1
PURCHASE AGREEMENT
dated as of September 20, 1998
between
Retail Company of Germany, Inc.
as Seller
Venator Group, Inc.
as Guarantor for Seller
Xx. Xxxxx Xxxxxxx Vermogensverwaltungs GmbH,
Berlin
as Buyer 1
and
Xx. Xxxxx Xxxxxxx Beteilingungsverwaltungs GmbH,
Berlin
as Buyer 2
regarding the purchase of the Woolworth Group
in Germany and Austria
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TABLE OF CONTENTS
PREAMBLE
SECTION 1 DEFINITIONS, INTERPRETATXONS ..................................
SECTION 2 THE WOOLWORTH GROUP ...........................................
SECTION 3 SALE AND PURCHASE .............................................
SECTION 4 PURCHASE PRICE ................................................
SECTION 5 CLOSING .......................................................
SECTION 6 REPRESENTATIONS AND WARRANTIES ................................
SECTION 7 BREACH OR REPRESENTATIONS AND
WARRANTIES, LIABILITY .............................
SECTION 8 TAX MATTERS ...................................................
SECTION 9 RELATIONSHIP BETWEEN THE SELLER
AND THE WOOLWORTH GROUP ............................
SECTION 10 FURTHER COVENANTS AND UNDERSTANDINGS ..........................
SECTION 11 COSTS AND TAXES ...............................................
SECTION 12 GUARANTEE FOR SELLER ..........................................
SECTION 13 JOINT AND SEVERAL LIABILITY ...................................
SECTION 14 MISCELLANEOUS .................................................
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PURCHASE AGREEMENT
dated as of September 20, 1998
between
1. Retail Company of Germany, Inc.
Wilmington, Delaware, USA
- "Seller" -
2. Venator Group, Inc., New York, N.Y., USA
- "Guarantor for Seller" -
3. Xx. Xxxxx Xxxxxxx Vermogensverwaltungs GmbH, Berlin
- "Buyer 1" -
and
4 Xx. Xxxxx Xxxxxxx Beteiligungsverwa1tungs GmbH, Berlin
- "Buyer 2" -
- Buyer 1 and Buyer 2
collectively referred to as "Buyer" -
PREAMBLE
1. The Seller is the sole owner of the Woolworth Group (as defined below) which
operates general merchandise stores and related support facilities in Germany
and Austria.
2. The Seller and the Buyer intend to sell and acquire respectively the
Woolworth Group as an operating business on and subject to the terms and
conditions of this Agreement.
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3. The Parties hereby agree as follows:
SECTION 1
DEFINITIONS, INTERPRETATIONS
1.1 Definitions
-----------
As used in this Agreement, terms below shall have the following meanings:
Accounts Date: December 31, 1997 for Xxxxx Der Xxxxx GmbH1 Xxxxx
Der Xxxxx KG, Xxxxxxx and Lidos and January 31.,
1998 for all other Material Woolworth Companies.
Affiliate: Any affiliated company (verhundenes Unternehmen)
as defined in Section 15 of the German Stock
Corporation Act.
Business Day: Any day on which banks are open for business in
Frankfurt am Main, Germany, Munich, Germany, and
London, England.
Buyer 1: Xx. Xxxxx Xxxxxxx Vermogensverwaltungs GmbH.
Buyer 2: Xx. Xxxxx Xxxxxxx Beteiljgungsverwaltungs GmbH.
Buyer: Buyer 1 and Buyer 2
Xxxxxxx: As defined in Section 2.1 h).
Closing: As defined in Section 5.2.
Closing Date: As defined in Section 5.1.
Guarantor for Seller: Venator Group, Inc., New York,
N.Y., USA
Kaufring: As defined in Section 2.1 i).
Krone: As defined in Section 2.1 d).
Lidos: As defined in Section 2.1 g).
Material Woolworth
Companies: As defined in Section 2.4.
Merkur: As defined in Section 2.1 j).
Xxxxx fler Xxxx GmbH: As defined in Section 2.1 c).
Xxxxx Der Xxxxx KG: As defined in Section 2.1 f).
Other Participations: As defined in Section 2.3.
Party: Seller or Buyer of Guarantor for Seller.
Preliminary Balance: As defined in Section 9.1
Purchase Price: As defined in Section 4.1.
Seller: Retail Company of Germany,
Inc., Wilmington, Delaware,
USA.
Sold Interests: As defined in Section 3.1.
Tappiser a Xxxxxx: As defined in Section 2.1 e).
Taxes: As defined in Section 8.1.
Woolworth Austria: As defined in Section 2.1 b)
WoolworthCompanies: As defined in Section 2.4.
WoolworthGermany: As defined in Section 2.1 a).
WoolworthGroup: As defined in Section 2.2.
1.2 Headings, Interpretation
------------------------
Headings are inserted for convenience only and shall not affect the
interpretation of this Agreement. All references to "Section" refer to the
corresponding Section of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances
require. unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
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1.3 German Translations
-------------------
Terms to which a German translation has been added shall be interpreted
throughout this Agreement in the meaning assigned to them by the German
translation.
1.4 Exhibits
--------
All Exhibits (including Appendices thereto) recorded in the notarial
protocol ("Reference Deed") of Notary Public Xx. Xxxxxxxx Xxxxxx, Frankfurt
am Main, dated September 12, 1998 (Roll of Deeds No. 398/1998) and all
Exhibits (including Appendices thereto) attached to this Agreement form an
integral part of this Agreement and are referred to as an Exhibit hereto.
Any Exhibit attached hereto which has the same designation as an Exhibit
previously recorded by the Reference Deed shall replace and supersede such
Exhibit previously recorded in the Reference Deed.
SECTION 2
THE WOOLWORTH GROUP
2.1 The following companies are members of the Woolworth Group:
a) Deutsche Woolworth GmbH (formerly X.X. Xxxxxxxxx Co. GmbH; "Woolworth
Germany"), Frankfurt am Main, Germany, which has a registered share
capital of DM 505,000,000.00 (Deutsche Marks five hundred and five
million)
Woolworth Germany is a wholly owned subsidiary of the Seller;
b) X.X. Xxxxxxxxx Co. Xxx.m.b.H. ("Woolworth Austria") Linz, Austria,
which has a registered share capital of ATS 70,000,000.00 (Austrian
Shilling seventy million)
Woolworth Austria is a wholly owned subsidiary of the seller;
c) Xxxxx Der Xxxxx Beteilingungs-GmbH ("Xxxxx Der Xxxxx GmbH"), St.
Xxxxxx, Germany, which has a registered share capital of DM 50,000.00
(Deutsche Marks fifty thousand).
Xxxxx Der Xxxxx GmbH is a wholly owned subsidiary of the Seller;
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x) Xxxxx Xxxxxxxxxxxxxxxxxxxxxxx xxx ("Xxxxx"), Xxxxxx, Xxxxxxx,
which has a registered share capital of DM 17,000,000.00
(Deutsche Marks seventeen million).
Woolworth Germany holds a 99.91% interest (= shares in the
aggregate nominal amount of DM 16,985,000.00) and the Seller
holds a 0.09% interest (= share in the nominal amount of DM
15,000.00) in Krone;
e) Tappiser & Xxxxxx XxxX ("'Xxxxxxxx & Xxxxxx"), Xxxxxxxxx xx Xxxx,
Xxxxxxx, which has a registered share capital of DM 500,000.00
(Deutsche Marks five hundred thousand).
Tappiser & Xxxxxx GmbH is a wholly owned subsidiary of Woolworth
Germany;
f) Xxxxx Der Xxxxx Beteiligungs-GmbH & Co. KG ("Xxxxx Der Xxxxx
KG"), Frankfurt am Main, Germany.
