge of any proposed change in any such
laws, rules or regulations (other than laws of general applicability) that would
materially and adversely affect the transactions contemplated by the Transaction
Documents or all or a material part of the Business or the Purchased Property.
SECTION 5.12. Litigation. There are no claims, actions, suits,
proceedings, labor disputes or investigations pending or, to the best knowledge
of the Seller, threatened, before any federal, state or local court or
governmental or regulatory authority, domestic or foreign, or before any
arbitrator of any nature, brought by or against the Seller or any of their
respective officers, directors, employees, agents or Affiliates involving,
affecting or relating to the Business, the Purchased Property, or the
transactions contemplated by the Transaction Documents, nor is any basis known
to the Seller or any of its directors or officers for any such action, suit,
proceeding or investigation. Neither the Business nor the Purchased Property is
subject to any order, writ, judgment, award, injunction or decree of any
national, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, that affects or might affect the Business or
the Purchased Property, or that would or might interfere with the transactions
contemplated by the Transaction Documents.
SECTION 5.13. Assigned Contracts. Each Assigned Contract is
valid, binding and enforceable against the parties thereto in accordance with
its terms, and in full force and effect on the date hereof. The Seller has
performed in all material respects all obligations required to be performed by
it to date under, and is not in default or delinquent in performance, status or
any other respect (claimed or actual) in connection with, any Assigned Contract,
and no event has occurred which, with due notice or lapse of time or both, would
constitute such a default. To the best knowledge of the Seller, no other party
to any Assigned Contract is in default in respect thereof, and no event has
occurred which, with due notice or lapse of time or both, would constitute such
a default. The Seller has delivered to the Buyer or its representatives true and
complete originals or copies of all the Assigned Contracts.
SECTION 5.14. Receivables. To the knowledge of the Seller, all
Eligible Receivables are (or will be) current and collectible in amounts not
less than the aggregate amount thereof (net of reserves established in
accordance with prior practice) carried (or to be carried) on the books of the
Seller, and are not subject to any counterclaims or set-offs. There are no
written or, to the knowledge of the Seller after due inquiry, oral agreements
relating to any actual or potential "markdowns", advertising allowances, service
agreements or margin guaranties in connection with any Eligible Receivables.
SECTION 5.15. Customers, Suppliers and Competitors. Schedule
5.15 sets forth a complete and correct list of (a) all customers whose purchases
exceeded twelve percent (12%) of the aggregate net sales of the Business during
fiscal year 1998 and the period from December 1, 1998 through May 31, 1999, and
(b) the suppliers by dollar volume of the Business and the aggregate dollar
volume of purchases (broken down by principal categories) by the Business from
such suppliers for such periods. Except as set forth in Schedule 5.15, none of
such customers or suppliers has, or to the best knowledge of the Seller, intends
to terminate or change significantly its relationship with the Business.
SECTION 5.16. Ownership of Purchased Property. The Seller is
the owner of the Purchased Property existing as of the date hereof. The Seller
will have, and at the Closing the Buyer will receive, good and valid title to
the Purchased Property, free and clear of any Liens. Seller has no pending
insurance claims relating to the Purchased Property.
SECTION 5.17. Survival. Each of the representations and
warranties set forth in this Article 5 shall be deemed represented and made by
the Seller at the Closing as if made at such time and shall survive the Closing
notwithstanding any investigation on the part of the Buyer for a period
terminating on the first (1st) anniversary of the Closing Date, except that the
representations and warranties set forth in Section 5.7 shall survive for the
applicable statute of limitations.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
Buyer hereby represents and warrants to the Seller as follows:
SECTION 6.1. Corporate Organization. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite corporate power and
authority to own its properties and assets and to conduct its businesses as now
conducted.
SECTION 6.2. Authorization and Validity of Agreement. The
Buyer has all requisite power and authority to enter into the Transaction
Documents and to carry out its obligations thereunder. The execution and
delivery of the Transaction Documents and the performance of the Buyer's
obligations thereunder have been duly authorized by all necessary corporate
action by the Buyer, and no other proceedings on the part of the Buyer are
necessary to authorize such execution, delivery and performance. Each of the
Transaction Documents has been duly executed by the Buyer and constitutes its
valid and binding obligation, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws of general application relating to or affecting creditors'
rights generally and except for the limitations imposed by general principles of
equity.
SECTION 6.3. No Conflict or Violation. The execution, delivery
and performance by the Buyer of the Transaction Documents do not and will not
violate or conflict with any provision of the Certificate of Incorporation and
the By-laws of the Buyer and do not and will not violate any provision of law,
rule or regulation or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate nor will result in a breach of
or constitute (with due notice or lapse of time or both) a default under, or
give rise to any acceleration of remedies or any right of termination under, any
contract, lease, loan agreement, mortgage, security agreement, trust indenture
or other agreement or instrument to which the Buyer is a party or by which it is
bound or to which any of its properties or assets is subject.
SECTION 6.4. Approvals and Consents. Except (i) as set forth
on Schedule 6.4, (ii) as may be required to transfer any Permits, and (iii) such
consents, approvals and filings, the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Buyer to consummate the transactions contemplated hereby, the execution,
delivery and performance of the Transaction Documents on behalf of the Buyer do
not require the consent or approval of, or filing with, any government,
governmental body or agency or other entity or Person.
SECTION 6.5. Litigation. There are no claims, actions, suits,
proceedings, labor disputes or investigations pending or, to the best knowledge
of the Buyer, threatened, before any federal, state or local court or
governmental or regulatory authority, domestic or foreign, or before any
arbitrator of any nature, brought by or against the Buyer or any of its
officers, managing members, employees, agents or Affiliates involving, affecting
or relating to the transactions contemplated by the Transaction Documents, nor
is any basis known to the Buyer or any of its managing members or officers for
any such action, suit, proceedings or investigation.
SECTION 6.6. Survival. Each of the representations and
warranties set forth in this Article 6 shall be deemed represented and made by
the Buyer at the Closing as if made at such time and shall survive the Closing
notwithstanding any investigation on the part of the Seller for a period
terminating on the first (1st) anniversary of the Closing Date.
SECTION 7. COVENANTS OF THE SELLER.
The Seller covenants as follows:
SECTION 7.1. Conduct of Business Before the Closing Date.
