EXHIBIT 10.01
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: )
)
EDISON BROTHERS STORES, INC., et al., ) Chapter 11
) Case No. 99-529, et seq. (MFW)
)
Debtors. ) Jointly Administered
ASSET PURCHASE AGREEMENT
BY AND AMONG
X. XXXXX, INC. (OR A PERMITTED DESIGNEE(S) THEREOF),
AS PURCHASER,
AND
EDISON BROTHERS STORES, INC.,
EDISON BROTHERS APPAREL STORES, INC., AND
XXXX LTD. BIG & TALL,
AS SELLERS
ASSET PURCHASE AGREEMENT
BY AND AMONG
X. XXXXX, INC. (OR A PERMITTED DESIGNEE(S) THEREOF),
AS PURCHASER,
AND
EDISON BROTHERS STORES, INC.,
EDISON BROTHERS APPAREL STORES, INC.,
AND
XXXX LTD. BIG & TALL,
AS SELLERS
Dated as of April 30, 1999
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is dated as of April 30, 1999, by and
among X. Xxxxx, Inc., a corporation organized and existing under the laws of the
Commonwealth of Massachusetts ("X. Xxxxx"), or such other entity or entities as
shall be designated by X. Xxxxx as permitted hereunder (as more fully defined in
Section 1.1 below, "Purchaser"), and Edison Brothers Stores, Inc. and Edison
Brothers Apparel Stores, Inc., debtors and debtors-in-possession under Chapter
11 Case No. 99-529, et seq. (MFW), jointly administered, in the United States
Bankruptcy Court for the District of Delaware (jointly, "Edison"), and Xxxx Ltd.
Big & Tall, a Canadian corporation ("Xxxx Canada"), and together with Edison,
"Sellers"). In consideration of the mutual covenants, agreements and warranties
herein contained, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
1.1 Specific Definitions. Unless otherwise defined herein,
terms used herein shall have the meanings set forth below:
"Account" or "Accounts" shall have the meaning ascribed thereto in
Section 2.1(b) hereof.
"Accounts Amount" shall have the meaning ascribed thereto in Section
2.1(b) hereof.
"Acquired Assets" shall have the meaning ascribed thereto in Section
2.1 hereof.
"Additional Escrow Amount" shall have the meaning ascribed thereto in
Section 3.2(a) hereof.
"Affiliate Obligations" means Sellers' debt and other obligations and
liabilities to affiliates and stockholders of Sellers, and includes all
interest, fees, costs and similar amounts payable by Sellers in respect thereof.
"Aggregate Retail Price" shall mean the sum of: (i) the aggregate
Retail Price of the Merchandise Inventory on hand at the Closing Date as
calculated in accordance with the methods set forth in Section 3.1 hereof, and
as otherwise provided herein, and (ii) the Gross Rings amount, calculated in
accordance with the methods set forth in Section 3.3(b) hereof.
"Aggregate Retail Price Merchandise Inventory Target" shall mean, as
applicable, the "Aggregate Retail Price Merchandise Inventory Target" for the
respective Business Division identified in Schedule 3.1(a) hereof.
"Agreement" means this Asset Purchase Agreement, including all Exhibits
and Schedules hereto, as it may be amended from time to time in accordance with
its terms.
"Allowed Claim" shall mean (i) if the holder of such claim did not file
proof thereof with the Bankruptcy Court within the applicable period of time
fixed by the Bankruptcy Court pursuant to Rule 3003(c)(3) of the Bankruptcy
Rules, the amount of such claim as of the filing date of the Chapter 11 Cases as
listed in the Sellers' Chapter 11 schedules of assets and liabilities as neither
disputed, contingent or unliquidated; or (ii) if the holder of such claim has
filed proof thereof with the Bankruptcy Court within the applicable period of
time fixed by the Bankruptcy Court pursuant to Rule 3003(c)(3) of the Bankruptcy
Rules, (1) the amount stated in such proof as of the filing date of the Chapter
11 Cases if no objection to such proof of claim was interposed within the
applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules, or
the Bankruptcy Court, or (2) the amount thereof as fixed by a final order of the
Bankruptcy Court if an objection to such proof was interposed within the
applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules, or
the Bankruptcy Court.
"Ancillary Documents" shall have the meaning ascribed thereto in
Section 11.8 hereof.
"Assignment and Assumption" shall mean an Assignment and Assumption of
Leases, Contracts and other Assumed Obligations, in substantially the form
attached hereto as Exhibit 10.2(a), executed and delivered by Purchaser and
Sellers in accordance with Sections 10.2 and 10.3 hereof.
"Assumed Contracts" shall have the meaning ascribed thereto in Section
2.2(b) hereof.
"Assumed Leases" shall have the meaning ascribed thereto in Section
2.2(a) hereof.
"Assumed Lease/Contract Cap" means an amount not to exceed $200,000.00
in the aggregate in respect of amounts required to be paid by Sellers under
section 365(b) of the Bankruptcy Code or otherwise in order to cure any and all
existing defaults under a Store Lease or other Contract as a condition to the
assumption and assignment thereof to Purchaser under this Agreement.
"Assumed Obligations" shall have the meaning ascribed thereto in
Section 2.5 hereof.
"Avoidance Action" or "Avoidance Actions" shall have the meaning
ascribed thereto in Section 2.2(c) hereof.
"Bankruptcy Code" means Title 11, United States Code, sections
101-1330, as same shall be amended from time-to-time.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware, having jurisdiction over Edison and its assets in the
Chapter 11 Cases.
"Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy Procedure
as shall be promulgated by the Supreme Court of the United States, as same shall
be applicable in the Chapter 11 Cases.
"Bill of Sale" shall have the meaning ascribed thereto in Section 10.2
hereof, and shall be in substantially the form attached hereto as Exhibit
10.2(b).
"Bulk Sales Act" shall have the meaning ascribed thereto in Section 3.8
hereof.
"Business" means the United States and Canadian businesses of Sellers
for the sale and distribution of men's big and tall apparel and related
accessories under the tradenames "Xxxx", "Mr. Xxx & Tall" and the other
Intellectual Property, and the "Xxxx By Mail, Ltd." catalogue business.
"Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which the banks in New York City or Toronto, Canada are authorized or
obligated by law or executive order to close.
"Business Division" shall mean, as applicable, the Xxxx Stores business
division or the Xxxx By Mail business division of the Business, as such terms
are used and reflected in Schedule 3.1(a) hereof.
"Business Records" shall have the meaning ascribed thereto in Section
2.1(g) hereof.
"Canadian Assignment Costs" shall have the meaning ascribed thereto in
Section 8.11 hereof.
"Chapter 11 Cases" means the pending cases commenced by Edison and certain
affiliates on March 9, 1999 under Chapter 11 of the Bankruptcy Code, pending in
the Bankruptcy Court under docket no. 99-529, et seq. (MFW), jointly
administered.
"Claim" means any claim, lawsuit, demand, suit, inquiry made, hearing,
investigation, notice of violation, litigation, proceeding, arbitration, or
other dispute, whether civil, criminal, administrative or otherwise.
"Closing" means the consummation of the transactions contemplated
herein in accordance with Article X hereof.
"Closing Date" means the date on which the Closing shall occur, as more
extensively discussed in Section 10.1 hereof.
"Closing Locations" shall have the meaning ascribed thereto in Section
8.4 hereof.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Competitive Business" shall have the meaning ascribed thereto in
Section 6.2(a) hereof.
"Confidential Information" shall have the meaning ascribed thereto in
Section 6.2(a) hereof.
"Contaminant" means any substance regulated under any Environmental Law
as a pollutant, hazardous substances, hazardous or toxic wastes, hazardous
materials, or "toxic substances" under any Environmental Law.
"Contract" means any agreement, contract, commitment, lease, or other
binding arrangement or understanding, whether written or oral arising under or
in connection with, or relating to, the conduct of the Business to which a
Seller is a party.
"Cure Amount" shall have the meaning ascribed thereto in Section 2.5(a)
hereof.
"Defective Merchandise" shall mean any item of merchandise that is not
saleable in the ordinary course because it is damaged, ripped, worn, faded,
scratched, broken, or affected by other similar defects, including, but not
limited to, such items of merchandise that have been segregated by Sellers and
marked "out of stock" in the Ordinary Course of Business.
"Deposit" shall have the meaning ascribed thereto in Section 8.5 hereof.
"Designated Leases" shall have the meaning ascribed thereto in Section
2.2(a) hereof.
"Disclosure Schedule" means the disclosure schedules hereto, if any.
"Disputed Status Property" shall have the meaning ascribed thereto in
Section 2.7 hereof.
"Dollars" or "$" means dollars of the United States of America, unless
specifically provided otherwise in this Agreement.
"Dollar Equivalent" means the U.S. noon spot exchange rate as
reported by the Bank of Canada on the applicable Business Day.
"Edison" shall have the meaning ascribed thereto in the opening
paragraph of this Agreement.
"Employees" shall have the meaning ascribed thereto in Section 7.2
hereof.
"Environmental Law" means any Regulation which is related to or
otherwise imposes liability or standards of conduct concerning discharges,
releases or threatened releases of Contaminants into ambient air, water or land,
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of
Contaminants.
"Environmental Liabilities and Costs" means all Losses from any claim,
by any Person, whether based on Contract, tort, or arising under or pursuant to
any Environmental Law or a Release of a Contaminant into the environment,
including any Remedial Action, any Lien in favor of any authority pursuant to
any Environmental Law or any Order or agreement with any authority.
"Escrow Agreement" shall mean that certain Escrow Agreement entered
into and executed by Sellers and Purchaser in conjunction with the Closing in
accordance with Section 3.2(a) hereof, which agreement shall be in form and
substance reasonably satisfactory to Sellers, Purchaser and the Escrow Agent.
"Escrow Agent" means Mercantile Bank, N.A. (St. Louis, MO), or
such other party as shall be mutually acceptable to Purchaser and Sellers.
"Escrow Amount" shall have the meaning ascribed thereto in Section
3.2(a) hereof.
"ETA" shall have the meaning ascribed thereto in Section 11.11 hereof.
"Excluded Assets" shall have the meaning ascribed thereto in Section
2.3 hereof.
"Excluded Records" shall have the meaning ascribed thereto in Section
2.1(g) hereof.
"Gross Rings" shall have the meaning ascribed thereto in Section 3.3(b)
hereof.
"Guarantee" means any guarantee or other contingent liability (other
than any endorsement for collection or deposit in the ordinary course of
business), direct or indirect, with respect to any Indebtedness or obligations
of another Person, through a Contract or otherwise.
"H-S-R Approvals" shall have the meaning ascribed thereto in Section
5.1(c) hereof.
"H-S-R Approvals Amount" shall have the meaning ascribed thereto in
Section 6.1(b) hereof.
"Indebtedness" with respect to any Person means any obligation of such
Person for borrowed money, and in any event shall include (i) any obligation
incurred for all or any part of the purchase price of property or other assets
or for the cost of property or other assets constructed or of improvements
thereto, other than accounts payable included in current liabilities and
incurred in respect of property purchased in the ordinary course of business,
(ii) the face amount of all letters of credit issued for the account of such
Person, (iii) obligations (whether or not such Person has assumed or become
liable for the payment of such obligation) secured by Liens, (iv) capitalized
lease obligations, (v) all Guarantees of such Person, (vi) all accrued interest,
fees and charges in respect of any Indebtedness, and (vii) all prepayment
premiums and penalties, and any other fees, expenses, indemnities and other
amounts payable as a result of the prepayment and/or discharge of any
Indebtedness.
"Intellectual Property" shall have the meaning ascribed thereto in
Section 2.1(f) hereof.
"In-Transit Goods" shall mean such items of merchandise inventory that
have been or will be paid for by Sellers but which are in-transit between (i)
one or more Stores, (ii) any Store and any warehouse or distribution center,
(iii) any Store(s), warehouse and/or distribution center and any merchandise
vendor or shipper, or (iv) otherwise in- transit or not located in the Sellers'
Stores, warehouse(s) or distribution center(s), on the Closing Date and which
items are received either in the Xxxx Stores or Xxxx By Mail after the
completion of the Physical Inventory thereat; provided, however, upon receipt of
such goods by Sellers or Purchaser, as the case may be, such goods shall become
Merchandise Inventory hereunder, with a physical count thereof being conducted
upon receipt in accordance with Section 3.3(a) hereof, and with payment of any
portion of the Purchase Price with respect thereto being calculated and made in
accordance with Sections 3.1(b) and 3.2(b) hereof.
