ASSET PURCHASE AGREEMENT
BY AND AMONG
THE TJX COMPANIES, INC.,
▇▇▇▇▇▇▇▇'▇, INC.,
AND
BRYLANE, L.P.
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AS OF OCTOBER 18, 1996
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TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.....................................................1
1.1. Transfer of Assets..............................................................................1
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1.2. Assumption of Liabilities.......................................................................2
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1.3. The Closing.....................................................................................2
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1.4. Estimated Purchase Price; Purchase Price........................................................3
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1.5. Purchase Price Allocations and Tax Adjustment...................................................5
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2. REPRESENTATIONS AND WARRANTIES OF TJX AND SELLER..............................................................7
2.1. Organization; Capitalization....................................................................7
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2.2. Authorization; No Violation.....................................................................8
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2.3. Financial Statements; Absence of Undisclosed Liabilities.......................................10
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2.4. Title to Assets................................................................................10
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2.5. Tax Matters....................................................................................11
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2.6. Contracts......................................................................................12
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2.7. Compliance with Laws...........................................................................14
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2.8. Employee Relations.............................................................................14
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2.9. Absence of Certain Changes or Events...........................................................14
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2.10. Trade Names and Other Intangible Property......................................................17
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2.11. Employee Benefit Plans.........................................................................17
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2.12. Transactions with Affiliates...................................................................18
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2.13. Insurance......................................................................................19
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2.14. Litigation.....................................................................................19
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2.15. Regulatory Approvals...........................................................................19
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2.16. Environmental Matters..........................................................................19
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2.17. Inventory......................................................................................20
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2.18. Accounts Receivable............................................................................20
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2.19. Disclosure.....................................................................................20
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2.20. Investment Intent, Related Matters.............................................................20
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3. REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................21
3.1. Organization...................................................................................21
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3.2. Authorization; No Violation....................................................................21
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3.3. Regulatory Approvals...........................................................................21
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3.4. Litigation.....................................................................................22
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3.5. Financial Statements...........................................................................22
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3.6. Absence of Certain Changes.....................................................................22
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3.7. Financing......................................................................................22
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3.8. Partnership Documents..........................................................................23
3.9. Disclosure.....................................................................................23
4. ACCESS TO INFORMATION, ETC.; PUBLIC ANNOUNCEMENTS............................................................23
4.1. Access to Information, Etc.....................................................................23
4.2. Public Announcements...........................................................................23
5. COVENANTS OF THE PARTIES.....................................................................................23
5.1. Conduct of Business............................................................................23
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5.2. Compliance with Laws...........................................................................25
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5.3. Continuing Obligation to Inform................................................................25
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5.4. Union Agreement...............................................................................26
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5.5. Customer Lists.................................................................................27
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5.6. TJX D&B Guarantee..............................................................................28
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5.7. Non-Competition................................................................................28
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5.8. Creation by Seller of the Trade Name Sub.......................................................29
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5.9. Reimbursement by the Parties...................................................................29
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5.10. Efforts to Obtain Satisfaction of Conditions...................................................29
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5.11. Acquisition Proposals..........................................................................29
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5.12. Certain Employment and Employee Benefit Matters................................................30
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5.13. Bulk Transfers.................................................................................33
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5.14. Consents to Assignment.........................................................................33
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5.15. Sharing of Data................................................................................33
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5.16. Use of Name....................................................................................34
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5.17. Certain Matters Pertaining to Taxes............................................................35
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5.18. Further Assurances.............................................................................36
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5.19. Title Matters..................................................................................36
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5.20. Environmental Investigations...................................................................37
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5.21. Deferred Payment Receivables...................................................................38
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6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.....................................................................39
6.1. Governmental Approvals.........................................................................39
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6.2. Adverse Proceedings............................................................................39
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6.3. Transaction Agreements.........................................................................39
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6.4. Assumed Union Agreement........................................................................40
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7. CONDITIONS TO OBLIGATIONS OF BUYER...........................................................................40
7.1. Continued Truth of Representations and Warranties of TJX and Seller;
Compliance with Covenants and Obligations......................................................40
7.2. Opinions of Counsel............................................................................40
7.3. Closing Deliveries.............................................................................40
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7.4. CDM Agreement..................................................................................41
7.5. Material Adverse Change........................................................................41
8. CONDITIONS TO OBLIGATIONS OF SELLER..........................................................................41
8.1. Continued Truth of Representations and Warranties of Buyer; Compliance with
Covenants and Obligations......................................................................42
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8.2. Opinion of Counsel.............................................................................42
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8.3. Closing Deliveries.............................................................................42
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8.4. Assumption Documents...........................................................................42
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8.5. CDM Agreement..................................................................................43
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8.6. Material Adverse Charge........................................................................43
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9. INDEMNIFICATION..............................................................................................43
9.1. Indemnification by TJX and Seller..............................................................43
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9.2. Indemnification by Buyer. ....................................................................43
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9.3. Termination of Indemnification.................................................................44
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9.4. Claims for Indemnification.....................................................................44
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9.5. Defense by Indemnifying Party..................................................................45
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9.6. Exclusive Remedy...............................................................................45
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10. TERMINATION OF AGREEMENT....................................................................................45
10.1. Termination by Agreement of the Parties or by Passage of Time..................................45
10.2. Termination by Reason of Breach................................................................46
11. BROKERS.....................................................................................................46
11.1. For TJX and Seller.............................................................................46
11.2. For Buyer......................................................................................47
12. DEFINED TERMS...............................................................................................47
13. NOTICES.....................................................................................................54
14. SUCCESSORS AND ASSIGNS......................................................................................55
15. ENTIRE AGREEMENT; ATTACHMENTS...............................................................................55
16. EXPENSES....................................................................................................56
17. GOVERNING LAW...............................................................................................56
18. WAIVER OF JURY TRIAL........................................................................................56
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19. SECTION HEADINGS............................................................................................56
20. KNOWLEDGE...................................................................................................56
21. SEVERABILITY................................................................................................57
22. NO IMPLIED RIGHTS...........................................................................................57
23. TRANSFER OF RIGHTS OF BUYER TO ONE OR MORE AFFILIATES; PLEDGE TO FINANCING
PARTIES.................................................................................................57
24. COUNTERPARTS................................................................................................57
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EXHIBITS AND SCHEDULES
EXHIBITS
6.3A Form of Services Agreement
6.3B Forms of Trademark Agreements
6.3C Form of New York City Buying Office Letter
6.3D Form of Inventory Purchase Agreement
12.4 Terms of Buyer Note
SCHEDULES
1.4A Procedures for Preparing the Coopers Report
1.4B Form of Seller Net Assets Statement
1.4C Form of Purchase Price Calculation
2.2 Conflicts
2.3 Liabilities
2.4 Real Property; Title to Assets
2.5 Tax Matters
2.6 Contractual Obligations
2.7 Compliance with Laws
2.8 Employee Relations
2.9 Certain Changes or Events
2.10 Trade Names and Other Intangible Property
2.11 Employee Benefit Plans
2.12 Transactions with Affiliates
2.13 Insurance Policies
2.14 Notices, Claims and Litigation
2.16 Environmental Matters
2.17 Inventory
3.5 Buyer's Financial Statements
5.1 Conduct of Business
5.4 Union Agreement Amendment
5.7 Schedule of Recent Leases
5.12 Severance Plan
12.10 Other Excluded Assets
12.11 Other Excluded Liabilities
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ASSET PURCHASE AGREEMENT
Agreement made as of the 18th day of October, 1996 by and among THE TJX
COMPANIES, INC., a Delaware corporation ("TJX"), ▇▇▇▇▇▇▇▇'▇, INC., a
Massachusetts corporation and a wholly-owned Subsidiary of TJX ("▇▇▇▇▇▇▇▇'▇" or
the "Seller"), and Brylane, L.P., a limited partnership organized under the laws
of the state of Delaware ("Buyer"). Terms defined herein are used in the
attached Schedules and Exhibits as so defined unless otherwise defined therein.
WHEREAS, ▇▇▇▇▇▇▇▇'▇ operates the catalog division of TJX doing business
under the name "▇▇▇▇▇▇▇▇'▇ of Boston";
WHEREAS, CDM Corp., a Nevada corporation ("CDM" and collectively with
▇▇▇▇▇▇▇▇'▇ and the Trade Name Sub referred to below, the "Division"), is a
wholly-owned subsidiary of Seller and holds rights to certain trademarks,
tradenames and other intellectual property;
WHEREAS, prior to the Closing, TJX shall establish a new wholly-owned
subsidiary incorporated in the State of Delaware (the "Trade Name Sub") and
shall transfer and license certain trademarks to the Trade Name Sub, and the
shares of the Trade Name Sub shall be included in the Purchased Assets; and
WHEREAS, Buyer desires to purchase or receive an assignment from
Seller, and Seller desires to sell or assign to Buyer, the business of the
Division as presently conducted (the "Business"), except for the Excluded Assets
and the assets and liabilities of CDM which are being separately purchased and
assumed by Buyer pursuant to an Asset Purchase Agreement dated the date hereof
between CDM and Buyer (the "CDM Agreement") and except as provided in any
Transaction Agreement, through the purchase or assignment of the Purchased
Assets (as hereinafter defined) and the assumption of the Assumed Liabilities
(as hereinafter defined) under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.
1.1. Transfer of Assets. Except as otherwise set forth herein and
subject to the terms and conditions of this Agreement, and on the basis of the
representations, warranties and covenants set forth herein, as of Closing,
Seller will sell, convey, transfer, assign, and deliver to Buyer, and Buyer will
purchase from Seller, the Purchased Assets.
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1.2. Assumption of Liabilities. Subject to the conditions set forth
herein, as of the Closing, Buyer will assume and agree thereafter to pay, fully
satisfy when due and fully perform when required, all of the liabilities and
obligations of Seller, TJX and TJX affiliates (other than CDM), whether
occurring prior to, at or following the Closing, and, whether primary or
secondary, direct or indirect, absolute or contingent, primarily arising out of
or primarily relating to the Business or the Purchased Assets, except the
Excluded Liabilities (such liabilities and obligations being assumed hereunder
being referred to herein as the "Assumed Liabilities").
Buyer's obligations under this Agreement and the other Transaction
Agreements will not be subject to offset or reduction by reason of any actual or
alleged breach of any representation, warranty or covenant contained in this
Agreement or any other Transaction Agreement or any right or alleged right to
indemnification hereunder or thereunder. Seller's obligation under this
Agreement and the other Transaction Agreements shall not be subject to offset or
reduction by reason of any actual or alleged breach of any representations,
warranty or covenant contained in this Agreement or any other Transaction
Agreement or any right or alleged right to indemnification hereunder or
thereunder.
1.3. The Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 10, and subject to the satisfaction or waiver of the conditions set
forth in Sections 6, 7 and 8, the closing of the transactions contemplated
herein and under the Transaction Agreements shall take place at 10:00 a.m.
Boston time on the first Monday following the satisfaction or waiver of all of
the conditions required to be satisfied at or prior to the Closing (except that
if such conditions are satisfied or waived prior to December 2, 1996, such
conditions shall not for this purpose be deemed to be satisfied or waived until
the earlier of December 2, 1996 and the execution of definitive financing
documents pursuant to the Financing Commitments (as defined in Section 3.7)),
which Monday is at least three business days after such satisfaction or waiver,
at the offices of Ropes & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
unless another date, time or place is agreed to in writing by the parties
hereto, but in no event later than December 23, 1996, provided that such date
may be deferred to a date no later than January 27, 1997 that is the first
Monday that is at least three business days after the expiration or termination
of any waiting periods under the HSR Act, if applicable, and provided further
that if TJX or Seller shall deliver supplemental information to Buyer pursuant
to Section 5.3, then such closing date shall be the later of (a) the date
determined pursuant to the foregoing provisions of this sentence and (b) the
first Monday that is at least five days after the date on which such
supplemental information was delivered to Buyer (such date being referred to as
the "Delivery Date"). At such closing, Seller shall deliver to Buyer those
documents specified in Sections 7.3 and 7.4 hereof, against payment of the
Estimated Cash Purchase Price (as defined in Section 1.4) to Seller by wire
transfer in immediately available funds and delivery of the Buyer Notes to
Seller. Notwithstanding the foregoing, upon the Delivery Date, the closing shall
be deemed to occur at midnight on the Saturday preceding the Delivery Date,
which time is herein referred to as the "Closing" for all purposes, including
the
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allocation or assumption of assets, benefits and liabilities to be purchased,
transferred or assumed hereunder and the status of employees as employees of
Seller or Buyer hereunder; provided, however, that solely for the purpose of
determining whether the conditions set forth in Sections 6, 7 and 8 have been
fulfilled, the Closing shall be deemed to be the Monday referred to above.
1.4. Estimated Purchase Price; Purchase Price. At the closing referred
to above, (i) Buyer shall pay to Seller $192,100,000 plus interest thereon at
the Base Rate from the Closing to the date of payment of the foregoing amount
(the "Estimated Cash Purchase Price") and (ii) Buyer shall issue and deliver to
Seller the Buyer Notes. The Estimated Cash Purchase Price (but not the Buyer
Notes) shall be subject to post-closing adjustment as provided below. The
Estimated Cash Purchase Price as so adjusted is herein referred to as the "Cash
Purchase Price."
(a) As promptly as possible following the Closing, Seller
shall cause to be prepared an unaudited consolidated balance sheet of
the Division as of the time immediately prior to the Closing (the
"Closing Balance Sheet") in accordance with generally accepted
accounting principles applied consistently with Seller's past practices
used in the preparation of the Financial Statements (as defined in
Section 2.3(a)). Buyer shall provide Seller with access to records and
transferred employees of the Division, and shall otherwise cooperate
with Seller, to facilitate the preparation of the Closing Balance
Sheet.
As promptly as possible following the receipt of the Closing
Balance Sheet, Coopers and ▇▇▇▇▇▇▇ L.L.P. ("Coopers") shall perform
certain procedures as set forth in Schedule 1.4A in connection with the
elements, accounts or items of the Closing Balance Sheet that are to be
included in the Seller Net Assets for the purposes of issuing a report
(the "Coopers Report") thereon detailing the results of such procedures
as applied by Coopers in accordance with standards established by the
American Institute of Certified Public Accountants. Prior to the
issuance by Coopers of the Coopers Report, representatives of Seller
and Buyer shall have the opportunity to review ▇▇▇▇▇▇'▇ work papers.
Such preparation of the Seller Net Assets Statement and the Coopers
Report shall be conducted under the supervision of the Coopers partner
in charge of the account of Seller with consultation and review by the
Coopers partner in charge of the account of Buyer.
As promptly as possible following the receipt of the Closing
Balance Sheet, Coopers shall prepare and deliver a Seller Net Assets
Statement in substantially the form of Schedule 1.4B, prepared in
accordance with the procedures specified therein, and a calculation of
the Cash Purchase Price in substantially the form of Schedule 1.4C.
Assets and liabilities on the Seller Net Assets Statement will be equal
to such items in the Closing Balance Sheet except as otherwise
specified in Schedule 1.4B. The Seller Net Assets Statement will
exclude Excluded Assets and Excluded Liabilities.
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The "Seller Net Assets" shall mean the net asset figure appearing on
the Seller Net Assets Statement.
Coopers shall furnish the Seller Net Assets Statement and the
Coopers Report to Seller and Buyer within 45 days following the Closing
or as soon thereafter as practicable. Buyer and Seller shall cooperate
fully with Coopers in facilitating the issuance of such Coopers Report.
(b) If Buyer disagrees with the Seller Net Assets Statement
furnished in accordance with Section 1.4(a) or the calculation of the
final Cash Purchase Price, Buyer shall, within 30 days after receipt
thereof, respectively, furnish to Seller and Coopers a written
statement of such disagreement, together with an explanation of the
reasons therefor. If Buyer does not furnish such a statement within
such period, the amount of the Seller Net Assets set forth on the
Seller Net Assets Statement and the amount of the Cash Purchase Price
derived therefrom shall be binding and conclusive on all parties
hereto. If Buyer does furnish such a statement to Seller within such
period, the parties hereto shall first use commercially reasonable
efforts to resolve such disagreement among themselves. If the parties
are unable to resolve the dispute within 20 days after delivery of such
notification, the dispute shall be submitted promptly to Deloitte &
Touche, or if such firm declines to serve, then to KPMG Peat Marwick,
LLP (such firm being herein referred to as the "Alternative
Accountants"), for resolution within 30 days after submission. The
determination of the Alternative Accountants as to the resolution of
any such dispute shall be binding and conclusive upon all parties
hereto.
