Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
WEYCO GROUP, INC.
FLORSHEIM GROUP INC.
AND
THE OTHER SELLERS IDENTIFIED HEREIN
DATED AS OF MARCH 3, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................. 1
1.1 Accounts.................................................... 2
1.2 Accrued Expenses............................................ 2
1.3 Affiliate................................................... 2
1.4 Agreement................................................... 2
1.5 Agreement Sections.......................................... 2
1.6 Assumed Liabilities......................................... 3
1.7 Xxxx of Sale................................................ 3
1.8 Business Day................................................ 4
1.9 Buyer....................................................... 4
1.10 Buyer Closing Certificate................................... 4
1.11 Closing..................................................... 4
1.12 Closing Date................................................ 4
1.13 Closing Inventory Value..................................... 4
1.14 Code........................................................ 4
1.15 Cure Costs.................................................. 4
1.16 Disclosure Schedule......................................... 4
1.17 Escrow Agent................................................ 4
1.18 Escrow Agreement............................................ 4
1.19 ERISA....................................................... 4
1.20 Excluded Store Inventory.................................... 5
1.21 Excluded Stores............................................. 5
1.22 Existing Insurance Policies................................. 5
1.23 Existing Permits............................................ 5
1.24 Financial Information....................................... 5
1.25 Financial Statements........................................ 5
1.26 Florsheim................................................... 5
1.27 GAAP........................................................ 5
1.28 Golf Inventory.............................................. 5
1.29 Information Assets.......................................... 5
1.30 Inventory................................................... 5
1.31 Inventory Purchase Agreement................................ 6
1.32 Inventory Value............................................. 6
1.33 Xxxx Deere Inventory........................................ 6
1.34 Knowledge of Sellers........................................ 6
1.35 Law......................................................... 6
1.36 Lien........................................................ 6
1.37 Material Adverse Change..................................... 6
1.38 Miscellaneous Assets........................................ 7
1.39 Person...................................................... 7
1.40 Prepaid Expenses............................................ 7
1.41 Purchase Price.............................................. 7
1.42 Purchased Assets............................................ 7
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TABLE OF CONTENTS
(continued)
1.43 Purchased Contracts......................................... 8
1.44 Purchased Equipment......................................... 8
1.45 Purchased Leases............................................ 8
1.46 Purchased Stores............................................ 8
1.47 Records..................................................... 8
1.48 Retained Assets............................................. 8
1.49 Retained Liabilities........................................ 9
1.50 SAP and Other Computer Assets............................... 9
1.51 Seller or Sellers........................................... 9
1.52 Sellers Closing Certificate................................. 9
1.53 Store Assets................................................ 9
1.54 Trademarks.................................................. 9
1.55 Transition Services Agreement............................... 9
ARTICLE II PURCHASE AND SALE........................................ 9
2.1 Purchase and Sale........................................... 9
2.2 Final Inventory Value; Payment at Closing................... 10
ARTICLE III OTHER AGREEMENTS......................................... 11
3.1 Access...................................................... 11
3.2 Disclosure Schedule......................................... 11
3.3 Duties Concerning Consents; Conditions...................... 12
3.4 Deliveries of Information; Consultation..................... 12
3.5 Acquisition Proposals....................................... 12
3.6 Public Announcements........................................ 13
3.7 Retained Liabilities........................................ 13
3.8 Referrals and Deliveries.................................... 13
3.9 Allocation of Purchase Price................................ 14
3.10 Prorations.................................................. 14
3.11 Transaction Taxes........................................... 14
3.12 Risk of Loss................................................ 14
3.13 Employee Matters............................................ 15
3.14 Access to Records........................................... 15
3.15 Effective Time of Closing................................... 16
3.16 Pacific Rim Assets; Other International Assets.............. 16
3.17 Florsheim 401(k) Plan Assumption............................ 17
3.18 Purchased Equipment......................................... 18
3.19 Bankruptcy Matters.......................................... 18
3.20 Financing Commitments....................................... 20
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TABLE OF CONTENTS
(continued)
3.21 Purchase Orders............................................. 20
3.22 Use of Name................................................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS............ 20
4.1 Organization; Business...................................... 20
4.2 Authorization; Enforceability............................... 21
4.3 No Violation or Conflict.................................... 21
4.4 Assets...................................................... 21
4.5 Litigation.................................................. 22
4.6 Financial Information....................................... 22
4.7 Absence of Certain Changes.................................. 22
4.8 Store Assets................................................ 23
4.9 Purchased Contracts......................................... 23
4.10 Performance of Purchased Contracts.......................... 23
4.11 Intentionally Omitted....................................... 24
4.12 No Violation of Law......................................... 24
4.13 Brokers..................................................... 24
4.14 Taxes....................................................... 24
4.15 Purchased Stores............................................ 24
4.16 Consents; Approvals......................................... 24
4.17 No Pending Acquisitions..................................... 24
4.18 Labor Matters............................................... 25
4.19 Permits..................................................... 25
4.20 Inventory................................................... 25
4.21 Information Assets.......................................... 25
4.22 Environmental Protection.................................... 26
4.23 Accounts.................................................... 27
4.24 Customers and Suppliers..................................... 27
4.25 Insurance................................................... 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER.............. 27
5.1 Organization; Business...................................... 27
5.2 Authorization; Enforceability............................... 28
5.3 No Violation or Conflict.................................... 28
5.4 Brokers..................................................... 28
5.5 Consents; Approvals......................................... 28
5.6 Litigation.................................................. 28
5.7 Financing Commitments....................................... 28
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TABLE OF CONTENTS
(continued)
5.8 Due Diligence............................................... 28
5.9 No Further Representations.................................. 29
ARTICLE VI CONDUCT OF BUSINESS PENDING THE CLOSING.................. 29
6.1 Carry on in Ordinary Course................................. 29
6.2 Use of Purchased Assets..................................... 29
6.3 No Default.................................................. 29
6.4 Existing Insurance Policies................................. 30
6.5 Employment Matters.......................................... 30
6.6 Contracts and Commitments................................... 30
6.7 Preservation of Relationships............................... 30
6.8 Compliance with Laws........................................ 30
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER..... 30
7.1 Compliance with Agreement................................... 30
7.2 Proceedings and Instruments Satisfactory.................... 30
7.3 No Litigation............................................... 30
7.4 Representations and Warranties of the Sellers............... 31
7.5 No Material Adverse Change, Etc............................. 31
7.6 Bankruptcy Matters.......................................... 31
7.7 Deliveries at Closing....................................... 31
7.8 Other Deliveries............................................ 31
7.9 HSR......................................................... 31
7.10 Other Closings.............................................. 31
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS... 32
8.1 Compliance with Agreement................................... 32
8.2 Proceedings and Instruments Satisfactory.................... 32
8.3 No Litigation............................................... 32
8.4 Representations and Warranties of the Buyer................. 32
8.5 Deliveries at Closing....................................... 32
8.6 Other Documents............................................. 32
8.7 Delivery of Purchase Price.................................. 33
8.8 Letters of Credit........................................... 33
8.9 Bankruptcy Matters.......................................... 33
8.10 Other Closings.............................................. 33
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TABLE OF CONTENTS
(continued)
8.11 Letters of Credit........................................... 33
ARTICLE IX TERMINATION; MISCELLANEOUS............................... 33
9.1 Termination................................................. 33
9.2 Rights on Termination....................................... 34
9.3 Waiver of Conditions........................................ 35
9.4 Survival of Representations and Warranties.................. 35
9.5 Entire Agreement; Amendment................................. 35
9.6 Expenses.................................................... 35
9.7 Governing Law; Venue........................................ 35
9.8 Assignment.................................................. 36
9.9 Notices..................................................... 36
9.10 Counterparts; Headings...................................... 37
9.11 Interpretation.............................................. 37
9.12 Severability................................................ 37
9.13 No Reliance................................................. 37
9.14 Exhibits and Disclosure Schedule............................ 37
9.15 Income Tax Position......................................... 37
9.16 Further Assurances.......................................... 37
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SIGNATURES.............................................................. 39
EXHIBITS:
1. List of Miscellaneous Assets
2. Prepaid Expenses
3. Reserves for Accounts
4. List of Purchased Contracts
5. List of Purchased Leases
6. List of Purchased Stores
7. List of Retained Vehicles and Other Assets
8. Other Computer Assets
9. Allocation of Purchase Price
10. Inventory of Agreements
11. Permitted Liens
ANNEXES:
A. Form of Xxxx of Sale
B. Form of Buyer Closing Certificate
C. Form of Escrow Agreement
D. Form of Inventory Purchase Agreement
E. Form of Sellers Closing Certificate
F. Form of Transition Services Agreement
G. Intentionally Omitted
H. Intentionally Omitted
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ASSET PURCHASE AGREEMENT [U.S.]
THIS ASSET PURCHASE AGREEMENT is made as of this 3rd day of March,
2002 between and among WEYCO GROUP, INC., a Wisconsin corporation, FLORSHEIM
GROUP INC., a Delaware corporation, and those subsidiaries of Florsheim Group
Inc. that are identified as a Seller on the signature pages hereto.
RECITALS
WHEREAS, following the date hereof, each of the Sellers intends to
file voluntary petitions under Chapter 11 of the Bankruptcy Code (collectively,
the "Bankruptcy Case") before the United States Bankruptcy Court for the
Northern District of Illinois (the "Bankruptcy Court"); and
WHEREAS, the Buyer (or its permitted assigns as provided in Section
9.8 hereof) desires to purchase all of the Sellers' right, title and interest in
and to the Purchased Assets and assume the Assumed Liabilities from the Sellers,
and the Sellers desire to sell, convey, assign and transfer to the Buyer (or its
permitted assigns as provided in Section 9.8 hereof) all of the Sellers' right,
title and interest in and to the Purchased Assets together with the Assumed
Liabilities, all in the manner and subject to the terms and conditions set forth
in this Agreement and in accordance with Sections 105, 363 and 365 and other
applicable sections of the Bankruptcy Code; and
WHEREAS, subsequent to the execution of this Agreement, Florsheim,
certain subsidiaries of Florsheim and the Buyer shall enter into the
International Asset Purchase Agreement (as hereinafter defined); and
WHEREAS, if Florsheim and Florsheim Pacific (each as hereinafter
defined) exercise the Pacific Rim Option (as hereinafter defined) subsequent to
the date of this Agreement, subject to certain terms and conditions of this
Agreement and the terms and conditions of the Pacific Rim Asset Purchase
Agreement (as hereinafter defined), the Buyer shall purchase and assume, as
applicable, from Florsheim Pacific the Pacific Rim Assets and Liabilities (as
hereinafter defined);
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
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1.1 Accounts. "Accounts" shall mean all accounts receivable, notes
and associated rights owned by any Seller, the categories of which are set forth
on the Disclosure Schedule, but excluding such accounts receivable, notes and
rights specifically related to Florsheim's license with Xxxx Deere & Company and
any intercompany accounts, accounts receivable, notes and associated rights
reflecting amounts owed to a Seller by another Seller or a an Affiliate of any
other Seller.
1.2 Accrued Expenses. "Accrued Expenses" shall mean the liabilities
and obligations of any Seller under or with respect to the Purchased Contracts,
Purchased Leases, Existing Permits and any other assets included in the
Purchased Assets arising or accruing after the filing of the Bankruptcy Case and
prior to the Closing Date and which Buyer agrees to assume and which are listed
on an update to the Disclosure Schedule delivered to Buyer at least two (2)
Business Days prior to Closing but only to the extent that: (i) such liabilities
and obligations do not represent any indebtedness for borrowed money or any
obligations of a Seller to any Affiliate of a Seller; (ii) such liabilities and
obligations have been incurred in the ordinary course of business; and (iii) a
credit is made against the Purchase Price for such liabilities and obligations
pursuant to Section 1.41.
1.3 Affiliate. "Affiliate" of any Person shall mean any Person
controlling such Person, controlled by such Person or under common control with
such Person, by ownership of equity interests, contract or otherwise; provided,
however, that "Affiliate" shall not include any shareholder of Florsheim or
Weyco Group, Inc. or any Person controlling any such shareholder.
1.4 Agreement. "Agreement" shall mean this Asset Purchase Agreement,
together with the Exhibits attached hereto and the Disclosure Schedule, as the
same may be amended from time to time in accordance with the terms hereof.
1.5 Agreement Sections. The following terms shall have the meanings
specified in the Sections of this Agreement listed in the following table.