(a) Without the prior written consent of the Buyer, between
the date hereof and the Closing Date, the Seller shall not, except as required
or expressly permitted pursuant to the terms hereof:
(i) make any material change in the conduct of the
Business as it relates to the Purchased Property or enter into any
transaction relating to the Business (as it relates to the Purchased
Property) other than in the ordinary course of business consistent with
past practices;
(ii) make any sale, assignment, transfer, abandonment
or other conveyance of the Purchased Property or any part thereof,
except transactions pursuant to existing contracts set forth in the
Schedules hereto and dispositions of inventory or of worn-out or
obsolete Equipment and Machinery for fair or reasonable value in the
ordinary course of business consistent with past practice;
(iii) subject any of the Purchased Property, or any
part thereof, to any Lien or suffer such to exist other than such Liens
as may arise in the ordinary course of business consistent with past
practice by operation of law and that will not, individually or in the
aggregate, have a Material Adverse Effect or interfere materially with
the use, operation, enjoyment or marketability of any of the Purchased
Property;
(iv) fail to keep in full force and effect insurance
comparable in amount and scope of coverage maintained in respect of the
Business Locations;
(v) take any other action that would cause any of the
representations and warranties made by them in the Transaction
Documents not to remain true and correct;
(vi) make, enter into, modify, amend in any material
respect or terminate any Assigned Contract;
(vii) remove any furniture, fixtures or equipment
from the LaMirada Facility or Stamford Facility used as of the date
hereof in the conduct of the Business; or
(viii) commit to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date,
the Seller shall:
(i) continue to maintain, in all material respects,
the Purchased Property in accordance with present practice in a
condition suitable for its current use;
(ii) file, when due or required, federal, state,
foreign and other tax returns and other reports required to be filed
and pay when due all taxes, assessments, fees and other charges
lawfully levied or assessed against them, unless the validity thereof
is contested in good faith and by appropriate proceedings diligently
conducted;
(iii) continue to conduct the Business as it relates
to the Purchased Property in the ordinary course of business consistent
with past practice;
(iv) keep the books of account, records and files
relating to the Business in the ordinary course of business and in
accordance with existing practice; and
(v) continue to maintain existing business
relationships with landlords, lenders, suppliers and customers with
respect to the Business as it relates to the Purchased Property or the
Business Locations.
SECTION 7.2. Access to Properties and Records. The Seller
shall afford to the Buyer, and to the accountants, counsel and representatives
of the Buyer, full access during normal business hours throughout the period
prior to the Closing Date (or the earlier termination of this Agreement pursuant
to Section 14 hereof) to all properties, books, contracts, commitments, and
records of the Seller relating to the Business (in the context of the Purchased
Property) and, during such period, shall furnish promptly to the Buyer all other
information concerning the Business, its properties and its personnel as the
Buyer may reasonably request, provided that no investigation or receipt of
information pursuant to this Section 7.2 shall qualify any representation or
warranty of the Seller or the conditions to the obligations of the Buyer. The
Seller shall also afford the Buyer full access to the Business, all operations
of the Business and to all Purchased Property throughout the period prior to the
Closing Date.
SECTION 7.3. Negotiations. From and after the date hereof,
neither the Seller, any Affiliate, nor any of their respective officers or
directors nor anyone acting on behalf of the Seller or such persons shall,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any Person, firm, or other
entity or group (other than the Buyer or its representatives) concerning any
merger, sale of substantial assets (other than Excluded Inventory) or Purchased
Property, purchase or sale of shares of capital stock in an amount in excess of
twenty percent (20%) of the capital stock of the Seller outstanding on the date
hereof or similar transaction involving the Seller, the Business or any other
transaction inconsistent with the transactions contemplated hereby. The Seller
shall promptly communicate to the Buyer any inquiries or communications
concerning any such transaction which they may receive or of which they may
become aware.
SECTION 7.4. Best Efforts. The Seller shall use its best
efforts to perform and satisfy all conditions to Closing to be performed or
satisfied by the Seller under this Agreement as soon as possible, but in no
event later than the Closing Date. The Seller shall use its best efforts to
obtain all consents and approvals of third parties required to be obtained by
the Seller to effect the transactions contemplated by the Transaction Documents.
SECTION 7.5. Covenant Not To Compete. (a) The Seller
acknowledges that the agreements and covenants contained in this Section 7.5 are
essential to protect the value of the Business being acquired by the Buyer.
Therefore, the Seller agrees that for the period commencing on the Closing Date
and ending on the fifth (5th) anniversary of the Closing Date (such period is
hereinafter referred to as the "Restricted Period"), except as set forth below,
the Seller shall not anywhere in the United States participate or engage,
directly or indirectly, for themselves or on behalf of or in conjunction with
any Person, whether as an employee, agent, officer, consultant, director,
shareholder, partner, joint venturer, investor or otherwise, in the Business;
provided, however, that the foregoing shall not prohibit the ownership by the
Seller of equity securities of a public company in an amount not to exceed 2% of
the issued and outstanding shares of such company; provided, further, that the
Seller shall be entitled to engage in the Business to the following extent: (i)
the Seller shall be entitled to manufacture and/or purchase for wholesale resale
"Koosh" (in connection with Sears catalogue sales only) and "MTV" inventory
until December 31, 1999 and may sell such inventory, as well as any Excluded
Inventory (other than "Golds Gym" inventory), until June 30, 2000; and (ii) the
Seller shall be entitled to manufacture, purchase for wholesale resale and/or
sell "Golds Gym" inventory until December 31, 2000.
(b) The Seller agrees that a monetary remedy for a breach of
the agreement set forth in Section 7.5(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause the Buyer
irreparable harm, and that the Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages. In
the event of such a breach, the Seller agrees that the Buyer shall be entitled
to such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions as a court of competent jurisdiction shall
determine.
(c) If any provision of this Section 7.5 is invalid in part,
it shall be curtailed, as to time, location or scope, to the minimum extent
required for its validity under the laws of the United States and shall be
binding and enforceable with respect to the Seller as so curtailed.
SECTION 7.6. Notice of Breach. Through the Closing Date, the
Seller shall promptly give the Buyer written notice with particularity upon
having knowledge of any matter that may constitute a breach of any
representation, warranty, agreement or covenant of Seller contained in this
Agreement.
SECTION 7.7. Assignment of Contracts and Warranties. At the
Closing and effective as of the Closing Date, the Seller shall assign to the
Buyer all their rights under the Assigned Contracts. Notwithstanding the
foregoing, no Assigned Contract shall be assigned contrary to law or the terms
of such Assigned Contract and, with respect to Assigned Contracts that cannot be
assigned to the Buyer at the Closing Date, the performance obligations of the
Seller, as the case may be, thereunder shall, unless not permitted by such
Assigned Contract, be deemed to be subleased or subcontracted to the Buyer until
such Contract has been assigned. Seller shall (i) use its best efforts to obtain
all necessary consents, (ii) cooperate with the Buyer in any arrangement
designed to provide to the Buyer the benefits (including the exercise of rights)
under any such Assigned Contracts, including enforcement for the benefit of the
Buyer (and at the Buyer's expense) of any and all rights of Seller against a
third party thereto arising out of the breach or cancellation by such third
party or otherwise, (iii) hold all monies paid thereunder in trust for the
account of the Buyer and (iv) remit all such money without set-off of any kind
whatsoever to the Buyer as promptly as possible.
SECTION 7.8. Change of Name. As soon as practicable after the
Closing Date (allowing for a reasonable period of time for the Seller to hold a
duly convened meeting of shareholders), the Seller shall take all action
necessary to change the corporation name of Sirco International Corp. to a name
that is not (and that is not confusingly similar to) Sirco International Corp.,
including the "Sirco " name in any form, it being the intent of the parties
hereto that from and after the Closing Date, the Buyer will have the sole and
exclusive right as against the Seller and all other Persons to conduct business
under such name and that the Buyer may commence doing so at time of the Closing.
In connection therewith, the Seller shall not, after the Closing Date, do
business under the "Sirco " name in any form. Notwithstanding the foregoing, the
Seller shall have the right to continue to do business in Canada under the name
"Sirco Canada" up to and including December 31, 2000.
SECTION 7.9. Liquidation of Inventory; Right of First Offer.