(c) If the amount of the Seller Net Assets as set forth on the
Seller Net Assets Statement is: (i) less than $108,982,000, then the
Cash Purchase Price shall be the Estimated Cash Purchase Price minus
the amount by which the Seller Net Assets are less than $108,982,000;
(ii) greater than $108,982,000, then the Cash Purchase Price shall be
the Estimated Cash Purchase Price plus the amount by which the Seller
Net Assets are greater than $108,982,000; or (iii) $108,982,000, then
the Cash Purchase Price shall be the Estimated Cash Purchase Price.
(d) If, pursuant to Section 1.4(c), the Cash Purchase Price is
greater than or less than the Estimated Cash Purchase Price, the
difference, together with interest thereon at the base lending rate as
announced by The First National Bank of Boston at its headquarters and
in effect from time to time (the "Base Rate"), calculated daily, from
the date of the Closing to the payment of such difference, shall be
paid by Buyer to Seller or by Seller to Buyer, as the case may be,
within five days after the later of (i) delivery of the Seller Net
Assets Statement, including the calculation of the Cash Purchase Price
appended thereto, or (ii) the earlier of the resolution of any dispute
by Buyer and Seller following notification of their disagreement or a
determination by the Alternative Accountants pursuant to paragraph (b)
above. Any such amount shall be
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paid by cashier's or certified check or by wire transfer of immediately
available funds to an account designated by Seller or Buyer, as
applicable.
(e) The fees and expenses of Coopers in preparing the original
Closing Balance Sheet and the original Seller Net Assets Statement
shall be shared equally by Seller and Buyer, except that each party
will bear all expenses for any special work performed at its request.
The fees and expenses of the Alternative Accountants in connection with
the resolution of disputes pursuant to paragraph (b) above shall be
shared equally by Seller and Buyer.
1.5. Purchase Price Allocations and Tax Adjustment.
(a) Allocation. Buyer and Seller agree to allocate the
aggregate of the Cash Purchase Price, the principal amount of the Buyer
Notes and the amount of Assumed Liabilities among the Purchased Assets
for all purposes (including financial accounting and Tax reporting
purposes) by allocating the aggregate sum as follows:
(i) first, to all tangible assets among the Purchased
Assets in proportion to, but not in an amount in excess of,
the fair market value of such tangible assets, as determined
by the certified public accountants of Buyer (which
accountants shall be reasonably acceptable to Seller) in
connection with the preparation of the balance sheet of Buyer
immediately after Closing; and
(ii) second, any residual amount shall be allocated
to goodwill of the Business and any other intangible assets
among the Purchased Assets, as determined by the certified
public accountants of Buyer.
Buyer's certified public accountants shall prepare Form 8594 (or any successor
Form) for federal Income Tax purposes and any similar Form for state Income Tax
purposes in accordance with these values, and Buyer and Seller each agree to
file such Form(s) with their respective Income Tax Returns.
(b) Tax Adjustment. Seller shall provide Buyer with an
estimated statement of the tax basis of the Purchased Assets prepared
in accordance with past practice and applicable federal income tax
principles simultaneously with the delivery of the Net Asset Statement.
Within 30 days of receiving Seller's statement, Buyer shall provide
Seller a statement relating to the allocation of the Purchase Price in
accordance with Section 1.5(a) (the "Allocated Purchase Price").
Coopers shall determine the amount by which the Allocated Purchase
Price for the Purchased Assets other than goodwill (or any other
capital asset described in Section 1221 of the Code or any asset the
disposition of which
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hereunder is taxable as a capital gain) exceeds Seller's basis in such
assets for federal income tax purposes. Such excess multiplied by 35
percent is herein referred to as the "Net Federal Payment", which shall
be "grossed up" in the manner set forth below to determine the Tax
Adjustment. Coopers shall also calculate the Tax Adjustment due from
Buyer to Seller (with any dispute resolved in the manner set forth
below), and an appropriate installment of the Tax Adjustment shall be
paid by Buyer to Seller at least two business days before Seller pays
the corresponding portion of the Net Federal Payment to the Internal
Revenue Service with respect to Seller's estimated or final tax
liability for Seller's fiscal year ending January, 1997. All
calculations shall be based on the assumption that Seller elected not
to use the installment method of reporting income from the transaction.
The "Tax Adjustment" shall be the aggregate amount which, after
deduction of all net Taxes required to be paid by Seller (determined by
assuming that Seller is not subject to Federal income taxation on
capital gains realized in its taxable years ending in January of 1997
and January of 1998) with respect to the receipt thereof, is equal to
the Net Federal Payment. If, prior to the filing of Seller's federal
Income Tax Return for the year ending January, 1997, either Seller or
Buyer shall determine that corrections or other adjustments are
required in either the Net Federal Payment, the allocation of the
Purchase Price pursuant to Section 1.5(a) or the Tax Adjustment, either
party may require a redetermination of the Tax Adjustment and if the
redetermined Tax Adjustment is greater than the sum of the previous
payments from Buyer to Seller, Buyer shall pay to Seller the amount by
which the Tax Adjustment exceeds such prior payments or, if the sum of
the previous payments from Buyer to Seller is greater than the
redetermined Tax Adjustment, Seller shall refund to Buyer the amount by
which such prior payments exceed the Tax Adjustment as redetermined. In
the event that the Internal Revenue Service shall thereafter propose an
adjustment in connection with the examination of Seller's federal
Income Tax Return on the ground that the allocation of the Purchase
Price in accordance with the provisions of Section 1.5(a)(i) was
incorrect, Seller shall notify Buyer of such proposed adjustment and
shall permit Buyer, through its counsel, a reasonable opportunity to
participate in any administrative protest of such proposed adjustment
and, provided Buyer acknowledges its responsibility pay the Additional
Tax Adjustment, Seller agrees to accept the direction of Buyer with
respect to any proposal to settle the amount at issue. If the matter
cannot be settled with the Internal Revenue Service and Buyer wishes to
pursue the matter at Buyer's cost, Seller shall have the right to
impose such conditions as to further proceedings as are reasonable in
such circumstances. If it should be finally determined that the Net
Federal Payment was understated, Buyer shall promptly pay to Seller a
further Tax Adjustment (the "Additional Tax Adjustment") sufficient to
permit Seller to receive the amount of such understatement, together
with any interest, penalties and additions to tax
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attributable to such understatement and if it should be finally
determined that the Net Federal Payment was overstated, Seller shall
return an amount to Buyer sufficient to leave Seller with only the
amount of the Net Federal Payment as finally determined. If Buyer,
Seller and their accountants are unable to agree as to the amount of
the Tax Adjustment or any Additional Tax Adjustments or as to the
payments due as a consequence of thereof, Buyer and Seller shall each
submit its calculations of such amounts to a Big Six Accounting Firm
agreed upon by Buyer and Seller for the determination by such Firm of
such amounts, which determination shall be final and binding upon the
parties. The fees and expenses of such Big Six Accounting Firm shall be
borne by the party whose calculations were least in agreement with the
Big Six Accounting Firm, as determined by the Big Six Accounting Firm.
2. REPRESENTATIONS AND WARRANTIES OF TJX AND SELLER.
Each of TJX and Seller hereby, jointly and severally, represents and
warrants to Buyer as set forth below (and each of the parties acknowledges that,
except as specifically stated herein, such representations and warranties do not
cover and are not made in respect of or applicable to CDM or the Excluded Assets
and Excluded Liabilities, but all such representations and warranties, to the
extent applicable, shall apply to the Trade Name Sub upon its establishment):
2.1. Organization; Capitalization.
(a) TJX is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to own its properties, to carry
on its business as now conducted, and to consummate the transactions
contemplated hereby.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of The Commonwealth of
Massachusetts, and has all requisite corporate power and authority to
own, operate and lease its properties, to carry on its business as now
conducted, and to consummate the transactions contemplated hereby.
Seller is duly qualified to do business as a foreign corporation and in
good standing in each other jurisdiction in which its ownership,
operation or lease of property or the character of its business
requires such qualification, except for failures to be so qualified or
in good standing that would not reasonably be expected to have a
material adverse effect on the assets, business operations, financial
condition or results of operations of the Division, taken as a whole (a
"Material Adverse Effect"). Copies of the Certificate of Incorporation
and By-laws of Seller, each as amended to date, have been previously
delivered to Buyer, are complete and correct, and no amendments have
been made thereto or have been authorized since the date of such
delivery. Seller is not in violation of any provision of its
Certificate of Incorporation or By-laws.
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(c) Trade Name Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own its
properties, to carry on its businesses as now conducted, and to
consummate the transactions contemplated hereby. Trade Name Sub is duly
qualified to do business as a foreign corporation and in good standing
in each other jurisdiction in which its ownership, operation or lease
of property or the character of its business requires such
qualification, except for failures to be so qualified or in good
standing that would not reasonably be expected to have a Material
Adverse Effect. Copies of the Certificate of Incorporation and By-laws
of Trade Name Sub, each as amended to date, have been previously
delivered to Buyer, are complete and correct, and no amendments have
been made thereto or have been authorized since the date of such
delivery. Trade Name Sub is not in violation of any provision of its
Certificate of Incorporation or By-laws.
(d) Other than Seller's ownership of CDM and the establishment
of the Trade Name Sub prior to Closing, neither Seller nor CDM has any
subsidiaries or any material investment in any other Person or owns,
either directly or indirectly, any capital stock or other equity or
ownership interest in any corporation, partnership, association, trust,
joint venture or other entity.
(e) The authorized capital stock of Trade Name Sub will as of
the Closing date consist of 3000 shares of common stock, $.01 par value
per share ("Trade Name Sub Common Stock"), of which 1000 shares will be
issued and outstanding. Seller will as of the Closing date be the
record and beneficial holder of all issued and outstanding shares of
Trade Name Sub Common Stock. Such shares will as of the Closing date
have been duly and validly issued, and will be fully paid and
nonassessable. Seller will as of the Closing date have valid title to
such outstanding shares free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claim or rights whatsoever. There
will as of the Closing date be no outstanding warrants, options or
other rights to purchase or acquire from Trade Name Sub, or securities
exchangeable for or convertible into, any shares of Trade Name Sub
Common Stock or other equity securities of Trade Name Sub nor will
there be as of the Closing date in existence any agreements to issue
such shares or securities in the future.
(f) Immediately before the transfer to it of certain
trademarks, which will be effective immediately prior to the Closing,
Trade Name Sub will have no assets and no liabilities other than
certain costs not exceeding $10,000 relating to its formation as a
corporation, and will never have had any active business operations.
2.2. Authorization; No Violation. Each of TJX and Seller has full
corporate power and authority to execute and deliver this Agreement and the
other Transaction Agreements to
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which it is a party, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated on its part hereby and thereby. The
execution and delivery of this Agreement and each other Transaction Agreement to
which it is a party by TJX and Seller, and the consummation by TJX and Seller of
all transactions contemplated hereby and thereby, have been duly authorized by
all requisite corporate action on the part of TJX and Seller. This Agreement and
all other Transaction Agreements to which TJX or Seller is a party have been, or
will have been when entered into, duly executed and delivered by each, and
constitute, or will constitute when entered into, the valid and legally binding
obligations of TJX and Seller, as the case may be, enforceable against TJX, or
Seller in accordance with their respective terms, except as limited by (x)
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(y) equitable principles of general applicability. The execution, delivery and
performance by TJX and Seller of this Agreement and the execution, delivery and
performance by TJX and Seller of each other Transaction Agreement to which each
is a party, and the consummation by TJX and Seller of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) conflict with, or result in any violation or
breach of, or give rise to the right to terminate, accelerate or cancel any
obligation under, or require the payment of any fee, or constitute a default
under (i) any provision of the Certificate of Incorporation or By-laws of TJX or
Seller, (ii) except as disclosed in Schedule 2.2, and except for such violations
or conflicts which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, any agreement, contract, license,
indenture or other instrument to which TJX or Seller is a party or by which any
of them or any of their assets are bound or (iii) except for such violations or
conflicts which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, any judgment, order, award, writ,
decree, statute, law, ordinance, rule or regulation applicable to TJX or Seller
or by which any of their assets are bound, or (b) except for such liens, charges
or encumbrances which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, cause the creation of any lien
(except as disclosed in Schedule 2.2), charge or encumbrance upon any of the
assets of Seller, (c) except as disclosed in Schedule 2.2 require the consent,
waiver, approval or authorization of or any filing by any of them with any
person or governmental authority (other than the filing of a premerger
notification report under the HSR Act and, upon consummation of the transaction
contemplated by this Agreement, a Current Report on Form 8-K under the
Securities Exchange Act of 1934), other than such failures to obtain consent,
waiver approval or authorization or such failures to file which, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect, or (d) except as disclosed in Schedule 2.2, result in a loss or adverse
modification of any license, permit, certificate, franchise or contract granted
to or otherwise held by Seller or CDM which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; provided that
no representation or warranty is made as to the transferability of any permit,
license or similar right.
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2.3. Financial Statements; Absence of Undisclosed Liabilities.
(a) TJX has furnished to Buyer (i) the consolidated audited
financial statements of the Division as of and for the year ended
January 27, 1996, including the statements of operations, statements of
cash flows and balance sheets including the operating results of Seller
and CDM; and (ii) the unaudited financial statements of the Division as
of and for the twenty-six weeks ended July 27, 1996, including the
statements of operations, statements of cash flows and balance sheets
including the operating results of Seller and CDM (the "Financial
Statements"). The Financial Statements have been prepared in accordance
with generally accepted accounting principles applied and, in the case
of the unaudited financial statements, consistently with the audited
financial statements, except for changes expressly noted therein, and
present fairly, in all material respects, the consolidated financial
position and results of operations and cash flows of the Division as of
the dates and for the periods covered thereby, subject, in the case of
interim financials, to the absence of footnotes and to customary
year-end audit adjustments.
(b) Immediately prior to the Closing, the Division will not
have any liabilities or obligations of a nature required by generally
accepted accounting principles to be reflected on a balance sheet or in
notes thereto, except in each case (i) for liabilities incurred in the
ordinary course of business after July 27, 1996 and not required to be
reflected on a balance sheet, (ii) as set forth or reflected in the
Financial Statements or the Seller Net Assets Statement (or described
in the notes thereto) or (iii) as disclosed in the Schedule 2.3 hereto
or as expressly contemplated in this Agreement.
2.4. Title to Assets. Seller will as of the Closing have, and upon the
Closing will convey to Buyer, good and valid title to all assets (other than the
Fee Property, which is addressed below) reflected on the Seller Net Assets
Statement, in each case free and clear of all mortgages, liens, security
interests or encumbrances of any nature whatsoever except (i) such as are
disclosed in the notes to the Financial Statements or on Schedule 2.4 hereto,
(ii) liens and other encumbrances securing Debt reflected on the Seller Net
Assets Statement, (iii) mechanics', carriers', workmen's, repairmen's,
landlords' or other like liens arising or incurred in the ordinary course of
business, (iv) liens for Taxes, assessments and other governmental charges which
are not due and payable or which may thereafter be paid without penalty
(provided adequate accruals therefor are reflected on the Seller Net Assets
Statement), (v) liens and other encumbrances arising through Buyer or its
affiliates, and (vi) other imperfections of title or encumbrances which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect (the encumbrances referred to in the foregoing clauses
(i)-(vi) being "Permitted Liens"). Each such asset has been maintained in
accordance with past practice, and is usable in the ordinary course of business
in accordance with past practice, other than such failures to conform with the
foregoing standard which individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. Such assets, together with the
services currently provided by TJX and its Affiliates to
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the Division and the assets conveyed to Buyer pursuant to the CDM Agreement,
are, when utilized by a labor force substantially similar to that employed by
Seller on the date hereof and when furnished adequate working capital, adequate
to conduct the business operations currently conducted by the Division. Schedule
2.4 contains a true and complete list of all real property (together with a list
of all leases, subleases and material amendments thereto) which is used in
connection with the Business and/or which Seller or CDM owns in fee (such real
property owned in fee being the "Fee Property"). Except as set forth on Schedule
2.4, neither Seller nor CDM owns, occupies, leases, subleases, operates or holds
any options or interests in any real property (including, solely for purposes of
this sentence, the Excluded Assets). Seller and CDM have good, valid, leasehold
title to all property leased by them from third parties and good and marketable
title in fee simple to the Fee Property, in each case free and clear of all
liens, security interests and other encumbrances, except for Permitted Liens.
Except as to matters which individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect, each lease, sublease or other
agreement (collectively, the "Leases") set forth in Schedule 2.4 (or required to
be set forth in Schedule 2.4) is in full force and effect; all rents and
additional rents due to date on each such Lease have been paid or properly
accrued for; in each case, the lessee has been in peaceable possession since the
commencement of the original term of such Lease and no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted by the
lessor; and except as set forth in Schedule 2.4 or as set forth in a separate
letter between the parties of even date herewith referring to this Section 2.4,
there exists no event of default or event, occurrence, condition or act which,
with the giving of notice, the lapse of time or the happening of any further
event or condition, would become a default under such Lease. Schedule 2.4 also
lists all material Transferred Leases.