TERM SECTION
Acquisition 3.5(a)
Acquisition Proposal 3.5(a)
Bankruptcy Case 3.19
Bankruptcy Court 3.19
Bankruptcy Motion 3.19(b)
CERCLA 4.22(e)
CERCLIS 4.22(e)
Disclosure Schedule Change 3.2(b)
Effective Time of Closing 3.15
Environmental Laws 4.22(e)
Environmental Liabilities 4.22(e)
European Sellers 3.16(c)
European Assets and Liabilities 3.16(c)
Final Inventory Value 2.2(b)
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TERM SECTION
Florsheim 401(k) Plan 3.17(a)
Hazardous Substance 4.22(e)
HSR Act 7.9
Intellectual Property 4.22
International Asset Purchase Agreement 3.16(c)
Major Customers 4.24
Major Suppliers 4.24
Pacific Rim Asset Purchase Agreement 3.16(a)
Pacific Rim Assets and Liabilities 3.16(a)
Permitted Liens 4.4
Procedures Order 3.19(c)
Qualifying Buyer 3.16(b)
Sale Order 3.19(d)
Store Employees 4.18
Transferred Employee 3.13(a)
1.6 Assumed Liabilities. "Assumed Liabilities" shall mean the
following obligations and no others:
(a) the Accrued Expenses;
(b) all liabilities and obligations of Sellers under or with
respect to the Purchased Contracts, the Purchased Leases, the Existing Permits
and any other assets included in the Purchased Assets to the extent that such
liabilities and obligations arise or accrue on or subsequent to the Closing Date
and relate to the period on or subsequent to the Closing Date;
(c) all Cure Costs associated with the Purchased Contracts and
the Purchased Leases; and
(d) the following employee related obligations with respect to
any Transferred Employees: (i) with respect to Transferred Employees at
Purchased Stores, and any other individuals who are Transferred Employees, who
are not covered by any collective bargaining agreement, accrued vacation
benefits; (ii) with respect to Transferred Employees at Purchased Stores who are
covered by a collective bargaining agreement, the accrued but unpaid obligations
under that collective bargaining agreement (provided that any accrued but unpaid
compensation and employment taxes shall be included as Accrued Expenses); and
(iii) with respect to all Transferred Employees, if any, subject to employment
agreements as of the date hereof, any liabilities and obligations under such
employment agreements.
1.7 Xxxx of Sale. "Xxxx of Sale" shall mean a separate Xxxx of Sale
and Assumption of Liabilities in substantially the form of ANNEX A attached to
this Agreement to be executed by Buyer and each Seller.
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1.8 Business Day. "Business Day" shall mean a day other than
Saturday, Sunday or any day on which banks in New York City, Chicago, Illinois
and Milwaukee, Wisconsin are authorized or obligated to close.
1.9 Buyer. "Buyer" shall mean Weyco Group, Inc., a Wisconsin
corporation, or any assignee or assignees permitted by Section 9.8 hereof.
1.10 Buyer Closing Certificate. "Buyer Closing Certificate" shall
mean the Closing Certificate of the Buyer in substantially the form of ANNEX B
attached to this Agreement.
1.11 Closing. "Closing" shall mean the conference to be held on the
Closing Date at the offices of Xxxxxxx & Xxxxx, LLP, 000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, or such other time and place as the parties may
mutually agree to in writing, at which the transactions contemplated by this
Agreement shall be consummated.
1.12 Closing Date. "Closing Date" shall mean such date as the
parties may mutually agree to in writing, which date shall be within five (5)
Business Days following the satisfaction or waiver of each of the conditions set
forth in Article VII and Article VIII hereof.
1.13 Closing Inventory Value. "Closing Inventory Value" shall mean
the Inventory Value as of the Effective Time of Closing.
1.14 Code. "Code" shall mean the Internal Revenue Code of 1986, as
the same may be in effect from time to time.
1.15 Cure Costs. "Cure Costs" shall mean, with respect to a
Purchased Contract or a Purchased Lease, the amount necessary to cure past
monetary defaults thereunder in order for the Sellers to assume and assign to
Buyer such Purchased Contract or Purchased Lease in the Bankruptcy Case.
1.16 Disclosure Schedule. "Disclosure Schedule" shall mean the
Disclosure Schedule, dated the date of this Agreement, delivered by the Sellers
to the Buyer contemporaneously with the execution and delivery of this Agreement
and as the same may be amended from time to time after the date of this
Agreement and prior to the Closing Date in accordance with the terms of this
Agreement.
1.17 Escrow Agent. "Escrow Agent" shall mean an escrow agent
mutually acceptable to the Buyer and the Sellers.
1.18 Escrow Agreement. "Escrow Agreement" shall mean the escrow
agreement among the Buyer, Florsheim and the Escrow Agent, relating to the
payment of any premium for the extension of the Sellers' current directors and
officers insurance policy, to be executed on the Closing Date in substantially
the form of ANNEX C attached hereto.
1.19 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to time.
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1.20 Excluded Store Inventory. "Excluded Store Inventory" shall mean
the inventory owned by any Seller located at or in transit to the Excluded
Stores.
1.21 Excluded Stores. "Excluded Stores" shall mean any retail and
outlet stores operated by any of the Sellers in the United States other than the
Purchased Stores.
1.22 Existing Insurance Policies. "Existing Insurance Policies"
shall mean all of the insurance policies currently in effect and owned by any
Seller and which insure against risks related to the Purchased Assets, Sellers'
U.S. wholesale business or a Purchased Store.
1.23 Existing Permits. "Existing Permits" shall mean all permits,
licenses, approvals, qualifications, permissions and governmental authorizations
(including Environmental Permits) held by any Seller in the conduct its business
and which primarily relate to Sellers' U.S. wholesale business or a Purchased
Store.
1.24 Financial Information. "Financial Information" shall mean: (a)
the Financial Statements; (b) the books and records of account of Sellers and
(c) all other financial information relating to the financial condition of
Sellers delivered by the Sellers to the Buyer prior to the date hereof.
1.25 Financial Statements. "Financial Statements" shall mean the
audited financial statements of Florsheim and its subsidiaries for the year
ended December 30, 2000 and the unaudited financial statements of Florsheim and
its subsidiaries for the interim period ended September 29, 2001.
1.26 Florsheim. "Florsheim" shall mean Florsheim Group Inc., a
Delaware corporation.
1.27 GAAP. "GAAP" shall mean U.S. generally accepted accounting
principles as applied on a consistent basis.
1.28 Golf Inventory. "Golf Inventory" shall mean the Seller's
Inventory related to its former Golf product line, provided that the amount of
such inventory shall not exceed $100,000.
1.29 Information Assets. "Information Assets" shall mean the
Trademarks, Trademark registrations and applications, issued patents, patent
applications, copyrights, copyright registrations, information and advertising
owned by any Seller, including but not limited to trade secrets, know-how,
operating methods and procedures, proprietary information, processes, technical
knowledge, formulae, advertising copy, plans, customer lists (excluding customer
information subject to Sellers' privacy policy posted on their Web site),
supplier lists, telephone numbers, domain names, URLs and Web sites.
1.30 Inventory. "Inventory" shall mean all inventories owned by any
Seller, including raw materials, work in process and finished goods: (a)
associated with any Seller's U.S. wholesale shoe operations, based on the asset
classifications reflected in the Financial Statements dated as of September 29,
2001 or (b) located at or in transit to the Purchased Stores,
5
but shall exclude the Excluded Store Inventory, the Xxxx Deere Inventory and the
Golf Inventory.
1.31 Inventory Purchase Agreement. "Inventory Purchase Agreement"
shall mean the inventory purchase agreement between Buyer and Florsheim in
substantially the form of ANNEX D attached hereto with respect to Buyer's
purchase of any unsold Excluded Store Inventory upon the expiration of the
license period with respect to the Trademarks set forth in the Transition
Services Agreement.
1.32 Inventory Value. "Inventory Value" shall mean the gross book
value of the finished goods Inventory calculated, as of any date, as the number
of units on hand of each item number as of such date multiplied by the standard
cost of such item of finished goods Inventory as of December 29, 2001; provided,
however, that the standard cost of any such Inventory located in any of the
Purchased Stores shall be calculated at retail standard cost, consistent with
Sellers' past practice in the ordinary course of business, as reflected on
Sellers' retail financial reports. In the event no standard cost exists for any
item as of December 29, 2001, the standard cost of such item shall be based on
the price paid by the Sellers as set forth in the Sellers' purchase order for
such item or, in the event no such purchase order exists, the Sellers' original
cost estimate therefor from the party that sold such item to the Sellers plus,
in either case, the Sellers' cost of freight, duty and overhead with respect to
such item.
1.33 Xxxx Deere Inventory. "Xxxx Deere Inventory" means all
inventory specifically associated with Florsheim's license with Xxxx Deere &
Company.
1.34 Knowledge of Sellers. "Knowledge of Sellers" shall mean the
actual knowledge of Xxxxx X. Xxxxxxxxx, Xx., Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx,
Xxxx Xxxxxx or Xxxx Xxxxxxxxx.
1.35 Law. "Law" shall mean any domestic, federal, state, local or
other law, rule, regulation or governmental requirement of any kind, and the
rules, regulations and orders promulgated thereunder and any final orders,
decrees or judgments of any regulatory agency, court or other governmental
entity.
1.36 Lien. "Lien" shall mean, with respect to any asset: (a) any
mortgage, pledge, lien, charge, claim, restriction, condition, easement,
covenant, lease, encroachment, title defect, imposition, security interest or
other encumbrance or adverse claim of any kind; and (b) the interest of a vendor
or lessor under any conditional sale agreement, financing lease or other title
retention agreement relating to such asset.
1.37 Material Adverse Change. "Material Adverse Change" shall mean
any condition or fact which is, or is reasonably expected to be, materially
adverse to the financial condition, properties, business or results of operation
of Sellers' U.S. wholesale business or the Purchased Stores, taken as a whole,
measured from the date of this Agreement to the date of determination; provided,
that in no event shall any of the following be taken into account (alone or in
combination with any other event identified in this proviso) in determining
whether there has been such a Material Adverse Change: any change, event,
circumstance, development or effect primarily attributable to conditions
generally affecting the retail or wholesale shoe
6
industries, except to the extent that any such change, event, circumstance,
development or effect has an adverse effect on the Sellers that is materially
and disproportionately greater than the adverse effect on comparable entities
operating in such industries; provided, that the filing or pendency of the
Bankruptcy Case and any proceedings thereunder are not by themselves a Material
Adverse Change (it being understood that the facts underlying any allegations or
claims against the Sellers asserted in such proceedings may be the basis for a
Material Adverse Change).
1.38 Miscellaneous Assets. "Miscellaneous Assets" shall mean: (a) a
Seller's cash and cash equivalents that are located at a Purchased Store in
accordance with the applicable Seller's customary practices, (b) all trade show
booths and related fixtures owned by Sellers; and (c) those other assets owned
by Sellers and set forth in EXHIBIT 1.
1.39 Person. "Person" shall mean a natural person, corporation,
trust, partnership, limited liability company, association, unincorporated
organization, governmental entity, agency or branch or department thereof, or
any other legal entity.
1.40 Prepaid Expenses. "Prepaid Expenses" shall mean any expense,
the categories of which are set forth on EXHIBIT 2, related to Sellers' U.S.
wholesale business or a Purchased Store and prepaid by any Seller on or prior to
the Closing Date and which both corresponds to a period after the Closing Date
and which is transferred to Buyer pursuant to this Agreement.
1.41 Purchase Price. "Purchase Price" shall mean, subject to the
adjustments set forth herein, a total amount equal to: (a) $35,950,000; plus (b)
the fair market value of the Purchased Equipment as determined in accordance
with Section 3.18 hereof; plus (c) the value of the Accounts as of the Closing
Date set forth on EXHIBIT 3; plus (d) the amount of any Prepaid Expenses; minus
(e) the amount of any Accrued Expenses; minus (f) the amount of any Cure Costs
(other than the Cure Costs related to the non-SAP licenses described in the
definition of SAP and Other Computer Assets); minus (g) the amount of any
insurance proceeds received by the Sellers under the Existing Insurance Policies
as a result of any loss or damage to any tangible Purchased Assets (other than
Inventory) between the date hereof and the Closing Date, but only to the extent
such damaged tangible Purchased Assets are not repaired or replaced in
accordance with Section 3.12 hereof; and plus or minus (h) the adjustment
described in Section 2.2(c) relating to the Final Inventory Value.
1.42 Purchased Assets. "Purchased Assets" shall mean (a) the
Accounts, (b) the Purchased Contracts, (c) the Purchased Leases, (d) the
Purchased Equipment, (e) the Existing Permits, (f) the Inventory, (g) the
Information Assets, (h) the Miscellaneous Assets, (i) the Store Assets, (j) the
SAP and Other Computer Assets, (k) the Prepaid Expenses, (l) the Records and (m)
each Seller's causes of actions and claims against a third party that is a
debtor in possession under Chapter 11 of the Bankruptcy Code but only to the
extent that such causes of action and claims were asserted after a petition
under Chapter 11 of the Bankruptcy Code was filed with respect to such third
party. The Purchased Assets shall exclude the Retained Assets.
7
1.43 Purchased Contracts. "Purchased Contracts" shall mean those
written contracts, agreements, purchase orders, personal property leases and
licenses to which a Seller is a party or by which a Seller is bound and which
are set forth on EXHIBIT 4.