Krone holds a 99% interest in Xxxxx Der Xxxxx KG (limited
partnership interest (Kommanditeinlage) which has been registered
in the nominal amount of DM 10,000,000.00 (Deutsche Marks ten
million) of which DM 9,950,500.00 (Deutsche Marks nine million
nine hundred fifty thousand five hundred) have not yet been
paid). Xxxxx Der Xxxxx GmbH is general partner and holds a 1%
interest in Xxxxx Der Xxxxx KG;
g) Lidos Xxxxxxxxxx XxxX & Xx. Xxxxxxxxxxx--XX ("Xxxxx"), Xxxxxxx,
Xxxxxxx.
Krone holds a 99% interest in Lidos (limited partnership interest
which has been registered in the nominal amount of DM 49,500.00
(Deutsche Marks forty nine thousand five hundred)).
LHI Leasing for Handel und Industrie GmbH, Munich, holds a
limited partnership interest in Lidos which has been registered
in the nominal amount of DM 500.00 (Deutsche Marks five hundred)
The general partner of Lidos is Lidos Verwaltungs GmbH, Munich;
h) Xxxxxxx Grundstucks-Vermietungsgesellschaft mbH & Co. Objekt
Frankfurt KG ("Xxxxxxx"), Dusseldorf, Germany.
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Xxxxxxxxx Xxxxxxx holds a 99.99% interest in Xxxxxxx (limited
partnership interest which has been registered in the nominal
amount of DM 20,001,000.00 (Deutsche Marks twenty million and one
thousand) of which DM 19,981,000.00 (Deutsche Marks nineteen
million nine hundred eighty one thousand) have not yet been
paid). General partners of Xxxxxxx are Actium Leasobjekt
Gesellschaft mbH, Frankfurt am Main, with a partnership interest
of DM 1,000.00 (Deutsche Marks one thousand) and Selekta
Grundstucksverwaltungsgesellschaft mbH, Dusseldorf;
i) Kaufring AG ("Kaufring"), Dusseldorf, Germany, which has a
registered share capital of DM 90,000,000.00 (Deutsche Marks
ninety million).
Woolworth Germany holds a shareholding of 450,000 shares in the
aggregate nominal amount of DM 22,500,000.00 (Deutsche Marks
twenty two million five hundred thousand) in Kaufring; and
j) Merkur Einkaufsgeaollschaft Kaufring-Woolworth MbH ("Merkur"),
Dusseldorf, Germany, which has a registered share capital of DM
10,000,000.00 (Deutsche Marks ten million), of which DM
7,500,000.00 (Deutsche Marks seven million five hundred
thou-sand) have not been paid in yet.
Woolworth Germany holds a 50% interest and Kaufring holds a 50%
interest in Merkur.
2.2 For purposes of this Agreement the term "Woolworth Group" shall mean
a) a 100% interest in the companies referred to in Sections 2.1 a) - f;
b) a 99% interest in Lidos (Section 2.1 g)) and a 99.99% interest
in Xxxxxxx (Section 2.1 h));
c) a shareholding of 450,000 shares in the aggregate nominal amount
of DM 22,500,000.00 in Kaufring (Section 2.1 i));
d) a 50% interest in Merkur (Section 2.1 j)).
Exhibit 2.2 hereto outlines the interests held by the Seller directly
and indirectly in the Woolworth Group.
2.3 In addition to the interests included in Section 2.2, the members of
the Woolworth Group hold numerous participations in various immaterial
civil law partnerships, registered societies (eingetragene Vereine)
and other forms of association, e.g., partnerships for the common use
of shared facilities, advertising and PR associations, trade
associations, the recycling association Der Grune Punkt Duales System
Deutschland AG, etc. All of these participations have been entered
into, and will only create obligations within the scope of, the
ordinary course of business.
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2.4 The members of the Woolworth Group are hereinafter referred to as the
"Woolworth Companies" or a "Woolworth Company". The Woolworth Companies other
than Kaufring and Merkur are hereinafter referred to as the "Material Woolworth
Companies" or a "Material Woolworth Company".
SECTION 3
SALE AND PURCHASE
3.1 The Seller hereby sells to the Buyer and the Buyer hereby purchases
from the Seller
a) all Shares in Woolworth Germany;
b) all shares in Woolworth Austria;
c) all shares in Xxxxx Der Xxxxx GmbH; and
d) a share in the nominal amount of DM l5,000.00 (Deutsche Marks
fifteen thousand) (0.09%interest) in Krone
(collectively, the "Sold Interests")
3.2 The Buyer shall be entitled to the profit, if any, attributable to the
Sold Interests for the current fiscal years. The same shall apply for
profits, if any, of preceding fiscal years which have not been distributed
to the shareholders prior to the date of this Agreement.
3.3 The transfer of the Sold Interests to the Buyer shall be effected in
accordance with Section 5.2 on the Closing Date.
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SECTION 4
PURCHASE PRICE
4.l The purchase price ("Purchase Price") for the sold Interests and the
obligation not to compete assumed under Section 9.6 amounts to DM
950,000,000.00 (Deutsche Marks nine hundred and fifty million).
The Purchase Price is not subject to any adjustment.
4.2 The Purchase Price is allocated to the individual companies as
follows:
a) Interest in Woolworth Germany
and covenant not to compete DM 949,829,999.00
b) Interest in Woolworth Austria DM 1.00
c) Interest in Xxxxx Der Xxxxx
GmbH DM 50,000.00
d) Interest in Xxxxx XX l20,000.00
Total DM 950,000,000.00
4.3 The payment of the Purchase Price shall be effected in accordance with
Section 5.2 on the Closing Date.
The Buyer shall not be entitled to exercise any right of set-off or
retention with regard to the payment of the Purchase Price or interest
thereon.
SECTION 5
CLOSING
5.1 The Closing of this Agreement shall take place on the date (the
"Closing Date") which is five Business Days after the date on which the
merger contemplated by this Agreement may be consummated under Section 24a
para.4 of the German Act against Restraints of Competition or Article 7
Regulation (EC) No. 4064/89 on the Control of Concentrations between
undertakings, whichever is applicable, however in no case earlier than five
Business Days after the Buyer has gained knowledge that the merger may be
so consummated. In case the Closing Date would be a Friday, the Closing
Date shall be on the following Business Day.
The Closing of this Agreement shall take place at the offices of Woolworth
Germany in Frankfurt am Main. The Parties may agree on a different time and
place for the Closing.
