EXHIBIT 10.51
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CONVERSE INC.,
SELLER
and
FOOTWEAR ACQUISITION, INC.,
BUYER
DATED AS OF
APRIL 6, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I. TERMS OF PURCHASE AND SALE............................... 1
1.01 Purchase and Sale............................................. 1
1.02 Excluded Assets............................................... 4
1.03 The Closing................................................... 4
1.04 Payment of Purchase Price..................................... 4
1.05 Post-Closing Adjustment....................................... 6
1.06 Assumption of Certain Obligations............................. 8
1.07 Retained Liabilities.......................................... 8
1.08 Payment of Transfer Taxes and Other Charges................... 10
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER................. 10
2.01 Organization and Standing..................................... 10
2.02 Authorization by Seller....................................... 10
2.03 Assumed Contracts; Information................................ 11
2.04 Intellectual Property......................................... 12
2.05 Title to Purchased Assets; Absence of Liens and Encumbrances.. 14
2.06 Litigation.................................................... 15
2.07 Inventory..................................................... 15
2.08 Insurance..................................................... 15
2.09 Compliance with Laws.......................................... 15
2.10 Tax and Other Returns and Reports............................. 15
2.11 Environmental Matters......................................... 16
2.12 Accounts Receivable; Collection............................... 16
2.13 Software...................................................... 16
2.14 Customers and Suppliers....................................... 18
2.15 Changes in Accounting Method.................................. 18
2.16 Absence of Undisclosed Liabilities............................ 18
2.17 Subsidiary Assets............................................. 19
2.18 Schedules..................................................... 19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER.................. 19
3.01 Organization and Standing..................................... 19
3.02 Authorization by Buyer........................................ 19
3.03 Available Funds............................................... 20
3.04 HSR Matters................................................... 20
3.05 Litigation.................................................... 20
ARTICLE IV. COVENANTS OF SELLER...................................... 20
4.01 Cooperation................................................... 20
4.02 Court Approval................................................ 21
4.03 Conduct of Business........................................... 22
4.04 Disclosure Supplements........................................ 23
4.05 Closing....................................................... 24
4.06 Confidentiality............................................... 24
4.07 Transitional Arrangements Agreement........................... 24
4.08 Further Assurances............................................ 24
4.09 Inspection.................................................... 24
4.10 Maintain Insurance............................................ 25
4.11 Maintenance of, and Access to, Records........................ 25
4.12 Accounts Receivable........................................... 25
4.13 Consents...................................................... 25
4.14 Specific Enforcement of Covenants............................. 26
4.15 Acquisition Proposals......................................... 26
ARTICLE V. COVENANTS OF BUYER....................................... 26
5.01 Cooperation................................................... 26
5.02 Confidentiality............................................... 27
5.03 Employees..................................................... 27
5.04 Shipped Inventory Matters..................................... 27
ARTICLE VI. CONDITIONS TO BUYER'S OBLIGATIONS........................ 27
6.01 Covenants..................................................... 27
6.02 Representations and Warranties True........................... 27
6.03 Delivery of Certificates...................................... 27
6.04 Instruments of Transfer....................................... 28
6.05 Consents...................................................... 28
6.06 Approval Order................................................ 28
6.07 HSR Waiting Period............................................ 28
6.08 Injunction.................................................... 28
6.09 Material Adverse Change....................................... 28
6.10 Ancillary Agreements.......................................... 28
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS....................... 28
7.01 Covenants of Buyer............................................ 28
7.02 Representations and Warranties True........................... 29
7.03 Delivery of Certificates...................................... 29
7.04 Instruments of Assumption..................................... 29
7.05 Tender of Purchase Price...................................... 29
7.06 Approval Order................................................ 29
7.07 HSR Waiting Period............................................ 29
7.08 Injunction.................................................... 29
7.09 Further Action................................................ 29
7.10 Ancillary Agreements.......................................... 29
ARTICLE VIII. TERMINATION PRIOR TO CLOSING............................. 29
8.01 Termination................................................... 29
8.02 Effect on Obligations......................................... 30
8.03 Return of Deposit to Buyer.................................... 30
ARTICLE IX. INDEMNIFICATION.......................................... 30
9.01 Survival...................................................... 30
9.02 Indemnification by Seller..................................... 31
9.03 Indemnification by Buyer...................................... 31
9.04 Limitations................................................... 31
9.05 Indemnification Procedure..................................... 33
ARTICLE X. MISCELLANEOUS............................................ 34
10.01 Entire Agreement.............................................. 34
10.02 Use of Names.................................................. 34
10.03 Successors and Assigns........................................ 34
10.04 Counterparts.................................................. 35
10.05 Headings, Interpretation...................................... 35
10.06 Modification and Waiver....................................... 35
10.07 Expenses, etc................................................. 35
10.08 Notices....................................................... 35
10.09 Governing Law................................................. 36
10.10 Announcements................................................. 36
10.11 Compliance with Bulk Sales Laws............................... 37
10.12 Binding Nature of Agreement................................... 37
10.13 Seller's Knowledge............................................ 37
Schedules
Schedule 1.02 Certain Excluded Assets
Schedule 1.05(a) Deposits and Prepayments
Schedule 2.02(b) Conflicts, Etc.
Schedule 2.03(a) Assumed Contracts
Schedule 2.03(c) Purchase Orders, Etc.
Schedule 2.03(d) Material Customers
Schedule 2.03(e) Sales Personnel Compensation
Schedule 2.03(f)(i) Requalification Contracts
Schedule 2.03(f)(ii) Certain License Agreement
Schedule 2.04 Intellectual Property Matters
Schedule 2.04(i) Trade Names, Etc.
Schedule 2.06 Litigation
Schedule 2.09 Compliance with Law
Schedule 2.10 Tax Matters
Schedule 2.11(a) Environmental Matters
Schedule 2.13(a) Software Consents
Schedule 2.13(d) Licensed Software
Schedule 2.13(e) Software Records, Etc.
Schedule 2.13(f) Software Licensing Agreements
Schedule 2.13(h) Software Maintenance Agreements
Schedule 2.14(i) Customer Complaints
Schedule 2.14(ii) Requalification Customers
Schedule 2.17 Subsidiary Inventory and Accounts Receivable
Schedule 5.04 Shipped Inventory Matters
Schedule A Intellectual Property
Schedule A-1 Copyrights
Schedule A-2 Know-How
Schedule A-3 Licensed Intellectual Property
Schedule A-4 Patents
Schedule A-5 Trademarks
Schedule B Licenses
Schedule C Vendor Agreements
Schedule D Customer Agreements
Schedule E Marketing Agreements
Schedule F Inventory
Schedule G Applications
Schedule H Accounts Receivable
Exhibit A Form of Deposit Escrow Agreement
Exhibit B Form of Post Closing Escrow Agreement
Exhibit C Auditor Report Standards and Procedures
Exhibit D Form of Bankruptcy Court Order
Exhibit E Form of Transitional Arrangements Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") dated as of April 6, 2001
by and between Converse Inc., a Delaware corporation ("Seller"), and Footwear
Acquisition, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller is willing to sell, and Buyer desires to purchase, certain
intellectual property, contracts, accounts receivable, inventory and other
assets of Seller;
WHEREAS, Seller has filed a voluntary petition for relief under Chapter 11
of the United States Bankruptcy Code (the "Bankruptcy Code"), case no. 01-0223
(the "Bankruptcy Case"), which is currently pending in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court");
WHEREAS, Seller has determined that it is in its best interests to sell to
Buyer, and for Buyer to purchase from Seller, pursuant to Sections 363 and 365
of the Bankruptcy Code, the Purchased Assets (as defined herein) for
consideration, and upon the terms and conditions, hereinafter set forth; and
WHEREAS, Seller and Buyer intend that the Closing under this Agreement will
not occur until after a Notification and Report Form pursuant to the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvement Act of 1976 ("HSR Act") with respect to the
transaction is filed, if required, with the U.S. Department of Justice and
Federal Trade Commission, and any applicable waiting period under the HSR Act
has expired or been earlier terminated ("HSR Clearance").
NOW, THEREFORE, in consideration of the premises and mutual promises and
covenants contained herein, Buyer and Seller agree as follows:
ARTICLE I.
TERMS OF PURCHASE AND SALE
1.01 Purchase and Sale. Subject to the terms and conditions set forth
herein, Buyer agrees to purchase and pay for, and Seller agrees to sell, assign,
transfer and convey to Buyer, on the Closing Date (as defined in Section 1.03),
free and clear of all Liens (as defined in Section 4.02(b)(ii) below) subject in
the case of the Intellectual Property (as defined in Section 2.04 hereof) to
licenses pursuant to the agreements set forth on Schedule 2.04 to this
Agreement, all of the assets set forth in this Section 1.01 existing on the
Closing Date, wherever located (the "Purchased Assets"). The Purchased Assets
consist of and shall include only the items set forth in this Section 1.01,
subject to Buyer's rights to exclude certain specified assets prior to the
Closing in accordance with Section 1.02.
(a) The following items of intellectual property, contracts, inventory
and accounts receivable:
(i) all general intangibles and intangible property, including
the Intellectual Property owned by Seller;
(ii) all of Seller's rights under license and sublicense
agreements, pursuant to which Seller's Intellectual Property is
licensed to third parties, whether domestic or international,
including those listed or described on Schedule B hereto (the
"Licenses");
(iii) all of Seller's rights under supplier, services or vendor
agreements, purchase orders issued by Seller and other contracts
entered into by Seller in connection with the design, testing,
manufacture, warehousing, or transport of its products, and all
contractor and outsourcing agreements otherwise entered into in
connection with the products, including (x) those listed or described
on Schedule C and (y) existing agreements, arrangements or
understandings with E.M.I. of Taiwan, Buyer's Far East production
agent ("E.M.I.") for services and information provided by E.M.I.
(together, the "Vendor Agreements"); provided, however, that with
respect to all current and future production orders for inventory that
has not been received into Seller's distribution center as of the
Closing, and for which Seller has not yet placed or opened letters of
credit to the manufacturers of such inventory, Buyer agrees to open
letters of credit or secure credit terms on a timely basis, as
necessary to purchase such inventory, so long as such inventory
conforms to the purchase orders placed by Seller with respect to such
inventory and so long as Seller has provided Buyer with the terms of
the letters of credit or credit terms which are summarized on Schedule
C, and provided further that with respect to all production orders for
inventory for which Seller has opened letters of credit for which
sufficient time exists for Buyer to open substitute letter of credit
or secure credit terms to replace the letters of credit opened by
Seller, Buyer hereby agrees to open substitute letters of credit or
obtain substituted credit terms on a timely basis so long as Seller
has provided Buyer with the terms of such letters of credit or credit
terms;
(iv) all of Seller's rights under existing purchase orders,
including customer order backlog and customer agreements and other
agreements entered into by Seller for the purchase, distribution,
sale, consignment or other disposition of Seller's products, including
those listed or described on Schedule D hereto (the "Customer
Agreements");
(v) all of Seller's rights under any marketing agreements and
commitments to trade shows, media advertising, event sponsorships,
celebrity endorsements, endorsements with high school, college and
other organizations, including any prepayments or deposits with
respect thereto, as listed or described on Schedule E hereto (the
"Marketing Agreements");
(vi) all finished goods inventory wherever located, owned by
Seller, including (w) all finished products or goods that are to
become finished product prior to Closing that are in transit to or
from Seller's distribution and
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manufacturing facilities, (x) finished goods at Seller's manufacturing
facility not yet shipped that are or become finished product prior to
Closing, (y) all inventory located at Seller's retail locations
(including any of Seller's inventory located at retail stores owned by
Seller's subsidiaries) and (z) inventory listed on Schedule F hereto
(the "Inventory");
(vii) all information technology software and hardware
("Information Technology") necessary to conduct Seller's business,
other than its manufacturing and retail store businesses, as carried
out during the twelve (12) month period immediately prior to the date
of this Agreement, including the applications described on Schedule G
(the "Applications");
(viii) all of Seller's rights under any lease agreements to
computer hardware that is necessary to run the Applications (the
"Hardware Lease Agreements"); and
(ix) all trade receivables, royalty receivables and license fee
receivables owned by Seller (the "Accounts Receivable"), unpaid
interest accrued on any such accounts receivable and any security or
collateral relating thereto.
