EXHIBIT 2.1
TRADEMARK PURCHASE AGREEMENT
BY AND AMONG
ARIS INDUSTRIES INC.,
AND
XOXO CLOTHING COMPANY, INC., SELLERS,
EUROPE CRAFT IMPORTS, INC.,
MARCADE GROUP REALTY CORPORATION AND 8-3 RETAILING INC.,
THE OTHER SUBSIDIARIES
AND
GLOBAL BRAND HOLDINGS, LLC, BUYER,
▇▇▇▇▇▇▇ ▇▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇
DATED AS OF MAY 7, 2003
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE.....................................................2
Section 1.1 Purchase and Sale..................................................2
Section 1.2 Payment of Purchase Price..........................................2
Section 1.3 Assignments........................................................4
Section 1.4 Closing............................................................4
Section 1.5 Allocation of Purchase Price among the Buyer and the Sellers.......6
Section 1.6 ▇▇▇▇▇▇▇ Money Deposit..............................................6
Section 1.7 Prorated Fees; Remittance of Fees..................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS.............................7
Section 2.1 Organization and Power.......................................7
Section 2.2 Authorization; Enforceability................................7
Section 2.3 No Violation or Conflict.....................................8
Section 2.4 Complete Lists...............................................8
Section 2.5 Title and Ownership..........................................9
Section 2.6 No Transfers.................................................9
Section 2.7 No Infringement..............................................9
Section 2.8 No Other Licenses...........................................10
Section 2.9 Existing Licenses...........................................10
Section 2.10 Registrations...............................................10
Section 2.11 No Royalties................................................10
Section 2.12 No Claims or Litigation.....................................10
Section 2.13 Brokers.....................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER..............................11
Section 3.1 Organization................................................11
Section 3.2 Authorization; Enforceability...............................11
Section 3.3 No Violation or Conflict....................................11
Section 3.4 Funds.......................................................11
Section 3.5 Brokers.....................................................11
ARTICLE IV CERTAIN MATTERS PENDING CLOSING......................................12
Section 4.1 Full Access.................................................12
Section 4.2 Confidentiality.............................................12
Section 4.3 Carry on in Regular Course..................................12
Section 4.4 Consents, Approvals and Notifications.......................13
Section 4.5 Exclusive Dealing...........................................14
Section 4.6 Cooperation.................................................15
Section 4.7 Special Meeting of Shareholders.............................15
Section 4.8 Publicity...................................................16
Section 4.9 Updates.....................................................16
Section 4.10 Temporary License Agreement.................................16
ARTICLE V CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.....................18
Section 5.1 Compliance with Agreement...................................18
Section 5.2 Proceedings and Instruments Satisfactory....................18
Section 5.3 Absence of Litigation.......................................18
Section 5.4 Representations and Warranties..............................18
Section 5.5 No Adverse Change...........................................19
Section 5.6 Deliveries at Closing.......................................19
Section 5.7 Commitment by ▇▇▇▇▇▇▇.......................................19
Section 5.8 Approvals and Consents......................................20
Section 5.9 Change of Name..............................................20
Section 5.10 Shareholders' Approval......................................20
Section 5.11 Esteem Fashions Agreement...................................20
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS..................21
Section 6.1 Compliance with Agreement...................................21
Section 6.2 Proceedings and Instruments Satisfactory....................21
Section 6.3 Absence of Litigation.......................................21
Section 6.4 Representations and Warranties..............................21
Section 6.5 Payment of Purchase Price...................................21
Section 6.6 Delivery at Closing.........................................21
Section 6.7 Shareholders' Approval......................................22
Section 6.8 Absence of Dissenters' Rights...............................22
Section 6.9 Approvals and Consents......................................22
ARTICLE VII POST-CLOSING COVENANTS, INDEMNITY AND TERMINATION..........................22
Section 7.1 No Further Use..............................................22
Section 7.2 Sellers' Indemnity..........................................22
Section 7.3 Buyer's Indemnity...........................................24
Section 7.4 Termination.................................................25
Section 7.5 Rights on Termination; Waiver...............................26
Section 7.6 Survival of Indemnities.....................................26
ARTICLE VIII MISCELLANEOUS.............................................................26
Section 8.1 Notices.....................................................26
Section 8.2 Further Assurances..........................................27
Section 8.3 Governing Law and Forum.....................................27
Section 8.4 Headings....................................................28
Section 8.5 Counterparts................................................28
Section 8.6 Binding Effect..............................................28
Section 8.7 Entire Agreement............................................28
Section 8.8 Amendments and Waivers......................................28
Section 8.9 Expenses....................................................28
Section 8.10 Assignment..................................................28
Section 8.11 Taxes and Fees..............................................29
Section 8.12 Severability................................................29
Section 8.13 Interpretation..............................................29
Section 8.14 Rules of Construction.......................................29
Section 8.15 Bulk Transfers..............................................29
Section 8.16 IRS Tax Forms...............................................29
Exhibits
Exhibit A -- List of Trademarks, Trademark Applications, Trademark
Registrations and Trademark License
Agreements
Exhibit B -- Allocation of Purchase Price Among Sellers
Exhibit C -- Form of Escrow Agreement
Exhibit D -- Form of Assignment of Trademarks and Trademark
Applications in United States
Exhibit E -- Form of Assignment of Copyrights
Schedules
Schedule 1.1 - List of Domain Names
Schedule 1.4 (g) - List of Stores
Schedule 1.4 (h) - List of Advertising Funds
Schedule 2.3 - List of Required Consents
Schedule 2.5(a) - List of Liens, Security Interests and Encumbrances
Schedule 2.5(c) - List of Claims of Conflicting Ownership
Schedule 2.5(d) - List of Exceptions to Trademark Registrations
Schedule 2.7 - List of Alleged Potential Infringements
Schedule 2.8(a) - List of Obligations to Third Parties Relating to
Representations of Trademark Assets or
Copyright Assets
Schedule 2.8(b) - List of Certain Terminated Licenses
Schedule 2.8(c) - Description of Adversary Proceeding
Schedule 2.11 - List of Royalties or Other Payments Required to Be
Paid by the Sellers
Schedule 2.12(a) - List of Pending Claims or Litigation Against Sellers
or ECI
Schedule 2.12(b) - List of Pending Claims Against Third Parties
TRADEMARK PURCHASE AGREEMENT
TRADEMARK PURCHASE AGREEMENT dated as of this 7th day of May 2003
(this "Agreement") by and among Aris Industries, Inc., a New York corporation
("Aris"), its wholly-owned subsidiary, Europe Craft Imports, Inc., a New
Jersey corporation ("ECI"), and ECI's wholly-owned subsidiary, XOXO Clothing
Company, Inc., a Delaware corporation ("XOXO Inc.;" Aris and XOXO Inc. being
collectively referred to herein as the "Sellers"), ECI's wholly-owned
subsidiary, Marcade Group Realty Corporation, a New York corporation
("Marcade"), the wholly-owned subsidiary of XOXO Inc., 8-3 Retailing Inc., a
California corporation ("8-3 Retailing"), (8-3 Retailing and Marcade being
collectively referred to herein as the "Other Subsidiaries"), Global Brand
Holdings, LLC, a New York limited liability company (the "Buyer"), and, solely
with respect to Section 3.4 hereof, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇.