"In-Transit Physical Inventory" shall have the meaning ascribed thereto
in Section 3.3(a) hereof.
"Inventory Procedures" shall have the meaning ascribed thereto in
Section 3.3(a) hereof, and as contained in Exhibit 3.3 hereof.
"Inventory Service" shall have the meaning ascribed thereto in Section
3.3(a) hereof.
"X. Xxxxx" means X. Xxxxx, Inc., a corporation organized and existing
under the laws of the Commonwealth of Massachusetts.
"Lease" shall have the meaning ascribed thereto in Section 2.2(a)
hereof.
"License"shall have the meaning ascribed thereto in Section 8.4 hereof.
"Lien" means any security interest, lien, charge, mortgage, deed,
assignment, pledge, hypothecation, encumbrance, easement, restriction or
interest of another Person of any kind or nature.
"Losses" mean all liabilities of every kind, losses, costs, claims,
judgments, awards, damages (including punitive, consequential and treble
damages), penalties or expenses (including, without limitation, reasonable
attorneys' fees and expenses and costs of investigation and litigation), and
also including any expenditures or expenses incurred to cover, remedy or rectify
any such Losses.
"Merchandise Inventory" shall mean for purposes of this Agreement all
of Sellers' merchandise inventory as at the Closing Date designated and/or
allocated for the Business, whether located in the Stores, any Seller
distribution center or warehouse (including, but not limited to, the Xxxx
Catalogue Warehouse), any third party location, or any other place or location
otherwise under the custody and control of Sellers, including layaway, repair
and special order merchandise; provided, however, Merchandise Inventory shall
not include: (i) Defective Merchandise, (ii) goods which belong to sublessees,
licensees or concessionaires of Sellers, and (iii) goods held by Sellers on
memo, on consignment, or as bailee; provided, further, In-Transit Goods shall
not become Merchandise Inventory until such time as such goods are received by
Sellers or Purchaser, as the case may be.
"On Order Goods" shall have the meaning ascribed thereto in Section 2.4
hereof.
"Order" means any decree, order, injunction, rule, judgment, consent of
or by any governmental authority.
"Ordinary Course of Business" means the operation of the Business by
Sellers in the usual and ordinary course in a manner substantially similar to
the manner in which Sellers have operated the Business both prior to and since
the commencement of the Chapter 11 Cases.
"Overbid Auction" shall have the meaning ascribed thereto in Section
8.5 hereof.
"Permits" shall have the meaning ascribed thereto in Section 2.1(e)
hereof.
"Person" means any corporation, partnership, joint venture, limited
liability company, organization, entity, authority or natural person.
"Permitted Designee" shall have the meaning ascribed thereto in Section
11.9 hereof.
"Physical Inventory" shall have the meaning ascribed thereto in Section
3.3(a) hereof.
"Purchase Price" shall have the meaning ascribed thereto in Section 3.1
hereof.
"Projected Closing Aggregate Retail Price" shall have the meaning
ascribed thereto in Section 3.2(a) hereof.
"Purchaser" means X. Xxxxx or any Permitted Designee thereof as
permitted under this Agreement.
"Regulation" means any law, statute, regulation, ruling, rule or Order
of, administered or enforced by or on behalf of any governmental authority.
"Rejection Claim Reimbursement" shall have the meaning ascribed thereto
in Section 3.1(d) hereof.
"Release" means any release, spill, emission, leaking, pumping,
disposal, discharge, dispersal or migration into the indoor or outdoor
environment or into or out of any property or assets (including the Acquired
Assets) owned or leased by Sellers as at the Closing Date, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or property.
"Remedial Action" means all actions required under any applicable
Environmental Law to (1) clean up, remove, treat or in any other way address
Contaminants in the environment; (2) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment; or (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Xxxx By Mail" shall mean the operations, business and assets of
Sellers' "Xxxx By Mail, Ltd." and related catalogue operations and businesses in
the United States of America and Canada, respectively.
"Xxxx By Mail Lease" means, individually, any lease of non-residential
real property from which Sellers conduct the Business of Xxxx By Mail and,
collectively, all of Sellers' leases of non-residential real property from which
Sellers conduct the Business of Xxxx By Mail, including, but not limited to, the
Xxxx Catalogue Warehouse.
"Xxxx Canada" shall have the meaning ascribed thereto in the opening
paragraph of this Agreement.
"Xxxx Canada Assets" shall mean any and all Acquired Assets relating to
the Business located in or designated for the Business operations in Canada,
including, but not limited to, any Inventory, Leases, Contracts and Intellectual
Property relating exclusively to the Business operations in Canada, but
specifically excluding any Acquired Assets relating to or associated with the
Xxxx By Mail Business, wherever located.
"Xxxx Canada Store Lease" shall mean the non-residential real property
lease or leases under which Sellers occupy each of the Xxxx Stores in Canada.
"Xxxx Catalogue Warehouse" means that certain
warehouse/distribution/office facility located at Alpharetta, GA leased by
Edison in the conduct of the Business of Xxxx By Mail.
"Xxxx Stores" shall mean the operations, businesses and related assets
of Sellers' men's big and tall division retail store operations maintained under
the tradenames "Xxxx" and "Mr. Xxx & Tall" or other Intellectual Property in the
United States of America and Canada, respectively.
"Representative" shall have the meaning ascribed thereto in Section 3.8
hereof.
"Retail Price" shall mean with respect to each item of Merchandise
Inventory, the PLU or "scan" price of such item on the Closing Date (which shall
be determined based upon reference to the Sellers' price files as of the date
immediately preceding the date of execution of this Agreement, which price files
shall be attached hereto and incorporated herein as Exhibit 3.1(a) hereof), or
as to items of Merchandise Inventory that are subject to Gross Rings under
Section 3.3(b) hereof, the applicable Gross Rings amount. The Retail Price of
any item of Merchandise Inventory shall be determined as provided for in this
Agreement and in accordance with the Inventory Procedures. In the event of a
conflict between this Agreement and the Inventory Procedures, the terms of this
Agreement shall control. The Retail Price of any item of Merchandise Inventory
shall exclude all sales Taxes and point-of-sale discounts, and Sellers represent
that the scan prices of items of Merchandise Inventory do not and shall not
include sales Taxes and point-of-sale discounts. If an item of Merchandise
Inventory has more than one scan price, or if multiple items of the same SKU are
scanned at different prices, the lowest scan price on any such item shall
prevail for such item or for all such items within the same SKU, as the case may
be, unless it is reasonably determined by Sellers and Purchaser that the lowest
scan price was incorrect and infrequent, in which case the higher scan price
shall control. In the event an item of Merchandise Inventory cannot be scanned,
then such item shall have a Retail Price equal to the lowest ticketed price
thereof, unless it is reasonably determined by Sellers and Purchaser that the
lowest ticketed price was incorrect and infrequent, in which case the higher
ticketed price shall control.
"Sale Order" means that certain order(s) to be entered by the
Bankruptcy Court in the Chapter 11 Cases, in substantially the form attached as
Exhibit 8.6 to this Agreement, inter alia, approving the transactions
contemplated by this Agreement.
"Sale Procedures" shall have the meaning ascribed thereto in Section
8.5 hereof.
"Sale Procedures Order" shall have the meaning ascribed thereto in
Section 8.5 hereof.
"Sellers" shall have the meaning ascribed thereto in the opening
paragraph of this Agreement.
"Sellers' Purchase Orders" shall have the meaning ascribed thereto in
Section 2.2(b) hereof.
"Store" or "Stores" means the premises from which Sellers operate the
Business of the Xxxx Stores.
"Store Cash Amount" shall have the meaning ascribed thereto in Section
2.1(a) hereof.
"Store Cash Adjustment Amount" shall have the meaning ascribed thereto
in Section 2.1(a) hereof.
"Store Closing Sales" shall have the meaning ascribed thereto in
Section 8.4 hereof.
"Store Lease" means, individually, any lease of non-residential real
property from which Sellers conduct the Business of the Xxxx Stores and,
collectively, all of Sellers' leases of non-residential real property from which
Sellers conducts the Business of the Xxxx Stores, including, but not limited to,
as same relate to a Store(s).
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including, without limitation, income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales (including Canadian federal goods and services taxes), use,
franchise, excise, value added, capital, license, payroll, unemployment,
environmental, customs duties, capital stock, disability, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational and interest equalization,
windfall profits, severance and employees' income withholding and Social
Security taxes imposed by the United States or any other country or by any
state, province, municipality, subdivision or instrumentality of the United
States or of any other country or by any other tax authority, Canadian pension
plan contributions and unemployment insurance contributions, including all
applicable penalties and interest, and such term shall include any interest,
penalties or additions to tax attributable to such Taxes.
"Tax Return" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
A "third party" means any Person other than Sellers, Purchaser or any
of their respective affiliates.
"Topping Fee" shall have the meaning ascribed thereto in Section 8.5
hereof.
"Transferred Employees" shall have the meaning ascribed thereto in
Section 7.2 hereof.
"Unassumed Liabilities" shall have the meaning ascribed thereto in
Section 2.6 hereof.
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning through
this Agreement.
1.3 Other Definitional Provisions
(a) The words "hereof", "herein", and "hereunder and words of
similar import, when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) References herein to a specific Section, Subsection,
Exhibit or Schedule shall refer, respectively, to Sections, Subsections, Exhibit
or Schedules of this Agreement, unless the express context otherwise requires.
(d) Wherever the word "include", or "includes", or "including"
is used in this Agreement, it shall be deemed to be followed by the words
"without limitation".
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
----------------------------------------------------
2.1 Acquired Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing, Sellers shall sell, assign, transfer and deliver
to Purchaser, and Purchaser shall purchase, acquire and take assignment and
delivery of, the following assets owned by Sellers on the Closing Date (wherever
located) related exclusively to, or used exclusively in conjunction with, the
Business, and all of Sellers' right, title and interest therein and thereto on
the Closing Date, but not including those assets specifically excluded in
Section 2.3 hereof (all of the assets to be sold, assigned, transferred and
delivered to Purchaser hereunder shall be deemed included in the term "Acquired
Assets" as used herein):
(a) cash in an amount equal to $400.00 (or the Dollar
Equivalent of $400.00 for Xxxx Stores located in Canada) per Xxxx Store location
(including for purposes hereof each U.S. and Canadian Xxxx Store and each
Designated Lease location, without duplication) ("Store Cash Amount"). Sellers
shall implement steps to ensure that the Store Cash Amount shall be on hand at
each Xxxx Store location upon the commencement of business on the Closing Date;
provided, however, in the event the aggregate dollar amount of cash on hand in
the Xxxx Store locations at the Closing Date is greater than the Store Cash
Amount, then the Purchase Price shall be increased by an amount equal to the
difference between the aggregate actual dollar amount of cash on hand in the
Xxxx Store locations at the Closing Date and the Store Cash Amount; provided,
further, in the event the aggregate dollar amount of cash on hand in the Xxxx
Store locations at the Closing Date is less than the Store Cash Amount, then the
Purchase Price shall be decreased by an amount equal to the difference between
the aggregate actual dollar amount of cash on hand in the Xxxx Store locations
at the Closing Date and the Store Cash Amount (as adjusted in accordance with
this Section 2.1(a), if appropriate, the "Store Cash Adjustment Amount");
provided, further, Sellers and Purchaser agree that they shall each use their
respective good faith best efforts to reconcile and determine the amount of cash
on hand in each Xxxx Store location as of the Closing Date within the time
periods stated in Section 3.7 hereof;
(b) all prepaid and unamortized costs for marketing
expenditures and co-op advertising allowances (each an "Account" and
collectively the "Accounts") arising exclusively from or relating exclusively to
the operation or conduct of the Business; provided, however, in the event the
aggregate dollar amount of the Accounts at Closing is less than $750,000.00,
then the Purchase Price shall be reduced by an amount equal to the difference
between the actual aggregate dollar amount of Accounts and $750,000.00;
provided, further, in the event the aggregate dollar amount of Accounts at
Closing is greater than $750,000.00, then the Purchase Price shall be increased
by an amount equal to the difference between the actual aggregate dollar amount
of Accounts and $750,000.00 (as adjusted in accordance with this Section 2.1(b),
if appropriate, the "Accounts Amount"); provided, further, Sellers and Purchaser
agree that they shall each use their respective good faith best efforts to
reconcile the amount of Accounts and determine the Accounts Amount within the
time periods stated in Section 3.7 hereof;
(c) all supplies, materials and merchandise (including, but
not limited to, Merchandise Inventory) or other inventories relating exclusively
to the Business, including, without limitation, any such assets which (i) are
actually located at any location of Sellers, or any other third party location
to the extent such assets are designated for or allocated to the Business, (ii)
have been paid for by Sellers prior the Closing, or (iii) have been shipped to
Sellers, but not received by Sellers as of the Closing (collectively, the
"Inventory");
(d) all machinery, equipment, tools, vehicles, furniture,
furnishings, leasehold improvements, goods, and other tangible personal property
owned by Sellers which relate exclusively to the day-to-day operation or
maintenance of the Business which are actually located at the Xxxx Catalogue
Warehouse or any Store;
(e) all licenses, permits, approvals, certificates of
occupancy, authorizations, operating permits, registrations, plans and the like
applicable exclusively to the Business to the extent the same are transferable
by the Sellers to the Purchaser (collectively, the "Permits");
(f) all patents, patent applications, licenses, service names,
service marks, trade names, trademarks, trade name and trademark registrations
(and applications therefor), copyrights and copyright registrations (and
applications therefor), inventions and designs, including, without limitation,
any and all of Sellers' rights in and to the names "Xxxx", "Xxxx Big & Tall",
"Xxxx By Mail", and "Mr. Xxx & Tall" and any of their derivatives as used (or is
otherwise subject to a right by Sellers to use, but is not currently in use)
exclusively in connection with the conduct of the Business, or that appears on
products related to the Business, and any and all goodwill, trade secrets,
processes and know-how which relate exclusively to the Business, including, but
not limited to, any and all toll free or A800@ telephone numbers, domain rights
and Internet website(s) (collectively, the "Intellectual Property");
(g) all information, files, records, data, plans, and recorded
knowledge, including customer and supplier lists, related exclusively to or used
exclusively in connection with the Business (collectively, "Business Records"),
except to the extent that any of the foregoing are privileged or otherwise
subject to third party privacy rights (the items excluded from this Section
2.1(g) are collectively referred to herein as "Excluded Records"). The Business
Records shall be delivered at Closing to Purchaser by Sellers in their then
existing state and form; and
(h) any and all other assets and rights that are not of the
type or character referenced in Section 2.1(a) - (g) and which relate
exclusively to the Business.