For purposes of this Agreement, "Assumed Contracts" shall mean all
Licenses, IP License Agreements (as defined in Section 2.04(d), below),
Vendor Agreements, Customer Agreements, Applications (but only to the
extent they constitute executory contracts), Hardware Lease Agreements and
Marketing Agreements, but shall not include any licenses, contracts or
agreements listed on Schedule 1.02 or deleted from the schedules prior to
the Closing Date.
(b) The following items of personal property (together, the
"Supplementary Items") as follows:
(i) Marketing materials, including brochures, newsletters,
selling tools, point-of-sale materials, corporate and consumer videos
and photos, trade show booths, displays and materials, in-store
concept shops, fixtures and other point of sale materials, including
those located at customer locations, co-op agreements with vendors and
customers, written materials and paraphernalia relating to Converse's
heritage and history, including artifacts, original products, models
and product designs, historical photos, descriptions and documentation
and such other items identified by Buyer to Seller in writing prior to
Closing.
(ii) Existing and future designs of Seller's products, including
prototypes, drawings, logos, specifications and artwork associated
with each, and all Seller owned or controlled footwear lasts and
molds.
(iii) Such furniture, fixtures and equipment including computer
hardware owned by Seller, located at Seller's headquarters and
identified by Buyer to Seller in writing prior to Closing.
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(iv) Copies of books, records, supplier lists, customer lists and
order history, vendor lists with production and pricing data past and
pending, detailed inventory data, business records, other data owned
by Seller and used or held for use in connection with any of the
foregoing Intellectual Property, Assumed Contracts, Inventory,
Applications and Supplementary Items.
1.02 Excluded Assets. Notwithstanding the foregoing, Seller is not selling
and Buyer is not purchasing pursuant to this Agreement, and the term "Purchased
Assets" shall not include, any assets not specifically listed in Section 1.01
(the "Excluded Assets"); provided, however, that within the fourteen-day period
following the date the Approval Order (as defined below) is signed by the
Bankruptcy Court Buyer may, by written notification to Seller, provide to Seller
a Schedule 1.02 that specifically lists certain assets, licenses, agreements or
contracts to be excluded from purchase or assignment hereunder, which Schedule
1.02 shall be deemed to the extent necessary to amend such other Schedules
hereto that may have listed such assets, licenses, agreements or contracts as
Purchased Assets, and such assets, licenses, agreements or contracts shall
become Excluded Assets; provided, further, that in no event shall the Purchase
Price (as defined below) be reduced with respect to such deletions or
exclusions.
1.03 The Closing. Upon the terms and subject to the conditions contained
herein, the closing of the transactions contemplated hereby (the "Closing")
shall take place at 10:00 a.m. on later of (i) April 30, 2001 and (ii) the first
business day after the last condition in Articles VI and VII is satisfied (other
than those conditions requiring deliveries at the Closing itself) at ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at another location
or time mutually agreed upon by the parties (such date being hereinafter
referred to as the "Closing Date").
1.04 Payment of Purchase Price. (a) The price to be paid by Buyer for the
Purchased Assets at the Closing shall be $117,500,000 (the "Purchase Price")
minus (i) the Deposit (together with any interest earned thereon) and (ii)
$10,000,000 (the "Retention Amount"), which Retention Amount shall be held by
Buyer and reduced and/or paid in accordance with Section 1.05(c). On the date of
entry of the Approval Order (as defined below) by the Bankruptcy Court, as
evidence of its good faith, Buyer shall deposit $4,700,000 (together with the
$300,000 previously delivered to Seller, the "Deposit") in escrow with an escrow
agent selected by the parties (the "Escrow Agent") pursuant to an agreement
substantially in the form set forth as Exhibit A hereto (the "Deposit Escrow
Agreement"). The Deposit Escrow Agreement shall provide, among other things, for
the Deposit to be held in escrow until the earlier of the Closing or the
termination of this Agreement and released as follows: (A) upon Closing, the
Deposit and all interest earned thereon shall be released by the Escrow Agent to
Seller in order to partially fund the acquisition of the Purchased Assets, (B)
in the event of a termination of this Agreement by Seller pursuant to Section
8.01(c), the Deposit and all interest earned thereon shall be released by the
escrow agent to Seller as liquidated damages, which liquidated damages shall be
the sole and exclusive remedy of Seller as a result of such termination or (C)
in the event of any other termination of this Agreement, the Deposit and all
interest earned thereon shall be released by the Escrow Agent to Buyer.
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(b) Of the Purchase Price, $10,000,000 (the "Accounts
Receivable/Inventory Holdback Amount") shall be deposited into escrow pursuant
to an agreement substantially in the form set forth as Exhibit B hereto (the
"Post Closing Escrow Agreement") which Buyer, Seller and the Escrow Agent shall
enter into at the Closing. The Post Closing Escrow Agreement shall provide,
among other things, for the Accounts Receivable/Inventory Holdback Amount to be
deposited in escrow with the Escrow Agent for the period commencing on the
Closing Date and ending on the later of (i) ninety (90) days following the
Closing and (ii) fifteen (15) days following the resolution of any dispute
relating to the Audit (as defined below). The Accounts Receivable/Inventory
Holdback Amount shall be used to satisfy (x) any Estimated Adjustment Amount
pursuant to subsection 1.04(e); (y) any Downward Adjustment Amount owed to Buyer
pursuant to Section 1.05 and (z) any indemnification claims arising from the
breach of representations and warranties of Seller with respect to Sections 2.07
(Inventory) and 2.12 (Accounts Receivable) pursuant to and in accordance with
Article IX hereof. After the later of (i) ninety (90) days following the Closing
and (ii) fifteen (15) days following the resolution of any dispute relating to
the Audit, if the aggregate amount of claims made by Buyer against the Accounts
Receivable/Inventory Holdback Amount is less than $10,000,000 ("Holdback
Claims"), then Buyer and Seller shall countersign a certificate instructing the
Escrow Agent to release to Seller an amount equal to the difference between (x)
$10,000,000 and (y) the Holdback Claims plus any unpaid administrative expenses
of the Escrow Agent (the "Holdback Release Amount"); provided that if any
amounts payable from the Accounts Receivable/Inventory Holdback Amount are the
subject of an unresolved dispute, Buyer and Seller shall countersign a
certificate instructing the Escrow Agent to release to Seller the Holdback
Release Amount less any amounts subject to dispute (which amounts subject to
dispute shall be released as disputes are resolved in accordance with the terms
of the Post Closing Escrow Agreement).
(c) Of the Purchase Price, $5,000,000 (the "Escrow Amount") shall be
deposited into escrow pursuant the Post Closing Escrow Agreement. The Post
Closing Escrow Agreement shall provide, among other things, for the Escrow
Amount to be deposited in escrow with the Escrow Agent for a period of six (6)
months following the Closing. The Escrow Amount shall be used to satisfy any
indemnification claims arising from the representations and warranties of Seller
with respect to Sections 2.03 (Assumed Contracts), 2.04 (Intellectual Property),
2.05 (Title) and 2.13 (Software) pursuant to and in accordance with Article IX
hereof. After the 180th day from the Closing Date, if the aggregate amount of
indemnification claims made by Buyer against the Escrow Amount pursuant to this
Section 1.04(c) ("Indemnification Claim Amount") is less than $5,000,000, then
Buyer and Seller shall countersign a certificate instructing the Escrow Agent to
release to Seller an amount equal to the difference between (i) $5,000,000 and
(ii) the Indemnification Claim Amount plus any unpaid administrative expenses of
the Escrow Agent (the "Escrow Release Amount"); provided that if any amounts
payable from the Escrow Amount are the subject of an unresolved dispute, Buyer
and Seller shall countersign a certificate instructing the Escrow Agent to
release to Seller the Escrow Release Amount less any amounts subject to dispute
(which amounts subject to dispute shall be released as disputes are resolved in
accordance with the terms of the Post Closing Escrow Agreement).
(d) Buyer shall pay the Purchase Price to Seller at the Closing in
immediately available funds wire transferred into an account maintained by
Seller and which shall be
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designated by Seller at least five (5) business days prior to the Closing Date,
less (i) the Deposit plus any interest accumulated thereon, (ii) the Retention
Amount, (iii) the Accounts Receivable/Inventory Holdback Amount and (iv) the
Escrow Amount. The Accounts Receivable/Inventory Holdback Amount and the Escrow
Amount shall be wired transferred to the Escrow Agent pursuant to the terms of
the Post Closing Escrow Agreement.
(e) The appropriate financial officers of Seller shall close the books
of Seller as of April 28, 2001 in accordance with its normal course of business
consistent with past practice, and shall deliver to Buyer no later than May 20,
2001, a report setting forth the estimated value of (i) the Account Receivables
as of April 28, 2001 (the "Estimated Accounts Receivable Value") and (ii) the
Inventory as of April 28, 2001 (the "Estimated Inventory Value"). The sum of the
Estimated Accounts Receivable Value and the Estimated Inventory Values shall be
the "Estimated Value." If the Estimated Value exceeds $80,300,000, there will be
no adjustment of the purchase price until the Auditor Report is available in
accordance with Section 1.05. If the difference between $80,300,000 and the
Estimated Value exceeds the Retention Amount (which excess shall be referred to
as the "Estimated Adjustment Amount") then an amount equal to the excess of (i)
the Estimated Adjustment Amount over (ii) $1,000,000 (One Million Dollars) shall
be immediately paid to Buyer (the "Estimated Payment") from the Accounts
Receivable/Inventory Holdback Amount upon delivery to the Escrow Agent by Buyer
of a certificate setting forth such amount. Seller shall have no right to
interfere with the payment by the Escrow Agent of the Estimated Payment.
1.05 Post-Closing Adjustment. (a) Following the Closing, Buyer shall cause
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P. or such other "big five" accounting firm selected by
Buyer and approved by Seller (which approval shall not be unreasonably withheld)
(the "Auditor") to prepare a valuation of Accounts Receivable and Inventory (the
"Auditor Report"). The Auditor Report shall be prepared in accordance with the
principles set forth on Exhibit C, and shall set forth the value of Accounts
Receivable as of the Closing Date (the "Accounts Receivable Value") and the
value of the Inventory as of the Closing Date (the "Inventory Value"), in each
case in accordance with GAAP applied in accordance with Exhibit C. In addition,
the Audit Report shall set forth the value of all deposits and prepayments made
by Seller in respect of Assumed Contracts, which deposits and prepayments will
inure to the benefit of Buyer and are identified on Schedule 1.05(a) (the
"Deposit/Prepayment Value"). For purposes of this Agreement and the Auditor
Report, the aggregate Deposit/Prepayment Value shall not exceed $500,000. The
Audit Report shall state the sum of the Accounts Receivable Value plus the
Inventory Value plus the Deposit/Prepayment Value (the "Audited Value"). The
Auditor shall deliver the Auditor Report to Buyer and Seller within thirty (30)
business days of the Closing Date (the "Audit Report Date"). Buyer and Seller
shall share equally the cost of the Auditor Report.
(b) If Seller disputes the Auditor Report, Seller shall so notify Buyer
in writing (a "Notice of Dispute") within ten (10) days after the date of
Seller's receipt of the Auditor Report, specifying its calculation of the
Accounts Receivable Value and the Inventory Value and any other points of
disagreement. Upon receipt of a Notice of Dispute, Buyer shall promptly consult
with Seller with respect to such alternate calculation and points of
disagreement in an effort to resolve such dispute (in connection with such
effort to resolve disputes, and in connection with the Auditor's preparation of
the Auditor Report, Buyer shall
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grant to Seller, its agents and the Auditors reasonable access to the books and
records of Buyer pertaining to the Inventory and Accounts Receivable). If any
such dispute cannot be resolved by Seller and Buyer within five (5) days after
Buyer receives a Notice of Dispute from Seller, Seller and Buyer shall
immediately appoint the Boston, Massachusetts office of Ernst & Young LLP to act
as an arbitrator (the "Accounting Arbitrator") to determine the appropriate
calculation of each of the Accounts Receivable Value, the Inventory Value, the
Deposit/Prepayment Value, the Audited Value and all other remaining points of
disagreement with respect to the Auditor Report (the "Review"). Seller and Buyer
understand and agree that, in resolving any dispute with respect to the Auditor
Report, the Accounting Arbitrator shall apply GAAP and the standards set forth
on Exhibit C. All determinations made by the Accounting Arbitrator shall be
final, conclusive and binding. The Accounting Arbitrator shall be directed to
hold a hearing within ten (10) days of appointment (which hearing shall be held
in Boston, Massachusetts) and to make a determination within five (5) days after
such hearing, unless otherwise mutually agreed by the parties. The fees and
expenses of the Accounting Arbitrator shall be borne equally by Seller and by
Buyer. Each of the parties shall bear its own attorneys' and accounting fees and
expenses incurred in connection with the Review.