WITNESSETH:
WHEREAS, the Sellers are the owners of the trade name and service
▇▇▇▇ XOXO and the trademarks XOXO, XOXO IN AMERICA AND ABROAD, LOLA and
FRAGILE and all variations thereof, as well as the trademark registrations
issued by the United States Patent and Trademark Office and the trademark
registrations issued by the appropriate government trademark offices in
certain foreign jurisdictions (collectively, the "Trademark Registrations"),
together with the goodwill of the businesses of the Sellers connected with the
use of, or symbolized by, said trade name, service ▇▇▇▇ and trademarks (the
"Trademarks"), and all of the rights of the Sellers as licensors under
licenses for the Trademarks and all of the claims by the Sellers, if any,
against third parties for present or past infringements of any or all of the
Trademarks (all of which with the Trademarks being collectively referred to
herein as the "Trademark Assets");
WHEREAS, the Sellers have filed applications in the United States
Patent and Trademark Office and in the appropriate government trademark
offices in certain foreign jurisdictions to register the service ▇▇▇▇ XOXO and
the trademarks XOXO, XOXO IN AMERICA AND ABROAD, LOLA and FRAGILE (the
"Trademark Applications");
WHEREAS, the Sellers are the owners of all rights of copyright
throughout the world, whether registered or not, in and to any and all
materials and works (i) authored or created by the Sellers, (ii) authored or
created for the Sellers, the rights to which have been assigned to the Sellers
(including all materials and works created by any of the Sellers' employees,
licensees, sub-licensees and franchisees), and (iii) authored or created for
the Sellers, the rights to which are assignable to the Sellers (including all
materials and works created by any of the Sellers' employees, licensees,
sub-licensees and franchisees), all of which materials and works having been
utilized on, or in connection with, any products bearing the Trademarks, as
well as in connection with any advertising, promotional and all other
materials bearing the Trademarks, including, without limitation, all artwork,
audio or visual content, designs, prototypes, labeling, tags, packaging, and
promotional material of or for all products bearing the Trademarks (the
"Copyright Assets"); and
WHEREAS, the Sellers desire to sell and assign, and the Buyer desires
to purchase and assume, the Trademark Assets, the Trademark Applications and
the Copyright Assets on the terms and conditions set forth herein.
NOW, THEREFORE, for the mutual promises set forth herein and other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by all of the parties hereto, the parties hereto agree as
follows:
Article I
Purchase and Sale
1.1 Purchase and Sale. At the Closing (as hereinafter defined) and
subject to all of the terms and conditions of this Agreement, the Sellers in
perpetuity hereby irrevocably grant, sell, transfer and assign to the Buyer,
and the Buyer in perpetuity hereby purchases and assumes from the Sellers, all
of the Sellers' right, title and interest of every kind and nature in and to
(a) the Trademark Assets (other than with respect to the Trademark LOLA), (b)
the Trademark Applications as set forth on Exhibit A hereto and (c) the
Copyright Assets, which Trademark Assets (other than with respect to the
Trademark LOLA), Trademark Applications and Copyright Assets shall be free and
clear of any liens, security interests or other encumbrances other than the
Trademark License Agreements. In addition, the Sellers hereby sell, assign,
transfer, grant and set over to the Buyer all domain names incorporating the
Trademarks or any variation, combination or common misspelling thereof which
may be owned by the Sellers as set forth on Schedule 1.1 hereto. With respect
to the trademark LOLA, Sellers hereby irrevocably grant, sell, transfer and
assign to the Buyer, and the Buyer in perpetuity hereby purchases and assumes
from the Sellers, whatever right, title and interest Sellers may have in the
trademark LOLA; provided, however, that the parties hereby agree that the
trademark LOLA shall be excluded from all obligations of the Sellers pursuant
to this Agreement pertaining to the Trademarks, Trademark Registrations and
Trademark Applications, including but not limited, to Sections 1.4(b), 2.3(b),
2.4(a), 2.5, 2.10 and 7.2 hereof.
1.2 Payment of Purchase Price.
(a) The purchase price (the "Purchase Price") to be paid by
the Buyer for the Trademark Assets, the Trademark Applications and the
Copyright Assets shall be Forty-Three Million ($43,000,000) Dollars to be paid
to the order of each of Aris and XOXO Inc. in accordance with the allocation
set forth on Exhibit B hereto, by wire transfer on the Closing Date (as
hereinafter defined) of immediately available funds to accounts designated by
Aris and XOXO Inc. in writing at least three (3) Business Days prior to the
Closing Date.
For the purposes of this Agreement, the term "Business Day" shall
mean any day other than a Saturday, Sunday or any other day on which national
banks in the City of New York are not open for business.