2.2 Assignment of Leases, Contracts, Purchase Orders and Certain
Claims. Subject to the terms and conditions set forth in this Agreement,
including, but not limited to Section 2.2(a) hereof, Sellers will assign and
transfer to Purchaser, effective as of the Closing Date, all of Sellers' right,
title and interest in and to, and Purchaser will take assignment of, the
following rights and interests that are exclusively used in connection with, or
relate exclusively to, the Business (and the right, title and interest of
Sellers under all of the following shall be deemed included in the term
"Acquired Assets" as used herein):
(a) All Store Leases, other than Designated Leases
(collectively, the "Assumed Leases"); provided, however, Purchaser shall have
the right to terminate this Agreement (as provided in Section 8.4 hereof) in the
event the Bankruptcy Court does not authorize Sellers' assumption and assignment
to Purchaser under the Sale Order of at least 130 Store Leases; provided,
further, notwithstanding anything in this Agreement to the contrary, Purchaser
may designate such Store Leases as Purchaser shall, in its sole discretion,
determine not to have Sellers assign to Purchaser (each a "Designated Lease",
and collectively the "Designated Leases"), none of which Designated Leases may
be Xxxx Canada Store Leases; provided, however, Purchaser may not designate more
than thirty (30) Store Leases as Designated Leases hereunder; provided, further,
Purchaser shall be obligated to identify those Store Leases that shall be
designated as Designated Leases on or before the Closing (upon such designation
the listing of Designated Leases shall be made a part hereof as Exhibit 2.2(a).
(b) Such Contracts or other arrangements entered into by the
Sellers in the Ordinary Course of Business, including, but not limited to, any
Xxxx By Mail Lease and Contracts where Sellers are the customer/purchaser and
the goods, supplies or materials purchased thereunder are not included in
Inventory (collectively, the "Sellers' Purchase Orders") (collectively, the
"Assumed Contracts"), each as shall be identified in Schedules 2.2(b)
respectively to be delivered by Sellers to Purchaser within five (5) Business
Days of the execution and delivery of this Agreement, and upon acceptance
thereof by Purchaser shall be made a part hereof; within five (5) Business Days
of Purchaser's receipt of Schedule 2.2(b), Purchaser shall notify Sellers of
those Contracts that it shall not accept.
(c) All Claims and rights of action against vendors and
lessors of the Assumed Contracts and Assumed Leases, respectively, to the
Business relating exclusively to the Acquired Assets, the Xxxx Stores, the Xxxx
Catalogue Warehouse, or the Business, including, but not limited to, all rights
and avoidance claims of Sellers under sections 544, 547, 548, 549 and 550 of the
Bankruptcy Code (each an "Avoidance Action" and collectively the "Avoidance
Actions"); provided, however, effective as of the Closing the Purchaser shall be
deemed to have released each such claim that constitutes an Avoidance Action.
2.3 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, the following assets of Sellers, as well as any other assets not
defined as Acquired Assets, shall be retained by Sellers and are not being sold
or assigned to Purchaser hereunder (all of the following are referred to
collectively as the "Excluded Assets"):
(a) any capital stock held by Sellers or any other
affiliates of Sellers;
(b) cash and cash equivalents not required to be transferred
to Purchaser pursuant to Section 2.1(a) hereof; provided that Purchaser and
Sellers agree that in the event either of them receive any cash or cash
equivalents that properly constitute the property of the other in accordance
with the terms of this Agreement, such cash or cash equivalents as shall be the
property of the other party to this Agreement shall be held by its recipient in
trust for the other, and further shall be accounted for and paid over to the
other party promptly after its receipt;
(c) any and all Excluded Records (and any and all of Sellers'
books of account (except as same relate to the Accounts), corporate seal(s),
charter, by-laws, minute books and other corporate governance documents);
(d) any Designated Leases;
(e) any Contracts not identified in Schedule 2.2(b)
hereof, and any Contracts identified in Schedule
2.2(b) hereof not accepted by Purchaser in the time
period provided in Section 2.2(b) hereof;
(f) any income and corporate Taxes recoverable or
refundable;
(g) any life insurance policies and proceeds thereof;
provided; however, any such policies or proceeds
which relate to Transferred Employees post-Closing
shall constitute an Acquired Asset(s) hereunder;
(h) all sums owing to either of the Sellers by any
affiliate or stockholder of any of the Sellers; and
(i) any governmental rebates or refunds due or which may
become due to either of the Sellers pursuant to any
federal or provincial sales, customs or excise tax
legislation.
2.4 Assumption/Payment of Certain Obligations. At Closing, Purchaser
will assume all of Sellers' rights and obligations in respect of Sellers'
purchase orders for goods and other merchandise ordered prior to Closing, but
not paid for or delivered prior to the Closing Date ("On Order Goods"), solely
to the extent such On Order Goods are identified in Schedule 2.4 hereof to be
made a part of this Agreement at Closing; provided, however, no component of the
On Order Goods shall be duplicative of any component of the In-Transit Goods.
2.5 Additional Assumed Obligations. At the Closing, except as provided
in Section 2.4, Section 2.5 and/or in Section 2.6 hereof, Purchaser shall
assume, and agree to pay, perform, fulfill and discharge the following
additional obligations of the Sellers:
(a) those obligations which are required to be performed after
the Closing Date under the following: (i)the Assumed Leases; and (ii) the
Assumed Contracts; provided, however, Purchaser shall pay any amounts due to any
and all non-Seller parties to any Assumed Contract or Assumed Lease in respect
of any cure amount ("Cure Amount") under section 365(b) of the Bankruptcy Code
or otherwise; provided, however, Purchaser's obligation to pay any amount in
respect of the Cure Amount shall be limited in all respects by the Assumed
Lease/Contract Cap;
(b) those obligations relating to accrued but unused vacation
of Transferred Employees of Sellers (or any of them) hired by Purchaser at
Closing; provided, however, following the Closing, subject to Section 7.2
hereof, Purchaser may establish such policies and procedures in respect of
Transferred Employees' vacation and other employee-related policies post-Closing
as Purchaser shall deem appropriate, in its discretion; and
(c) those obligations which are required to be performed after
the Closing Date in respect of the On Order Goods.
The amounts set forth in this Section 2.5(a) - (c) are collectively
defined herein as the "Assumed Obligations").
2.6 No Other Liabilities Assumed. Sellers acknowledge and agree that
pursuant to the terms and provisions of this Agreement and under any Lease or
Contract, Purchaser will not assume any obligation of Sellers, other than the
Assumed Obligations. In furtherance and not in limitation of the foregoing,
neither Purchaser nor any of its affiliates shall assume, and shall not be
deemed to have assumed, other than as specifically set forth in Article II
hereof, any debt, claim, obligation or other liability of Sellers or any of its
affiliates whatsoever, including, but not limited to, (i) any Environmental
Costs and Liabilities for any act, omission, condition or event caused by or
attributable to Sellers to the extent occurring or existing prior to the Closing
Date, including without limitation all Environmental Costs and Liabilities
relating in any manner to Sellers' direct or indirect handling, transportation
or disposal of any Contaminants, (ii) any of Sellers' liabilities in respect of
Taxes, except as expressly provided in Section 11.11(b) hereof, (iii) any
investment banking, financial advisory, brokers' or finders' fees arising by
reason of Sellers' dealings with brokers or other third parties, or other
liability of Sellers for costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement, (iv) any Indebtedness, except for
the Assumed Obligations, (v) any obligations or liabilities for Sellers'
Employees, including severance, termination pay, pension, profit sharing or any
other employee benefit plans, compensation or retiree medical and other benefits
and obligations, except to the extent otherwise provided in Sections 2.5(b) and
7.2 hereof, or any obligation, claim or amount under the Workers Adjustment and
Retraining Notification Act ("WARN Act"), (vi) any obligation or liability
arising as a result of or whose existence is a breach of Sellers'
representations, warranties, agreements or covenants contained in this Agreement
or otherwise, (vii) any Excluded Assets, (viii) any Affiliate Obligations, (ix)
any liability subject to compromise, except to the extent same constitutes an
Assumed Obligation, and (x) rebates, allowances, deductions and/or price
discrepancies relating in any manner to products sold in pursuit of the Business
prior to the Closing Date (collectively, "Unassumed Liabilities"). Disclosure of
any obligation or liability on any schedule to this Agreement shall not create
an Assumed Obligation or other liability of Purchaser, except where such
disclosed obligation has been expressly assumed by Purchaser as an Assumed
Obligation in accordance with the provisions of Article II hereof.
2.7 Certain Limitations on Purchaser's Right to Acquire. Sellers and
Purchaser acknowledge that Sellers are currently in possession of certain
property under one or more Leases or Contracts, of which Sellers may actually be
the owner, as distinguished from lessee, under certain principles of law or
equity, and which property Purchaser may wish to have Sellers treat as Acquired
Assets (such property is hereinafter referred to as "Disputed Status Property").
Purchaser may elect to have Sellers sell, transfer, and assign to Purchaser all
of Sellers' right, title and interest in and to such Disputed Status Property;
provided, that Purchaser shall make such election in writing delivered to
Sellers prior to the Closing; provided, further, notwithstanding any contrary
provision of this Agreement or any document executed pursuant hereto, Purchaser
shall not have the right, to the extent the same are held by Sellers (or either
of them) under any Lease, Store Lease or Contract not assumed by Purchaser
pursuant to Section 2.5 above, to acquire (i) any furniture, fixture, machinery,
equipment or other item of tangible personal property which constitutes Disputed
Status Property, or (ii) any furniture, fixture, machinery, equipment or other
item of tangible personal property which does not constitute Disputed Status
Property, unless in each case (and only if) Purchaser arranges to acquire such
property in a manner which results in the Sellers being released and discharged
(in a manner reasonably satisfactory to Sellers) from any and all further cost,
expense or liability relating to such item (whether such costs, expenses and
liability relate to or arise during the period prior to the Closing or after the
Closing).
