Exhibit 2
SHARE PURCHASE AGREEMENT
Among
XXXXXX, XXXXXXX & CO., INC.,
BIDERMANN TAILORED CLOTHING INC.,
XXXXXX DESIGNER GROUP INC.,
and
XXXXXXXX-VAN HEUSEN CORPORATION
dated as of June 28, 2000
TABLE OF CONTENTS
PAGE
ARTICLE 1.
DEFINITIONS...............................................................................................2
1.1 Definitions...............................................................................................2
ARTICLE 2.
PURCHASE AND SALE OF SHARES...............................................................................4
2.1 Transfer by Sellers of Shares.............................................................................4
2.2 Other Transactions........................................................................................4
2.3 Obtaining Permits and Licenses............................................................................5
2.4 Further Assurances........................................................................................5
ARTICLE 3.
CONSIDERATION.............................................................................................5
3.1 Purchase Price............................................................................................5
3.2 Inventory.................................................................................................5
ARTICLE 4.
INDEMNITIES...............................................................................................8
4.1 Indemnity.................................................................................................8
4.2 Indemnification Procedure.................................................................................9
4.3 Other Indemnification Provisions.........................................................................10
ARTICLE 5.
EMPLOYEES AND EMPLOYEE BENEFITS..........................................................................10
5.1 Employee Relations and Benefits..........................................................................10
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF SELLERS................................................................13
6.1 Organization and Corporate Power.........................................................................13
6.2 Capitalization...........................................................................................13
6.3 Ownership of Shares......................................................................................13
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6.4 Due Authorization; No Breach.............................................................................14
6.5 Title and Condition of Assets............................................................................14
6.6 Consents.................................................................................................15
6.7 Compliance With Laws.....................................................................................15
6.8 Permits and Licenses.....................................................................................15
6.9 Contracts................................................................................................15
6.10 Tax Matters..............................................................................................15
6.11 Finders; Brokers.........................................................................................17
6.12 Litigation, Claims and Proceedings.......................................................................17
6.13 Employee Matters.........................................................................................17
6.14 Survival of Representations and Warranties...............................................................18
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF BUYER..................................................................18
7.1 Corporate Existence......................................................................................18
7.2 Due Authorization; No Breach.............................................................................18
7.3 Consents.................................................................................................19
7.4 Purchase for Investment..................................................................................19
7.5 Finders; Brokers.........................................................................................20
7.6 Availability of Funds....................................................................................20
7.7 No Other Representations or Warranties...................................................................20
7.8 Survival of Representations and Warranties...............................................................20
ARTICLE 8.
COVENANTS................................................................................................20
8.1 Conduct of the Business..................................................................................20
8.2 Best Efforts and Alternative Proposals...................................................................22
8.3 Notification.............................................................................................22
8.4 Letter of Credit.........................................................................................23
8.5 Returned Inventory.......................................................................................24
8.6 Accounts Receivable......................................................................................24
8.7 Name Change..............................................................................................25
ARTICLE 9.
CONDITIONS OF CLOSING....................................................................................25
9.1 Mutual Conditions........................................................................................25
9.2 Additional Conditions of Sellers.........................................................................25
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PAGE
9.3 Additional Conditions of Buyer...........................................................................26
ARTICLE 10.
TERMINATION; SURVIVAL....................................................................................26
10.1 Termination by Buyer or CDG..............................................................................26
10.2 Survival.................................................................................................28
ARTICLE 11.
CLOSING..................................................................................................28
11.1 Closing..................................................................................................28
11.2 Sellers' Obligations and Closing Deliveries..............................................................28
11.3 Buyer's Obligations and Closing Deliveries...............................................................29
ARTICLE 12.
EXPENSES AND POST-CLOSING OBLIGATIONS....................................................................29
12.1 Taxes and Other Charges..................................................................................29
12.2 Further Assurances.......................................................................................30
12.3 Access to Books, Records and Facilities..................................................................30
12.4 Recission................................................................................................31
ARTICLE 13.
PUBLICITY, CONFIDENTIALITY...............................................................................32
13.1 Publicity................................................................................................32
13.2 Confidentiality..........................................................................................32
ARTICLE 14.
NOTICES..................................................................................................32
14.1 Notices..................................................................................................32
ARTICLE 15.
MISCELLANEOUS............................................................................................34
15.1 Binding Effect; Assignment...............................................................................34
15.2 Exhibits and Schedules...................................................................................34
15.3 Specific Performance.....................................................................................34
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PAGE
15.4 Counterparts.............................................................................................34
15.5 Headings; Interpretation.................................................................................35
15.6 Waiver...................................................................................................35
15.7 Severability.............................................................................................35
15.8 Governing Law and Forum..................................................................................35
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EXHIBITS
Exhibit 2.2(a) Escrow Agreement
Exhibit 2.2(c) Waiver and Consent
Exhibit 2.2(d) Hosiery Agreement
v
SCHEDULES
Schedule 4.1(a) - Assumed Liabilities
Schedule 5.1(a)(i) - CDG Employees
Schedule 5.1(a)(ii) - Severance Benefits
Schedule 5.1(h) - Vacation Policy
Schedule 6.1 - Jurisdiction Where Qualified to do Business
Schedule 6.6 - CDG Required Consents
Schedule 6.7 - Compliance with Laws
Schedule 6.8 - Permits and Licenses
Schedule 6.9 - Contracts in Default
Schedule 6.10(a) - Tax Filings
Schedule 6.10(b) - Tax Defaults
Schedule 6.10(c) - Tax Extensions
Schedule 6.10(d) - Tax Suits
Schedule 6.10(e) - Tax Liens
Schedule 6.12 - Litigation, Claims and Proceedings
Schedule 6.13(d) - Employee Benefit Plans
Schedule 7.2 - Due Authorization; No Breach
Schedule 7.3 - Buyer's Required Consents
Schedule 8.2 - Assets to be Assigned
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Exhibit 99.2
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "AGREEMENT"), dated as of June
2000, is entered into by and among XXXXXX, XXXXXXX & CO., INC., a Delaware
corporation ("CP"), XXXXXX DESIGNER GROUP INC., a Delaware corporation ("CDG"),
BIDERMANN TAILORED CLOTHING INC., a Delaware corporation ("BTC", and
collectively with CP, the "SELLERS"), and XXXXXXXX-VAN HEUSEN CORPORATION, a
Delaware corporation ("BUYER").
WHEREAS, CDG is engaged, among other things in the business of
designing, marketing and selling dress shirts with the Xxxxxxx Xxxx, Xxxxxxx
Xxxx New York, Xxxxxxx Xxxx Collection and Xxxxxxx Xxxx Reaction labels (the
"BUSINESS") pursuant to a license agreement made as of August 1, 1997 between
K.C.P.L. Inc., a Delaware corporation ("KCPL"), and CDG, as amended (the "KCPL
SHIRT LICENSE AGREEMENT");
WHEREAS, CP, Xxxxxx, Peabody Canada, Inc., a Canadian corporation,
Arrow Factory Stores Inc., a Delaware corporation ("FS"), CDG, Consumer Direct
Corporation, a Delaware corporation, Xxxxxx Xxxxxxx Holding Corp., a Delaware
corporation, and Buyer have entered into a purchase and sale agreement (the
"PURCHASE AGREEMENT") which, among other things, contemplates that the parties
will enter into this Agreement;
WHEREAS, pursuant to the Purchase Agreement, CP, Buyer and Xxxxxx
Peabody Resources Corporation, a Delaware corporation ("RESOURCES"), will enter
into the Trademark License Agreement (as defined in the Purchase Agreement);
WHEREAS, pursuant to the Purchase Agreement, CP, Buyer and FS will
enter into the Transition Services Agreement (as defined in the Purchase
Agreement);
WHEREAS, Sellers collectively own, beneficially and of record, all of
the issued and outstanding equity securities of CDG (the "SHARES"); and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, all of the Shares upon the terms and conditions set forth herein,
for purposes of acquiring the Business and CDG's rights under the KCPL Shirt
License Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
2
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS. The following terms are defined in the Section indicated:
TERM SECTION
Agreement.................................................Introduction
Alternative Proposal...............................................8.2
Ancillary Agreements...............................................2.2
Arbiter.........................................................3.2(d)
Assets.............................................................6.4
BTC.......................................................Introduction
Business......................................................Recitals
Buyer.....................................................Introduction
Buyer Indemnified Parties.......................................4.1(a)
Buyer Plans.....................................................5.1(b)
Buyer's 401(k) Plan.............................................5.1(g)
Capital Stock Equivalents..........................................6.2
CDG.......................................................Introduction
CDG's Cost......................................................3.2(a)
CDG Employees...................................................5.1(a)
Claim..............................................................4.2
Closing...........................................................11.1
Closing Date......................................................11.1
Confidentiality Agreement.........................................13.2
Contract...........................................................6.9
CP........................................................Introduction
CP's 401(k) Plan................................................5.1(f)
Damages.........................................................4.1(a)
3
Encumbrances.......................................................2.1
ERISA...........................................................5.1(d)
Escrow Agreement................................................2.2(a)
Estimated Inventory Purchase Price..............................3.2(a)
Final Inventory Purchase Price..................................3.2(d)
FS............................................................Recitals
Governmental Authority.........................................6.10(i)
HSR Act............................................................6.6
Indemnified Party..................................................4.2
Indemnifying Party.................................................4.2
Issuing Bank.......................................................8.4
Items.............................................................15.2
July 9 Count....................................................3.2(c)
KCPL..........................................................Recitals
KCPL Inventory..................................................3.2(a)
KCPL Inventory Closing Date Statement...........................3.2(b)
KCPL Inventory Escrow...........................................3.2(a)
KCPL Letter of Credit..............................................8.4
KCPL Shirt License Agreement..................................Recitals
Liability.......................................................4.1(a)
Pension Plan....................................................5.1(e)
Permits............................................................6.8
Purchase Agreement............................................Recitals
Purchase Price.....................................................3.1
Resources.....................................................Recitals
Returned Inventory.................................................8.5
Securities Act.....................................................7.4
Seller Indemnified Parties......................................4.1(b)
4
Sellers...................................................Introduction
Sellers' Knowledge.................................................6.9
Shares........................................................Recitals
Sourcing Commitments...............................................8.4
Tax Returns....................................................6.10(g)
Taxes..........................................................6.10(h)
Transferred Employees...........................................5.1(a)
Vacation Policy.................................................5.1(h)
WARN............................................................5.1(i)
ARTICLE 2.
PURCHASE AND SALE OF SHARES
2.1 TRANSFER BY SELLERS OF SHARES. On the Closing Date (as defined in
Section 2.3) and subject to the terms and conditions set forth in this
Agreement, Sellers will sell, assign, transfer and deliver to Buyer the Shares,
free and clear of all options, pledges, mortgages, security interests, liens,
restrictions on voting or transfer or other encumbrances of any nature
("ENCUMBRANCES").
