EXHIBIT 10.6
RETAIL OPPORTUNITY AGREEMENT
THIS RETAIL OPPORTUNITY AGREEMENT is made and entered into as of April 14,
1997 by and among SLJ RETAIL LLC, a Delaware limited liability company (the
"Company"), XXXXXXX SHOE COMPANY INC., a Delaware corporation ("Xxxxxxx"), each
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of MAXWELL V. XXXX, XXXXX XXX XXXX, XXXXXXXX X. XXXX and XXXXX XXXXXXXX, AS
TRUSTEE OF THE XXXXXXX X. XXXX TRUST (individually, a "Xxxxxxx Control
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Shareholder" and collectively, the "Xxxxxxx Control Shareholders"), XXXXXXX
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RETAIL INC., a Delaware corporation ("Xxxxxxx Retail"), and XXXXXXX COMPANY, a
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Delaware corporation ("Xxxxxxx").
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RECITALS
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A. The Xxxxxx Group Inc., a Delaware corporation ("Xxxxxx"), Xxxxxxx and
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Xxxxxxx Retail are parties to a Contribution Agreement dated of even date
herewith (the "Contribution Agreement"), pursuant to which the Company has been
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formed.
B. Capitalized terms used in this Agreement and not otherwise defined
herein will have the definitions set forth in the Contribution Agreement, unless
otherwise clearly indicated to the contrary herein.
C. Pursuant to the Contribution Agreement, Xxxxxxx has agreed with Xxxxxx
to enter into this Agreement with the Company, and to cause the Xxxxxxx Control
Shareholders, as the controlling shareholders of Xxxxxxx, and Xxxxxxx Retail and
Xxxxxxx, as the wholly-owned subsidiaries of Xxxxxxx, to enter into this
Agreement with the Company, providing that Xxxxxxx, the Xxxxxxx Control
Shareholders, Xxxxxxx Retail and Xxxxxxx (collectively, the "Xxxxxxx Parties")
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will refer to the Company certain opportunities to engage in the retail footwear
business, on a first refusal basis, under and subject to all of the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
1. Definitions; Rules of Construction.
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(a) Definitions. The following definitions will apply to the capitalized
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terms used in this Agreement for all purposes, unless otherwise clearly
indicated:
"Advisory Board" has the meaning set forth in the Operating Agreement.
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"Xxxxxx Member" has the meaning set forth in the Operating Agreement.
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"First Refusal Notice" has the meaning set forth in Section 2(b).
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"First Refusal Right" has the meaning set forth in Section 2(a).
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"Xxxxxxx Entities" means any entity (other than the Company) that is
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controlled, directly or indirectly, by one or more of the Xxxxxxx Parties.
"Xxxxxxx Parties" has the meaning set forth in the Recitals to this
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Agreement.
"Xxxxxxx Retail Opportunity" has the meaning set forth in Section 2(a).
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"Retail Footwear Products" means men's, women's or children's footwear
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products intended for retail (and not wholesale) sale.
"Retail Footwear Trademarks" means trademarks, trade names, service marks,
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logos and similar rights for use in connection with the sale of Retail Footwear
Products in Mall Specialty Footwear Stores and Retail Outlet Footwear Stores.
"Retail Opportunity" means any and all of the following: (i) concepts,
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ideas and/or designs for Mall Specialty Footwear Stores and Retail Outlet
Footwear Stores (other than the S&L/JNY Retail Store Concepts), (ii) concepts,
ideas and/or designs for Retail Footwear Products to be sold in Mall Speciality
Retail Stores (other than S&L/JNY Products), (iii) Retail Footwear Trademarks
(other than the Xxx & Xxxxx Trademarks and the Xxxxx New York Trademarks), (iv)
licensing or other intellectual property rights with respect to any matter
described in clauses (i), (ii) or (iii); and (v) premises available for lease or
purchase as Mall Specialty Footwear Stores or Retail Outlet Footwear Stores
(other than the Stores).
"Third Party Retail Opportunity" has the meaning set forth in Section 2(a).
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(b) Rules of Construction.