ARTICLE III
PURCHASE PRICE AND PAYMENT
--------------------------
3.1 Purchase Price. The aggregate purchase price for the Acquired
Assets (the "Purchase Price") shall be comprised of the items set forth in
subsections (a) - (d) below:
(a) Purchaser shall pay Sellers (or their designee), upon such
schedule and such terms as are set forth in Section 3.2 hereof, the sum of
$31,700,000.00; provided, however, in the event that the Aggregate Retail Price
of the Merchandise Inventory for a Business Division at Closing is less than the
Aggregate Retail Price Merchandise Inventory Target for the relevant Business
Division set forth in Schedule 3.1(a) hereof, Purchaser shall be entitled to a
reduction in the Purchase Price equal to the product of (i) the difference
between the applicable Aggregate Retail Price Merchandise Inventory Target for
such Business Division and the Aggregate Retail Price of the Merchandise
Inventory for such Business Division, multiplied by (ii) the following
cost-to-retail adjustment factor, as applicable: (a) Xxxx Stores -- 37%, and (b)
Xxxx By Mail -- 45%; provided, further, in the event that the Aggregate Retail
Price of the Merchandise Inventory for a Business Division at Closing is greater
than the Aggregate Retail Price Merchandise Inventory Target for such Business
Division set forth in Schedule 3.1(a) hereof, the Sellers shall be entitled to
an enhancement in the Purchase Price equal to the product of (i) the difference
between the applicable Aggregate Retail Price Merchandise Inventory Target for
such Business Division and the Aggregate Retail Price of the Merchandise
Inventory for such Business Division, multiplied by (ii) the following
cost-to-retail adjustment factor, as applicable: (a) Xxxx Stores -- 37%, and (b)
Xxxx By Mail -- 45%. For purposes of this Agreement, the Merchandise Inventory
at Closing of the Xxxx Stores and Xxxx By Mail components of the Business shall
(i) include, but not be limited to, any Merchandise Inventory in any Stores,
distribution center, warehouse, or under the custody and control of any third
party (including, but not limited to, warehousemen, customs warehouse or broker)
allocable or otherwise attributable to the Business, and (ii) be calculated
based upon the Aggregate Retail Price of any and all Merchandise Inventory of
the Xxxx Stores or Xxxx By Mail, as the case may be, on hand as at the Closing
Date, calculated in accordance with the Inventory Procedures set forth in
Section 3.3(a) hereof; provided, however, Purchaser and Sellers agree that for
purposes of calculating the Aggregate Retail Price of the Merchandise Inventory,
the Retail Price of any Merchandise Inventory which constitutes Xxxx Canada
Assets shall be converted into Dollars following the conduct of the Physical
Inventory contemplated by Section 3.3(a) hereof;
(b) An amount equal to the lower of (i) the product of (x) the
Retail Price of any In-Transit Goods multiplied by (y) the relevant
cost-to-retail adjustment factors for the relevant Business Division as set
forth in Section 3.1(a) above, as applicable or (ii) the actual landed invoice
cost (inclusive of any freight charges and customs duties) of such merchandise
inventory; provided, however, Sellers and Purchaser shall at the Closing agree
on the amount and identity of all In-Transit Goods as at the Closing Date;
provided, further, no component of the In-Transit Goods shall be duplicative of
any component of the On Order Goods; provided, further, that Sellers shall not
be entitled to any increase in the Purchase Price in respect of In-Transit Goods
to the extent such items comprise a component of and are included in the
Projected Aggregate Retail Price of the Merchandise Inventory upon which
Purchaser and Sellers shall determine the amount of the Purchase Price payable
by Purchaser at Closing;
(c) In accordance with Section 2.5 hereof, Purchaser's
assumption of the Assumed Obligations; and
(d) An amount equal to the aggregate distribution to be paid
on the Allowed Claim of any lessor under a Designated Lease under a plan of
reorganization or liquidation confirmed by the Bankruptcy Court in the Chapter
11 Cases in respect of any rejection damage claim arising under sections 365(a)
and 502(b)(6) of the Bankruptcy Code following the rejection of any such
Designated Lease by Edison pursuant to order of the Bankruptcy Court (the
"Rejection Claim Reimbursement"). Purchaser shall pay such amounts as may become
due in respect of the Rejection Claim Reimbursement at such distribution date(s)
as shall be designated in any confirmed plan in the Chapter 11 Cases; provided,
however, in the event Purchaser (or any Permitted Designee thereof, as
applicable) is able to secure the agreement of any non-Seller party to a
Contract or Lease to accept an amount less than the amount required to be paid
by Purchaser under this Section 3.1(d), Purchaser shall pay the amount required
under this Section 3.1(d) or such lesser amount as it shall negotiate with the
non-Seller party, at its sole election; provided, further, the Sale Order shall
provide that (i) Purchaser (or any Permitted Designee thereof, as the case may
be) shall have standing from and after the Closing to object to the allowance of
any rejection damage claim filed or asserted by any lessor under a Designated
Lease and (ii) Sellers may not compromise or settle any rejection damage claim
post-Closing without the prior written consent of Purchaser (or the relevant
Permitted Designees thereof); however, if Sellers propose in good faith a
compromise or settlement of any such rejection damage claim and Purchaser
declines to provide its consent thereto, Sellers shall have no further
obligation to prosecute any objection to the allowance of such claim, and
Purchaser shall thereafter bear all costs and responsibilities associated with
any objection to such claim.
3.2 Payment of Purchase Price; Escrow. (a) At Closing, Purchaser shall
pay Sellers by wire transfer of immediately available funds an amount in respect
of the Purchase Price equal to (i) $31,700,000; provided, however, (a) in the
event the projected Closing Aggregate Retail Price of the Merchandise Inventory
("Projected Closing Aggregate Retail Price") for the Xxxx Stores Business
Division on the Closing Date, as same is reflected in Sellers' books and records
(exclusive of In-Transit Goods (which shall be counted and paid for by Purchaser
as otherwise provided in this Agreement) and any shrink reserves), is either
greater than or less than, as the case may be, the Aggregate Retail Price
Merchandise Inventory Target as set forth in Schedule 3.1(a) hereto applicable
to such Business Division, the amount payable by Purchaser at Closing in respect
of the Purchase Price shall either be increased or reduced, as the case may be,
by an amount equal to the differential between (x) the Projected Closing
Aggregate Retail Price of the Merchandise Inventory for such Business Division
and the relevant Aggregate Retail Price Merchandise Inventory Target for such
Business Division, multiplied by 0.37, and (b) in the event the Projected
Closing Aggregate Retail Price of the Merchandise Inventory for the Xxxx by Mail
Business Division is either greater than or less than, as the case may be, the
Aggregate Retail Price Merchandise Inventory Target as set forth in Schedule
3.1(a) hereto applicable to such Business Division, the amount payable by
Purchaser at Closing in respect of the Purchase Price shall either be increased
or decreased, as the case may be, by an amount equal to the differential between
(x) the Projected Closing Aggregate Retail Price of the Merchandise Inventory
for such Business Division and (y) the relevant Aggregate Retail Price
Merchandise Inventory Target for such Business Division, multiplied by 0.45;
less (ii) the sum of (x) the H-S-R Approvals Amount and (y) the aggregate amount
of any deposits or other monies received by Sellers prior to the Closing Date in
respect of any layaway, repair and/or special order merchandise that is included
in Merchandise Inventory subject to this Agreement. The Purchase Price shall be
further adjusted at Closing in respect of the Accounts Amount, the Store Cash
Adjustment Amount, and the Deposit (together with any interest earned thereon),
as shall be applicable hereunder. Sellers and Xxxxxxxxx agree that they shall
jointly direct the holder of the Deposit to deliver same to the Sellers (or as
otherwise agreed by Xxxxxxxxx and Sellers) at Closing. Sellers shall deliver to
Purchaser a good faith estimate of the Projected Closing Aggregate Retail Price
of the Merchandise Inventory both of the Xxxx Stores and Xxxx By Mail Business
Divisions not later than two (2) Business Days prior to the Closing Date.
Sellers and Purchaser agree that on the Closing Date $5,000,000.00 of the
Purchase Price shall be deposited into escrow with the Escrow Agent under the
terms of the Escrow Agreement (the "Escrow Amount"). The Escrow Agreement shall
provide, among other things, that the Escrow Amount shall be made available to
satisfy such claims as may be asserted by Purchaser as provided for herein and
in the Escrow Agreement with regard to (a) any adjustment(s) to the Purchase
Price in accordance with the terms of this Agreement and (b) any final and
binding judgments against Purchaser post-Closing for any matter or claim for
which Purchaser is entitled to indemnification under Section 3.8 hereof.
Purchaser and Sellers agree that the escrow arrangement created by the Escrow
Agreement shall have a term of nine (9) months from the Closing Date, unless a
shorter time is hereafter agreed upon in writing by Sellers and Purchasers. The
Escrow Agreement shall further provide that in the event there is any claim(s)
threatened or asserted (with proof thereof reasonably satisfactory to Sellers
having been delivered to Sellers) by any person against Purchaser at the
expiration of the term of the Escrow Agreement, which claim(s) has not yet
matured into a final binding judgment against Purchaser at such time, the escrow
created by the Escrow Agreement and this Agreement shall be extended for a
period of time and in such amount as shall be agreed by Sellers and Purchaser;
provided, however, in the event Purchaser and Sellers are unable to agree on
either the amount or duration of the extension of the escrow created hereby and
the Escrow Agreement, such dispute shall be resolved by the Bankruptcy Court (or
if said court is without jurisdiction, through binding arbitration in the manner
provided in this Agreement). The Escrow Agreement shall further provide that the
Escrow Agent shall disburse some or all of the Escrow Amount to Sellers and/or
Purchaser, as their interests therein may appear, and as may be agreed by them,
after the Purchase Price adjustment for the reconciliation of the Aggregate
Retail Price of the Merchandise Inventory has been made and agreed upon, such
that the amount of the Escrow Amount then remaining on deposit with the Escrow
Agent shall be fixed at the amount of $1,000,000.00 (with any excess being paid
to Sellers and any shortage being paid by Sellers); provided, however, Purchaser
and Sellers shall use their reasonable good faith efforts to reconcile and agree
on the Aggregate Retail Price of the Merchandise Inventory, as well as any
adjustments to the Purchase Price required as a result thereof, within
forty-five (45) days of the completion of the last Physical Inventory conducted
hereunder; provided, further, that Sellers shall not be obligated to replenish
the Escrow Amount to the $1,000,000.00 threshold for any payments made to
Purchaser from the Escrow Amount as a result of claims other than those made
pursuant to the reconciliation of the Aggregate Retail Price of the Merchandise
Inventory made there against by Purchaser in accordance with this Agreement and
the Escrow Agreement. In addition to the Escrow Amount described above, at
Closing Purchaser shall deposit with the Escrow Agent the additional sum of
$200,000 in respect of the Assumed Lease/Contract Cap ("Additional Escrow
Amount"); provided, Purchaser shall cooperate with Sellers in giving such
instructions as may be required to cause the Escrow Agent to disburse from and
out of the Additional Escrow Amount such amounts as are necessary to enable
Sellers timely to pay any Cure Amount in accordance with the terms and
provisions of the Sale Order.
(b) On or before the date that is fifteen (15) days after
Purchaser delivers to Sellers the written reconciliation of the In-Transit
Physical Inventory required under Section 3.3 hereof, Purchaser shall pay
Sellers the amount required under Section 3.1(b) hereof.
3.3 Physical Count and Valuation. (a) On or before Closing, Sellers
shall furnish Purchaser with a schedule identifying the location of all Acquired
Assets, including, but not limited to, Merchandise Inventory (inclusive of
In-Transit Goods, if any). On or before the Closing Date, Purchaser and Sellers
shall have jointly engaged and retained RGIS ("Inventory Service") to conduct
and complete a physical count and inspection of the Merchandise Inventory
located in (i) the Xxxx Stores and any Xxxx Stores warehouse or distribution
center, and (ii) Xxxx By Mail, including, but not limited to the Xxxx Catalogue
Warehouse, on or before seven (7) days after the Closing Date (excluding the
Closing Date for purposes hereof) (the "Physical Inventory"). The instructions
and guidelines to be abided by Purchaser, Sellers and the Inventory Service in
the conduct of the Physical Inventory ("Inventory Procedures") shall be agreed
upon Sellers and Purchaser prior to Closing, and upon such agreement shall be
attached as Exhibit 3.3 hereto. Purchaser and Sellers shall each be permitted,
at their own expense, to have representatives present for the taking of such
Physical Inventory. Based on such Physical Inventory, and as otherwise provided
in Section 3.3(b) hereof, Purchaser shall reasonably determine the amount of the
Aggregate Retail Price of the Merchandise Inventory as of the Closing Date,
subject to Seller s' reasonable approval and taking into account the results of
such Physical Inventory. The parties hereto agree that Sellers and Purchaser
shall each be responsible for one-half of the Inventory Service s' invoice(s)
for conducting the Physical Inventory and the calculation of the Aggregate
Retail Price of the Merchandise Inventory. Post-Closing, Purchaser shall, at
Purchaser's expense, perform a physical count and inspection of any In-Transit
Goods upon their arrival at either the Xxxx Stores or Xxxx By Mail Business
Division, as the case may be, utilizing the Inventory Procedures set forth in
Exhibit 3.3 hereof (the "In-Transit Physical Inventory"); provided, however, the
In-Transit Physical Inventory shall be completed by Purchaser within five (5)
Business Days following the receipt of any such In-Transit Goods. Within ten
(10) days of the completion of the In-Transit Physical Inventory by Purchaser,
Purchaser shall furnish Sellers with a written reconciliation of the results of
the In-Transit Physical Inventory. Purchaser agrees that it shall not sell any
of the In-Transit Goods until after the In-Transit Physical Inventory with
respect thereto has been completed.