2.2 OTHER TRANSACTIONS. In addition to the transactions contemplated above,
the following acts or transactions shall also occur at or before the Closing:
(a) Buyer, Sellers and The Bank of New York shall each execute and deliver
an Escrow Agreement substantially in the form attached hereto as Exhibit
2.2(a) (the "ESCROW AGREEMENT");
(b) Sellers shall deliver UCC-3 partial releases and/or termination
statements and such other instruments as are required to release all
Encumbrances of the lenders and other creditors of CDG on CDG's assets;
(c) CDG and, to the extent relevant, its affiliates (including the Sellers)
shall execute and deliver, and CDG and Sellers shall use their reasonable
efforts to cause CDG's contractors, subcontractors and warehousemen to
deliver, a Waiver and Consent substantially in the form attached hereto as
Exhibit 2.2 (c); and
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(d) Buyer shall execute and deliver a Hosiery Agreement substantially in
the form attached hereto as Exhibit 2.2(d).
The agreements set forth in paragraphs (a) through (c) of this Section 2.2
are hereinafter referred to as the "ANCILLARY AGREEMENTS."
2.3 OBTAINING PERMITS AND LICENSES. Buyer shall use all reasonable efforts
to obtain as of the Closing or as soon thereafter as may be practicable all
permits and licenses required by any governmental agency with respect to the
Business. Sellers shall provide any cooperation reasonably requested by Buyer to
assist Buyer in obtaining such permits and licenses.
2.4 FURTHER ASSURANCES. After the Closing, each party hereto shall from
time to time, at the request of any other party and without further cost or
expense to such other party, execute and deliver such other instruments of
conveyance and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the transactions
contemplated hereby and to vest in Buyer good and valid title to the Shares.
ARTICLE 3.
CONSIDERATION
3.1 PURCHASE PRICE. Buyer shall pay Sellers for the Shares an amount equal
to the Final Inventory Purchase Price (as defined in Section 3.2(d)). All
payments made to Sellers pursuant to this Section 3.1 (all such payments,
collectively, the "PURCHASE PRICE") shall be made by wire transfer of
immediately available funds to an account designated in writing by Sellers at
least five business days prior to the Closing Date. All payments made to Sellers
pursuant to this Section 3.1 shall be made at Closing, except as expressly
provided otherwise in Section 3.2.
3.2 INVENTORY. (a) Ten days prior to the Closing Date, Sellers shall
deliver to Buyer their good faith estimate, prepared on a basis consistent with
CDG's past practices, of CDG's Cost of the KCPL Inventory (defined below) as of
the close of business on the Closing Date. The estimate referred to in the
preceding sentence is referred to as the "ESTIMATED INVENTORY PURCHASE PRICE".
Buyer shall pay Sellers at Closing 95% of the Estimated Inventory Purchase
Price. The balance of the Estimated Inventory Purchase Price (the "KCPL
INVENTORY ESCROW") shall be deposited in escrow by Buyer in accordance with the
Escrow Agreement. For purposes hereof, "CDG'S COST" shall mean CDG's cost as
calculated in accordance with generally accepted accounting principles applied
in a manner consistent with the preparation of the audited financial statements
of Xxxxxx American Corp. for the fiscal year ended December 31, 1999. For
purposes of this Agreement, "KCPL INVENTORY" means: all raw materials, work in
process, trim (including, without limitation, packing, labels, buttons, zippers
and hang tags) and finished goods inventory relating to the Business, in each
case including, without limitation, any
6
of such items in transit from manufacturing facilities of CDG and its affiliates
or third parties or warehouses of CDG and its affiliates. Notwithstanding
anything to the contrary in the foregoing, KCPL Inventory in transit will be
treated pursuant to this Section 3.2(a) based on the date of receipt and the
condition upon receipt. The parties to this Agreement agree to cooperate in
resolving any disputes with third party vendors with respect to such KCPL
Inventory.
(b) As soon as practicable following the Closing Date and in any event
within 60 calendar days thereof, Sellers shall prepare and deliver to Buyer a
statement of CDG's Cost of the KCPL Inventory as of the close of business on the
Closing Date (including the notes thereto, the "KCPL INVENTORY CLOSING DATE
STATEMENT"), together with the work papers used by Sellers (and, subject to the
execution and delivery by Buyer of a customary accountants' access letter,
including all work papers used by Sellers' independent public accountants) in
the preparation thereof. There shall be attached to the KCPL Inventory Closing
Date Statement an annex setting forth in reasonable detail the computation of
CDG's Cost of the KCPL Inventory.
(c) The KCPL Inventory Closing Date Statement shall be based upon a full
physical count of the KCPL Inventory as of the close of business on July 9,
2000, which shall be conducted by CDG and observed and participated in by Buyer
and its representatives (the "JULY 9 COUNT"), as adjusted for items sold after
the July 9 Count, items received after the July 9 Count and items manufactured
after the July 9 Count. Buyer and Sellers shall share equally the cost of the
July 9 Count. As promptly as practicable following the July 9, Count, Sellers
shall deliver to Buyer copies of all work papers used by Sellers (and, subject
to the execution and delivery by Buyer of a customary accountants' access
letter, including all work papers used by Sellers' independent public
accountants) in connection with the July 9 Count. Sellers shall, and shall cause
Sellers' independent public accountants to, be available to Buyer and its
representatives to answer questions regarding the July 9 Count or such work
papers.
(d) Unless Buyer delivers written notice to Sellers on or prior to the 45th
day following Buyer's receipt of the KCPL Inventory Closing Date Statement and
the work papers used in the preparation thereof of Buyer's objection to any
amount set forth in the KCPL Inventory Closing Date Statement, specifying in
reasonable detail all disputed amounts and the basis therefor, Buyer shall be
deemed to have accepted and agreed to the KCPL Inventory Closing Date Statement.
If Buyer so notifies Sellers, Sellers and Buyer shall have 15 business days
thereafter to resolve their differences, and each of Buyer and Sellers shall
make a good faith effort to resolve their differences. If any amount remains in
dispute, all such amounts remaining in dispute shall be submitted for resolution
to a "Big 5" accounting firm mutually agreed upon by Buyer and each of the
Sellers which has not had a material relationship with either Buyer and its
subsidiaries or either of the Sellers and their respective subsidiaries within
the two years preceding the appointment. If Buyer and Sellers cannot agree on
the arbiter, they shall request that their respective independent certified
public accountants jointly designate the arbiter, and such appointment shall be
binding and conclusive on the parties hereto. The arbiter designated by Buyer
and Sellers or their respective independent certified public accountants, as the
case may
7
be, is hereinafter referred to as the "ARBITER." Within 30 business days after
the Arbiter's acceptance of its appointment under this Section 3.2(d) as
Arbiter, each of the Sellers and Buyer shall submit to the Arbiter (and each
other) a single presentation setting forth its proposed resolution of the
dispute and the basis therefor and the resulting computation of the KCPL
Inventory Closing Date Statement and CDG's Cost of the KCPL Inventory
(collectively, the "FINAL INVENTORY PURCHASE PRICE"). Within 20 business days
after the earlier to occur of (1) the Arbiter's receipt of the presentations
referred to in the preceding sentence or (2) the expiration of the 30 business
day period referred to in the preceding sentence, the Arbiter shall accept
either Buyer's or Sellers' proposed resolution of the dispute and the resulting
computation of the KCPL Inventory Closing Date Statement and CDG's Cost of the
KCPL Inventory, and shall notify each of Buyer and Sellers of its decision in
writing. Such decision shall be final, binding and conclusive on all parties
hereto. The party whose proposed resolution is not accepted shall pay all of the
Arbiter's fees and expenses with respect to its engagement under this Section
3.2(d). Each party agrees to execute, if requested by the Arbiter, a reasonable
engagement letter with the Arbiter with respect to its engagement under this
Section 3.2(d).
(e) If the Final Inventory Purchase Price as determined above equals or
exceeds the Estimated Inventory Purchase Price, the KCPL Inventory Escrow shall
be delivered to Sellers and Buyer shall pay Sellers by wire transfer of
immediately available funds to an account designated in writing by Sellers an
amount equal to any excess, together with interest on such excess at an annual
rate equal to the reference rate from time to time of The Chase Manhattan Bank
from and including the Closing Date to but not including the date of payment. If
the Final Inventory Purchase Price is less than the Estimated Inventory Purchase
Price but greater than 95% thereof, the portion of the KCPL Inventory Escrow
equal to any such excess shall be delivered to Sellers and the balance shall be
delivered to Buyer. If the Final Inventory Purchase Price is equal to 95% of the
Estimated Inventory Purchase Price, the KCPL Inventory Escrow shall be delivered
to Buyer. If the Final Inventory Purchase Price is less than 95% of the
Estimated Inventory Purchase Price, the KCPL Inventory Escrow shall be delivered
to Buyer, and Sellers shall pay Buyer an amount equal to such difference between
95% of the Estimated Inventory Purchase Price and the Final Inventory Purchase
Price by wire transfer of immediately payable funds to an account designated in
writing by Buyer, together with interest on such amount at an annual rate equal
to the reference rate from time to time of The Chase Manhattan Bank from and
including the Closing Date to but not including the date of payment. All Net
Investment Proceeds in the Inventory Escrow Fund (as those terms are defined in
the Escrow Agreement) shall be disbursed to Buyer and Sellers, respectively, in
the same proportion that the KCPL Inventory Escrow is disbursed. Any amounts
payable pursuant to this Section 3.2(e) in addition to the Inventory Escrow Fund
shall be made on the third business day following (i) the 30th day after the
delivery to Buyer of the KCPL Inventory Closing Date Statement and the work
papers used in the preparation thereof, to the extent that there shall have been
no dispute between Sellers and Buyer with respect to the KCPL Inventory Escrow
and the KCPL Inventory Closing Date Statement, and/or (ii) if a dispute with
respect to the KCPL Inventory Escrow or the KCPL
8
Inventory Closing Date Statement is settled by the parties without resort to
arbitration, the date of such settlement and/or (iii) the issuance of the
Arbiter's written decision under Section 3.2(d).
ARTICLE 4.
INDEMNITIES
4.1 INDEMNITY. (a) Sellers hereby agree, jointly and severally, to
indemnify and hold harmless each of Buyer and its affiliates and their
respective directors, shareholders, partners, officers, employees, agents,
consultants, representatives, successors, transferees and assigns (hereinafter
sometimes collectively referred to as "BUYER INDEMNIFIED PARTIES") against any
Liabilities of CDG which are not set forth on Schedule 4.1(a), including,
without limitation, any Liability under any law, rule or regulation now or
hereinafter in effect relating to environmental matters and any liability loss,
damage (excluding consequential damages (including, without limitation, lost
business profits)) and other out-of-pocket costs (including reasonable fees and
expenses of outside counsel) incident to proceedings or investigations or the
prosecution or defense of any claim (collectively, "DAMAGES") incurred by any of
them relating to any such Liability. The term "LIABILITY" shall mean and include
any direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
cost of environmental investigation or remediation, obligation or
responsibility, of whatever kind or nature, whether known or unknown, fixed or
unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured,
accrued or unaccrued, absolute, contingent or otherwise. Liabilities for Taxes
are exclusively provided for in Section 12.1.