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(i) All section and paragraph titles and captions in this Agreement
are for convenience only, will not be deemed part of this Agreement, and in
no way define, limit, extend, or describe the scope or intent of any
provisions of this Agreement. Except as specifically provided otherwise,
references to "Sections" are to Sections of this Agreement.
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(ii) Whenever the context may require, any pronoun used in this
Agreement includes the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs includes the plural and
vice versa. The locative adverbs "hereof," "herein," "hereafter," etc.
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refer to this Agreement as a whole.
2. Right of First Refusal on Retail Opportunities.
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(a) Each Xxxxxxx Party agrees that it will, and that it will cause each of
its Xxxxxxx Entities to, prior to acquiring, licensing, leasing or commercially
exploiting a Retail Opportunity for its own account, offer the Company a right
of first refusal ("First Refusal Right") to acquire, license or lease (as
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appropriate), and commercially exploit, (i) each such Retail Opportunity now
held or hereafter developed by such Xxxxxxx Party or its Xxxxxxx Entity (a
"Xxxxxxx Retail Opportunity"), and (ii) each such Retail Opportunity hereafter
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offered or made available to such Xxxxxxx Party by a Person other than a Xxxxxxx
Party or its Xxxxxxx Entity (a "Third Party Retail Opportunity").
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(b) Each Xxxxxxx Party shall give the Company prompt written notice ("First
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Refusal Notice") of any such Retail Opportunity that it proposes to acquire,
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license, lease or commercially exploit for its own account, with a copy thereof
to the Xxxxxx Member, offering such Retail Opportunity to the Company and
containing a detailed description of the Retail Opportunity so offered and, as
to Third Party Retail Opportunities, including a copy of any term sheet, letter
of intent or other document under which the Third Party Retail Opportunity has
been offered or made available to such Xxxxxxx Party or its Xxxxxxx Entities.
(c) The Company shall be deemed to have declined each First Refusal Right
offered to it pursuant to this Section 2 unless, within thirty days after
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receipt by the Company and the Xxxxxx Member of such First Refusal Notice, the
Xxxxxx Member gives written notice to the Company, with a copy thereof to
Xxxxxxx, to the effect that the Xxxxxx Member desires that the Company accept
such First Refusal Right. If the Xxxxxx Member gives such a notice, then the
Xxxxxx Member, the Xxxxxxx Parties and the Company, in consultation with the
Advisory Board, will, for a period not to exceed ninety days after receipt by
the Company and the Xxxxxx Member of such First Refusal Notice (the "Feasibility
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Review Period"), review the feasibility and desirability of the commercial
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exploitation by the Company of such Retail Opportunity, including, without
limitation, the Company's ability to obtain any financing necessary to acquire
and exploit such Retail Opportunity. If, within the Feasibility Review Period,
the Company determines that it desires to acquire and exploit such Retail
Opportunity and that the acquisition and exploitation of such Retail Opportunity
by the Company is feasible, the Company shall give written notice to Xxxxxxx
that it accepts such First Refusal Right and the closing of the transfer and
assignment of such Retail Opportunity to the Company shall take place as soon as
is reasonably possible thereafter in accordance with the provisions of paragraph
(d) below.
(d) At the closing contemplated by paragraph (c) above, the Xxxxxxx Parties
will take, and will cause their respective Xxxxxxx Entities to take, all such
actions as shall reasonably be necessary so that: (i) Xxxxxxx Retail
Opportunities consisting of concepts, ideas and/or designs for Mall Specialty
Footwear Stores, Retail Outlet Footwear Stores or Retail Footwear Products, or
intellectual property rights relating thereto, shall be assigned to the Company
or otherwise made available for retail use by the Company without any charge or
fee (other than the reimbursement to the Xxxxxxx Parties of their reasonable
out-of-pocket expenses incurred in developing such Xxxxxxx Retail
Opportunities); (ii) Xxxxxxx Retail Opportunities consisting of Retail Footwear
Trademarks or intellectual property rights relating thereto shall be licensed to
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the Company on then-prevailing market terms and conditions (as determined in
good faith negotiations between the Xxxxxxx Parties and the Xxxxxx Member);
(iii) Xxxxxxx Retail Opportunities consisting of premises for Mall Specialty
Footwear Stores or Retail Outlet Footwear Stores shall be leased to or purchased
by the Company on then-prevailing market terms and conditions (as determined in
good faith negotiations between the Xxxxxxx Parties and the Xxxxxx Member); (iv)
all Third Party Retail Opportunities shall be offered or made available to the
Company on the same terms and conditions on which they have been offered or made
available to one or more of the Xxxxxxx Parties or their respective Xxxxxxx
Entities; and (v) each Xxxxxxx Party shall enter into, and shall use its best
efforts to cause each other Person offering a Third Party Retail Opportunity to
enter into, such written agreements as shall be reasonably necessary or
appropriate to accomplish the foregoing.