(a) If the Seller desires to sell all of the Excluded Inventory or any portion
thereof (the Excluded Inventory or such portion thereof, the "First Offer
Inventory"), then before offering the First Offer Inventory for sale to third
parties, the Seller shall deliver to the Buyer a notice (an "Offer") setting
forth the price and all material terms and conditions upon which the Seller
would be willing to sell the First Offer Inventory. Within two Business Days
following receipt of the Offer (such two Business Day period, the "First Offer
Response Period") the Buyer shall by notice to the Seller either (i) accept the
Offer or (ii) elect not to accept the Offer. If the Buyer shall fail to deliver
notice of its election pursuant to the foregoing sentence during the First Offer
Response Period, the Buyer shall be deemed conclusively to have elected not to
accept the Offer.
(b) In the event that the Buyer does not elect to accept the
Seller's Offer within the First Offer Response Period, the Seller shall be free
to offer to sell the First Offer Inventory during the Offer Period to any and
all third parties, at a price the same as or higher than the price set forth in
the Offer. The "Offer Period" shall mean the period of three weeks following the
expiration of the First Offer Response Period.
(c) In the event that the Buyer accepts the Offer within the
First Offer Response Period, then the Buyer and the Seller shall execute and
deliver to each other a contract of sale relating to the First Offer Inventory.
The Seller shall sell and the Buyer shall purchase the First Offer Inventory in
accordance therewith.
(d) The Seller agrees to use its reasonable best efforts to
liquidate the Excluded Inventory in an orderly manner.
(e) The provisions of subsections (a), (b) and (c) of this
Section 7.9 shall not apply to any sales of Excluded Inventory by the Seller in
the ordinary course of business.
SECTION 7.10. License Relationships. The Seller shall use its
best efforts to facilitate the transfer of its licensing relationships with the
Licensors under the relevant Assigned Contracts to the Buyer, and shall take no
action or omit to take any action which could reasonably be expected to
adversely affect the Buyer's efforts to negotiate a license with Logo Athletic.
The Seller shall promptly provide the Buyer with copies of all correspondence
between the Seller and any Licensor from the date hereof to the Closing Date, as
well as copies of any similar correspondence between the Seller and Logo
Athletic during such period.
SECTION 7.11. Estoppel Certificates. The Seller shall use its
reasonable best efforts to obtain estoppel certificates in form and substance
reasonably satisfactory to the Buyer from each landlord under the leases for the
Business Locations in favor of the Buyer and any lender providing financing for
the purchase of the Purchased Property, and to obtain a release of any and all
Liens on the Purchased Property prior to the Closing Date.
SECTION 7.12. Files and Records. The Seller shall be entitled
to retain a copy of all Files and Records. The Seller hereby covenants not to
provide copies or other reproductions of the Files and Records in any format to
any third party, other than (i) as may be required by law, (ii) in connection
with the defense of any suit, action or proceeding, (iii) to a governmental
authority pursuant to written request therefor or (iv) to the Seller's
accountants for use solely in connection with preparation of the Seller's
financial statements or tax returns.
SECTION 7.13. Gold's Gym License. The Seller convenants that
it shall not renew its license with Gold's Gym, or enter into a new or
supplemental license with Gold's Gym, upon termination of its current license
agreement with Gold's Gym.
SECTION 7.14. Subsequent Purchase Orders. Schedule 7.14 sets
forth a list of all outstanding purchase orders relating to "Xxxxx Xxxxx,"
"Dunlop" or "Action/Cherokee" luggage inventory for which goods have not yet
been received at the LaMirada Facility. The Seller agrees not to issue any
further purchase orders (or similar requests) relating to such luggage inventory
prior to the Closing Date without the prior written consent of the Buyer. The
Seller represents and warrants that it is not aware of any reason why the Buyer
would not be entitled to the same payment terms under which the Seller has
historically operated the Business, and the Seller covenants to cooperate with
and assist the Buyer in its efforts to obtain such payment terms.
SECTION 7.15. Account Numbers. The Seller shall reasonably
cooperate with the Buyer in the Buyer's efforts to cause the Buyer to have the
exclusive right to use the Seller's vendor numbers and other customer account
numbers after the Closing, including but not limited to the Seller sending a
letter (in a form agreed with the Buyer) to its customers indicating its consent
to the Buyer's usage of such numbers.
SECTION 8. COVENANTS OF THE BUYER.
SECTION 8.1. Best Efforts. The Buyer shall use its best
efforts to perform and satisfy all conditions to Closing to be performed or
satisfied by the Buyer under this Agreement as soon as possible, but in no event
later than the Closing Date. The Buyer shall use its best efforts to obtain all
consents and approvals of third parties required to be obtained by the Buyer to
effect the transactions contemplated by the Transaction Documents.
SECTION 8.2. Notice of Breach. Through the Closing Date, the
Buyer shall promptly give the Seller written notice with particularity upon
having knowledge of any matter that may constitute a breach of any
representation, warranty, agreement or covenant of the Buyer contained in this
Agreement.
SECTION 8.3. Financing. The Buyer shall use its reasonable
best efforts to have in place on the Closing Date sufficient financing to
consummate the transactions contemplated by the Transaction Documents.
SECTION 9. EMPLOYEES.
SECTION 9.1. Offer of Employment. The Buyer intends to, but
shall not be obligated to, offer to hire, effective as of the Closing Date, each
of the employees listed on Schedule 9.1 hereto. The employees who accept such
offers of employment shall be referred to herein as "Hired Employees".
SECTION 9.2. Liability. Neither the Buyer nor its Affiliates
shall assume or have any direct or indirect obligation or liability of any
nature, whether matured or unmatured, accrued or contingent, due or to become
due or otherwise, to any Hired Employee or other present or former employee of
the Seller or their respective Affiliates, or to any dependent, survivor or
beneficiary thereof, arising out of or in relation to such person's employment
with the Seller or their respective Affiliates or the termination of such
employment prior to the Closing Date.
SECTION 9.3. Rights. Nothing herein expressed or implied shall
confer upon any Hired Employee or other employee or former employee of the
Seller or legal representatives thereof, any rights or remedies, including,
without limitation, right to employment or continued employment for any
specified period, under or by reason of this Agreement.
SECTION 10. TAXES. The parties hereto hereby covenant and
agree as follows:
SECTION 10.1. Allocation of Purchase Price and Purchase Price
Allocation Forms. The Buyer shall, as promptly as practicable after the Closing
Date, submit to the Seller a statement of the Buyer's allocation of the Purchase
Price to the different items of Purchased Property (the "Allocation Statement").
The Buyer and Seller agree that the amount allocated under the Allocation
Statement to the Equipment and Machinery shall not exceed its applicable Book
Value. The Allocation Statement shall be binding and conclusive upon the parties
hereto, unless the Seller objects in writing to any item or items shown on the
Allocation Statement within ten Business Days after delivery thereof to the
Seller. If the Buyer and the Seller shall be unable to resolve any dispute with
regard to the Allocation Statement within ten Business Days after delivery of
the Seller's written objections, the matter or matters in dispute shall be
submitted (at the expense of the Buyer) to the Buyer's Accountant. The decision
of the Buyer's Accountant shall be conclusive and binding upon the Buyer and the
Seller.