2.5. Tax Matters. Except as set forth in Schedule 2.5:
(a) All Returns required to be filed on or before the date
hereof by, or with respect to Seller or CDM have been duly and timely
filed (taking into account extensions); and Seller and CDM have timely
paid, withheld or made provision for all Taxes shown as due and payable
on any such Returns.
(b) Each of Seller and CDM is a member of the TJX Affiliated
Group, and the TJX Affiliated Group files a consolidated federal Income
Tax Return.
(c) No assessment or deficiency for Taxes which has not been
paid has been made or proposed against Seller or CDM, nor are any of
the Returns now being or, to the best knowledge of Seller and TJX,
threatened to be examined or audited, and no consents waiving or
extending any applicable statutes of limitations for the Returns, or
any Taxes required to be paid thereunder, have been filed. Seller, CDM
or TJX shall promptly notify Buyer of any notice of pending action or
proceeding involving Taxes relating to Seller or CDM between the date
hereof and the date of the Closing. All deficiencies for Taxes
-11-
determined as a result of any past completed audit have been satisfied.
Seller has delivered or made available to Buyer complete and correct
copies of all audit reports and statements of deficiencies with respect
to any Tax assessed against or agreed to by Seller, CDM or TJX for the
three most recent taxable periods for which such audit reports and
statements of deficiencies have been received with respect to Seller or
CDM.
(d) Seller and CDM have collected the Transfer Taxes shown on
the Returns provided to Buyer and have remitted such amounts shown to
be due to the appropriate governmental authorities.
(e) None of the assets of Seller or CDM are subject to any
liens in respect of Taxes (other than for current Taxes not yet due and
payable).
(f) Neither Seller nor CDM has made any payments, is obligated
to make any payments or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code.
(g) Seller has delivered to Buyer (or made available to Buyer
as part of the diligence process) complete and correct copies of all
state, local and foreign income or franchise Tax Returns filed by
Seller or CDM for the three most recent taxable years for which such
Tax Returns have been filed immediately preceding the date of this
Agreement. Other than with respect to Taxes shown on Tax Returns
described in this clause, neither Seller nor CDM is subject to any Tax
imposed on net income in any jurisdiction or by any taxing authority.
2.6. Contracts. Schedule 2.6 contains a true and complete list of all
contracts, agreements, deeds, indentures, notes, letters of credit, mortgages,
leases, licenses, instruments, commitments, sales orders, purchase orders,
quotations, bids, undertakings, arrangements or understandings, written or oral
(each, a "Contract") of the types described below to which or by which Seller or
CDM is a party or otherwise bound or to which or by which any of Seller's or
CDM's assets are subject or bound and in effect on the date hereof, not
including any Excluded Liabilities (Contracts of the type described below,
collectively, the "Contractual Obligations").
(a) All collective bargaining agreements and other labor
agreements; all employment or material consulting agreements; and all
other plans, agreements or arrangements that constitute compensation or
benefits to any of the directors, officers or employees of Seller or
CDM, except to the extent any of the foregoing constitute an Employee
Plan;
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(b) All Contracts under which Seller or CDM is or will after
the Closing be restricted from carrying on any business or other
activities anywhere in the world;
(c) All Contracts (including, without limitation, options) to
sell or otherwise dispose of any assets except in the ordinary course
of business or to purchase or otherwise acquire any property or
properties or other assets except pursuant to purchase orders for
inventory and other arrangements with suppliers in the ordinary course
of business, other than Contracts with respect to assets or properties
having individual values of less than $150,000 individually or
$1,000,000 in the aggregate or Contracts involving liabilities or
obligations of the Division of less than $150,000 individually or
$1,000,000 in the aggregate;
(d) All Contracts under which Seller or CDM has any liability
for Debt or obligation for Debt or constituting or giving rise to a
Guarantee by Seller or CDM of any liability or obligation of any Person
(including, without limitation, partnership and joint venture
agreements) other than (i) Debts or Guarantees individually involving
liabilities or obligations of the Division of less than $100,000
individually or $1,000,000 in the aggregate, (ii) Excluded Liabilities,
and (iii) arrangements with suppliers in the ordinary course of
business.
(e) All leases (except as set forth in Schedule 2.4) or other
Contracts under which any tangible personal property (other than
inventory) having a cost or capital lease obligation in excess of
$150,000 individually or $1,000,000 in the aggregate is held or used by
Seller or CDM;
(f) All Contracts to lease or sublease (as lessor) any real
property;
(g) All Contracts whereby Seller or CDM has agreed to purchase
any property (other than inventory) individually involving liabilities
of the Division in excess of $150,000 individually or $1,000,000 in the
aggregate which extend beyond 12 months and are not terminable by
Seller or CDM without penalty within 12 months; and
(h) Each other Contract (other than Contracts of the type
described in (a) through (g) of this Section 2.6 or listed on Schedule
2.4) not in the ordinary course of business that involves liabilities
or obligations of the Division in excess of $200,000 individually or
$1,000,000 in the aggregate.
Seller has heretofore made available to Buyer for inspection a true and
complete copy of each of the Contractual Obligations referred to in (a) through
(h) above. To the knowledge of TJX, each such Contract is valid, binding and
enforceable against each party thereto, except where the failure to be valid,
binding or enforceable would not reasonably be expected to have a Material
Adverse Effect. Neither Seller nor CDM nor, to the knowledge of TJX, any third
party is in default under or in breach or violation of, nor has an event
occurred that (with or
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without notice, lapse of time or both) would constitute a default by Seller or
CDM or, to the knowledge of TJX, any third party of the Contractual Obligations,
other than defaults, breaches or violations of such Contractual Obligations
which are disclosed in Schedule 2.2 or which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Neither
Seller nor CDM has received or given notice of any such breach, default or event
of default.
2.7. Compliance with Laws. The Division has all requisite licenses,
permits and certificates (all of which are in full force and effect), including
health and safety permits, from federal, state and local authorities necessary
to conduct its business and own, operate and lease its assets (collectively, the
"Permits"), except for such failures to so have which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
To the knowledge of TJX, the Division is not in violation of any law, regulation
or ordinance (including, without limitation, laws, regulations or ordinances
relating to building, zoning, sanitation or safety matters, but excluding
Environmental Law which is governed by Section 2.16) relating to its assets or
business, except for such violations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. None of such
licenses, permits or certificates will be impaired as a result of the
transactions contemplated by this Agreement, except as disclosed in Schedule 2.7
or except in any case that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Neither Seller nor
CDM has received any notice to the effect that, or otherwise been advised that,
it is not in compliance with, or that it is in violation of, any such federal,
state or local license, permit or certificate in a manner that would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
2.8. Employee Relations. Except as set forth on Schedule 2.8:
(i) none of the employees of the Division is represented by any labor union;
(ii) there is no unfair labor practice charge or complaint or enforceable
decision and order against Seller or CDM pertaining to current or former
employees of the Division pending before the National Labor Relations Board
(the "NLRB"), the Equal Employment Opportunity Commission, the Department of
Labor, OSHA, or any other state or local agency, or relating to the Fair Labor
Standards Act; and (iii) there is no pending labor strike or, to the knowledge
of TJX, labor organizing activity affecting the Division.
2.9. Absence of Certain Changes or Events. Except as set forth on
Schedule 2.9 or except as contemplated by this Agreement, since July 27, 1996,
the business of the Division has been conducted in the usual and ordinary course
consistent with past practice. Except as set forth on Schedule 2.9 and except to
the extent that any of the following events relate to Excluded Assets or
Excluded Liabilities, since July 27, 1996 neither Seller nor CDM has:
(a) made any capital expenditures or commitments with respect
thereto except routine expenditures for repairs and maintenance and
except in an aggregate amount substantially consistent with the
Committed Capital Budget Status Report dated as of
-14-
October 15, 1996 (under the column "FYE 1/97 Capital Plan") which has
been previously provided to Buyer (the "Capital Budget Plan");
(b) incurred or otherwise become liable in respect of any Debt
or become liable in respect of any Guarantee, other than (A) Excluded
Liabilities, (B) arrangements with suppliers in the ordinary course of
business and (C) Debts or Guarantees, individually involving
liabilities or obligations of the Division of less than $100,000
individually or $500,000 in the aggregate;
(c) mortgaged or pledged any of its assets or subjected any o
its assets to any lien or encumbrance;
(d) sold, leased to others or otherwise disposed of any of its
assets except in the ordinary course of business and consistent with
past practice;
(e) purchased any equity security of any Person (other than
the Trade Name Sub) or any assets (other than inventory) constituting
all or substantially all of a business, or been party to any merger,
consolidation or other business combination or entered into any
Contractual Obligation relating to any such purchase, merger,
consolidation or business combination;
(f) made any loan, advance or capital contribution to or
investment in any Person other than loans, advances or capital
contributions to or investments in or to Seller, CDM, the Trade Name
Sub, TJX or any of its Affiliates, and other than anticipation payments
for supplies or loans or advances to employees in the ordinary course
of business;
(g) canceled or compromised any Debt or claim other than in
the ordinary course of business and other than any intercompany
advances or claims between Seller and its affiliates;
(h) made or agreed to make any material change in its
customary methods of accounting or accounting practices;
(i) settled or agreed to settle any material cause of action
or suit (in contract or tort or otherwise), arbitration, process or
investigation by or before any governmental authority;
(j) amended, canceled or terminated any Contract, license or
other instrument material to either, except in the ordinary course of
business and except for the termination, at the time of Closing, of
intercompany advance arrangements;
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(k) made any material revaluation of the assets of Seller and
CDM, including without limitation, any material write-offs, material
increases or decreases in any reserves except in the ordinary course of
business and consistent with past practice, or any write up of the
value of inventory, property, plant, equipment or any other asset;
(l) suffered any other event or condition of any character
which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(m) failed to pay or discharge when due or in accordance with
past practices any material liabilities except for liabilities which
are being contested in good faith;
(n) made any material change to its catalog and prospect
mailings from the planned advertising and mailings program described in
the Catalog Plan entitled "Remaining 1996 ▇▇▇▇▇▇▇▇'▇ Mailings" (the
"Catalog Plan") which has been previously provided to Buyer; provided
that for purposes of this paragraph (n), material change shall be
limited to any one or more of the following events: (A) canceling a
planned catalog edition; (B) a material reduction in the circulation of
any catalog; (C) a material reduction in the level of prospecting in a
particular season (which for purposes of this paragraph (xiv) shall
consist of Spring, Summer, Fall, Winter and holiday); or (D) a material
change in the number of pages of any catalog edition;
(o) maintained its property, plant and equipment other than in
accordance with past practice;
(p) had any material change in its relationships with its
employees, agents, customers or suppliers;
(q) made any changes in the rate of compensation payable (or
paid or agreed or orally promised to pay, conditionally or otherwise,
any extra compensation) to any director, officer, manager, employee,
consultant or agent of Seller (other than increases or bonuses granted
in the ordinary course of business and consistent with past practices,
which increases as in the aggregate would not reasonably be expected to
have a Material Adverse Effect); or
(r) made any material addition to or material modification of
any Employee Plan other than additions or modifications that are also
applicable to other divisions or subsidiaries of TJX or necessary to
consummate the transactions contemplated hereby.
Since July 27, 1996, none of TJX, Seller or CDM has entered into any Contractual
Obligation (and TJX has not entered into any Contractual Obligation obligating
Seller or CDM) to do any of the things referred to in clauses (a) through (g)
and (j) above with respect to Seller or CDM.
-16-
2.10. Trade Names and Other Intangible Property. Schedule 2.10 contains
a true and complete list of all registered and, to the knowledge of TJX,
unregistered trademarks, trade names and service marks and applications therefor
owned by or licensed to TJX, Seller, the Trade Name Sub or CDM and used in the
Business as presently conducted by the Division, other than certain marks and
names the use of which is not material to the Division. Except as disclosed on
Schedule 2.10, to the knowledge of TJX, Seller, the Trade Name Sub or CDM owns
or has the right to use all trademarks, trade names and service marks identified
on Schedule 2.10, except for such failures to own or have the right to use as in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. Each Contract that involves liabilities or obligations of the Division
to any third party in excess of $150,000 for the use of trademarks, trade names
or service marks is listed on Schedule 2.10.
Except as set forth on Schedule 2.10, (a) to the knowledge of TJX, no
other person has made a written claim that is currently unresolved that such
other person is the legal owner of any of the trademarks, trade names and
service marks listed on Schedule 2.10; (b) TJX, Seller, the Trade Name Sub and
CDM, and each of them, has the right to transfer the right to use all of the
trademarks, trade names and service marks listed on Schedule 2.10 for use by
Buyer in the conduct of the Business as is presently conducted; and (c) none of
TJX, the Trade Name Sub or Seller have granted any license or right to use any
of the trademarks, trade names and service marks identified in Schedule 2.10 to
any other Person other than as set forth on Schedule 2.10.
2.11. Employee Benefit Plans.
.
(a) Plans. Schedule 2.11 contains a true and complete list of
all bonus, stock bonus, stock option, stock purchase, vacation pay,
holiday pay, dependent care assistance, pension, profit sharing,
retirement, deferred compensation, excess benefit, health insurance,
life insurance, disability, severance pay, salary continuation and
other similar retirement, welfare or fringe benefit plans, whether or
not reduced to writing, in which any employees of the Division
participate or under which any such employees have accrued and remain
entitled to a benefit and which are maintained (or to which
contributions currently are made or required to be made) by Seller or
by any other member (hereinafter, "Benefit Plan Affiliate") of any
controlled group of corporations, group of trades or businesses under
common control, or affiliated service group of which Seller is also a
member, which group would be treated as a single employer under Section
414(b), (c) or (m) of the Code (the "Employee Plans"). Each Employee
Plan (other than any such plan that is a multiemployer plan) described
in Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") is herein referred to as an "Employee Welfare
Plan" and each Employee Plan (other than any such plan that is a
multiemployer plan) described in Section 3(2) of ERISA is herein
referred to as an Employee Pension Plan. The Employee Welfare Plans and
Employee Pension Plans are
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herein referred to collectively as the "ERISA Plans". With respect to
Employee Plans other than multiemployer plans, Seller has provided or
made available to Buyer a copy of each such plan (including amendments
and related funding agreements) that has been reduced to writing, a
description of each such plan (including amendments) that has not been
reduced to writing, the current Summary Plan Description for each such
plan that is an ERISA Plan, the most recent Internal Revenue Service
determination letter for each such plan that is intended to be
qualified under Section 401(a) of the Code, and, where applicable, the
most recent Form 5500 filed with respect to each such plan.
(b) ERISA Plans. Each Employee Pension Plan that is intended
to be qualified under Section 401(a) of the Code is so qualified. Each
ERISA Plan has been administered in all material respects in accordance
with its terms and applicable law. Neither Seller nor any Benefit Plan
Affiliate has incurred any liability under Title IV of ERISA (other
than for the payment of PBGC premiums in the normal course) with
respect to any ERISA Plan, nor to the knowledge of the TJX has any
event occurred that would give rise to any such liability.
(c) Multiemployer Plans. Except as set forth on Schedule
2.11, none of the Employee Plans is a multiemployer plan.
(d) Lawsuits, etc.. Except as set forth on Schedule 2.11 and
except for matters that would not reasonably be expected to have a
Material Adverse Effect, there are no lawsuits or claims (other than
claims for benefits in the normal course and domestic-relations
litigation involving the assignment of benefits) pending or, to the
knowledge of TJX, threatened with respect to benefits under any
Employee Plan, nor is there any pending or, to the knowledge of TJX,
threatened governmental audit or similar investigation relating to any
Employee Plan."
2.12. Transactions with Affiliates. Except as disclosed in Schedule
2.12, as set forth in any Transaction Agreement or as expressly contemplated
hereunder, no officer or director of TJX, Seller, the Trade Name Sub or CDM nor
any "Related Party" of TJX is a party to any material transaction with Seller or
CDM, including, without limitation, any contract, agreement or other arrangement
providing for the rental of real or personal property from, or otherwise
requiring payments to, any Related Party, which will be in effect immediately
after the Closing. Except as set forth in Schedule 2.12, no employee of Seller,
the Trade Name Sub, CDM nor any Related Party of TJX is indebted in an amount
greater than $50,000 to Seller, CDM or the Trade Name Sub except for advances
made in the ordinary course of business to meet reimbursable business expenses
anticipated to be incurred by such obligor and none of Seller, CDM or the Trade
Name Sub is indebted to any such employee or Related
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Party of TJX other than for compensation for services rendered or reimbursable
business expenses as an employer and other than for any claims which are subject
to Section 2.14.