(e) No Xxxxxxx Party shall have the right to utilize, implement, transfer
or commercially exploit in any manner any Xxxxxxx Retail Opportunity, or accept
or acquire any Third Party Retail Opportunity, unless and until either (i) such
Retail Opportunity has been offered to the Company pursuant to a First Refusal
Notice and the Company is deemed to have declined such First Refusal Right on
the basis contemplated by Section 2(c) or, (ii) the Company has failed to accept
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such Retail Opportunity within the Feasibility Review Period contemplated by
Section 2(c); provided, however, that any of the Xxxxxxx Parties may accept or
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acquire any Third Party Retail Opportunity that it reasonably believes would no
longer be available to it after the expiration of the time periods contemplated
by Section 2(c) hereof, provided that such Xxxxxxx Party immediately offers the
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Company a First Refusal Right with respect to such Retail Opportunity, as a
Xxxxxxx Retail Opportunity, in accordance with the provisions of this Section 2.
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(f) Each Xxxxxxx Party acknowledges and agrees that, upon the closing of
the transfer or assignment of a Retail Opportunity to the Company pursuant to
Section 2(d), such Retail Opportunity and all activities of the Company in
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commercially exploiting such Retail Opportunity shall become part of the
"Company Activities," as defined in and for all purposes of the Non-Compete
Agreement.
3. Further Assurances. Each Xxxxxxx Party shall, and shall cause its
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Xxxxxxx Entities to, take all actions necessary, proper or advisable in order
for such Xxxxxxx Party to perform its obligations hereunder and to consummate
and make effective all transactions contemplated by this Agreement.
4. Termination. This Agreement shall automatically terminate, without
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notice, immediately upon the earlier to occur of (i) the expiration of the
"Non-compete Period" (as defined in the Non-Compete Agreement); (ii) the date
when neither Xxxxxx nor any other Affiliate of GE Capital holds Member Interests
in the Company aggregating ten percent or more of all of the Member Interests in
the Company (computed on a fully-diluted basis); or (iii) the date when Xxxxxxx
Retail no longer serves as Manager under the Operating Agreement.
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5. Equitable Remedies; Consent to Jurisdiction.
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(a) It is expressly understood and acknowledged by each of the Xxxxxxx
Parties that any breach or threatened breach of this Agreement cannot be
remedied solely by the recovery of damages and that, in the event of a breach or
threatened breach hereof by any of the Xxxxxxx Parties, the Company or any third
party beneficiary of the Company's rights hereunder may pursue both injunctive
relief and any and all other remedies available at law or in equity for any such
breach or threatened breach, including the recovery of damages and reasonable
attorneys' fees and costs.
(b) THE XXXXXXX PARTIES AGREE THAT ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT BY THE COMPANY OR ANY THIRD PARTY BENEFICIARY OF
THE COMPANY'S RIGHTS HEREUNDER IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY ITS
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE XXXXXXX PARTIES
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE XXXXXXX PARTIES WAIVES ANY OBJECTION TO
JURISDICTION OR VENUE (INCLUDING ANY OBJECTION BASED ON THE GROUNDS OF FORUM NON
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CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
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ACTION OR PROCEEDING IN SUCH JURISDICTION. EACH OF THE XXXXXXX PARTIES HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY ANY OF THE COURTS REFERENCED
IN THIS PARAGRAPH (b) IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, IN
ACCORDANCE WITH SECTION 7 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE UPON THE
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EARLIER OF (i) THE DATE FIVE (5) CALENDAR DAYS AFTER SUCH MAILING OR (ii) ANY
EARLIER DATE PERMITTED BY APPLICABLE LAW.