Promptly after the Closing Date (but not before a resolution
of all disputes, if any, with regard to the Allocation Statement), the Buyer's
Accountant shall prepare, in consultation with the Seller or the Seller's
Accountant, those statements or forms (including Form 8594 if applicable)
required by Section 1060 of the Code and the Treasury regulations promulgated
thereunder with respect to the allocation of the Purchase Price. Such statements
or forms shall be prepared consistently with the allocation of Purchase Price.
Such statements or forms shall be filed by the parties on their respective
federal income tax returns as required by Section 1060 of the Code and the
Treasury regulations promulgated thereunder and each party shall provide the
other party with a copy of such statement or form as filed.
SECTION 10.2. Indemnification Payments. Any indemnification
payments made pursuant to Section 11.1 shall constitute a purchase price
adjustment for Tax purposes.
SECTION 11. INDEMNIFICATION AND ARBITRATION.
SECTION 11.1. Indemnification by the Seller. Subject to
Section 5.17 and notwithstanding the Closing or the delivery of the Purchased
Property and regardless of any investigation at any time made by or on behalf of
the Buyer or of any knowledge or information that the Buyer may have, the Seller
shall indemnify and fully defend, save and hold the Buyer, any Affiliate of the
Buyer and its directors, officers and employees (the "Buyer Indemnitees"),
harmless if any Buyer Indemnitee shall at any time or from time to time suffer
any damage, liability, loss, cost, expense (including all reasonable attorneys'
fees and expenses of investigation incurred by the Buyer Indemnitees in any
action or proceeding between the Seller and the Buyer Indemnitees or between the
Buyer Indemnitees and any third party or otherwise), deficiency, interest,
penalty, impositions, assessments or fines (collectively, "Buyer Losses")
arising out of or resulting from, or shall pay or become obliged to pay any sum
on account of, any and all the Seller Events of Breach, provided that notice of
such breach shall be received by Seller within a period of one (1) year from the
Closing Date. As used herein, "Seller Events of Breach" shall be and mean any
one or more of the following:
(a) any untruth or inaccuracy in any representation of the
Seller or the breach of any warranty of the Seller contained in the Transaction
Documents;
(b) any failure of the Seller duly to perform or observe any
term, provision, covenant, agreement contained herein on the part of the Seller
to be performed or observed;
(c) any claim or cause of action by any party against any
Buyer Indemnitee, with respect to any liabilities of Seller other than the
Assumed Liabilities or any asset of the Seller other than the Purchased
Property.
For purposes of determining the existence of any
misrepresentation, breach of warranty, or nonfulfillment of any covenant or
agreement, or calculating the amount of any damages incurred in connection with
any such misrepresentation, breach of warranty, or nonfulfillment of any
covenant or agreement, any and all references to material or Material Adverse
Effect shall be disregarded.
SECTION 11.2. Procedures for Indemnification by the Seller. If
with respect to a third party a Seller Event of Breach occurs or is alleged and
a Buyer Indemnitee asserts that the Seller have become obligated to such Buyer
Indemnitee pursuant to Section 11.1 hereof, or if any suit, action,
investigation, claim or proceeding (a "Proceeding") is begun, made or instituted
by a third party as a result of which the Seller may become obligated to a Buyer
Indemnitee hereunder, such Buyer Indemnitee shall give written notice to the
Seller. The Seller agrees to defend, contest or otherwise protect the Buyer
Indemnitee against any Proceeding at its sole cost and expense. The Buyer
Indemnitee shall have the right, but not the obligation, to participate at its
own expense in the defense thereof by counsel of the Buyer Indemnitee's choice
and shall in any event cooperate with and assist the Seller to the extent
reasonably possible. If the Seller fails timely to defend, contest or otherwise
protect against such Proceeding, the Buyer Indemnitee shall have the right to do
so, including, without limitation, the right to make any compromise or
settlement thereof, and the Buyer Indemnitee shall be entitled to recover the
entire cost thereof from the Seller, including, without limitation, reasonable
attorneys' fees, disbursements and amounts paid as the result of such
Proceeding, and the Seller shall be bound by any determination made in such
Proceeding or any compromise or settlement effected by the Buyer. If the Seller
assumes the defense of any Proceeding, (a) it will be conclusively established
for purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification, (b) no compromise or
settlement of such claims may be effected by the Seller without the Buyer
Indemnitee's consent unless (i) there is no finding or admission of any
violation of federal, state, local, municipal, foreign, international,
multinational or other administrative order, law, ordinance, principal of common
law, regulation, statute or treaty or any violation of the rights of any Person
and no effect on any other claims that may be made against the Buyer Indemnitee
and (ii) the sole relief provided is monetary damages that are paid in full by
the Seller; and (c) the Buyer Indemnitee will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
SECTION 11.3. Indemnification by the Buyer. Subject to Section
6.6 and notwithstanding the Closing or the delivery of the Purchased Property,
the Buyer shall indemnify and agree to fully defend, save and hold the Seller,
any Affiliate of the Seller, and their directors, officers and employees (the
"Seller Indemnitees"), harmless if any Seller Indemnitee shall at any time or
from time to time suffer any damage, liability, loss, cost, expense (including
all reasonable attorneys' fees and expenses of investigation incurred by the
Seller Indemnitees in any action or proceeding between the Buyer and the Seller
Indemnitees or between the Seller Indemnitees and any third party or otherwise),
deficiency, interest, penalty, impositions, assessments or fines (collectively,
"Seller Losses") arising out of or resulting from, or shall pay or become
obligated to pay any sum on account of, any and all the Buyer Events of Breach,
provided that notice of such breach shall be received by the Buyer within a
period of one (1) year from the Closing Date. As used herein, "Buyer Events of
Breach" shall be and mean any one or more of the following:
(a) any untruth or inaccuracy in any representation of the
Buyer or the breach of any warranty of the Buyer contained in the Transaction
Documents;
(b) any failure of the Buyer duly to perform or observe any
term, provision, covenant, agreement or condition contained herein on the part
of the Buyer to be performed or observed;
(c) any claim or cause of action by any party arising after
the Closing Date against any Seller Indemnitee with respect to the Assumed
Liabilities.
For purposes of determining the existence of any
misrepresentation, breach of warranty, or nonfulfillment of any covenant or
agreement, or calculating the amount of any damages incurred in connection with
any such misrepresentation, breach of warranty, or nonfulfillment of any
covenant or agreement, any and all references to material or Material Adverse
Effect shall be disregarded.