(c) Within five (5) business days of the later of (x) the Audit Report
Date and (y) in the case of any dispute of pursuant to Section 1.05(b), the
resolution of such dispute:
(i) If the Audited Value exceeds $80,300,000 (the amount of such
excess being the "Additional Purchase Price"), then (A) Buyer shall
pay Seller by wire transfer of immediately available funds an amount
equal to the Additional Purchase Price and (B) Buyer shall pay to
Seller the Retention Amount by wire transfer of immediately available
funds. Under no circumstances shall the Additional Purchase Price
exceed $25,000,000.
(ii) If the Audited Value is less than $80,300,000, then Buyer
shall be entitled to the difference between $80,300,000 and the
Audited Value (the "Downward Adjustment Amount"); provided, however,
that under no circumstances shall the Downward Adjustment Amount
exceed $25,000,000. If the Downward Adjustment Amount exceeds the sum
of the Retained Amount plus the Estimated Payment (such excess being
herein referred to as the "Required Additional Payment"), then (A)
first, the Retention Amount shall be credited to and retained by Buyer
and (B) the Escrow Agent shall pay to Buyer from the existing Accounts
Receivable/Inventory Holdback Amount by wire transfer of immediately
available funds the Required Additional Payment; provided further that
if the Downward Adjustment Amount exceeds $20,000,000, Seller shall
pay to Buyer by wire transfer of immediately available funds such
excess amount up to an amount not to exceed $5,000,000.
(iii) If a Downward Adjustment Amount has been determined and no
Estimated Payment was made pursuant to Section 1.04(e), then (A)
first, the Retention Amount shall be reduced and credited to Buyer by
an amount equal to the Downward Adjustment Amount, and (B) to the
extent the Downward Adjustment Amount exceeds the Retention Amount
(the "Excess Amount"), the
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Escrow Agent shall pay to Buyer from the Accounts Receivable/Inventory
Holdback Amount by wire transfer of immediately available funds the
Excess Amount; provided further that if the Downward Adjustment Amount
exceeds $20,000,000, Seller shall pay to Buyer by wire transfer of
immediately available funds such excess amount up to an amount not to
exceed $5,000,000. Any Retention Amount remaining after the reduction
thereto pursuant to subclause (A) above shall be paid by Buyer to
Seller by wire transfer of immediately available funds.
(iv) If the Downward Adjustment Amount is less than the sum of
Retention Amount and Estimated Payment (such shortfall being herein
referred to as the "Required Refund"), then (A) if the Required Refund
is less than or equal to the Estimated Payment then Buyer shall pay to
the Escrow Agent for deposit into the Accounts Receivable/Inventory
Holdback Amount by wire transfer of immediately available funds an
amount equal to the Required Refund or (B) if the Required Refund is
greater than the Estimated Payment then Buyer shall (x) pay to the
Escrow Agent for deposit into the Accounts Receivable/Inventory
Holdback Amount by wire transfer of immediately available funds an
amount equal to the Estimated Payment and (y) pay to Seller from the
Retention Amount an amount equal to the excess of the Required Refund
over the Estimated Payment by wire transfer of immediately available
funds.
Notwithstanding anything to the contrary contained herein, Buyer agrees that
under no circumstance shall Escrow Agent release any of the Escrow Amount to
Buyer to satisfy any amounts owed to Buyer in respect of the Downward Adjustment
Amount except as otherwise permitted pursuant to Section 9.04(b). Any payment
by Seller, the Escrow Agent or Buyer required by this subsection (c) shall bear
interest at the rate equal to the interest being earned on the Accounts
Receivable/Inventory Holdback Amount pursuant to the Post Closing Escrow
Agreement from the Closing Date until the date of payment. The Additional
Purchase Price or the Downward Adjustment Amount, as the case may be (excluding
payments attributable to interest), will be treated by the parties as an
increase or decrease, as the case may be, in the Purchase Price.
(d) The allocation for tax purposes of the Purchase Price will be
agreed upon by the parties prior to the Closing.
1.06 Assumption of Certain Obligations. Upon the sale, transfer,
assignment, conveyance, and delivery of the Purchased Assets to Buyer at the
Closing, Buyer shall assume and thereafter pay, perform, and discharge all
obligations to be performed or arising after the Closing under all of the
Assumed Contracts (the "Assumed Obligations"). Other than the Assumed
Obligations, Buyer shall not assume or be liable for any other obligations or
liabilities of Buyer (including any cure amounts payable to other parties to the
Assumed Contracts).
1.07 Retained Liabilities. (a) Seller shall retain and pay, discharge and
perform any and all obligations and liabilities not expressly assumed by
Purchaser in Section 1.06 above,
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including the following obligations and liabilities (all such obligations and
liabilities, the "Retained Liabilities"):
(i) liabilities for unpaid Taxes (as defined in Section 2.10);
(ii) all obligations or liabilities of Seller that relate to any
of the Excluded Assets;
(iii) all obligations or liabilities for any borrowed money
incurred by Seller whether pre-petition or post-petition;
(iv) all obligations and liabilities resulting from, caused by or
arising out of, directly or indirectly, the conduct of Seller's
business or ownership or lease of any of its properties or assets or
any properties or assets previously used by Seller at any time prior
to the Closing Date, including such of the foregoing as constitute,
may constitute or are alleged to constitute a tort, breach of
contract, or violation or requirement of any law or governmental
regulation;
(v) any and all liabilities of Seller under any employee benefit
plans, whether formal or informal, whether or not set forth in
writing, and whether covering one person or more than one person,
sponsored or maintained by Seller. For the purposes hereof, the term
"employee benefit plan" includes all plans, funds, pension funds,
programs, policies, arrangements, practices, customs and
understandings providing benefits of economic value to any employee,
former employee, or present or former beneficiary, dependent or
assignee of any such employee or former employee other than regular
salary, wages or commissions paid substantially concurrently with the
performance of the services for which paid. The term "employee benefit
plan" includes all employee welfare benefit plans within the meaning
of Article 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and all employee pension benefit plans
within the meaning of Article 3(2) of ERISA. Seller shall retain
liability for all employee pension benefits;
(vi) any alleged or actual liability for the investigation,
cleanup or removal of any Hazardous Material (as defined in Section
2.11), or for death or injury to person or property, as a result of
the generation, transportation, disposal, storage, release, emission
or discharge of any Hazardous Material onsite or offsite and in, on,
under, from or onto any real property subject to any lease or
otherwise, past or present, that occurred or existed on or before the
Closing Date;
(vii) any alleged or actual liability and penalties for
violations of or noncompliance with environmental laws and that
occurred or existed on or before the Closing Date; and
(viii) liability for all compensation, salary, wages, bonuses,
commissions, incentive payments or any other benefit, perquisite,
cost, expense, liability or obligation attributable to services
provided prior to the Closing but
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payable on or after the Closing to the employees, contractors,
athletes or celebrities solicited and hired by Buyer pursuant to
Section 5.03, if any. Buyer shall have no liability for compensation,
salary, wages, bonuses, commissions, incentive payments or any other
benefit, perquisite, cost, expense, liability or obligation relating
to the employment or termination of employment by Seller before or
after the Closing of any of Seller's employee's, contractors, athletes
or celebrities.
(b) At the Closing, Seller shall deliver to Buyer (i) duly executed
instruments of assignment and assumption including an assignment and assumption
agreement (the "Assignment and Assumption Agreement"), in form and substance
reasonably satisfactory to Buyer and its counsel, and sufficient for the
assignment of the Purchased Assets and the assumption by Buyer of the Assumed
Obligations and (ii) take all acts reasonably necessary to give Buyer possession
of, or control over, the Purchased Assets; provided, however, that in the case
of Inventory located at retail stores, Seller agrees to take all action
necessary to have such Inventory delivered to Seller's Charlotte, North Carolina
distribution center within 45 days following the Closing, provided further that
Buyer agrees to pay the freight charges incurred in connection with such
delivery.
1.08 Payment of Transfer Taxes and Other Charges. At or after the Closing,
Seller shall pay all transfer taxes, sales taxes (including retail sales taxes),
stamp taxes, withholding taxes, and other similar taxes which are due in
connection with the transactions contemplated hereby.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.01 Organization and Standing. Seller is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all corporate power and authority to carry on its business as it is
currently conducted, subject to Bankruptcy Court approval. Seller is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where the conduct of its business renders such qualification
necessary, except where failure to be so qualified would not have Material
Adverse Effect. For purposes of this Agreement, a Material Adverse Effect means
a material adverse effect on the value or condition of the Purchased Assets,
taken as a whole.
2.02 Authorization by Seller.
(a) The execution, delivery and performance by Seller of this
Agreement and the consummation by Seller of the transactions contemplated hereby
have been or will by the Closing Date be, as the case may be, duly authorized by
all requisite corporate action of Seller. This Agreement has been duly and
validly executed and delivered by Seller and, upon entry of the Approval Order,
will be the legal, valid, and binding obligation of Seller, enforceable against
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Seller in accordance with its terms, except as enforceability may be limited by
equitable principles (regardless of whether enforcement is brought in a
proceeding in equity or at law).
(b) Except as set forth on Schedule 2.02(b), neither the execution and
delivery of this Agreement or any other agreements and documents to be executed
or delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby, will (i) violate, or conflict with, any provision of
Seller's Certificate of Incorporation or By-Laws, (ii) violate, or conflict
with, or result in a breach of any provisions of, or constitute a default under,
or result in the termination of, or 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 being sold hereunder by Seller under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, agreement, lease or other instrument to which Seller is a
party or by which it or any of its properties is bound, or (iii) violate, or
conflict with, any order, writ, injunction, arbitral award, judgment or decree
of any court, governmental body or arbitrator applicable to Seller, except, in
the case of clause (ii), for any such violations, conflicts, breaches, defaults,
terminations, accelerations or other matters which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
2.03 Assumed Contracts; Information.
(a) Except as set forth on Schedule 2.03(a):
(i) Each of the Assumed Contracts was duly executed and delivered
by Seller and each constitutes the valid and legally binding
obligations of the parties thereto and is enforceable by Seller in
accordance with its terms.
(ii) Except with regard to compliance under Assumed Contracts
that is excused pursuant to Section 365(b)(2) of the Bankruptcy Code,
Seller is in compliance in all material respects with the terms and
conditions of the Assumed Contracts and all laws, rules and
regulations applicable thereto.
(iii) Except with regard to defaults under Assumed Contracts that
(A) can be cured pursuant to Section 365(b)(1) of the Bankruptcy Code
or (B) can be excused pursuant to Section 365(b)(2) of the Bankruptcy
Code, to Seller's knowledge, no event of default (or term of like
intent) has occurred under any Assumed Contract
(iv) To Seller's knowledge, Seller has not received or sent
notice that an event has occurred which, with the lapse of time or the
giving of notice, or both, would constitute an event of default (or
term of like intent) under the terms of any Assumed Contract.
(v) To Seller's knowledge, Seller has not received notice from
any person that any Assumed Contract has been, or is to be,
terminated, or that any Assumed Contract has been, or is to be,
terminated prior to its stated term, nor to
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Seller's knowledge, does there exist any basis for a termination of
any Assumed Contract.
(vi) No consent of any party is required to sell, assign and
transfer to Buyer any Assumed Contract that provides for the provision
of goods or services or the payment of money having a value in excess
of $100,000 per annum.