(b) In the event the Physical Inventory is conducted at any
Xxxx Store or Xxxx By Mail location on a date that is after the Closing Date,
then for the period from the Closing Date until the completion of the Physical
Inventory at the relevant location, Purchaser shall keep (i) a strict count of
gross register receipts less applicable sales Taxes plus 1.75% ("Gross Rings")
and (ii) cash reports of all sales of Merchandise Inventory prior to the
completion of the Physical Inventory applicable thereto. Register receipts shall
show for each item of Merchandise Inventory sold the Retail Price for such item
and the markdown or discount, if any, specifically granted by Purchaser in
connection with such sale. All such reports shall be made available by Purchaser
to Sellers during Purchaser's regular business hours upon reasonable written
notice from Sellers to Purchaser.
3.4 Post-Closing Purchase Price Adjustment. Upon determination of the
Aggregate Retail Price of the Merchandise Inventory in accordance with Section
3.3 hereof (in addition to the adjustments provided for in Section 3.5 below),
the Purchase Price (as adjusted at the Closing) shall be further adjusted (i) as
set forth in Section 3.1 hereof, and (ii) to the extent necessary to reimburse
Purchaser for the differential cost to Purchaser of its having honored within
ninety (90) days after the Closing Date any store merchandise credit or gift
certificate issued by Sellers to any customer of the Business pre-Closing.
Purchaser and Sellers shall prepare a mutually acceptable written statement as
soon as practicable after the Closing setting forth the calculation of any such
Purchase Price adjustments. If an increase in the Purchase Price is required
hereunder, the amount of such increase shall promptly be paid by Purchaser to
Sellers by wire transfer in immediately available good funds. In the event there
is required a decrease in the Purchase Price, Purchaser and Sellers shall direct
the Escrow Agent to pay the amount of such decrease to Purchaser from the Escrow
Amount. In the event such decrease in the Purchase Price exceeds the Escrow
Amount, Sellers shall promptly pay to Purchaser by wire transfer in immediately
available, funds an amount equal to the amount of such excess.
3.5 Prorations. To the extent that any of the items listed below in
this Section 3.5 are paid by Sellers prior to the Closing or are payable by
Purchaser or the Sellers after the Closing Date, such items shall be apportioned
as of the Closing Date such that Sellers shall be liable for (and shall
reimburse Purchaser to the extent that Purchaser shall pay) that portion of such
of the foregoing relating or attributable to periods prior to the Closing Date
and Purchaser shall be liable (and shall reimburse Sellers to the extent Sellers
shall have paid) that portion of the foregoing relating or attributable to,
periods on or after the Closing Date. Should any amounts to be prorated not have
been finally determined on the Closing Date, a mutually satisfactory estimate of
such amounts made on the basis of Sellers' records shall be used as a basis for
settlement at Closing, and the amount finally determined will be prorated as of
the Closing Date and appropriate settlement made as soon as practicable after
such final determination. If as a result of any such settlement in accordance
with the preceding sentence Purchaser is owed an amount from Sellers, Purchaser
shall have the right in its sole discretion to be reimbursed for such amount out
of the Escrow Amount. Such prorated items shall include: (a) personal property,
real estate, retail sales, occupancy and water Taxes, if any, on or with respect
to the Business, the Acquired Assets and/or the Assumed Obligations; (b) Taxes,
rent and other items payable by Sellers under any Assumed Lease, Assumed
Contract or other contractual obligation to be assigned to or assumed by
Purchaser hereunder, except as provided in Section 2.5 hereof; (c) the amount of
sewer rents and charges for water, telephone, electricity and other utilities
and fuel; (d) payroll expenses related to employees of Sellers hired by
Purchaser at Closing; and (e) insurance premiums of any policies acquired by
Purchaser at Closing. Sellers and Xxxxxxxxx agree to furnish each other with
such documents and other records as each party reasonably requests in order to
confirm all adjustment and proration calculations made pursuant to this Section
3.5. The proration and adjustment process provided in this Section 3.5 shall
also include an adjustment of cash received by Purchaser or Sellers (as the case
may be) to which the other is entitled pursuant to the provisions of Sections
2.1 and 2.3 above, but shall not include an adjustment for security and other
deposits heretofore paid by Sellers to third parties.
3.6 Further Assurances From time to time after the Closing and without
further consideration, (a) Sellers, upon the request of Purchaser and at
Sellers' expense, shall execute and deliver such documents and instruments of
conveyance and transfer as Purchaser may reasonably request in order to
consummate more effectively the purchase and sale of the Acquired Assets as
contemplated hereby and to vest in Purchaser title to the Acquired Assets
transferred hereunder, provided that (i) Sellers shall not be required to
execute or deliver any document or instrument pursuant to this Section 3.6 which
includes any provision(s) which impose financial obligations upon the Sellers
which are greater than those imposed upon Sellers under the other provisions of
this Agreement or the documents executed pursuant hereto and (ii) in no event
shall Sellers be required to incur any material cost or expense in the
performance of its obligations under this Section 3.6 (it being understood that
Purchaser shall in any event be entitled to require Sellers to take such action
as Sellers would otherwise be required to take pursuant to this Section 3.6 but
for the cost thereof by advancing to Sellers the amount Sellers reasonably
anticipate incurring in excess of immaterial costs and expenses of taking such
action), and (b) Purchaser, upon the request of Sellers and at Purchaser's
expense, shall execute and deliver such documents and instruments of assumption
as Sellers may reasonably request in order to confirm Purchaser's liability for
the obligations under the Assumed Obligations or otherwise more fully consummate
the transactions contemplated by this Agreement; provided that (i) Purchaser
shall not be required to execute or deliver any document or instrument pursuant
to this Section 3.6 which includes any provision(s) which impose obligations
upon the Purchaser which are greater than those imposed upon Purchaser under the
other provisions of this Agreement or the documents executed pursuant hereto,
and (ii) in no event shall Purchaser be required to incur any material cost or
expense in the performance of its obligations under this Section 3.6 (it being
understood that notwithstanding the foregoing, Sellers shall in any event be
entitled to require Purchaser to take such action as Purchaser would otherwise
be required to take pursuant to this Section 3.6 but for the cost thereof by
advancing to Purchaser the amounts Purchaser reasonably anticipates incurring in
excess of immaterial costs and expenses in taking the action).
3.7 Diligent Efforts to Finalize All Adjustments. Sellers and Purchaser
hereby agree to use their diligent, good faith efforts to effectuate and
finalize all Purchase Price and other adjustments contemplated by this Article
III within ninety (90) days following the Closing Date. In the event that all
such adjustments have not been finalized and effectuated by the expiration of
such ninety (90) day period, either party shall have the right, upon written
notice to the other(s), to submit the determination of the remaining adjustments
to the Bankruptcy Court for determination (on shortened time if the Bankruptcy
Court will hear the matter on such basis); provided, however, in the event it is
determined that the Bankruptcy Court lacks jurisdiction to resolve disputes
relating to the Xxxx Canada Assets, then the parties agree that any such dispute
shall be submitted to binding arbitration by an arbitrator to be mutually
acceptable to Purchaser and Sellers or, if an arbitrator cannot be agreed upon,
an arbitrator appointed by a court with jurisdiction over the matter.
3.8 Indemnification. Sellers jointly and severally hereby indemnify and
hold Purchaser (and any Permitted Designee thereof), its officers, directors,
shareholders, affiliates and employees (collectively, "Representatives")
harmless from, against and in respect of (and shall on demand, following
submission of reasonable evidence thereof, reimburse Purchaser or its
Representatives for) any and all loss, liability, cost, expense or damage
suffered or incurred by Purchaser in respect of or in connection with (i) any
liabilities or obligations of Sellers not expressly assumed by Purchaser under
this Agreement, and (ii) any breach by Sellers of the representations,
warranties or agreements contained herein. The Purchaser hereby waives
compliance by the Sellers with the provisions of the Bulk Sales Act (Ontario) or
similar applicable legislation of any other province of Canada (the "Bulk Sales
Act"), and in consideration hereof, the Sellers agree to indemnify the Purchaser
from any claims that may be asserted against it by any creditor of the Sellers,
or any other person, firm or corporation, by reason of the Purchaser not having
required the Sellers to comply with the Bulk Sales Act or by reason of the
waiver aforesaid, provided that the Sellers shall have no liability pursuant to
this Section 3.8 for any claims with respect to any debts or obligations which
were agreed to be assumed by the Purchaser pursuant to this Agreement or any
Ancillary Documents delivered pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers represent and warrant to Purchaser as of the date of this
Agreement and the Closing Date, as follows:
4.1 Due Incorporation; Good Standing Sellers are corporations duly
incorporated under the laws of the states or provinces of their respective
incorporation, and are in good standing thereunder as of the date hereof and as
of the Closing.
4.2 Consents. To Sellers' actual knowledge, except for consents,
approvals or authorizations of, or filings with, the Bankruptcy Court, the H-S-R
Approvals, and any notices or approvals required in connection with the transfer
of the Xxxx Canada Assets, no notice to, filing with, authorization of,
exemption by, or consent of any governmental authority is required in order for
Sellers to consummate the transactions contemplated hereby.
4.3 Title to and Condition of Properties. At and as of the Closing
Date, Sellers will have good and marketable title to, and will have the right to
sell, convey, transfer, assign and deliver to Purchaser the Acquired Assets,
including, but not limited to, the Leases, the Assumed Contracts and the
Inventory on hand at each of the locations from and at which the Business is
conducted and operated. Subject to any consents required with respect to the
transfer of the Xxxx Canada Assets, at and as of the Closing Date, the Bill of
Sale and the Assignment and Assumption will be effective to vest in Purchaser
good and valid record and marketable title to the Acquired Assets, including,
but not limited to, the Leases, the Assumed Contracts and all of the Inventory
on hand at each of the locations from and at which the Business is conducted and
operated. To Sellers' actual knowledge, at and as of the Closing Date, Sellers
will have good and marketable title to, and will have the right to sell, convey,
transfer, assign and deliver to Purchaser its interest in the Intellectual
Property.
4.4 Contracts. To Seller's actual knowledge, incorporated into Schedule
2.2(b) hereof is a true and complete list of all material Contracts (i.e.,
contracts under which Sellers would be required to pay $10,000 or more annually
to another party) as of the date hereof to which a Seller is party and which
relates exclusively to the Business, or to which any of the Acquired Assets or
Assumed Obligations are subject.
4.5 Brokers. Sellers have incurred no liability to any broker, finder
or agent with respect to the payment of any commission regarding the
consummation of the transactions contemplated hereby, except for certain fees
and commissions payable to Gruppo, Xxxxx & Co., Sellers' financial advisor, the
payment of which shall be the sole responsibility of Sellers.
4.6 Accounts. To Sellers' actual knowledge, all of Sellers' Accounts
have been made in the Ordinary Course of Business.
4.7 Additional Representations and Warranties of Sellers. (a) Sellers
have maintained their pricing files relating exclusively to the Business in the
Ordinary Course of Business, and prices charged to the public for goods (whether
in-Stores, by advertisement or otherwise) are the same in all material respects
as set forth in such pricing files for the periods indicated therein. All
pricing files and records requested by Purchaser relative to the Merchandise
Inventory have been and will continue to be made available to Purchaser. All
such pricing files and records requested by Xxxxxxxxx and agreed to be supplied
by Sellers are and shall continue to be true and accurate in all material
respects as to the actual cost to Sellers for purchasing the goods referred to
therein and as to the selling price to the public for such goods as of the dates
and for the periods indicated therein.