SECTION 11.4. Procedures for Indemnification by the Buyer. If
with respect to a third party a Buyer Event of Breach occurs or is alleged and a
Seller Indemnitee asserts that the Buyer has become obligated to such Seller
Indemnitee pursuant to Section 11.3 hereof, or if any Proceeding is begun, made
or instituted by a third party as a result of which the Buyer may become
obligated to a Seller Indemnitee hereunder, such Seller Indemnitee shall give
written notice to the Buyer. The Buyer agrees to defend, contest or otherwise
protect the Seller Indemnitee against any Proceeding at its sole cost and
expense. The Seller Indemnitee shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of the Seller
Indemnitee's choice and shall in any event cooperate with and assist the Buyer
to the extent reasonably possible. If the Buyer fails timely to defend, contest
or otherwise protect against such Proceeding, the Seller Indemnitee shall have
the right to do so, including, without limitation, the right to make any
compromise or settlement thereof, and the Seller Indemnitee shall be entitled to
recover the entire cost thereof from the Buyer, including, without limitation,
reasonable attorneys' fees, disbursements and amounts paid as the result of such
Proceeding, and the Buyer shall be bound by any determination made in such
Proceeding or any compromise or settlement effected by the Seller. If the Buyer
assumes the defense of any Proceeding, (a) it will be conclusively established
for purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification, (b) no compromise or
settlement of such claims may be effected by the Buyer without the Seller
Indemnitee's consent unless (i) there is no finding or admission of any
violation of federal, state, local, municipal, foreign, international,
multinational or other administrative order, law, ordinance, principal of common
law, regulation, statute or treaty or any violation of the rights of any Person
and no effect on any other claims that may be made against the Seller Indemnitee
and (ii) the sole relief provided is monetary damages that are paid in full by
the Buyer; and (c) the Seller Indemnitee will have no liability with respect to
any compromise or settlement of such claims effected without its consent.
SECTION 11.5. Successors and Assigns. All of the rights and
obligations of the Seller and the Buyer pursuant to this Section 11 shall
survive any sale, assignment or other transfer by the Buyer of title to or
interest in any of the Purchased Property or any part thereof and shall apply to
and bind each and every successor and assign of the Buyer to any of the
Purchased Property.
SECTION 11.6. Arbitration. (a) Any controversy or claim
arising out of or relating to this Agreement or any other Transaction Document
or any breach thereof shall be settled by arbitration. The arbitration shall be
held in New York and, except to the extent inconsistent with this Section 11.6,
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time of the arbitration. The
arbitration shall be conducted in the English language. The arbitration
proceedings, all documents and all testimony, written or oral, produced in
connection therewith, and the arbitration award shall be confidential.
(b) The arbitral panel shall consist of three arbitrators,
none of which at the time of the arbitration may be employees of the parties
hereto or their Affiliates. The Party initiating arbitration (the "Claimant")
shall appoint its arbitrator in its demand (the "Demand"). The other Party (the
"Respondent") shall appoint one arbitrator within 30 days of receipt of the
Demand and shall notify the Claimant of such appointment in writing. If the
Respondent fails to appoint an arbitrator within such 30-day period, the
arbitrator named in the Demand shall decide the controversy or claim as a sole
arbitrator. Otherwise, the two arbitrators appointed by the Parties shall
appoint a third arbitrator within 30 days after the Respondent has notified the
Claimant of the appointment of the Respondent's arbitrator. When the arbitrators
appointed by the Claimant and Respondent have appointed a third arbitrator and
the third arbitrator has accepted the appointment, the two arbitrators shall
promptly notify the Parties of the appointment of the third arbitrator. If the
two arbitrators appointed by the Parties fail or are unable so to appoint a
third arbitrator or so to notify the Parties, any Party may request the then
President of the American Arbitration Association to appoint the third
arbitrator. The President of the American Arbitration Association shall appoint
the third arbitrator within 30 days after such request and shall notify the
Parties of the appointment. The third arbitrator shall act as chairman of the
tribunal.
(c) If there are more than two Parties to the dispute, such
Parties shall agree upon the three arbitrators and upon which of such
arbitrators shall act as chairman of the tribunal. In the event that within 30
days from the receipt of the Demand the Parties to the dispute are unable to
agree upon a panel of arbitrators, any Party may request that the then President
of the American Arbitration Association appoint the arbitration panel and the
chairman. The President of the American Arbitration Association shall appoint
the arbitration panel and chairman within 30 days after such request and shall
notify the Parties of the appointments.
(d) The arbitral award may grant any relief deemed by the
arbitrators to be just and equitable, including, without limitation, specific
performance. The arbitral award shall state the reasons for the award and relief
granted, shall be final and binding on the Parties to the arbitration, and may
include an award of costs, including reasonable attorneys' fees and
disbursements. Any award rendered may be confirmed, judgment upon any award
rendered may be entered, and such award of the judgment thereon may be enforced
in any court of any state or country having jurisdiction over the Parties and/or
their assets.
SECTION 12. CONDITIONS TO OBLIGATIONS OF THE SELLER. The
obligations of the Seller to consummate the transactions contemplated by the
Transaction Documents are subject to the fulfillment, at or before the Closing
Date, of the following conditions, any one or more of which may be waived by the
Seller in its sole discretion:
SECTION 12.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as if again
made by the Buyer on and as of such date, and the Seller shall have received a
certificate dated the Closing Date and signed by a duly authorized
representative of the Buyer to that effect.
SECTION 12.2. Performance of the Obligations of the Buyer. The
Buyer shall have performed in all material respects all obligations required
under this Agreement to be performed by it on or before the Closing Date, and
the Seller shall have received a certificate dated the Closing Date and signed
by a duly authorized representative of the Buyer to that effect.
SECTION 12.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of the Transaction
Documents shall have been duly obtained and shall be in full force and effect on
the Closing Date; provided, however, that it shall not be a condition to the
obligations of the Seller that any consent related to the assignment of any
Assigned Contract shall have been obtained prior to the Closing Date.
SECTION 12.4. No Violation of Orders. No preliminary or
permanent injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares any of
the Transaction Documents invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby shall be in
effect.
SECTION 12.5. Buyer Closing Documents. The Buyer shall have
delivered to the Seller the following documents:
(a) all instruments that are necessary or desirable to effect
the assumption by Buyer of the Assumed Liabilities, including the Xxxx of Sale,
Assignment and Assumption Agreement;
(b) such other documents relating to the transactions
contemplated by the Transaction Documents to be consummated at the Closing as
the Seller shall reasonably request;
(c) a certificate, executed by the Secretary of Buyer,
certifying the Board of Directors of the Buyer have approved the execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated thereby (with copies of the resolutions duly
adopted by the Buyer's Board of Directors attached), and certifying the
incumbency of the officer or officer's of the Buyer signing the Transaction
Documents;
(d) the officer's certificate referred to in Section 12.1; and
(e) an opinion of counsel to the Buyer in form satisfactory to
the Seller stating, among other things, that the Purchase of the Purchased
Property by the Buyer has been duly authorized by the Board of Directors of the
Buyer in accordance with applicable law.
SECTION 12.6. Legal Matters. All certificates, instruments,
opinions and other documents required to be executed or delivered by or on
behalf of the Buyer under the provisions of the Transaction Documents, and all
other actions and proceedings required to be taken by or on behalf of the Buyer
in furtherance of the transactions contemplated hereby and thereby, shall be
reasonably satisfactory in form and substance to counsel for the Seller.
SECTION 13. CONDITIONS TO OBLIGATIONS OF THE BUYER. The
obligations of the Buyer to consummate the transactions contemplated by the
Transaction Documents are subject to the fulfillment, at or before the Closing
Date, of the following conditions, any one or more of which may be waived by the
Buyer in its sole discretion:
SECTION 13.1. Representations and Warranties of the Seller.
All representations and warranties made by the Seller in this Agreement shall be
true and correct in all material respects (except as to representations and
warranties which are qualified as to materiality, which representations and
warranties shall be true and correct in all respects) on and as of the Closing
Date as if again made by the Seller on and as of such date, and the Buyer shall
have received a certificate dated the Closing Date and signed by the Chairman of
the Board or President and by the chief financial officer of the Seller to that
effect with respect to Seller.