(b) Buyer shall indemnify and hold harmless each of the Sellers and their
affiliates and the directors, shareholders, partners, officers, employees,
agents, consultants, representatives, successors, transferees and assigns of any
thereof (hereinafter sometimes collectively referred to as "SELLER INDEMNIFIED
PARTIES") against any Damages which are caused by or arise out of any breach of
any covenant or agreement of Buyer hereunder or under any Ancillary Agreement.
It is agreed and understood that claims under this Section 4.1(b) may be brought
by Seller Indemnified Parties at any time and shall not be limited as to dollar
amount.
(c) Sellers shall also, jointly and severally, indemnify and hold harmless
each Buyer Indemnified Party against any Damages (i) which are caused by or
arise out of any breach of any covenant or agreement of Sellers hereunder or
under any Ancillary Agreement or (ii) which are caused by or arise out of any
breach of any representation or warranty of Sellers contained in the first and
third sentences of Section 6.1 or in Section 6.2, Section 6.3, Section 6.4 or
Section 6.5. No claim for breach of a representation or warranty shall be
asserted under Section 4.1(c)(ii) after the expiration of the survival period
thereof under Section 6.14. The maximum amount recoverable by Buyer Indemnified
Parties for indemnification for breaches of representations and warranties under
Section 4.1(c)(ii) shall be $500,000 in the aggregate. It is
9
agreed and understood that claims under Section 4.1(a) and Section 4.1(c)(i) may
be brought by Buyer Indemnified Parties at any time and shall not be limited as
to dollar amount.
(d) Any indemnification amounts payable to Buyer Indemnified Parties or
Seller Indemnified Parties hereunder shall be paid to them by wire transfer of
immediately available funds to a bank account designated by them in writing.
(e) The indemnification obligations of Sellers and Buyer set forth in this
Section 4.1 shall constitute the sole and exclusive remedy of the Buyer
Indemnified Parties and Seller Indemnified Parties for the recovery of any
Damages, except for Damages which are caused by or arise out of the fraud of the
other party.
(f) Nothing in this Agreement shall be deemed to limit Buyer's rights under
Section 8.11 of the Purchase Agreement if CDG is prevented from exercising its
rights as the licensee under the KCPL Shirt License Agreement.
4.2 INDEMNIFICATION PROCEDURE. The obligation of a party (the "INDEMNIFYING
PARTY") to indemnify any person or entity (the "INDEMNIFIED PARTY") under
Section 4.1 hereof is conditioned upon receiving from the Indemnified Party
written notice of the assertion or institution of a claim arising from or
related to any liability set forth in Section 4.1 hereof (a "CLAIM") or of the
occurrence of an event which the Indemnified Party reasonably believes could
lead to the assertion of a Claim, specifying in reasonable detail the nature and
amount of such Claim, promptly after the Indemnified Party becomes aware of such
Claim or event; provided, however, that the failure of the Indemnifying Party to
receive such notice on a timely basis shall relieve the Indemnifying Party of
its obligation to indemnify hereunder only if and to the extent that such
failure is prejudicial to its ability to defend such Claim. Subject to the terms
hereof, the Indemnifying Party shall have the absolute right, in its sole
discretion and at its sole expense, to elect to defend, settle or otherwise
protect against any Claim with legal counsel of its own selection reasonably
satisfactory to the Indemnified Party, provided, however, that no Claim may be
settled by the Indemnifying Party without the consent of the Indemnified Party,
which consent shall not be unreasonably withheld. The Indemnified Party shall
have the right, but not the obligation, to participate, at its own expense, in
the defense of any Claim through counsel of its own and the fees and expenses of
such counsel will be at the expense of such Indemnified Party unless (i) the
Indemnifying Party specifically authorized the employment of such counsel and
specifically agreed to pay such counsel's fees, (ii) based on the advice of
counsel, there is a conflict of interest between the position of the
Indemnifying Party on the one hand and the Indemnified Party on the other hand,
or (iii) the Indemnifying Party fails to assume the defense or fails to contest
such action in good faith, in any which case, if the Indemnified Party notifies
the Indemnifying Party that it elects to employ separate counsel, the
Indemnifying Party will not have the right to assume the defense of such Claim
on behalf of the Indemnified Party and the reasonable fees and expenses of such
separate counsel shall be borne by the Indemnifying Party. The Indemnified Party
shall, and shall cause its affiliates to, at all times
10
cooperate in all reasonable ways with, make its relevant files and records
available for inspection and copying by, and make (subject to assertion of
attorney-client and other applicable privileges) its employees available or
otherwise render reasonable assistance to the Indemnifying Party in connection
with its defense of any Claim. Subject to the next sentence, if the Indemnified
Party, without the prior consent of the Indemnifying Party (which shall not be
unreasonably withheld or delayed), makes any settlement with respect to any
Claim, the Indemnifying Party shall be discharged from all obligations under
Section 4.1 hereof with respect to such Claim. In the event the Indemnifying
Party does not undertake the defense against, settlement of or protection
against any Claim in accordance with this Section 4.2, the Indemnified Party
shall have the right, but not the obligation, to defend, contest, assert cross
claims or counterclaims or otherwise protect against the same, to make any
compromise or settlement thereof, with the consent of the Indemnifying Party
which shall not be unreasonably withheld or delayed, and to recover from the
Indemnifying Party and be indemnified by the Indemnifying Party for the entire
cost thereof, including, without limitation, legal expenses, disbursements and
all amounts paid as a result of such Claim or the compromise or settlement
thereof.
4.3 OTHER INDEMNIFICATION PROVISIONS. The parties to this Agreement shall
make appropriate adjustments for insurance proceeds actually recovered by or on
behalf of an Indemnified Party in respect of an indemnifiable liability in
determining the amount of Damages pursuant to any Claims asserted under this
Article 4. All indemnification payments made pursuant to this Article 4 shall be
considered adjustments to the Purchase Price for federal income tax purposes.
ARTICLE 5.
EMPLOYEES AND EMPLOYEE BENEFITS
5.1 EMPLOYEE RELATIONS AND BENEFITS. (a) The parties hereto intend that
there shall be continuity of employment for all CDG employees listed on Schedule
5.1(a)(i) ("CDG EMPLOYEES"). Buyer will be responsible for the payment of all
severance benefits, if any, consistent with severance practices set forth on
Schedule 5.1(a)(ii), and other costs related to any termination of the CDG
Employees by Buyer on or after the Closing Date. CDG Employees who are employed
by CDG at Closing shall be referred to as "TRANSFERRED EMPLOYEES."
(b) As of the Closing Date, each Transferred Employee shall participate in
employee benefit plans, agreements, programs, policies and arrangements of Buyer
that are no less favorable in the aggregate than those that cover similarly
situated employees of Buyer ("BUYER PLANS"). Notwithstanding the above, with
respect to medical and dental welfare benefits, Transferred Employees will
continue to receive coverage under CP's medical and dental plans from the
Closing Date through the end of the calendar month in which the Closing Date
11
occurs, with respect to claims incurred during such period. On the first day of
the calendar month immediately following the Closing Date, Transferred Employees
shall participate in Buyer's medical and dental plans, and such plans shall be
responsible for any claims thereafter.
(c) CP shall or shall cause the applicable plan to retain responsibility
for and continue to pay all medical, life insurance, disability and other
welfare plan expenses and benefits for each Transferred Employee with respect to
claims incurred by such employees or their covered dependents subject to and in
accordance with the terms of the applicable plan for payment of such expenses
and benefits prior to the Closing Date. Expenses and benefits with respect to
claims incurred by Transferred Employees or their covered dependents on or after
the Closing Date shall be the responsibility of Buyer. For purposes of this
paragraph, a claim is deemed incurred when the services that are the subject of
the claim are performed; in the case of life insurance, when the death occurs,
in the case of long-term disability benefits, when the disability occurs and, in
the case of a hospital stay, when the employee first enters the hospital.
(d) With respect to any Buyer Plan that is a "welfare benefit plan" (as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) or any Buyer Plan that would be a "welfare benefit plan"
(as defined in Section 3(1) of ERISA) if it were subject to ERISA, Buyer shall
(i) cause there to be waived any pre-existing condition applicable to the
Transferred Employees, to the extent waived under CDG's similar welfare benefit
Plan, (ii) give effect for the year in which the Closing Date occurs, in
determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, such Transferred
Employees with respect to similar CDG Plans, as in effect immediately prior to
the Closing Date and (iii) recognize all credited service to the same extent
such service was recognized under similar CDG Plans immediately prior to the
Closing Date.
(e) As of the Closing Date with respect to each Transferred Employee, CP
shall cause the participation by each such employee in the Xxxxxx Retirement
Plan (the "PENSION PLAN") to cease and shall cause the accrued benefit of each
such Transferred Employee in the Pension Plan to fully vest. No assets or
liabilities with respect to the Transferred Employees shall be transferred as a
result of this Agreement from the Pension Plan to any plan or arrangement
established by Buyer or any other employer for the benefit of the Transferred
Employees (other than pursuant to an eligible rollover distribution). Benefits
payable to the Transferred Employees under the Pension Plan through the Closing
Date shall be payable to such Transferred Employees pursuant to the terms of,
and at the time and in the amounts provided under, the Pension Plan based upon
such Transferred Employees' years of service with, and compensation received
from, CDG through the Closing Date (including periods of employment with any
other employer which is taken into account under the Pension Plan). No period of
service by any Transferred Employee with Buyer or any other employer and no
compensation earned by any Transferred Employee for services performed for Buyer
or any other employer shall be taken into account under the Pension Plan as a
result of this Agreement except as expressly provided above.
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(f) As of the Closing Date with respect to each Transferred Employee, CP
shall (i) cause the account balance of each Transferred Employee in the Xxxxxx
Savings Plan ("CP'S 401(K) PLAN") to fully vest, (ii) cause the participation by
each Transferred Employee in the CP's 401(k) Plan to cease and (iii) make
distributions to such Transferred Employees in accordance with the terms of the
CP's 401(k) Plan and applicable law.
(g) Buyer shall take all steps necessary to permit each such Transferred
Employee who has received an eligible rollover distribution (as defined in
Section 402(c)(4) of the Code) from the Pension Plan or CP's 401(k) Plan, if
any, to roll such eligible rollover distribution into an account under the
Buyer's Associate Investment Plan (the "BUYER'S 401(K) PLAN"). Periods of
employment by Transferred Employees with CDG for which credit was given under
the CP's 401(k) Plan shall be taken into account for purposes of eligibility and
vesting (but not benefit accrual) under the Buyer's 401(k) Plan and any Buyer
Plan that is a "pension plan" (as defined in section 3(2) of ERISA).
(h) With respect to any accrued but unused vacation time to which any
Transferred Employee is entitled pursuant to the vacation policy applicable to
such Transferred Employee immediately prior to the Closing Date (the "VACATION
POLICY"), which Vacation Policy is set forth on Schedule 5.1(h), Buyer shall
assume the liability for such accrued vacation and allow such Transferred
Employee to use such accrued vacation; PROVIDED, HOWEVER, that if Buyer deems it
necessary to disallow such Transferred Employee from taking such accrued
vacation, Buyer shall be liable for and pay in cash to each such Transferred
Employee an amount equal to such accrued but unused vacation time in accordance
with the terms of the Vacation Policy; and PROVIDED, FURTHER, that Buyer shall
be liable for and pay in cash an amount equal to such accrued but unused
vacation time to any Transferred Employee whose employment terminates for any
reason subsequent to the Closing Date, subject to the terms of the Vacation
Policy. Nothing herein shall be deemed to require Buyer to continue the Vacation
Policy on or after the Closing Date for the Transferred Employees.