(b) Sellers have not since March 31, 1999, and shall not up to
the Closing Date, (i) marked up or raised the price of any items of Merchandise
Inventory (except for price/cost adjustments or chain wide price adjustments in
the Ordinary Course of Business), or removed or altered any tickets or any
indicia of clearance or reduced price merchandise or (ii) conducted any
non-ordinary course promotional activity.
(c) Sellers shall ticket or mark all items of Merchandise
Inventory received at the Xxxx Stores or at Xxxx By Mail after the date hereof
but prior to the Closing Date in a manner consistent with similar inventory
located at the Xxxx Stores or at Xxxx By Mail and in accordance with Sellers'
historic practices and policies relative to pricing and marking of inventory.
(d) All point of sale activity at the Xxxx Stores or at Xxxx
By Mail has occurred and will occur up to the Closing Date in the Ordinary
Course of Business.
(e) To the best of Sellers' knowledge, all Merchandise
Inventory is in compliance in all material respects with all applicable U.S. and
Canadian federal, state, province, or local product safety laws, rules and
standards.
(f) Sellers have paid and will continue to pay through the
Closing Date, (i) all self-insured or Sellers funded employee benefit programs
for Employees of the Business, including health and medical benefits and
insurance and all proper claims made in accordance with such programs, (ii) all
casualty, liability, workers' compensation and other insurance premiums, and
(iii) all applicable Taxes.
(g) Sellers have not and shall not through and including the
Closing Date intentionally take any actions to increase the cost of operating
the Business, including, without limitation, increasing salaries or other
amounts payable to Employees, except to the extent such action is in the
Ordinary Course of Business.
(h) Sellers have and shall continue through and including the
Closing Date to operate the Business in the Ordinary Course of Business.
(i) Sellers are not a party(ies) to any collective bargaining
agreement covering any of the Employees of the Business and no labor union
represents any such Employees.
(j) Xxxx Canada is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
4.8 As of the date of the execution and delivery hereof and as at the
Closing, Sellers' books and records fairly and accurately reflect and represent
(i) the Retail Price of the Merchandise Inventory in the Xxxx Stores and in Xxxx
By Mail, and (ii) the sales of Merchandise Inventory in the Xxxx Stores and Xxxx
By Mail.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
5.1 Purchaser represents and warrants to Sellers as follows:
(a) Organization, Standing and Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its organization. Purchaser has all requisite corporate power
and authority to own, lease and operate its properties, to carry on its business
as now being conducted and to execute, deliver and perform this Agreement and
all writings relating hereto, and Purchaser's execution and delivery of this
Agreement has been duly authorized by all requisite corporate action. This
Agreement has been validly executed by Purchaser and constitutes the valid and
binding obligation of Purchaser enforceable in accordance with its terms,
subject to the satisfaction of the conditions contained in Articles VI and VIII
hereof.
(b) No Conflicts or Violations. The execution and delivery of
this Agreement, the consummation of the transactions herein contemplated, and
the performance of, fulfillment of an compliance with the terms and conditions
hereof by Purchaser do not and will not: (i) conflict with or result in a breach
of the articles of incorporation or by-laws of Purchaser; (ii) violate any
statute, law, rule or regulation, or any order, writ, injunction or decree of
any court or governmental authority; or (iii) violate or conflict with or
constitute a default under any agreement, instrument or writing of any nature to
which Purchaser is a party or by which Purchaser or its assets or properties may
be bound.
(c) Consents. Except as concerns such filings and approvals as
may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act ("H-S-R
Approvals"), as applicable, no notice to, filing with, authorization of,
exemption by, or consent of any authority is required in order for Purchaser to
consummate the transactions contemplated hereby.
(d) Brokers. Purchaser has incurred no liability to any
broker, finder or agent with respect to the payment of any commission regarding
the consummation of the transactions contemplated hereby.
5.2 "AS IS" Purchase. Purchaser hereby acknowledges and agrees that,
except as otherwise expressly provided in Article IV above, (i) Sellers make no
representation or warranties whatsoever, express or implied, with respect to any
matter relating to the Acquired Assets, and (ii) Purchaser accepts the Acquired
Assets "AS IS," "WHERE IS," and "WITH ALL FAULTS."
ARTICLE VI
COVENANTS OF SELLERS AND/OR PURCHASER
-------------------------------------
6.1 Consents and Approvals. (a) Subject to the provisions of Section
3.6 above and subsection (b) below, Sellers and Purchaser shall each use their
commercially reasonable best efforts (i) to obtain all consents and approvals,
as reasonably requested by Purchaser, to more effectively consummate the
purchase and sale of the Acquired Assets and the assumption and assignment of
the Assumed Contracts, Assumed Leases, and Assumed Obligations, as applicable,
together with any other necessary consents and approvals to consummate the
transactions contemplated hereby, (ii) to make, as reasonably requested by
Purchaser, all filings, applications, statements and reports to all authorities
which are required to be made prior to the Closing Date by or on behalf of
Sellers or any of their affiliates pursuant to any applicable Regulation in
connection with this Agreement and the transactions contemplated hereby, (iii)
to obtain, as reasonably requested by Purchaser, all required consents and
approvals (if any) to assign and transfer the Permits to Purchaser at Closing
and, to the extent that one or more of the Permits are not transferable, to
obtain replacements therefor; (iv) to obtain, to the extent required, all
consents to the sale, transfer and/or assignment of the Xxxx Canada Assets to
Purchaser (or any designee thereof), including, but not limited to any Xxxx
Store Lease associated with the conduct of the Business in Canada; and (v) to
obtain, with respect to the Xxxx Canada Assets, from the lessors of the Xxxx
Store Leases to be assigned to the Purchaser (or any Permitted Designee thereof)
and from the other parties to the Contracts associated with the conduct of the
Business in Canada, an estoppel certificate stating that such Xxxx Store Lease
or Contract is in good standing, unmodified, and in full force and effect, that
all rent and other amounts due thereunder are current and that no default of the
Sellers exists thereunder at the Closing Date; provided that Sellers shall not
be required to make any filing in connection with the transfer of a Permit or
take any other action required by this sentence unless Purchaser advances any
and all fees and other charges imposed by any applicable authority or other
Person in connection with such filing, transfer or other requested action.
Subject to the provisions of Section 3.6 and subsection (b) below, in the event
that certain Permits are not transferable or replacements therefor are not
obtainable on or before the Closing, but such Permits are transferable or
replacements therefor are obtainable after the Closing, Sellers shall continue
to use such reasonable efforts in cooperation with Purchaser after the Closing
as may be required to obtain all required consents and approvals to transfer, or
obtain replacements for, such Permits after Closing and shall do all things
reasonably necessary to give Purchaser the benefits which would be obtained
under such Permits.
(b) Purchaser and Sellers shall each pay one-half of the
filing fees associated with obtaining the H-S-R Approvals, to the extent such
approvals and/or consents are required under Section 4.2 and Section 5.1(c)
hereof. Sellers' one-half share of the filing fees associated with the H-S-R
Approvals, and deducted from the Purchase Price at Closing pursuant to Section
3.2 hereof, shall be referred to herein as the "H-S-R- Approvals Amounts."
6.2 Noncompetition and Confidentiality.
(a) Sellers acknowledge they have a special knowledge of the
Business and the proprietary and confidential information included in the
Acquired Assets, and that Purchaser is making a considerable investment in the
Acquired Assets from which investment Sellers have benefited. In consideration
of this Agreement and such investment and benefit, and as an inducement to
Purchaser to enter into this Agreement and consummate the transactions
contemplated herein, Sellers agree that, for a period of three (3) years after
the Closing Date, (i) they will not, directly or indirectly, own, manage,
operate, control or participate in the ownership, management, operation or
control of, otherwise engage in the Business; or have any financial interest in,
or aid or assist anyone else in the conduct of, any business that competes with
the Business as conducted on the date hereof (a "Competitive Business");
provided, however, that Sellers may own less than 5% of any outstanding class of
publicly traded securities of an issuer that is a Competitive Business, and (ii)
they will not, directly or indirectly in one or a series of transactions,
disclose in violation of this Agreement to any person (other than any of
Sellers' officers, directors, employees, advisors or affiliates), or use or
otherwise exploit for their own benefit or for the benefit of anyone other than
Purchaser, Confidential Information (as defined below) and Sellers shall use
their reasonable efforts to direct all persons or entities to whom any
Confidential Information has been disclosed without violation hereunder to
observe the terms and conditions set forth herein as though each such person or
entity was bound hereby. "Confidential Information" means any trade secret,
confidential study, data, calculations, software storage media or other
compilation of information, patent, patent application, copyright, trademark,
trade name, service mark, service name, "know-how", trade secrets, customer
lists, details of client or consultant contracts, pricing policies, sales
techniques, confidential information relating to suppliers, marketing plans or
strategies, products and formulae, product development techniques or plans,
business acquisition plans or any portion or phrase of any scientific or
technical information, ideas, discoveries, designs, computer programs (including
source of object codes), processes, procedures, research or technical data,
improvements or other proprietary or intellectual property of Sellers
specifically relating to the Business, whether or not in written or tangible
form, and whether or not registered, and including all files, records, manuals,
books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term "Confidential Information" does
not include, and there shall be no obligation hereunder with respect to,
information that is or becomes generally available to the public other than as a
result of a disclosure by Sellers in breach of this Paragraph. Sellers shall
have no obligation hereunder to keep confidential any Confidential Information
if and to the extent disclosure of any therefor is specifically required by law;
provided, however, that in the event disclosure is required by applicable law,
Sellers shall provide Purchaser with prompt notice of such requirement, prior to
making any disclosure, so that Purchaser may seek an appropriate protective
order, and shall cooperate with Purchaser, at Purchaser's expense, in connection
therewith. Notwithstanding anything to the contrary in this Agreement, Sellers
shall not be deemed to be in default under this Section 6.2 or any other
provision of this Agreement by reason of any information which Sellers may
reasonably deem appropriate to disclose in the continuing administration of the
Chapter 11 Cases.
(b) For a period of two (2) years following the Closing Date,
Sellers agree that they will not, without the express prior written approval of
Purchaser (i) directly or indirectly recruit, solicit or otherwise induce or
influence any Transferred Employee, sales agent, joint venturer, lessor,
supplier, agent, representative or any other person that has or had during the
one (1) year period immediately preceding the Closing Date a business
relationship with Sellers relating to the Business, to discontinue, reduce or
adversely modify such employment, agency or business relationship with Purchaser
as it relates solely to the Business, or (ii) only to the extent competitive
with the Business as conducted on the Closing Date, employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or agent
who is employed or retained by Purchaser. Notwithstanding the foregoing, nothing
herein shall prevent an officer of Sellers from providing a letter of
recommendation to an employee with respect to a future employment opportunity.
(c) For a period of three (3) years following the Closing
Date, Sellers agree that they will not without the express prior written
approval of Purchaser, directly or indirectly, recruit, solicit or otherwise
induce or influence any customer of Purchaser to discontinue, reduce or modify
such business relationship with Purchaser to the extent such business
relationship pertains to the Business.
(d) Sellers agree that the violation or threatened violation
of any of the provisions of this Section 6.2 by them shall cause immediate and
irreparable harm to Purchaser and that the damage to Purchaser will be difficult
or impossible to calculate with precision. Therefore, in the event that Sellers,
or any employee, agent, or representative thereof violates this Section 6.2, an
injunction restraining Sellers or such employee, agent, or representative of
Sellers, as the case may be, from such violation may be entered (upon proper
proof) against the Sellers or such employee, agent, or representative of
Sellers, as the case may be, in addition to any other relief available to
Purchaser.
(e) If, at the time of enforcement of any provision of this
Section 6.2, a court shall hold that the duration, scope or other restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope or other restrictions reasonable under
such circumstances shall be substituted for the stated duration, scope or other
restrictions and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and other restrictions
permitted by law.
6.3 Referral of Business Opportunities. From and after the Closing
Date, Sellers shall use reasonable efforts to refer to Purchaser all incoming
business inquiries, customer orders and other matters related to the Business,
the Acquired Assets and the Assumed Obligations including, without limitation,
all customer orders received by Sellers via computer or other automated
inventory control systems. To the extent customer orders are delivered to third
party electronic data interchange providers, such providers will be instructed
to transmit such orders to Purchaser or Purchaser's providers. Electronic
delivery, if used, shall be by such method as shall be mutually agreed.