(vii) Seller has provided Buyer with full and complete copies of
all Assumed Contracts and any written amendments, modifications or
waivers with respect thereto. To Seller's knowledge, there exists no
oral amendments, modifications or waivers with respect to any of the
Assumed Contracts, except for such oral amendments, modifications or
waivers which, individually or in the aggregate, would not result in a
change in the provision of goods or services or the payment of money
having a value in excess of $100,000 per annum.
(b) Schedule B sets forth (i) a complete list of Licenses to which
Seller is a party and all other licenses to which Seller was a party since ▇▇▇▇▇
▇▇, ▇▇▇▇, (▇▇) amendments to any License, (iii) the names, addresses, phone and
fax numbers (and e-mail addresses, if known to Seller) of each licensee under a
License, (iv) key contact persons at each licensee of a License and (v) names of
Seller personnel who have been dealing with each licensee of a License.
(c) Schedule 2.03(c) sets forth (i) all outstanding purchase orders
with each of Seller's vendors of finished goods, (ii) all other material
agreements with vendors and (iii) copies of all outstanding letters of credit
issued by Seller to such vendors.
(d) Schedule 2.03(d) sets forth, with respect to all of Seller's 100
highest revenue generating customers ("Material Customers"), (i) credit terms,
(ii) margin allowances and discounts and (iii) return information.
(e) Schedule 2.03(e) sets forth the terms and conditions of Seller's
employment of or contractual arrangements with, Seller's internal and external
U.S. and overseas sales personnel, including commissions and bonuses.
(f) With respect to any Assumed Contracts listed or described on
Schedule 2.03(a) as exceptions to the representations set forth in 2.03(a)(vi),
Seller shall obtain appropriate consents to the sale, assignment and transfer
contemplated herein together with an estoppel agreed to by the consenting
parties to each such Assumed Contract acknowledging the transfer to Buyer of
such Assumed Contract. Notwithstanding the foregoing, Seller shall only be
required to use commercially reasonable efforts to obtain any consent required
under (i) the agreements listed on Schedule 2.03(f)(i), which would require
Buyer to establish itself as a "qualified" vendor, and (ii) the license
agreement listed in Schedule 2.03(f)(ii).
2.04 Intellectual Property. Except as set forth on Schedule 2.04:
(a) Seller owns all right, title and interest in and to the Owned
Intellectual Property. Seller has all rights necessary to use the Licensed
Intellectual Property in the manner presently used in its business. None of the
Intellectual Property infringes or violates the
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intellectual property rights of any third parties or, to Seller's knowledge, is
being infringed upon by third parties. Consummation of the transactions
contemplated hereby shall not impair any rights or impose any obligations with
respect to Intellectual Property, except for any notices, recordings or filings
that are required to be given or made by applicable law as a result of the
transfer of the Intellectual Property to Buyer. On the Closing Date, Seller will
transfer the Intellectual Property to Buyer, free and clear of Liens. None of
the Intellectual Property is subject to any outstanding order, decree, judgment,
stipulation, injunction, written restriction or agreement restricting the scope
of use thereof by Seller anywhere in the world.
(b) There is no pending or, to Seller's knowledge, threatened (or
unasserted but considered probable of assertion) claim against Seller, nor has
Seller received any written notice of any claim (i) asserting that any of the
Intellectual Property as used in Seller's business infringes or violates the
intellectual property rights of any third parties, (ii) asserting that any of
the Intellectual Property is being infringed upon or diluted by others, (iii)
asserting that any third parties have any rights to use any of the Intellectual
Property except for Licensed Intellectual Property licensed to Seller on a
nonexclusive basis, except for such claims which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(c) During the prior twelve months, Seller has not given notice to any
third parties asserting material infringement by such third parties of any of
the Intellectual Property, and to Seller's knowledge, there is no basis for any
such claim against a third party.
(d) All of the Licensed Intellectual Property is licensed pursuant to
valid written agreements (the "IP License Agreements").
(e) Seller has not adversely used any confidential information, trade
secrets or known patentable inventions of any person relating to the conduct of
its business, and Seller, to its knowledge, does not have any product which, if
commercially developed and sold, would adversely use any such confidential
information, trade secrets or other inventions except as would not have a
Material Adverse Effect.
(f) There is no pending or, to Seller's knowledge, threatened claim
that Seller is in breach of any IP License Agreement and, to Seller's knowledge,
no basis for any such claim exists, except as would not have a Material Adverse
Effect.
(g) There is no pending or, to Seller's knowledge, threatened claim
against Seller of any Licensed Intellectual Property asserting that any of the
Licensed Intellectual Property infringes or conflicts with the rights of third
parties, and to Seller's knowledge, no basis for any such claim exists.
(h) Seller has performed all of the obligations required to be
performed by it, and is not in default under any agreement relating to any
Intellectual Property, except where such failure to perform would not have a
Material Adverse Effect.
(i) Schedule 2.04(i) hereto identifies each trade name, fictitious
business name, or other similar name under which Seller has conducted any part
of its business during the
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five (5) years preceding the date hereof, and the trademark status reports set
forth in Schedule A-5 contain true and correct information regarding the
Trademarks set forth therein.
(j) For purposes of this Agreement:
(i) "Copyrights" shall mean all registered and unregistered
copyrights and applications for copyright registration in every
country of the world, including those identified in Schedule A-1;
(ii) "Intellectual Property" shall mean the Owned Intellectual
Property and the Licensed Intellectual Property;
(iii) "Know-How" shall mean technical information, trade secrets,
inventions, processes, specifications, manuals, reports, documents,
drawings, procedures, processes, devices, software and source code,
software documentation, research and development data, marketing
information, customer lists, database rights, industrial design
rights, other tangible embodiments of information and all other
intellectual property or proprietary rights other than Patents,
Trademarks and Copyrights, in every country of the world, owned by
Seller and its subsidiaries, including those identified in Schedule
A-2;
(iv) "Licensed Intellectual Property" shall mean all intellectual
property owned by third parties and licensed to Seller and its
subsidiaries, including those identified in Schedule A-3;
(v) "Owned Intellectual Property" shall mean all Patents,
Trademarks, Copyrights and Know-How owned by Seller and its
subsidiaries, including those listed on Schedules ▇-▇, ▇-▇, ▇-▇, ▇-▇
and A-5;
(vi) "Patents" shall mean all utility and design patents and
patent applications (including any divisions, continuations,
continuations-in-part, reexaminations, extensions, renewals or
reissues thereof), design, design registrations, utility models and
any similar rights and applications therefor, in every country of the
world, owned by Seller and its subsidiaries, including those
identified in Schedule A-4; and
(vii) "Trademarks" shall mean all registered and unregistered
trademarks, service marks, trade dress, trade names, Internet domain
names, fictitious business names or other similar names, and any other
identification of source or origin, and applications for registration
of any of the foregoing, together with associated goodwill, in every
country of the world, owned by Seller and its subsidiaries, including
those trademarks identified in the trademark status report attached
hereto as Schedule A-5.
2.05 Title to Purchased Assets; Absence of Liens and Encumbrances. Seller
owns all right, title and interest in and to, and has good and marketable title
to, all Purchased Assets transferred pursuant to this Agreement. Seller will
transfer all right, title and interest in the
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Purchased Assets, including any Purchased Assets located outside of the United
States, to Buyer at the Closing Date free and clear of Liens. Without limiting
the foregoing, on the Closing Date the Purchased Assets will not be in any
manner encumbered by any Liens arising out of unpaid state, federal, local and
foreign income, sales, or ad valorem taxes which are due and payable.
2.06 Litigation. Except as set forth on Schedule 2.06, there is no
litigation pending or, to Seller's knowledge, threatened (a) against Seller, its
business, subsidiaries or any of its Intellectual Property or other assets
which, if adversely determined, would affect the Purchased Assets, or (b) which
seeks to enjoin or obtain damages in respect of the consummation of the
transaction contemplated hereby.
2.07 Inventory. Seller has or will have on the Closing Date good and
marketable title to the Inventory free and clear of any Lien or other right of
any third party and Seller will transfer the Inventory to Buyer at the Closing,
free and clear of Liens. The Inventory is recorded on the books and records of
Seller at the lower of actual FIFO cost or market, net of any reserves (taking
into account obsolete, defective or unmerchantable goods, odd sizes, excess
quantities, unsaleable returns, other unsaleable merchandise), as determined in
accordance with GAAP.
2.08 Insurance. Seller has maintained and currently maintains sufficient
insurance coverage to protect its business and the full replacement value of the
Purchased Assets, as well as business interruption insurance with respect to
Seller's manufacturing facilities located in the United States and Mexico, in
each case with reputable insurance companies in amounts consistent with other
companies in its industry.
2.09 Compliance with Laws. Except as set forth on Schedule 2.09, Seller is
not aware of any violation of any applicable statute, ordinance, code,
restriction, regulation, or other governmental requirements, which violation,
individually or in the, aggregate, would have a Material Adverse Effect.
2.10 Tax and Other Returns and Reports. Except as listed in Schedule 2.10,
all material federal, state, local and foreign tax returns, reports, statements
and other similar filings required to be filed by Seller in connection with its
operation of the business as it pertains to the Purchased Assets (the "Tax
Returns") with respect to any federal, state, local or foreign taxes,
assessments, interests, penalties, deficiencies, fees and other governmental
charges or impositions, as well as all transfer taxes, sales taxes (including
retail sales taxes), duties and customs fees, stamp taxes, withholding taxes,
and other similar taxes (all such tax liabilities relating to the manufacture,
importation, delivery, shipment and use of the Purchased Assets, including
Inventory in transit, for all periods ended prior to the Closing Date referred
to herein as the "Taxes") have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed. Except as listed in Schedule 2.10, all Taxes, including those which are
called for by the Tax Returns, or heretofore or hereafter claimed to be due by
any taxing authority from Seller, have been properly accrued or paid. Seller
shall be solely responsible for Taxes accrued during periods ended on or prior
to the Closing Date and Seller shall have the sole right to contest any such
claim or deficiency in any administrative or judicial forum of its choosing, or
pursue or forego any appeal of any administrative judicial decision, or to
terminate or settle an administrative proceeding.
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2.11 Environmental Matters. Except as set forth on Schedule 2.11(a),
neither Seller nor, to Seller's knowledge, any other person has (x) discharged
or disposed of any Hazardous Materials at Seller's Charlotte, North Carolina
distribution facility or North Reading, Massachusetts headquarters in a manner
which at the time of such act was is in violation of any law, rule or regulation
affecting the use, discharge, or disposal of any Hazardous Material.
Additionally, none of such real property is being used, or to Seller's
knowledge, after due inquiry has ever previously been used, for the discharge or
disposal of any Hazardous Materials in a manner which at the time of such act
was in violation of any law, rule or regulation affecting the use, discharge, or
disposal of any Hazardous Material or, (y) received any notice from any
governmental authority indicating that the real property has been or may be
placed on any federal or state "Superfund" or "Superlien" list. The term
"Hazardous Material" means any substance that is defined as a "hazardous waste"
or "hazardous substance" under any applicable federal, state, or local statute,
regulation, or ordinance and shall include any (A) "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Article 6901 et
seq.), as amended from time to time, and regulations promulgated thereunder; and
(B) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. Article 9601 et
seq.) ("CERCLA"), as amended from time to time and regulations promulgated
thereunder.
2.12 Accounts Receivable; Collection. Schedule H sets forth a listing
showing aging by customer of the Accounts Receivable that are outstanding as of
the date hereof. The Accounts Receivable are not subject to any written or, to
Seller's knowledge, oral agreement or understanding providing for any credit,
chargeback, counterclaim, setoff, discount, returns or co-operative marketing
payments in respect thereof, except for any such credits, chargebacks,
counterclaims, setoffs, discounts, returns or co-operative marketing payments
that have been estimated and reserved for based on historical experience (either
generally or specifically) on the books and records of Seller. Seller has not
accelerated or delayed collection of Accounts Receivable in advance of or beyond
their regular due dates or the dates when the same would otherwise have been
collected other than in the ordinary course of business. Accounts Receivable
with extended payment terms providing for payments over more than 90 days are
carried at no greater than present value.