(i) Buyer agrees to provide any required notice under the Worker Adjustment
and Retraining Notification Act of 1988, as amended ("WARN"), and any other
applicable law and to otherwise comply with any such statute with respect to any
"plant closing" or "mass layoff" (as defined in WARN) or similar event affecting
any Transferred Employees and occurring on or after the date such person becomes
a Transferred Employee. Buyer shall indemnify and hold harmless the Seller
Indemnified Parties with respect to any liability under WARN or other applicable
law arising from the actions (or inactions) of Buyer or its affiliates with
respect to the termination of the Transferred Employees by Buyer on or after the
Closing Date.
(j) Nothing herein, expressed or implied, shall confer upon any employee or
former employee of CDG, Buyer, Sellers or any of their affiliates (including,
without limitation, the Transferred Employees), any rights or remedies
(including, without limitation, any right to
13
employment or continued employment for any specified period) of any nature or
kind whatsoever, under or by reason of this Agreement.
(k) CP shall use reasonable efforts to provide to Buyer Corporate Services
and Non-Corporate Services (as those terms are defined in the Transition
Services Agreement, as amended hereby) relating to the Business pursuant to the
Transition Services Agreement on the terms and subject to the conditions set
forth therein, as amended hereby.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers hereby jointly and severally represent and warrant to uyer that:
6.1 ORGANIZATION AND CORPORATE POWER. Each of the Sellers and CDG is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware. CDG has all requisite power and authority to own, lease and operate
the properties and assets owned, leased and/or operated by it and to carry on
the Business as now being conducted. Each of the Sellers and CDG has full
corporate power and authority to enter into and perform this Agreement and each
Ancillary Agreement to which it is a party. CDG is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities make such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on CDG or its ability to
consummate the transactions contemplated hereby. All such jurisdictions are
listed on Schedule 6.1 hereto. Buyer heretofore has been provided with correct
and complete copies of the Certificate of Incorporation and By-Laws of CDG, as
in effect on the date hereof, including all amendments thereto through the date
hereof. Sellers have heretofore made available to Buyer correct and complete
copies of the minute books of CDG. CDG has not made any investments in or
advances to, and (other than as disclosed in the Purchase Agreement) does not
own any securities of or other interests in, any other person or otherwise
control any other person.
6.2 CAPITALIZATION. The authorized share capital of CDG consists of 3,000
shares of common stock, par value $1.00 per share. Of such authorized shares,
only the Shares are issued and outstanding and no other shares of capital stock
of CDG or securities exercisable or convertible into or exchangeable for shares
of capital stock of CDG ("CAPITAL STOCK EQUIVALENTS") are authorized, issued or
outstanding. There are no subscriptions, options, warrants, calls, rights,
contracts, commitments, understandings, restrictions or arrangements relating to
the issuance, sale, transfer or voting of any shares of capital stock, whether
issued or unissued, of CDG or Capital Stock Equivalents, including any rights of
issuance, conversion or exchange under any outstanding securities or other
instruments. There are no bonds, debentures,
14
notes or other indebtedness having the right to vote on any matter submitted
for a vote of CDG's stockholders. All of the Shares have been validly issued
and are outstanding and fully paid, nonassessable and free of preemptive
rights.
6.3 OWNERSHIP OF SHARES. Sellers are the record and beneficial owner of all
of the Shares. The Shares are owned free and clear of all Encumbrances. Upon the
consummation of the transactions contemplated hereby, Buyer will acquire title
to the Shares free and clear of all Encumbrances, except for Encumbrances
arising as a result of any action taken by, or failure to act of, Buyer or any
of its affiliates.
6.4 DUE AUTHORIZATION; NO BREACH. The execution, delivery and performance
by each of the Sellers and CDG of this Agreement and each Ancillary Agreement to
which any of them is a party and the consummation of the transactions
contemplated hereby and thereby have been approved by their respective Boards of
Directors and no further corporate action is required to be taken by any of them
and their affiliates in order to execute, deliver and perform this Agreement and
the Ancillary Agreements to which any of them is a party and to transfer the
Shares to Buyer. This Agreement is a valid and legally binding obligation of
each of the Sellers and CDG enforceable against each of them in accordance with
its terms subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity), and each Ancillary Agreement and other
agreement or instrument contemplated by this Agreement to which any of the
Sellers and CDG is a party, when executed and delivered by each of the Sellers
and CDG that is a party thereto in accordance with the provisions thereof, will
be a valid and legally binding obligation of such party, enforceable against
such party in accordance with its terms subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
the effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity). All persons who have executed
this Agreement on behalf of any of the Sellers and CDG or who will execute on
behalf of any of the Sellers and CDG any agreement or instrument contemplated by
this Agreement, have been duly authorized to do so by all necessary corporate
action. Neither the execution and delivery of this Agreement, any Ancillary
Agreement and the other agreements and documents to be executed or delivered
pursuant hereto, nor the consummation of the transactions contemplated hereby
and thereby, will (i) violate, or conflict with, any provision of the
certificate of incorporation or by-laws of any of the Sellers and CDG, (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event of default which with notice or lapse of time
or both would become a default) under, or result in the termination (or grant a
right of termination) of, cancellation, amendment or accelerate (or grant the
right to accelerate) the performance required by, or result in the creation of
any Encumbrance upon any of the assets of CDG set forth on Schedule 8.2 or the
KCPL Inventory (collectively, the "ASSETS") under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
15
agreement, lease, Permit or other material instrument to which any of the
Sellers and CDG is a party or by which any of the Sellers and CDG or any of
the Assets may be bound or (iii) violate, or conflict with, any order, writ,
injunction, arbitration award, judgment or decree of any court, governmental
body or arbitrator applicable to CDG or any applicable statute, law, rule or
regulation, except, in the case of clause (ii) or (iii), as would not have a
material adverse effect on CDG, the Shares, the Assets or the Business.
6.5 TITLE AND CONDITION OF ASSETS. As of the Closing Date, CDG will have
good and marketable title to the Assets. Except for Encumbrances created by, or
arising as a result of the ownership of the Shares by, Buyer, the Assets will be
free and clear of all Encumbrances as of Closing.
6.6 CONSENTS. Schedule 6.6 hereto sets forth all actions, approvals,
permits, consents or authorizations required to be obtained by CDG in order to
consummate the transactions contemplated hereby, other than the expiration of
any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR ACT").
6.7 COMPLIANCE WITH LAWS. Except as set forth in Schedule 6.7 hereto, CDG
is not in default under or in violation of any United States federal, state or
local statute, law or regulation which would give rise to a material Liability
or which is reasonably likely to materially and adversely affect CDG, the Shares
or the Business as presently conducted.
6.8 PERMITS AND LICENSES. Schedule 6.8 attached hereto sets forth all
governmental licenses, permits and other governmental authorizations
(collectively "PERMITS") which are issued to, held or used by CDG in respect of
the ownership or use of the Assets as presently used or the conduct of the
Business as currently conducted, including the dates of issuance and expiration
thereof and, except as set forth on Schedule 6.8 hereto, there are no other
governmental licenses, permits, franchises or authorizations which are material
to the operation of the Business as presently conducted. Except as set forth on
Schedule 6.8 hereto, within the past 24 months, CDG has not received any written
warning, notice of violation or probable violation, notice of revocation or
other written communication from or on behalf of any governmental entity, which
violation has not been corrected or otherwise settled, alleging (i) any material
violation of any Permit listed on Schedule 6.8, (ii) that CDG needs a Permit to
conduct the Business as currently conducted or to use the Assets as currently
used, in each case which Permit is not currently held by CDG or (iii) any
current violation, with respect to the conduct of the Business as presently
conducted or the use of the Assets as presently used, of any United States
federal, state or local statutes or regulations.
6.9 CONTRACTS. Except as set forth in Schedule 6.9, (i) each contract,
lease, license, commitment, sales order, purchase order, invoice and other
agreement set forth on Schedule 4.1(a) (the "CONTRACT") is a valid agreement, in
full force and effect and constitutes a
16
valid and binding obligation of CDG, and, to Sellers' Knowledge, of any other
party thereto, and is legally enforceable, (ii) none of Sellers and CDG has
received any written notice from any other party to a Contract of the
termination thereof or alleging a material default thereunder by CDG and (iii)
there is no material default or event which, with notice or lapse of time or
both, would constitute a material default on the part of CDG (nor, to Sellers'
Knowledge, on the part of any other party thereto) under any Contract. For the
purposes of this Agreement, "SELLERS' KNOWLEDGE" shall mean any fact or set of
facts of which any director or officer of either Seller or CDG has actual
knowledge.
6.10 TAX MATTERS. (a) Except as set forth in Schedule 6.10(a), CDG has duly
and timely filed all material Tax Returns that are required to be filed in all
jurisdictions where such entities are required to file with the appropriate
Governmental Authority (as defined below) and has duly, completely and correctly
reported all income and all other amounts and information required to be
reported thereon and no material fact has been omitted therefrom.
(b) Except as set forth in Schedule 6.10(b), CDG has duly and timely paid
all material Taxes, including all installments on account of material Taxes for
the current year, that are due and payable by it.
(c) Except as set forth on Schedule 6.10(c), CDG has not requested, or
entered into any agreement or other arrangement or executed any waiver providing
for, any extension of time within which (i) to file any Tax Return covering any
Taxes for which it is or may be liable; (ii) to file any elections, designations
or similar things relating to Taxes for which it is or may be liable; (iii) it
is required to pay or remit any Taxes or amounts on account of Taxes; or (iv)
any Governmental Authority may assess or collect Taxes for which it is or may be
liable.
(d) As of the date hereof, there are no actions, suits, proceedings,
investigations, audits or claims that have been commenced or, to the best
knowledge of Sellers, threatened in writing, against CDG in respect of any
Taxes, except as set forth in Schedule 6.10(d).
(e) There are no Encumbrances for material Taxes on any of the assets of
CDG that arose in connection with any failure to pay any Tax or otherwise,
except for Encumbrances described on Schedule 6.10(e) other than Encumbrances
for current Taxes which are not yet due and payable.
(f) CDG is not a party to, bound by or liable under any Tax-sharing
agreement.
(g) For purposes of this Agreement, "TAX RETURNS" includes, without
limitation, all returns, reports, declarations, elections, notices, filings,
information returns and statements filed in respect of Taxes.
17
(h) For purposes of this Agreement, "TAXES" includes, without limitation,
all taxes, duties, fees, premiums, assessments, imposts, levies and other
charges of any kind whatsoever imposed by any Governmental Authority, together
with all interest, penalties, fines, additions to tax or other additional
amounts imposed in respect thereof, including those levied on, or measured by,
or referred to as income, gross receipts, profits, capital, transfer, land
transfer, sales, goods and services, use, value-added, excise, stamp,
withholding, business, franchising, property, payroll, employment, health,
social services, education and social security taxes, all surtaxes, all customs
duties and import and export taxes, all license, franchise and registration fees
and all unemployment insurance, health insurance and other government pension
plan premiums.