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5.2 On the Closing Date, the Parties shall perform or have performed the
following acts which shall constitute the closing ("Closing"; Erfullung):
a) transfer of the Sold Interests to the Buyer by notarial deeds of
transfer C90 % to Buyer 1 and 10 % to Buyer 2). The transfer of the
Sold Interests to the Buyer shall be effected subject to the condition
subsequent (aufschiebende Bedingung) that the banks referred to below
under Section 5.2 b) confirm in writing (telefax confirmed by letter)
to the Seller that the Purchase Price set forth in Section 4.1 has
been irrevocably credited in full to the accounts referred to below
under Section 5.2
b) payment of the Purchase Price as follows:
aa) two portions by transfer of immediately available funds and credit
thereof to the following accounts:
(i) a portion equal to the Preliminary balance in favor of Woolworth
Germany, if any, to the following account of Woolworth Germany:
Blank: Bayeri5che Hypo- und
Vereinsbank AG
Account No.: 8279 802
BLZ: 503 201 91
such payment being deemed to satisfy both the Preliminary Balance
owed by the Seller to Woolworth Germany and an equal portion of
the Purchase Price owed by the Buyer to the Seller; and
(ii) a portion equal to the difference between the Purchase Price on
the one side and the Preliminary Balance in favor of Woolworth
Germany plus the amount of DM 5,000,000.00 (Deutsche Marks five
million) on the other side to the following account of the
Seller:
Bank: Deutsche Bank AG
Account No.: 0000000
BLZ: 500 700 10
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or to such other account as shall have been notified in
writing by Seller to Buyer not later than 3 (three) Business
Days prior to the Closing Date;
bb) one portion in the amount of DM 5,00,000.00 (Deutsche Marks
five million) by offset (Verrechnung) against the claims in
the same amount of certain managers of Woolworth Germany
against the Guarantor for Seller, which have been assigned
to the Buyer 1 in accordance with the Bleteiligungsvertrag
of September 19, 1998 (Roll of Deeds No. 412/1998 of Notary
Public Xx. Xxxxxxxx Xxxxxx, Frankfurt am Main). The
foregoing offset shall be deemed effected upon transfer and
credit of the funds as specified in Section 5.2 b) aa) and
shall be deemed to constitute payment of the Purchase Price
in an amount of DM 5,000,000.00 (Deutsche Marks five
million) and fulfillment of the claims in the same amount of
certain managers of Woolworth Germany against the Guarantor
for Seller. Buyer shall hold Seller and Guarantor for Seller
harmless in respect of any taxes payable on said amount;
c) delivery of a legal opinion issued by outside counsel for the Seller
and the Guarantor for Seller substantially in the form attached hereto
as Exhibit 5.2 c), which shall be a condition precedent to the payment
of the Purchase Price.
d) fulfillment of all other obligations to be fulfilled as of the Closing
Date in accordance with this Agreement, including the obligations
under Sections 9.4 and 9.5.
The Seller shall confirm to the Buyer as promptly as possible the receipt
of the funds referred to in Section 5.2. (b)aa) (ii).
The Parties shall confirm in a closing document at the Closing that all
acts to be performed pursuant to this Section 5.2 have been performed.
5.3 The Buyer shall ensure (dafur cinstehen) that the complete notification
required under Section 24a para. 4 of the German Act against Restraints of
Competition or Article 7 Regulation (EC) No. 4064/89 on the Control of
Concentrations between Undertakings, whichever is applicable, will be filed
with the competent antitrust authority within five Business Days after the
date of this Agreement. The Seller shall cooperate with the Buyer in the
preparation of such notification.
If the competent antitrust authority should deny its approval, each Party
may withdraw (zurucktreten) from this Agreement, provided, however, that
the Buyer shall comply with all conditions (Auflagen) which the competent
antitrust authority proposes to impose, unless such conditions are
unreasonable (unzumutbar) for the Buyer. Neither Party is obligated to
appeal a decision of the competent antitrust authority.
As soon as the merger contemplated by this Agreement may be consummated
under 24a para. 4 of the German Act against Restraints of Competition or
Article 7 Regulation (EC) No. 4064/89 on the Control of Concentrations
between Undertakings, whichever is applicable, the Seller and the Buyer
shall notify each other as well as Bayerische Hypo- und Vereinsbank AG,
Munich, (the latter substantially in the form of Exhibit 5.3 hereto) and
Mengeler Xxxxxxx Weittel Xxxxx, Frankfurt am Main, c/c Xx. Xxxxxx Xxxxxxx,
on behalf of the Seller, and Doser Arnereller Xxxxx, Frankfurt am Main,
Xxxxxxxxx Xxxxxxxxx, on behalf of the Buyer, thereof in writing without
delay.
Each Party may withdraw from this Agreement if the merger contemplated by
this Agreement may not be consummated under Section 24a para. 4 of the
German Act against Restraints of Competition or Article 7 Regulation (EC)
No. 4064/89 on the Control of Concentrations between Undertakings,
whichever is applicable, on or before December 21, 1998.
5.4 If the Purchase Price is not paid in full on the Closing Date, the
outstanding balance shall bear interest of 8% p.a. for the period from the
Closing Date until actual payment. Any other rights or remedies which the
Seller may have under statutory law including the rights to claim damages
or to withdraw from this Agreement shall remain unaffected.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants (gewahrleistet und sichert zu) to the Buyer
that:
6.1 Legal Matters
a) Each Material Woolworth Company has been duly established and is validly
existing under the laws of the jurisdiction of its incorporation or
foundation. None of the Material Woolworth Companies is in a status of
insolvency ("zahlungsunfahigkeit") or overindebtedness ("Uberschuldung",
i.e. the liabilities exceeding the assets as set forth in Section 268 (3)
German Commercial Code). The statements made in Section 2, including
Exhibit 2.2 hereto, with regard to the Seller and the Woolworth Companies
are correct. Only the companies shown on Exhibit 2.2 hereto (other than the
Seller) form part of the Woolworth Group in Germany and Austria. The
Material Woolworth Companies do not hold, directly or indirectly, any
material interest in companies other than those mentioned in Section 2 and
except for the silent partnership interest of Woolworth Germany in
Woolworth Austria.
b) Except as disclosed in Exhibit 6.1 b) hereto, the seller is the sole and
unrestricted owner of the Sold Interests. The Sold Interests and the
interests in the other Woo1worth Companies held indirectly by Woolworth
Germany are free and clear of any rights and claims of third parties. The
Sold Interests are non-assessable (keine Nachschubpllichten) . The seller
is authorized to sell and transfer the Sold Interests in accordance with
this Agreement without any restrictions.
c) Except as described in Exhibit 2.1 and Exhibit 6.1 b) hereof, all capital
contributions on the Sold Interests as well as on the shares or interests
in the other Material Woolworth Companies have been completely made, either
in cash or in kind.
There have been (i) no transactions between the Seller and Woolworth
Germany, and (ii) to the best knowledge of the Seller, no transactions
between another Material Woolworth Company and its shareholder, resulting
in a repayment of the stated share capital of such Material Woolworth
Company within the meaning of Section 30 of the German Law relating to
Limited Liability Companies (Cesetz xxxx die Gesellschaft mit beschrankter
Haftung -GmhHG -) or Section 57 of the German Stock Corporation Act
(Aktienqesetz) or of capital contributions owed under limited partnership
agreements (Hafteinlagen).
d) This Agreement and its implementation does not constitute a breach of any
agreement by which the seller is bound.
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6.2 Real Estate
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a) (i) Exhibit 6.2 a) (i) hereto contains a complete list of all real
estate (stores, headquarters building in Frankfurt am Main, office and
other buildings and land in Lagen, distribution center in Bonen and
other real estate) owned or co-owned by, or subject to an inheritance
building right (Erbbaurecbt) or an in-rem lease (Dauernutzungsrecht)
in favor of, any Material Woolworth Company;
except as mentioned in Exhibit 6.2 a) (i) there are with respect to
the real estate listed in Exhibit 6.2 a) (i) no contractual rights of
third parties materially adversely affecting the transferability of
the ownership to, or the operation of the retail business of the
Material Woolworth Companies or their subtenants as presently operated
at, the respective real estate, nor are there, to the knowledge of the
Seller, any application5 for registration of such rights pending;
(ii) Exhibit 6.2 a) (ii) hereto contains a complete list of all real
estate owned by a Material Woolworth Company and subject to an
inheritance building right in favor of a third party; and
(iii) Exhibit 6.2 a) (iii) hereto lists all material rental or lease
agreements concerning real estate to which any Material Woolworth
Company is a party (other than rental or lease agreements between two
or more Material Woolworth Companies) . Not listed on such Exhibit
are, however, immaterial lease agreements, such as so-called
propaganda agreements (Propaganda-Vertrage) and rental agreements
concerning apartments, parking space and advertising space
(Werbeflachen).