(b) Notwithstanding anything in subsection (a) of this
Section 1.2 to the contrary, the Buyer shall, on the Closing Date, deposit Two
Million ($2,000,000) Dollars of the Purchase Price in an interest bearing
account (the "Escrow Deposit Account") at a bank in escrow with Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP as escrow agent (the "Escrow Agent"), pursuant to an
Escrow Agreement in the form of Exhibit C hereto (the "Escrow Agreement"), for
a period (the "Escrow Period") commencing with the Closing Date and ending six
(6) months after the later of the Closing Date or the ▇▇▇▇▇▇▇ Effective Date
(as such term is hereinafter defined). The Escrow Agent shall release amounts
from the Escrow Deposit Account in accordance with the following procedure:
(i) if, on the ▇▇▇▇▇▇▇ Effective Date, the Off-Price Sales (as defined below)
by ▇▇▇▇▇▇▇ Apparel, Inc., a Delaware corporation ("▇▇▇▇▇▇▇"), of products
using the Trademarks, during the period from the date hereof to the ▇▇▇▇▇▇▇
Effective Date, exceed thirty-five (35%) percent of its total sales of such
products during that period, the Escrow Agent shall, at the end of the Escrow
Period, release the then remaining funds in the Escrow Deposit Account to an
account designated in advance by the Buyer; (ii) if, during the Escrow Period,
a retailer shall claim a chargeback arising from actions or omissions of the
Sellers or ▇▇▇▇▇▇▇ which the Buyer pays or gives credit therefor, the Escrow
Agent shall release the amount so paid or credited to an account designated in
advance by the Buyer; (iii) if, during the Escrow Period, a licensee shall
off-set or otherwise deduct any amount against its payments due pursuant to
its license agreement as a result of any actions or omissions of the Sellers
or ▇▇▇▇▇▇▇, the Escrow Agent shall release the amount of such off-set or
deduction to an account designated in advance by the Buyer; or (iv) at the end
of the Escrow Period, the Escrow Agent shall release the then remaining funds
in the Escrow Deposit Account, to the extent not distributed pursuant to
clauses (i), (ii) or (iii) hereof, to an account designated in advance by the
Sellers. During the Escrow Period and for the month following its termination,
the Sellers shall, not later than the tenth (10th) day of each month, give the
Buyer a report as to the ▇▇▇▇▇▇▇ sales during the prior month, with such data
as would enable the Buyer to monitor compliance with this Section 1.2(b) and
Section 5.7 hereof.
For the purposes of this Agreement, the term "Off-Price Sales" shall
mean sales of any products using the Trademarks at a price that is more than
twenty-five (25%) off the initial listed wholesale price and any style that is
sold to retailers other than upper and mid-tier department stores and
specialty stores.
(c) Notwithstanding anything in subsections (a) or (b) of
this Section 1.2 to the contrary, the Buyer shall, on the Closing Date,
deposit One Million ($1,000,000) Dollars of the Purchase Price in an interest
bearing account (the "Additional Escrow Deposit") at the same bank as
described in subsection (b) of this Section 1.2 in escrow with the Escrow
Agent pursuant to the Escrow Agreement for a period (the "Additional Escrow
Period") commencing with the Closing Date and ending with the third
anniversary of the Closing Date. The Escrow Agent shall release amounts from
the Additional Escrow Deposit in accordance with the following procedure: (w)
if the Buyer presents evidence of Damages (as defined in Section 7.2(a)
hereof) as to which the Buyer is entitled to indemnification pursuant to
Section 7.2(a) arising out of claims relating to the items set forth in
Schedule 1.2(c) hereto, the Escrow Agent shall release the amount of Damages
to an account designated in advance by the Buyer; (x) if the Buyer presents
evidence of Damages sustained by the Buyer in any proceeding with respect to
the transactions contemplated by this Agreement (the "Grupo Proceeding") that
may be instituted against the Buyer by Grupo Xtra of New York, Inc. ("Grupo")
or any of Grupo's Affiliates (as such term is defined in Rule 405 under the
Securities Act of 1933, as amended) by a final, non-appealable, judgment, the
Escrow Agent shall release the amount of Damages to an account designated in
advance by the Buyer; (y) if the Buyer presents invoices from its defense
counsel for its reasonable fees and disbursements incurred in the Grupo
Proceeding, the Escrow Agent shall release an amount equal to the invoice to
the account designated in advance by the Buyer; or (z) at the end of the
Additional Escrow Period, the Escrow Agent shall release the then remaining
funds in the Additional Escrow Account, to the extent not distributed pursuant
to clauses (w), (x) or (y) hereof, to an account designated in advance by the
Sellers.
(d) The amount of any escrowed funds released to the Buyer
pursuant to either subsection (b) or (c) of this Section 1.2 (other than any
amount which represents interest) shall be treated for all tax purposes as an
adjustment to the Purchase Price. Appropriate adjustments to the allocation of
the Purchase Price (including the Final Allocation as such term is hereinafter
defined) shall be made at the time of the release of any escrowed funds to the
Buyer pursuant to subsection (b) or (c) of this Section 1.2. The party
receiving a distribution of any interest that is earned on the Escrow Deposit
Account shall be solely responsible for the payment of any taxes with respect
to such interest.
1.3 Assignments. The Sellers shall be responsible, at their expense,
for the preparation of each individual country assignment and other
appropriate documents for each country in which the Trademarks are registered
or an application for registration has been made (including, without
limitation, any required powers of attorney or legalization documents). Each
individual country assignment, power of attorney and/or legalization document
shall be provided to the Buyer at the Closing in a form previously submitted
to, and found to be reasonably acceptable by, the Buyer's trademark counsel.
1.4 Closing.
(a) The closing of the purchase and sale of the Trademark
Assets, the Trademark Applications and the Copyright Assets contemplated by
this Agreement (the "Closing") shall take place at the offices of the Buyer's
counsel, ▇▇▇▇▇▇▇ & Masyr, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 10 A.M. on the third Business Day following the satisfaction or waiver of
the last to be satisfied or waived of the conditions set forth in Article V
and Article VI hereof, or at such other time, on such other day and/or at such
other place as Aris and the Buyer may mutually agree (the date of the Closing
being hereafter referred to as the "Closing Date").
(b) At the Closing, the Sellers shall deliver to the Buyer
(i) a fully-executed Assignment of Trademarks and Trademark Applications in
the United States of America in the form attached hereto as Exhibit D and (ii)
fully executed assignment(s) of Trademarks and Trademark Applications outside
the United States in the form(s) reasonably acceptable to the Buyer's counsel.
(c) At the Closing, the Sellers shall, upon the Buyer's
request, prepare and execute such original assignments, in form reasonably
acceptable to the Buyer's counsel, as are necessary to effectuate the transfer
of the Trademark Assets other than the Trademarks and the Trademark
Applications, including, without limitation, transfers of each of the Sellers'
rights as a licensor of any of the Trademarks under the license agreements
listed in Exhibit A hereto (the "Trademark License Agreements") other than the
▇▇▇▇▇▇▇ License Agreement (as hereinafter defined).