(i) For purposes of this Agreement, "GOVERNMENTAL AUTHORITY" means any
government, regulatory authority, governmental department, agency, commission,
board, tribunal, crown corporation, or court or other law, rule or
regulation-making entity having or purporting to have jurisdiction on behalf of
any nation, or province or state or other subdivision thereof or any
municipality, district or other subdivision thereof.
6.11 FINDERS; BROKERS. With the exception of fees and expenses payable to
Bear, Xxxxxxx & Co. Inc., which shall be Sellers' sole responsibility, none of
CDG and the Sellers is a party to any agreement with any finder or broker, or in
any way obligated to any finder or broker for any commissions, fees or expenses
in connection with the origin, negotiation, execution or performance of this
Agreement or the Ancillary Agreements.
6.12 LITIGATION, CLAIMS AND PROCEEDINGS. Except as set forth in Schedule
6.12 attached hereto, as of the date hereof there are no (i) judgments, orders,
writs or injunctions of any foreign or U.S. federal, state or local court or
governmental authority presently pending or, to Sellers' Knowledge, threatened
against CDG, the Business or the Shares or by which any of the Assets or the
Shares are or would be bound or (ii) lawsuits, actions, arbitrations, claims,
governmental proceedings or notices of violation presently pending or, to
Sellers' Knowledge, threatened to which CDG is a party (as plaintiff, defendant
or otherwise) which relate to CDG, the Shares or the Business, except in the
case of each of clauses (i) and (ii) for Liabilities which are not set forth on
Schedule 4.1(a). As of the date hereof, there is no lawsuit, action, arbitration
or governmental proceeding pending to which any of CDG and its affiliates is a
party which seeks to prevent the consummation, or otherwise challenges the
validity, of the transactions contemplated hereby.
6.13 EMPLOYEE MATTERS. (a) CDG is not a party to or bound by any labor
contract and neither Seller is a party to or bound by any labor contract
affecting CDG or the CDG Employees. The CDG Employees are not represented by
any union or other employee organization. There has not been, there is not
presently pending or existing and, to Seller's Knowledge, there is not
threatened (a) any strike, slowdown, picketing, work stoppage or lockout in
respect of CDG or any of the CDG Employees or (b) any organizational activity
involving
18
CDG or any of the CDG Employees. To Sellers' Knowledge, CDG is not engaged in
any unfair labor practice or discriminatory employment practice and as of the
date hereof no complaint of any such practice against CDG has been filed and
is pending or is threatened to be filed with or by the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
administrative agency that regulates labor or employment practices. As of the
date hereof no grievance has been filed or, to Sellers' Knowledge, threatened
to be filed against CDG by any employee pursuant to any collective bargaining
or other employment agreement.
(b) Except as set forth on Schedule 4.1(a), CDG is not party to any
employment or severance arrangement or agreement that is to be assumed by Buyer.
The execution of this Agreement and the consummation of the transactions
contemplated hereby will not (x) entitle any current or former employee of CDG
to any severance, termination or other payment pursuant to any employment or
severance policies or arrangements or (y) accelerate the time of payment or
vesting or increase the amount of compensation due any such employee that, in
either case, is to be assumed by Buyer.
(c) To Sellers' Knowledge, all employees of CDG are either United States
citizens or resident aliens specifically authorized to engage in employment in
the United States.
(d) Other than as set forth on Schedule 6.13(d), within the six-year period
preceding the date hereof CDG has not maintained or had an obligation to
contribute to any "employee benefit plans," as defined in Section 3(3) of ERISA
or any other employee benefit arrangements or payroll practices.
6.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a) None of the
representations and warranties made by Sellers shall survive the Closing, except
as provided in this Section 6.14. The representations and warranties contained
in the first and third sentences of Section 6.1 and in Section 6.2, Section 6.3,
Section 6.4 and Section 6.5 shall survive the Closing until the first
anniversary of the Closing Date and shall thereupon expire together with any
right to indemnification for breach thereof (except to the extent a claim for
indemnification has been made prior to the expiration of such period.)
(b) EXCEPT AS SET FORTH IN THIS AGREEMENT AND IN OTHER CERTIFICATES
DELIVERED PURSUANT TO THIS AGREEMENT, NONE OF SELLERS AND THEIR AFFILIATES MAKES
ANY REPRESENTATION OR WARRANTY TO BUYER WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO CDG, THE SHARES OR THE BUSINESS.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF BUYER
19
Buyer hereby represents and warrants to Sellers that:
7.1 CORPORATE EXISTENCE. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Buyer has all requisite power and authority to own the Shares and
to carry on the Business as it intends to conduct the Business after the
Closing. Buyer is duly authorized, qualified or licensed to do business as a
foreign corporation and in good standing in every jurisdiction wherein, by
reason of the character of the Business, the failure to be so qualified would
have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby. Buyer has full corporate power and authority
to enter into and perform this Agreement and each Ancillary Agreement to which
it is a party.
7.2 DUE AUTHORIZATION; NO BREACH. (a) The execution and performance by
Buyer of this Agreement and each Ancillary Agreement to which it is a party and
the transactions contemplated hereby and thereby have been approved all
necessary corporate action, and no further corporate action is required to be
taken by it in order to execute, deliver and perform this Agreement. Each of
this Agreement and the Ancillary Agreements to which it is a party is a valid
and legally binding obligation of Buyer, and each agreement or instrument
contemplated by this Agreement, when executed and delivered by Buyer in
accordance with the provisions hereof, will be a valid and legally binding
obligation of Buyer in each case enforceable against Buyer in accordance with
its terms subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity). All persons who have executed this Agreement on
behalf of Buyer or who will execute on behalf of Buyer any agreement or
instrument contemplated by this Agreement, have been duly authorized to do so by
all necessary corporate action. Except as set forth on Schedule 7.2 hereto,
neither the execution and delivery of this Agreement, the Ancillary Agreements
and all other agreements and documents to be executed or delivered hereunder,
nor the consummation of the transactions contemplated hereby and thereby, will
(i) violate, or conflict with, any provision of Buyer's certificate of
incorporation or by-laws or other governing documents, (ii) violate, or conflict
with, or result in a breach of any provisions of, or constitute a default (or an
event of default which with notice or lapse of time or both would because a
default) under, or result in the termination (or grant a right of termination)
of, cancellation, amendment or accelerate (or grant the right to accelerate) the
performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Buyer
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, agreement, lease, Permit or other material
instrument to which Buyer is a party or by which it or any of its properties or
assets are bound or (iii) violate, or conflict with, any order, writ,
injunction, arbitration award, judgment or decree of any court, governmental
body or arbitrator applicable to Buyer or any applicable statute, law, rule or
regulation, except, in the case of clause (ii) or (iii), as would not have a
material adverse effect
20
on the ability of Buyer to perform its obligations hereunder or any Ancillary
Agreement to which it is a party.
7.3 CONSENTS. Buyer is not subject to any order, judgement or decree which
would prevent the consummation of the transactions contemplated hereby. No
claim, legal action, suit, arbitration, governmental investigation, action, or
other legal or administrative proceeding is pending or, to the knowledge of
Buyer, threatened against Buyer which would enjoin or delay the transactions
contemplated hereby. Except as set forth in Schedule 7.3 hereto, no consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, any governmental authority or entity,
domestic or foreign, or of any third party, is or has been required on the part
of Buyer in connection with the execution and delivery of this Agreement or the
Ancillary Agreements or any of the transaction documents, or the consummation of
the transactions contemplated hereby and thereby, except for such consents,
approvals, orders or authorizations of, licenses or permits, filings or notices
the failure of which to obtain or make would not have a material adverse effect
on the ability of Buyer to consummate the transactions contemplated hereby.
7.4 PURCHASE FOR INVESTMENT. Buyer is aware that the Shares have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or under any state or foreign securities laws. Buyer is not an underwriter, as
such term is defined under the Securities Act, and is purchasing such shares
solely for investment, with no present intention to distribute any Shares to any
person, and Buyer will not sell or otherwise dispose of Shares except in
compliance with the registration requirements or exemption provisions under the
Securities Act and the rules and regulations promulgated thereunder, or any
other applicable securities laws.
7.5 FINDERS; BROKERS. Buyer is not party to any agreement with any finder
or broker, or in any way obligated to any finder or broker for any commissions,
fees or expenses in connection with the origin, negotiation, execution or
performance of this Agreement or the Ancillary Agreements.
7.6 AVAILABILITY OF FUNDS. Buyer has (i) in hand or (ii) the right to
borrow under legally valid and binding definitive agreements all funds necessary
to enable Buyer to consummate the transactions contemplated by this Agreement.
7.7 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the representations
and warranties contained in this Article 7, neither Buyer nor any other person
makes any other express or implied representation or warranty on behalf of
Buyer.
7.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations
and warranties contained in this Article 7 shall survive the Closing, except for
those representations and warranties contained in Sections 7.2, 7.4 and 7.5
which shall survive until the 12-month anniversary of the Closing.
21
ARTICLE 8.
COVENANTS
8.1 CONDUCT OF THE BUSINESS. Sellers hereby agree that, except (i) as
expressly contemplated elsewhere in this Agreement or (ii) as consented to by
Buyer, from the date hereof until the Closing or the termination of this
Agreement in accordance with Article 10 hereof, Sellers shall:
(a) cause CDG to operate the Business only in the usual and ordinary course
of business and use all reasonable efforts consistent with good business
judgment to (i) maintain the present business organization of CDG, (ii)
maintain CDG's books and records in accordance with past practices; (iii) keep
available the services of CDG's officers and employees related to or involved
with the Business, provided, however, that Buyer acknowledges that the
announcement of the transactions contemplated by this Agreement may adversely
affect CDG's ability to keep available such services; and (iv) maintain
satisfactory relationships with licensors, suppliers, creditors, distributors,
customers and others transacting business with CDG relating to or involving or
in connection with the Business, provided, however, that Buyer acknowledges
that the announcement of the transactions contemplated by this Agreement may
adversely affect CDG's ability to maintain such relationships;
(b) refrain from taking any action which reasonably could be expected to
render any representation or warranty of Sellers contained herein untrue or
incorrect in any material respect (except to the extent a representation or
warranty is qualified by materiality, in which case Sellers will refrain from
taking any action which would render such representation or warranty untrue or
incorrect) as of the Closing;
(c) cause CDG to comply in all material respects with all laws applicable
to the Business;
(d) cause CDG to comply in all material respects with all applicable laws;
(e) cause CDG to refrain from making any wage or salary increase, or from
agreeing to make any such increase, for any of the CDG Employees except as
required pursuant to any employment agreement listed on Schedule 4.1(a), as
the same is in effect on the date hereof, and except for any such increases
that, in the aggregate, do not exceed $50,000 per year and, with respect to
any CDG Employee, individually, do not exceed 15% of such CDG Employee's
current base salary;
22
(f) cause CDG to refrain from terminating or attempting to terminate any
Contract, including the KCPL Shirt License Agreement, other than the
termination or attempted termination in the ordinary course of business of a
Contract other than the KCPL Shirt License Agreement;
(g) refrain from amending the Certificate of Incorporation or By-Laws of
CDG, merging CDG with or into or consolidating CDG with any other person,
subdividing or in any way reclassifying any of CDG's capital stock or changing
in any manner the rights of the Shares or the character of the Business;
(h) cause CDG to refrain from issuing, selling, or purchasing, or issuing
options or rights to subscribe for, or entering any contracts or commitments
to issue, sell or purchase any shares of CDG's capital stock, the capital
stock of others or any bonds, notes, debentures or other evidences of
indebtedness of CDG or any other person;
(i) cause CDG to refrain from declaring or making any dividend payment or
distribution to any stockholder of CDG or disposing of any Asset (other than
KCPL Inventory in the ordinary course of business) or making any direct or
indirect redemption, retirement, purchase or other acquisition of any capital
stock of CDG; and
(j) cause CDG to refrain from making any change in its accounting methods
or practices, except as required by law or United States generally accepted
accounting practices.