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The information set forth on Exhibits 6.2 a) (i) to 6.2 a) (iii)
hereto is correct as of the date of such Exhibits, unless expressly
marked as "informational".
b) Other than as disclosed on Exhibit 6.2 b) hereto or elsewhere in this
Agreement or any Exhibit thereto, the Material Woolworth Companies do
not violate any law applicable to the retail business carried out by
them in a way which would materially adversely affect the business of
the Material Woolworth Companies taken as a whole, in particular with
regard to:
- insufficient provision of legally required parking places (fehlender
Nachweis von gesetzlich erforderlichen stellplatzen);
- governmental objections (behodrdliche Beanstandungen) and unfulfilled
obligations imposed by public authorities (unerledigte Auflagen);
- objections by neighbours (nachbarrechtliche Beanstandungen);
- damage to the structure of buildings on the real estate.
c) There is no violation by any Material Woolworth Company of any rental,
or lease agreement listed on Exhibit 6.2 a) (iii) hereto which would
give the owner of the real estate the right to terminate prematurely
the rental or lease agreement concerned. No Material Woolworth Company
is in arrears with respect to payments under any such rental or lease
agreement, except for cases in which payments have been lawfully
offset or withheld.
d) Except as disclosed on Exhibit 6.2 d) hereto, neither the execution
nor the consummation of this Agreement and the transactions
contemplated by this Agreement permit the respective lessor under any
rental or lease agreement listed on Exhibit 6.2 a) (iii) hereto to
prematurely terminate the respective agreement where such termination
would have a material adverse effect on the retail business of the
Material Woolworth Companies as a whole.
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6.3 Permits, Licenses, Environment
------------------------------
a) To the knowledge of the Seller,
(i) each Material Woolworth Company has obtained all material
permits, licenses and other authorizations which are required
under public law to conduct its business as presently conducted;
(ii) all such permits, licenses and other authorizations are valid and
subject only to general statutory rights of revocation or
withdrawal; and
(iii) there are no circumstances which give reason to believe that any
of such permits, licenses and other authorizations might be
revoked, withdrawn or restricted.
b) No Material Woolworth Company brought upon, kept, or used on any real
estate listed on Exhibits 6.2 a) (i) to (iii) any contaminant
(hazardous or toxic material or waste, including asbestos), except for
(i) contaminants which have been used in the construction or
remodelling of buildings and with respect to which no remedial
action is required under applicable laws;
(ii) contaminants used, stored or sold by the Material Woolworth
Companies in the ordinary course of business in reasonable
quantities and provided that they are or were used, stored or
sold in compliance with applicable laws;
(iii) cases the cost to remedy which would not exceed DM 50,000.00
(Deutsche Marks fifty thousand) in any individual case; and
(iv) the cases listed on Exhibit 6.3 b) (iv) hereto.
c) Except for the cases listed on Exhibit 6.3 c) hereto, there are no
governmental orders or charges under trade or environmental law (keine
gewerheoder umweltrechtlichen Verfugungen oder Beanstandungen von
Behorden) which relate to the businesses of the Material Woolworth
Companies and the compliance with which would result in costs in
excess of DM 50,000.00 (Deutsche Marks fifty thousand) in any
individual case.
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6.4 Intellectual Property Rights
----------------------------
Exhibit 6.4 hereto lists all material trademarks and other intellectual
property rights which have been registered in favor of any Material
Woolworth Company. Exhibit 6.4 a hereto lists certain trademarks registered
in the name of the seller or an Affiliate of the Seller (other than the
Woolworth Companies) which have been or will be assigned to Woolworth
Companies prior to the Closing. To the knowledge of the Seller and subject
to the successful registration of trademarks for which applications are
pending, the Material Woolworth Companies have the unrestricted, and with
respect to the trademarks listed on Exhibit 6.4 b hereto, exclusive right,
to use such intellectual property rights as, well as the Woolworth trade
name, as currently used in their businesses in Germany and Austria. Except
as mentioned in Exhibit 6.5 hereto, no intellectual property right listed
on Exhibit 6.4 hereto is currently subject to written challenge received or
followed up within the last year by a third party. To the knowledge of the
Seller, no Material Woolworth Company violates, to a material extent, any
industrial property rights of any third party.
6.5 Litigation etc.
Exhibit 6.5 hereto lists
(i) pending and threatened legal proceedings (civil, administrative, tax,
arbitration, except for collections in the ordinary course of
business) of the Material Woolworth Companies, which involve an amount
(disregarding legal costs) in excess of DM 100,000.00 (Deutsche Marks
one hundred thousand) in any individual case;
(ii) pending or threatened material governmental investigations and
material criminal and administrative proceedings (Straf- und
Ordnungswidrigkeitenver-fahren) against any Material Woolworth Company
or its employees or governing bodies (Organe), which investigations or
proceedings relate to the business of any Material Woolworth Company.
To the knowledge of the Seller, Exhibit 6.5 hereto is complete and
correct.
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6.6 Insurances
The material insurance contracts of the Material Woolworth Companies are
listed on Exhibit 6.6 hereto and are valid and binding, have been properly
fulfilled and have not been terminated. The Buyer is aware that the
insurance contracts marked on the Exhibit as Umbrella Insurance Contracts
are umbrella insurance contracts taken out by the Seller or its Affiliates
which cover the business of the Material Woolworth Companies and will
terminate as of the Closing Date, unless otherwise provided for in Section
10.6.
6.7 Disclosure of Certain Agreements
a) Exhibit 6.7 a) hereto lists all obligations of any Material Woolworth
Company to purchase merchandise which provide for annual payments in
excess 6f DM 1,000,000.00 (Deutsche Marks one million) in any
individual case or, to the knowledge of the Seller, which extend
beyond one year.
b) Exhibit 6.7 b) hereto lists all leasing agreements (relating to assets
other than real estate) of any Material Woolworth Company which
provide for annual payments in excess of DM 250,000.00 (Deutsche Marks
two hundred fifty thousand) in any individual case.
c) Except for the agreements listed on Exhibit 6.7 c) hereto, none of the
Material Woolworth Companies is a party to any joint venture
agreements or agreements on cooperation with other businesses or with
joint purchasing organizations.
d) None of the Material Woolworth Companies is a party to any material
distribution, distributorship, agency, commission or similar
agreements which are atypical for the operation of general merchandise
stores.
e) None of the Material Woolworth Companies is a party to any material
distribution, distributorship, agency, commission or similar
agreements which are atypical for the provision of photo services.
f) None of the Material Woolworth Companies is a party to any material
distribution, distributorship, agency, commission or similar
agreements which are atypical for the provision of services in the
areas of purchase, sale, administration and maintenance of real
property or construction and remodelling of buildings.
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g) None of the Material Woolworth Companies is a party to any material
distribution, distributorship, agency, commission or similar
agreements which are atypical for the provision of services for
electronics.
h) To the knowledge of the Seller, none of the agreements listed on
Exhibits 6.7 a) to 6.7 c) hereto has been terminated and no Material
Woolworth Company is in material breach of any such agreement.
6.8 Employees, Consultants
----------------------
a) The documents listed on Exhibit 6.8 a) hereto and previously provided
to the Buyer correctly reflect the structure of the pension scheme
(Struktur der betrieblichen Altersversorgung) applicable to the
employees of the Material Woolworth Companies.
b) The documents listed on Exhibit 6.8 b) hereto and previously provided
to the Buyer correctly reflect the system of fixed and variable
compensation of the Material Woolworth Companies applicable after the
Closing Date to the officers and leading employees (Fuhrungskrafte und
leitende Angestellte) of the Material Woolworth Companies and the
performance measurement and incentive system applicable after the
Closing Date to all employees of the Material Woolworth Companies.
c) To the knowledge of the Seller, Exhibit 6.8 c) hereto lists all
material shop agreements (Bletriebsvereinbarugen) by which the
Material Woolworth Companies are bound.
d) The Material Woolworth Companies are not engaged in any material
dispute with trade unions on the date of this Agreement.
e) To the knowledge of the Seller, except for project oriented
consultancy agreements, there are no consultancy agreements which
provide for an average compensation in excess of DM 20,000.00
(Deutsche Marks twenty thousand) per month in any individual case or a
notice period of more than one year.