2.13 Software.
(a) Seller's rights in and to (i) the Applications that are required to
process Inventory and Accounts Receivable (the "Accounts Receivable/Inventory
Software") and (ii) all other Applications not requiring the consent of third
parties for the assignment thereof will be granted to Buyer, either by transfer
of title, assignment of rights or grant of license at the Closing. Schedule
2.13(a) sets forth a list of the Applications ("Licensed Software") requiring
the consent of the owners and/or licensors ("Licensors") thereof ("Licensors'
Consent"). Subject to receipt of Licensors' Consent, Seller's rights in and to
Licensed Software will be granted to Buyer, either by transfer of title,
assignment of rights or grant of license at the Closing. Seller shall use
commercially reasonable efforts to obtain Licensors' Consent prior to Closing.
Upon receipt of Licensors' Consent, if applicable, Seller shall, at the request
of Buyer, provide programming code, source code and documentation in Seller's
possession and execute and
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deliver such other instruments of sale, transfer, conveyance, assignment or
license as Buyer may reasonably request in order to effectively vest in Buyer
the rights contemplated hereby.
(b) The activities and operations of Seller with regard to the
Applications prior to the Closing, are not, and have not been, in violation of
any agreement, or in violation of any rights held by any Person except for pre-
petition amounts owed under license agreements between Seller and Licensors
relating to the Applications.
(c) Seller holds either:
(i) sole and exclusive ownership of all rights in and to the
Applications; or
(ii) valid rights and licenses to utilize the Applications in its
operations and activities as carried out during the twelve-month
period prior to the date of this Agreement.
The Accounts Receivable/Inventory Software constitutes substantially all
the computer software necessary for Buyer to conduct the operations and
activities necessary to manage and dispose of Inventory and Accounts Receivable.
All Licensed Software is transferable to Buyer with Licensors' Consent. The
Applications and computer hardware leased pursuant to the Hardware Lease
Agreements constitute all of the computer software and hardware necessary to
conduct the operations and activities of Seller (other than its manufacturing
and retail store operations) during the prior twelve months. The Information
Technology, whether transferred to Buyer hereunder, or in the form of services
provided by Seller pursuant to Section 4.01, constitutes or will constitute on
the Closing Date, all of the computer software and hardware necessary to conduct
the operations and activities of Seller (other than its manufacturing and retail
store operations) during the prior twelve months.
(d) In the case of each Application indicated in Schedule 2.13(d) as
being owned by Seller (hereafter "Owned Software"), Seller has good and
marketable right, title and interest in and to all forms, versions and releases
of the Owned Software, including all copyright rights and all applicable patent
and trade secret rights, free and clear of any Liens other than rights of
authors which may not be legally waived except for the language and database
licensed by third parties which is used to operate the Owned Software. No item
of Owned Software is a derivative work (as defined in U.S. Copyright Law) of any
other work that is not owned in its entirety by, or properly licensed such that
no one may claim any rights in such derivative work other than, Seller. Except
as indicated in Schedule 2.13(d), Seller is in actual possession of the complete
source code and object code, and is in possession of all documentation necessary
for the effective use, distribution and support of each such item of Owned
Software.
(e) Except as indicated in Schedule 2.13(e), Seller:
(i) maintains master machine readable reproducible copies, source
code listings, technical documentation and user documentation for the
most current releases and versions thereof; and
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(ii) maintains the machine readable copies such that they
substantially conform to the corresponding source code listings,
programming and user manuals, and published specifications (if any).
(f) All Applications which are not Owned Software (herein referred to
as "Third Party Software") are subject to restrictions on assignment, transfer,
relocation, use, copying, distribution, preparation of derivative works,
display, performance, sale, offer for sale, manufacture or disclosure (such
activities collectively and individually referred to herein as "Use") as are
contained in the corresponding license agreements identified in Schedule
2.13(f).
(g) Subject to Licensors' Consent, if applicable, the continued or
further Use of any Application by Buyer after the Closing, which Use is
consistent with the Use of such item by Seller prior to the Closing, will not
give rise to any obligation to pay any royalty, fee, penalty, damages or
compensation to any Person.
(h) All contracts, agreements, commitments or obligations of Seller for
the maintenance, support, upgrade, correction of defects or deficiencies, or for
continuing or for renewing rights to, any Third Party Software, and any payment
obligations or options therefor, are identified in Schedule 2.13(h).
2.14 Customers and Suppliers. Since January 1, 2001 and except as disclosed
in Schedule 2.14(i), there has been no written complaint or, to Seller's
knowledge, oral complaint from any Material Customer and no notice of breach or
of termination under any contract with a Material Customer. Seller has not been
advised in writing or, to Seller's knowledge, orally by any Material Customer or
supplier of finished goods ("Finished Goods Supplier") that such Material
Customer or Finished Goods Supplier was or is intending to terminate its
relationship or would not continue to purchase or sell supplies or services for
future periods on account of any dissatisfaction with Seller's performance. All
order backlog is described on Schedule D hereto, and such backlog has been
accurately accounted for in the records of Seller in accordance with Seller's
historical practices; and, to Seller's knowledge, the order backlog represents
good orders consistent with Seller's and industry practice. Seller has not been
advised in writing or, to Seller's knowledge, orally that any customer intends
to cancel or change the material terms of any orders included in such order
backlog. Notwithstanding any of the foregoing, with respect to the Material
Customers identified on Schedule 2.14(ii) as potentially requiring Buyer to
establish itself as a "qualified" vendor ("Requalification Customers"), Seller
makes no representation to Buyer in respect of any Requalification Customer that
following the date hereof gives notice of termination or its intention to
terminate its relationship with Seller or its intention not to continue to
purchase supplies or services for future periods because of the failure of Buyer
to so "qualify".
2.15 Changes in Accounting Method. Since December 1, 2000, Seller has not
made any material change in any method of accounting or accounting practice
related to the Inventory or the Accounts Receivable.
2.16 Absence of Undisclosed Liabilities. Except for the Assumed
Obligations, to Seller's knowledge there are no material liabilities with
respect to the Purchased Assets other
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than those disclosed or provided in this Agreement and in the Schedules hereto;
Seller is not aware of any facts or circumstances that could be expected to
result in such liabilities.
2.17 Subsidiary Assets. To Seller's knowledge, there are no assets owned by
any of its subsidiaries that are necessary for Buyer, following the Closing, to
carry on the business conducted by Seller prior to the Closing (other than
Seller's manufacturing and retail store operations). Schedule 2.17 sets forth
all material accounts receivable and inventories (other than those related to
Seller's manufacturing and retail stores) that are owned by Seller's
subsidiaries, if any (the "Subsidiary A/R and Inventory"). Buyer and Seller
acknowledge and agree that the Subsidiary A/R and Inventory is not a part of the
Purchased Assets.
2.18 Schedules. All of the information contained on the Schedules to this
Agreement with respect to the Purchased Assets and Assumed Contracts is
complete, accurate and correct in all material respects.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01 Organization and Standing. Buyer is a corporation validly existing and
in good standing under the laws of Delaware, and has all requisite corporate
power to enter into this Agreement, to perform its obligations hereunder, and to
carry out the transactions contemplated hereby. Buyer has the requisite
corporate power to carry on its business as it is now being conducted.
3.02 Authorization by Buyer. (a) the execution, delivery, and performance
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
of Buyer. This Agreement has been duly and validly executed and delivered by
Buyer and constitutes the legal, valid, and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium,
receivership or similar laws affecting or referring to the enforcement of
creditors' rights generally or by equitable principles (regardless of whether
enforcement is brought in a proceeding in equity or at law).
(b) Neither the execution and delivery of this Agreement and all other
agreements and documents to be executed or delivered hereunder, nor the
performance and fulfillment by Buyer of all its representations, warranties,
covenants and obligations hereunder, will (i) violate, or conflict with, any
provision of Buyer's Articles of Incorporation or By- Laws, (ii) violate, or
conflict with, or result in a breach of any provisions of, or constitute a
default under, or result in a breach of any provisions of, or constitute a
default under, or result in the termination of, or 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 or other instrument to which Buyers is a party
or by which its is bound,
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or (iii) violate, or conflict with, any order, writ, injunction, arbitral award,
judgment or decree of any court, governmental body or arbitrator applicable to
Buyer.
3.03 Available Funds. Upon satisfaction of all conditions to Buyer's
obligation to purchase the Purchased Assets, Buyer will have the funds necessary
to pay the Purchase Price.
3.04 HSR Matters. Buyer shall notify Seller within three days hereof as to
whether the transactions contemplated by this Agreement require the parties
hereto to file a Notification and Report Form pursuant to the HSR Act. In the
event that Buyer notifies Seller that no such filing is necessary, Buyer hereby
represents and warrants that as of the Closing Buyer (i) is its own "ultimate
parent entity," as such term is defined under the Premerger Notification Rules
(the "Rules") to the HSR Act and (ii) (x) had annual net sales of less than
$10,000,000 and (y) has less than $10,000,000 in total assets, each as
determined in accordance with Section 801.11 of the Rules to the HSR Act.
3.05 Litigation. There is no litigation pending (a) against Buyer in
connection with the conduct of its business which, if adversely determined,
would materially and adversely affect the business or financial condition of
Buyer or (b) which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated by this Agreement.
ARTICLE IV.
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
4.01 Cooperation. Subject to the terms and conditions herein provided,
Seller agrees to use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with Buyer in
connection with the foregoing, including using its reasonable best efforts (i)
to obtain all necessary waivers, consents and approvals from other parties to
any Assumed Contract and any other material agreements, leases and contracts
included in the Purchased Assets; (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
state or foreign law or regulations, including the Approval Order; (iii) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby (including, at Buyer's request, to defend any lawsuit brought against
Buyer that threatens to enjoin, restrain or adversely affect the ability of the
parties to consummate the transactions contemplated hereby); (iv) to effect all
necessary registrations, filings and submissions of information requested by
governmental authorities; (v) to fulfill all conditions to this Agreement; and
(vi) to provide Buyer promptly with all information and assistance with respect
to the foregoing and the Purchased Assets as Buyer may reasonably request, in
writing or otherwise. Without limiting the foregoing, on the Closing Date or as
promptly as reasonably practicable thereafter, Seller will execute and deliver
to Buyer all applications for transfer of trademark registrations and other
documents reasonably requested by Buyer to effectuate the unconditional transfer
of the Intellectual Property upon the Closing Date,
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free and clear of all Liens subject, in the case of the Intellectual Property,
to licenses granted pursuant to the agreements set forth on Schedule 2.04 to
this Agreement that may exist on the Closing Date, and will waive any other
right, title and interest of Seller in and to the Intellectual Property.
Effective upon the Closing Date, Seller will and does hereby grant to Buyer an
exclusive, irrevocable, worldwide, fully- paid, royalty-free right and license
to exercise all rights in and to the Intellectual Property to permit Buyer's
full enjoyment of its ownership rights during the period before Buyer becomes
the record owner, and while Seller is the record owner, of the applicable
Intellectual Property, which license shall be for the benefit of Buyer, its
licensees, successors and assigns. Upon the Closing Date, Seller shall execute
and deliver to Buyer such documents as Buyer may reasonably request to effect
the foregoing. Effective as of the Closing Date, Seller grants to Buyer an
irrevocable power of attorney, with full power of substitution, with respect to
the Intellectual Property. Upon the Closing Date, Seller agrees to execute in
favor of Buyer or its designee a specific irrevocable power of attorney with
full power of substitution, in form and substance satisfactory to Buyer, to
record the assignment of the Intellectual Property from Seller to Buyer. In
furtherance of the foregoing, to the extent that Seller is unable to transfer
right, title and interest in and to any Assumed Contract to Buyer on the Closing
Date, Seller agrees, to the extent permitted by law, to provide Buyer with the
benefits of any such Assumed Contract, provided, however, that Buyer agrees to
perform the Assumed Obligations, if any, in respect thereof and provided further
that the provision to Buyer of such benefits shall not relieve Seller of (i) its
obligations to obtain any required consents hereunder nor (ii) such consequences
as may be provided for hereunder for failure to obtain such consents.