8.2 BEST EFFORTS AND ALTERNATIVE PROPOSALS. Each party to this Agreement
will use all reasonable best efforts to take all action and to do all things
necessary, proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements
(without payment of money, commencement of litigation, the assumption of any
material obligation or the entering of any agreement to divest or hold separate
any assets), including using all reasonable best efforts to prevent a change in
the current management of CDG referred to in the next sentence. If the parties
anticipate a change in the current management of CDG prior to Closing, or if a
change of management occurs prior to Closing, in each case within the meaning of
Section 16.1(iv) of the KCPL Shirt License Agreement, CDG shall present the
names and business qualifications of the new management employees, along with a
summary of such individuals' experience and reputation in the garment industry,
to KCPL for its review and reasonable approval and take all other reasonable
steps to secure KCPL's reasonable approval of such new management employees
prior to Closing. All assets of CDG other than the KCPL Inventory and assets set
forth on Schedule 8.2 shall be assigned or transferred by CDG to a Seller or one
of their affiliates as soon as practicable after the date hereof. Any Liability
of CDG which the Buyer Indemnified Parties are indemnified against pursuant to
Section 4.1(a) shall be assumed by a Seller or one of their affiliates. Sellers
and CDG shall use their reasonable best efforts to effect such assignments,
transfers and assumptions prior
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to Closing. Sellers agree that they and their affiliates shall (a) not, and
shall direct and use reasonable best efforts to cause their officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer to
consummate any transaction similar to the transactions contemplated by this
Agreement and the Ancillary Agreements involving the Shares, the KCPL Shirt
License Agreement or the Business that would prevent, delay or impede the
consummation of the transactions contemplated hereby (any such proposal or offer
being hereinafter referred to as an "ALTERNATIVE PROPOSAL") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions or otherwise cooperate in any way with, any person relating
to an Alternative Proposal, or otherwise facilitate or encourage any effort or
attempt to make or implement an Alternative Proposal and (b) upon execution and
delivery of this Agreement, (and shall direct and use their best efforts to
cause their officers, directors, employees, agents and representatives to)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
8.3 NOTIFICATION. Sellers shall provide Buyer with written notice prior to
Closing of any material damage or destruction of the assets used in the
Business, material adverse change in the Business, any occurrence that would
cause the representation set forth in Section 6.12 hereof to no longer be true
without regard to the date as of which such representation was made, or breaches
of Article 6 that constitute a failure to satisfy Section 9.3(b), in each case
of which Sellers or CDG acquire actual knowledge prior to the Closing Date.
8.4 LETTER OF CREDIT. Buyer shall use all reasonable efforts to replace at
Closing all outstanding letters of credit pertaining to the orders which CDG has
with third party manufacturers for the manufacture of goods for use in the
Business ("SOURCING COMMITMENTS") to which CDG is a party and to replace at
Closing the outstanding letter of credit provided by CDG for the benefit of KCPL
under the KCPL Shirt License Agreement (the "KCPL LETTER OF CREDIT"). If Buyer
is unable to replace at Closing any such outstanding letters of credit, in whole
or in part, Buyer (i) with respect to the KCPL Letter of Credit, shall and (ii)
with respect to all such other letters of credit will use all reasonable efforts
to, provide at Closing "back-to-back" letters of credit to each of the banks
that issued each of the letters of credit that are not being replaced (each, an
"ISSUING BANK") in a form satisfactory to the relevant Issuing Bank (in its sole
discretion) issued by a bank satisfactory to the relevant Issuing Bank (in its
sole discretion), in an amount equal to 100% of the then undrawn stated amount
of the outstanding letters of credit issued by such Issuing Bank that are not
being replaced. The notice of reimbursement with respect to any drawdown on any
such "back-to-back" letter of credit shall state the amount of the drawdown and
the purchase orders to which it relates. If Buyer is unable to provide such
"back- to-back" letters of credit, Buyer will reimburse CDG for all amounts
drawn down under outstanding letters of credit that are not being replaced and
for which "back-to-back" letters of credit are not being provided within five
business days after receipt by Buyer of reasonable
24
evidence of such drawdown. Such evidence shall include the letter of credit
number, the latest ship date, product description, product cost, price per unit
and a copy of the funding message and such other documentation that Buyer may
reasonably request. On the date hereof and at least ten business days prior to
Closing CDG will provide Buyer with a list of each outstanding letter of credit,
stating the letter of credit number, the issuing bank, the name, address and
country of the beneficiary, the purchase orders covered, the expiration date and
the amount outstanding on the day the list is compiled with respect to each
outstanding letter of credit. If Buyer offers to provide a "back-to-back" letter
of credit to an Issuing Bank issued by Chase Manhattan Bank, N.A., Citibank,
N.A. or The Bank of New York in customary form in an amount equal to 100% of the
then undrawn stated amount of the relevant outstanding letter of credit, and the
Issuing Bank states that any such issuing bank or such form is not satisfactory
to the Issuing Bank, Buyer shall be deemed to have satisfied its obligations
under the second sentence of this Section 8.4 with respect to such outstanding
letter of credit.
8.5 RETURNED INVENTORY. Buyer and Sellers agree (a) to minimize all returns
of KCPL Inventory sold by CDG to third parties prior to Closing and any such
return needs to be authorized by each party and (b) if such returns cannot be
avoided as a practical matter consistent with the past practice of the Business,
Buyer agrees to purchase all such inventory which is returned to Sellers within
180 days after Closing (the "RETURNED INVENTORY"). Buyer shall pay Seller for
such Returned Inventory an amount equal to seventy-five percent (75%) of Buyer's
actual selling price therefor.
8.6 ACCOUNTS RECEIVABLE. (a) After the Closing Date, Sellers shall have the
sole right and authority to collect, for their own account and sole benefit, all
monies receivable in respect of the Assets for any period prior to the Closing
Date, and Buyer shall have the sole right and authority to collect, for its own
account and sole benefit, all monies payable in respect of the Assets for any
period on or following the Closing Date. Buyer and Sellers shall jointly send a
letter on the Closing Date to each customer of the Business announcing the
transaction contemplated hereby and describing the customer's obligations to
each of Sellers and Buyer, including specific instructions for the remittance of
payments to each of Sellers and Buyer. The form and substance of such letter
shall be agreed upon at or prior to the Closing.
(b) If Sellers (or their successors) shall receive any such monies with
respect to any period on or following the Closing Date, it shall hold all such
monies in trust for the sole benefit of Buyer and its affiliates. If Buyer or
any of its affiliates (or their successors) shall receive any such monies with
respect to any period prior to the Closing Date, it shall hold all such monies
in trust for the sole benefit of Sellers. On the first and fifteenth day of each
calendar month (or, if such day is not a business day, the first business day
thereafter), Sellers (or their successors) or Buyer and its affiliates (or their
successors), as the case may be, shall cause the transfer and delivery to the
other of any such monies which they (or their successors) may receive after the
Closing Date. No party will take any action that compromises the ability of the
other party and its affiliates or their successors to collect, for its own
account and sole benefit, all
25
monies payable to it as provided herein. Each of Sellers and Buyer and their
respective affiliates will use all reasonable efforts to collect its own
receivables and to assist the other in the collection of their respective
accounts receivable; provided, however, that nothing in this Agreement, shall be
deemed to require any of them (i) to take any action that such party believes,
in its sole discretion, would be detrimental to such party's business
relationship with any customer or (ii) to incur any out-of-pocket expenses or
allocate any significant employee resources to the collection of the other's
accounts receivable.
(c) All disputed items and deductions taken from payments for invoices,
arising from, but not limited to, markdown and other allowances, returns, NSF
checks, vendor guide violations, shortages, discounts and price relating to
pre-Closing accounts receivable and shipments are the responsibility of Sellers,
and Sellers shall have sole authority to make decisions regarding the same. All
disputed items and deductions taken from payments for invoices, arising from,
but not limited to, markdown and other allowances, returns, NSF checks, vendor
guide violations, shortages, discounts and price relating to post-Closing
accounts receivable and shipments are the responsibility of Buyer, and Buyer
shall have sole authority to make decisions regarding the same. Each of Sellers
and Buyer will identify to the other all such disputes and deductions that come
to its attention but are the responsibility of the other and provide any
documentation in its possession to the responsible entity. In the event that a
deduction has been taken against the wrong party, such party shall provide all
documentation provided by the customer to the responsible party. Settlement in
the form of a cash reimbursement of deductions taken against the wrong party
shall be made on the first and fifteenth day of each calendar month (or, if such
day is not a business day, the first business day thereafter).
8.7 NAME CHANGE. Buyer acknowledges and agrees that neither it nor any of
its affiliates shall by virtue of any of the transactions contemplated hereby,
or otherwise, obtain any right, title or interest whatsoever in or to the name
"Xxxxxx" and any trademark, tradename, symbol, sign or logo bearing the name
"Xxxxxx" or suggestive thereof. After the Closing neither Buyer nor any of its
affiliates (including CDG) shall utilize in any respect the name "Xxxxxx" or any
trademark, tradename, sign, symbol or logotype bearing the name "Xxxxxx" or
suggestive thereof, except that CDG may continue to contain the name "Xxxxxx in
its name for a period not exceeding five business days from the Closing Date.
ARTICLE 9.
CONDITIONS OF CLOSING
9.1 MUTUAL CONDITIONS. The obligations of each party to this Agreement to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements are, unless waived by each party, subject to the fulfillment on or
before the Closing, of each of the following conditions:
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(a) No statute, rule, regulation, injunction or restraining order shall be
in effect to forbid or enjoin the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements;
(b) The transactions contemplated by this Agreement and the Ancillary
Agreements to be completed before the Closing shall have been consummated upon
the terms and subject to the conditions set forth therein;
(c) All waiting periods under the HSR Act shall have expired or been
terminated; and
(d) The transactions contemplated by the Purchase Agreement shall have been
consummated upon the terms and subject to the conditions set forth therein.