6.9 Annual Accounts, Financials
---------------------------
a) The audited annual accounts (balance sheets, profit and loss
statements and annexes) as of the applicable Accounts Date of
Woolworth Germany, Woolworth
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Austria, Krone and Tappiser & Xxxxxx and the unaudited annual accounts as
of the applicable Accounts Date of Xxxxx Der Xxxxx GmbH, Xxxxx Der Xxxxx
KG, Lidos and Xxxxxxx, which have been provided to the Buyer, have been
prepared in accordance with the statutory commercial provisions concerning
annual accounts and the generally accepted bookkeeping and accounting
principles applied on a basis consistent with that of prior years (unless
expressly stated otherwise in the accounts or auditor's reports) , which
are applicable to each respective Material Woolworth Company under the laws
of the jurisdiction of its incorporation or foundation- Each of such
accounts presents, as of its respective Accounts Date, a true and fair view
of the asset position (vermogens1age), financial position (Finanzlage) and
earnings position (Ertragslage) of the respective Material Woolworth
Company to which it relates within the meaning of $264 of the Commercial
Code or similar provisions of the laws under which the respective Material
Woolworth Company is incorporated, if and to the extent the presentation of
such view is required by the generally accepted accounting principles in
the respective jurisdiction.
The audited consolidated annual accounts (Konzernabschlub) as of January
31, 1998 of Woolworth Germany (the "Consolidated Annual Accounts1'), which
have been provided to the Buyer, have been prepared in accordance with the
German statutory commercial provisions and generally accepted principles
concerning consolidation, applied on a basis consistent with that of prior
years (unless stated otherwise in the accounts or auditor's report).
b) To the knowledge of the Seller, there are no material facts which
would require a material change of the annual accounts described in
Section 6.9 a), if such facts bad been known at the time the
respective annual accounts had been established.
c) The unaudited interim accounts (balance sheets and profit and loss
statements) for Woolworth Germany, as consolidated with its
subsidiaries, and for Woolworth Austria (the "Interim Statements") as
of August 1, 1998 (the "Interim Statement Date") and for the period
February 1, 1998 through August 1, 1998 as shown in Exhibit 6.9 C)
hereto have been prepared in accordance with accounting principles
generally accepted in Germany or Austria, respectively, on a basis
consistent with the past practices of the respective companies.
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Each such Interim Statement presents, as of the interim Statement Date, a
true and fair view of the asset position, financial position and earnings
position of the relevant company in all material respects, except that:
(i) the Interim Statements do not reflect the exact calculation for the
relevant periods of certain accrual and year-end-audit-adjustment
items that are normally determined on an accrual basis as part of the
annual audit and which are, in the Interim Statements, allocated to
the interim accounting periods on the basis of the budgeted amounts as
updated from time to time,
(ii) no physical inventory count was taken, and
(iii)certain inventory accounts are recognized on a cash basis with a
partial adjustment to an accrual basis in the Interim Statements,
causing offsetting variances in the cash, inventory and accounts
payable accounts.
d) With the exception of the transactions mentioned in Section 10.4 hereafter,
there are no material financing arrangements currently in effect for any
Material Woolworth Company of a type which would not be required to be
shown or reflected in the annual financial statements.
6.10 Guaranties
----------
No Material Woolworth Company has assumed any guaranties or other
liabilities for any obligation of another Woolworth Company (other than a
Material Woolworth Company) or a third party, other than those disclosed on
Exhibit 6.10 hereto or in any annual accounts of the Material Woolworth
Companies as per the applicable Accounts Date or in any auditor's reports
thereon, if any. Excluded from this representation and warranty are
furthermore assumptions of liabilities for the obligations of Affiliates in
amounts of less than DM 100,000.00 (Deutsche Marks one hundred thousand) in
any one case.
6.11 Subsidies
---------
Except as listed in Exhibit 6.11 hereto, to the knowledge of the Seller,
since January 1, 1996, no Material Woolworth Company has been promised or
received any subsidies or other grants under public law.
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To the knowledge of the Seller, no transaction has been entered into by the
Seller or any Material Woolworth Company (including the transactions
contemplated by this Agreement) in consequence of which any of the Material
Woolworth Companies is or may be liable to refund the whole or part of any
subsidies or grants received.
6.12 Events since the Accounts Date
------------------------------
Except as disclosed on Exhibit 6.12 hereto and except for the events and
transactions mentioned in this Agreement or any other Exhibit hereto, there
have not been any of the following events or transactions with regard to
any Material Woolworth Company from the Accounts Date applicable to such
Material Woolworth Company to the date of this Agreement:
a) change of the stated capital, redemption of the Sold Interests,
modification of the rights relating to the Sold Interests or change of
the corporate documents, except that the Seller has carried out the
transactions described in Exhibit 6.1 b) hereto;
b) declaration or payment of dividends or other distributions with
respect to any of the Sold Interests, except for a dividend for the
fiscal year 1997/98 in the amount of DM 11,500,000.00 (Deutsche Marks
eleven million five hundred thousand) paid on June 9, 1998 by
Woolworth Germany to the Seller and interest in the amount of DM
633,594 (Deutsche Marks six hundred thirty three thousand five hundred
ninety four) paid on June 9, 1998 by Woolworth Germany to an Affiliate
of Seller in fulfilment of a former silent partnership agreement
between such companies, both as shown in the notes to the audited
annual accounts of Woolworth Germany for the year ended January 31,
1998;
c) acquisition or disposition of any interests in other companies;
d) incurrence of commitments for capital expenditures in excess of DM
1,000,000.00 (Deutsche Marks one million) in any individual case;
e) change in accounting methods, principles or practices materially
affecting its assets, liabilities or business, unless required by law
or a change in generally accepted accounting principles;
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f) entry into any agreement with the Seller or any of its Affiliates
(other than the Woolworth Companies);
g) creation of any security interest in its material assets;
h) disposition of assets with a book value of, or resulting in proceeds
in excess of DM 500,000.00 (Deutsche Marks five hundred thousand) in
any individual case;
i) damage to or destruction or loss of any of its assets which damage,
destruction or loss would exceed DM 100,000.00 (Deutsche Marks one
hundred thousand) in value in any individual case; or
j) any other material events or material transactions which are, to the
knowledge of the seller, other than in the ordinary course of
business.
6.13 Events Since the Date of this Agreement
---------------------------------------
The Seller shall use its best efforts (which shall include reasonable
instructions to management) such that from the date of this Agreement until
the Closing Date
a) none of the events or transactions described in Section 6.12 a), b)
and f) will occur;
b) none of the events or transactions described in Section 6.12, c), d),
e) and g) will occur;
c) other than as shown on Exhibit 6.13 hereto, no event or transaction
described in Section 6.12 h) will occur; and
d) no material transactions will be carried out by any Material Woolworth
Company which are not within the ordinary course of business of the
Woolworth Group as a whole;
it being understood by the Buyer that the Seller does not have voting
control of either Xxxxxxx or Lidos.
6.14 Loans
-----
Exhibit 6.14 hereto lists all material outstanding loans extended by
banking institutions or other creditors to the Material Woolworth
Companies.