4.02 Court Approval. (a) Prior to Closing, the sale of the Purchased Assets
to Buyer pursuant to this Agreement and the other transactions contemplated by
this Agreement shall have been approved by the Bankruptcy Court pursuant to
sections 105, 363, 365 and 1146(c) of the Bankruptcy Code, pursuant to an order
in substantially the form attached hereto as Exhibit D (with no modifications or
changes except those approved by Buyer and Seller, the "Approval Order"), and
the Approval Order shall have become a Final Order. Buyer and Seller agree to
use reasonable efforts to cause the Bankruptcy Court to enter the Approval
Order. Promptly following entry of the Approval Order, Seller shall serve such
entered Approval Order to all parties to the Assumed Contracts.
(b) For purposes of this Agreement, (i) a Final Order means an order or
a judgment entered by the Bankruptcy Court (x) that has not been reversed,
stayed, modified or amended, (y) as to which no appeal or petition for review or
motion for rehearing or reargument has been taken or has been made, and (z) as
to which the time for filing a notice of appeal, a petition for review or a
motion for reargument or rehearing has expired, (ii) "Liens" means all title
defects or objections, mortgages, deeds of trust, liens, claims, charges,
pledges, security interests, obligations, interests or other encumbrances of any
nature whatsoever, whether domestic or foreign; provided, however, that any
claims, credits, obligations, charges or similar rights of customers of Seller
that offset or reduce any Accounts Receivable relating to such customers shall
not constitute "Liens" on such Accounts Receivable.
(c) Seller shall cooperate reasonably with Buyer and its
representatives in connection with the Approval Order and the bankruptcy
proceedings in connection therewith.
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Seller further covenants and agrees that if the Approval Order is entered the
terms of any plan submitted by Seller to the Bankruptcy Court for confirmation
shall not conflict with, supersede, abrogate, nullify, modify or restrict the
terms of this Agreement and the rights of Buyer hereunder, or in any way prevent
or interfere with the consummation or performance of the transactions
contemplated by this Agreement including any transaction that is contemplated by
or approved pursuant to the Approval Order.
(d) If the Approval Order or any other orders of the Bankruptcy Court
relating to this Agreement shall be appealed by any Person (or a petition for
certiorari or motion for rehearing or reargument shall be filed with respect
thereto), Seller agrees to take all steps as may be reasonable and appropriate
to defend against such appeal, petition or motion, and Buyer agrees to cooperate
in such efforts, and each party hereto agrees to use its reasonable efforts to
obtain an expedited resolution of such appeal; provided, however, that nothing
herein shall preclude the parties hereto from consummating the transactions
contemplated herein if the Approval Order shall have been entered and has not
been stayed and Buyer, in its sole discretion, waives in writing the requirement
that the Approval Order be a Final Order.
4.03 Conduct of Business.
(a) Between the date hereof and the Closing Date, Seller will use its
commercially reasonable efforts to preserve, protect, and maintain the Purchased
Assets, and to operate its business in the same manner it currently operates.
Seller will not harm the Purchased Assets and will not take any action that will
materially adversely affect the Assumed Contracts. Seller shall (i) maintain the
Inventory in all material respects in the manner in which it has been maintained
during the fifteen- month period immediately prior to the date hereof and (ii)
comply in all material respects with all provisions of any Assumed Contract.
Without limiting the foregoing, Seller shall conduct its business diligently and
in the ordinary and normal course and consistent with past practice (including
using its commercially reasonable efforts to preserve beneficial relationships
with distributors, agents, lessors, suppliers and customers).
(b) Seller shall not engage in any transaction relating to the purchase
or sale of goods, inventories, capital expenditures, marketing programs or other
operating or production items or accounts receivable, from the date hereof until
the Closing other than: (i) transactions in the ordinary course of business or
(ii) transactions not objected to by Buyer. For the purposes of this Section
4.03, (A) any transaction involving the sale of excess, close-out or obsolete
goods in excess of $25,000, (B) any transaction involving the sale of goods at
or below cost (other than transactions involving the sale of excess, close-out
or obsolete goods of less than $25,000 in the aggregate) or (C) any commitment
or expenditure exceeding $25,000 (excluding payroll expenditures) shall be
deemed to be outside the ordinary course of business. Buyer shall communicate to
Seller the names of one or more representatives of Buyer who shall be
"Designated Representatives" and as such shall be authorized to object to
transactions outside the ordinary course of business. Seller shall notify the
Designated Representatives of each transaction outside the ordinary course of
business, and Buyer shall notify Seller of any objection to such transaction as
soon as reasonably practicable, but in no event more than two (2) business days
following receipt of notice of such proposed transaction. If Seller has not
received notice of
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an objection to any such transaction within such two (2) business day period,
Seller may assume Buyer does not object to such transaction.
(c) Without limiting the generality of the foregoing and except as
approved by Buyer or otherwise expressly provided in this Agreement, during the
period from the date hereof through the Closing Date, Seller shall not:
(i) sell, transfer, license or otherwise dispose of, or agree to
sell, transfer, license or otherwise dispose of, any Purchased Assets,
except in the ordinary and normal course of business consistent with
industry practice, including, without limitation, fulfilling customer
orders prior to normal shipment periods inconsistent with industry
practices (which industry practices shall include seasonality
requirements);
(ii) modify, waive or accelerate or delay collection of accounts
receivable in advance of or beyond their regular due dates or the
dates when the same would otherwise have been collected other than
with respect to accounts receivable not exceeding $5,000 and otherwise
in the ordinary course of business;
(iii) enter into any new agreements that would be included in
Assumed Contracts, or amend or alter in any material way any existing
Assumed Contracts;
(iv) take any action the taking of which, or omit to take any
action the omission of which, would cause any of the representations
and warranties contained in Article II to fail to be true and correct
in all material respects as of the Closing as though made at and as of
the Closing; or
(v) agree to do any of the foregoing.
4.04 Disclosure Supplements.
(a) From time to time prior to the Closing, Seller shall promptly
supplement or amend the disclosures contained in the Schedules or Exhibits with
respect to any matter: (i) which may arise hereafter and which, if existing or
occurring at or prior to the date hereof, would have been required to be set
forth or described therein; or (ii) which makes it necessary to correct any
information in the Schedules or Exhibits or in any representation and warranty
of Sellers which has been rendered inaccurate thereby. No supplement or
amendment to the Schedules or Exhibits or any delivery of Schedules after the
date hereof, unless expressly consented in writing by Buyer, shall be deemed to
cure any breach of any representation or warranty made in this Agreement, or
modify, affect or diminish Buyer's right to terminate this Agreement pursuant to
Section 8.01(c).
(b) During the period from the date hereof to the Closing, Seller shall
promptly: (i) furnish or make available to Buyer copies of all financial or
other reports relating to the Purchased Assets as soon as they become available,
all certified by a duly authorized officer of Seller that such financial
statements were generated in the ordinary course of business
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consistent with past accounting or past applicable operational reporting
practices; and (ii) notify Buyer of the occurrence of any event having a
Material Adverse Effect.
4.05 Closing. Seller shall use its reasonable best efforts to cause the
conditions set forth in Article VI to be satisfied by the Closing Date,
including undertaking such measures as may be appropriate, including written
notice letters, required to obtain the necessary consents.
4.06 Confidentiality. If the Closing does not occur, Seller will maintain
in confidence all information relating to Buyer furnished to it by Buyer, or any
agents of Buyer, including information concerning the businesses, financial
condition or stockholders of Buyer, and will not disclose such information to
others, or use such information for any purpose unless and until such
information is or becomes in the public domain by reason other than disclosure
by Seller, except as such information may be required to be disclosed by Seller
under applicable law or which has previously been made public. If this Agreement
is terminated, Seller shall return all confidential information received from
Buyer and all copies and summaries thereof.
4.07 Transitional Arrangements Agreement. At the Closing, Seller and Buyer
shall execute and deliver a Transitional Arrangements Agreement, in
substantially the form of Exhibit E hereto.
4.08 Further Assurances. At any time or from time to time after the Closing
Date, Seller shall execute and deliver any further instruments or documents, and
take all such further action as Buyer may request, including procuring assurance
and cooperation from Seller's officers and employees, in order to transfer to
and vest in Buyer all of Seller's right, title and interest in and to the
Purchased Assets, including using its best efforts, at Buyer's expense, to
assist and cooperate with Buyer in Buyer's preparation and filing of documents
relating to the transfer of the Intellectual Property. In the event that Seller
fails to promptly execute and deliver any such instruments or documents
reasonably requested by Buyer, Seller hereby irrevocably appoints Buyer as its
power-of-attorney, effective only upon the Closing, with full right of
substitution for the purpose of executing such documents. This power of attorney
shall be for the benefit of Buyer, its licensees, successors and assigns.
4.09 Inspection. For all periods prior to the Closing, Seller agrees to
grant Buyer full and complete access to all of its properties at any time and to
its customers, vendors and suppliers during normal business hours and upon
reasonable notice from Buyer and to cooperate with any request of Buyer to
permit Buyer to inspect or review any location owned or leased by Seller,
including the making available of such personnel of Seller as Buyer may
reasonably request. At Buyer's discretion, Buyer may arrange for its employees,
officers, accountants and attorneys to visit and inspect any such location and
to review any all documentation pertaining to the Purchased Assets. Without
limiting the foregoing, Seller agrees to make available to Buyer or its auditors
or attorneys, and to provide full and complete access to, for inspection and
copying, documentation relating to any of the following:
(a) All financial records for the last five years including accounts
receivable, accounts payable, capital spending, income statements, balance
sheets, accounting work papers,
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tax files, all agreements for the past three years with any financial
institution with whom Seller has had dealings;
(b) Employee records for the past three years of full and part-time
employees and contract employee, including salary information and employment
contracts and all agreements with outside organizations providing labor or
employment services to Seller; provided, however, that employee records shall in
no event include employee medical records or any other information reasonably
determined by Seller to be of a confidential nature;
(c) All records, including order and payment histories, of the
customers and vendors of Seller's subsidiaries and the names and contact numbers
of all managers and other employees of such subsidiaries;
(d) All Assumed Contracts, including purchase orders;
(e) Records of all transfers of Inventory and goods in connection with
the closing of Seller's manufacturing facilities and retail locations;
(f) all documentation pertaining to any investigation, institution,
settlement or agreement to settle any litigation, action or proceeding before
any governmental entity in connection with the businesses of Seller, including
under the Foreign Corrupt Practices Act, for five years prior to the Closing;
and
(g) reasonable access to employees for the purposes of conducting
interviews; provided, however, that Buyer shall give Seller reasonable advance
notice thereof to Buyer.
4.10 Maintain Insurance. Seller shall maintain insurance coverage
sufficient to protect its business and the Purchased Assets.
4.11 Maintenance of, and Access to, Records. After the Closing Date, Seller
shall provide Buyer with access (with an opportunity to make copies), during
normal business hours, and upon reasonable notice, to any records relating to
the Purchased Assets and Assumed Obligations. Seller shall preserve and maintain
any books and records relating to the Purchased Assets that are not otherwise
provided to Buyer for at least two years after the Closing Date.
4.12 Accounts Receivable. In the event that Seller receives any payment
relating to any Account Receivable outstanding on or after the Closing Date,
such payment shall be the property of Buyer. Seller will promptly endorse and
deliver to Buyer any cash, checks or other documents received by it on account
of any such Accounts Receivable. Seller shall advise Buyer (promptly following
its becoming aware thereof) of any counterclaims or set-offs that may arise
subsequent to the Closing Date with respect to any Account Receivable.
4.13 Consents. Following the Closing, Seller shall use its best efforts to
obtain all necessary consents of third parties to those contracts that but for
obtaining such consent would have been Assumed Contracts transferred to Buyer on
the Closing Date. Immediately after obtaining any required consents, Seller
agrees to take all necessary action to assign such
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contracts to Buyer, including the execution and delivery to Buyer of instruments
of assignment in form and substance reasonably satisfactory to Buyer and its
counsel.
4.14 Specific Enforcement of Covenants. Seller acknowledges that
irreparable damage would occur in the event that any of the covenants and
agreements of Seller set forth in Article IV of this Agreement were not timely
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Buyer shall be entitled to an injunction or
injunctions to prevent or cure any breach of such covenants and agreements of
Seller and to enforce specifically the terms and provisions thereof, this being
in addition to any other remedy to which it may be entitled at law or in equity
or under the terms of this Agreement.