(d) At the Closing, the Sellers and ECI will deliver, and
will cause their Affiliates to deliver, to the Buyer (and the Sellers will
cause their Trademark counsel to deliver to the Buyer) any original files with
respect to the registrations and applications covering the Trademarks in their
respective possession, as well as all originals of the License Agreements,
royalty payment and sales reports, any approvals, any advertising and all
material correspondence relating to the Trademark License Agreements and/or
the Trademarks and all other material relating to the Trademarks in their
respective possession; provided that the Buyer shall provide the Sellers, ECI
and their Affiliates with reasonable access during normal business hours to
such materials after the Closing Date for a period of five (5) years.
(e) At the Closing, the Sellers will deliver to the Buyer
written confirmation, in form reasonably acceptable to the Buyer's counsel,
that Aris, XOXO Inc. and ▇▇▇▇▇▇▇ have agreed to terminate, effective as of the
earlier of (i) September 30, 2003 or (ii) the date upon which the Buyer
purchases the ▇▇▇▇▇▇▇ Inventory (as such term is hereinafter defined) pursuant
to Section 5.7 hereof (the "▇▇▇▇▇▇▇ Effective Date"), the restated and revised
trademark license agreement dated August __, 2002 (the "▇▇▇▇▇▇▇ License
Agreement"), only insofar as it relates to the granting to ▇▇▇▇▇▇▇ of an
exclusive license to use the XOXO Trademarks (as such term is defined in the
▇▇▇▇▇▇▇ License Agreement) to manufacture, market, promote, advertise and sell
women's, men's and children's clothing, jeanswear and sportswear. The Sellers
shall also deliver to the Buyer at the Closing, a written confirmation from
▇▇▇▇▇▇▇, in form reasonably satisfactory to the Buyer's counsel, that,
effective as of the ▇▇▇▇▇▇▇ Effective Date, ▇▇▇▇▇▇▇ will have no further
rights to any of the Trademarks and no right to manufacture, market,
distribute or sell products using the Trademarks. The Sellers shall also
obtain ▇▇▇▇▇▇▇'▇ commitment to deliver original files and otherwise to comply
with Section 1.4(d) hereof by not later than the ▇▇▇▇▇▇▇ Effective Date;
provided that the Buyer shall provide ▇▇▇▇▇▇▇ with reasonable access during
normal business hours to such materials thereafter for a period of five (5)
years.
(f) At the Closing, the Sellers shall assign to the Buyer,
in the form attached hereto as Exhibit E, all of the Copyright Assets. It
being understood by the parties that there exist, to the Sellers' knowledge,
no registrations with respect to any of the Copyright Assets.
(g) Schedule 1.4(g) hereto lists all of the stores operated
by one of the Sellers or one of the Other Subsidiaries in which products using
the Trademarks are being sold as of the date of this Agreement. At the
Closing, the Sellers and the Other Subsidiaries shall update such Schedule to
reflect the stores so selling as of the Closing Date.
(h) Schedule 1.4(h) hereto lists all funds allocated by the
Sellers and the Other Subsidiaries for advertising as of the date of this
Agreement with respect to the Trademarks. At the Closing, the Sellers and the
Other Subsidiaries shall update such Schedule to indicate how such funds were
used between the date of this Agreement and the Closing Date and to indicate
any remaining advertising commitments relating to the Trademarks.
1.5 Allocation of Purchase Price among the Buyer and the Sellers.
(a) Within fifteen (15) business days of the date of this
Agreement, Aris shall prepare and provide to the Buyer an allocation of the
Purchase Price pursuant to Section 1060 of the Internal Revenue Code of 1986
as amended and the Treasury regulations promulgated thereunder (the
"Preliminary Allocation"), together with copies of any written appraisal or
other evaluation relied upon by Aris as the basis for such allocation. Within
fifteen (15) business days following such provision (the "15-Day Response
Period"), the Buyer shall have the right to propose changes in writing to the
Preliminary Allocation. If the Buyer does not raise any objections within the
15-Day Response Period, the Preliminary Allocation shall be treated as
finalized (such allocation once finalized, the "Final Allocation"). If the
Buyer raises any objections within the 15-Day Response Period, the Buyer and
Aris shall negotiate in good faith and use their commercially reasonable
efforts to resolve such dispute. If the Buyer and Aris are able to resolve
such dispute within thirty (30) days after the expiration of the 15-Day
Response Period, the Preliminary Allocation shall be modified in accordance
with their agreement (and as so modified, shall become the Final Allocation).
If the Buyer and Aris are not able to resolve such dispute, the Buyer and Aris
shall submit such dispute for resolution to a "Big 4" accounting firm or other
independent valuation expert they mutually agree upon. If the Buyer and Aris
are not able to agree on the selection of a "Big 4" accounting firm or other
independent valuation expert within ten (10) days, they shall submit their
dispute for resolution to an independent valuation expert to be selected by
the American Arbitration Association (such allocation once finalized, the
Final Allocation). The costs of such "Big 4" accounting firm or other
independent valuation expert shall be borne equally by the parties.
(b) The Sellers and the Buyer shall (i) be bound by the
Final Allocation for all tax purposes, (ii) timely file with appropriate
taxing authorities all forms (including IRS Form 8594) and tax returns
required to be filed in connection with the Final Allocation, (iii) prepare
and file all tax returns in a manner consistent with the Final Allocation and
(iv) take no position inconsistent with the Final Allocation in any tax
return, any audit or examination by, or any proceeding before, any taxing
authority or otherwise. In the event that the Final Allocation is disputed by
any taxing authority, the party receiving notice of such dispute shall
promptly notify and consult with the other party and keep the other party
apprised of material developments concerning resolution of such dispute.