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6.15 Tax Status of Seller
-------------------
From 1985 through the Seller's fiscal year 1995 the German tax authorities
have recognized the Seller as a corporation which for tax purposes was
resident in Germany (in Deutschland unbeschrankt steuerpflichtige
Korperschaft) . No change has occurred in the facts underlying this tax
treatment and, to the knowledge of the Seller, no change in the
interpretation of these facts by German tax authorities is pending.
The representations and warranties in this Section 6 must be correct on the
date of this Agreement and on the Closing Date, provided, however, that
(i) representations and warranties which are based on knowledge or
awareness of the Seller or refer to Exhibits hereto must be correct
only on the date of this Agreement unless otherwise provided for in
the following subparagraph (ii); and
(ii) representations and warranties made as of a specific date must be
correct only on such date.
To the extent that representations and warranties of the Seller under this
Agreement are based on knowledge or awareness of the Seller, only the
knowledge or awareness of the individuals serving on the board of directors
of the Seller, of the individuals listed on Exhibit 6 (last para.) hereto,
and of the individuals serving as managing directors (Geschaftsfuhrer) and
the individuals serving as holders of a general power of representation
within the meaning of Section 54 of the German Commercial Code
("Prokuristen") of the Material Woolworth Companies other than Xxxxxxx and
Lidos shall be attributed to the Seller.
SECTION 7
BREACH OF REPRESENTATIONS AND
WARRANTIES, LIABILITY
7.1 In the event the Seller breaches any of its representations and
warranties contained in Section 6, the Seller shall compensate the
Buyer for the damages suffered by the Buyer as a result thereof,
provided, however, that the Buyer shall
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a) inform the Seller without undue delay in writing of any alleged breach
of the representation and warranty, it being understood that
(i) the duty to examine as stipulated in Section 377 subsec. 1 of the
German commercial Code shall not apply; and
(ii) it shall in no event be considered an undue delay if the Buyer
notifies the Seller of such breach within one month after having
become aware of the nature, the scope and the likely consequences
of such breach;
b) before claiming damages, give the Seller the opportunity to remedy the
breach of the representation and warranty within a reasonable period
of time;
c) use all reasonable efforts to mitigate the damages suffered; and
d) to the extent applicable, fulfill its obligations under Section 7.5.
7.2 The Buyer shall have no claims based on a breach of a representation and
warranty if and to the extent that the Buyer has knowledge within the
meaning of $ 460 German Civil Code on the date of this Agreement that a
representation and warranty is incorrect. Knowledge of the Buyer means
knowledge of any member of the governing bodies or employees of the Buyer
or of any adviser of the Buyer involved in the review, preparation or
consummation of any of the transactions contemplated by this Agreement.
7.3 The Buyer shall have claims under section 7.1 based on a breach of a
representation and warranty only if the aggregate amount of all such claims
exceeds DM 10,000,000.00 (Deutsche Marks ten million) and then only to the
extent that the aggregate amount of all such claims exceeds DM 7,500,000.00
(Deutsche Marks seven million five hundred thousand)
Example 1: The Buyer has claims based on a xxxxxx of a representation and
warranty in the aggregate amount DM 11,000,000.--. In such case, the Buyer
shall have claims under Section 7.1 only in an amount of DM 3,500,000.00.
Example 2: If the Buyer has claims in the aggregate amount of DM
9,000,000.--, the Buyer shall have no claims under Section 7.1.
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Individual claims based on a breach of a representation and warranty shall
be considered only to the extent that they exceed the amount of DM
50,000.00 Deutsche Marks fifty thousand). The Buyer shall have no claims to
the extent that the aggregate amount of all claims of the Buyer exceeds 20%
(twenty percent) of the Purchase Price set forth in Section 4.1. Any
statute-barred claim shall be disregarded for purposes of this Section 7.3.
This Section 7.3 shall not apply to claims of the Buyer based on a breach
of a representation and warranty contained in Sections 6.1 a), first and
second sentence, 6.1 b), 6.1 c), 6.12 a), b) and f) and 6.13 a).
7.4 Any claims of the Buyer based on a breach of a representation and warranty,
except for claims based on a breach of a representation and warranty
contained in Sections 6.1 a), first sentence, 6.1 b), 6.l a), first
sentence, 6.2 a) and 6.3 b) shall be statute-barred (verjahrt) 20 (twenty)
months after the Closing Date.
Claims based on Sections 6.1 a) first sentence, 6.1 b) and 6.1 c), first
sentence, shall be statute-barred 15 (fifteen) years after the Closing
Date. Claims based on Sections 6.2 a) or 6.3 b) shall be statute-barred 24
(twenty four) months after the Closing Date.
7.5 If a third party asserts a claim which might lead to any liability of the
Seller under Section 7.1, the Buyer shall inform the Seller thereof without
undue delay in writing. The Buyer shall give the Seller the opportunity to
defend such claim at the Seller s cost. The Buyer shall allow the Seller to
participate in all negotiations and correspondence with such third party at
the Seller's cost. Upon request of the Seller, the Buyer shall cause the
respective Material Woolworth Company to which such third party claim
relates to initiate legal proceedings against such third party at the cost
and in accordance with the instructions of the Seller. In order to enable
the Seller to assess properly the benefits of the claim raised by the third
party and the chances of litigation, and to proceed with the litigation,
the Buyer shall make available or cause the respective Material Woolworth
Company to make available all relevant documentation, give or cause to be
given all relevant information, grant or cause to be granted the right to
inspect the tiles and the documents, and alloy the questioning of the staff
of the respective Material Woolworth Company involved.
7.6 Except for the representations and warranties set forth in Section 6, the
Seller has not given any representations and warranties to the Buyer and
shall not be
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deemed to have given any such representations and warranties by way of
implication in fact or in law or otherwise.
The Buyer has been provided the opportunity to make, and has made, its own
investigation of the Material Woolworth Companies. None of the information
given by the Seller to the Buyer beyond the warranties and representations
set forth in Section 6 was given so as to be, or is being, relied upon by
the Buyer as basis for its decision to purchase the Sold Interests at the
price and on the terms and conditions set forth in this Agreement. The
Seller shall not be liable in any way to the Buyer with respect to the
accuracy or completeness of the Briefing Memorandum of Xxxxxx Xxxxxxx & Co.
Limited or any other written or oral information made available to the
Buyer or its advisers in connection with their investigation of the
Material Woolworth Companies.
The Buyer shall have no rights, claims or remedies against the Seller other
than those expressly provided for in this Section 7 and in Section B and
claims for specific performance of obligations of the seller expressly set
forth in this Agreement Any other rights, claims and remedies of any legal
nature whatsoever (contractual, pre-contractual, statutory or otherwise),
in particular the right to cancel, rescind or withdraw from this Agreement
and any other right or remedy, which would have a similar effect, shall be
excluded. Such exclusion shall not apply to the extent it would be contrary
to mandatory applicable law.
SECTION 8
TAX MATTERS
8.1 Each of the Material Woolworth Companies has filed, when due, all
applicable domestic or foreign tax and social security returns with respect
to taxes (Steuern), assessments, fees, publicly levied charges for social
security payments (Sozialversicherungbeitrage) including late interest or
penalties (hereinafter together "Taxes") -
8.2 The Seller shall indemnify and hold each Material Woolworth Company
harmless from any assessments of Taxes against such Material Woolworth
Company which relate to the time period up to the Accounts Date applicable
to such Material Woolworth Company, if and to the extent that they are not
reflected, and no sufficient accruals have been established therefor, in
the annual accounts
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of the respective Material Woolworth Company as per the applicable Accounts
Date. Any payments to be made by the Seller hereunder shall, as between the
Seller and the Buyer, be regarded as an adjustment to the Purchase Price.