SECTION 13.2. Performance of the Obligations of the Seller.
The Seller has performed in all material respects all obligations required under
this Agreement to be performed by them on or before the Closing Date, and the
Buyer shall have received a certificate dated the Closing Date and signed by the
Chairman of the Board or President and the chief financial officer of the Seller
to that effect with respect to the Seller.
SECTION 13.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of the Transaction
Documents shall have been duly obtained and shall be in full force and effect on
the Closing Date.
SECTION 13.4. No Violation of Orders. No preliminary or
permanent injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares any of
the Transaction Documents invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby shall be in
effect.
SECTION 13.5. No Material Adverse Change. During the period
from May 31, 1999 to the Closing Date, there shall not have been any material
adverse change in the assets, properties, business, operations or financial
condition of the Business.
SECTION 13.6. State Taxes. The Buyer shall have received any
and all clearance certificates or similar documents that may be required by any
state Tax authority in order to relieve the Buyer of any obligation to withhold
any portion of the Purchase Price.
SECTION 13.7. Seller Closing Documents. The Seller shall have
delivered to the Buyer the following documents:
(a) a certificate, executed by the Secretary of Seller,
certifying the Board of Directors of the Seller have approved the execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated thereby (with copies of the resolutions duly
adopted by the Seller's Board of Directors attached), and certifying the
incumbency of the officer or officer's of the Seller signing the Transaction
Documents;
(b) the officer's certificate referred to in Section 13.1;
(c) a certificate (dated not less than 5 Business Days prior
to the Closing Date) of the Secretary of State of the jurisdiction of the
Seller's incorporation as to the good standing of the Seller in such
jurisdiction;
(d) the Files and Records forming a part of the Purchased
Property;
(e) the Assignment and Assumption Agreement;
(f) an opinion of counsel to the Seller in form satisfactory
to the Buyer to stating, among other things, that the sale of the Purchased
Property to the Buyer has been duly authorized by the Board of Directors of the
Seller in accordance with applicable law;
(g) an estoppel certificate from each landlord at the Business
Locations in form and substance satisfactory to the Buyer, and a California form
UCC-2 from Coast Business Credit releasing its lien on the Purchased Property;
(h) a duly executed Services Agreement, Escrow Agreement and
Trademark Assignment;
(i) physical possession and control of the Purchased Property;
and
(j) such other documents relating to the transactions
contemplated by the Transaction Documents to be consummated at the Closing as
the Buyer shall reasonably request.
SECTION 13.8. Legal Matters. All certificates, instruments,
opinions and other documents required to be executed or delivered by or on
behalf of the Seller under the provisions of the Transaction Documents, and all
other actions and proceedings required to be taken by or on behalf of the Seller
in furtherance of the transactions contemplated hereby and thereby, shall be
reasonably satisfactory in form and substance to counsel for the Buyer.
SECTION 13.9. Buyer Financing. The Buyer shall have in place
on the Closing Date financing with Century Credit Corp., or other lender
satisfactory to the Buyer, as required (in the sole determination of the Buyer)
to consummate the transactions contemplated by the Transaction Documents.
SECTION 13.10. Employment Agreements. The Buyer shall have
entered into employment agreements with each of the Hired Employees on terms
satisfactory to the Buyer in its sole discretion.
SECTION 14. TERMINATION.
SECTION 14.1. Conditions of Termination. Notwithstanding
anything to the contrary contained herein, this Agreement may be terminated at
any time before the Closing:
(a) By mutual consent of the Seller and the Buyer,
(b) By either the Seller or the Buyer if the other party shall
have breached this Agreement in any material respect and such breach continues
for a period of ten (10) days after the receipt of notice of the breach from the
non-breaching party,
(c) By the Seller if, at August 2, 1999, any of the conditions
set forth in Section 12 shall not have been met, unless the Seller's breach of
this Agreement is the reason for the failure of such conditions to be satisfied,
(d) By the Buyer if, at August 2, 1999, any of the conditions
set forth in Section 13 shall not have been met, unless the Buyer's breach of
this Agreement is the reason for the failure of such conditions to be satisfied,
or
(e) By the Buyer or the Seller, in the event that the Closing
has not occurred prior to August 10, 1999, except to the extent that the failure
of the Closing then to occur arises out of or results from the action or
inaction of the Buyer (if it is seeking to terminate pursuant to this Section
14.1(e)) or the Seller (if the Seller is seeking to terminate pursuant to this
Section 14.1(e)).
SECTION 14.2. Effect of Termination. In the event of
termination pursuant to Section 14.1 hereof, this Agreement shall become null
and void and have no effect, with no liability on the part of the Seller or the
Buyer, or their directors, officers, agents or stockholders, with respect to
this Agreement, except for the liability for breach of this Agreement.
SECTION 15. MISCELLANEOUS.
SECTION 15.1. Successors and Assigns. Except as otherwise
provided in this Agreement, no party hereto shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect, provided, that the Buyer may
assign its rights hereunder to an Affiliate and to any party providing financing
in connection with the transactions contemplated hereby, provided further, that
no such assignment shall reduce or otherwise vitiate any of the obligations of
the Seller hereunder. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
SECTION 15.2. Governing Law; Jurisdiction. This Agreement
shall be construed, performed and enforced in accordance with, and governed by,
the laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof.
SECTION 15.3. Expenses. Except as otherwise provided herein,
each of the parties hereto shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. All state and local sales, transfer,
excise, value-added or other similar taxes, and all recording and filing fees
that may be imposed by reason of the sale, transfer, assignment and delivery of
the Purchased Property, shall be borne equally between the Buyer and the Seller.
SECTION 15.4. Broker's and Finder's Fees. There are no claims
for brokerage commissions or finder's fees or similar compensation in connection
with the transactions contemplated by the Transaction Documents based on any
arrangement made by or on behalf of the parties hereto and each party shall
indemnify and hold the other harmless against any costs or damages incurred as a
result of any such claim resulting from an arrangement made by or on behalf of
such indemnifying party.
SECTION 15.5. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect.
SECTION 15.6. Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of service if served personally
on the party to whom notice is to be given, (ii) on the day of transmission if
sent via facsimile transmission to the facsimile number given below, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (iii) on the day after delivery to Federal Express or similar
overnight courier or the Express Mail service maintained by the U.S. Postal
Service or (iv) on the fifth day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid and properly addressed, to the party as follows:
If to the Seller:
c/o Webquill Internet Services, LLC
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx X. Xxxx
Telecopy: (000) 000-0000
Copy to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Buyer:
Interbrand L.L.C.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx XxXxxxxx
Telecopy: (000) 000-0000
Copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Any party may change its address for the purpose of this Section by giving the
other party written notice of its new address in the manner set forth above.
SECTION 15.7. Amendments; Waivers. This Agreement may be
amended or modified, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any
provision, term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall not be deemed to be nor construed
as further or continuing waiver of any such condition, or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
SECTION 15.8. Public Announcements. The parties agree that
after the signing of this Agreement, neither party shall make any press release
or public announcement concerning the transactions contemplated by the
Transaction Documents without the prior written approval of the other parties
unless a press release or public amendment is required by law. If any such
announcement or other disclosure is required by law, the disclosing party agrees
to give the nondisclosing parties prior notice and an opportunity to comment on
the proposed disclosure.