6.4 Sellers' Employees. Sellers shall use commercially reasonable
efforts to facilitate Purchaser's hire of such of Sellers' Employees as shall be
designated by Purchaser at or prior to the Closing, consistent with Section 7.2
hereof.
6.5 Purchaser's Access To Sellers' Records. From and after Seller's
execution and delivery of this Agreement, Sellers shall continue to provide
Purchaser (or its designated representatives) full and complete access, upon
reasonable advance notice to Sellers, to Sellers' employees, books and records,
corporate offices and other facilities for the purpose of conducting such
additional due diligence as Purchaser deems appropriate or necessary, in its
discretion, in order to facilitate Purchaser's efforts to consummate the
transaction provided for herein. Sellers hereby covenant and agree to reasonably
cooperate with Purchaser in this regard.
Other than the covenants set forth in the last sentence of Section 6.1(a) and
the covenants set forth in Sections 6.2, 6.3 and 6.4 (which shall survive the
Closing), all covenants of Sellers set forth in this Agreement shall lapse at,
and be of no further force or effect following, the Closing.
ARTICLE VII
COVENANTS OF PURCHASER
----------------------
7.1 Assumed Obligations. Subsequent to the Closing, Xxxxxxxxx agrees to
assume and perform the Assumed Obligations.
7.2 Employees. All the employees with respect to the Business
("Employees") shall be listed in Schedule 7.2 to be made a part hereof;
provided, that Sellers shall deliver the list to comprise Schedule 7.2 hereto
not later than ten (10) days prior to the commencement of the Overbid Auction.
Upon the occurrence of the Closing, Purchaser shall offer substantially all such
Employees continued employment by Purchaser in connection with the business
operations related to the Acquired Assets (including interim employment to those
Employees employed at the Designated Lease locations for a period not longer
than the term of the License thereat, in Purchaser's discretion), at
compensation and benefit levels substantially equivalent to their present
levels, unless Purchaser and such Employee(s) agree otherwise. Employees who
accept offers of employment made by Purchaser pursuant to this Section 7.2 shall
be referred to hereinafter as the "Transferred Employees." Sellers shall assist
Purchaser in effecting the change of employment of the Transferred Employees as
of the Closing in an orderly fashion. Nothing herein expressed or implied shall
confer upon any Employee of Sellers, any Transferred Employee, any other
employee or any legal representative thereof any additional rights or remedies,
including any additional right to employment or continued employment for any
specified period, of any nature or kind whatsoever, under or by reason of this
Agreement.
7.3 Reasonable Access to Records and Certain Personnel. Following
consummation of the Closing, so long as such access does not unreasonably
interfere with Purchaser's business operations, Purchaser shall permit Sellers'
counsel and other professionals employed in the Chapter 11 Cases or otherwise
retained by Sellers reasonable access to the financial and other books and
records relating to the Acquired Assets or the Business (whether in documentary
or data form) for the purposes of facilitating the continuing administration of
the Chapter 11 Cases, preparing Tax Returns or responding to Tax related
inquiries, and other such administrative activities, which access shall include
the right of such professionals to copy, at the Sellers' expense, such documents
and records as they may request in furtherance of the purposes described above,
subject in all respects to the provisions of Section 6.2 hereof. If Purchaser
moves any such documents or records from their present location, Sellers have
the right to require Purchaser to copy and deliver to Sellers or their
professionals such documents and records as they may request, but only to the
extent Sellers or any such professional (i) furnish Purchaser with reasonably
detailed written descriptions of the materials to be so copied and (ii) Sellers
reimburse Purchaser for the costs and expenses thereof. The parties acknowledge
that Sellers shall have the right to retain any documents and records provided
to them by Purchaser, subject in all respects to the provisions of Section 6.2
hereof. Following the Closing, Purchaser shall provide Sellers and such of
Sellers' professionals as Sellers shall have from time-to-time designated, with
reasonable access to former management of the Business during regular business
hours to assist Sellers as set forth in this Section 7.3, provided again that
such access does not unreasonably interfere with Purchaser's business
operations. Purchaser shall not dispose of any such documents and records except
as shall be consistent with applicable law; provided, further, Purchaser shall
provide Sellers with reasonable advance notice prior to the disposal of any such
documents or records, together with the opportunity for Sellers to preserve such
documents or records at Sellers' cost.
Except for the covenant set forth in Section 7.2 above (to the extent that it is
fully performed by Purchaser concurrently with or prior to the Closing), all of
Purchaser's covenants set forth in this Agreement shall survive the Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser under this Agreement are, at the option of
Purchaser, subject to satisfaction of the following conditions precedent on or
before the Closing Date.
8.1 Representations and Warranties True as of Both Present Date and
Closing Date Each of the representations and warranties of Sellers contained
herein shall be true and correct in all material respects on and as of the date
of this Agreement, (except for such changes as are contemplated by the terms of
this Agreement and except for representations and warranties which specifically
relate to an earlier date) on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. Sellers shall also have
complied with all of their respective covenants and obligations hereunder which
are to be completed or complied with at or prior to Closing.
8.2 Bankruptcy Condition. The Sale Order (i) shall have been entered by
the Bankruptcy Court, and (ii) shall not have been appealed or be subject to any
pending appeal as of the Closing Date, and no stay with respect thereto shall be
in effect as of the Closing Date.
8.3 No Material Adverse Change. The Purchaser being satisfied that
there has been no material adverse change in the Acquired Assets between the
date hereof and Closing.
8.4 Bankruptcy Court Approval of Certain Store Closing Sales. The
Bankruptcy Court must approve, simultaneous with the approval of the transaction
contemplated hereby, Sellers' grant to Purchaser of a license (the "License") to
use certain of Sellers' Stores for the purpose of conducting
"going-out-of-business," "store closing" or similar theme inventory liquidation
sales ("Store Closing Sales") in the Designated Lease locations (collectively,
the "Closing Locations", with such Store Closing Sales to be (a) for the sole
account and benefit of the Purchaser, (b) completed by Purchaser no later than
90 days after the Closing Date, and (c) conducted in accordance with procedures
reasonably satisfactory to Purchaser, and further consistent with such
procedures as are customarily approved by the Bankruptcy Court in similar such
situations. The Sale Order shall contain provisions satisfactory to Purchaser
which grants Purchaser the License to use the Closing Locations for the duration
of the Store Closing Sales thereat, with Purchaser being obligated to pay all
associated costs of the use and occupancy of the Closing Locations during the
conduct of the Store Closing Sales therefrom.
8.5 Overbid Protection; Expense Reimbursement. Purchaser acknowledges
that its offer may be subject to the Sellers' receipt of higher and/or better
offers in the course of the Bankruptcy Court approval process. In the event
Sellers solicit higher and/or better offers in connection with the Bankruptcy
Court approval process at an overbid auction to be held at a date, time and
place satisfactory to Purchaser, and conducted in accordance with procedures
deemed reasonably satisfactory to Purchaser ("Overbid Auction"), any competing
offer from a third party must be in an amount that is not less than
$1,000,000.00 higher than the Purchase Price herein, with any successive offers
being made in additional increments of not less than $250,000 of the next
highest offer received (collectively, the "Sale Procedures"); provided further,
if Purchaser is not the successful purchaser of the Acquired Assets, Sellers
shall (i) pay Purchaser a topping fee of $660,000, and (ii) reimburse Purchaser
for its actual, documented out-of-pocket expenses, including reasonable
attorneys' fees, in an amount not to exceed $150,000 plus an amount equal to the
H-S-R Approvals Amount (the amounts provided for in this Section 8.5(i) and (ii)
are collectively defined as the "Topping Fee"). Within two (2) business days of
the execution and delivery of this Agreement, or such other date(s) as Purchaser
and Sellers shall agree, Edison shall file a motion with the Bankruptcy Court,
seeking relief on an expedited basis, for entry of an order (a) approving the
Sale Procedures to be employed at the Overbid Auction, if any, and the Sellers'
payment of the Topping Fee, and (b) scheduling a hearing for approval of the
transaction provided for herein (the "Sale Procedures Order"). Purchaser shall
furnish Sellers with a xxxxxxx money good faith deposit in an amount equal to
$3,170,000 (the "Deposit") at the commencement of the Overbid Auction. The
Deposit shall be held and segregated by Sellers in an interest bearing account;
provided, however, the Sale Procedures Order shall contain such terms and
provisions or shall be satisfactory to Purchaser with respect to the governance
of the Deposit and the parties' relative rights and interests therein. The
Deposit (together with any interest earned thereon) shall be applied toward the
payment of the Purchase Price at Closing as provided in Section 3.2(a) hereof;
provided, however, in the event Purchaser elects to terminate this Agreement in
accordance with the terms hereof, Sellers shall, within two (2) Business Days of
delivery of written notice to Sellers of such termination by Purchaser, return
the Deposit to Purchaser, together with all interest earned thereon.
8.6 Bankruptcy Court Approval. Entry of one or more orders of the
Bankruptcy Court, inter ail, approving (i) the Sale Procedures, (ii) the sale,
assignment, transfer and conveyance of the Acquired Assets to Purchaser,
pursuant to the terms of this Agreement, and (iii) the Sellers' grant to the
Purchaser of the License at Closing. The Sale Order must be in form and content
reasonably satisfactory to the Purchaser and at a minimum contain the following:
(i) a finding that the Acquired Assets shall be sold to Purchaser free and clear
of all liens, claims and encumbrances pursuant to section 363(f) of the
Bankruptcy Code, (ii) provision that the Purchaser is a good faith purchaser
entitled to the protection of section 363(m) of the Bankruptcy Code, (iii)
authorization for Purchaser's conduct of the Store Closing Sales at the Closing
Locations upon terms and conditions reasonably satisfactory to Purchaser, (iv)
authorization for Sellers' assumption and assignment to Purchaser of at least
130 Store Leases, (v) the exemption of the transactions contemplated herein from
certain taxes under section 1146(c) of the Bankruptcy Code, and (vi) the
retention of jurisdiction by the Bankruptcy Court to resolve any and all
disputes that may arise under this Agreement as between Sellers and Purchaser,
and further to hear and determine any and all disputes between Sellers and/or
Purchaser, as the case may be, and any non-Seller party to, among other things,
any Assumed Contract or Assumed Lease, as applicable, concerning, inter ail,
Sellers' assumption and assignment thereof to Purchaser under this Agreement.
8.7 Lease/Contract Assumption and Assignment. The Sale Order shall
approve and authorize the assumption and assignment of the Assumed Leases and
Assumed Contracts over which the Bankruptcy Court has jurisdiction. The Sale
Order shall also provide that Purchaser's obligation to pay Sellers' lessors
under any Assumed Leases over which the Bankruptcy Court has jurisdiction any
amount in respect of a Cure Amount shall be limited in all respects to the
aggregate amount of the Assumed Lease/Contract Cap.
8.8 Sale Order Deadline. Except as otherwise provided in Section 10.1
hereof, the Sale Order shall be entered on or before May 19, 1999.
8.9 Closing Deadline. Except as otherwise provided in Section 10.1
hereof, the Closing must occur on or before May 25, 1999.
8.10 Intentionally Omitted.
8.11 Assignment of Xxxx Canada Store Leases. Sellers shall have
obtained (in form reasonably satisfactory to Purchaser (or any Permitted
Designee thereof)) the written consent of (i) each landlord under each Xxxx
Canada Store Lease(s) to the assumption and assignment thereof to Purchaser (or
any designee thereof), and (ii) each holder of a Lien as against any Xxxx Canada
Asset to the release of such Lien, unless Purchaser (or any Permitted Designee
thereof, as applicable) provides Sellers with written notice of its waiver of
the requirements of this Section 8.11, whether whole or in part, at Purchaser's
(or any designee thereof, as applicable) sole discretion, together with the
Xxxxxxx certificates described in Section 6.1(a) hereof; provided, however, in
the event Sellers are unable to obtain one or more landlord consents, and
Purchaser does not waive the requirement for such consents, then the subject
Lease(s) shall not be assigned to Purchaser, Sellers shall remain obligated in
respect of such Lease(s), and Purchaser and Sellers shall nevertheless proceed
with the Closing (subject to the satisfaction of all other conditions precedent
thereto) and shall agree on a mutually acceptable adjustment of the Purchase
Price; provided, however, in the event Purchaser and Sellers are unable to agree
on the amount of any such adjustment to the Purchase Price, such dispute shall
be submitted to binding arbitration in the manner provided in Section 3.7
hereof. Sellers agree that they shall fund up to $200,000 (CDN) towards the
expenses, if any, of obtaining the required consents to the assignment of Xxxx
Canada Store Leases and other Contracts associated with the conduct of the
Business in Canada ("Canadian Assignment Costs"), it being the further agreement
of the parties that Sellers and Purchaser shall each be entitled to direct the
disposition of one-half of the Canadian Assignment Costs, in their respective
discretion.