6. Assignment. Neither this Agreement nor any of the rights, interests
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or obligations hereunder can be assigned or delegated by any Xxxxxxx Party,
without the prior written consent of the Company, or by the Company, without the
prior written consent of Xxxxxxx.
7. Notices. All notices that are required or may be given pursuant to
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this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this
Section 7):
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If to any Xxxxxxx Party:
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c/x Xxxxxxx Shoe Company Inc.
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000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxxx 00000
(or, if by mail, X.X. Xxx 00
Xxxxxxxxx, Xxxxxxxxxxxxx 00000)
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
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Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company:
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000 Xxxxxxxxxx Xxxxx
Xxxxx X
Xxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With copies to:
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GE Capital Equity Capital Group, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel -- Equity Capital Group
Facsimile: (000) 000-0000
and
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
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Attention: Xxxx Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Xxxxxx Member:
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GE Capital Equity Capital Group, Inc.
c/o GE Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Counsel -- Equity Capital Group
Facsimile: (000) 000-0000
and
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
8. Binding Effect. This Agreement will be binding upon and inure to the
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benefit of the parties hereto and their successors, legal representatives, and
permitted assigns.
9. Third Party Beneficiaries. This Agreement is made solely and
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specifically between and for the benefit of the parties hereto, the Members from
time to time of the Company as third party beneficiaries of the rights of the
Company hereunder and their respective successors and assigns (subject to the
express provisions hereof relating to successors and assigns). Except for such
parties, such Members as third party beneficiaries and their respective
successors and assigns, no other Person whatsoever will have any rights,
interest, or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise.
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10. Waiver. No failure by any party to insist upon the strict
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performance of any covenant, duty, agreement, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof will constitute
waiver of any such breach or any other covenant, duty, agreement, or condition.
11. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which together will constitute one agreement binding on all
the parties hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart.
12. Entire Agreement. This Agreement contains the entire understanding
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of the parties relating to the subject matter hereof and supersedes all prior
written or oral and all contemporaneous oral agreements and understandings
relating to the subject matter hereof. This Agreement cannot be modified or
amended except in accordance with Section 7.5 of the Operating Agreement, and
then only in writing signed by the party against whom enforcement is sought.
13. Governing Law. This Agreement will be governed by and construed and
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interpreted in accordance with the laws of the State of New York applicable to
contracts made and to be performed in that State.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first above written.
SLJ RETAIL LLC
By: XXXXXXX RETAIL INC., its Manager
By:/s/ Xxxxx X. Xxxxxxxx
________________________________
Xxxxx X. Xxxxxxxx
Chairman
XXXXXXX SHOE COMPANY INC.
By:/s/ Xxxxx X. Xxxxxxxx
________________________________
Xxxxx X. Xxxxxxxx
Executive Vice President
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/s/ Xxxxxxx X. Xxxx
________________________________________
Xxxxxxx X. Xxxx
/s/ Xxxxx Xxx Xxxx
________________________________________
Xxxxx Xxx Xxxx
/s/ Xxxxxxxx X. Xxxx
________________________________________
Xxxxxxxx X. Xxxx
/s/ Xxxxx Xxxxxxxx
________________________________________
Xxxxx Xxxxxxxx, as Trustee of the
Xxxxxxx X. Xxxx Trust Fund of the
Xxxxxxx X. Xxxx Irrevocable Trust
dated 12/23/80
XXXXXXX RETAIL INC.
By: /s/ Xxxxx X. Xxxxxxxx
__________________________________
Xxxxx X. Xxxxxxxx
Chairman
XXXXXXX COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
__________________________________
Xxxxx X. Xxxxxxxx
Chief Financial Officer
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