1.6 ▇▇▇▇▇▇▇ Money Deposit. Notwithstanding anything in this Agreement
to the contrary and in addition to its obligations under Section 1.2, the
Buyer shall, upon execution of this Agreement, wire transfer an amount equal
to Two Million ($2,000,000) Dollars in immediately available funds (the
"▇▇▇▇▇▇▇ Money Deposit") to an escrow account designated by the mutual
agreement of the parties (the "▇▇▇▇▇▇▇ Money Escrow Account"). The ▇▇▇▇▇▇▇
Money Deposit shall be held in escrow pursuant to the Escrow Agreement with
the Escrow Agent and released from the ▇▇▇▇▇▇▇ Money Escrow Account in
accordance with the following procedure: (a) in the event that the Closing
occurs, the ▇▇▇▇▇▇▇ Money Deposit shall, at the Buyer's option, be immediately
returned to an account designated in advance by the Buyer or paid to the
Sellers as part of the Purchase Price; or (b)(i) in the event that the Closing
does not occur as a result of the failure of any one of the conditions set
forth in Article V hereof (other than Section 5.3) to be satisfied by the
Sellers for a reason other than the default of the Buyer, or (ii) in the event
that the Sellers accept an Alternative Transaction as permitted by Section 4.5
hereof, or (iii) in the event that the Closing does not occur as a result of
the litigation described in Sections 5.3 and 6.3 hereof, the ▇▇▇▇▇▇▇ Money
Deposit shall be immediately returned to an account designated in advance by
the Buyer; or (c) in the event that the Closing does not occur as a result of
the failure of any one of the conditions in Sections 6.1, 6.4 and 6.5 hereof
to be satisfied by the Buyer for a reason other than the default of the
Sellers and the Sellers are not in default, the ▇▇▇▇▇▇▇ Money Deposit shall be
immediately transferred to an account designated in advance by the Sellers.
Notwithstanding anything in this Section 1.6 to the contrary, the foregoing
provisions shall not in any manner limit the rights that the parties may have
with respect to this Agreement, including any remedies that may be available
for breach of this Agreement or otherwise.
1.7 Prorated Fees; Remittance of Fees. License fees, advances,
royalties or other fees paid to the Sellers under the License Agreements as of
the Closing Date for any period after the Closing Date shall be prorated as of
the Closing Date. The Sellers shall provide, at the Closing, appropriate
schedules and royalty reports to facilitate any such proration. At the
Seller's option, payments by the related Seller due pursuant to this Section
1.7 may be offset against the Purchase Price or paid by the Seller at the
Closing to the Buyer. The Buyer shall promptly remit to the Sellers any
license fees, royalties or other fees and payments due to the Sellers or their
Affiliates either for the period prior to the Closing or for inventory sales
made prior to the ▇▇▇▇▇▇▇ Effective Date which are paid by third parties to
the Buyer after the Closing.
Article II
Representations and Warranties of Sellers
The Sellers and ECI, where indicated, jointly and severally,
represent to the Buyer as follows:
2.1 Organization and Power. Each of the Sellers and ECI is a
corporation duly and validly organized and existing and in good standing under
the laws of its respective state of incorporation and has full corporate power
to own its respective assets and, together, to convey the Trademark Assets,
the Trademark Applications and the Copyright Assets to the Buyer pursuant to
this Agreement.
2.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement, and of all of the documents and instruments
required hereby, by each of the Sellers and ECI are within the respective
corporate powers of the Sellers and ECI, have been duly authorized by the
respective Board of Directors of each of the Sellers and ECI and, prior to the
Closing, will have been duly authorized by all necessary corporate actions by
each of the Sellers and ECI, including, without limitation, approval by the
shareholders of Aris as provided in Section 4.7 hereof. This Agreement is, and
the other documents and instruments required hereby will be, when executed and
delivered by each of the Sellers and ECI, the valid and binding obligations of
the Sellers and ECI, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and general principles of equity, and sufficient to transfer
and convey to the Buyer all of the Sellers' right, title, and interest in and
to the Trademark Assets, the Trademark Applications and the Copyright Assets.
2.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the other documents and instruments to be executed and
delivered by the Sellers pursuant hereto, and the consummation by the Sellers
and ECI of the transactions contemplated herein or therein,
(a) do not and will not violate, or conflict with, any
applicable law, judgment, order or decree;
(b) subject to any filing with the United States Patent and
Trademark Office and any comparable foreign governmental office, will not
require any authorization, consent, approval, exemption or other action by, or
notice to, any governmental entity, except those that the failure to give or
obtain is not, individually or in the aggregate, reasonably likely to have a
material adverse effect on the Trademark Assets, the Trademark Applications
and the Copyright Assets, taken as a whole, or prevent, materially delay or
materially impair the ability of the Sellers or ECI to consummate the
transactions contemplated by this Agreement; or
(c) subject to obtaining the consents referred to in
Schedule 2.3 hereto, will not violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will not result in the termination of, or
accelerate the performance required by, or result in the creation of, any
lien, security interest or other encumbrance upon any of the Trademark Assets,
the Trademark Applications or any of the Copyright Assets under any term or
provision of the Sellers' certificates of incorporation or bylaws, or any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which any of the Sellers is a party or by which any
of the Sellers or any of the Trademark Assets, the Trademark Applications or
any of the Copyright Assets may be bound or affected.
2.4 Complete Lists.
(a) Exhibit A hereto is a complete and correct list,
together with a brief description and current status (including, if
applicable, date of application, filing or registration, as the case may be,
the registration or application number and the class), of (a) all of the
Trademarks and Trademark Applications thereof owned by the Sellers and (b) all
of the license agreements granted by any of the Sellers with respect to the
Trademarks and which are still in effect (other than the ▇▇▇▇▇▇▇ License
Agreement), which license agreements constitute the Trademark License
Agreements, and all amendments thereto. The Sellers have heretofore furnished
to the Buyer copies of all of the Trademark License Agreements, including all
amendments thereto as set forth on Exhibit A.
(b) To the Sellers' knowledge, there exist no applications
or registrations with respect to the Copyright Assets and, to the Sellers'
knowledge, there exist no license agreements granted by any of the Sellers
with respect to the Copyright Assets.
2.5 Title and Ownership.
(a) The Sellers are the owners of all right, title and
interest in and to each item of the Trademark Assets, the Trademark
Applications and the Copyright Assets, with the sole and exclusive good, valid
and transferable title to the Trademark Assets, the Trademark Applications and
the Copyright Assets, all of which are free and clear of any liens, security
interests or other encumbrances except for the Trademark License Agreements
and the liens, security interests and encumbrances set forth on Schedule
2.5(a) hereto.