9.2 ADDITIONAL CONDITIONS OF SELLERS. The obligations of Sellers to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements are, unless waived by Buyer, subject to the fulfillment, on or before
the Closing of each of the following additional conditions:
(a) Buyer and each other party thereto other than CDG and its affiliates
shall have executed and delivered each of the Ancillary Agreements to which it
is a party; and
(b) All covenants of Buyer under this Agreement and the Ancillary
Agreements to be performed prior to the Closing shall have been performed in
all material respects, and the representations and warranties of Buyer
contained in this Agreement and the Ancillary Agreements shall be true and
correct on and as of the Closing in all material respects (except to the
extent qualified by materiality, in which event such representations and
warranties shall be true and correct) with the same effect as though such
representations and warranties had been made on and as of such date.
9.3 ADDITIONAL CONDITIONS OF BUYER. The obligations of Buyer to consummate
the transactions contemplated by this Agreement and the Ancillary Agreements
are, unless waived by Buyer, subject to the fulfillment, on or before the
Closing, of each of the following additional conditions:
(a) Sellers and each other party thereto other than Buyer shall have
executed and delivered each of the Ancillary Agreements to which they are a
party;
(b) All covenants of Sellers under this Agreement and the Ancillary
Agreements to be performed prior to the Closing shall have been performed, and
the representations and warranties of Sellers contained in this Agreement and
the Ancillary Agreements shall be true and correct on and as of the Closing in
all material respects
27
(except to the extent qualified by materiality in which event such
representations and warranties shall be true and correct) with the same effect
as though such representations and warranties had been made on and as of such
date;
(c) Sellers shall have delivered to Buyer the written resignations of all
directors and officers of CDG, in each case effective as of the Closing Date;
and
(d) There shall not have occurred since the date hereof any damage to, or
destruction or loss of, KCPL Inventory that constitutes a material adverse
change to the KCPL Inventory.
ARTICLE 10.
TERMINATION; SURVIVAL
10.1 TERMINATION BY BUYER OR CDG. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement shall be terminated and the
transactions hereby contemplated shall be abandoned if prior to Closing the
transactions contemplated by the CDG Asset Purchase Agreement (as defined in the
Purchase Agreement) shall have been consummated and this Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to Closing by:
(a) mutual written consent of Sellers and Buyer;
(b) Sellers or Buyer, by written notice to the other, if the transactions
contemplated hereby are not consummated on or before July 31, 2000 and if the
failure to consummate such transactions on or before such date did not result
from a breach prior to or on the Closing Date of any representation, warranty or
covenant of the party seeking such termination; provided that if any of the
conditions set forth in Sections 9.1(c) and 9.1(d) have not been satisfied prior
to July 31, 2000, Sellers may in their reasonable discretion elect to extend the
July 31, 2000 deadline referred to above to October 31, 2000; and provided
further that Buyer may not terminate this Agreement and abandon the transactions
contemplated hereby because the condition set forth in Section 9.3(d) has not
been satisfied (i) until the twelve month anniversary of the material adverse
change referred to in Section 9.3(d) and (ii) unless CDG and its affiliates have
not cured such material adverse change on or prior to such twelve month
anniversary;
(c) Sellers or Buyer, by written notice to the other, if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action, in each case, permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions
28
contemplated hereby and such order, decree, ruling or other action shall have
become final and nonappealable;
(d) Sellers or Buyer, by written notice to the other, if the other
party(ies) is in breach in any material respect of any of its representations
or warranties made in this Agreement or the Ancillary Agreements, or is in
violation or default in any material respect of any of its covenants or
agreements in this Agreement or the Ancillary Agreements, if such breach,
violation or default is not cured within twenty (20) business days after
written notice by the notifying party to the other party(ies);
(e) Sellers or Buyer, by written notice to the other, if the Purchase
Agreement, is terminated in accordance with its terms;
(f) Sellers, by written notice to Buyer, if the $7 million fee referred to
in Section 8.11 of the Purchase Agreement (i) becomes payable and is not
irrevocably waived in writing by Buyer or (ii) is paid; or
(g) Sellers or Buyer, by written notice to the other on or before July 15,
2000, if all consents and agreements required to be obtained from KCPL and its
affiliates under the KCPL Shirt License Agreement, the Assignment of License
Agreement referred to in the Purchase Agreement, the Termination of License
Agreement referred to in the Purchase Agreement, or otherwise, in connection
with the execution and delivery of the CDG Asset Purchase Agreement and the
consummation of the transactions contemplated thereby have been obtained
irrevocably in writing.
10.2 SURVIVAL. If this Agreement is terminated pursuant to Section 10.1
hereof, this Agreement shall become void and of no further force and effect,
except for the provisions of Article 4 and Sections 12.1(a), 13.1, 13.2 and 15.8
hereof; PROVIDED that such termination shall not relieve any party for liability
for Damages resulting from its breach of this Agreement. Promptly following
termination of this Agreement each party will destroy or return to the other
parties all documents received from such parties in connection with the
contemplated transaction, except documents which have been publicly distributed
or publicly filed.
ARTICLE 11.
CLOSING
11.1 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as soon as practicable after
all the conditions to Closing set forth
29
in Article 9 hereof shall be satisfied or duly waived, or at such other time and
place as Buyer and Sellers may mutually agree (the date of the Closing referred
to herein as the "CLOSING DATE").
11.2 SELLERS' OBLIGATIONS AND CLOSING DELIVERIES. At the Closing, Sellers
shall deliver, or cause to be delivered, to Buyer:
(a) each of the Ancillary Agreements other than the Hosiery Agreement,
executed by Sellers or CDG, as the case may be and, in the case of the Waivers
and Consents, CDG and, to the extent relevant, its affiliates (including the
Sellers) and its contractors, subcontractors and warehousemen that agree to
sign after CDG and the Sellers use their reasonable efforts to cause them to
sign;
(b) written receipt executed by each of the Sellers of payment of the
portion of the Purchase Price paid at Closing;
(c) certificate of the President or any Vice President of CDG that the
conditions set forth in Section 9.3(b) have been satisfied;
(d) certificates evidencing the Shares, which certificates shall be
properly endorsed for transfer or accompanied by duly executed stock powers,
in either case executed in blank or in favor of Buyer, with all necessary
stock transfer stamps attached thereto and cancelled, and otherwise in a form
acceptable for transfer on the books of CDG;
(e) resignations of directors of CDG as contemplated by Section 9.3(c)
hereof; and
(f) such instruments of sale, transfer, conveyance, assignment and
assumption, in form and substance reasonably satisfactory to Buyer's counsel,
as shall be effective to effect the assignments, transfers and assumptions
contemplated by Section 8.2.
11.3 BUYER'S OBLIGATIONS AND CLOSING DELIVERIES. At the Closing, Buyer
shall deliver, or cause to be delivered:
(a) to Sellers, the Purchase Price (except as expressly provided otherwise
in Section 3.2);
(b) to Sellers, the Ancillary Agreement referred to in Sections 2.2 (a) and
2.2 (d), executed by Buyer;
(c) to the Escrow Agent, the KCPL Inventory Escrow;
30
(d) to Sellers, a Certificate of the President or any Vice President of
Buyer to the effect that the conditions set forth in Section 9.2(b) have been
satisfied.
ARTICLE 12.
EXPENSES AND POST-CLOSING OBLIGATIONS
12.1 TAXES AND OTHER CHARGES. (a) Except as specifically provided for
otherwise in Sections 3.2(c) and (d) and Section 12.1(d), and regardless of
whether or not the transactions contemplated hereby are consummated, each party
to this Agreement shall pay all expenses incurred by it or on its behalf in
connection with the preparation, authorization, execution and performance of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, including, but not limited to, all
fees and expenses of all consultants, brokers, investment bankers, agents,
representatives, counsel and accountants engaged by such party. Any liability
for all sales, documentary stamp, transfer and similar Taxes (including, without
limitation, all recording fees and related charges) arising from or attributable
or related to the sale, transfer or assignment to Buyer of any of the Shares
shall be paid by the party that is primarily responsible for such Taxes under
applicable law and such party shall, at its expense, file all Tax Returns and
other documentation with respect to all such Taxes.
(b) Notwithstanding anything else in this Agreement to the contrary,
Sellers will indemnify and hold Buyer harmless from and against any and all
Liabilities for Taxes imposed on CDG (i) for taxable periods ending on or
before the Closing Date and (ii) in the case of Taxable periods beginning
before and ending after the Closing Date, that are attributable to that
portion of the Taxable period beginning before the Closing Date through the
Closing Date. For purposes of clause (ii) of this Section 12.1(b), the Taxes
based on income or gross receipts attributable to such pre-closing Tax period
shall be determined by closing the books of CDG as of the close of the
Closing Date, and treating the portion of the Taxable period through and
including the Closing Date and after the Closing Date as if each were
separate Taxable periods, except that exemptions, allowances and deductions
calculated on an annual or similar basis shall be apportioned on a per diem
basis.
(c) CDG shall, as instructed by Sellers, prepare and file, or cause to
be prepared and filed, any and all Tax Returns required to be filed by CDG
(after giving effect to any valid extensions of the due date for filing any
such Tax Returns) in respect of periods, or portions thereof, ending on or
prior to the Closing Date. All such Tax Returns shall be prepared in a manner
consistent with the prior Tax Returns of CDG, unless otherwise required under
applicable law. CDG, as instructed by Buyer, shall prepare and file, or cause
to be prepared and filed any and all other Tax Returns required to be filed
by CDG. Without prejudice to its right to indemnification under this
Agreement, Buyer shall cause CDG to pay all Taxes shown as due and
31
owing on all such Tax Returns. Sellers and Buyer shall reasonably cooperate,
and shall cause their respective affiliates, officers, employees, agents,
auditors and other representatives reasonably to cooperate, in preparing and
filing all Tax Returns, including maintaining and making available to the
other parties all records necessary in connection with Taxes and in resolving
all disputes and audits with respect to all taxable periods relating to Taxes.
(d) If Sellers and Buyer disagree as to the amount for which Buyer and
CDG or Sellers are liable in respect of Taxes under this Agreement, CP and
Buyer shall promptly consult with each other in an effort to resolve such
dispute. If any such point of disagreement cannot be resolved within 30 days
of the date of consultation, such dispute shall be submitted to a Tax adviser
which is mutually acceptable to Buyer and each of the Sellers to act as an
arbitrator to resolve all points of disagreement concerning Taxes with
respect to this Agreement; provided that Buyer and Seller shall share equally
the cost of such Tax advisor.
(e) Sellers, at their option, shall have sole control over any contest or
other proceeding (including claims for refund or challenges of Tax assessments)
which relates to liability for Taxes for periods or portions thereof ending on
or prior to the Closing Date. In any event, any refunds of Taxes which become
available on or after the date of the Closing but which relate to Tax periods or
portions thereof ending on or prior to the Closing shall belong to Sellers.
12.2 FURTHER ASSURANCES. At any time after the Closing, Sellers and Buyer
agree to cooperate with one another to execute and deliver such other documents,
instruments of transfer or assignment, files, books and records and do all such
further acts and things as may be reasonably required to carry out the
transactions contemplated by this Agreement or the Ancillary Agreement.