SECTION 15.9. Entire Agreement. This Agreement, and the
Exhibits hereto contain the entire understanding between the parties hereto with
respect to the transactions contemplated hereby and thereby and supersedes and
replaces all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All schedules hereto and any
documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement as fully as though completely set forth
herein.
SECTION 15.10. Parties in Interest. Nothing in this Agreement
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Seller, and the Buyer and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the obligations or liability of any third
persons to the Seller or the Buyer. No provision of this Agreement shall give
any third persons any right of subrogation or action over or against the Seller
or the Buyer.
SECTION 15.11. Scheduled Disclosures. Disclosure of any
matter, fact or circumstance in a Schedule to this Agreement shall not be deemed
to be disclosure thereof for purposes of any other Schedule hereto.
SECTION 15.12. Section and Paragraph Headings. The section and
paragraph headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 15.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
SIRCO INTERNATIONAL CORP.
By: /s/Xxxx Xxxxx
-----------------------
Xxxx Xxxxx
President and
Chief Executive Officer
INTERBRAND L.L.C.
By: /s/Xxxxxx XxXxxxxx
-----------------------
Xxxxxx XxXxxxxx
President and
Chief Executive Officer
EXHIBIT A
Assigned Contracts
1. Agreement dated September 23, 1997 by and between Seller and IBM Credit
Corporation.
2. Agreement dated as of March 21, 1997 by and between Seller and Green
Tree Vendor Services Corporation relating to two Power Mac computers in
the Stamford facility.
3. Agreement dated May 7, 1997 by and between Seller and Lease Corp. of
America relating to the telephone system at the LaMirada Facility.
4. Agreement dated December 18, 1998 by and between Seller and Pitney
Xxxxx Credit Corp. relating to the postage meter at the LaMirada
Facility.
5. Agreement dated August 9, 1996 between Seller and Xerox Corporation
relating to the copy machine at the LaMirada Facility.
6. License Agreement dated June 1, 1996 by and between Seller and Xxxxx
Xxxxx International Inc.
7. License Agreement dated January 6, 1999 by and between Seller and
Dunlop Maxfli Sports Corporation.
8. Purchase Orders set forth on Schedule 7.14.
9. License Agreement dated March 20, 1995 by and between Seller and Bueno
of California, Inc.
EXHIBIT B
Xxxx of Sale, Assignment and Assumption Agreement
EXHIBIT C
Assigned Trademarks
"Sirco," Registration No. 1,875,264
"Sirco," Registration No. 1,942,022
"Cross Trainer," Registration No. 2,245,761
"Mondo," Registration No. 2,085,127
"Mountain Gear," Registration applied for (No. 75-413,664); the Seller has been
advised that such application has been preliminary rejected by the U.S. Patent
and Trademark Office
Sirco design, Registration No. 1,880,633
Sirco design, Registration No. 1,943,673
"Action," Registration No. 926,625
EXHIBIT D
License Agreements
1. License Agreement, dated June 1, 1996 by and between Seller and Xxxxx
Xxxxx International, Inc.
2. License Agreement, dated January 6, 1999 by and between Seller and
Dunlop Maxfli Sports Corporation.
EXHIBIT E
Trademark Assignment Agreement
Execution Copy
EXHIBIT F
Services Agreement
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this "Agreement") is made and
entered into as of August 11, 1999 between Sirco International Corp. ("Sirco"),
a New York corporation, and Interbrand L.L.C. ("Interbrand"), a Delaware limited
liability company. Capitalized terms used but not otherwise defined in this
Agreement have the respective meanings given in the Asset Purchase Agreement (as
defined in the first Recitals clause hereof).
RECITALS
WHEREAS, Sirco and Interbrand have entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated as of the date hereof,
pursuant to which Interbrand will purchase the Purchased Property from Sirco on
the Closing Date;
WHEREAS, following the Closing, Interbrand will conduct business at the
Business Locations and, in connection therewith, Interbrand wishes to obtain,
and Sirco wishes to provide, certain transition services as provided in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Use of Warehouse and Office Space. (a) Sirco hereby grants to
Interbrand non-transferable licenses, commencing on the Closing Date and
expiring on the dates specified below, for employees and/or representatives of
Interbrand ("Authorized Occupants") to use, occupy and access the (i) warehouse
facility leased by Sirco and located at 00000 Xxxxx Xxxxxx, XxXxxxxx, Xxxxxxxxxx
00000-0000, excluding any space subleased to Bueno of California Inc. (the
"LaMirada Facility"), and (ii) entire office space leased by Sirco and located
at 00 Xxxxxxxx Xxxx Xxxxxx (Xxxxx 000), Xxxxxxxx, Xxxxxxxxxxx 00000 (the
"Stamford Office," and together with the LaMirada Facility, the "Licensed
Space"). The license to use the LaMirada Facility will expire on the earlier to
occur of (i) sixty (60) days after notice is given by the landlord that the
LaMirada Facility must be vacated and (ii) December 15, 1999; provided, however,
that Interbrand agrees to use reasonable efforts to cooperate with Sirco in
connection with shortening this period to accommodate a new tenant for the
LaMirada Facility; provided, further that Interbrand agrees to use its
reasonable best efforts to vacate the LaMirada Facility on or before September
15, 1999 in connection with the installation of a new tenant for the LaMirada
Facility on such date, and in connection therewith Sirco agrees to promptly
provide Interbrand with copies of any correspondence relating to such a new
tenancy and to otherwise keep Interbrand fully informed of any developments
which might cause the LaMirada Facility license period to be shortened. The
license to use the Stamford Office will expire on the earlier to occur of (i)
ninety (90) days after notice is given by the landlord that the Stamford Office
must be vacated and (ii) November 30, 1999. Sirco and Interbrand agree that it
is their express intention that no landlord-tenant relationship is or shall be
deemed to be created between them by virtue of the licenses granted hereby.
(b) Sirco will continue to operate the LaMirada Facility during the
term of the license granted pursuant Section 1(a) and will segregate all
property owned by Sirco from the Purchased Property at such location. The
Authorized Occupants will be granted full and free access to the LaMirada
Facility during the term of the license. After the Closing, Sirco's employees
and/or representatives will vacate the Stamford Office and will be granted
access to the Stamford Office only with the prior approval of Interbrand.
(c) The licenses granted to Interbrand with respect to the Licensed
Space shall include the right to use all furniture, fixtures, equipment
(including, but not limited to computers, copiers, fax machines, and telephones)
and office supplies owned by Sirco and related in whole or in part to the
operation of the Business and which are located at the Licensed Space on the
Closing Date, and Sirco hereby covenants that it will not remove or make any
material changes to any of such items after the date hereof, and warrants that
such furniture, fixtures and equipment are that which is used by Sirco as of the
date hereof to conduct the Business as it relates to the Purchased Property.
Interbrand will not, and will not permit its Authorized Representatives to,
remove any such furniture, fixtures or equipment (other than Purchased Property)
from the Licensed Space.
(d) During the period of its occupation of the Stamford Office,
Interbrand agrees (i) to take all action reasonably required to forward and/or
redirect calls and faxes not relating to its business to Sirco and (ii) that it
will not use Sirco's color copier without Sirco's consent, to the extent such
copier remains at the Stamford Office.