(b) The Sellers have the exclusive right and authority,
subject to the Trademark License Agreements, to use, or to license third
parties to use, each of the Trademarks in connection with the manufacture,
sale and advertising of the products, or the classes, as to which such
Trademarks were intended to cover in the United States and in the other
countries of the world as identified in Exhibit A hereto.
(c) No person or entity other than the Sellers has, or shall
have, any claim of ownership with respect to any of the Trademark Assets, the
Trademark Applications or the Copyright Assets whatsoever, except for the
claims set forth in Schedule 2.5(c) hereto;
(d) The Sellers are the sole owner of record in the
appropriate government trademark and/or copyright offices Trademark
Registrations listed on Exhibit A, as well as the Trademark Applications
listed on Exhibit A, with the exception of those trademark registrations which
are set forth on Schedule 2.5(d); and
(e) The Sellers shall retain, after the Closing, no right,
title or interest in any trademark, or in any trademark registration or in any
trademark application which is similar in any way to the Trademarks, the
Trademark Registrations or the Trademark Applications or in any copyright
which is similar to the Copyright Assets, except as otherwise provided in
Sections 5.7 and 5.9.
(f) The Sellers have no right, title or interest in or to
any trademark application or registration with respect to the Trademarks other
than the Trademark Applications or the Trademark Registrations, respectively.
2.6 No Transfers. Except for the Trademark License Agreements and the
items set forth on Schedule 2.5(a) hereto, none of the Sellers has previously
assigned, transferred, conveyed or otherwise encumbered its right, title and
interest in the Trademark Assets, the Trademark Applications or the Copyright
Assets.
2.7 No Infringement. To the best of knowledge of the Sellers and ECI,
each of the Sellers' and ECI's use of the Trademarks or the Copyright Assets
prior to the date hereof did not infringe upon any rights owned or possessed
by any third party, except for the potential alleged infringements set forth
on Schedule 2.7 hereto.
2.8 No Other Licenses. Except for the ▇▇▇▇▇▇▇ License Agreement and
the Trademark License Agreements, there presently exists no licenses for the
use of the Trademarks, the Trademark Applications or the Copyright Assets by
any person or entity for the sale of any type of merchandise or services and
there presently exists no obligation by the Sellers to any third parties
concerning the representations of the Trademark Assets or the Copyright Assets
by such third parties, except as set forth on Schedule 2.8(a). Not in
limitation of the foregoing, any and all licenses granted to Grupo or any
Affiliate thereof have been terminated and neither Grupo nor any Affiliate
thereof (including Grupo's trustee in bankruptcy) has any claims against any
of the Sellers with respect to use of the Trademarks or the Copyright Assets.
Also not in limitation of the second preceding sentence, any and all licenses
granted to the entities listed in Schedule 2.8(b) hereto (the "Terminated
Licenses") have been terminated and each of such entities has no claims
against any of the Sellers with respect to use of the Trademarks or the
Copyright Assets, except for that certain adversary proceeding filed by Grupo
and Moses ▇▇▇▇ ▇▇▇▇▇, as plaintiffs, against the CIT Group/Commercial
Services, Inc., Aris and ▇▇▇▇▇▇▇ (the "Adversary Proceeding") as described on
Schedule 2.8(c) hereto.
2.9 Existing Licenses. Each of the Sellers and, to the knowledge of
the Sellers, each party to each Trademark License Agreement listed in Exhibit
A, respectively, has performed in all material respects each material term,
covenant and condition of each License Agreement which is to be performed by
it at or before the date hereof. Each of the Trademark License Agreements is
in full force and effect and constitutes the legal and binding obligation of
the respective Seller and, to the knowledge of the respective Seller, the
other party or parties thereto. Each of the Sellers has not taken any material
action, or omitted to take any material action, which through the passage of
time or otherwise, would constitute a material default under any Trademark
License Agreement.
2.10 Registrations. All Trademark Registrations as identified in
Exhibit A hereto are current and have not expired.
2.11 No Royalties. No royalties or other consideration is required to
be paid by the Sellers or ECI to any third party in connection with the
Sellers' use and enjoyment of the Trademarks, the Copyright Assets and the
other Trademark Assets, except as set forth on Schedule 2.11.
2.12 No Claims or Litigation. Except as disclosed on Schedule 2.12(a)
hereto, there have not been any claims, actions or judicial or other adversary
proceedings against any of the Sellers, and, to the best knowledge of the
Sellers and ECI, there are no pending or potential claims or litigation,
relating in each case to any of the Trademarks, the Copyright Assets or the
Trademark Applications. Neither the Sellers nor ECI have asserted any similar
claims against any entity or individual, and there exists no valid basis for
any such claim, in each case with respect to the Trademarks, the Copyright
Assets or the Trademark Applications except as disclosed on Schedule 2.12(b)
hereto.
2.13 Brokers. Each of the Sellers and ECI has not incurred, nor will
any person or entity be entitled to, any brokers', finders', or similar fee in
connection with the transactions contemplated by this Agreement as a result of
actions taken by the Sellers, ECI or any of their other Affiliates.
Article III
Representations and Warranties of Buyer
The Buyer, and where so indicated in Section 3.4 hereof, ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ represent and warrant to the Sellers as follows:
3.1 Organization. The Buyer is a limited liability company duly and
validly organized and existing and in current status under the laws of the
State of New York and has full corporate power to consummate the transactions
contemplated in and pursuant to this Agreement.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement, and all of the documents and instruments
required hereby, are within the power of the Buyer and have been duly
authorized by all necessary action by the Buyer. This Agreement is, and the
other documents and instruments required hereby will be, when executed and
delivered by the Buyer, the valid and binding obligations of the Buyer,
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
affecting creditors' rights and general principles of equity.
3.3 No Violation or Conflict. The execution, delivery, and
performance of this Agreement, and the consummation by the Buyer of the
transactions contemplated herein,
(a) do not and will not conflict with, or violate, any law,
judgment, order or decree; or
(b) will not require any authorization, consent, approval,
exemption or other action by, or notice to, any governmental entity.