12.3 ACCESS TO BOOKS, RECORDS AND FACILITIES. (a) Sellers agree that on and
after the Closing they will permit Buyer and its representatives, during normal
business hours and working days and upon reasonable advance notice, (i) to have
access to and to examine and make copies of all books and records of CDG (except
books and records protected by attorney-client or other privilege which Sellers
may be entitled to assert against Buyer or its affiliates in any pending or
threatened proceeding, suit or action) which relate to the Shares or the
operations of the Business to the extent that the events reflected therein
relate to transactions or events occurring prior to the Closing or to
transactions or events occurring subsequent to the Closing which arise out of
transactions or events occurring prior to the Closing and (ii) to have access to
and to examine and make copies of all documents listed in the Schedules attached
hereto and all files, records and papers of any and all proceedings and matters
listed in the Schedules attached hereto. During the period commencing on the
date hereof and ending on the Closing Date, CDG will, and Sellers will cause CDG
to, afford to Buyer and its counsel, accountants and other authorized
representatives access at all reasonable times upon reasonable advance notice to
the officers, directors, employees, accountants and other advisors and agents,
properties, books, records and contracts, of CDG (excluding those relating to
CDG's businesses other than the
32
Business, CDG's assets other than the Assets, or Liabilities of CDG not set
forth on Schedule 4.1(a)), and the right to make copies and extracts from such
books, records and contracts, and to furnish Buyer with all financial, operating
and other data and information concerning CDG and the Business (excluding those
relating to CDG's businesses other than the Business, CDG's assets other than
the Assets, or Liabilities of CDG not set forth on Schedule 4.1(a)) as Buyer and
its advisors may reasonably request. All books and records of CDG relating to
the Shares, the Assets or the operations of the Business will be preserved by
CDG in accordance with CDG's records retention policy, but in no event for a
period of less than three years following the Closing. Prior to any destruction
or disposition by CDG of any such books and records, Sellers will notify Buyer
in writing and Buyer shall have the right to receive and retain such books and
records at its expense.
(b) Except in respect of Liability for Taxes, in which event the commitment
shall continue until the expiration of Sellers' obligations therefor, Buyer
agrees that from the Closing Date and until the fifth anniversary of the Closing
Date, Buyer will permit, and will cause its subsidiaries to permit, Sellers and
their representatives full access during normal business hours and working days
and upon reasonable advance notice to have access to the books and records of
Buyer and its subsidiaries (except records protected by attorney-client or other
privilege which Buyer or its affiliates may be entitled to assert against
Sellers or their affiliates in any pending or threatened proceeding, action or
suit), relating to the Shares, the Assets or the operations of the Business, to
the extent that any of the foregoing relates to periods prior to the Closing,
and is reasonably necessary in connection with any then pending or threatened
litigation, claim, liability, or judicial or administrative matters in which any
of Sellers or their affiliates is involved.
12.4 RECISSION. If after the Closing the $7 million fee referred to in
Section 8.11 of the Purchase Agreement (i) becomes payable and is not
irrevocably waived in writing by Buyer or (ii) is paid, the parties hereto shall
use their best efforts to (1) unwind and rescind all transactions consummated
pursuant hereto, (2) restore the status quo as at immediately prior to the
Closing and (3) terminate this Agreement to the extent provisions hereof have
not been performed and do not relate to transactions consummated pursuant hereto
that are not unwound and rescinded; provided that, in any event, the provisions
of Article 4 and Section 12.1(a) (in each case, as modified to reflect the
actions referred to in clauses (1) and (2)) and Sections 13.1, 13.2 and 15.8
shall remain in effect, and provided further that such termination shall not
relieve any party for Damages resulting from its breach of this Agreement. To
the extent that the parties hereto cannot effect any of the actions referred to
in clauses (1) and (2) of the preceding sentence, they shall use their best
efforts to enter into any reasonable and lawful arrangement designed to put the
parties in the same or comparable economic position that they would have been in
had such actions been effected.
33
ARTICLE 13.
PUBLICITY, CONFIDENTIALITY
13.1 PUBLICITY. Sellers and Buyer agree that no publicity, release or
announcement concerning (a) the execution of this Agreement or the Ancillary
Agreements, (b) any of the provisions of this Agreement or the Ancillary
Agreements or the transactions contemplated hereby or thereby or (c) the
consummation of the transactions contemplated by this Agreement or the Ancillary
Agreements shall be issued without the advance written approval of the form and
content of the same by the other parties; provided, however, that no such
consent shall be required when such disclosure is required by applicable law,
although the parties agree to consult with each other as to the content of any
release so required and consider in good faith the comments of the other
thereon.
13.2 CONFIDENTIALITY. Buyer and Sellers confirm that they and their
affiliates are bound by the terms of the confidentiality agreement, dated
December 9, 1998, as amended (the "CONFIDENTIALITY AGREEMENT"), between Xxxxxx
American Investment Corp. and Xxxxxxxx-Van Heusen Corporation and that they will
keep and treat the evaluation material and all other items of confidential
information exchanged hereunder by Buyer and its affiliates, on the one hand,
and Sellers and their affiliates, on the other hand, in accordance with the
terms of the Confidentiality Agreement.
ARTICLE 14.
NOTICES
14.1 NOTICES. Any notices or communications permitted or required hereunder
shall be deemed sufficiently given if hand-delivered, or sent by (i) registered
or certified mail return receipt requested, (ii) telecopy or other electronic
transmission service (to the extent receipt is confirmed) or (iii) by overnight
courier, in each case to the parties at their respective addresses and telecopy
numbers set forth below, or to such other address of which any party may notify
the other party in writing.
If to Buyer, to
Xxxxxxxx-Van Heusen Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
34
With a copy to:
Xxxxxxxx-Van Heusen Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Sellers, to
Xxxxxx, Xxxxxxx & Co., Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Vestar Capital Partners
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
35
ARTICLE 15.
MISCELLANEOUS
15.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon, and
inure to the benefit of, all the parties to this Agreement and their respective
successors, legal representatives and assigns permitted in accordance with this
Section 15.1. Nothing herein shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party hereto. No assignment of
this Agreement or of any rights or obligations hereunder may be made by any
party (by operation of law or otherwise) without the prior written consent of
the other parties to this Agreement, and any attempted assignment without the
required consents shall be void; provided, however, that no such consent shall
be required for Buyer to assign part or all of its rights and obligations under
this Agreement prior to the Closing to one or more subsidiaries of Buyer, or
after the Closing to any third party.
15.2 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached hereto and
the documents and agreements referred to herein to be delivered and the acts to
be performed at or subsequent to the Closing (collectively, the "ITEMS") are
incorporated herein and expressly made a part of this Agreement as fully as
though completely set forth herein.
15.3 SPECIFIC PERFORMANCE. Sellers and Buyer acknowledge that the other
will have no adequate remedy at law if it fails to perform any of its
obligations under this Agreement and the Ancillary Agreements. In such event,
the performing party shall have the right, in addition to any other rights it
may have, to seek specific performance of this Agreement and the Ancillary
Agreements and/or injunctive relief.
15.4 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
to this Agreement. In pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one such counterpart.
15.5 HEADINGS; INTERPRETATION. (a) The headings contained in this Agreement
are inserted for convenience of reference only and shall not otherwise affect
the meaning or interpretation or be deemed a substantive part of this Agreement.
(b) Except to the extent that the context otherwise requires "include,"
"includes" and "including" are deemed to be followed by "without limitation"
whether or not they are in fact followed by such words or words of like import.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement will refer to this Agreement as a whole,
including the Exhibits and
36
Schedules attached hereto, and not to any particular provision of this
Agreement, and section and subsection references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein will be equally applicable
to both the singular and plural forms of such terms.
(e) All matters to be agreed to by any party hereunder must be agreed to in
writing by such party unless otherwise indicated herein.
15.6 WAIVER. The failure of any party at any time or times to enforce or
require performance of any provision hereof shall in no way operate as a waiver
or affect the right of such party at a later time to enforce the same. No waiver
by any party of any condition or the breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach, or a waiver of any other condition or of any
term, covenant, representation or warranty contained in this Agreement. Any
agreement on the part of a party hereto to a waiver shall be valid only if set
forth in an instrument in writing signed by such party.
15.7 SEVERABILITY. If any provision of this Agreement shall hereafter be
held to be invalid or unenforceable for any reason, that provision shall be
reformed to the maximum extent permitted to preserve the original intent of the
parties, failing which, it shall be severed from this Agreement with the balance
of this Agreement continuing in full force and effect. Such occurrence shall not
have the effect of rendering the provision in question invalid in any other
jurisdiction or in any other case or circumstances, or of rendering invalid any
other provisions contained herein to the extent that such other provisions are
not themselves actually in conflict with any applicable law.
15.8 GOVERNING LAW AND FORUM. This Agreement and the Ancillary Agreements
and the rights and duties of the parties hereunder and thereunder shall be
governed by, and construed in accordance with, the law of the State of New York
applicable to contracts made and to be performed therein. Each of the parties
waives any objection that it may have to the venue of any suit, action or
proceeding with respect to this Agreement and the Ancillary Agreements or the
transactions contemplated hereby or thereby in the courts of the State of New
York or the courts of the United States of America, in each case located in the
Borough of Manhattan, City of New York and State of New York, or that such suit,
action or proceeding brought in the courts of the State of New York or the
courts of the United States of America, in each case located in the Borough of
Manhattan, City of New York and State of New York, was brought in an
inconvenient court and agrees not to plead or claim the same. Each of the
parties agrees to service of process by registered mail, return receipt
requested, or by any other manner provided by New York law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
XXXXXX, XXXXXXX & CO., INC.
By: /s/ XXXXX X. XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: Chairman
BIDERMANN TAILORED CLOTHING INC.
By: /s/ XXXXX X. XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: Chairman
XXXXXX DESIGNER GROUP INC.
By: /s/ XXXXX X. XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: Chairman
XXXXXXXX-VAN HEUSEN CORPORATION
By: /s/ XXXX X. XXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
GUARANTEE
---------
Xxxxxx American Corp., a Delaware corporation ("CAC"), hereby irrevocably
and unconditionally guarantees the payment of any amount payable by either of
Bidermann Tailored Clothing Inc., a Delaware corporation ("BTC"), or Xxxxxx,
Xxxxxxx & Co., Inc., a Delaware corporation ("CP"), under the Share Purchase
Agreement (defined below) to Xxxxxxxx-Van Heusen Corporation, a Delaware
corporation ("BUYER"), which is not paid by BTC or CP when due. For purposes of
this Guarantee, the "SHARE PURCHASE AGREEMENT" refers to the Purchase and Sale
Agreement dated as of June 28, 2000 among Xxxxxx Designer Group Inc., BTC, CP
and Buyer. Notwithstanding the foregoing, if (i) CAC and its affiliates cease to
be affiliates of CDG, (ii) the
entity that controls CDG upon the occurrence of the event described in clause
(i) executes and delivers to Buyer a guarantee identical in all material
respects to this Guarantee (the "SUBSTITUTE GUARANTEE") and (iii) the entity
referred to in clause (ii) is not less creditworthy than CAC, Buyer shall accept
the Substitute Guarantee and this Guarantee thereafter shall have no force or
effect.
XXXXXX AMERICAN CORP.
By: /s/ XXXXX X. XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: Chairman