1.44 Purchased Equipment. "Purchased Equipment" shall mean the
computer equipment and furniture associated with Florsheim's headquarters and
the computer equipment, furniture, fixtures, and other equipment associated with
the Sellers' warehouse, in each case owned by the Sellers, that Buyer may elect
to purchase in its reasonable discretion in connection with its incremental
employment needs resulting from the consummation of the transactions
contemplated by this Agreement; provided that the fair market value of the
Purchased Equipment shall be calculated in accordance with Section 3.18 hereof.
1.45 Purchased Leases. "Purchased Leases" shall mean the real
property leases related to the Purchased Stores as set forth on EXHIBIT 5.
1.46 Purchased Stores. "Purchased Stores" shall mean the retail and
outlet stores operated by any Seller in the United States and that are
identified on EXHIBIT 6, but not including the Excluded Stores.
1.47 Records. "Records" shall mean (a) copies of such books,
documents and records primarily owned or used by a Seller in the operation of
Sellers' U.S. wholesale business or a Purchased Store, including any accounting
records, correspondence, governmentally required records, engineering data,
designs, drawings, blue prints, plans, photos, specifications, lists, customer
lists (excluding customer information subject to Sellers' privacy policy posted
on their Web site), computer media, software and software documentation, sales
literature, catalogues, promotional items, advertising materials and other
written materials, and (b) originals of historical photos, advertising and
similar documents or records owned by any Seller, but shall exclude any items
listed in clause (a) or (b) that are located at any of the Excluded Stores.
1.48 Retained Assets. "Retained Assets" shall mean all of the assets
of Sellers as of the Closing Date which are not Purchased Assets, including,
without limitation, the following: (a) each Seller's franchise to be a
corporation, articles of incorporation, bylaws, minute books, stock books,
corporate seals and other corporate records having to do with the corporate
organization and capitalization of each Seller; (b) all canceled checks, bank
statements and tax returns of each Seller and all rights of each Seller to tax
refunds and tax rebates; (c) Sellers' accounts receivable and related license
with Xxxx Deere & Company and the Xxxx Deere Inventory; (d) Florsheim's
warehouse located in Jefferson City, Missouri; (e) Florsheim's headquarters
located at 000 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx; (f) the leaseholds,
leasehold improvements, personal property, equipment, machinery, tooling, tools,
fixed assets, fixtures, furnishings and furniture and other tangible assets
located at or related to Florsheim's warehouse or headquarters (other than the
Purchased Equipment); (g) the leaseholds of the Excluded Stores and all Excluded
Store Inventory and other assets located at or primarily related to any Excluded
Store; (h) any other contracts or leases to which a Seller is a party or by
which a Seller is bound but which is not a Purchased Contract or Purchased
Lease; (i) the Existing Insurance Policies, any life insurance contract of which
any Seller is a beneficiary and any proceeds thereof and claims thereunder; (j)
each Seller's cash and cash equivalents, except to the extent included in the
Miscellaneous Assets; (k) each Seller's causes of actions and claims against
third parties
8
relating to the period prior to the Effective Time of Closing and avoidance
claims and other claims of the Sellers under the Bankruptcy Code, 11 U.S.C.
xx.xx. 101 et seq.; (l) the vehicles and other assets set forth on the EXHIBIT
7; (m) all employee benefit plans of Sellers and associated rights, obligations
and liabilities including, subject to Section 3.17 hereof, the Florsheim 401(k)
Plan; (n) any Accounts placed for collection by the Sellers prior to the Closing
Date; and (o) any other asset of Sellers that is not a Purchased Asset.
1.49 Retained Liabilities. "Retained Liabilities" shall mean all
obligations and liabilities of Sellers arising out of the operation of their
respective businesses or the ownership of the Purchased Assets prior to the
Effective Time of Closing which are not Assumed Liabilities.
1.50 SAP and Other Computer Assets. "SAP and Other Computer Assets"
shall mean (a) the Sellers' SAP operating system and all associated software
(including any of the Sellers' modifications thereof) and related licenses, but
excluding maintenance and consulting agreements, hardware and hardware leases,
and (b) the other computer software and related licenses of the Sellers
described on EXHIBIT 8; provided, that the Buyer shall assume any Cure Costs
with respect to any licenses described on such Exhibit without any adjustment to
the Purchase Price therefor.
1.51 Seller or Sellers. "Seller" or "Sellers" shall mean Florsheim
or any of its domestic subsidiaries which are identified as Sellers on the
signature pages hereto.
1.52 Sellers Closing Certificate. "Sellers Closing Certificate"
shall mean the Closing Certificate of each Seller in substantially the form of
ANNEX E attached to this Agreement.
1.53 Store Assets. "Store Assets" shall mean all machinery, tooling,
equipment, furniture, fixed assets, fixtures, motor vehicles, furnishings,
parts, tools, dies, jigs, patterns, office equipment, personal property, cash
registers, computers, construction in progress, leasehold improvements, and
other assets owned by a Seller located at a Purchased Store or primarily used by
a Seller in the operation of a Purchased Store, including, but not limited, to
those assets which are set forth in the Disclosure Schedule.
1.54 Trademarks. "Trademarks" shall mean the business names, product
brand names, trade names, trademarks, service marks, and logos owned by a Seller
(including the name "Florsheim") and the goodwill and other rights associated
therewith.
1.55 Transition Services Agreement. "Transition Services Agreement"
shall mean the transition services agreement between Buyer and Florsheim to be
executed on the Closing Date in substantially the form of ANNEX F attached
hereto.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement:
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(a) the Sellers shall sell, assign, convey and deliver to the
Buyer, and the Buyer shall purchase and accept from the Sellers, all of each
Seller's right, title and interest in and to the Purchased Assets; and
(b) the Buyer shall assume and agree to pay, perform and
discharge, promptly when payment or performance is due or required the Assumed
Liabilities and be bound by all of the terms and obligations of the Assumed
Liabilities.
2.2 Final Inventory Value; Payment at Closing.
(a) The Inventory Value shall be determined based on a one
hundred percent (100%) physical count conducted by Buyer and Florsheim or an
inventory service reasonably acceptable to Buyer and Florsheim no more than five
(5) Business Days prior to the anticipated Closing Date. Except as Buyer and
Florsheim may otherwise agree, no wholesale sales or shipments from the Sellers'
warehouse in Jefferson City, Missouri will occur after the physical count is
taken and before the Closing Date unless a new physical count is taken prior to
the Closing Date. In the event that the physical count is conducted by an
inventory service, Buyer and Florsheim shall each have one or more
representatives observe such physical count. The cost of any inventory service
shall be shared equally by Buyer and Florsheim. Prior to the physical count, the
parties shall agree on the methodology by which such count shall be conducted.
(b) At least two (2) days prior to the anticipated Closing
Date, Florsheim shall deliver to the Buyer for its approval, which approval
shall not be unreasonably withheld, Florsheim's determination of the Closing
Inventory Value (upon such approval by Buyer and with any corrections or
adjustments approved by Buyer and Florsheim, the "Final Inventory Value"), along
with a certificate of Florsheim's President or Chief Financial Officer
certifying that Florsheim's determination of the Closing Inventory Value was
based on the results of the physical count described in subsection (a) above and
the books and records of Sellers, presents fairly each Seller's determination of
the Closing Inventory Value and was prepared in accordance with the provisions
of this Agreement. Provided that the physical count is conducted in accordance
with the agreed upon methodology described in subsection (a) above, Buyer shall
not have the right to object to Florsheim's determination of the Closing
Inventory Value based solely upon the methodology used in the physical count.
The same "standard cost" methodology and the same amount of standard cost for
each item shall be used in computing the Closing Inventory Value, the Final
Inventory Value and the dollar amount set forth in Section 2.2(c). Throughout
the period in which the physical count is being taken and the Final Inventory
Value is being determined, each Seller shall provide Buyer and its
representatives with access to and the right to copy any records of Sellers
relating to the Inventory Value.
(c) In the event that the Final Inventory Value is in excess
of $27,925,979.63, the Purchase Price shall be increased by the amount of such
excess. In the event that the Final Inventory Value is less than $27,925,979.63,
the Purchase Price shall be reduced by the amount of such deficiency in excess
of $1,600,000.
(d) At the Closing, the Buyer shall deliver the Purchase Price
less $500,000 to the Sellers by a single wire transfer of immediately available
funds. Such wire
10
transfer shall be delivered to the Sellers in care of Florsheim, which all
Sellers hereby designate as their agent to receive, hold and disburse whatever
portion of the Purchase Price that each Seller is entitled to receive for the
sale of the Purchased Assets owned by such Seller.
(e) At the Closing, the Buyer shall deliver $500,000 to the
Escrow Agent to be held by the Escrow Agent on the terms and subject to the
conditions set forth in the Escrow Agreement.
ARTICLE III
OTHER AGREEMENTS
3.1 Access. Upon reasonable notice, from the date hereof through the
Closing Date, the Sellers shall afford to the officers, employees, accountants,
legal counsel and other representatives of the Buyer full access upon reasonable
prior notice and during normal business hours to all of the properties, books,
contracts, commitments, SAP data bases and associated files, file structure and
file field definitions, Financial Information and records of the Sellers related
to the Purchased Assets. Buyer shall be entitled to conduct appraisals of all or
any portion of the Purchased Assets and to conduct inspections thereof. In
addition, Sellers shall grant Buyer limited access (with Florsheim's
participation in such contacts) to the Major Customers, the Major Suppliers and
the lessors of the Purchased Stores and shall reasonably cooperate with Buyer in
communicating with such persons. Nothing in this Agreement shall prevent Buyer
or its Affiliates from initiating or having contact with any Person (including
Major Customers, Major Suppliers and the lessors of the Purchased Stores) in the
ordinary course of Buyer's business, provided that prior to the Effective Time
of Closing Buyer shall have no discussion regarding this Agreement or the
Sellers (except to confirm information publicly disclosed by the Sellers or to
state that such matters cannot be discussed) except with Florsheim's
participation. Between the date hereof and the Closing Date, the Sellers shall
use commercially reasonable efforts to make available to Buyer the services of
the Sellers' information technology employees as reasonably requested by Buyer,
provided, however, that any request that, in the Sellers' discretion, would
significantly interfere with the ordinary course operation of the Sellers'
business would not be reasonable for this purpose. If Buyer expressly requests
that Sellers use their best efforts to retain the services of a particular
information technology employee, Buyer shall reimburse the Sellers for the
Sellers' costs (including salary and benefits but not corporate overhead),
determined on an hourly basis, of continuing to employ any such information
technology employee, and Buyer shall reimburse the Sellers for the full cost of
any severance obligations incurred by the Sellers with respect to any such
information technology employee.
3.2 Disclosure Schedule.
(a) Disclosure Schedule. Contemporaneously with the execution
and delivery of this Agreement, Florsheim is delivering to the Buyer the
Disclosure Schedule, which is accompanied by a certificate signed by the
President of Florsheim, stating that the Disclosure Schedule is being delivered
pursuant to this Agreement and is the Disclosure Schedule referred to in this
Agreement. The Disclosure Schedule is deemed to constitute an integral part of
this Agreement and is included in the representations, warranties, covenants or
agreements of the
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Sellers contained in this Agreement to the extent that such representations,
warranties, covenants or agreements expressly refer to the Disclosure Schedule
or if information in the Disclosure Schedule on its face qualifies or is an
exception to such representations, warranties, covenants or agreements.
(b) Updates. Prior to the Closing Date, Florsheim shall update
the Disclosure Schedule from time to time by written notice to the Buyer to
reflect any matter that is materially adverse to the Seller's U.S. wholesale
business, the Purchased Stores or the Purchased Assets which has occurred from
and after the date of this Agreement which, if existing on the date of this
Agreement, would have been required to be described in the Disclosure Schedule
or would have required a revision of such section (in either case, a "Disclosure
Schedule Change"). If requested by the Buyer, Florsheim shall meet and discuss
with the Buyer any such Disclosure Schedule Change. If the parties cannot
resolve any differences regarding a Disclosure Schedule Change within fifteen
(15) days, and if the Disclosure Schedule Change constitutes a Material Adverse
Change, the Buyer may terminate this Agreement within ten (10) days after the
end of such fifteen (15) day period.
3.3 Duties Concerning Consents; Conditions. Between the date hereof
and the Closing Date, each party to this Agreement shall cooperate with each
other and use commercially reasonable efforts to: (a) obtain any third party
consents or approvals required by this Agreement; and (b) take, or cause to be
taken, all other action and do, or cause to be done, all other things reasonably
necessary or appropriate to cause each of the conditions precedent set forth in
Articles VII and VIII of this Agreement to be satisfied and to consummate the
transactions contemplated by this Agreement.
3.4 Deliveries of Information; Consultation. From time to time prior
to the Closing Date, each of the following shall occur:
(a) Deliveries by the Sellers. Each Seller shall furnish
promptly to the Buyer: (i) Florsheim's 2001 fiscal year Financial Statements
promptly after such Financial Statements are filed with the Securities and
Exchange Commission; (ii) prior to the filing of the Bankruptcy Case, the
monthly consolidated financial statements of Florsheim (as prepared by Florsheim
in accordance with its normal accounting procedures); (iii) after the filing of
the Bankruptcy Case, the monthly operating reports filed by the Sellers with the
Bankruptcy Court; and (iv) all other information concerning the Sellers' U.S.
wholesale business, the Purchased Stores and the Purchased Assets as the Buyer
may reasonably request and that does not significantly interfere with the
ordinary course operation of the Sellers' business.