3.4 Funds. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇, members of the Buyer,
jointly possess funds (or have available commitments from creditworthy
institutions or persons to provide funds), confirmation of which has been
previously provided to the Sellers, in an aggregate amount sufficient to
enable the Buyer to consummate the transactions contemplated hereby and pay
all fees, expenses and costs in connection with the negotiation, execution and
performance of this Agreement.
3.5 Brokers. The Buyer has not incurred, nor will any person or
entity be entitled to, any brokers', finders', or similar fee in connection
with the transactions contemplated by this Agreement as a result of actions
taken by the Buyer or any Affiliate of the Buyer.
Article IV
Certain Matters Pending the Closing
4.1 Full Access. The Buyer and its authorized agents, officers and
representatives shall have full access to the offices, properties, books,
documents and records of the Sellers, ECI and their licensees and others,
related to the Trademark Assets, the Trademark Applications and the Copyright
Assets during normal business hours in order to conduct such examination and
investigation of the Trademark Assets, the Trademark Applications and the
Copyright Assets as the Buyer deems necessary provided that such examinations
shall not unreasonably interfere with the Sellers', ECI's, the licensees' or
others' operations and activities.
4.2 Confidentiality. From the date hereof until the Closing Date and
in the event that the transactions provided for herein are not consummated,
the Buyer and its officers, employees, agents and representatives will hold in
confidence all information obtained from the Sellers, ECI, the Other
Subsidiaries and their respective officers, directors, employees, agents, or
representatives and, in the event this Agreement is terminated, will promptly
return to the Sellers, or destroy at the request of the Sellers, all documents
obtained from the Sellers, ECI, the Other Subsidiaries and their respective
officers, directors, employees, agents, or representatives, and all copies of
such documents made by the Buyer and its officers, employees, agents and
representatives, excepting, however, any such information or documents which:
(i) was, is, or becomes in the public domain; (ii) was in fact lawfully known
or lawfully furnished to the Buyer prior to disclosure to the Buyer by the
Sellers, ECI, the Other Subsidiaries or their respective officers, directors,
employees, agents, or representatives; or (iii) is lawfully disclosed or
lawfully furnished to the Buyer by a third party (other than officers,
directors, employees, agents and representatives of the Sellers, ECI or the
Other Subsidiaries) who is under no obligation of confidentiality to the
Sellers, ECI or the Other Subsidiaries. The Buyer may also use any information
as to which (y) it is compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law or (z)
Aris, acting for itself and/or as agent for the other Seller and the Other
Subsidiaries, waives confidentiality. In the event that the Buyer becomes
legally compelled to disclose any confidential information pursuant to clause
(y) of this Section 4.2, the Buyer will provide Aris with prompt written
notice so that Aris may seek a protective order or other appropriate remedy
and/or waive compliance. Notwithstanding the foregoing, the parties to this
Agreement (and each employee, representative, or other agent of the parties)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions provided for herein, provided,
however, that no party (nor any employee, representative, or other agent of
thereof) shall disclose any information to the extent that such disclosure
could result in a violation of any federal or state securities law.
4.3 Carry on in Ordinary Course. With regard to the businesses
currently conducted by the Sellers, ECI and the Other Subsidiaries, the
Sellers, ECI and the Other Subsidiaries shall, from the date hereof to the
Closing Date:
(a) diligently carry on their businesses, to the extent
related to the Trademarks or the Trademark Assets, in the ordinary course and
substantially in the same manner as heretofore conducted; provided, that
notwithstanding anything to the contrary in this Agreement, the Sellers and
ECI shall have the right in their sole discretion to settle, compromise or
resolve any claim, action or proceeding involving any of the Sellers or ECI
and/or the Trademark Assets; provided that any such settlement, compromise or
resolution has no material adverse effect on the Trademarks;
(b) without the prior written consent of the Buyer, not
enter into any contract or commitment with respect to the Trademarks or the
Copyright Assets nor amend any existing contract or commitment with respect to
the Trademark Assets or the Copyright Assets, except as otherwise contemplated
by this Agreement; provided that, notwithstanding anything to the contrary in
this Agreement, the Sellers and ECI shall have the right to grant a security
interest in any or all of the Trademark Assets in favor of GMAC Commercial
Finance LLC ("GMAC"), which security interest, if granted, shall terminate
upon the payment by the Sellers of any amounts due and payable to GMAC at the
Closing, which payment the Sellers shall make, or cause to be made, in
connection with the Buyer's payment of the Purchase Price.
(c) comply in all material respects with all applicable
laws related to the Trademarks and the Copyright Assets;
(d) without the prior written consent of the Buyer, enter
into any new material advertising commitments;
(e) without the prior written consent of the Buyer, make
sales to persons or entities other than the retailers to which sales were made
prior hereto; and
(f) pay all of their liabilities in the ordinary course of
business when due and payable (other than long-term indebtedness).
4.4 Consents, Approvals and Notifications.
(a) The Sellers and ECI shall give any notices to, make any
filings with, and use their respective reasonable efforts to obtain any other
authorizations, consents and approvals of any governmental authorities
required to be obtained by any of them to consummate the transactions
contemplated hereby.
(b) Aris shall obtain the consents of (i) The CIT
Group/Commercial Services, Inc. and the other Financial Institutions named
therein under the Financing Agreement dated February 26, 1999; (ii) The CIT
Group/Commercial Services, Inc., in its capacity as factor and lender to
▇▇▇▇▇▇▇ (pursuant to, inter alia, the Promissory Note, the Factoring Agreement
and the Inventory Security Agreement, each dated April 18, 2002, and the
Letter of Credit Agreement dated May 2, 2002), under the Grant of Security
Interest in Trademarks, Tradenames and Licenses, dated as of April 18, 2002,
from XOXO Inc. to The CIT Group/Commercial Services, Inc.; (iii) ▇▇ ▇▇▇▇ Fund
I, L.P. under the Securities Purchase Agreement dated as of February 26, 2001;
and (iv) GMAC (as successor in interest to BNY Financial Corporation) under
the Series A Junior Secured Note Agreement dated as of June 30, 1993 and any
other agreement evidencing a security interest in the Trademark Assets in
favor of GMAC existing as of the date of this Agreement or entered into
hereafter; and shall also obtain the consents of such other holders of
indebtedness or other third parties as shall be required for the Sellers to
consummate their obligations under this Agreement; provided, however, that any
such consent may be conditioned upon the payment of any amounts outstanding
thereunder at the Closing, which payment(s) the Sellers shall make, or cause
to be made, in connection with the Buyer's payment of the Purchase Price.