8.3 If and to the extent that Taxes of a Material Woolworth Company result in
tax benefits (Steuerentlastungen) to such Material Woolworth Company or an
Affiliate of it or of the Buyer (e.g. due to timing differences), the
resulting benefits shall be deducted from the corresponding indemnification
claim pursuant to section 8.2 with the present value of such benefits
(discount rate of 6.5% p.a.) at the time the Taxes become due and payable.
When calculating the prospective tax benefits, a flat tax rate of 46% shall
be applied for corporate income tax and trade tax on income.
8.4 If and to the extent that Taxes result from final increases in the assets
(Vermogensrnehrungen) of a Material Woolworth Company or an Affiliate of
it, the Buyer shall have no indemnification claim. Final increases in
assets shall be deemed to exist if unknown assets are capitalized, or if
accruals are dissolved and the underlying facts do not result in later
expenses. Final increases in assets caused by the capitalization of unknown
assets shall be considered under this Section 8.4 only if and to the extent
not covered by Section 8.3.
8.5 Any tax refunds to a Material Woolworth Company which relate to the time
period up to the Accounts Date applicable to such Material Woolworth
Company and which have not been recorded as an asset in the annual accounts
of such Material Woolworth Company as per the Accounts Date applicable to
it as well as over-accruals for Taxes in the annual accounts of the
Material Woolworth Companies shall be off-set by the Seller against claims,
if any1 under this Agreement, but shall not lead to payment claims of the
Seller against the Buyer.
8.6 Claims of the Buyer under this Section 8 shall be statute-barred 6 (six)
months after the respective taxes have been finally assessed. The Buyer
will not apply for, or agree to, and will not take any action which may
result in, the extension of the statutes of limitation for the assessment
of any Taxes.
8.7 The Buyer shall cause the Material Woolworth Companies to properly maintain
all records relevant for the assessment of any Taxes up to the Accounts
Date. In case of a tax audit (steuerliche Aubenprufung) of any Material
Woolworth Company for the time period until the Accounts Date applicable to
it, the Buyer shall forthwith inform the seller thereof in writing and give
representatives of the Seller reasonable opportunity to participate in such
tax audit and all negotiations and correspondence with the tax authorities
at the seller's cost.
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Upon request of he seller, the Buyer shall cause the respective Material
Woolworth Company to appeal any tax assessment resulting from any such tax
audit at the cost and in accordance with the instructions of the Seller. In
order to enable the Seller to assess properly the chances of such an appeal
and to proceed with such appeal, the Buyer shall make available or cause
the "respective Material Woolworth Company to make available all relevant
documentation, give or cause to be given all relevant information, grant or
cause to be granted the right to inspect the books and the documents, and
allow the questioning of the staff of the respective Material Woolworth
Company involved.
8.8 The Buyer is aware that, as a consequence of the transactions contemplated
herein, the direct group taxation (Organschaft) existing between the Seller
and Woolworth Germany and the indirect group taxation existing between the
Seller and Krone and Tappiser & Xxxxxx will terminate as of February 1,
1998 with respect to trade tax and as of the closing Date with respect to
value added tax.
8.9 In the event of a U.S. Internal Revenue Service tax audit of Seller or its
Affiliates, the Buyer agrees to cooperate reasonably with the Seller and to
grant the Seller reasonable access to all relevant documentation included
in the records of the Material Woolworth Companies referred to in the first
sentence of Section 8.7.
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SECTION 9
RELATIONSHIP BETWEEN THE SELLER
AND THE WOOLWORTH GROUP
9.1 Except as otherwise provided for in this Agreement or its Exhibits or the
agreements referred to in its Exhibits, all accounts receivable and
accounts payable of the Woolworth Companies on the one side and the seller
and its Affiliates (except for the Woolworth Companies) on the other side
shall be settled as of and paid on the Closing Date, whether or not such
accounts receivable and payable are due by such date.
All accounts receivable and accounts payable of the Woolworth Companies on
the one side and the Seller and its Affiliates (except for the Woolworth
Companies) on the other side (including accounts receivable and payable
under the cash pooling agreement with Deutsche Bank AG of August 18, 1997
but excluding accounts receivable and payable under the continuing
contractual relationships referred to in Exhibits 9.2 and 9.3 hereto),
shall be settled according to the following procedure: Two Business Days
before the closing Date, the Seller shall (i) repay the accounts payable
due to Woolworth Germany in an amount sufficient for the operational needs
of Woolworth Germany up to the Closing Date, (ii) suspend the
afore-mentioned cash pooling agreement, (iii) estimate in good faith the
amounts of all of such accounts receivable and payable as of the Closing
Date, (iv) determine on the basis of the amounts so estimated a preliminary
balance (the "Preliminary Balance") and (v) notify the Preliminary Balance
to the Buyer. If the Preliminary Balance is in favor of Woolworth Germany;
it shall be settled on the Closing Date by payment by the Buyer of such
portion of the Purchase Price which is equal to the Preliminary Balance in
accordance with Section 5.2 b) aa) (i) to the account of Woolworth Germany
specified therein. If the Preliminary Balance is in favor of the Seller,
the Buyer shall cause Woolworth Germany to pay to the Seller an amount
equal to the preliminary Balance on the Closing Date. Within three weeks
from the Closing Date, the Seller will, and the Buyer will cause Woolworth
Germany to, (i) determine the net final amount of all of such accounts
receivable and payable as of the Closing Date and (ii) effect payment of
the net balance owed, if any. The net balance shall in no case be greater
than DM 15,000,000.00 (Deutsche Marks fifteen million) and neither the
seller nor Woolworth Germany shall be obligated to pay any net balance in
excess of such amount.
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9.2 The Affiliates of Seller (other than the Material Woolworth Companies) have
in the past rendered certain corporate services (such as management reviews
and accounting advice and service) and specific services (such as
electronic data processing, auditing, market research and financial
services, including cash management) to the Woolworth Companies. The Seller
shall cause its Affiliates to continue to render such services, upon the
same terms and conditions so far applied, until the Closing Date. Certain
of such services shall be continued as of the Closing Date as per the draft
amendments attached hereto as Exhibit 9.2.
9.3 Unless expressly otherwise provided for in this Agreement or the Exhibits
hereto, all contractual relationships between the Seller and its Affiliates
(except for the Woolworth Companies) on the one side and the Woolworth
companies on the other side, as well as the rights and obligations
thereunder, shall terminate as of the closing Date. This shall not apply
for the agreements listed on Exhibit 9.3 hereto, which shall be continued
subject to their terms and conditions.
9.4 The Buyer shall assume all guaranties, securities and other obligations of
any kind (including back-to-back guaranties and securities given to banks
or other third parties and obligations under letters of credit) which the
seller or any of its Affiliates (except for the Woolworth Companies) has
assumed exclusively in favor or for the benefit of any Woolworth Company.
The Buyer shall ensure that the Seller and any of its Affiliates will be
released from such guaranties, securities and other obligations or, if this
is flat possible, counterindemnified by a guaranty of one of the three
major German banks. With regard to the guaranties, securities and other
obligations listed on Exhibit 9.4 hereto, the Buyer shall fulfill its
obligations under this Section 9.4 on the Closing Date. With regard to any
such guaranties, securities and other obligations notified by the seller to
the Buyer after the date of this Agreement, the Buyer shall fulfill its
obligations under this Sections 9.4 without delay upon notice thereof by
the Seller, it being understood that the obligation of the Buyer to ensure
that the Seller be released therefrom shall be limited to such guaranties,
securities and other obligations in the aggregate amount of DM 500,000.00
(Deutsche Marks five hundred thousand).