(b) Consultation. At the reasonable request of the Buyer, the
Sellers shall meet with representatives of the Buyer to discuss operational and
financial matters of Sellers with respect to Sellers' U.S. wholesale business,
the Purchased Stores and the Purchased Assets.
3.5 Acquisition Proposals.
(a) Definitions. As used in this Agreement, the following
terms shall have the meanings specified:
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(i) "Acquisition" shall mean any or all of the
following, other than the transactions described in this Agreement: (A) a
merger, share exchange, consolidation, reorganization, combination or similar
transaction involving any Seller; (B) a purchase, exchange or tender offer for
50% or more of the outstanding shares of stock of any Seller; or (C) a purchase,
lease or other acquisition of the Purchased Assets or any equity interest (or
any option, warrant or securities convertible into any equity interest) from any
Seller, except sales of inventory sold in the ordinary course of business
consistent with past practice.
(ii) "Acquisition Proposal" shall mean the making of any
proposal by any Person concerning an Acquisition.
(b) Until the filing of the Bankruptcy Case, Florsheim shall
not, and shall cause the other Sellers, and shall use commercially reasonable
efforts to cause all of Sellers' respective officers, directors, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained or engaged by that party) to not, directly or indirectly:
(i) initiate or solicit any inquiries concerning an Acquisition or an
Acquisition Proposal; (ii) engage in any negotiations concerning, or provide any
confidential information or data to, any Person relating to an Acquisition or an
Acquisition Proposal; or (iii) consummate, agree or commit to consummate any
Acquisition or Acquisition Proposal. Florsheim shall immediately cease or cause
to be terminated any of the foregoing activities until the filing of the
Bankruptcy Case. This Section 3.5(b) shall not apply to soliciting, negotiating,
implementing and consummating any Acquisition Proposal with respect to the
Pacific Rim Assets and Liabilities or the Retained Assets or any assets of an
Affiliate of any Seller which are not covered by this Agreement or the
International Asset Purchase Agreement.
(c) After the filing of the Bankruptcy Case, consistent with
the Sellers' fiduciary duties, the restrictions of clause (b) shall no longer be
applicable. Sellers shall not sell the Purchased Assets to another party except
(i) in accordance with the bidding procedures approved by the Bankruptcy Court
through the entry of the Procedures Order or (ii) in the event that this
Agreement is terminated prior to the Closing pursuant to Section 9.1. Buyer
shall receive copies of all Qualified Bids (as defined in the bidding
procedures) received by the Sellers for the Purchased Assets in accordance with
the terms of the bidding procedures approved by the Bankruptcy Court as a result
of the entry of the Procedures Order.
3.6 Public Announcements. Subject to each party's disclosure
obligations imposed by Law, the Buyer and Florsheim will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated by this Agreement and shall not issue any public
announcement or statement with respect thereto prior to consultation with, and
review by, the other party.
3.7 Retained Liabilities. Except for the Assumed Liabilities, the
Buyer is not assuming any liabilities or obligations of any Seller, including,
without limitation, the Retained Liabilities.
3.8 Referrals and Deliveries. After the Closing, the Sellers shall
immediately: (a) deliver to the Buyer, in the form received with the addition of
any required endorsements by
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the Sellers, any cash, checks or other payments received by the Sellers in
respect of the Accounts; (b) refer to Buyer any and all inquiries from customers
or suppliers of the Sellers or other Persons relating to the business of Sellers
other than with respect to the Retained Assets and, if the option described in
Section 3.16(a) is not exercised, the Pacific Rim Assets and Liabilities; and
(c) deliver to Buyer all purchase orders received by the Sellers relating to the
business of any Seller other than with respect to the Retained Assets and, if
the option described in Section 3.16(a) is not exercised, the Pacific Rim Assets
and Liabilities.
3.9 Allocation of Purchase Price. The Purchase Price shall be
allocated in accordance with Section 1060 of the Internal Revenue Code and
substantially as set forth on EXHIBIT 9 attached hereto. The Buyer and the
Sellers shall cooperate with each other in the preparation and filing of I.R.S.
Form 8594 in connection with such allocation. Neither the Buyer nor the Sellers,
nor any of their respective Affiliates, shall take any position (whether in
financial statements, audits, tax returns or otherwise) which is inconsistent
with the allocation of the Purchase Price unless required to do so by applicable
Law.
3.10 Prorations. Except to the extent included in the Assumed
Liabilities, all personal property taxes, real property expenses, utility
expenses, and other similar expenses of the Sellers relating to the Sellers'
U.S. wholesale business, the Purchased Stores or the Purchased Assets, if any,
payable after the Effective Time of Closing shall be prorated, whereby the
Sellers shall be responsible for that portion of the prorated expenses accrued
for the period ending as of the Effective Time of Closing, and Buyer shall be
responsible for that portion of the prorated expenses attributable to the period
beginning as of the Effective Time of Closing. Such prorated expenses shall be
settled between the parties promptly after the determination from time to time
of such prorated expenses.
3.11 Transaction Taxes. All federal, state and local sales,
transfer, gains, excise, value-added or other similar taxes, including, without
limitation, all state and local taxes in connection with the transfer of the
Purchased Assets, and all recording and filing fees (collectively, "Transaction
Taxes"), that may be imposed by reason of the sale, transfer, assignment and
delivery of the Purchased Assets, and are not exempt under section 1146(c) of
the Bankruptcy Code, shall be paid one half by the Buyer and one half by the
Sellers. The Buyer and the Sellers agree to cooperate to determine the amount of
Transaction Taxes payable in connection with the transactions contemplated under
this Agreement. The Sellers agree to assist the Buyer reasonably in the
preparation and filing of any and all required returns for or with respect to
such Transaction Taxes with any and all appropriate taxing authorities.
3.12 Risk of Loss. Risk of loss with respect to the Purchased Assets
shall remain with Sellers until the Effective Time of Closing and shall pass to
Buyer upon the Effective Time of Closing. In the event of any loss or damage to
the tangible Purchased Assets prior to the Closing, the Sellers shall use
commercially reasonable efforts to apply any proceeds received by the Sellers
under the Existing Insurance Policies in respect of such loss or damage to
repair or replace the damaged tangible Purchased Assets.
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3.13 Employee Matters.
(a) Within forty five (45) days after the filing of the
Bankruptcy Case, the Buyer shall provide the Sellers with a list of all
employees of the Sellers to whom the Buyer or any of its Affiliates intends to
offer employment, and the Buyer or any of its Affiliates shall promptly
thereafter make offers of employment to such employees. Prior to the delivery of
such list, if requested by the Buyer and as soon as practicable thereafter,
Sellers shall provide accrued vacation benefit information regarding any
employees identified by Buyer for use by Buyer and its Affiliates in determining
whether to make offers of employment to such persons. Any such offer of
employment by the Buyer or any of its Affiliates shall be made for employment
commencing on the Closing Date and shall be, at a minimum, consistent with the
Buyer's standard compensation arrangements other than the Buyer's defined
benefit plans. On the Closing Date, the Buyer shall provide the Sellers with a
complete list of all employees of the Sellers who shall be (or have been) hired
by the Buyer or any of its Affiliates as of the Closing Date (any such employee
shall be referred to herein as a "Transferred Employee"). In the event that
neither the Buyer nor any of its Affiliates makes an offer of employment to any
employee of a Seller identified by the Buyer on the list described in the first
sentence of this Section 3.13(a) (provided that this sentence shall not apply to
any employee identified by the Buyer on such list who does not accept the offer
of employment of Buyer or any of its Affiliates), then the Buyer shall promptly
reimburse the Sellers for any retention bonus or related payment that is due to
any such employee upon the consummation of the transactions contemplated by this
Agreement. Transferred Employees shall be employed on an at will basis, and no
provision of this Agreement shall be construed as providing to such Transferred
Employees a guarantee of continued employment. The Buyer shall not be
responsible for any liabilities and obligations with respect to the Transferred
Employees or any other employee of the Sellers other than (x) in accordance with
Section 1.6 hereof; (y) in accordance with Section 3.1 hereof or (z) in
accordance with applicable Laws. Nothing in this Section 3.13 or elsewhere in
this Agreement shall be deemed to make any employee of the Sellers a third party
beneficiary of this Agreement.
(b) For a period of 180 days after the Closing Date, or in the
event that this Agreement is terminated prior to the consummation of the
transactions contemplated hereby, for a period of one (1) year following such
termination, the Buyer shall not, and shall not permit any of its Affiliates,
directly or indirectly, to solicit or employ any of the employees of a Seller
who are not Transferred Employees without the prior written consent of
Florsheim; provided, however, that nothing contained herein shall prohibit the
Buyer from generally advertising for personnel, not specifically targeting any
employees of the Sellers or their Affiliates, and employing employees of the
Sellers or their Affiliates who respond to such general personnel
advertisements. If, within 180 days after the Closing Date and except as
permitted by the preceding sentence, the Buyer hires an employee of a Seller who
is not a Transferred Employee, the Buyer shall promptly notify Florsheim and
reimburse the Sellers for any amounts that the Sellers are required to pay in
connection with the termination of such employee and, for any such employee who
is a party to a written employment agreement, assume all obligations that accrue
from and after the Closing Date under such employment agreement and reimburse
the Sellers for any damages arising from the Sellers' rejection of such
employment agreement.
3.14 Access to Records. After the Closing Date, each party shall
permit the other parties, and such other parties' attorneys, accountants, agents
and designees, such access to,
15
and right to copy, all books of account, papers and records (including the
Records), as the requesting party may reasonably deem necessary or desirable.
Any such examination shall be at the expense of the requesting party, shall be
performed during normal business hours at the place where such Records are
regularly maintained by the party from which access is requested and shall not
unreasonably interfere with the normal business activities of such party. Each
party shall notify the others at any time within the five (5) year period after
the Closing Date if it intends to destroy any or all of the books of account,
papers and records described above, and such other parties shall have the right
to review and remove any of such books of account, papers and records at their
own expense.
3.15 Effective Time of Closing. The parties agree that, the
transactions described in this Agreement shall be deemed effective as of 12:01
A.M., Eastern Time, on the Closing Date (the "Effective Time of Closing").
3.16 Pacific Rim Assets; Other International Assets.
(a) Florsheim and Florsheim Pacific Limited, a Hong Kong
corporation and a wholly owned subsidiary of Florsheim ("Florsheim Pacific")
shall have the option (the "Pacific Rim Option") to sell to Buyer and, if
Florsheim and Florsheim Pacific so elect, Buyer irrevocably agrees to purchase
from Florsheim Pacific, substantially all of the assets of Florsheim Pacific,
and the Buyer shall assume substantially all of the operating liabilities of
Florsheim Pacific (collectively, the "Pacific Rim Assets and Liabilities"), all
on the terms and subject to the conditions provided in the Pacific Rim Asset
Purchase Agreement (the "Pacific Rim Asset Purchase Agreement") to be entered
into no later than the commencement of the hearing before the Bankruptcy Court
on the Procedures Order (each such term as defined below). The purchase price
for the Pacific Rim Assets and Liabilities shall be $1,000,000, subject to the
following adjustments: (i) such purchase price shall be subject to an upward or
downward dollar for dollar adjustment if, as of the Closing Date, the net
working capital as defined under GAAP (but excluding cash and cash equivalents
and intercompany accounts), associated with the Pacific Rim Assets and
Liabilities is greater or less than such net working capital based on the
Sellers' September 29, 2001 balance sheet; and (ii) such purchase price also may
be subject to other adjustments agreed upon and described in the Pacific Rim
Asset Purchase Agreement. The Pacific Rim Option shall be exercised by Florsheim
and Florsheim Pacific delivering written notice to the Buyer on or before the
date which is the earliest of: (A) seventy (70) days after the date of this
Agreement, (B) five (5) Business Days prior to the date of the hearing to obtain
the Sale Order (as defined in Section 3.19(e) hereof) and (C) ten (10) Business
Days prior to the Closing Date.
(b) If Florsheim and Florsheim Pacific do not exercise the
Pacific Rim Option as provided above and instead desire to sell all or
substantially all of the Pacific Rim Assets and Liabilities to one or more third
parties, or if Florsheim and Florsheim Australia Limited, an Australian
corporation (the "Australian Subsidiary" and together with Florsheim, the
"Australian Sellers"), desire to sell all or substantially all of the assets of
the Australian Subsidiary to one or more third parties, such third parties must
satisfy the following criteria and must otherwise be reasonably acceptable to
the Buyer:
16
(i) Such third parties shall be financially sound and
reasonably experienced with operating a business of the kind consistent with the
positioning of the business in the past;
(ii) In light of such reasonable experience, such third
parties are unlikely to denigrate the Trademarks to be licensed to them by the
Buyer as provided below; and
(iii) Such third parties shall provide expectations of a
financially reasonable royalty stream equal to not less than five percent of
their net wholesale sales and shall have committed to reasonable minimum royalty
levels.