2.13. Insurance. TJX or Seller maintains and will continue until the
Closing to maintain policies of fire and casualty, liability and other forms of
insurance in such amounts, with such deductibles and against such risks and
losses as are, in TJX's judgment, reasonable for the business and assets of the
Division. A true and complete list of such insurance policies is set forth on
Schedule 2.13. All of such policies are sufficient for compliance with all
requirements of law and all contracts, leases and other agreements to which
Seller or any subsidiary is a party except where any such insufficiencies would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
2.14. Litigation. Except as set forth on Schedule 2.14, neither Seller
nor CDM is a party to any litigation, suit, action, investigation, proceeding,
unfair labor practice complaint or grievance or controversy before any court,
administrative agency or other governmental authority relating to or affecting
the assets of the Division. Except as set forth on Schedule 2.14, to the
knowledge of TJX, neither Seller nor CDM is threatened with, and none of the
assets of the Division are subject to, any litigation, suit, action,
investigation, proceeding, unfair labor practice complaint or grievance or
controversy before any court, administrative agency or other governmental
authority relating to or affecting the assets of the Division that would
reasonably be expected to have a Material Adverse Effect. To the knowledge of
TJX, the Division is in compliance with all judgments, orders, writs,
injunctions or decrees of any court, administrative agency or governmental
authority to which the Division or its assets are subject, except for such
failures to be in compliance which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. There are no such
actions, proceedings or investigations pending or, to the knowledge of TJX,
threatened against Seller or CDM, or, to the knowledge of TJX, pending or
threatened against any other party challenging the validity or propriety of the
transactions contemplated by this Agreement other than from the failure to
obtain consents which are not a condition to Buyer's closing hereunder (which
latter challenges that are known by TJX shall be included in an updated Schedule
2.14 furnished to Seller immediately prior to the Closing solely for
informational purposes).
2.15. Regulatory Approvals. All governmental consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
that must be obtained or satisfied by Seller or CDM and are necessary for the
consummation of the transactions contemplated by this Agreement, have been, or
will be prior to the Closing, obtained and satisfied, except for such failures
to be so obtained or satisfied which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
2.16. Environmental Matters. Except as set forth on Schedule 2.16,
to the knowledge of TJX, each of Seller and CDM has operated in compliance in
all respects with, and has no liability under, any applicable federal, state
and local environmental protection, pollution control, occupational, health and
safety or similar laws, statutes, rules, regulations,
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ordinances, restrictions, licenses and permits (collectively, the "Environmental
Law"), except for such noncompliances which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 2.16, to the knowledge of TJX, there has not been any and
there is no past or continuing release or threat of release, generation or
discharge of any hazardous or toxic substance, including without limitation a
"hazardous substance" as defined in 42 U.S.C. ss. 9601(14) and asbestos, PCB's,
oil, gasoline and other petroleum-based substances (each, a "Hazardous
Substance"), into the environment at, on or from any property currently or
previously leased, owned, occupied or operated by either Seller or CDM, except
for such releases, generations and discharges as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
To the knowledge of TJX, except as set forth on Schedule 2.16 there have been no
Hazardous Substances generated by Seller or CDM that have been disposed of or
come to rest at any site that has been included in the National Priority List or
analogous state or local site list and none of Seller or CDM has been alleged to
be in violation of, or been subject to any administrative or judicial proceeding
pursuant to any Environmental Law. TJX has delivered to Buyer copies of all
environmental audits or other studies or reports that assess environmental
conditions at any property currently or previously leased, owned, occupied or
operated by Seller or CDM.
2.17. Inventory. Except as disclosed in the Financial Statements or on
Schedule 1.4B, the value at which the Inventory of Seller and CDM is carried on
(a) the July 27, 1996 consolidated balance sheet included in the Financial
Statements (the "Balance Sheet") and (b) the Closing Balance Sheet reflects or
will reflect the customary inventory valuation policies of Seller (including the
establishment of reserves) and is in accordance with GAAP consistently applied.
Since July 27, 1996, Seller and CDM have continued to replenish their inventory
in the ordinary course of business consistent with past practice, and have not
made any material change in their inventory policies or procedures, except for
changes regarding the liquidation of merchandise as disclosed in Schedule 2.17.
2.18. Accounts Receivable. All accounts receivable (excluding Deferred
Payment Receivables) reflected on the Balance Sheet are collectible at the
aggregate recorded amounts thereof and all accounts receivable (excluding
Deferred Payment Receivables) acquired since the date of the Balance Sheet are
collectible at the aggregate recorded amounts thereof, in all cases net of
reserves therefor.
2.19. Disclosure. The October 15, 1996 draft form of preliminary
prospectus of ▇▇▇▇▇▇▇▇'▇ furnished to Buyer does not contain any misstatement of
material fact or omit to state any material fact necessary to make the
statements made therein, in light of the context in which they are made, not
misleading.
2.20. Investment Intent, Related Matters. Seller is acquiring the
Buyer Notes for Seller's own account and Seller has the present intention of
holding the Buyer Notes for investment purposes and not with a view to, or for
sale or resale in connection with, any
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public distribution thereof or with any present intention of selling,
distributing or otherwise disposing of the Buyer Notes. Seller is an "accredited
investor" as that term is defined in Regulation D under the Securities Act.
Seller understands that the Buyer Notes have not been registered under the
Securities Act and may be transferred only pursuant to registration thereunder
or an exemption therefrom.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to TJX and Seller as follows:
3.1. Organization. Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite power and authority to own its properties and to carry on
its business as now being conducted. A certified copy of the Certificate of
Limited Partnership of Buyer, as amended to date, has been previously delivered
to Seller and is complete and correct.
3.2. Authorization; No Violation. Buyer has full power and authority to
execute and deliver this Agreement and the other agreements provided for herein,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated on its part hereby and thereby. The execution and
delivery of this Agreement and other Transaction Agreements by Buyer, and the
consummation by Buyer of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite partnership action on the part of Buyer.
This Agreement and each other Transaction Agreement have been or will have been
when entered into duly executed and delivered by Buyer, and constitute or will
constitute when entered into the valid and legally binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms, except as
limited by (i) bankruptcy, insolvency or similar laws affecting creditor's
rights generally and (ii) equitable principles of general applicability. The
execution, delivery and performance of this Agreement and each other Transaction
Agreement, and the consummation by Buyer of the transactions contemplated hereby
and thereby, will not, with or without the giving of notice or the passage of
time or both, (a) violate the provisions of any material law, rule or regulation
applicable to Buyer; (b) violate the provisions of Buyer's Agreement of Limited
Partnership; (c) violate any material judgment, decree, order or award of any
court, governmental body or arbitrator; or (d) conflict with or result in the
breach or termination of any term or provision of, or constitute a default
under, or cause any acceleration under, or cause the creation of any lien,
charge or encumbrance upon the properties or assets of Buyer pursuant to, any
indenture, mortgage, deed of trust or other material agreement or instrument to
which it or its properties is a party or by which Buyer is or may be bound,
except for such violations, conflicts, defaults or the like which, individually
or in the aggregate, would not reasonably be expected to have a Buyer's Material
Adverse Effect.
3.3. Regulatory Approvals. All material consents, approvals,
authorizations and other requirements prescribed by any material law, rule or
regulation that must be obtained or
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satisfied by Buyer and are necessary for the consummation of the transactions
contemplated by this Agreement have been, or will be prior to the Closing,
obtained and satisfied, except for such failures to so obtain or satisfy which,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect, on the assets, business operations, financial condition
or results of operation of Buyer ("Buyer's Material Adverse Effect").
3.4. Litigation. Buyer is not a party to, nor, to the knowledge of
Buyer, has been threatened with, and none of the assets of Buyer are subject to,
any litigation, suit, action, investigation, proceeding, unfair labor practice
complaint or grievance or controversy before any court, administrative agency or
other governmental authority relating to or affecting the assets of Buyer that
would reasonably be expected to have a Buyer's Material Adverse Effect. To the
knowledge of Buyer, Buyer is in compliance with all judgments, orders, writs,
injunctions or decrees of any court, administrative agency or governmental
authority to which Buyer or its assets are subject, except for such failures to
be in compliance which, individually or in the aggregate, would not reasonably
be expected to have a Buyer's Material Adverse Effect. Except for any failure to
obtain any consent which is not a condition to the Closing hereunder by Seller,
there are no such actions, proceedings or investigations pending or, to the
knowledge of Buyer, threatened against Buyer, or, to the knowledge of Buyer,
pending or threatened against any other party challenging the validity or
propriety of the transactions contemplated by this Agreement.
3.5. Financial Statements. Attached hereto as Schedule 3.5 are (i) the
audited consolidated financial statements of Buyer as of and for the year ended
February 3, 1996, including the statements of operations, statements of cash
flows and balance sheets, and (ii) the unaudited financial statements of Buyer
as of and for the twenty-six weeks ended August 3, 1996, including the
statements of operations, statements of cash flows and balance sheets, (the
"Buyer's Financial Statements"). Buyer's Financial Statements have been prepared
in accordance with generally accepted accounting principles applied consistently
with Buyer's past practices and accounting policies, except for changes
expressly noted therein, and present fairly, in all material respects, the
consolidated financial position and results of operations and cash flows of
Buyer as of the dates and for the periods covered thereby, subject, in the case
of interim financials, to the absence of footnotes and to customary year-end
adjustments.
3.6. Absence of Certain Changes. Since August 3, 1996, Buyer has not
suffered any event or condition of any character which in any one case or in the
aggregate has had a material adverse effect, or any event or condition which
individually or in the aggregate has or would reasonably be expected to have a
Buyer's Material Adverse Effect; it being understood that Buyer has incurred or
expects to incur Debt in order to finance the transactions contemplated by this
Agreement.
3.7. Financing. Buyer has received and delivered to Seller firm
commitment letters from certain financing parties (the "Financing Parties")
dated as of the date hereof (the "Financing Commitments"), with respect to ▇▇▇
and equity financing in an amount sufficient
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to enable Buyer to pay the Estimated Cash Purchase Price. Such Financing
Commitments have not been altered or amended and are in full force and effect.
3.8. Partnership Documents. A copy of each of the Agreement of
Limited Partnership dated as of August 30, 1993 and each of Amendments Nos. 1
through 7 thereto of Buyer have been previously delivered to TJX and Seller,
each such document is complete and correct, and except for such Amendments Nos.
1 through 7 there are no amendments or modifications to Buyer's Agreement of
Limited Partnership.
3.9. Disclosure. The October 17, 1996 draft form of preliminary
prospectus of Buyer furnished to TJX and Seller does not (without giving effect
to the transactions contemplated by this Agreement) contain any misstatement of
material fact or omit to state any material fact necessary to make the
statements made therein, in light of the context in which they are made, not
misleading.
4. ACCESS TO INFORMATION, ETC.; PUBLIC ANNOUNCEMENTS.
4.1. Access to Information, Etc. From the date of this Agreement until
the Closing or any earlier termination of this Agreement, TJX and Seller shall
afford the officers, attorneys, accountants, Financing Parties and other
authorized representatives and professionals of Buyer access upon reasonable
notice and during normal business hours to all management personnel, offices,
properties, books and records (including information with respect to customer
lists, but not the identities of individual customers on such lists) of TJX and
Seller relating to the business of the Division, so that Buyer may have full
opportunity to make such investigation as it reasonably desires of the
management, business, properties and affairs of the Division, and Buyer shall
(at its expense) be permitted to make abstracts from, or copies of, all such
books and records. TJX and Seller shall furnish to Buyer such financial and
operating data and other information as to the assets and the business of the
Division as Buyer shall reasonably request. The foregoing shall not limit the
Buyer's obligations under that certain Confidentiality Agreement dated as of
July 20, 1995, as amended, by and between TJX and Buyer (the "Confidentiality
Agreement").
4.2. Public Announcements. The parties agree that prior to the Closing,
except as otherwise required by law, any and all public announcements or other
public communications concerning this Agreement and the transactions
contemplated hereby shall, unless required under applicable securities laws, be
subject to the approval of all parties, which approval shall not be unreasonably
withheld.
5. COVENANTS OF THE PARTIES.
5.1. Conduct of Business. Except as set forth in Schedule 5.1
or as otherwise contemplated by this Agreement, prior to the Closing Seller
shall carry on the business of the Division in the ordinary course consistent
with past practice. Without limiting the foregoing,
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prior to the Closing, except as set forth in Schedule 5.1 or as otherwise
contemplated hereby, Seller shall and it shall cause CDM to (except with the
prior written consent of Buyer):
(a) not take any action to amend the Certificate of
Incorporation or By-laws of Seller or CDM other than such amendments
which will not adversely affect Seller's obligations hereunder;
(b) not mortgage, pledge, or subject to any lien, charge or
any other encumbrance any of the assets of the Division except in the
ordinary course of business consistent with past practice;
(c) not sell, assign, or transfer any of the assets of the
Division except in the ordinary course of business consistent with
past practices;
(d) not merge or consolidate with or into any corporation or
other entity;
(e) not enter into any lease for which the aggregate estimable
rental liability of such lease is greater than $150,000, other than (i)
leases entered into in the ordinary course of business consistent with
past practice that do not involve real estate and (ii) those leases
reflected in the Capital Budget Plan;
(f) not materially alter the terms, status or funding
condition of any Employee Plan with respect to any employees of the
Division except for such alterations that are also applicable to other
divisions or subsidiaries of TJX or are necessary to consummate the
transactions contemplated hereby;
(g) not settle any litigation, suit, action, investigation,
proceeding or controversy before any court, administrative agency or
other governmental authority except for such litigation, suit, action,
investigation or proceeding that individually would not result in
liabilities of the Division in excess of $250,000; and
(h) use its commercially reasonable efforts to preserve intact
its business organization and use its commercially reasonable efforts
consistent with past practices to keep available the services of its
employees and to preserve the goodwill of its business relationships
with, including, without limitation, its suppliers;
(i) not make any material change to its catalog and prospect
mailings from the planned advertising and mailing program described to
Buyer in the Catalog Plan; provided that for purposes of this Section
5.1(i), material change shall mean one of the following events: (A)
canceling a planned distribution of catalogs; (B) material reduction in
the circulation of any catalog; (C) material reduction in the level of
prospecting in a particular season (which purposes for this paragraph
(i) shall consist of
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spring, summer, fall, winter and holiday); or (D) material change in
the number of pages of any catalog edition; or
(j) not make any material change in its program of maintenance
for its property, plant and equipment, and continue substantially to
follow the Capital Budget Plan;
(k) continue to replenish and maintain the inventory of the
Business in a normal and customary manner, consistent with the current
practices of the Business;
(l) use their commercially reasonable efforts (without cost to
either of them or TJX and its other affiliates) to obtain any consents
or approvals required under any Contracts (including customer
contracts) or otherwise that are necessary to complete the transaction
or to avoid a default under any such Contracts;
(m) pay or discharge when due all material liabilities in
accordance with past payment practices except for liabilities that are
contested in good faith;
(n) not terminate the employment by Seller of any Management
Employee without the consent of Buyer, such consent not to be
unreasonably withheld, provided that if Buyer shall not respond to a
request from Seller for such consent within five business days of its
receipt of such request from Seller, such consent shall be deemed to
have been given, and provided further that if Seller shall terminate
the employment of any Management Employee over the reasonable
objection, or without seeking consent, of Buyer, the sole consequence
under this Agreement of such termination shall be that all liabilities
and obligations of Seller to such terminated Management Employee shall
be Excluded Liabilities; and
(o) not commit or agree to do any of the foregoing in the
future.
5.2. Compliance with Laws. Prior to the Closing, Seller will comply,
and will cause CDM to comply, with all laws and regulations which are applicable
to it, the ownership of its assets or to the conduct of its business and will
perform and comply with all contracts, commitments and obligations by which it
is bound, except in each case for failures to so comply or perform as in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
5.3. Continuing Obligation to Inform. From time to time prior to the
Closing, TJX and Seller will deliver or cause to be delivered to Buyer material
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule or Exhibit inaccurate or incomplete in any
material respect at any time after the date hereof until the Closing. If Buyer
receives any such supplemental information prior to the Closing, Buyer
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shall have the right to review such supplemental information for a period of
five days from the receipt thereof and to object to any item of such
supplemental information which was not contained in this Agreement or in the
Schedules or Exhibits attached hereto within such five day period if such item
is material to the Division taken as a whole. Any such objection shall be set
forth in writing and shall state in detail the basis for such objection. If
Buyer objects to any such item on the basis set forth above within such five day
period then Buyer shall have as its sole remedy hereunder the option to
terminate the Agreement within such five day period or to proceed with the
Closing and, upon the Closing, Buyer shall be conclusively deemed to have waived
all claims hereunder relating to such misrepresentation or breach of warranty
(unless such supplemental information arises from a breach of a covenant under
this Agreement by TJX or Seller, in which event Buyer may pursue the remedies
available to it pursuant to this Agreement as limited by Section 9.6). If Buyer
does not object within such five day period, such supplemental information shall
be incorporated into this Agreement.