9.5 The members of the boards (Geschaftstfuhrung, Aufsichtsrat oder Beirat) of
the Woolworth Companies, who are employees, directors or officers of the
Seller or any
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of its Affiliates (except for the Woolworth Companies) and who are listed
on Exhibit 9.5 hereto, shall resign from such office with the Woolworth
Companies as of the Closing Date and the Buyer shall resolve or cause to be
resolved the ratification and approval (Entlastung) of all their actions
taken prior to their resignations. The employees and members of the boards
of the Woolworth Companies, who serve on any boards of the Seller or any of
is Affiliates (except for the Woolworth Companies) and who are listed on
Exhibit 9.5 hereto, shall resign from such office with the Seller or any of
its Affiliates as of the Closing Date.
9.6 For a period of three years after the Closing Date, the Seller and its
Affiliates shall not, directly or indirectly,
a) establish a business in Germany or Austria which would compete with
the retail business presently conducted by the Material Woolworth
Companies; or
b) acquire a majority interest (equity or votes) in an enterprise in
Germany or Austria which is engaged in a business which competes with
the retail business presently conducted by the Material Woolworth
Companies.
This obligation not to compete shall not apply to business activities of
the type currently carried out through specialty stores, such as The Sports
Authority, Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports,
Colorado, Afterthoughts or Northern Reflections, or to direct marketing,
internet and catalogue sales operations selling the types of merchandise
sold in the above-mentioned specialty stores.
9.7 After the closing Date, the Seller shall keep strictly confidential all
business and trade secrets of the Material Woolworth Companies.
SECTION 10
FURTHER COVENANTS AND UNDERSTANDINGS
10.1 The Parties shall execute all documents and do all other things and perform
all other acts (including giving access to documents) as may be reasonably
necessary to perform the terms of this Agreement and the orderly separation
of the business affairs of the Seller and its Affiliates (other than the
Woolworth companies) on the one hand from those of the Woolworth Companies
on the
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other hand. This obligation shall extend beyond the Closing Date.
10.2 Until the Closing Date, neither ?arty shall make a press release or similar
announcement with respect to the transactions contemplated by this
Agreement without the prior consent of the other Parties. Each Party shall
consult with the other Parties about the form and content of any such press
release or similar announcement it intends to make on the Closing Date or
thereafter. This provision shall not apply to any press releases or similar
announcements made internally to the management or workers' representation
of any of the Woolworth Companies or required to be made under applicable
law.
10.3 Until the Closing Date, the Buyer and its advisers shall not contact any of
the Woolworth Companies or their management other than through the
individuals designated by the Seller on Exhibit 10.3 hereto
10.4 The Buyer acknowledges and understands that:
a) (i) Woolworth Germany and its Affiliates are engaged in a variety of
off-balance sheet leasing arrangements in which Xxxxxxx, Lidos,
Katorn, Xxxx and Ala serve as the leasing vehicles;
(ii) Woolworth Germany or its Affiliates have issued guarantees of the
leasing obligations of each of the leasing vehicles referred to in
Section 10.4 a) (i); and
(iii) in certain cases, the unamortized loan value of the properties
which are the subject of the leasing arrangements referred to in
Section 10.4 a) (i) may exceed senior management's best estimates of
the present market values of such properties;
b) the value at which Woolworth Germany's investment in the shares of
Kaufring is reflected in Woolworth Germany's financial statements
exceeds the current market value of such shares based on the share
price quoted on the Frankfurt Stock Exchange
and, therefore, the Buyer shall have no claims against the Seller with
regard to the above matters pursuant to the provisions of Section 6 or
otherwise.
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10.5 By letter of January 12, 1998, Deutsche Bank AG has granted to the Seller
and Woolworth Germany as joint and several debtors a line of credit in the
amount of DM 50,000,000.00 (Deutsche Marks fifty million). Until the
Closing Date, the Seller and Woolworth Germany will use their best efforts
to either terminate such credit facility or to release the seller of its
liability thereunder If for any reason such termination or release has not
become effective by the Closing Date, the Buyer shall cause Woolworth
Germany to continue its best efforts in this respect and shall indemnify
the seller against any liability under such credit facility.
10.6 It is agreed that, at the written request of the Buyer, which has to be
given not less than two days prior to the Closing Date, the Guarantor for
Seller's property and general liability policies will be extended to cover
the interest of Buyer 35 respects Buyer's ownership and operation of
Woolworth Germany for claims occurring within 30 days of the Closing Date,
subject to the terms and conditions of said policies. A condition of such
agreement is that the Buyer maintain property protection standards to an
equal or greater level than the property protection standards previously
maintained by the Guarantor for seller. A further condition of such
agreement is that there be no material change to the operation of Woolworth
Germany, under the ownership of Buyer, for said 30 day period. The total
premium for such 30 days extension of insurance coverage shall amount to
US$ 65,678.00 (US Dollars sixty five thousand six hundred and seventy
eight). The Buyer shall ensure that such premium is paid by Woolworth
Germany to the Guarantor for Seller on the Closing Date.
SECTION 11
COSTS AND TAXES
11.1 Any transfer taxes (including real estate transfer tax), fees (including
notarial fees) , stamp duties and charges (including those incurred in
connection with antitrust clearances, governmental approvals, filings and
the like) payable in connection with this Agreement and its implementation
shall be borne by the Buyer.
11.2 Each Party shall bear the costs of its own advisers.
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SECTION 12
GUARANTEE FOR SELLER
The Guarantor for seller hereby guarantees (garantiert) to the Buyer the
performance of the obligations of the Seller vis-a-vis the Buyer under this
Agreement. In addition, the Guarantor for Seller shall indemnify the Buyer
from any liability of the Buyer which may arise under Section 41S German
Civil Code by the consummation of this Agreement, except that this
indemnification shall not extend to the liability of the Buyer under
Section 419 German civil Code for any guarantees, securities and other
obligations of the seller referred to in Section 9,4. The Guarantor for
seller does not assume any liability, and no such liability shall be deemed
assumed by the Guarantor for seller pursuant to this Section 12, with
regard to any liability of the Seller in connection with the facts outlined
in Exhibit 6.1 b) hereto.
SECTION 13
JOINT AND SEVERAL LIABILITY
Buyer 1 and Buyer 2 shall be jointly and severally liable (haften als
Gesamtschuldner) for all obligations of the Buyer hereunder, including the
obligation to pay the Purchase Price. Buyer 2 hereby irrevocably appoints
Buyer 1 as its agent (stellvertreter) to receive and give any statement or
notice under or in connection with this Agreement.
SECTION 14
MISCELLANEOUS
14.1 This Agreement is subject to the laws of the Federal Republic of
Germany.
14.2 This Agreement shall create rights and obligations only of and between
the Parties hereto.
14.3 Any changes of or amendments to this Agreement, including any change
of this Section 14.3, must be in writing and signed by the Parties to
be effective, unless notarial form is required.
14.4 Should any provision of this Agreement, or any provision to be
incorporated in the future, be or become invalid or unenforceable, the
validity of the balance of this
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Agreement shall not be affected thereby. The same shall apply if this
Agreement contains any omissions. In lieu of an invalid or unenforceable
provision or in order to complete any omission, a fair provision shall
apply which, to the extent legally permissible, comes as close as possible
to what the Parties had intended or would have intended, according to the
spirit and purpose of this Agreement, if they had considered the matter at
the time this Agreement was executed. The same shall apply if a provision
is invalid because of the stipulated scope or time period.
14.5 Exclusive place of venue (Gerichtsstand) for all disputes under or in
connection Agreement and its implementation shall be Frankfurt am
Main.