(a "Qualifying Buyer"). Buyer hereby agrees to enter into a license agreement
with any Qualifying Buyer for use of the Trademarks in form and substance
reasonably satisfactory to the Buyer and the Qualifying Buyer. If the Australian
Sellers elect to liquidate the Australian Assets, Buyer hereby agrees to enter
into one or more license agreements with the Australian Sellers or one or more
third party buyers of such assets each in form and substance reasonably
satisfactory to the Buyer and such other parties for the limited purpose of
liquidating the Australian Assets. After the Closing, to the extent that the
Australian Assets have not been sold or liquidated in accordance with this
Section 3.16, the parties agree to maintain the existing license agreement
between Florsheim and the Australian Subsidiary on the same terms and conditions
as of the date hereof.
(c) Florsheim, Florsheim Canada, Inc., an Ontario corporation,
Florsheim Europe S.R.L., an Italian corporation, Florsheim S.A. de C.V., a
Mexican corporation, Florsheim B.V., a Netherlands corporation, and Florsheim
France, SARL, a French corporation, (the foregoing entities, excluding
Florsheim, are hereinafter referred to as the "European Sellers") shall sell to
the Buyer and the Buyer will purchase from them, substantially all of the assets
of the European Sellers, and the Buyer shall assume substantially all of the
operating liabilities of the European Sellers (collectively, the "European
Assets and Liabilities"), all as provided in one or more International Asset
Purchase Agreements (referred to herein collectively as the "International Asset
Purchase Agreement") to be entered into no later than the commencement of the
hearing before the Bankruptcy Court on the Procedures Order (each such term as
defined below). The purchase price for the European Assets and Liabilities shall
be $1,500,000, subject to the following adjustments: (i) such purchase price
shall be subject to an upward or downward dollar for dollar adjustment if, as of
the Closing Date, the net working capital as defined under GAAP (but excluding
cash and cash equivalents and intercompany accounts), associated with the
European Assets and Liabilities is greater or less than such net working capital
based on the Sellers' September 29, 2001 balance sheet; and (ii) such purchase
price also may be subject to other adjustments agreed upon and described in the
International Asset Purchase Agreement.
3.17 Florsheim 401(k) Plan Assumption. Not later than fifteen (15)
days prior to the Closing Date, Florsheim shall deliver written notice to the
Buyer of Florsheim's determination of whether, in its sole discretion and
consistent with applicable Law and the exercise of its fiduciary duties on
behalf of participants in the Florsheim and Affiliates 401(k) Plan (the
"Florsheim 401(k) Plan"), Florsheim desires to assign the Florsheim 401(k) Plan
to the
17
Buyer. If Florsheim notifies the Buyer of its desire to make such assignment,
not later than sixty (60) days after deliver of such written notice, Buyer shall
deliver written notice to Florsheim of Buyer's election whether or not to accept
the assignment of the Florsheim 401(k) Plan. If Buyer elects to accept such
assignment, Florsheim shall assign to Buyer, all of the rights, responsibilities
and obligations of Florsheim and its Affiliates as sponsor of the Florsheim
401(k) Plan and Buyer shall assume all of the liabilities and obligations of
Florsheim and its Affiliates under the Florsheim 401(k) Plan. If Buyer elects to
accept the assignment of the Plan, Buyer and Florsheim shall take such steps as
may reasonably be required to effect such assignment and assumption and, upon
consummation of such assignment and assumption, Buyer shall pay Florsheim
$1,000,000 by wire transfer of immediately available funds.
3.18 Purchased Equipment. Buyer shall inform Florsheim of the
Purchased Equipment it desires to purchase from the Sellers hereunder by
delivering written notice to Florsheim no later than twenty one (21) days after
the date of this Agreement. Buyer and Florsheim shall mutually agree as to the
reasonableness of the items of Purchased Equipment and the fair market value
thereof to be included in the Purchase Price as contemplated by Section 1.41(b);
provided, however, that the Purchased Equipment shall not include items
reasonably required by the Sellers to wind up its businesses after the Closing.
3.19 Bankruptcy Matters. The Sellers intend to file voluntary
petitions under Chapter 11 of the Bankruptcy Code (collectively, the "Bankruptcy
Case") before the United States Bankruptcy Court for the Northern District of
Illinois (the "Bankruptcy Court"). In light of the Bankruptcy Case of the
Sellers, the following are requirements of the consummation of the transactions
contemplated by this Agreement; and time is of the essence with respect to all
time deadlines in such requirements unless and except to the extent that Buyer
agrees in writing to extend any such deadline for the Sellers to perform:
(a) The Bankruptcy Case shall be filed with the Bankruptcy
Court on or before March 4, 2002, which date the Sellers may extend for an
additional period of up to fifteen (15) days.
(b) On or before five (5) calendar days after the filing date
of the Bankruptcy Case, the Sellers shall file in the Bankruptcy Case a motion
to (i) approve this Agreement and the consummation of the transactions
contemplated hereby under Bankruptcy Code ss.363 and any and all other
applicable bankruptcy statutes and rules of procedure; and (ii) approve
procedures for competing bids regarding this Agreement and the consummation of
the transactions contemplated hereby and to set a final hearing for approval of
this Agreement and the consummation of the transactions contemplated hereby (the
"Bankruptcy Motion"). The Bankruptcy Motion shall be in form and content
satisfactory to Buyer and the Sellers and drafts thereof must be provided to
Buyer for review and comments by Buyer's counsel and approved by Buyer no later
than the filing date of the Bankruptcy Case.
(c) The Sellers shall use best efforts, on or before thirty
five (35) calendar days after the filing date of the Bankruptcy Case, to obtain
the Bankruptcy Court's entry of an order (the "Procedures Order"), approving the
procedures for competing bids in the Bankruptcy Motion and setting a final
hearing for approval of the this Agreement and the consummation of the
transactions contemplated hereby. The Procedures Order entered by the
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Bankruptcy Court must be in form and content satisfactory to both the Sellers
and the Buyer and must establish the procedures governing the submission of any
competing bid for the purchase of the Purchased Assets and the assumption of the
Assumed Liabilities and the conduct of an auction if any such competing bid is
submitted, including, without limitation, a provision for initial and subsequent
bidding increments that the Sellers and the Buyer mutually approve.
(d) The Sellers shall use best efforts, on or before seventy
(70) calendar days after the filing date of the Bankruptcy Case, to obtain the
Bankruptcy Court's entry of an order (the "Sale Order") approving this Agreement
and the consummation of the transactions contemplated hereby. Among other
things, the Sale Order must adjudicate, under Bankruptcy Code ss.363(f) and to
the full extent allowed by that statute, that the sale of the Purchased Assets
to Buyer is free and clear of all Liens and adverse interests of any kind that
can be extinguished as to the Purchased Assets in accordance with Bankruptcy
Code ss.363(f); and such Sale Order must further adjudicate that Buyer is a good
faith purchaser of the Purchased Assets entitled to all of the protections of
Bankruptcy Code ss. 363(m). The Sale Order entered by the Bankruptcy Court must
be in form and content satisfactory to the Buyer and the Sellers.
(e) The Bankruptcy Motion shall request, and the Sellers shall
use best efforts to obtain the Bankruptcy Court's adjudications in the
Procedures Order, that Buyer shall receive full cash reimbursement from the
Sellers of all actual costs and fees (including reasonable attorneys' fees)
incurred by Buyer and any professionals retained by Buyer in negotiating,
documenting, investigating and obtaining Bankruptcy Court approval of this
Agreement and the consummation of the transactions contemplated hereby, if Buyer
is not the successful bidder for the Purchased Assets at the hearing scheduled
by the Bankruptcy Court to approve this Agreement (the "Sale Hearing"), or if
the transactions contemplated by this Agreement do not close as a result of a
material breach by the Sellers under this Agreement, provided that Buyer is not
then in material breach of this Agreement, subject to a maximum amount of
$375,000.
(f) The Sellers shall use best efforts to obtain the
Bankruptcy Court's adjudication in the Procedures Order that Buyer shall be paid
by the Sellers the amount of $875,000.00 in cash (the "Break-Up Fee") in
addition to the costs and fees described in subparagraph (e) above, if Buyer is
not the successful bidder for the Purchased Assets at the Sale Hearing, or if
the transactions contemplated by this Agreement do not close as a result of
either a material breach by the Sellers under this Agreement or a failure by
Sellers to satisfy a material obligation under this Agreement that is within
Sellers' control, provided that Buyer is not then in material breach of this
Agreement. Such Break-Up Fee shall be, and is, in recognition of the fact that
any competitive bidder appearing and bidding more than Buyer will have been
brought to the bidding process at the level of the ultimate successful bid
because of this Agreement. The Sellers also shall obtain binding commitments
from their pre-petition bank group to use their commercially reasonable efforts
to support the Break-Up Fee.
(g) The Bankruptcy Motion shall request, and the Sellers shall
use best efforts to obtain the Bankruptcy Court's adjudications in the Sale
Order, pursuant to Bankruptcy Code xx.xx. 363 and 365, for the assumption by the
Sellers and assignment to Buyer of the Purchased Leases and the Purchased
Contracts, provided that the Purchase Price, as provided in
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Section 1.41 hereof, shall be reduced by the amount of the Cure Costs, as
provided in Section 1.15 hereof.
3.20 Financing Commitments. The Buyer has previously delivered to
the Sellers written commitments for satisfactory senior debt financing from
financial institutions acceptable to Buyer and sufficient to consummate the
transactions contemplated by this Agreement (the "Commitments").
3.21 Purchase Orders. From and after the date of this Agreement and
prior to the Closing Date, the Sellers shall, prior to the execution thereof,
provide the Buyer with a copy of any purchase order for inventory for the
Sellers' U.S. wholesale business pursuant to which delivery is expected to occur
after the Closing Date. Within two (2) Business Days after the date on which the
Sellers deliver to the Buyer a copy of any such purchase order, the Buyer shall
notify the Sellers of any objection the Buyer may have to the purchase order. If
the Buyer does not so object within such two (2) Business Day period, the
Sellers then execute and deliver the purchase order and the inventory is not
delivered prior to the Closing Date, the purchase order shall be deemed a
Purchased Contract hereunder and any liabilities and obligations arising from
such purchase order shall be Assumed Liabilities in accordance with Section
1.6(b). If the Buyer does so object within such two (2) Business Day period and
the Buyer and the Sellers cannot agree to changes to such purchase order within
a reasonable time, such purchase order, if then executed and delivered by the
Sellers, shall be deemed a Retained Asset hereunder. With respect to any letters
of credit provided by or on behalf of the Sellers in connection with purchase
orders that are Purchased Contracts on the Closing Date, (i) Buyer shall replace
any such letter of credit with a replacement letter of credit procured by the
Buyer and acceptable to the supplier of the purchased goods or (ii) the Buyer
will cash collateralize 105% of the face amount of the letter of credit issued
on behalf of the Sellers with the issuing institution.
3.22 Use of Name. After the Closing, promptly following the
expiration of the license period with respect to the Trademarks set forth in the
Transition Services Agreement, the Sellers shall take such measures as may be
necessary or appropriate to change their names to names substantially dissimilar
to "Florsheim"; provided, however, that the Sellers may continue to use their
names as of the date hereof in the Bankruptcy Case.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to
the Buyer that:
4.1 Organization; Business.
(a) Each Seller is a corporation duly and validly organized
and existing and in good standing under the Laws of the jurisdiction specified
in the Disclosure Schedule and is qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where the ownership or
leasing of property by it or the conduct of its business requires qualification
as a foreign corporation. The Disclosure Schedule contains a list of all such
jurisdictions in which each Seller is qualified to do business.
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(b) Each Seller has full corporate power and authority
necessary to carry on its business as it is now conducted and to own, lease and
operate its assets and properties.
(c) Each Seller owns or has the right to use all property,
real or personal, tangible or intangible, which is necessary for the operation
of its U.S. wholesale business, the Purchased Stores (taken as a whole) and the
Purchased Assets as currently conducted.
(d) Each Seller other than Florsheim is a direct or indirect
wholly-owned subsidiary of Florsheim.
4.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement and each of the documents and instruments required
by this Agreement to be executed and delivered by any Seller are within the
corporate power of such Seller and have been duly authorized by all necessary
corporate action by such Seller. This Agreement is, and the other documents and
instruments required by this Agreement to be executed and delivered by any
Seller or Sellers will be, when executed and delivered by the Seller or Sellers,
the valid and binding obligations of the respective Sellers, enforceable against
each such Seller in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws generally affecting the rights of
creditors and subject to general equity principles.