5.4. Union Agreement. Seller and Buyer shall negotiate in good faith
with Local No. 313 of the International Ladies Garment Worker's Union AFL-CIO
(the "Union") to enable Buyer to assume all Seller's obligations under the
agreement dated as of January 1, 1995 between NBC Distributors Inc., Avon
Trading Corporation, Seller and the Union (the "Union Agreement") and in
connection therewith to amend the Union Agreement as set forth on Schedule 5.4.
Subject to obtaining consent of the Union to Buyer's assumption of the Union
Agreement with the Union's agreement to amend the Union Agreement as set forth
on Schedule 5.4, effective upon the Closing, Buyer shall become a successor
employer to Seller and shall assume all of Seller's obligations under the Union
Agreement as so consented to (the "Assumed Union Agreement").
Each of the parties hereto agrees that Section 4204 of ERISA shall
apply to the transactions described herein, and each of the parties hereto
agrees it shall at all times take any and all necessary actions to meet the
requirements of Section 4204 of ERISA, including, without limitation, as
follows:
(a) Effective upon the Closing, Buyer shall adopt and assume all
Seller's obligations under the multiemployer plan referred to in the Union
Agreement (the "Multiemployer Plan"), including, without limitation, the
obligation to contribute to the Multiemployer Plan. Buyer shall contribute to
the Multiemployer Plan, with respect to Employees of the Business, for
substantially the same number of "contribution base units" (as defined in
Section 4001(a)(11) and 4204(a)(1)(A) of ERISA) for which Seller has an
obligation to contribute with respect to the Multiemployer Plan immediately
prior to the Closing.
(b) Buyer shall take all action necessary to comply with Section 4204
of ERISA with respect to the Multiemployer Plan and furnish proof of such
compliance to Seller. Such compliance shall include, without limitation, the
posting of a bond or escrow (or letter of credit if acceptable to the
Multiemployer Plan) within the time required by Section 4204(a)(1)(B) of ERISA
for the Multiemployer Plan, in an amount, for the period of time, and
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in a form that complies with Section 4204(a)(1)(B) of ERISA, or within such time
period obtaining a variance from such bonding or escrow requirement from the
Multiemployer Plan or from the Pension Benefit Guaranty Corporation (the "PBGC")
so that a transfer of contribution obligations to Buyer under the Multiemployer
Plan with respect to employees of the Business does not result in a complete or
partial withdrawal of Seller from the Multiemployer Plan under Sections 4203 or
4205 of ERISA, respectively.
(c) Unless a variance is obtained from the applicable Multiemployer
Plan or the PBGC, Seller agrees that if Buyer completely or partially withdraws
(within the meaning of Sections 4203 or 4205 of ERISA) from the Multiemployer
Plan with respect to contribution base units made on behalf of employees of the
Business during the five plan years of the Multiemployer Plan beginning after
the Closing, Seller shall be secondarily liable, and Buyer shall be primarily
liable, to the Multiemployer Plan in an amount equal to the withdrawal liability
Seller would have had to the Multiemployer Plan under Title IV of ERISA, as of
the Closing, as a result of the sale of the Business (but for the application of
Section 4204 of ERISA to such transaction).
(d) With respect to the Multiemployer Plan, if at any time prior to the
expiration of the fifth plan year of such Multiemployer Plan following the
Closing, Seller is liquidated or any other event described in Section 4204(a)(3)
of ERISA occurs, then Seller shall provide a bond or amount in escrow where
required in accordance with Section 4204(a)(3) of ERISA.
5.5. Customer Lists.
(a) TJX acknowledges and agrees that all customer lists and other
current customer-related information acquired by Seller in the conduct of its
business concerning the customers of Seller will upon the Closing be the sole
property of Buyer and shall not be used by TJX or its Subsidiaries or disclosed
by TJX or its Subsidiaries, except as provided in subsection (b) or as otherwise
agreed to in writing by Buyer. Buyer acknowledges and agrees that all customer
lists and other current customer-related information acquired by TJX in the
conduct of its business concerning the customers of TJX and its Subsidiaries
(other than Seller and CDM) are the sole property of TJX and its Subsidiaries
and shall not be used by Buyer or its Subsidiaries or disclosed by Buyer or its
Subsidiaries, except as otherwise provided in subsection (c) or as otherwise
agreed to in writing by TJX.
(b) TJX may use the ▇▇▇▇▇▇▇▇'▇ "one million name" customer list
currently in its possession for one currently planned credit card solicitation
mailing and for reasonable associated followup telemarketing, provided that the
telemarketing will not extend more than three months after completion of the
mailing.
(c) Buyer may use the TJX "large size" customer list currently in its
possession for two catalog mailings and two associated remailings, provided that
such mailings and remailings are completed prior to January 31, 1998.
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(d) Each of TJX and Brylane shall, upon completion of the activities
permitted by paragraphs (b) or (c), as the case may be, promptly return to the
other all copies (whether electronic or paper) of the relevant customer list.
5.6. TJX D&B Guarantee. TJX currently provides a guarantee of payment
to the Division's vendors through a Dun & Bradstreet notification. Buyer
acknowledges that TJX intends to terminate such guarantee as to liabilities
incurred by the Division after the Closing, at the earliest date such
termination may become effective. Until such guarantee shall have been
terminated, Buyer will not, and will not permit its Subsidiaries to, incur any
obligations to vendors in excess of the aggregate amount customarily incurred by
Seller.
5.7. Non-Competition.
(a) Effective from the date hereof, and for a period of five
years thereafter, TJX and its subsidiaries, including without
limitation Seller, shall not directly or indirectly participate in the
ownership, management, operation or control of, or be connected as a
partner, consultant, agent or otherwise with, or have any financial
interest in (through stock or other equity ownership, investing of
capital, lending of money or otherwise, although excluding passive
ownership of less than ten percent of the outstanding equity in a
company), alone or in association with others, any business (any such
business, a "Competitive Business") that sells merchandise anywhere in
the world through printed women's or men's apparel catalogs that are
substantially similar to the catalogs currently distributed by
▇▇▇▇▇▇▇▇'▇ (determined based on merchandise categories, merchandise
quality and value-orientation); provided, however, that the foregoing
shall not preclude TJX or any of its subsidiaries from engaging or
participating in (i) the sale of merchandise through the Internet or
other visual electronic media; (ii) print advertising of apparel or
other merchandise sold through stores or visual electronic media,
notwithstanding that items featured in such advertising may be ordered
by mail, telephone, telecopy or electronically; or (iii) printed
catalogs in which less than ten percent of the merchandise items are
men's or women's apparel. Notwithstanding the foregoing, TJX or any of
its subsidiaries may acquire stock or assets of a business that
conducts a Competitive Business; provided, however, such Competitive
Business accounts for less than twenty-five percent (25%) of the annual
revenues of such acquired business; and provided further, that TJX or
such subsidiary shall use all commercially reasonable efforts to, or
shall use all commercially reasonable efforts to cause such acquired
business to, within one year of the acquisition of such acquired
business, and in any event shall within two years of such acquisition,
divest itself of any such Competitive Business which accounts for five
percent (5%) or more of the annual revenues of such acquired business.
(b) For a period of two years after the Closing, neither TJX
nor any of its subsidiaries will, directly or indirectly, solicit the
employment of any employee of Buyer, while such employee is an employee
of Buyer or within two months thereafter,
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who immediately prior to the Closing was employed by Seller as a
Management Employee; provided, however, that TJX or any of its
subsidiaries may solicit the employment of any such employee whose
employment has been terminated by Buyer.
(c) TJX and Seller acknowledge that the restrictions contained
in this Section 5.7 are reasonably necessary for the protection of
Buyer and realization by Buyer of the benefit of their bargain under
this Agreement and that a violation of such provisions will cause
damage that may be irreparable or impossible to ascertain and,
accordingly, that Buyer will be entitled to injunctive or other similar
relief in equity from a court of competent jurisdiction to enforce
these restrictions or restrain a violation of this Agreement. If at the
time of enforcement of any provision of Section 5.7, a court (or
arbitrator selected by the agreement of the parties) holds that the
restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
5.8. Creation by Seller of the Trade Name Sub. Prior to the Delivery
Date TJX shall establish the Trade Name Sub as a wholly-owned subsidiary of
Seller incorporated in the State of Delaware and shall transfer or license to
the Trade Name Sub certain trademarks as described in the Trademark Agreements.
5.9. Reimbursement by the Parties.
(a) To the extent that TJX or Seller, on the one hand, or
Buyer, on the other hand, receive any payment after the Closing which
belongs to the other party, it shall promptly pay over such payment to
the other party.
(b) Buyer shall promptly reimburse TJX for any post-Closing
drawdowns made upon TJX or any of its subsidiaries under letters of
credit or under any Guarantees for merchandise included in the
Purchased Assets received after the Closing.
5.10. Efforts to Obtain Satisfaction of Conditions. Each party hereto
covenants and agrees to use all commercially reasonable efforts to obtain the
satisfaction of the conditions specified in this Agreement including, without
limitation, its commercially reasonable efforts to obtain all necessary
consents, approvals and waivers to the consummation of the transactions
contemplated by this Agreement.
5.11. Acquisition Proposals. Following the execution of this Agreement
and prior to any termination hereof, neither TJX nor Seller, nor any of their
respective directors, officers, employees or other representatives or agents
shall, directly or indirectly, communicate, solicit, initiate, encourage or
participate (including furnishing non-public information concerning Seller's
business, properties or assets) in any discussions or negotiations with regard
to any proposal (other than the transaction contemplated by this Agreement) for
a tender offer,
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exchange offer, merger or other business combination involving Seller or CDM or
for the acquisition of an equity interest in, or a substantial portion of the
assets of, Seller or CDM (an "Acquisition Proposal"). TJX and Seller each agree
to promptly communicate to Buyer the identity of any other party and the initial
terms of any proposal any of them may receive from any other party in respect of
an Acquisition Proposal.
5.12. Certain Employment and Employee Benefit Matters.
(a) Employment. Except for the CDM employee, Buyer agrees to
employ from and after the Closing all persons (the "Employees")
employed by the Division immediately prior to the Closing, including
any such employee absent from active service by reason of illness,
disability, or leave of absence whether paid or unpaid, at salary and
wage rates not less than those paid prior to the Closing. Nothing in
the preceding sentence shall preclude Buyer from terminating any
Employee after the date of the Closing, subject to the other provisions
of this Agreement; provided that with respect to any such termination
of employment occurring within six months following the Closing, Buyer
shall honor all severance policies, agreements, or other arrangements
that are contemplated by this Agreement to be in effect with respect to
the terminated Employee immediately after the Closing.
(b) Continuation of Welfare Benefits. For a period of not less
than six months from and after the Closing, and thereafter to the
extent required by law, Buyer shall make available to the Employees
(and their spouses and dependants) medical, dental, life insurance, and
disability benefits in each case substantially equivalent to the
medical, dental, life insurance and disability benefits that were
available generally to the Employees (including spouses and dependents)
under the applicable Employee Welfare Plans prior to the Closing;
provided, that the eligibility of an Employee (and his or her spouse
and dependents) for such benefits upon and after Closing shall be
determined (i) without regard to any preexisting-condition,
waiting-period, actively-at-work or similar exclusion or condition
except for any such to which such Employee is subject under the
applicable Employee Welfare Plans immediately prior to the Closing, and
(ii) after taking into account for eligibility purposes the Employee's
service with Seller and any Benefit Plan Affiliate prior to the
Closing.
(c) Liability of Seller, etc. for Certain Claims. From and
after the Closing, Seller and its Benefit Plan Affiliates shall be
liable for all welfare-benefit and fringe-benefit claims that were
incurred prior to the Closing by the Employees (or their eligible
spouses and dependents) and that are presented within twelve (12)
months following the Closing. For purposes of the foregoing sentences,
a claim will be deemed to have been incurred when an individual is
provided with medical, dental, vision or other services that are
covered expenses and give rise to the claim; provided, that a claim for
life insurance or similar death benefits will be deemed to have been
incurred at time of death. In addition, Seller and its Benefit Plan
Affiliates shall
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provide and remain liable for continuation of coverage required under
Sections 601 through 608 of ERISA and Section 4980B of the Code
("COBRA") with respect to any person as to whom the qualifying event
(as defined at Section 603 of ERISA) occurred prior to the Closing.
Buyer shall defend and indemnify Seller and its Benefit Plan Affiliates
from any and all claims, premiums, administrative fees, costs and
expenses incurred by Seller or any Benefit Plan Affiliate in connection
with or relating to COBRA continuation coverage provided to, or claimed
by, any Employee (and/or any dependent of any such Employee) with
respect to a qualifying event occurring at or after Closing, including,
without limitation, any such coverage in respect of Employees whose
group health plan coverage is eliminated, reduced, curtailed or
otherwise modified (including by reason of differences in the terms and
conditions of Buyer's plans as compared to the terms and conditions of
the applicable Employee Welfare Plan) at or after Closing.
(d) Disability and workers' compensation benefits. Seller and
its Benefit Plan Affiliates shall continue to provide and be liable for
long-term disability benefits in accordance with the terms of the
applicable Employee Welfare Plan to each individual whose claim for
such long-term disability benefits was incurred before the Closing. For
purposes of the preceding sentence, a long-term disability benefit
claim shall be treated as having been incurred before the Closing only
if the injury or illness giving rise to such claim occurred before the
Closing and such claim is covered by the long term disability benefit
insurance coverage provided by Northwestern National Life Insurance
Coverage to Seller and its Benefit Plan Affiliates as such coverage is
in effect prior to the Closing. Seller and its Benefit Plan Affiliates
shall continue to provide and be liable for workers' compensation
benefits and employer's liability benefits in accordance with the terms
of the applicable worker's compensation program and applicable law to
each individual who immediately prior to the Closing was legally
entitled to workers compensation benefits and employer's liability
benefits from Seller and its Benefit Plan Affiliates (whether or not
such legal entitlement has been established as of the Closing) for an
injury or illness which occurred before the Closing. In accordance with
past practices of the Division, Buyer shall make reasonable efforts to
encourage and accommodate the return to employment of Employees
described in the preceding two sentences.
(e) Severance, etc.. Buyer shall provide the Employees
severance arrangements as set forth in the Severance Pay Plan attached
hereto as Schedule 5.12 (the "Severance Plan"), which Buyer shall adopt
immediately after the Closing.
(f) 401(k) plan; defined benefit plan. Effective as of the
Closing, TJX shall cause the account balances of affected Employees
under TJX's 401(k) plans (the "Seller's 401(k) Plan") to be fully
vested to the extent not already vested. As soon as practicable
following Closing, TJX shall cause such vested accounts to be
transferred on a non-elective basis pursuant to Section 414(l) of the
Code to a tax-qualified 401(k)
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plan maintained by Buyer for Buyer's employees ("Buyer's Plan"), and
Buyer shall cause Buyer's Plan to accept such transferred accounts.
Buyer shall also cause Buyer's Plan, or another tax-qualified defined
contribution plan maintained by Buyer, to accept rollovers or direct
rollovers of "eligible rollover distributions," if any, made with
respect to Employees under TJX's tax-qualified defined pension plan by
reason of the transactions contemplated by this Agreement. In
connection with the transfers (including rollovers) described in the
preceding sentences, Buyer shall furnish to the administrator of the
transferor plan evidence reasonably satisfactory to the administrator
that the transferee plan of Buyer is, as of the date of the transfer,
qualified under Section 401(a) of the Code. Seller shall furnish to
Buyer evidence reasonably satisfactory to Buyer that Seller's 401(k)
Plan is, as of the date of the transfer, qualified under Section 401(a)
of the Code. The Employees shall be eligible to participate, from and
after the Closing, in Buyer's Plan in accordance with the terms of such
plan but taking into account in the case of each Employee, for
eligibility and vesting purposes, pre-Closing service creditable to
such Employee for purposes of Seller's 401(k) Plan. Nothing in this
Agreement shall be construed as requiring or contemplating any transfer
of assets (except for direct rollovers, if any, as described above)
from or special distribution or vesting under TJX's tax-qualified
defined benefit pension plan and its related trust or as entitling any
Employee to continued active participation in such plan.
(g) Deferred compensation, etc.. Seller shall continue to be
liable for benefits, if any, accrued with respect to Employees prior to
the Closing under Seller's General Deferred Compensation Plan and
accrued and vested with respect to Employees prior to the Closing under
Seller's Supplemental Executive Retirement Plan.
(h) Employees covered by a collective bargaining agreement.
