TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated as of January 6, 2002 (the
"Agreement"), among THE RIGHT START, INC., a California corporation ("Parent"),
TOY SOLDIER, INC. , a Delaware corporation and wholly-owned subsidiary of Parent
("Buyer"), F.A.O. XXXXXXX, a New York corporation ("FAO"), QUALITY FULFILLMENT
SERVICES, INC., a Virginia corporation ("QFS" and, together with FAO, the
"Sellers" ) and ROYAL VENDEX KBB N.V., a Netherlands corporation
("Shareholder").
R E C I T A L S:
Parent, Buyer, Sellers and Shareholder have entered into an Asset Purchase
Agreement, dated November 19, 2001 (the "APA"), pursuant to which, among other
things, Buyer shall purchase the Assets (as such term, and each other
capitalized term used herein without definition, is defined in the APA) from the
Sellers upon the terms and subject to the conditions set forth in the APA.
Subsequent to the Closing under the APA, FAO proposes to operate the
Closure Stores for purposes of effecting the orderly liquidation of FAO's
retained assets and the termination of its business.
As a condition to the Closing under the APA, the parties hereto have agreed
to enter into this Agreement.
In consideration of the foregoing and the mutual agreements and covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. Transition Services. In order to permit FAO to operate the Closure
Stores after the Effective Time, during the Term (as defined in Section 5 below)
Buyer hereby agrees to perform (and Parent shall cause Buyer to perform) for
Sellers the transition services specified on Exhibit A and such other transition
services as may be requested from time to time by Sellers in writing (the
"Transition Services"). FAO shall reimburse (and Shareholder shall cause FAO to
reimburse) the Buyer on a monthly basis, 20 days after receipt of an invoice
from the Buyer, for the Buyer's actual costs incurred in providing the
Transition Services.
2. Use of Name.
(a) FAO has retained, as of the Closing (and Buyer acknowledges that
FAO possesses) a royalty free, non-transferable, nonexclusive
license, for the duration of the Term and solely in connection
with the operation of the Closure Stores by FAO, to use the names
"FAO Xxxxxxx" and "FAO Schweetz," any derivatives thereof, and
any trademarks, service marks or trade names used by FAO in the
operation of its business prior to the Closing (the "FAO Names").
(b) FAO agrees to use the FAO Names in accordance with reasonable
written quality control guidelines delivered by Buyer to FAO and
in accordance with the Xxxxxxx Agreement. Buyer acknowledges that
use of the FAO Names in professionally created signage of the
type typically used by nationally recognized liquidators
conducting store closure sales shall not be a violation of such
quality control guidelines.
3. Further Assurances. The parties shall cooperate fully with each other to
enable the parties to fulfill their obligations and responsibilities hereunder.
The parties shall use all reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary, proper or
advisable under applicable laws, and execute and deliver such documents and
other papers as may be required or appropriate to carry out the provisions of
this Agreement and to consummate, perform and make effective the transactions
contemplated hereby.
4. Term. This Agreement shall be effective as of the Effective Time and
shall terminate on the earlier to occur of (a) the six month anniversary of the
Closing and (b) the date on which Sellers notify Buyer that all of the Closure
Stores have been closed and the remaining employees of Sellers have been
discharged (the "Term"), provided that the obligations of Buyer hereunder with
respect to COBRA coverage shall not terminate until the minimum statutory
obligation to provide such coverage shall terminate.
5. Amendments. This Agreement may not be amended except in a writing signed
by, or on behalf of, all parties hereto.
6. Notices. All notices, consents, instructions and other communications
required or permitted under this Agreement (collectively, "Notice") shall be
effective only if given in writing and shall be considered to have been duly
given when (i) delivered by hand, (ii) sent by telecopier (with receipt
confirmed), provided that a copy is mailed (on the same date) by certified or
registered mail, return receipt requested, postage prepaid, or (iii) received by
the addressee, if sent by Express Mail, Federal Express or other reputable
express delivery service (receipt requested), or by first class certified or
registered mail, return receipt requested, postage prepaid. Notice shall be sent
in each case to the appropriate addresses or telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may from time to
time designate as to itself by notice similarly given to the other parties in
accordance herewith, which shall not be deemed given until received by the
addressee). Notice shall be given:
to FAO at:
Xxxxx Xxxxxx XXX, X.X.