4.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement and the other documents and instruments to be
executed and delivered by the Sellers (or any of them) pursuant to this
Agreement and the consummation by the Sellers of the transactions contemplated
hereby or thereby do not and will not:
(a) conflict with, violate, or constitute a default (or an
event which, with notice or the passage of time, or both, would constitute a
default) under, any Law, the Certificate of Incorporation or Bylaws (or other
charter documents) of any Seller, or any Purchased Contract or Purchased Lease
except as may be caused by the filing of the Bankruptcy Case; or
(b) result in the creation of any Lien (except any Permitted
Lien) with respect to any of the Purchased Assets.
4.4 Assets.
(a) Except as set forth in the Disclosure Schedule, each
Seller owns and will convey to Buyer good and marketable title to the Purchased
Assets owned by such Seller free and clear of any and all Liens except the
Assumed Liabilities and the Permitted Liens. Except as set forth in the
Disclosure Schedule, all of Seller's tangible assets included in the Purchased
Assets are physically located in a Purchased Store, the Sellers' warehouse
located in Jefferson City, Missouri or Florsheim's headquarters located at 000
X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx. Except with respect to the Purchased
Leases or otherwise as set forth in the Disclosure Schedule, none of the
Purchased Assets is leased, rented, licensed or otherwise not owned by the
Sellers.
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(b) Except as set forth in the Disclosure Schedule and except
for the Retained Assets, the Purchased Assets include all of the material assets
and properties owned or used by the Sellers which are reasonably necessary for
the operation of Sellers' U.S. wholesale business or the Purchased Stores as
currently conducted. The "Inventory of Agreements" previously provided to the
Buyer, as supplemented by Sellers and annexed hereto as EXHIBIT 10, is a true,
correct and complete list of all material contracts of the Sellers other than
the Purchased Leases.
(c) When used in this Agreement, the term "Permitted Liens"
means the Liens so described in EXHIBIT 11 hereto and no others.
4.5 Litigation. Except as set forth in the Disclosure Schedule, (a)
there is not now any litigation, suit, arbitration, proceeding or action of any
kind pending or, to the Knowledge of Sellers, proposed or threatened, or, to the
Knowledge of Sellers, any governmental investigation, against or relating to any
Seller that, if adversely determined, would reasonably be expected to adversely
affect the Purchased Assets, Sellers' U.S. wholesale business or the Purchased
Stores by an amount of $100,000 or more; and (b) there are no actions, suits or
proceedings pending or, to the Knowledge of Sellers, proposed or threatened,
against any Seller by any Person which would prevent or materially impair the
ability of the Sellers to consummate the transactions contemplated by this
Agreement or which question or affect the legality or validity of the
transactions contemplated by this Agreement.
4.6 Financial Information.
(a) The Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis and fairly present in all material
respects the consolidated financial position of Florsheim and its subsidiaries
as of the dates thereof and the results of the operations and changes in
financial position for the periods then ended, subject, in the case of the
interim financial statements, to customary year-end and audit adjustments and
any other adjustments described therein and the absence of footnotes in such
interim financial statements.
(b) The Financial Information of Sellers (other than the
Financial Statements) that Sellers have provided to Buyer prior to the date
hereof: (i) is correct and complete in all material respects; and (ii) is
maintained in a manner consistent with past practice.
4.7 Absence of Certain Changes. Except as set forth in the
Disclosure Schedule, since September 29, 2001, the Sellers have operated the
Purchased Assets, the Sellers' U.S. wholesale business and the Purchased Stores
in the ordinary course of business consistent with past practice and there has
not been any:
(a) damage, destruction or loss which has materially and
adversely affected the Purchased Assets or the results of operation of Sellers'
U.S. wholesale business or any damage, destruction or loss which makes any
Purchased Store substantially unusable (whether or not covered by insurance);
(b) transactions consummated by Sellers involving the
Purchased Assets, the Sellers' U.S. wholesale business or the Purchased Stores
other than in the ordinary course of business consistent with past practice;
22
(c) material increase in the level or rate of compensation of
any Store Employee other than in the ordinary course of business consistent with
past practice;
(d) purchase, sale or other disposition, in one or more
related transactions, of assets or properties included in the Purchased Assets,
the Sellers' U.S. wholesale business or a Purchased Store for consideration in
excess of $250,000, other than purchases, sales or other dispositions in the
ordinary course of business;
(e) waiver or release in writing or, to the Knowledge of
Sellers, any oral waiver or release, of any material rights or claims associated
with the Purchased Assets, the Sellers' U.S. wholesale business or, taken as a
whole, the Purchased Stores;
(f) authorization by any Seller of the cancellation or
compromise of any debts owed to any Seller and payable after the Closing by a
customer of the Sellers' U.S. wholesale business that exceed $10,000 for any
such wholesale customer;
(g) grant of credit or price concessions to any Major Customer
on terms or in amounts materially more favorable than those which have been
extended to such customer in the past twelve months or grant of such credit or
price concessions to any other U.S. wholesale customer which, taken together,
are materially adverse to Sellers' U.S. wholesale business, except, in either
case, as reflected in the Financial Statements;
(h) executory purchase commitments related to the Purchased
Assets, the Sellers' U.S. wholesale business or a Purchased Store which, taken
together, are materially in excess of Sellers' historical business requirements,
including with respect to operating inventories, or at prices materially higher
than current market prices; or
(i) any termination or material disruption in any of Sellers'
business relationships with any Major Customer. The Disclosure Schedule sets
forth the amount of sales, on a monthly basis, by the Sellers to each Major
Customer during the Sellers' fiscal year ended December 29, 2001.
4.8 Store Assets. Except as set forth in the Disclosure Schedule,
for each Purchased Store, the Store Assets, taken as a whole, are in good
operating condition and repair for the purposes for which they are used by the
Sellers consistent with past practice, reasonable wear and tear excepted.
4.9 Purchased Contracts. The Purchased Contracts include all
domestic and international licenses of the Trademarks owned or licensed by the
Sellers. Florsheim has delivered or made available true, correct and complete
copies of all Purchased Contracts to the Buyer.
4.10 Performance of Purchased Contracts. The Sellers and, to the
Knowledge of Sellers, each other party to each material Purchased Contract, have
fully performed each material term, covenant and condition of each such contract
which is to be performed by them at or before the date hereof; provided, that
all Purchased Contracts marked with an asterisk (*) on EXHIBIT 4 shall be deemed
to be material Purchased Contracts for the purpose of this Section 4.10. Except
with respect to the filing of the Bankruptcy Case, each material Purchased
Contract
23
is in full force and effect and in all material respects constitutes the legal
and binding obligation of each Seller that is a party thereto, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws generally affecting the rights of
creditors and subject to general equity principles.
4.11 Intentionally Omitted.
4.12 No Violation of Law. Except as set forth in the Disclosure
Schedule, the Purchased Assets, the Sellers' U.S. wholesale business and the
Purchased Stores do not violate or conflict in any material respect with any Law
that is material to the operation thereof in the ordinary course of business
consistent with past practice. To the Knowledge of Sellers, the Purchased
Assets, the Sellers' U.S. wholesale business and the Purchased Stores are not
currently the subject of an inspection or inquiry regarding violations or
alleged violations of any Law by any federal, state, provincial, local or other
governmental agency.
4.13 Brokers. Except for fees payable to Financo Inc., which shall
be the sole responsibility of the Sellers, no Seller has incurred any broker's,
finder's or any similar fee in connection with the transactions contemplated by
this Agreement.
4.14 Taxes. There are no tax Liens upon any of the Purchased Assets
except Liens for current taxes not yet due and payable.
4.15 Purchased Stores.
(a) The Purchased Stores: (i) to the Knowledge of Sellers, are
not subject to any leases or tenancies of any kind (except that of the
applicable Seller); (ii) are not in the possession of any adverse possessors;
(iii) are used in a manner which is consistent with applicable Law; (iv) are
served by water, sewer, electrical, telephone, drainage and other utilities
required to operate the Purchased Stores in the ordinary course of business
consistent with past practice; and (v) require no material work or improvement
to be brought into compliance with any material applicable Law.
(b) Except as set forth in the Disclosure Schedule, to the
Knowledge of Sellers, there is no: (i) planned or contemplated public
improvements which may result in material special assessments against the
Sellers relating to the Purchased Stores or which may adversely affect the
availability of utility service to the Purchased Stores or (ii) contemplated
material increase in the real estate taxes payable by the Sellers pursuant to
the Purchased Leases.
4.16 Consents; Approvals. Except the approval of the Bankruptcy
Court and with respect to any required HSR filing, no permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any governmental or regulatory authority or any other Person is required
in connection with the execution, delivery and performance of this Agreement by
the Sellers.
4.17 No Pending Acquisitions. Except for this Agreement, no Seller
is a party to or bound by any agreement to effect an Acquisition.
24
4.18 Labor Matters. There is no pending or, to the Knowledge of
Sellers, threatened labor dispute, strike or work stoppage related to Sellers'
U.S. wholesale business or the Purchased Stores. With respect to the employees
of the Sellers employed at the Purchased Stores (the "Store Employees"), (i)
there is not now pending or, to the Knowledge of Sellers, threatened, any charge
or complaint against any Seller by or before the National Labor Relations Board
and (ii) except as set forth on the Disclosure Schedule, to the Knowledge of
Sellers, no union organizing activities are in process or contemplated and no
petitions have been filed for union organization or representation of employees
of any Seller not presently organized.
4.19 Permits. The Disclosure Schedule lists all of the Existing
Permits that are material to the operation of Sellers' U.S. wholesale business
and the Purchased Stores (the "Material Permits"). The Existing Permits
constitute all material permits, licenses, approvals, qualifications,
permissions and governmental authorizations which are required for the operation
of Sellers' U.S. wholesale business and the Purchased Stores as currently
conducted. Each of the Material Permits is in full force and effect and the
applicable Seller is in compliance with all obligations, restrictions or
requirements thereof. True and accurate copies of the Material Permits have been
delivered or made available to Buyer.
4.20 Inventory. The Inventory is in all material respects
merchantable and useable or resalable in the ordinary course of the Sellers'
business consistent with past practice of the Sellers, except for Inventory
identified as damaged or worn on the Sellers' SAP operating system consistent
with the Sellers' past practices.
4.21 Information Assets.
(a) The Disclosure Schedule sets forth a list of all of the
United States, Australian, Canadian, European and Pacific rim Trademark
registrations and applications maintained by the Sellers and all United States,
Australian, Canadian, European, Pacific rim issued patents and patent
applications maintained by the Sellers, included in the Purchased Assets (the
"Intellectual Property"), and other Trademark registrations and applications,
included in the Purchased Assets, and other issued patents and patent
applications, and U.S. copyright registrations, in each case owned by the
Sellers. To the Knowledge of Sellers, all of such Intellectual Property
registrations are valid and subsisting, all pending applications for such
Intellectual Property are live and all maintenance, renewal and other fees
relating to such registrations or applications are current, in each case, in all
material respects. As defined herein, Intellectual Property includes all
Trademark registrations and applications that Sellers currently use.
(b) Except as set forth in the Disclosure Schedule, each
Seller owns the entire right, title and interest in and to each item of
Intellectual Property which it purports to own. Each Seller owns or possesses
adequate licenses or other rights to use all other items of Information Assets
used by such Seller. No Seller has received written notice alleging that it is
infringing on the intellectual property rights of others. There are no material
claims, demands or proceedings instituted or pending or, to the Knowledge of
Sellers, threatened by any Person contesting or challenging the right of any
Seller to use any Information Assets which, if adversely determined, would be
materially adverse to the Sellers' U.S. wholesale business, the Purchased Assets
or the Purchased Stores. To the Knowledge of Sellers, there are no material
25
registered patents, trademarks, trade names or copyrights owned by a Person
other than the Sellers which any Seller is using without license to do so. To
the Knowledge of Sellers, no Person is infringing in any material respect on any
item of Information Assets which is material to the operation of the Sellers'
U.S. wholesale business, the Purchased Assets or the Purchased Stores in the
ordinary course of business consistent with past practice.
4.22 Environmental Protection. Except as set forth on the Disclosure
Schedule,
(a) The use and operation of the Sellers' U.S. wholesale
business, the Purchased Stores and, to the Knowledge of Sellers, the buildings
in which the Purchased Stores are located is, and at all times has been, in
compliance with, and has not been and is not in violation of and has not created
any liability of the Sellers under, any Environmental Law.
(b) No Seller has received any written notice that any of the
Purchased Stores has been identified on any current or proposed (i) National
Priorities List under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list
arising from a state or local law similar to CERCLA.
(c) No Seller has received any written notice of any claims or
Liens resulting from any Environmental Liabilities or arising under or pursuant
to any Environmental Law, with respect to or affecting the Sellers' U.S.
wholesale business, any of the Purchased Stores or, to the Knowledge of Sellers,
the buildings in which the Purchased Stores are located, or otherwise affecting
the use and operation of the Purchased Assets.