Notwithstanding any provision of this Section 5.12, in the case of any
Employee who is covered by a collective bargaining agreement, Buyer
shall offer employment on such terms and provide only such pay and
benefits as are provided for in the Assumed Union Agreement. Without
limiting the foregoing, the parties shall take such actions with
respect to the Multiemployer Plan as are described in Section 5.4.
(i) Cooperation. In connection with any benefits that may be
paid or payable to an Employee following the Closing under any Employee
Plan, Buyer shall cooperate with and assist Seller and its Benefit Plan
Affiliates in obtaining all necessary consents and in providing to the
Employee all necessary disclosures. Seller shall also cooperate with
Buyer in Buyer's efforts to succeed to or obtain the benefit of
Seller's unemployment insurance rating reserve account (or comparable
concept) in each relevant jurisdiction.
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5.13. Bulk Transfers. The parties hereto waive compliance with the
requirements of any so-called Bulk Sales law of any jurisdiction in connection
with the sale of the Purchased Assets to Buyer.
5.14. Consents to Assignment. To the extent any of the Transferred
Leases or Contracts provides that such Transferred Lease or Contract may not be
assigned to Buyer without the written consent of the lessor, any mortgagee,
lender or other third party (collectively, a "Consenting Party") or if Buyer
should reasonably request any nondisturbance agreement, each of TJX and Seller
shall use their commercially reasonable efforts to secure and to deliver all
necessary consents and nondisturbance agreements to Buyer at or prior to the
Closing; provided that, without the written consent of Buyer or Seller, as
applicable, no such consent or nondisturbance agreement shall require any
payment by Buyer, Seller or CDM or result in an increase in the continuing
obligations thereunder.
5.15. Sharing of Data. The parties agree that from and after the
Closing:
(a) TJX and Seller shall have the right for a period of five
years following the Closing (or such longer period as shall be
necessary to satisfy TJX's legal and tax obligations or requirements)
to have reasonable access to such books, records and accounts,
including financial and tax information, correspondence, production
records, employment records and other similar information as are
transferred to Buyer pursuant to the terms of this Agreement for the
limited purposes of concluding its involvement in the business of the
Division prior to the Closing, engaging in related litigation with
third parties and complying with its obligations under applicable
securities, tax, environmental, employment or other laws and
regulations. Buyer shall have the right for a period of five years
following the Closing (or such longer period as shall be necessary to
satisfy Buyer's legal and tax obligations or requirements) to have
reasonable access to those books, records and accounts, including
financial and tax information, correspondence, production records,
employment records and other records as are retained by TJX and Seller
pursuant to the terms of this Agreement to the extent that any of the
foregoing relates to the business of the Division transferred to Buyer
hereunder, or is otherwise needed by Buyer for the purpose of engaging
in related litigation with third parties, or in order to comply with
its obligations under applicable securities, tax, environmental,
employment or other laws and regulations. Each party hereby covenants
to the other parties that it will keep such books, records, accounts,
and information in existence and in good order for such period of time
as the other parties are entitled to reasonable access thereto pursuant
to this Section 5.15.
(b) Buyer shall make available to TJX or Seller upon written
request (i) copies of any books or records of the Division, (ii)
Buyer's personnel to assist TJX or Seller in locating and obtaining any
books or records of the Division, and (iii) any of Buyer's personnel
whose assistance or participation is reasonably required by TJX or
Seller or
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any of its affiliates in anticipation of, or preparation for, existing
or future litigation, Returns or other matters in which TJX, Seller or
any of their affiliates is involved.
(c) Each of TJX and Seller hereby covenant and agree that they
will keep confidential all information obtained or retained pursuant to
the provisions of this Section 10.1 in accordance with the provisions
of the Confidentiality Agreement. The provisions contained in such
Confidentiality Agreement are hereby incorporated herein by this
reference.
(d) TJX may retain copies of any books, records and accounts
of Seller and CDM. TJX may utilize such books, records and accounts
only to satisfy, enforce or defend its obligations and rights hereunder
or under any Transaction Agreements or for tax purposes or for purposes
relating to any litigation, suit, action, investigation, proceeding or
controversy affecting TJX, Seller, CDM or Trade Name Sub.
(e) At all times from and after the Closing, each of Seller
and Buyer shall use reasonable efforts to make available to the other
upon written request its and its Subsidiaries' officers, directors,
employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal, administrative or
other proceedings in which the requesting party may from time to time
be involved.
(f) Except to the extent otherwise contemplated by the
Services Agreement or any other Transaction Agreement, a party
providing information, services or personnel to the other party under
this Section 5.15 shall be entitled to receive from the recipient, upon
the presentation of invoices therefor, payments for such amounts,
relating to supplies, disbursements and other out-of-pocket expenses,
as may be reasonably incurred in providing such Information or
Services; provided, however, that no such reimbursements shall be
required for the salary or cost of fringe benefits or similar expenses
pertaining to personnel of the providing party.
5.16. Use of Name. From and after the Closing, TJX and Seller agree not
to use or permit any of their respective subsidiaries to use the name
"▇▇▇▇▇▇▇▇'▇", "▇▇▇▇▇▇▇▇'▇ of Boston", or any of the other names that constitute
tradenames that are being transferred to Buyer pursuant to the terms of this
Agreement, or any derivation or any name likely to be confused therewith after
the Closing in connection with any business except for (a) such use as is
contemplated by the Trademark Agreements; (b) licenses other than for tradenames
owned by the Division or for which the Division has an exclusive license; (c)
any of the other marks that constitute trademarks or tradenames as to which
Buyer at any time ceases to have exclusive right of use, other than rights
transferred by Buyer to third parties after the Closing and (d) ministerial use
by Seller of the corporate names "▇▇▇▇▇▇▇▇'▇, Inc." or "▇▇▇▇▇▇▇▇'▇ of Boston,
Ltd.", which Seller agrees to change or cause to be changed as soon as
practicable, and in any event within ten business days after the Closing.
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5.17. Certain Matters Pertaining to Taxes.
(a) Income Taxes. TJX, Seller and CDM will include the income
of the Division on their respective Income Tax Returns for all periods
through the Closing and pay any Income Taxes attributable to such
income. TJX shall be liable for and pay and shall indemnify and hold
harmless Buyer from and against any and all damages, losses and expense
arising out of any liability for all Income Taxes of Seller, CDM or
TJX.
(b) Transfer Taxes. Notwithstanding any other provisions of
this Agreement to the contrary, Buyer shall pay, or cause to be paid,
all the following Transfer Taxes:
(i) all Transfer Taxes incurred in connection with
the sale and transfer of the Purchased Assets under this
Agreement and the "Purchased Assets" under, and as defined in,
the CDM Agreement, and Buyer shall promptly reimburse Seller
on an after-tax basis for any such tax, fee or duty which it
is required to pay under applicable law;
(ii) all Transfer Taxes for any period ending on the
Closing which were not required to be paid prior to the
Closing and which are reflected on the Closing Balance Sheet;
and
(iii) all Transfer Taxes asserted to be due for
periods prior to the date of the Closing which were not
reflected on Returns filed with the jurisdiction asserting
liability, except to the extent that it is finally determined
that such liability is based on the presence or actions of TJX
or its affiliates other than Seller or CDM in such
jurisdiction.
Except as provided above in this paragraph (b), Seller shall
be responsible for payment of all Transfer Taxes asserted to be due for
periods prior to the Closing.
(c) Other Taxes. With respect to Other Taxes, Buyer shall be
responsible for preparing, and filing on Seller's behalf, all Returns
required to be filed subsequent to the date of the Closing and for
paying all such Taxes other than (i) Other Taxes arising with respect
to Excluded Assets (irrespective of whether such Other Taxes relate to
transactions or events occurring before or after the Closing) and (ii)
Other Taxes which Seller is expressly obligated to pay hereunder.
(d) Buyer's Taxes and Obligations. Buyer shall indemnify and
hold TJX and its affiliates, including Seller and CDM, harmless from
any loss, liability or expenses of such persons arising out of any
claims for Taxes pertaining to operations of Buyer after the date of
the Closing, any transactions of Buyer which are not contemplated
hereby and which are outside the ordinary course of business occurring
as of the
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Closing or subsequent to the Closing and such Taxes attributable to
pre-closing events or transactions as are included within the Assumed
Liabilities.
(e) Cooperation. Seller and Buyer shall reasonably cooperate
and shall cause their respective Affiliates, agents, auditors,
representatives, officers and employees reasonably to cooperate, in
preparing and filing all Tax Returns (including amended returns and
claims for refund), including maintaining and making available to each
other all records necessary in connection with Taxes and in resolving
all disputes and audits with respect to all taxable periods relating to
Taxes. Buyer shall provide Seller with pre-closing data relevant to the
preparation of Seller's Income Tax Returns within 45 days following the
Closing and shall provide Seller with confirmation that accrued Taxes
on the Closing Balance Sheet have been paid promptly following such
payment. Buyer and Seller agree to retain or cause to be retained all
books and records pertinent to the Business until the applicable period
for assessment under applicable law (giving effect to any and all
extensions or waivers) has expired, and to abide by or cause the
abidance with all record retention agreements entered into with any
taxing authority. Buyer and Seller each agree to give the other
reasonable notice prior to transferring, discarding or destroying any
such books relating to Tax matters and, if the other party so requests,
shall allow such other party to take possession of such books and
records. Buyer and Seller shall cooperate with each other in the
conduct of any audit or other proceedings involving the Business for
any Tax purposes and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent
of this subsection. For any Transfer Tax Return or Other Tax Return
that Buyer is responsible for filing and that requires the signature of
an officer of Seller or CDM, Buyer shall present a completed Return for
the signature of an appropriate officer. Buyer shall give such officer
any support for the Tax Return reasonably requested by such officer.
The officer shall sign the return and deliver it to Buyer as soon as
reasonably practicable.
(f) At Buyer's request, TJX, Seller and CDM shall cooperate
with Buyer and treating Buyer as a successor employer for purposes of
any payroll tax purpose, including but not limited to withholding,
social security and unemployment insurance taxes.
5.18. Further Assurances. From time to time after the Closing, at the
request of Buyer, Seller shall execute and deliver any further instruments and
take such other action as Buyer may reasonably request to vest or confirm in
Buyer title to the Purchased Assets or otherwise carry out the transactions
contemplated hereby.
5.19. Title Matters. Seller will cooperate with Buyer in Buyer's
efforts to obtain a title insurance policy with respect to the Fee Property. The
cost of such title insurance policy shall be borne solely by Buyer. Seller has
delivered or will deliver to Buyer copies of any surveys of the Fee Property in
Seller's possession.
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5.20. Environmental Investigations. The parties covenant and agree
as follows:
(a) Defined Terms.
(i) "Remedial Work" means activities which are
necessary to remediate an environmental condition in order to
cause such condition not to be in violation of Environmental
Law, including, without limitation, remedial investigations,
remedial action plans, removal, treatment, storage,
transportation and disposal of Hazardous Substances.
(ii) "Remediation Costs" means the cost (not
including allocated overheads or other internal costs) of
performing the Remedial Work. Remediation Costs shall not
include the cost of the Phase I Environmental Investigations
or the Phase II Environmental Investigations.
(iii) "Phase I Environmental Investigations" means
the types of activities usually associated with Phase I
environmental investigations including, but not limited to,
site inspections, records review, interviews with government
officials and employees of Seller and CDM and related report
preparation.
(iv) "Phase II Environmental Investigations" means
the types of activities usually associated with Phase II
environmental investigations including, but not limited to,
soil and groundwater sampling and related data and report
preparation.
(b) Phase I Environmental Investigations. Buyer may conduct a
Phase I Environmental Investigation in respect of the Fee Property. If
Buyer elects to perform any such Phase I Environmental Investigation,
then such Investigation shall be conducted by Prime Engineering or a
nationally recognized environmental consulting firm to be selected by
Buyer or its lenders with the reasonable approval of TJX. All costs of
the Phase I Environmental Investigations shall be the sole
responsibility of Buyer.
(c) Phase II Environmental Investigations. If the Phase I
Environmental Investigation report in respect of the Fee Property
reasonably recommends the performance of a Phase II Environmental
Investigation at any real property, then Buyer shall have the right to
perform any such Phase II Environmental Investigation. All costs of the
Phase II Environmental Investigations shall be the sole responsibility
of Buyer. Buyer shall indemnify and hold harmless Seller from and
against any and all losses, liabilities, claims, damages or expenses
(including reasonable legal fees) suffered or incurred by Seller to the
extent arising out of or based on any such
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investigation; without limiting the generality of the foregoing, Buyer
shall repair any damage occurring to the Fee Property in connection
with such investigation.
(d) Cooperation. When consents of third parties are required
for access to conduct an environmental investigation of any real
property, Seller shall exercise commercially reasonable efforts to
obtain the consent of such third parties. Seller shall cooperate in all
reasonable respects to permit the conduct of the Phase I and Phase II
Environmental Investigations upon reasonable notice and during normal
business hours, provided that such Environmental Investigations shall
not interfere with the conduct of the Business.
(e) Environmental Reports. TJX shall be entitled to review on
an ongoing basis the data and work papers of the environmental
consulting firm and Buyer with respect to any Remediation Costs or
Remediation Work. Final Phase I Environmental Investigation reports and
Phase II Environmental Investigation reports (collectively, the
"Environmental Reports") shall include a reasonable estimate of the
reasonable and probable Remediation Costs.
(f) Remediation Costs. If the Environmental Reports disclose
that Remediation Costs that may reasonably be expected to be required
by law to be paid by Buyer will exceed $2,000,000, then Buyer may
terminate this Agreement in accordance with the provisions of Section
10 unless TJX and Seller jointly and severally indemnify Buyer, on
terms reasonably satisfactory to Buyer, for such excess and the
Remedial Work would not cause a material disruption of the operation of
the Fee Property. If Buyer does not elect to terminate this Agreement
pursuant to the terms of this subparagraph, then Buyer shall be solely
responsible for all Remediation Costs.
5.21. Deferred Payment Receivables. Within three business days after
the Closing, Buyer shall deliver, on paper and on electronic media, a list of
all Deferred Payment Receivables as of the close of business on the Closing,
including amounts, account numbers and ▇▇▇▇ dates of each separate Deferred
Payment Receivable. If not included on such list, the name, address and
telephone number of the customer associated with each Deferred Payment
Receivable shall be furnished to Seller promptly upon request. Seller will
process and submit such Deferred Payment Receivables for payment to its account
in accordance with its practices and policies (including deferred payment
policies) as in effect immediately prior to the Closing, and will employ its
customary collection practices in attempting to realize upon the Deferred
Payment Receivables.
(a) If merchandise giving rise to such a Deferred Payment
Receivable is returned to Buyer prior to the ▇▇▇▇ date of the Deferred
Payment Receivable, Buyer shall promptly notify Seller. Seller shall
refrain from submitting such Deferred Payment Receivable for payment,
and Buyer shall promptly pay to Seller an amount equal to such Deferred
Payment Receivable.
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(b) If merchandise giving rise to such a Deferred Payment
Receivable is returned to Buyer after the ▇▇▇▇ date of the Deferred
Payment Receivable, any credit issued by Buyer shall be issued from
Buyer's account.
(c) If the issuing bank or other issuer refuses payment of a
Deferred Payment Receivable (referred to as a "hard decline"), Seller
shall bear such loss and may attempt to collect the amount of such
Deferred Payment Receivable from the customer in accordance with its
customary collection practices.
(d) All "charge-backs" of Deferred Payment Receivables will be
made by the issuing bank or other issuer to and against Seller's
account. If Seller has received reasonable indication from the issuing
bank, other issuer or the customer that such "charge-back" resulted
from a return of merchandise, Buyer shall promptly pay to Seller an
amount equal to such Deferred Payment Receivable. In addition, if and
to the extent that the aggregate amount of all "charge backs" of
Deferred Payment Receivables against Seller's account that have not
been reimbursed by Buyer exceeds $250,000, Buyer shall promptly pay to
Seller an amount equal to such excess.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligations of Seller and Buyer under this Agreement to consummate
the transactions described in Sections 1.1, 1.2 and 1.3 at the Closing are
subject to the fulfillment, on or before the Closing, of the following
conditions precedent, unless waived in writing by all parties hereto:
6.1. Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation
(including the expiration or termination of any waiting periods under the HSR
Act, if applicable, but excluding consents, authorizations and approvals
relating to use, occupancy, tax liens and similar matters) for the consummation
of the transactions contemplated by this Agreement shall have consented to,
authorized, permitted or approved such transactions.
6.2. Adverse Proceedings. The respective obligations of each party to
effect the transactions contemplated by the Agreement shall be subject to the
conditions that no United States or state governmental authority or other agency
or commission or United States or state court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary, or
permanent) which is in effect and has the effect of prohibiting consummation of
the transactions contemplated by this Agreement.