Xx Xxxxxxx 0, XX-0000 XX Amsterdam
Postbus 7997, 1008, AD Amsterdam
Attention: Xxxxxx Xxxxx/Xxxx ter Hark
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The Netherlands
Tel: 00.00.0000.000
Fax: 00.00.0000.000
Email: xxxx.xxx.xxxx@xxxxxxxxx.xx
with required copy to (which, in and of itself, shall not constitute notice):
Kronish Xxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxxxxxxx@xxxxxxx.xxx
and to Buyer and Parent at:
Toy Soldier Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxxxx@xxxxxxxxxx.xxx
with required copy to (which, in and of itself, shall not constitute notice):
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: xxxx@xxxxxxxxx.xxx
7. Governing Law. This Agreement will be governed by and construed under
the laws of the State of New York without regard to conflicts-of-laws principles
that would require the application of any other law.
8. Jurisdiction; Service of Process. Any Proceeding arising out of or
relating to this Agreement may be brought in the courts of the State of New York
, County of New York, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of New York, and each of the
parties irrevocably submits to the exclusive jurisdiction of each such court in
any such Proceeding, waives any objection it may now or hereafter have to venue
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or to convenience of forum, agrees that all claims in respect of the Proceeding
shall be heard and determined only in any such court and agrees not to bring any
Proceeding arising out of or relating to this Agreement in any other court. The
parties agree that either or both of them may file a copy of this paragraph with
any court as written evidence of the knowing, voluntary and bargained agreement
between the parties irrevocably to waive any objections to venue or to
convenience of forum. Each party hereto agrees that service of process in any
Proceeding may be made upon it in any manner permitted by the laws of the state
of New York or the federal laws of the United States or as follows: (i) by
personal service or (ii) by certified or registered mail to the party for which
intended at its address for notice pursuant to Section 6. Service of process
upon any party in any manner referred to in the preceding sentence shall be
deemed in every respect effective service of process upon such party.
9. Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that, in the event of a breach or threatened breach of this Agreement, the
parties shall be entitled to specific performance, injunctive or other equitable
relief, in addition to any other remedy available at law or in equity, without
posting bond or other undertaking.
10. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be adjusted
rather than voided, if possible, in order to achieve the intent of the parties
to this Agreement to the extent possible, without invalidating or adjusting the
remaining provisions hereof, and any such prohibition, unenforceability or
adjustment in any jurisdiction shall not invalidate, render unenforceable or
adjust such provision in any other jurisdiction.
11. Successors and Assigns. All covenants and agreements in this Agreement
contained by or on behalf of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties.
12. Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. The exchange of copies of this Agreement and of
signature pages by facsimile transmission shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.
14. Shareholder's Obligations. Where in this Agreement provision is made
for any action to be taken or not taken by either Seller, Shareholder undertakes
to cause such Seller to take or not take such action, as the case may be.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
by their respective duly authorized officers, as of the date first above
written.
TOY SOLDIER, INC.
By: /s/ Xxxxx X. Xxxxx
Title: President and CEO
THE RIGHT START, INC.
By: Xxxxx X. Xxxxx
Title: President and CEO
F.A.O. XXXXXXX
By: /s/ Xxx Xxxxxxx
Title: CEO
QUALITY FULFILLMENT SERVICES, INC.
By: /s/ Xxx Xxxxxxx
Title: CEO
ROYAL VENDEX KBB N.V.
By: /s/ Xxxx Xxxxxxx
Title: Director Corporate Development
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EXHIBIT A
Transition Services
Maintaining and updating the Accounts of Sellers on the Accounting System
transferred to Buyer.
Providing payroll services for employees of Sellers.
Providing human resource services to Sellers, including managing all of
Sellers' employee benefit programs.
Providing office space, in the facilities currently occupied by Seller's New
York headquarters office, to administrative and executive personnel of Sellers.
Providing and delivering inventory to the Closure Stores at cost (including
distribution) to the extent requested by Sellers to facilitate the operation of
the Closure Stores.
Assisting Sellers in the termination of Sellers' 401(k) plan.
Elevator and escalator maintenance services for certain Closure Stores pursuant
to the Complete Maintenance Agreement for Elevators and Escalators dated October
5, 1998 between Xxxxxxxxxx XXXX and FAO.
Any other administrative services provided by headquarters to stores.
Any third party services which are delivered at the individual stores but
contracted for on an FAO-wide basis under contracts which are being assigned to
the Buyer.
Providing COBRA coverage to former employees of Sellers from and after the time
requested by Sellers, to the extent requested by Sellers.