4.15 Acquisition Proposals. Between the date hereof and the Closing, Seller
shall not, directly or indirectly, (a) take any action to solicit, initiate
submission of or knowingly encourage any Acquisition Proposal or (b) participate
in any substantive discussions or negotiations regarding an Acquisition Proposal
with anyone, except in the case of each of the foregoing for Acquisition
Proposals by or on behalf of Buyer or its affiliates. During such period, Seller
shall promptly notify Buyer upon receipt of any indication of interest or any
offer with respect to an Acquisition Proposal. For purposes hereof, an
"Acquisition Proposal" shall include any proposal for any acquisition or
purchase by anyone of all or a portion of the Purchased Assets or any equity
interest in Seller or any of its subsidiaries, of any merger or business
combination with, or any acquisition of, Seller or any of its subsidiaries. If,
after the entry of the Approval Order, Seller enters into a written agreement to
accept any Acquisition Proposal, Seller shall, in addition to returning Buyer's
Deposit (together with any interest), promptly reimburse Buyer for all of
Buyer's expenses incurred in connection with preparing its Bid, its
investigation of Seller and its negotiation and preparation of this Agreement,
including the fees and expenses of Buyer's attorneys, accountants and advisors,
such reimbursement being in addition to any other remedy to which Buyer may be
entitled at law or in equity or under the terms of this Agreement.
Notwithstanding anything herein to the contrary, until the Bankruptcy Court
enters the Approval Order Seller may (and may authorize and/or permit any of its
officers, directors, employees, attorneys, agents or representatives to) furnish
information with respect to Seller to any person or persons making an
unsolicited proposal or inquiry and shall notify Buyer in writing of any such
proposal or inquiry.
ARTICLE V.
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
5.01 Cooperation. Subject to the terms and conditions herein provided,
Buyer agrees to use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with Seller in
connection with the foregoing, including using its reasonable best efforts (i)
to obtain all necessary consents, approvals and authorizations as are required
to be obtained under any federal, state or foreign law or regulations required
to be obtained by Buyer; (ii) to lift or rescind
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any injunction or restraining order or other order adversely affecting the
ability of Buyer to consummate the transactions contemplated hereby; (iii) to
effect all necessary registrations, filings and submissions of information
requested of Buyer by governmental authorities; (iv) to fulfill all conditions
to this Agreement capable of being fulfilled by Buyer; and (v) to provide Seller
promptly with all information and assistance with respect to the foregoing,
including obtaining the Approval Order, as Seller may reasonably request, in
writing or otherwise.
5.02 Confidentiality. Buyer agrees that if the Closing does not occur, it
will maintain in confidence all information relating to Seller furnished to it
by Seller, or any agents of Seller, including information concerning Seller's
business, the Purchased Assets, the liabilities of Seller related to the
business and the financial condition of Seller, and will not disclose such
information to others, or use such information for any purpose unless and until
such information is in or enters the public domain by reason other than
disclosure by Buyer, except as such information may be required to be disclosed
by Buyer under applicable law. If this Agreement is terminated, Buyer shall
return all confidential information received from Seller and all copies and
summaries thereof.
5.03 Employees. Buyer may consider making an offer of employment to certain
current or former employees of Seller, upon such terms, and with compensation
and benefits as Buyer may determine in its sole discretion.
5.04 Shipped Inventory Matters. Set forth on Schedule 5.04 is a form of
letter sent to the Finished Goods Suppliers listed thereon requesting that such
Finished Goods Suppliers ship inventory to Seller without letters of credit to
secure the purchase of such inventory. Buyer hereby acknowledges such letters
and agrees to purchase such inventory from such Finished Goods Suppliers
following the Closing so long as such inventory conforms to the purchase orders
placed by Seller in respect thereof.
ARTICLE VI.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to purchase the Purchased Assets shall be subject
to the satisfaction on or prior to Closing of all of the following conditions:
6.01 Covenants. Seller shall have complied in all material respects with
all of its agreements and covenants contained herein to be performed at or prior
to Closing.
6.02 Representations and Warranties True. All representations and
warranties of Seller in this Agreement or in any Exhibit or Schedule delivered
pursuant to this Agreement shall be true, complete and correct on the Closing
Date, except for such failures to be true, complete and correct as would not,
individually or in the aggregate, have a Material Adverse Effect.
6.03 Delivery of Certificates. Buyer shall have received a certificate or
certificates, dated as of the Closing Date, executed by a duly authorized
executive of Seller certifying, without personal liability on the part of the
officer executing the same, in such detail as Buyer
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may reasonably request that the conditions specified in Sections 6.01 and 6.02
hereof have been fulfilled.
6.04 Instruments of Transfer. Buyer shall have received a ▇▇▇▇ of sale and
such other duly executed instruments of transfer, conveyance, and assignment,
duly executed by an authorized officer of Seller, in form and substance
reasonably satisfactory to Buyer and its counsel, as is necessary or desirable
to effect the transfers, conveyances, and assignments to Buyer of the Purchased
Assets as contemplated by this Agreement.
6.05 Consents. Except for consents identified on Schedules 2.03(f)(i) and
2.03(f)(ii), all requisite third party consents and estoppels shall have been
obtained and shall be in full force and effect except where the failure to have
obtained such consents or estoppels would not have a Material Adverse Effect.
For the purposes of this Section 6.05, the failure to obtain any consent or
estoppel related to Assumed Contracts which, individually or in the aggregate,
account for payments to Seller in excess of $500,000 per year, shall be deemed
to have a Material Adverse Effect.
6.06 Approval Order. The Approval Order shall have been entered by the
Bankruptcy Court.
6.07 HSR Waiting Period. The waiting period under the HSR Act shall have
expired or terminated, if applicable.
6.08 Injunction. No court or governmental body of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and (i)
restrains, enjoins or otherwise prohibits the consummation of the transaction
contemplated hereby or (ii) would materially adversely affect the value of the
Purchased Assets, and no governmental body shall have instituted any proceeding
therefor.
6.09 Material Adverse Change. Since February 1, 2001 there shall have
occurred no change, or discovery of a condition or occurrence of any event which
would reasonably be expected to result in a Material Adverse Effect.
6.10 Ancillary Agreements. Seller shall have executed and delivered the
Post Closing Escrow Agreement and the Transitional Arrangements Agreement.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Purchased Assets shall be subject to
the satisfaction on or prior to Closing of all of the following conditions:
7.01 Covenants of Buyer. Buyer shall have complied in all material respects
with all of its agreements and covenants contained herein to be performed at or
prior to Closing.
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7.02 Representations and Warranties True. All representations and
warranties of Buyer in this Agreement shall be true and correct on the Closing
Date.
7.03 Delivery of Certificates. Seller shall have received a certificate or
certificates, dated as of the Closing Date, executed by a duly authorized
executive of Buyer certifying, without personal liability on the part of the
officer executing the same, in such detail as Seller may reasonably request that
the conditions specified in Sections 7.01 and 7.02 hereof have been fulfilled.
7.04 Instruments of Assumption. Seller shall have received duly executed
instruments of assumption of the Assumed Obligations, duly executed by an
authorized officer of Buyer, in form and substance reasonably satisfactory to
Seller and its counsel, as is necessary or desirable to effect the assumption by
Buyer of the Assumed Contracts as contemplated by this Agreement.
7.05 Tender of Purchase Price. Buyer shall have tendered the Purchase
Price.
7.06 Approval Order. The Approval Order shall have been entered by the
Bankruptcy Court and shall have become a Final Order.
7.07 HSR Waiting Period. The waiting period under the HSR Act shall have
expired or terminated, if applicable.
7.08 Injunction. No court or governmental body of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits the consummation of the transaction contemplated
hereby, and no governmental body shall have instituted any proceeding therefor.
7.09 Further Action. All actions, consents, approvals (temporary or
permanent), authorizations, exemptions and waivers from third parties that shall
be required in order to enable Seller to consummate the transactions
contemplated hereby shall have been duly obtained, (except for such actions,
consents, approvals, authorizations, exemptions and waivers of non-governmental
third parties, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal).
7.10 Ancillary Agreements. Buyer shall have executed and delivered the Post
Closing Escrow Agreement and the Transitional Arrangements Agreement.
ARTICLE VIII.
TERMINATION PRIOR TO CLOSING
8.01 Termination. This Agreement may be terminated:
(a) By the mutual written consent of Buyer and Seller;
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(b) By either Buyer or Seller in writing, if the Closing does not occur
by April 30, 2001 provided that neither Buyer nor Seller may terminate this
Agreement pursuant to this clause (b) if the Closing shall not have been
consummated within such time period by reason of the failure of such party to
perform in all material respects any of its covenants or agreements contained in
this Agreement;
(c) By either Seller or Buyer in writing, without liability to the
terminating party (provided the terminating party is not otherwise in material
default or in breach of this Agreement) if there has been a material
misrepresentation or material breach of this Agreement by the other party which
is not cured within fifteen (15) days after such party has been notified in
writing of such breach and the intent to terminate this Agreement pursuant to
this clause 8.01(c); or
(d) By Buyer by not later than April 20, 2001 if the Bankruptcy Court
does not enter the Approval Order by April 13, 2001.
8.02 Effect on Obligations. Termination of this Agreement pursuant to this
Article shall terminate all obligations of the parties hereunder, except for
Seller's obligations under Section 4.06 and Buyer's obligations under Section
5.02 hereof, except that (a) in the event of a termination under Section 8.01(c)
by Seller, the Deposit shall be paid to Seller as liquidated damages, which
liquidated damages shall be the sole and exclusive remedy of Seller as a result
of such termination, or (b) in the event of a termination under Section 8.01(c)
by Buyer, Buyer shall retain all its rights in law and in equity; provided,
however, that Buyer hereby agrees that Seller shall have no liability to Buyer
in excess of $5,000,000 as a result of any termination of this Agreement. Buyer
acknowledges that the agreements contained in this Section 8.02 are an integral
part of the transactions contemplated by this Agreement and that, without these
agreements, Seller would not enter into this Agreement.
8.03 Return of Deposit to Buyer. Upon the termination by either party of
this Agreement pursuant to Section 8.01(a) or (b) or upon the termination by
Buyer of this Agreement pursuant to Section 8.01(c), the Escrow Agent shall pay
the Deposit (together with any earned interest) to Buyer.
ARTICLE IX.
INDEMNIFICATION
9.01 Survival.
The representations and warranties of Seller with respect to Sections 2.07
(Inventory) and 2.12 (Accounts Receivable) will survive the Closing and shall
expire 90 days after the Closing Date. The representations and warranties of
Seller with respect to Sections 2.03 (Assumed Contracts), 2.04 (Intellectual
Property), 2.05 (Title) and 2.13 (Software) shall survive for 6 months after
Closing. The representations and warranties of Buyer with respect to Section
3.04 (HSR Matters) shall survive for 6 months after Closing. No other
representations or warranties of Buyer or Seller shall survive Closing.
Following the Closing, the right to indemnification based on representations,
warranties, covenants and obligations in this Agreement as set forth in
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this Article IX shall be the sole remedy of the parties hereto and will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification based on such representations, warranties, covenants and
obligations.
9.02 Indemnification by Seller
From and after the Closing, Seller hereby agrees to indemnify, defend and
hold Buyer and its officers, directors, agents and employees (the "Buyer
Indemnified Parties"), harmless from, against and in respect of any and all
losses, claims, suits, actions, proceedings, awards, judgments, settlements,
fines, penalties, liabilities, obligations, damages, deficiencies, costs or
expenses (including reasonable expenses of investigation and attorneys' fees)
net of any insurance proceeds and tax benefits if, as and when received, in
either case to which such Buyer Indemnified Party is entitled by virtue of any
of the foregoing (collectively "Claims") arising out of or resulting from:
(i) any breach of a covenant or misrepresentation by Seller of a
representation or warranty which expressly survives Closing pursuant
to Section 9.1 hereof;
(ii) any liability for Taxes incurred on or before the Closing
Date;
(iii) the Excluded Assets; and
(iv) the Retained Liabilities.