6.3. Transaction Agreements. The other parties hereto that are
intended to be parties thereto shall have entered into a Services Agreement
the "Services Agreement"),
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Trademark Agreements (the "Trademark Agreements"), a New York City Buying Office
Letter (the "New York City Buying Office Letter"), and an Inventory Purchase
Agreement (the "Inventory Purchase Agreement"), each in substantially the form
of Exhibits 6.3A, 6.3B, 6.3C and 6.3D, respectively, and a Registration Rights
Agreement (the "Registration Rights Agreement") in form and substance reasonably
satisfactory to TJX and Buyer.
6.4. Assumed Union Agreement. The Assumed Union Agreement shall
have become effective upon the Closing.
7. CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement to purchase the Purchased
Assets and assume the Assumed Liabilities and to issue the Buyer Notes at the
Closing are subject to the fulfillment, on or before the Delivery Date, of the
following conditions precedent, each of which may be waived in writing in the
sole discretion of Buyer:
7.1. Continued Truth of Representations and Warranties of TJX and
Seller; Compliance with Covenants and Obligations. Subject to Section 5.3, the
representations and warranties of TJX and Seller shall be true on and as of the
Delivery Date in all material respects as though such representations and
warranties were made on and as of the Delivery Date, except for any changes
permitted by the terms hereof or contemplated herein and except as to
representations and warranties made as of a specific date, which shall be
correct as of such date. Each of TJX and Seller shall have performed and
complied in all material respects with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
7.2. Opinions of Counsel. Buyer shall have received the opinions
of Ropes & ▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., counsel to TJX and Seller,
respectively, in form and substance reasonably satisfactory to Buyer.
7.3. Closing Deliveries. Buyer shall have received at or prior to
the closing on the Delivery Date each of the following:
(a) a certificate signed by the President or any Vice
President of each of TJX and Seller, dated as of the Delivery Date, to
the effect that the conditions specified in Section 7.1 have been
satisfied;
(b) certificates of the Secretary of State of The Commonwealth
of Massachusetts, where available prior to the Delivery Date, the State
of Nevada and the State of Delaware as to the legal existence and good
standing (including tax where available prior to the Delivery Date) of
Seller, CDM and the Trade Name Sub, respectively;
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(c) certificates of the Secretary or any Assistant Secretary
of TJX and Seller, respectively, attesting to the incumbency of TJX's
and Seller's officers, respectively, the authenticity of the
resolutions authorizing the transactions contemplated by the Agreement,
and the authenticity and continuing validity of the charter documents
delivered pursuant to Section 2.1;
(d) a cross-receipt executed by Seller;
(e) one or more bills of sale, in form and substance
reasonably satisfactory to Buyer (the "Bills of Sale"), conveying in
the aggregate all of the Division's owned personal property included in
the Purchased Assets;
(f) Lease Assignment and Assumption Agreements for each real
property lease and personal property lease included in the Purchased
Assets and Assumed Liabilities, in form and substance reasonably
satisfactory to Buyer (the "Lease Assignment and Assumption
Agreements");
(g) A deed for the Fee Property and any other parcel of owned
real estate included in the Purchased Assets, in form and substance
reasonably satisfactory to Buyer (each, a "Deed");
(h) such other bills of sale, assignments and other
instruments of transfer as may be necessary conveying and transferring
to Buyer title to the Purchased Assets not transferred by the documents
described in subparagraphs (e) through (g) above; and
(i) such other documents, instruments or certificates as
Buyer may reasonably request.
7.4. CDM Agreement. CDM shall have executed and delivered the CDM
Agreement and all conditions precedent to Buyer's obligation to close thereunder
shall have been satisfied or waived.
7.5. Material Adverse Change. Since July 27, 1996, there shall
have been no material adverse change in the assets, financial condition,
prospects or results of operations of the Division.
8. CONDITIONS TO OBLIGATIONS OF SELLER.
The obligations of Seller under this Agreement to sell and deliver the
Purchased Assets at the Closing are subject to the fulfillment, on or before the
Delivery Date, of the following conditions precedent, each of which may be
waived in writing at the sole discretion of Seller:
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8.1. Continued Truth of Representations and Warranties of Buyer;
Compliance with Covenants and Obligations. The representations and warranties of
Buyer in this Agreement shall be true on and as of the closing on the Delivery
Date in all material respects as though such representations and warranties were
made on and as of such date, except for any changes permitted by the terms
hereof or consented to in writing by Seller and except, in the case of the
representations and warranties contained in Section 3.8, for further amendments
to the Agreement of Limited Partnership referenced therein, true and complete
copies of which shall have been furnished to Seller, that do not have an adverse
effect on the value or rights of the Buyer Notes. Buyer shall have performed and
complied in all material respects with all terms, conditions, obligations,
agreements and restrictions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.2. Opinion of Counsel. Seller shall have received the opinions
of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, counsel to Buyer, in form and
substance reasonably satisfactory to Seller.
8.3. Closing Deliveries. Seller shall have received at or prior to
the Closing each of the following:
(a) a certificate signed by the President or any Vice
President of Buyer, dated as of the Closing, to the effect that the
conditions specified in Section 8.1 have been satisfied;
(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing (including tax)
of Buyer in Delaware;
(c) certificates of the Secretary or any Assistant Secretary
of Buyer attesting to the incumbency of Buyer's officers, the
authenticity of the resolutions authorizing the transactions
contemplated by this Agreement, and the authenticity and continuing
validity of the charter documents delivered pursuant to Section 3.1;
(d) payment of the Estimated Cash Purchase Price by wire
transfer in immediately available funds;
(e) the Buyer Notes executed by Buyer;
(f) a cross-receipt executed by Buyer; and
(g) such other documents, instruments or certificates as
Seller may reasonably request.
8.4. Assumption Documents. Upon the terms and subject to the
conditions contained herein, at the Closing, Buyer shall execute and deliver to
Seller one or more
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instruments of assumption for the Assumed Liabilities, including the Lease
Assignment and Assumption Agreements, in forms reasonably satisfactory to Buyer
and Seller.
8.5. CDM Agreement. Buyer shall have executed and delivered the CDM
Agreement and all conditions precedent to CDM's obligation to close thereunder
shall have been satisfied or waived.
8.6. Material Adverse Charge. Since August 3, 1996, there shall
have been no material adverse change in the assets, financial condition,
prospects or results of operations of Buyer and its subsidiaries taken as a
whole.
9. INDEMNIFICATION.
9.1. Indemnification by TJX and Seller. Each of TJX and Seller hereby,
jointly and severally, agrees to indemnify each of Buyer, its subsidiaries and
their respective affiliates, officers and directors (each, an "indemnified
party") against and hold them harmless from any loss, liability, claim, damage
or expense (including reasonable legal fees and expenses and including all
amounts paid in the investigation or defense of the foregoing) suffered or
incurred by any such indemnified party to the extent arising out of or based
upon (i) subject to Section 5.3, any breach of any representation or warranty of
TJX, Seller or CDM contained in this Agreement or the CDM Agreement or in any
certificate or document delivered by TJX, Seller or CDM pursuant hereto or
thereto which by the terms of and in accordance with Section 9.3 survives the
Closing; (ii) any breach of any covenant or agreement of TJX, Seller or CDM
contained in this Agreement or the CDM Agreement; (iii) any of the Excluded
Liabilities; (iv) the enforcement by Buyer of this Section 9.1; and (v) WARN or
any state plant closing or notification law to the extent arising out of or
based upon any actions taken or omissions made by Seller with respect to the
Division prior to the Closing; provided, however, that no such indemnified party
shall be entitled to receive any amount pursuant to clause (i) above unless the
aggregate of all losses, liabilities, costs and expenses relating thereto for
which TJX and Seller would, but for this proviso, be liable exceeds on a
cumulative basis $2,500,000, and then only to the extent of any such excess.
Further, TJX and Seller shall not be required to indemnify the indemnified
parties to the extent any losses, liabilities, costs and expenses, withholding
any identification pursuant to Section 9.4, in the aggregate exceed the sum of
the Cash Purchase Price plus $20,000,000.
9.2. Indemnification by Buyer. Buyer hereby agrees to indemnify each of
TJX, its subsidiaries and their respective affiliates, officers and directors
(each, an "indemnified party") against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by any such indemnified party to the extent
arising from (i) any breach of any representation or warranty of Buyer contained
in this Agreement which by the terms of Section 9.3 survives the Closing; (ii)
any breach of any covenant or agreement of Buyer contained in this Agreement;
(iii) any of the Assumed Liabilities, (iv) except to the extent specifically
contemplated by this Agreement, all
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other matters arising out of or in connection with the operation, assets or
liabilities of the Business or the Purchased Assets after the Closing; (v) any
Guarantee or obligation to assure performance or letter of credit given or made
by TJX, Seller or an affiliate of TJX with respect to any obligation of Seller
or CDM being assumed by Buyer, (vi) the enforcement by TJX or Seller or its
affiliates or any indemnified party of this Section 9.2; and (vii) WARN or any
state plant closing or notification law, to the extent arising out of or based
upon any actions taken or omissions made by Buyer with respect to the Division
after the Closing.
9.3. Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto:
(a) pursuant to clause (i) of Section 9.1 and clause (i) of
Section 9.2, shall terminate on the earlier of October 31, 1998 or 120
days after the end of the first full, 12-month fiscal year of Buyer
following the Closing in respect of which audited financial statements
of Buyer shall have been prepared (the "Expiration Date"); provided,
however, that the obligations to indemnify and hold harmless a party
hereto pursuant to clause (i) of Section 9.1 and clause (i) of Section
9.2 (X) with respect to the breach of any representation or warranty
contained in Section 2.1, 2.2, 3.1 or 3.2 hereof, or in Section 2.1 or
2.2 of the CDM Agreement, shall not terminate, (Y) with respect to the
breach of any representation or warranty contained in Section 2.4, 2.11
or 2.16, shall terminate on the date that is four years after the
Closing, and (Z) with respect to the breach of any representation and
warranty contained in Section 2.5, shall terminate on the last day of
the applicable statute of limitations;
(b) pursuant to clause (ii) of Section 9.1 shall survive
indefinitely (except the obligations to indemnify and hold harmless
with respect to a breach of any covenant set forth in Sections 5.1 and
5.2 shall terminate on the Expiration Date); and
(c) pursuant to the other clauses of Section 9.1 and of
Section 9.2 hereof, shall not terminate;
provided, however, that as to clause (a) or (b) above such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to
which the person to be indemnified (or the related party thereof) shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such claim) to
the party to be providing the indemnification.
9.4. Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the "Indemnified
Party"), shall promptly notify the party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for such claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure.
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The Indemnifying Party shall deal in good faith with the Indemnified Party's
claim for indemnification, and shall respond within a reasonable time period. In
the event of any such claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by a third party, the notice to
the Indemnifying Party shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom.
9.5. Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding. The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such action, with its counsel and at its own expense. If the Indemnifying Party
does not assume the defense of any such claim or litigation resulting therefrom
within 30 days after the date the Indemnifying Party receives notice of such
claim, (a) the Indemnified Party may defend against such claim or litigation
with its own counsel and at the expense of the Indemnifying Party and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its own counsel and at its own expense. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party which consent shall not be unreasonably
withheld, except that the Indemnified Party may compromise or settle any such
claim in the event the Indemnifying Party fails to assume the defense of such
claim as provided in the prior sentence. Except for the settlement of a claim
which involves the payment of money only (in which case the Indemnifying Party
shall give the Indemnified Party the opportunity to discuss with it such
payment, which opportunity shall not affect the right of the Indemnifying Party
to effect such settlement in its full discretion), the Indemnifying Party shall
not settle or compromise any claim without the prior written consent of the
Indemnified Party.
9.6. Exclusive Remedy. Except in any case involving actual fraud, any
violation of Section 5.7 or any violation of Section 5.18, or as otherwise
expressly set forth in this Agreement, the parties' sole and exclusive remedy
(other than termination pursuant to Section 10) with respect to any and all
claims relating to the subject matter of this Agreement or the CDM Agreement
shall be pursuant to the indemnification provisions set forth in this Section 9.
10. TERMINATION OF AGREEMENT.
10.1. Termination by Agreement of the Parties or by Passage of Time.
This Agreement may be terminated by the mutual written agreement of the parties
hereto or by any party hereto or thereto if the transactions contemplated herein
and therein have not been consummated on or before December 23, 1996, unless
such failure shall have resulted from any willful breach of any representation,
warranty or covenant by the party proposing termination; provided that such date
may be deferred to a date no later than January 27, 1997 that is the first
Monday that is at least three business days after the expiration or termination
of
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any waiting periods under the HSR Act, if applicable, and provided further that
if TJX or Seller shall deliver supplemental information to Buyer pursuant to
Section 5.3, then such termination date shall be the later of (a) the date
determined pursuant to the foregoing provisions of this sentence and (b) the
first Monday that is at least five days after the date on which such
supplemental information was delivered to Buyer. This Agreement may be
terminated by TJX and Seller on the one hand, or by Buyer on the other hand, if
there is a material breach by the other party or parties hereto of any
representation, warranty, covenant or agreement on the part of such other party
or parties set forth in this Agreement, or if a representation or warranty of
such other party shall be untrue in any material respect, or if any condition
specified in Section 6, 7 or 8 to the obligations of the terminating party
cannot be satisfied at Closing; and in any such case such other party or parties
acknowledges in writing that the conditions specified in Section 6 or in Section
7 or 8, as the case may be, to the obligations of the terminating party cannot
be satisfied at Closing. In the event of such termination by agreement or
passage of time (other than as a result of any such willful breach), Buyer shall
have no further obligation or liability to TJX or Seller under this Agreement,
and TJX and Seller shall have no further obligation or liability to Buyer under
this Agreement.
10.2. Termination by Reason of Breach. This Agreement may be terminated
by TJX or Seller, if any time prior to the Closing there shall occur a material
or willful breach of any of the representations, warranties or covenants of
Buyer or the failure by Buyer to perform any material condition or obligation
hereunder, and may be terminated by Buyer, subject to Section 5.3, if at any
time prior to the Closing there shall occur a material or willful breach of any
of the representations, warranties or covenants of TJX or Seller or the failure
of TJX or Seller to perform any material condition or obligation hereunder. If
this Agreement is terminated by reason of breach, subject to Section 5.3, the
breaching party shall indemnify the non-breaching party for all costs and
expenses incurred by the non-breaching party (including all legal, accounting or
other professional fees and commitment fees); provided, that the non-breaching
party shall have any and all further rights and remedies available to it under
law or equity as a result of such breach.
11. BROKERS.
11.1. For TJX and Seller. Each of TJX and Seller represents and
warrants that it has not engaged any broker or finder (other than Salomon
Brothers Inc and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated) or incurred any liability
for brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement other than to Salomon Brothers Inc
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated. Each of TJX and Seller agrees to pay all
fees, expenses and other compensation owed to Salomon Brothers Inc and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated, in respect of its services to TJX and Seller, and
agrees to indemnify and hold harmless Buyer against any claims or liabilities
asserted against it by any person acting or claiming to act as a broker or
finder on behalf of any of them. Neither Seller nor CDM is currently bound by
any agreement for the provision of investment banking or financial advisory
services with respect to any proposed recapitalization or issuance of debt or
equity
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securities of Seller or CDM, or the provision of any other investment banking or
financial advisory services to Seller or CDM, except in connection herewith.
11.2. For Buyer. Buyer represents and warrants that it has not engaged
any broker or finder (other ▇▇▇▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇) or
incurred any liability for brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement other than to
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇. Buyer agrees to pay all fees, expenses
and other compensation owed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ in respect of its services to
Buyer, and agrees to indemnify and hold harmless each of TJX and Seller against
any claims or liabilities asserted against it by any person acting or claiming
to act as a broker or finder on behalf of Buyer.