(d) No Seller has received any written citation, directive,
inquiry, notice, order, summons, warning, or other communication in writing
during the last three (3) years that relates to any alleged, actual, or
potential violation or failure of the Sellers to comply with any Environmental
Law, or of any alleged, actual, or potential obligation of the Sellers to
undertake or bear the cost of any Environmental Liabilities, with respect to any
of the Purchased Stores or with respect to the use and operation of the
Purchased Assets.
(e) As used in this Agreement:
(i) "CERCLA" shall mean the federal Comprehensive
Environmental Response, Compensation and Liability Act, as the same may have
been amended.
(ii) "CERCLIS" shall mean the Comprehensive
Environmental Response Compensation and Liability Inventory System established
pursuant to CERCLA.
(iii) "Environmental Law" shall mean any Law of, any
permit from, or any consent decree or agreement with, any federal, state,
regional, special district or local governmental authority regulating, relating
to or imposing liability or enforceable standards of conduct relating to
environmental matters or the protection of the environment, including, without
limitation, the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act, CERCLA, any so-called "Superfund" or
"Superlien" Law, the federal Toxic Substances Control Act and any similar state
or local Law.
(iv) "Environmental Liabilities" means any liabilities
arising from or under Environmental Law and consisting of or relating to: (A)
any environmental
26
matters or conditions (including on-site or off-site contamination and
regulation of Hazardous Substances); (B) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, claims,
demands, and remedial action, response, investigation or inspection costs and
expenses arising under Environmental Law; or (C) financial responsibility under
Environmental Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remedial action required
by applicable Environmental Law.
(v) "Hazardous Substance" shall mean any hazardous,
toxic or polluting contaminant, substance or waste, including, without
limitation, any solid waste, toxic substance, hazardous substance, hazardous
material, hazardous chemical, pollutant or hazardous or acutely hazardous waste
defined or qualifying as such in (or for the purposes of) any Environmental Law,
and shall also include (but not be limited to) petroleum (including, without
limitation, crude oil and any fraction thereof), any radioactive material
(including, without limitation, any source and special nuclear by-product
material as defined at 42 U.S.C. ss. 2011 et seq., as amended or hereafter
amended), polychlorinated biphenyls (PCBs) and asbestos in any form or
condition.
4.23 Accounts. All Accounts have arisen from bona fide transactions
by Sellers in the ordinary course of business.
4.24 Customers and Suppliers. The Disclosure Schedule lists the ten
(10) largest customers (the "Major Customers") and the five (5) largest
suppliers (the "Major Suppliers") of the Sellers' U.S. wholesale business taken
as a whole during the Sellers' fiscal year ended December 30, 2000 and for the
period from December 31, 2000 through December 29, 2001 on the basis of the
total dollar amount of sales to customers and purchases from suppliers. Since
September 29, 2001, there has been no termination or material adverse disruption
of the business relationship of any Seller with any Major Customer or Major
Supplier, nor to the Knowledge of Sellers has any Seller received any notice
that any Major Customer or Major Supplier intends to so terminate or materially
disrupt its business relationship.
4.25 Insurance. To the Knowledge of Sellers, the Sellers maintain
casualty insurance with respect to the tangible Store Assets which is adequate
to cover the tangible Store Assets in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers that:
5.1 Organization; Business. The Buyer is a corporation duly and
validly organized and existing and in active status under the Laws of the State
of Wisconsin. The Buyer has full corporate power and authority necessary to
carry on its business as it is now conducted and to own, lease and operate its
assets and properties. The Buyer owns or has the right to use all property, real
or personal, tangible or intangible, which is necessary for the operation of its
business as currently conducted.
27
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by the Buyer and all of the documents and
instruments required by this Agreement to be executed and delivered by the Buyer
are within the corporate power of the Buyer and have been duly authorized by all
necessary corporate action by the Buyer. This Agreement is, and the other
documents and instruments required by this Agreement to be executed and
delivered by the Buyer will be, when executed and delivered by the Buyer, the
valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws generally affecting the rights of creditors and subject to general
equity principles.
5.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement by the Buyer do not and will not conflict with or
violate any Law, the Articles of Incorporation or Bylaws of the Buyer or any
contract or agreement to which the Buyer is a party or by which Buyer may be
bound.
5.4 Brokers. Except for fees to Riverview Financial Group, which
shall be the sole responsibility of the Buyer, the Buyer has not incurred any
broker's, finder's or any similar fee in connection with the transactions
contemplated by this Agreement.
5.5 Consents; Approvals. Except the approval of the Bankruptcy Court
and with respect to any required HSR filing, no permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any governmental or regulatory authority or any other Person is required
in connection with the execution, delivery and performance of this Agreement by
the Buyer.
5.6 Litigation. (a) There is not now any, litigation, suit,
arbitration, proceeding or action of any kind pending or, to the knowledge of
the Buyer, proposed or threatened, or, to the knowledge of the Buyer, any
governmental investigation, against or relating to the Buyer that, if adversely
determined, would reasonably be expected to have a material and adverse on the
Buyer; and (b) there are no actions, suits or proceedings pending or, to the
knowledge of the Buyer, proposed or threatened, against the Buyer by any Person
which would prevent or materially impair the ability of the Buyer to consummate
the transactions contemplated by this Agreement or which question or affect the
legality or validity of the transactions contemplated by this Agreement.
5.7 Financing Commitments. The Commitments shall provide the Buyer
with sufficient funds to pay the Purchase Price in accordance with this
Agreement, and the Buyer otherwise has sufficient funds to satisfy its
obligations under this Agreement. The Buyer does not have any reason to believe
that the Commitments will not be funded at or prior to the Closing. The
Commitments are not subject to due diligence, syndication or participation
conditions.
5.8 Due Diligence. The Buyer has had an opportunity to ask questions
and receive answers from the Sellers and their management regarding the terms
and conditions of the purchase and sale of the Purchased Assets and the Assumed
Liabilities and regarding the business, financial affairs, and other aspects of
the Sellers. Notwithstanding the foregoing, the
28
Sellers acknowledge and agree that no due diligence investigation undertaken by
the Buyer or its representatives shall be deemed to reduce or eliminate the
Buyer's reliance upon the Sellers' representations and warranties made herein.
5.9 No Further Representations. THE BUYER HEREBY ACKNOWLEDGES AND
AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE SELLERS MAKE NO
REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
ANY MATTER RELATING TO THE PURCHASED ASSETS OR THE ASSUMED LIABILITIES,
INCLUDING, WITHOUT LIMITATION, INCOME TO BE DERIVED OR EXPENSES TO BE INCURRED
IN CONNECTION WITH THE PURCHASED ASSETS OR THE ASSUMED LIABILITIES, THE PHYSICAL
CONDITION OF ANY PERSONAL PROPERTY COMPRISING A PART OF THE PURCHASED ASSETS OR
WHICH IS THE SUBJECT OF ANY OTHER LEASE OR CONTRACT TO BE ASSUMED BY THE BUYER
AT THE CLOSING, THE ENVIRONMENTAL CONDITION OF ANY REAL PROPERTY UNDERLYING ANY
OF THE PURCHASED ASSETS WHICH ARE TO BE TRANSFERRED TO THE BUYER AT CLOSING OR
ARE THE SUBJECT OF ANY REAL PROPERTY LEASE TO BE ASSUMED BY THE BUYER AT THE
CLOSING, THE ZONING OF ANY SUCH REAL PROPERTY OR IMPROVEMENTS, THE VALUE OF THE
PURCHASED ASSETS (OR ANY PORTION THEREOF), THE TERMS, AMOUNT, VALIDITY OR
ENFORCEABILITY OF ANY ASSUMED LIABILITIES, THE COLLECTIBILITY OF THE ACCOUNTS,
THE FITNESS OF THE PERSONAL PROPERTY OR ANY OTHER PORTION OF THE PURCHASED
ASSETS FOR ANY PARTICULAR PURPOSE.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing Date
except as contemplated in or caused by the filing of the Bankruptcy Case,
Florsheim shall, and shall cause each Seller to:
6.1 Carry on in Ordinary Course. Subject to Section 3.21 hereof, use
commercially reasonable efforts to carry on its business in the ordinary course
of business consistent with past practice and not make or institute any unusual
methods of purchase, sale, lease, management, accounting or operation that would
be material and adverse to Sellers' U.S. wholesale business or the Purchased
Stores. Nothing in this Section 6.1 shall limit Sellers' discretion with respect
to the Retained Assets or prohibit Sellers from conducting store closing
clearance sales as contemplated by the Transition Services Agreement.
6.2 Use of Purchased Assets. Use commercially reasonable efforts to
use, operate, maintain and repair the Purchased Assets in the ordinary course of
business consistent with past practice.
6.3 No Default. Use commercially reasonable efforts not to do any
act or omit to do any act, or permit any act or omission to act, which will
cause a material breach of any of the Purchased Contracts.
29
6.4 Existing Insurance Policies. Use commercially reasonable efforts
to maintain all of the Existing Insurance Policies in full force and effect.
6.5 Employment Matters. With respect to the Store Employees, not:
(a) grant any increase in the rate of pay of any of such employees except in the
ordinary course of business consistent with past practice or as otherwise
approved by the Bankruptcy Court in connection with any employee retention or
severance plan; or (b) enter into or modify any written employment arrangement
with any of such employees.
6.6 Contracts and Commitments. With respect to the Purchased Assets,
the Sellers' U.S. wholesale business or the Purchased Stores, not, without the
Buyer's prior written consent, enter into any contract or commitment or engage
in any transaction (a) in excess of $100,000 or not in the ordinary course of
business consistent with past practice and (b) not purchase, lease, sell or
dispose of any capital asset included in the Purchased Assets; except, in each
case, as otherwise provided herein or as approved by the Bankruptcy Court.
6.7 Preservation of Relationships. Use commercially reasonable
efforts to preserve intact its business organization related to Sellers' U.S.
wholesale business and the Purchased Stores and preserve the business
relationships of the Major Customers and Major Suppliers.
6.8 Compliance with Laws. Use commercially reasonable efforts to
comply in all material respects with all material Laws applicable to the
Purchased Assets.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
Each and every obligation of the Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following express conditions precedent:
7.1 Compliance with Agreement. The Sellers shall have performed and
complied in all material respects with all of their obligations under this
Agreement which are to be performed or complied with by the Sellers prior to or
on the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Buyer, and the Sellers shall have made
available to the Buyer for examination the originals or true and correct copies
of all such documents the Buyer may reasonably request.
7.3 No Litigation. No suit, action or other proceeding shall be
pending before any court in which (i) the consummation of the transactions
contemplated by this Agreement is restrained or enjoined or (ii) the relief
requested is to restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and such relief has a substantial
likelihood of being granted. No injunction or other order that declares this
30
Agreement invalid or unenforceable or which prevents the consummation of the
transactions hereby shall be in effect.
7.4 Representations and Warranties of the Sellers. The
representations and warranties made by the Sellers in this Agreement shall be
true and correct in all material respects, taken as a whole, as of the Closing
Date with the same force and effect as though said representations and
warranties had been made at such time, except to the extent any representations
and warranties speak as of a specified date, in which case such representations
and warranties shall be true and correct in all material respects as of such
date, and except as would not constitute a Material Adverse Change; provided,
however, that the representations and warranties made by the Sellers in Sections
4.2 and 4.20 of this Agreement shall be true and correct in all material
respects.
7.5 No Material Adverse Change, Etc.. During the period from the
date of this Agreement to the Closing Date there shall not have occurred a
Material Adverse Change.
7.6 Bankruptcy Matters. Each of the bankruptcy matters described in
Section 3.19 hereof shall have been satisfied as provided therein. The Buyer
shall have no obligation to complete the Closing until the Sale Order is a final
and non-appealable order that is not subject to any stay of any kind of its
effectiveness, provided that, in its sole and absolute discretion, the Buyer
shall have the right to complete the Closing so long as the Sale Order is in
full force and effect and is not subject to any stay of any kind.
7.7 Deliveries at Closing. Florsheim, as agent for all of the
Sellers, shall have delivered to the Buyer the following documents, each dated
the Closing Date and properly executed: (a) the Xxxx of Sale; (b) the Inventory
Purchase Agreement; (c) the Transition Services Agreement; (d) the Seller
Closing Certificate; and (e) assignments in recordable form for each Purchased
Lease, for the Information Assets and (if requested by Buyer) for any executory
contracts and other assets, necessary to effect the transfer of the Purchased
Assets to the Buyer.
7.8 Other Deliveries.
(a) Each Seller shall have delivered to the Buyer such
certificates and documents of officers of the Seller and public officials as
shall be reasonably requested by the Buyer to establish the existence of such
Seller and the due authorization of this Agreement and the transactions
contemplated by this Agreement by such Seller.
(b) Florsheim shall have delivered to the Buyer any consent or
other approval required to transfer a Purchased Asset to Buyer. Florsheim shall
also use commercially reasonable efforts to obtain appropriate documents from
its lenders confirming their release of Liens.
7.9 HSR. The waiting period under the Xxxx-Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), if applicable, shall have
expired.