9.03 Indemnification by Buyer
From and after the Closing, Buyer hereby agrees to indemnify, defend and
hold harmless Seller and its officers, directors, agents and employees (the
"Seller Indemnified Parties") from, against and in respect of any and all Claims
arising out of or resulting from (i) any breach of any warranty or
misrepresentation by Buyer or the breach or nonperformance of any covenant,
agreement or obligation to be performed on the part of Buyer under this
Agreement, or in any closing certificate contemplated hereby or in any Schedule
hereto, (ii) any Assumed Obligations and (iii) except for the Retained
Liabilities and the Excluded Assets, the use of the Purchased Assets after the
Closing Date.
9.04 Limitations
(a) Notwithstanding anything contained in this Agreement to the
contrary, neither party shall be liable for any amounts for which an Indemnified
Party (as defined below) is otherwise entitled to indemnification in connection
with the breach or inaccuracy of any representation or warranty or any breach of
any covenant contained herein until the aggregate
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amount for which such Indemnified Party is entitled to indemnification with
respect to all such Claims for indemnification in the aggregate exceeds One
Million Dollars ($1,000,000) (the "Threshold"), at which time such party shall
be liable for any such excess. In determining the foregoing Threshold and in
otherwise determining the amount to which the Indemnified Party is entitled to
assert a claim for indemnification pursuant to this Article IX, only actual
losses shall be considered. The Threshold shall not apply (i) with respect to
Buyer's claims hereunder, as to any Claims related to (A) the Excluded Assets,
(B) the Retained Liabilities or (C) any breach or inaccuracy of any
representation or warranty relating to Sections 2.07 (Inventory) and 2.12
(Accounts Receivable) and (ii) with respect to Seller's claims hereunder, as to
any Claims related to the payment of all amounts due to Seller pursuant to
Sections 1.05 (Payment of Purchase Price) and 1.05 (Post-Closing Adjustment).
The Threshold shall not apply as to any Claims arising from fraud committed by
the Indemnifying Party against the Indemnified Party with respect to the
transactions contemplated under this Agreement. The parties hereto waive as
against each other any claim to consequential, special, exemplary or punitive
damages except to the extent consequential, special, exemplary or punitive
damages are awarded to a third person against an Indemnified Party in
circumstances in which such Indemnified Party is entitled to indemnification
hereunder such consequential, special, exemplary or punitive damages so awarded
shall be payable to such Indemnified Party hereunder.
(b) Notwithstanding anything to the contrary contained in this Article
IX, the amount for which Buyer shall be entitled to, and Seller liable for,
indemnification hereunder shall not exceed the following: (i) the aggregate
amount recoverable from Seller for indemnification claims arising from the
representations and warranties of Seller with respect to Sections 2.07
(Inventory) and 2.12 (Accounts Receivable) shall not exceed the excess of
$25,000,000 over the Downward Adjustment Amount and (ii) the aggregate amount
recoverable from Seller for indemnification claims arising from the breach of
any covenant by Seller or the representations and warranties of Seller with
respect to Sections 2.03 (Assumed Contracts), 2.04 (Intellectual Property), 2.05
(Title) and 2.13 (Software) shall not exceed $5,000,000. Indemnification claims
arising from the representations and warranties of Seller with respect to
Sections 2.07 (Inventory) and 2.12 (Accounts Receivable) shall be satisfied
first from the Accounts Receivable/Inventory Holdback Amount and, to the extent
the Accounts Receivable/Inventory Holdback Amount is insufficient to cover any
such claims (subject to the maximum allowable amounts set forth in the preceding
sentence), Seller agrees to satisfy any such claims. Indemnification claims
arising from the representations and warranties of Seller with respect to
Sections 2.03 (Assumed Contracts) and 2.04 (Intellectual Property), 2.05 (Title)
and 2.13 (Software) shall be satisfied solely from the Escrow Amount. Seller and
Buyer agree that under no circumstances shall the Escrow Agent release any of
the Escrow Amount to Buyer to satisfy any amounts owed to Buyer in respect of
any indemnification claims arising from the representations and warranties of
Seller with respect to Sections 2.07 (Inventory) and 2.12 (Accounts Receivable).
Notwithstanding the foregoing, if Seller has not paid any amounts due to Buyer
on account of an undisputed Downward Adjustment Amount pursuant to Section 1.05
hereof, Seller agrees to use any funds remaining in the Escrow Amount
immediately prior to its release to Seller, towards the satisfaction of each
unpaid Downward Adjustment.
(c) The obligation of Seller to indemnify Buyer in connection with the
representations and warranties of Seller contained in Sections 2.07 (Inventory)
and 2.12
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(Accounts Receivable) shall terminate on the later of (i) ninety (90) days
following the Closing or (ii) fifteen (15) days following the resolution of any
dispute relating to the Audit. The obligation of Seller to indemnify Buyer in
connection with the representations and warranties of Seller contained in
Sections 2.03 (Assumed Contracts), 2.04 (Intellectual Property), 2.05 (Title)
and 2.13 (Software) shall terminate 6 months after the Closing Date.
Notwithstanding the foregoing, the respective indemnification obligations of the
parties hereunder shall not expire with respect to any Claim brought within such
specified time periods until the indemnification obligation, if any, with
respect to such Claim shall have been finally determined and paid.
9.05 Indemnification Procedure
In any case under this Agreement where Seller has indemnified a Buyer
Indemnified Party or Buyer has indemnified a Seller Indemnified Party (the
indemnifying party hereinafter the "Indemnifying Party" and the party entitled
to indemnification hereinafter the "Indemnified Party") against any Claim,
indemnification shall be conditioned on compliance with the procedure and shall
be subject to the limitations outlined below:
(a) Provided that prompt notice is given of a Claim for which
indemnification might be claimed under this Article IX, unless the failure to
provide such notice does not actually and materially prejudice the interests of
the Indemnifying Party, the Indemnifying Party promptly will defend, contest, or
otherwise protect against any such Claim at its own cost and expense. Such
notice shall describe the Claim in reasonable detail and shall indicate the
amount (estimated, if necessary) of the loss that has been or may be suffered by
an Indemnified Party.
(b) An Indemnified Party may, but will not be obligated to, participate
at its own expense in a defense thereof by counsel of its own choosing, but the
Indemnifying Party shall be entitled to control the defense unless such
Indemnified Party has relieved the Indemnifying Party from liability with
respect to the particular matter, provided that the Indemnifying Party may only
settle or compromise the matter subject to indemnification without the consent
of the Indemnified Party if such settlement includes a complete release of all
Indemnified Parties as to the matters in dispute and provided further that such
Indemnified Party will not unreasonably withhold consent to any settlement or
compromise that requires its consent.
(c) In the event the Indemnifying Party fails to timely defend,
contest, or otherwise protect against any such Claim, an Indemnified Party may,
but will not be obligated to, defend, contest, or otherwise protect against the
same, and make any reasonable compromise or settlement thereof and recover
(subject to the limitations set forth in Section 9.04) the entire costs thereof
from the Indemnifying Party, including reasonable attorneys' fees, disbursements
and all amounts paid as a result of such Claim or the compromise or settlement
thereof; provided, however, that (i) an Indemnified Party may only settle or
compromise the matter subject to indemnification without the consent of the
Indemnifying Party if such settlement includes a complete release of the
Indemnifying Party as to the matters in dispute and provided further that the
Indemnifying Party will not unreasonably withhold consent to any settlement or
compromise that requires its consent and (ii) if the Indemnifying Party
subsequently undertakes the defense of such matter, an Indemnified Party shall
be entitled to recover from the Indemnifying Party only
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those costs incurred in the defense prior to such time the Indemnifying Party
undertakes the defense of such matter together with the reasonable costs of
providing assistance.
(d) The Indemnified Parties shall cooperate and provide such assistance
as the Indemnifying Party may reasonably request in connection with the defense
of the matter subject to indemnification and in connection with recovering from
any third parties amounts that the Indemnifying Party may pay or be required to
pay by way of indemnification hereunder. The Indemnified Parties shall take
commercially reasonable steps to protect its position with respect to any matter
that may be the subject of indemnification hereunder in the same manner as it
would any similar matter where no indemnification is available.
ARTICLE X.
MISCELLANEOUS
10.01 Entire Agreement. This Agreement (including the attached Schedules)
constitutes the sole understanding of the parties with respect to the subject
matter hereof. Matters disclosed by Seller to Buyer pursuant to any Article of
this Agreement shall be deemed to be disclosed with respect to all Articles of
this Agreement. No amendment, modification, or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
10.02 Use of Names. Effective upon the Closing, Seller shall have no right
to use the "Converse" name and any of the Trademarks and other Intellectual
Property acquired by Buyer and Seller shall take all necessary and appropriate
steps to avoid the use of such names or variants thereof; provided, however,
that (a) Seller shall have the right to use the name "Converse" in connection
with the Bankruptcy Case and (b) Buyer grants Seller the limited right, for a
period not to exceed 120 days after the Closing, to use the name "Converse" or
variants thereof in connection with the orderly sale of its remaining assets, so
long as such use does not interfere with the operation of Buyer's business and
its use of the Purchased Assets. At any time following the Closing when Seller
has any rights to use the name "Converse" pursuant to the proviso contained in
the foregoing sentence, Seller agrees to take necessary steps to avoid any
confusion over the ownership of the "Converse" name. Subject to the foregoing,
at the Closing, Seller shall take all actions necessary to (i) change its name
in accordance with this paragraph, and (ii) execute such documents as are
necessary to permit Buyer to utilize the "Converse" name in its corporate name.
10.03 Successors and Assigns. This Agreement may not be assigned by either
Buyer or Seller without the prior written consent of the other party hereto, and
any such assignment contrary to the terms hereof shall be null and void and of
no force or effect. If this Agreement is assigned with such consent, the terms
and conditions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective assigns. Notwithstanding the provisions
of this Section 10.03, Buyer may assign its rights and obligations under this
Agreement to any subsidiary of Buyer, without the prior written consent of
Seller provided that Buyer shall remain obligated to pay the Purchase Price.
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10.04 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes by deemed to be an original
and all of which shall constitute the same instrument.
10.05 Headings, Interpretation. The headings of the Articles and paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof. For
purposes of this Agreement, the words "include", "includes" or "including" shall
be deemed to incorporate and be followed by the phrase "without limitation."
10.06 Modification and Waiver. At any time prior to the Closing Date, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall only be valid if set forth in an
instrument in writing signed on behalf of such party.
10.07 Expenses, etc. Except as specifically provided herein, each of Seller
and Buyer shall pay all costs and expenses incurred by it or on its behalf in
connection with this Agreement and the transactions contemplated hereby,
including, without limiting the generality of the foregoing, fees and expenses
of its own consultants, accountants, and counsel. Each party shall bear the
expenses of any finder, broker, agent or other intermediary who may have acted
for or on behalf of Buyer or Seller in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
10.08 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by hand, transmitted via
facsimile or sent via nationally recognized overnight courier (receipt
confirmed) addressed
IF TO SELLER TO:
Converse Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇/7579
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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IF TO BUYER TO:
▇/▇ ▇▇▇-▇-▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice which is delivered in the manner provided herein shall be deemed to
have been duly given to the party to whom it is directed upon actual receipt by
such party (or its agent for notices hereunder) or at such time as delivery is
refused by the addressee upon presentation.
10.09 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York without reference to its
conflicts of laws principles.
10.10 Announcements. From the date hereof until the Closing Date, Seller
and Buyer shall afford each other the opportunity to review in advance any
public announcements, including those to either party's employees, of the
transaction contemplated by this Agreement. For all periods prior to Closing, no
public announcement shall be made without such prior review and the consent of
the other party to the form of the public announcement, such consent not to be
unreasonably withheld. However, prior review and consent of the other party
shall not be required with respect to any legally required communication either
to a party's employees or otherwise.
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10.11 Compliance with Bulk Sales Laws. Buyer and Seller hereby waive
compliance by Buyer and Seller with the bulk sales law and any other similar
laws in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.
10.12 Binding Nature of Agreement. This Agreement shall not be binding on
Seller unless and until the Approval Order is entered.
10.13 Seller's Knowledge. As used in this Agreement, the term "Seller's
knowledge" refers to the actual knowledge of ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
CONVERSE INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive Officer
FOOTWEAR ACQUISITION, INC.
By: /s/ Marsden ▇. ▇▇▇▇▇
--------------------------
Name: Marsden ▇. ▇▇▇▇▇
Title: President
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