EXHIBIT 10.110
SUN CAPITAL PARTNERS IV, LP
October 7, 2005
GFC Holding Corp.
c/o Sun Capital Partners Group, Inc.
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Acquisition Agreement and Agreement
and Plan of Merger (the "Agreement"), dated as of the date hereof, by and among
Goody's Family Clothing, Inc., a Tennessee corporation (the "Company"), GFC
Enterprises, Inc., a Tennessee corporation ("Acquisition Corp."), and GFC
Holding Corp., a Delaware corporation ("Parent"). Capitalized terms used herein
but not defined shall have the meanings given to such terms in the Agreement.
Sun Capital Partners IV, LP ("Sun") guarantees that it shall
contribute to Parent (directly or indirectly), at or prior to the Offer Payment
Date, in accordance with the terms and subject to the conditions set forth in
this letter agreement, and directly or indirectly through one or more
Affiliates, an amount in cash equal to the aggregate Offer Price (the "Offer
Contribution Obligation") subject to (i) the satisfaction of each of the
conditions to the consummation of the Offer set forth in Annex A of the
Agreement or waiver of such conditions by Acquisition Corp. or Parent, as
evidenced by a written instrument executed by Acquisition Corp. and Parent, (ii)
there having been no termination of the Agreement pursuant to Article 8 of the
Agreement, and (iii) there having been no amendments to the Agreement not
consented to in writing by Sun. Sun also hereby guarantees that it shall
contribute to Acquisition Corp. at or prior to the Effective Time, in accordance
with the terms and subject to the conditions set forth in this letter agreement,
and directly or indirectly through one or more Affiliates, an amount in cash
equal to the aggregate Merger Consideration plus the aggregate option
consideration less any cash or cash equivalents of the Company used to pay
Merger Consideration (the "Merger Contribution Obligation" and, collectively
with the Offer Contribution Obligation, the "Contribution Obligation") subject
to (i) the satisfaction of each of the conditions to Parent's and Acquisition
Corp.'s obligations to consummate the Merger set forth in Article 7 of the
Agreement or waiver of such conditions by Acquisition Corp. or Parent, as
evidenced by a written instrument executed by Acquisition Corp. and Parent, (ii)
there having been no termination of the Agreement pursuant to Article 8 of the
Agreement, and (iii) there having been no amendments to the Agreement not
consented to in writing by Sun. In the event that the transactions contemplated
by the Agreement are not consummated due to a breach of a representation,
warranty or covenant by Parent or Acquisition Corp., Sun guarantees that it
shall contribute (directly or indirectly) to Parent, upon the final and
non-appealable determination of such breach, all damages awarded therefore with
respect to Parent and Acquisition Corp.'s liability to the Company under Section
8.05 of the Agreement, in an aggregate amount (such amount, the "Damages
Amount") not to exceed (a) the amount of the Company Break Up Fee plus (b) the
lesser of the aggregate amount of the Company's Expenses and $3,000,000.
Notwithstanding the foregoing sentence, Sun will not be liable for any punitive
damages nor does it guarantee any liability of Parent or Acquisition Corp. for
any punitive damages. This letter agreement relates solely to the obligation of
Sun to provide financing of the Contribution Obligation or the Damages Amount,
as appropriate, to Acquisition Corp. as set forth above and is not a guaranty of
collection or the performance of any other obligations of Parent, Acquisition
Corp., Sun or any other Person.
Notwithstanding anything contained herein to the contrary, (i) under
no circumstances shall Sun, its Affiliates (other than Acquisition Corp.), their
respective partners, or any of their respective directors, officers, managers,
employees or agents be liable or obligated for any amount in excess of the
Contribution Obligation or the Damages Amount, as the case may be, and (ii)
except for its liability for the Damages Amount pursuant to Section 8.05 of the
Agreement, if applicable, effective upon the earliest to occur of (A) the
termination of the Agreement in accordance with its terms (other than with
respect to Sun's contribution to Parent of the Damages Amount with respect to
any liability of Parent to the Company pursuant to Section 8.05 of the
Agreement, (B) the contribution to Acquisition Corp. of an amount equal to the
Contribution Obligation, (C) any amendment to the Agreement not consented to in
writing by Sun, or (D) consummation of the Merger, all obligations of Sun under
this letter agreement shall terminate automatically and none of Sun, its
Affiliates (other than Parent and Acquisition Corp.), their respective partners,
or any of their respective directors, officers, managers, employees or agents
shall have any liability to the Company or any other Person in connection with
this letter agreement.
Sun represents and warrants that it is a Delaware limited partnership
with $1.5 billion of aggregate capital commitments, $1,433,148,250 of which were
uncalled as of September 15, 2005.
Nothing in this letter agreement shall limit the right and ability of
Sun to syndicate its rights and obligations hereunder to other co-investors
prior to the Closing; provided that any such syndication shall not limit the
Company's rights against Sun under this letter agreement. In no event will Sun's
aggregate liability pursuant to this letter agreement to Buyer and to any other
beneficiary hereof exceed the Contribution Obligation.
Sun hereby acknowledges that this letter agreement is being delivered
and accepted as a material inducement to the Company to enter into the
Agreement, that the Company is an intended third party beneficiary of this
letter agreement, and that this letter agreement may not be amended or waived
without the prior written consent of the Company. Except as provided in the
preceding sentence, this letter agreement is solely for the benefit of Buyer and
is not intended to confer any benefits on, or create any rights in favor of, any
other Person.
This letter agreement will be governed by the laws of the State of New
York, disregarding any conflict of laws provisions which may require the
application of the law of another jurisdiction.
Each of Parent, Acquisition Corp., the Company and Sun hereby submits
to the exclusive jurisdiction of the United States district court for the
Eastern District of Tennessee, Knoxville Division, solely in respect of the
interpretation and enforcement of the provisions of this letter agreement and
hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement of this letter agreement, that
it is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in such courts or that this letter agreement may
not be enforced in or by such courts or that its property is exempt or immune
from execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding is
improper. Service of process with respect thereto may be made upon the Company
or Sun by mailing a copy thereof by registered or certified mail, postage
prepaid, to such party at its
address set forth above; provided that service of process may be accomplished in
any other manner permitted by applicable Law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE ACTIONS OF
SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, AND ENFORCEMENT
HEREOF.
SUN HEREBY CONSENTS TO RECEIPT OF NOTICE OF ANY BREACH BY PARENT OR
ACQUISITION CORP. SIMULTANEOUSLY WITH NOTICE TO PARENT AND ACQUISITION CORP. BY
THE COMPANY AND SUN HEREBY WAIVES ANY REQUIREMENT TO PROVIDE NOTICE TO PARENT
AND ACQUISITION CORP. PRIOR TO DELIVERY OF NOTICE TO SUN.
* * * * * * *
Sincerely,
SUN CAPITAL PARTNERS IV, LP
By: Sun Capital Advisors IV, LP
Its: General Partner
By: Sun Capital Partners IV, LLC
Its: General Partner
By:
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Name:
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Its:
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Agreed and accepted:
GFC HOLDING CORP.
By:
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Name:
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Title:
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