7.10 Other Closings. The transactions contemplated by the
International Asset Purchase Agreement and, if Florsheim and Florsheim Pacific
exercise their option to sell the
31
Pacific Rim Assets and Liabilities as provided herein, the Pacific Rim Asset
Purchase Agreement, shall have been consummated prior to or contemporaneously
with the Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE SELLERS
Each and every obligation of the Sellers to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following express conditions precedent:
8.1 Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement which are to be performed or complied with by it prior to or on the
Closing Date.
8.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Florsheim, as agent for all of the
Sellers, and the Buyer shall have made available to Florsheim for examination
the originals or true and correct copies of all such documents which Florsheim
may reasonably request.
8.3 No Litigation. No suit, action or other proceeding shall be
pending before any court in which (i) the consummation of the transactions
contemplated by this Agreement is restrained or enjoined or (ii) the relief
requested is to restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement and such relief has a substantial
likelihood of being granted. No injunction or other order that declares this
Agreement invalid or unenforceable or which prevents the consummation of the
transactions hereby shall be in effect.
8.4 Representations and Warranties of the Buyer. The representations
and warranties made by the Buyer in this Agreement shall be true and correct in
all material respects, taken as a whole, as of the Closing Date with the same
force and effect as though such representations and warranties had been made at
such time, except to the extent any representations and warranties speak as of a
specified date, in which case such representations and warranties shall be true
and correct in all material respects as of such date.
8.5 Deliveries at Closing. The Buyer shall have delivered to
Florsheim the following documents, each dated the Closing Date and properly
executed: (a) the Buyer Closing Certificate; (b) the Inventory Purchase
Agreement; (c) the Transition Services Agreement; and (d) the Xxxx of Sale.
8.6 Other Documents. The Buyer shall have delivered to Florsheim
such certificates and documents of officers of the Buyer and of public officials
as shall be reasonably requested by Florsheim to establish the existence and
good standing of the Buyer and the due
32
authorization of this Agreement and the transactions contemplated by this
Agreement by the Buyer.
8.7 Delivery of Purchase Price. The Buyer shall have delivered the
Purchase Price to Florsheim, as agent for all of the Sellers. All of the Sellers
acknowledge and agree that it shall be the sole and exclusive responsibility of
Florsheim to deliver to each of them their respective allocated amounts of the
Purchase Price.
8.8 HSR. The waiting period under the HSR Act, if applicable, shall
have expired.
8.9 Bankruptcy Matters. Each of the bankruptcy matters described in
Section 3.19 hereof shall have been satisfied as provided therein.
8.10 Other Closings. The transactions contemplated by the
International Asset Purchase Agreement and, if Florsheim and Florsheim Pacific
exercise their option to sell the Pacific Rim Assets and Liabilities as provided
herein, the Pacific Rim Asset Purchase Agreement, shall have been consummated
prior to or contemporaneously with the Closing.
8.11 Letters of Credit. The Buyer shall have provided replacement
letters of credit or cash collateralized the Sellers' existing letters of credit
in accordance with Section 3.21 hereof.
ARTICLE IX
TERMINATION; MISCELLANEOUS
9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing, as follows:
(a) by mutual written agreement of the Buyer and the Sellers;
(b) by the Buyer if there is a material breach by the Sellers
of any representation or warranty of the Sellers under this Agreement and the
Sellers are unable or shall fail or refuse to cure such breach within twenty
(20) days after notice from the Buyer specifying such breach;
(c) by the Buyer if there is a material breach by the Sellers
of any material covenant of the Sellers under this Agreement or a failure by the
Sellers to satisfy a material obligation under this Agreement that is within the
Sellers' control and the Sellers are unable or shall fail or refuse to cure such
breach or satisfy such obligation within twenty (20) days after notice from the
Buyer specifying such breach or failure;
(d) by the Buyer if, after best efforts of the Sellers, the
matters related to the Bankruptcy Case set forth in Section 3.19 hereof are not
satisfied as described, and as of the dates set forth, in such section;
(e) by the Buyer pursuant to Section 3.2(b) of this Agreement;
33
(f) by the Sellers if there is a material breach by the Buyer
of any representation, warranty or covenant of the Buyer under this Agreement
and the Buyer is unable or shall fail or refuse to cure such breach within
twenty (20) days after notice from the Sellers specifying such breach;
(g) by the Sellers, upon the execution of a definitive
agreement involving a sale of all or substantially all of the Purchased Assets
by the Sellers to a purchaser or purchasers other than the Buyer (an
"Alternative Transaction"); or
(h) by either the Buyer or the Seller if the Closing has not
occurred on or before June 30, 2002.
9.2 Rights on Termination.
(a) If this Agreement is validly terminated pursuant to
Section 9.1 hereof, this Agreement shall forthwith become null and void and have
no effect (other than Sections 9.2, 9.3, 9.6, 9.7, 9.9, 9.10 and 9.11 of this
Agreement which shall survive any such termination), and there shall be no
liability or obligation on the part of any party hereto, or their respective
Affiliates, directors, officers, employees, agents or representatives, with
respect to this Agreement or any document or instrument in connection therewith,
except (i) the liability of a party for its own expenses pursuant to Section
9.6, (ii) any liability provided for in Section 9.2(b) and Section 9.2(c) and
(iii) nothing contained in this Agreement shall relieve any party from any
liability for any material breach prior to such termination of such party's
representations, warranties, covenants or agreements set forth in this
Agreement, except to the extent a fee has been paid pursuant to Section 9.2(b)
or Section 9.2(c) below, in which case such fee shall constitute liquidated
damages and shall be the Buyer's sole remedy for such breach by the Sellers.
(b) If this Agreement is terminated pursuant to Section
9.1(b), Section 9.1(d) (other than a termination by the Buyer pursuant to
Section 9.1(d) based upon its unreasonable failure to be satisfied with either
the Procedures Order or the Sale Order) or Section 9.1(e), unless, in each case,
at the time of such termination there is a material breach by the Buyer of any
representation, warranty or covenant of the Buyer under this Agreement, the
Sellers shall reimburse the Buyer for all actual costs and fees (including
reasonable attorneys' fees) incurred by the Buyer and any professionals retained
by the Buyer in negotiating, documenting, investigating and obtaining Bankruptcy
Court approval of this Agreement and the consummation of the transactions
contemplated hereby subject to a maximum amount of $375,000 (collectively,
"Expense Reimbursement").
(c) If this Agreement is terminated pursuant to Section 9.1(c)
or Section 9.1(g), unless at the time of such termination pursuant to Section
9.1(c) there is a material breach by the Buyer of any representation, warranty
or covenant of the Buyer under this Agreement, the Sellers shall reimburse the
Buyer for all items of Expense Reimbursement and pay to the Buyer an amount
equal to the Break-Up Fee, provided, however, that the Break-Up Fee shall not be
payable in connection with a termination under Section 9.1(g) until the closing
of such Alternative Transaction.
34
9.3 Waiver of Conditions. If any of the conditions set forth in
Article VII of this Agreement have not been satisfied, the Buyer may
nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement and if any of the conditions set forth in Article
VIII of this Agreement have not been satisfied, the Seller may nevertheless
elect to proceed with the consummation of the transactions contemplated by this
Agreement. Any such election to proceed shall be evidenced by a certificate
signed on behalf of the waiving party by an officer of that party.
9.4 Survival of Representations and Warranties. The representations
and warranties of Buyer and the Sellers contained in this Agreement or made
pursuant to this Agreement shall not survive the Closing Date and the Effective
Time of Closing and the consummation of the transactions contemplated by this
Agreement.
9.5 Entire Agreement; Amendment. This Agreement and the documents
referred to in this Agreement and required to be delivered pursuant to this
Agreement constitute the entire agreement among the parties pertaining to the
subject matter of this Agreement, and supersede all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other agreements among
the parties in connection with the subject matter of this Agreement, except as
specifically set forth in this Agreement. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the Buyer and the Sellers. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
9.6 Expenses. Except as otherwise provided herein, whether or not
the transactions contemplated by this Agreement are consummated, each of the
parties to this Agreement shall pay the fees and expenses of its respective
counsel, accountants, brokers, consultants, investment bankers and other experts
incident to the negotiation and preparation of this Agreement and consummation
of the transactions contemplated by this Agreement.
9.7 Governing Law; Venue. This Agreement shall be governed by, and
construed and interpreted in accordance with, the Laws of the State of Illinois,
without regard to the conflicts of laws principles thereof. The parties agree
that, during the period from the filing of the Bankruptcy Case until the date on
which the Bankruptcy Case is closed or dismissed (the "Bankruptcy Period"), the
Bankruptcy Court shall have exclusive jurisdiction to resolve any controversy,
claim or dispute arising out of or relating to this Agreement or any other
agreement entered into in connection herewith, or the breach hereof or thereof.
The parties further agree that, prior to and following the Bankruptcy Period,
any action or proceeding with respect to such controversy, claim or dispute may
be brought against any of the parties exclusively in the United States District
Court for the Northern District of Illinois, and each of the parties hereby
consents to the personal jurisdiction of such court and the Bankruptcy Court
(and to the appropriate appellate courts) in any such action or proceeding and
waives any objection, including, without limitation, any objection to the laying
of venue or on the grounds of forum non conveniens, which any of them may now or
hereafter have to the bringing of such action or proceeding in such respective
jurisdictions. Each party hereby irrevocably consents to the service of process
of any of the aforesaid courts in any such action or proceeding by the mailing
of copies thereof by
35
registered or certified mail, postage prepaid, to the other parties to such
action or proceeding. Each party acknowledges and agrees that any controversy
which may arise under this Agreement is likely to involve complicated and
difficult issues, and therefore each party hereby irrevocably and
unconditionally waives any right such party may have to a trial by jury.
9.8 Assignment. This Agreement shall not be assigned in whole or in
part by any Seller without the prior written consent of Buyer, and it shall not
be assigned in whole or in part by Buyer except: (a) with the prior written
consent of Florsheim; (b) to any subsidiary(ies) or Affiliate(s) of Buyer
provided that any such assignment shall not release Buyer from any of its
obligations set forth herein; or (c) as collateral security, in which case
Sellers shall execute and deliver any acknowledgment of such assignment as may
be reasonably required by Buyer's lender.
9.9 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an officer of a party by personal
delivery or telephonic facsimile transmission or five days after being deposited
in the United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to the Sellers: Florsheim Group Inc.
Attention: Xxxxx X. Xxxxxxxxx, Xx.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax No.: 000-000-0000
with a copy to (which shall not constitute notice):
Financo Inc.
Attention: Xxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: 000-000-0000
with a copy to (which shall not constitute notice):
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Attention: Xxxx X. Xxxxxxxxx, Esq. and
Xxxxxxx X. Xxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: 000-000-0000
If to the Buyer: Weyco Group, Inc.
Attention: Xxxx Xxxxxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Fax No.: 000-000-0000
36
with a copy to (which shall not constitute notice):
Riverview Financial Group
Attention: Xxxxxx Xxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax No.: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx & Xxxxx, LLP
Attention: Xxxxxxx X. Xxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
9.10 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute one and the same Agreement. The Table of
Contents and Article and Section headings in this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
9.11 Interpretation. Unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend to and include
the plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
9.12 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, shall not be affected thereby unless
such invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
9.13 No Reliance. Except for the parties to this Agreement and any
assignees permitted by Section 9.8 of this Agreement: (a) no Person is entitled
to rely on any of the representations, warranties and agreements of the parties
contained in this Agreement; and (b) the parties assume no liability to any
Person because of any reliance on the representations, warranties and agreements
of the parties contained in this Agreement.
9.14 Exhibits and Disclosure Schedule. All capitalized terms used in
any Exhibit to this Agreement or in the Disclosure Schedule shall have the
definitions specified in this Agreement unless otherwise defined therein.
9.15 Income Tax Position. Neither the Buyer nor the Sellers shall
take a position for income tax purposes which is inconsistent with this
Agreement.
9.16 Further Assurances. From time to time after the Closing Date,
upon the reasonable request of and at the sole expense of the Buyer, the Sellers
shall execute and deliver
37
or cause to be executed and delivered such further instruments of conveyance,
assignment and transfer and take such further action as the Buyer may reasonably
request in order to more effectively sell, assign, convey, transfer, reduce to
possession and record title to any of the Purchased Assets. The Sellers agree to
cooperate with the Buyer in all reasonable respects to assure to the Buyer the
continued title to and possession of the Purchased Assets as contemplated by
this Agreement.
[the remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
BUYER: WEYCO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
, Chief Executive Officer
SELLERS: FLORSHEIM GROUP INC.
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
------------------------------------
, Chief Executive Officer
THE FLORSHEIM SHOE STORE COMPANY -
NORTHEAST
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
------------------------------------
, Chief Executive Officer
THE FLORSHEIM SHOE STORE COMPANY - WEST
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
-------------------------------------
, Chief Executive Officer
X.X. X'XXXXX SHOE CO.
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
------------------------------------
, Chief Executive Officer
FLORSHEIM OCCUPATIONAL FOOTWEAR, INC.
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
------------------------------------
, Chief Executive Officer
39