8.12 H-S-R Approvals Obtained. The Purchaser shall have obtained all
requisite clearances in connection with the H-S-R Approvals.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
----------------------------------------------
The obligations of Sellers under this Agreement are, at the option of
Sellers, subject to the satisfaction of the following conditions precedent on or
before the Closing Date:
9.1 Representations and Warranties True as of Both Present Date and
Closing Date. The representations and warranties of Purchaser contained herein
shall be true and correct in all material respects on and as of the date of this
Agreement, and shall also be true in all material respects (except for such
changes as are contemplated by the terms of this Agreement, and except for
representations and warranties which specifically relate to an earlier date) on
and as of the Closing Date with the same force and effect as though made by
Purchaser on and as of the Closing Date. Purchaser shall also have complied with
all of its covenants and obligations hereunder which are to be completed or
complied with at or prior to Closing.
9.2 Bankruptcy Condition. The Sale Order (i) shall have been entered by
the Bankruptcy Court, and (ii) shall not have been appealed or be subject to any
pending appeal as of the Closing Date, and no stay with respect thereto shall be
in effect as of the Closing Date.
9.3 Intentionally Omitted.
9.4 Sale Order Deadline. Except as otherwise provided in Section 10.1
hereof, the Sale Order shall be entered on or before May 19, 1999.
9.5 Closing Deadline. Except as otherwise provided in Section
10.1 hereof, the Closing must occur on or before May 25, 1999.
9.6 H-S-R Approvals Obtained. The Purchaser shall have obtained all
requisite clearances in connection with the H-S-R Approvals.
ARTICLE X
CLOSING
-------
10.1 Closing. Provided that the Sale Order shall not have been appealed
or otherwise be subject to a stay or other injunction, and unless otherwise
agreed by Purchaser and Sellers, the Closing shall take place within three (3)
Business Days after the entry of the Sale Order, but in no event later then May
25, 1999; provided, however, in the event the Closing is delayed beyond May 25,
1999 due to delays associated with the H-S-R Approvals process, then the Closing
deadline shall be extended until the second Business Day after the H-S-R
Approvals shall have been obtained and all other closing conditions shall have
been satisfied; provided, however, in no event shall the Closing be extended
beyond June 14, 1999, unless otherwise mutually agreed by Purchaser and Sellers,
in which case the Closing shall take place at such other date, time and place as
Sellers and Purchaser shall mutually agree.
10.2 Deliveries by Sellers. At the Closing, Sellers will deliver, in
addition to the other documents contemplated by this Agreement, the following to
Purchaser: (a) a Bill of Sale ("Bill of Sale") in form and content mutually
satisfactory to Purchaser and Sellers; (b) the Assignment and Assumption; (c) a
Trademark Assignment in form and content mutually satisfactory to Purchaser and
Sellers; (d) the Escrow Agreement; (e) with respect to each vehicle comprising
part of the Acquired Assets, an original Certificate of Title (or, if
unavailable, a mutually satisfactory substitution therefor), with the assignment
portion completed and signed by Sellers; and (f) such other and additional
documents of transfer that may be reasonably requested by Purchaser (and/or any
Permitted Designee thereof).
10.3 Deliveries by Purchaser. At the Closing, Purchaser will deliver
the following: (a) the Purchase Price payable pursuant to and in accordance with
Section 3.1 and Section 3.2; and (b) duly-executed originals of the Assignment
and Assumption, and the Escrow Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Expenses. Subject to (i) Section 3.3 hereof (with respect to the
sharing of the cost of the Physical Inventory), (ii) Section 6.1(b) hereof (with
respect to the sharing of the cost of obtaining the H-S-R Approvals), and (iii)
Section 8.5 (with respect to the Topping Fee) each party hereto shall bear its
own expenses with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, in the event of any action or proceeding to
interpret or enforce this Agreement, the prevailing party in such action or
proceeding (i.e., the party who, in light of the issues contested or determined
in the action or proceeding, was more successful) shall be entitled to have and
recover from the non-prevailing party such costs and expenses (including,
without limitation, all court costs and reasonable attorneys' fees) as the
prevailing party may incur in the pursuit or defense thereof.
11.2 Amendment. This Agreement may be amended, modified or supplemented
but only in a writing signed by all of the parties hereto.
11.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person, (ii) on the date of
transmission if sent by telex, telecopy or other wire transmission (provided
that a copy of such transmission is simultaneously deposited in the manner
provided in clause (iv) below), (iii) one business day after being delivered to
a nationally known commercial courier service providing next day delivery
service (such as Fed Ex), or (iv) three business days after being deposited in
the U.S. mail, certified or registered mail, postage prepaid:
(A) If to Sellers, addressed as follows:
Edison Brothers Stores, Inc.
000 X. Xxxxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx,
Xx. Vice President, General Counsel, Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to:
Xxxx, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
-and-
Xxxxxxx and Xxxx
Suite 0000
Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(B) If to Purchaser, addressed as follows:
X. Xxxxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Executive Vice President,
Chief Financial Officer, Treasurer
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Xxxxx, Xxxxxxxxxx & Xxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
- and -
Xxxxxx Xxxxxxxx Xxxxxxx
Box 20
Toronto Dominion Centre
Toronto, Canada M5K1N6
Attn: Xxxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
11.4 Effect of Investigations. Any due diligence review, audit or other
investigation or inquiry undertaken or performed by or on behalf of Purchaser
shall not limit, qualify, modify or amend the representations, warranties and
covenants of, and indemnities by, Sellers made or undertaken pursuant to this
Agreement, irrespective of the knowledge and information received (or which
should have been received) therefrom by Purchaser.
11.5 Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
11.6 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Headings The headings preceding the text of Articles and Sections
of this Agreement and the Schedules thereto are for convenience only and shall
not be deemed part of this Agreement.
11.8 Applicable Law and Jurisdiction. SUBJECT TO ANY PROVISION IN THIS
AGREEMET AND ANY ANCILLARY DOCUMENT, TO THE CONTRARY, THIS AGREEMENT (AND ALL
DOCUMENTS, INSTRUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED PURSUANT TO THE
TERMS AND PROVISIONS HEREOF (COLLECTIVELY, AANCILLARY DOCUMENTS@)) SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH
JURISDICTION. PURCHASER AND XXXXXXX FURTHER AGREE THAT THE BANKRUPTCY COURT
SHALL HAVE JURISDICTION OVER ALL DISPUTES AND OTHER MATTERS RELATING TO (i) THE
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT OR ANY ANCILLARY DOCUMENT;
AND/OR (ii) THE ACQUIRED ASSETS AND/OR ASSUMED OBLIGATIONS (INCLUDING, WITHOUT
LIMITATION ANY DISPUTES REGARDING ANY ADJUSTMENTS CONTEMPLATED BY ARTICLE III
HEREOF WHICH ARE NOT RESOLVED BY MUTUAL AGREEMENT WITHIN ONE HUNDRED TWENTY
(120) DAYS FOLLOWING THE CLOSING DATE) AND PURCHASER EXPRESSLY CONSENTS TO AND
AGREES NOT TO CONTEST SUCH JURISDICTION.
11.9 Binding Nature; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned by any of the parties hereto
without prior written consent of the other parties; except, that (i) X. Xxxxx
may assign any of its rights hereunder to any affiliate, wholly-owned subsidiary
or designated participant therewith (a "Permitted Designee"), including with
regard to the acquisition of the Xxxx Canada Assets (and upon such designation
as a Permitted Designee hereunder, such Permitted Designee shall become
obligated to perform any and all obligations arising hereunder in respect of
that portion of the Acquired Assets and Assumed Obligations allocable thereto,
including, but not limited to, as concerns any obligations in respect of any
portion of the On-Order Goods or In-Transit Goods that may be attributable to
such Permitted Designee); provided, that, X. Xxxxx shall remain obligated to
cause any such Permitted Designee to perform the obligations of Purchaser
hereunder allocable and attributable solely to the portion of the Acquired
Assets acquired by such Permitted Designee, (ii) Purchaser may grant a security
interest in its rights and interests hereunder to its third-party lender(s).
Nothing contained herein, express or implied, is intended to confer on any
Person other than the parties hereto or their successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.10 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective affiliates and no provision
of this Agreement shall be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
11.11 Tax Matters.
(a) Purchaser shall make available to Sellers, and Sellers
shall make available to Purchaser, (i) such records as any such party may
require for the preparation of any Tax Returns required to be filed by Sellers
or Purchaser, as the case may be, and (ii) such records as Sellers or Purchaser
may require for the defense of any audit, examination, administrative appeal, or
litigation of any Tax Return in which Sellers or Purchaser was included.
(b) Purchaser shall be responsible for the timely payment of
all sales, use, transfer (including, without limitation, documentary transfer,
stamp and like taxes) and similar taxes payable in connection with the
consummation of the transactions contemplated by this Agreement; provided,
however, the Sale Order shall contain provision that the Sellers' sale,
transfer, assignment and conveyance of the Acquired Assets (other than the Xxxx
Canada Assets) to Purchaser hereunder shall be entitled to the protections
afforded under section 1146(c) of the Bankruptcy Code. To the extent required
under applicable law, Xxxx Canada will collect any such taxes from Purchaser,
and Purchaser will pay the same to Sellers at the Closing, in which case Sellers
shall remit same to the appropriate Canadian taxing authority.
(c) Notwithstanding anything herein to the contrary, as soon
as practicable following the Closing, Purchaser and Sellers shall for United
States and Canadian (including provincial) income tax purposes agree to an
allocation of the Purchase Price (and other capitalized costs) among the
Acquired Assets, subject to the provisions of Section 1060 of the Code, and such
other laws as may be applicable with respect to the Xxxx Canada Assets. The
parties hereto represent and warrant that they are both, or will be prior to the
Closing Date, registrants under Part X of the Excise Tax Act (the "ETA") and
covenant and agree to make the joint election contemplated by Subsection 167(1)
of the ETA, and prescribed for, and the Purchaser hereby covenants and agrees to
file the joint election with the Minister of National Revenue with its GST
return for its reporting period in which the transactions contemplated by this
Agreement take place. If it is determined that Goods and Services Tax is payable
by the Purchaser in respect of the supply of property contemplated by this
Agreement, then the Purchaser agrees to remit all such tax payable, and the
Purchaser agrees to indemnify the Sellers with respect thereto and all costs and
expenses relating thereto.
11.12 Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to this Agreement to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Nothing in the Disclosure
Schedule will be deemed adequate to disclose an exception to a representation or
warranty made herein unless the substance and applicability of such exception is
reasonably apparent from the disclosure contained in the Disclosure Schedule.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
items itself). The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party
hereto has breached any representation, warranty, or covenant contained herein
in any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which such party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant.
11.13 Entire Understanding. This Agreement and the Ancillary Documents
hereto set forth the entire agreement and understanding of the parties hereto in
respect to the transactions contemplated hereby, and this Agreement and such
Ancillary Documents hereto supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof. There have been no
representations or statements, oral or written, that have been relied on by any
party hereto, except those expressly set forth in this Agreement or in any
Ancillary Document hereto.
11.14 Broker Commission Indemnity. Purchaser and Sellers agree that if
any claims for commissions, fees, or other compensation, including, without
limitation, brokerage fees, finder's fees, or commissions are ever asserted
against Purchaser or the Sellers in connection with the transaction, all such
claims shall be handled and paid by the party whose actions form the basis of
such claim and such party shall indemnify, defend (with counsel reasonably
satisfactory to the party(ies) entitled to indemnification), protect and save
and hold the other harmless from and against any and all such claims or demands
asserted by any person, firm or corporation in connection with the transaction
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered on the date first above written.
PURCHASER:
X. XXXXX, INC.,
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Its: Executive V.P. & C.F.O.
SELLERS:
EDISON BROTHERS STORES, INC.,
Debtor and Debtor-in-Possession
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Senior Vice President
EDISON BROTHERS APPAREL STORES, INC.,
Debtor and Debtor-in-Possession
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Senior Vice President
XXXX LTD. BIG & TALL,
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Senior Vice President
May 19, 1999