12. DEFINED TERMS.
12.1. The following terms defined elsewhere in this Agreement as set
forth below shall have the respective meaning therein defined:
Terms Section
Additional Tax Adjustment......................................................Section 1.5(b)
Alternative Accountants........................................................Section 1.4(b)
Assumed Liabilities............................................................Section 1.2
Assumed Union Agreement........................................................Section 5.4
Balance Sheet..................................................................Section 2.17
Benefit Plan Affiliate.........................................................Section 2.11
Business.......................................................................Preamble
Base Rate......................................................................Section 1.4(d)
Bills of Sale..................................................................Section 7.3
Buyer..........................................................................Preamble
Buyer's Financial Statements...................................................Section 3.5
Buyer's Material Adverse Effect................................................Section 3.2
Buyer's Plan...................................................................Section 5.12(f)
Capital Budget Plan............................................................Section 2.9(a)
Cash Purchase Price............................................................Section 1.4
Catalog Plan...................................................................Section 2.9
CDM............................................................................Preamble
CDM Agreement .................................................................Preamble
▇▇▇▇▇▇▇▇'▇.....................................................................Preamble
Closing Balance Sheet..........................................................Section 1.4(a)
Closing........................................................................Section 1.3
Competitive Business...........................................................Section 5.7
Confidentiality Agreement......................................................Section 4.1
Consenting Party...............................................................Section 5.14
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Contract.......................................................................Section 2.6
Contractual Obligations........................................................Section 2.6
Coopers........................................................................Section 1.4(a)
Coopers Report.................................................................Section 1.4(a)
Deed...........................................................................Section 7.3(g)
Division.......................................................................Preamble
Employees......................................................................Section 5.12
Employee Plans.................................................................Section 2.11
Employee Welfare Plans.........................................................Section 2.11
Environmental Law..............................................................Section 2.16
ERISA Plan.....................................................................Section 2.11
ERISA..........................................................................Section 2.11
Estimated Cash Purchase Price..................................................Section 1.4
Expiration Date................................................................Section 9.3
Fee Property...................................................................Section 2.4
Financial Statements...........................................................Section 2.3(a)
Financing Commitments..........................................................Section 3.7
Financing Parties..............................................................Section 3.7
Hazardous Substance............................................................Section 2.16
Indemnified Party..............................................................Section 9.4
Indemnifying Party.............................................................Section 9.4
Information....................................................................Section 5.15
Lease Assignment and Assumption Agreements.....................................Section 7.3(f)
Leases ........................................................................Section 2.4
Material Adverse Effect........................................................Section 2.1(b)
Multiemployer Plan.............................................................Section 5.4(a)
Net Federal Payment............................................................Section 1.5(b)
New York City Buying Office Letter.............................................Section 6.3
NLRB...........................................................................Section 2.8
PBGC...........................................................................Section 5.4(b)
Permits........................................................................Section 2.7
Permitted Lien.................................................................Section 2.4
Phase I Environmental Investigation............................................Section 5.20
Phase II Environmental Investigation...........................................Section 5.20
Registration Rights Agreement..................................................Section 6.3
Remedial Work..................................................................Section 5.20
Remediation Costs..............................................................Section 5.20
Seller.........................................................................Preamble
Seller Net Assets..............................................................Section 1.4(a)
Seller Net Assets Statement....................................................Section 1.4(a)
Seller's 401(k) Plan...........................................................Section 5.12(f)
Services Agreement.............................................................Section 56.3
Severance Plan.................................................................Section 5.12(d)
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Tax Adjustment.................................................................Section 1.5(b)
TJX............................................................................Preamble
Trade Name Sub.................................................................Preamble
Trade Name Sub Common Stock....................................................Section 2.1
Trademark Agreements...........................................................Section 6.3
Union..........................................................................Section 5.4
Union Agreement................................................................Section 5.4
WARN...........................................................................Section 5.4
12.2. "Accounts Receivable" shall mean the accounts receivable of
Seller included in the Closing Balance Sheet (excluding Deferred Payment
Receivables).
12.3. "Books and Records" shall mean the books of accounts and records,
computer software and records, customer, mailing, delivery, buying history and
prospect lists and other intangible assets (other than Proprietary Rights)
primarily pertaining to the Purchased Assets, the Assumed Liabilities, Seller's
customers, suppliers and employees and the Business, other than the Excluded
Assets and Excluded Liabilities.
12.4. "Buyer Notes" shall mean the Convertible Subordinated Notes, in
form and substance reasonably satisfactory to Seller and having the terms set
forth on Exhibit 12.4, having an aggregate principal amount equal to $20,000,000
to be issued by Buyer to Seller on the Delivery Date.
12.5. "Code" shall mean the United States Internal Revenue Code of
1986, as amended.
12.6. "Contract Rights" shall mean all rights and interest of Seller as
of the date of the Closing in and to all Contracts (as defined in Section 2.6 of
this Agreement), other than Excluded Assets and Excluded Liabilities.
12.7. "Debt" of any Person shall mean all obligations of such Person
(a) in respect of indebtedness for borrowed money, (b) evidenced by notes,
bonds, debentures or similar instruments, (c) for the deferred purchase price of
goods or services (other than trade payables or accruals incurred in the
ordinary course of business), (d) under capital leases and (e) in the nature of
Guarantees of the obligations described in clauses (a) through (d) above of any
other Person.
12.8. "Deferred Payment Receivables" shall mean accounts receivable
associated with the Division's deferred billing program and/or credit card sales
on or prior to the date of the Closing as set forth in the Closing Balance
Sheet.
12.9. "Encumbrances" shall mean any lien, charge, security interest
or encumbrance which secures an obligation to pay money.
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12.10. "Excluded Assets", notwithstanding any other provision of this
Agreement, shall mean the rights, titles and interests of Seller and the Trade
Name Sub in and to the following items which shall not be acquired by Buyer
hereunder;
(a) all claims, choses in action and rights or actions by
Seller, CDM or the Trade Name Sub against third parties (including, but
not limited to, claims for refunds against governmental agencies or
other entities) which do not relate primarily to the Purchased Assets
or Assumed Liabilities and all claims for refunds of Income Taxes
attributable to all periods (including partial periods) ending on or
prior to the date of the Closing;
(b) nontransferable Permits and deposits;
(c) all cash and cash equivalents on hand as of the Closing
related to the Business, wherever located, including, without
limitation, in accounts, lock boxes, and other similar accounts
(whether maintained at a bank, savings and loan or other financial
institution);
(d) all Deferred Payment Receivables;
(e) equity interests in CDM; and
(f) any other asset or right listed or described on Schedule
12.10.
12.11. "Excluded Liabilities" notwithstanding any other provision of
this Agreement, shall mean the following liabilities and obligations of the
Division:
(a) all liabilities or obligations of Seller and CDM for (i)
Income Taxes, (ii) Transfer Taxes to the extent provided in Section
5.17(b) and (iii) Other Taxes attributable to the ownership, use or
operation of Excluded Assets (but specifically excluding sales taxes on
sales of merchandise by Seller) and any assessments, fines, interest
and penalties in respect thereof;
(b) all obligations and liabilities primarily related to the
Excluded Assets (including reserves associated with the collection of
Deferred Payment Receivables and closing down the Cosmopolitan
catalog), other than liabilities and obligations for which Buyer is
liable under any Transaction Agreement;
(c) all liabilities and obligations of Seller, CDM or the
Trade Name Sub to TJX or any TJX affiliate other than Seller, CDM or
the Trade Name Sub, except for obligations referred to in clause (v) of
Section 9.2 (Guarantees, etc.) and for liabilities and obligations
listed in Schedule 12.11;
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(d) all obligations and liabilities of Seller, CDM or the
Trade Name Sub for which any of them is responsible pursuant to Section
5.12 (Certain Employment and Employee Benefit Matters);
(e) all liabilities, obligations and claims arising from
occurrences prior to the Closing which are covered by any general
liability, casualty, property damage, products liability, auto
liability, excess general liability or any insurance policy, whether or
not subject to a deductible, excluding workers compensation and
insurance programs which are subject to Section 5.12 (Certain
Employment and Employee Benefit Matters), maintained by or on behalf of
Seller, regardless of the amount of reserves, if any, established with
respect to any such liabilities, obligations and claims and regardless
of whether any claim has been made prior to the Closing with respect to
any such events or occurrences;
(f) all obligations and liabilities of Seller relating to its
proposed bank financing with Bank of Boston and The First National Bank
of Chicago:
(g) all obligations and liabilities of Seller for
professional, service and filing fees relating to the proposed initial
public offering of common stock of ▇▇▇▇▇▇▇▇'▇ of Boston, Ltd.;
(h) all obligations and liabilities of Seller relating to
costs of formation of the Trade Name Sub;
(i) all obligations and liabilities of Seller relating to fees
and commissions described in the first sentence of Section 11.1.
(j) all liabilities and obligations with respect to lawsuits
filed against Seller, CDM or the Trade Name Sub prior to the date of
this Agreement; and
(k) all other liabilities and obligations of Seller listed
on Schedule 12.11.
12.12. "Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, motor vehicles, machinery, equipment, spare and
replacement parts and all other items of tangible personal property owned by
Seller as of the date of the Closing.
12.13. "Guarantee" with respect to any Person, shall mean (i) any
guarantee of the payment or performance of, or any contingent obligation in
respect of, any Debt or other obligation of any other Person, (ii) any other
arrangement whereby credit is extended to any other Person on the basis of any
promise or undertaking of such Person (A) to pay the Debt of such other Person,
(B) to purchase any obligation owed by such other Person, (C) to purchase or
lease assets (other than inventory in the ordinary course of business) under
circumstances
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that would enable such other Person to discharge one or more of its obligations,
or (D) to maintain the capital, working capital, solvency or general financial
condition of such other Person, and (iii) any liability of such Person as a
general partner of a partnership or as a venturer in a joint venture in respect
of Debt or other obligations of such partnership or venture.
12.14. "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
12.15. "Income Tax" shall mean any Tax which is, in whole or in
part, based on or measured by income or gains.
12.16. "Inventory" shall mean all merchandise, stock-keeping units,
work-in-process, inventories and similar materials, owned by Seller as of the
Closing and used in the Business or held for resale by the Business.
12.17. "Management Employee" shall mean any individual employed by
Seller at a position of supervisor or higher.
12.18. "Other Tax" shall mean any Tax that is not an Income or
Transfer Tax.
12.19. "Permits" shall mean all of Seller's licenses, permits,
certificates, franchises and other governmental authorizations necessary to
carry on the Business as presently conducted other than such authorizations
related to Excluded Assets.
12.20. "Person" shall mean any individual, partnership, corporation,
association, trust, joint venture, unincorporated organization or other entity,
and any governmental entity.
12.21. "Proprietary Rights" shall mean all (i) fictitious names, trade
names, registered and unregistered trademarks and service marks and all related
applications, (ii) patents, patent rights and all related applications and (iii)
copyrights in published and material unpublished works.
12.22. "Purchased Assets" shall mean all of Seller's rights, title and
interest in and to all of the assets and properties primarily used in the
conduct of the Business other than Excluded Assets, whether tangible,
intangible, real, personal or mixed, and wherever located, including, without
limitation, the following:
(a) shares representing all the outstanding capital stock of
the Trade Name Sub;
(b) refunds or transferable deposits relating primarily to
the Business;
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(c) all Contract Rights and all rights and interest of Seller
in and to all other agreements, contracts, subleases, leases, and
commitments primarily related to the Business;
(d) all Accounts Receivable;
(e) the Transferred Leases;
(f) all real property;
(g) all Fixtures and Equipment;
(h) all Inventory;
(i) all Supplies;
(j) all Books and Records, subject to Section 5.5;
(k) all Proprietary Rights except as otherwise provided in
this Agreement or any other Transaction Agreement;
(l) to the extent transferable, all Permits;
(m) prepaid expenses and prepaid rent, except those relating
to Excluded Assets;
(n) the goodwill of the Business and its value as a going
concern; and
(o) all claims, judgments, choses in action and rights or
actions against third parties including, but not limited to, claims for
refunds against governmental agencies or other entities which relate
primarily to the Purchased Assets or Assumed Liabilities or the
Business.
Notwithstanding the foregoing, Purchased Assets shall not include any
Excluded Assets.
12.23. "Related Party" shall mean an "affiliate" as such term is
defined in the rules and regulations promulgated under the Securities Act.
12.24. "Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
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12.25. "SEC" shall mean the Securities and Exchange Commission.
12.26. "Securities Act" shall mean the Securities Act of 1933, as
amended.
12.27. "Supplies" shall mean all supplies, wrapping supplies and
packaging items, employee uniforms and similar items.
12.28. "Tax" shall mean any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental taxes under Code Section
59A, customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax, fee, levy, duty, impost or charge of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
12.29. "TJX Affiliated Group" shall mean the affiliated group,
within the meaning of Section 1504(a) of the Code, of which TJX is the common
parent.
12.30. "Transaction Agreements" shall include this Agreement, the
CDM Agreement, the Lease Assignment and Assumption Agreements, the Services
Agreement, the Trademark Agreements, the Bills of Sale, the Deeds, the Inventory
Purchase Agreement, the Buyer Notes, the Registration Rights Agreement and the
New York City Buying Office Letter;
12.31. "Transfer Tax" shall mean any sales, use, registration,
recording, value added, license or similar levy or fee imposed upon the transfer
of ownership or the use of tangible or intangible property, including without
limitation any deed stamp.
12.32. "Transferred Leases" shall mean all of the leases or subleases
of real and personal property to which Seller is a lessee or a sublessee that
are used in the conduct of the Business.
13. NOTICES.
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telex,
telecopier, nationally recognized overnight delivery service or registered,
certified or first class mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice:
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To TJX or Seller: The TJX Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and General Counsel
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer: Brylane, L.P.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) on the date delivered, if delivered personally; (b)
when the answer back is received if sent by telex; (c) when confirmation of
receipt is received if sent by telecopier; (d) one business day after being
sent, if sent by nationally recognized overnight delivery service; (e) three
business days after being sent, if sent by registered or certified mail; or (f)
five business days after being sent, if sent by first class mail.
14. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns (which shall be
deemed to include any person purchasing or otherwise acquiring all or
substantially all of the assets of a party hereto or any of its successors or
assigns), except that the parties may not assign their respective obligations
hereunder without the prior written consent of the other party, except that
Seller may assign its rights and obligations to any direct or indirect
subsidiary of TJX. No transfer or assignment by any party shall relieve such
party of any of its obligations hereunder.
15. ENTIRE AGREEMENT; ATTACHMENTS. This Agreement, all Exhibits and Schedules
hereto, and all agreements and instruments to be delivered by the parties
pursuant hereto in
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accordance with the applicable provisions of this Agreement or referenced herein
constitute the Agreement and (together with the Confidentiality Agreement)
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. No representations, warranties, prospectus or other
information not expressly set forth herein shall be of any force and effect,
absent actual fraud or intentional wrongdoing, and are not being relied on by
Buyer, TJX or Seller. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
16. EXPENSES.
Except as otherwise expressly provided herein, the parties shall each
pay their own expenses in connection with this Agreement and the transactions
contemplated hereby. Buyer shall pay the filing fee costs in connection with any
HSR Act filing.
17. GOVERNING LAW.
This Agreement and all rights and obligations of the parties and all
claims relating to this Agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts.
18. WAIVER OF JURY TRIAL.
Each of TJX, Seller and Buyer hereby irrevocably waives, to the fullest
extent permitted by law, all rights to trial by jury in any action, proceeding,
or counterclaim (whether based upon contract, tort or otherwise) arising out of
or relating to this Agreement or any of the transactions contemplated hereby.
19. SECTION HEADINGS.
The section headings contained herein are for the convenience of the
reader only and shall not be deemed to be a part of this Agreement.
20. KNOWLEDGE.
The term "knowledge of TJX" as used in this Agreement shall mean to the
knowledge or belief of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
of TJX or ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ of
Seller based on a reasonable diligence inquiry by such individuals in the
ordinary course of business as to the truth or accuracy of such representation
or warranty.
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21. SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
22. NO IMPLIED RIGHTS.
Nothing expressed or implied herein shall confer upon any past or
present employee of TJX, Seller or of any other affiliate of TJX, his or her
representatives, beneficiaries, successors and assigns, nor upon any collective
bargaining agent, any rights or remedies of any nature, including without
limitation, any rights to employment or continued employment with Seller, TJX,
Buyer or any successor or affiliate.
23. TRANSFER OF RIGHTS OF BUYER TO ONE OR MORE AFFILIATES; PLEDGE TO FINANCING
PARTIES. Buyer and TJX hereby agree that, at any time on or prior to the
Closing, Buyer may transfer to one of its direct, wholly-owned subsidiaries all
rights and obligations provided herein to purchase from Seller the Purchased
Assets; provided, however, that such subsidiary expressly assumes all
obligations of Buyer and that no such transfer shall relieve Buyer of any of its
obligations hereunder; and provided further that the Buyer Notes will in any
event be issued by Buyer. In addition, TJX agrees that Buyer and such subsidiary
may grant a security interest in this Agreement and all other agreements to be
entered into in connection herewith to the Financing Parties who will provide
financing for the transactions contemplated by this Agreement under any and all
financing documents entered into by such Financing Parties to secure Buyer's and
such subsidiary's obligations to such Financing Parties under any such
documents.
24. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly
executed by the parties hereto under seal as of and on the date first above
written.
THE TJX COMPANIES, INC.
By: ___________________________
Title: __________________________
▇▇▇▇▇▇▇▇'▇, INC.
By: ___________________________
Title: __________________________
BRYLANE, L.P.,
a Delaware limited partnership
By: VGP Corporation
Its: General Partner
By: ___________________________
▇▇▇▇ ▇. ▇▇▇▇
President
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3164389.01