(e) During the terms of the licenses for the Licensed Space, Sirco
shall continue to make all payments and fulfill all contractual obligations
relating to (i) the leases for the Licensed Space and (ii) all utilities and
maintenance contracts relating to the Licensed Space to the extent the same are
not the responsibility of the lessors for the Licensed Space.
(f) With respect to the LaMirada Facility, within five (5) Business
Days of the Closing Date, Interbrand shall provide Sirco with written evidence
that all Purchased Property located at the LaMirada Facility has been insured by
Interbrand.
(g) During the term of the license for each Licensed Space, Interbrand
shall take no action which would constitute a material violation of any term of
Sirco's lease for such Licensed Space.
2. Transition Services. (a) Commencing on the Closing Date and during
the term of the license for the LaMirada Facility, Sirco shall provide
Interbrand with sufficient personnel (based on past Sirco's past experience in
the operation of the Business) (the "Sirco Service Providers") at the LaMirada
Facility to (i) process orders, (ii) package and ship merchandise, (iii) stock
inventory, and (iv) perform other administrative tasks consistent with Sirco's
prior operation of the Business as Interbrand may reasonably direct (the
services set forth in subclauses (i) through (iv), the "Transition Services").
The Sirco Service Providers shall (a) remain employees of Sirco at all times,
(b) be paid solely by Sirco, (c) be available at the LaMirada Facility each
Business Day consistent with past practices, (d) be adequately trained to
perform the Transition Services and (e) be subject to the reasonable direction
of Interbrand while performing Transition Services. In addition, during the term
of the license for the LaMirada Facility, Sirco will have available sufficient
packaging and stuffing materials to facilitate the sale by Interbrand of the
Eligible Inventory.
(b) Interbrand covenants that for so long as it occupies the LaMirada
Facility pursuant to the license granted herein (the "Transition Services
Period") it shall make all Machinery and Equipment constituting Purchased
Property available for use by Sirco personnel in connection with the performance
of Sirco's duties hereunder and the sale by Sirco of the Excluded Inventory
located in the LaMirada Facility.
3. Fees. (a) For the license of the Stamford Office, Interbrand will
pay Sirco (or at Sirco's option, the Stamford Office lessor) a monthly fee of
$2,800, with the first payment (appropriately pro rated if the Closing occurs
after the first of the month) due on the Closing Date and subsequent payments
due on the first of each month that the Stamford Office license is in effect.
(b) For the Transition Services, Interbrand will pay Sirco a monthly
fee (the "Services Fee") equal to (i) 3% of the Net Sales (as defined below) of
inventory for the account of Interbrand from the LaMirada Facility, (ii) $1.20
for each "stuffed bag" sold and (iii) $[0.35] for each "non-stuffed bag" sold.
These payments will be inclusive of all packaging and stuffing materials and
labor. The Services Fee shall be paid to Sirco in arrears within three (3)
Business Days of the end of each month that Transition Services are being
performed. In the event that Interbrand must vacate the LaMirada Facility in
connection with the installation of a new tenant therein on or before September
30, 1999, the Services Fee owed pursuant to subsection 3(b)(i) above shall be
reduced to 1% in respect of any sales outside the ordinary course of business
effected in connection with vacating such facility. As used herein, "Net Sales"
means the dollar amount of gross sales of inventory for the account of
Interbrand less discounts and shipping and handling charges.
(c) Notwithstanding subsection 3(b) above, Interbrand shall in no event
be required to pay Services Fees in the aggregate in respect of Transition
Services in an amount in excess of the product of (i) Sirco's total operating
costs of the LaMirada Facility during the Transition Services Period, including
but not limited to rent, materials and labor costs (in each case excluding any
rent, materials or labor payments made during such period in respect of periods
prior to the Closing Date), and (ii) a fraction, the numerator of which shall be
equal to the invoiced sales amounts of Interbrand from the LaMirada Facility
during the Transition Services Period (the "Interbrand Invoiced Amounts") and
the denominator of which shall be the sum of (x) the Interbrand Invoiced Amounts
and (y) the invoiced sales amounts of Sirco from the LaMirada Facility during
the Transition Services Period.
(d) During the Transition Services Period (including for these purposes
a reasonable period of time thereafter to calculate any amounts owing pursuant
to subsections (b) and (c) above), each party hereto shall provide the other,
within five (5) Business Days of the end of each month, with a certificate of an
officer of such entity certifying its invoiced amounts from the LaMirada
Facility for the prior month (each, an "Invoiced Sale Certificate"), and in
addition Interbrand shall include in its Invoiced Sale Certificate a statement
of its Net Sales for such period and Sirco shall include a statement of its
total operating costs for the LaMirada Facility for such period. Each party
shall be entitled, at one time during the Transition Services Period, at its
cost and expense, to conduct an audit of the other party's Invoiced Sale
Certificate(s).
(e) In the event that following the Transition Services Period it is
determined that Interbrand is owed a refund of Service Fees paid as a result of
the application of subsection (c) above, such refund shall be paid to Interbrand
by Sirco within five (5) Business Days of such determination.
4. Relationship of the Parties.
It is expressly understood and agreed that, in rendering services
hereunder, Sirco is acting as an independent contractor and that this Agreement
does not constitute either party as an employee, partner, joint venturer, agent
or other representative of the other party for any purpose whatsoever. Neither
party has the right or authority to enter into any contract, warranty, guarantee
or other undertaking in the name of or for the account of the other party, or to
assume or create an obligation or liability of any kind, express or implied, on
behalf of the other party, or to bind the other party in any manner whatsoever,
or hold itself out as having any right, power or authority to create any such
obligation or liability on behalf of the other or to bind the other party in any
manner whatsoever (except as to any actions taken by either party at the express
written request and direction of the other party).
5. Miscellaneous.
(a) Severability. If any term or provision of this Agreement or the
application thereof with respect to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
(b) Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of New York
without giving effect to the principles of conflict or choice of laws thereof.
Any and all disputes hereunder shall be settled in the manner set forth in
Section 11.6 of the Asset Purchase Agreement.
(c) Headings. The caption headings in this Agreement are for reference
purposes only, and do not constitute a part of this Agreement and shall not
affect its meaning or interpretation.
(d) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be made in the same manner as
is set forth in the Asset Purchase Agreement.
(e) Force Majeure. Neither party shall be liable for its failure or
delay in fulfilling its obligations hereunder, if such failure or delay is
caused by fire, flood, weather conditions or other Act of God, invasions,
insurrections, riots, closing of the public highways, strike, lockout or other
labor dispute, civil unrest, war or any other reason beyond the reasonable
control of the party. In the case of strikes, lockouts or other labor disputes,
it is understood that such event is beyond the reasonable control of the party
suffering the event unless and until the party is able to resolve it in a manner
which such party deems reasonable and appropriate.
This Agreement shall enter into full force and effect as of the date
first set forth above upon its execution below by both of the parties.
SIRCO INTERNATIONAL CORP.
By:___________________
INTERBRAND L.L.C.
By: ____________________
Schedule 9.1
Hired Employees
1. Xxxx Xxxxx
2. Xxxxxxx Xxxxx
3. Xxxxxxxxx XxXxxxx
4. Xxxx Xxxxx