(c) The Sellers shall give such notification of transfer to
each of the licensees as is required by the applicable Trademark License
Agreement and shall obtain from the licensees written confirmation that they
have no set-offs to the Trademark License Agreements.
4.5 Exclusive Dealing.
(a) The Sellers and ECI shall not, and shall not permit any
of their officers, directors, employees, agents or representatives to,
directly or indirectly (through any Affiliates), solicit, initiate or accept
any discussions, submissions of proposal or offers or negotiations with, or
participate in any negotiations or discussions with, or provide any
information or data of any nature whatsoever to, or otherwise cooperate in any
other way with, or assist or participate in, facilitate or encourage any
effort or attempt by, or enter into any agreement with, any person other than
the Buyer (or one of its Affiliates) concerning any merger, sale of
substantially all of its assets, sale of shares of capital stock or other
equity securities, or any similar transaction, in each case, involving XOXO
Inc. or the Trademark Assets, the Trademark Applications and/or the Copyright
Assets (such transactions being hereinafter referred to as "Alternative
Transactions") or authorize or permit any of their respective officers,
directors, employees, agents or representatives to take any such action.
Notwithstanding anything in the foregoing to the contrary, an Alternative
Transaction shall not include any transaction (without regard to the form
thereof) the substance of which is limited to the transfer of ownership of the
assets of the Sellers other than the Trademark Assets, the Trademark
Applications or the Copyright Assets, including, without limitation, the
trademarks Members Only(R) and/or Baby Phat(R).
(b) Notwithstanding the foregoing, if, prior to the
consummation of the transactions contemplated hereby, the Board of Directors
of Aris determines, based upon advice from outside legal counsel, that failure
to act could reasonably be expected to be inconsistent with the Board's
fiduciary duties under applicable law, the Sellers or ECI may provide
information with respect to the Sellers or ECI to another person or entity
that has made an unsolicited proposal for an Alternative Transaction and
participate in discussions and negotiations with such person or entity
relating to such Alternative Transaction, provided that such other person or
entity executes a confidentiality agreement restricting the use and disclosure
of any information provided by the Sellers or ECI which is in substance
similar to the confidentiality obligations of the Buyer set forth in the
letter of intent, dated December 10, 2002.
(c) The Sellers or ECI shall promptly (i.e., within one (1)
Business Day) notify Buyer if any proposal, offer, inquiry or other contact is
received by, any information is requested from, or any discussions or
negotiations are sought to be initiated or continued with, the Sellers, ECI or
any of their respective officers, directors, employees, representatives or
agents in respect of an Alternative Transaction, and shall, in any such
notice, indicate the identity of the offeror and the material terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts. The Sellers shall not enter into any definitive agreement relating
to an Alternative Transaction unless the Sellers shall have furnished the
Buyer with the notice described in this subsection (c) and given the Buyer
five (5) days to match the offer made by the third party. If the Buyer matches
the offer within such five (5)-day period, the Sellers shall thereafter sell
the Trademark Assets and the Copyright Assets only to the Buyer or its
Affiliate. If, after the Sellers providing such notice and the Buyer having
elected not to match the third party offer, the Sellers enter into a
definitive agreement for an Alternative Transaction, the Sellers shall pay the
Buyer as liquidated damages a cash fee of Two Million ($2,000,000) Dollars,
which amount includes the Buyer's expenses.
4.6 Cooperation. The Sellers, ECI and the Buyer shall:
(a) fully cooperate in good faith and at their respective
commercially reasonable expense with each other and their respective legal
counsel and accountants in connection with any steps to be taken as part of
their obligations under this Agreement;
(b) use their commercially reasonable efforts to satisfy
those conditions set forth in Articles V and VI which are to be satisfied by
them; and
(c) promptly give notice to the other party of the existence
or occurrence of any fact or condition which would make any representation or
warranty contained herein untrue in any material respect or which might
reasonably be expected to prevent the consummation of the transactions
contemplated hereby.
4.7 Special Meeting of Shareholders.
(a) Subject to the fiduciary duties of the Board of
Directors of Aris under applicable law, Aris shall promptly take all steps
necessary to cause a special meeting of its shareholders (the "Special
Meeting") to be duly called, noticed, convened and held as soon as practicable
for the purposes of voting to approve this Agreement, the transactions
contemplated hereby and all matters related thereto. In connection with the
Special Meeting, subject to its fiduciary duties under applicable law, the
Board of Directors of Aris shall recommend to the holders of the Aris Common
Stock, $.01 par value (the "Common Stock"), that the shareholders vote in
favor of the approval of this Agreement, the transactions contemplated hereby
and all matters related thereto.
(b) In connection with the Special Meeting and in each case
subject to the fiduciary duties of the Board of Directors of Aris under
applicable law, Aris will prepare and cause to be mailed to its shareholders
(i) a notice of the Special Meeting and (ii), in accordance with Section 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Regulation 14A or Regulation 14C thereunder, a definitive proxy statement or a
definitive information statement (the "Statement") as soon as practicable
after execution of this Agreement and, in any event, shall cause such notice
(together with the Statement) to be mailed no later than the time required by
the Business Corporation Law of the State of New York (the "BCL") and Aris'
Certificate of Incorporation and Bylaws. The Buyer shall provide Aris with any
information for inclusion in the Statement or any amendments or supplements
thereto which is required by Regulation 14A or Regulation 14C under the
Exchange Act or which is reasonably requested by Aris. The information
supplied by the Buyer for inclusion in the Statement shall not, at (i) the
time the Statement (or any amendment or supplement thereto) is first mailed to
the shareholders of Aris, and (ii) the time of the Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated thereon or necessary in order to make the statements
therein not misleading. Aris shall consult with the Buyer with respect to the
Statement and shall afford the Buyer a reasonable opportunity to comment
thereon. If, at any time prior to the Special Meeting, any event should occur
relating to the Sellers which should be set forth in an amendment of, or a
supplement to, the Statement, Aris will promptly inform the Buyer in writing.
In each such case, Aris, with the cooperation of the Buyer, will promptly
prepare and mail such amendment or supplement and Aris shall consult with the
Buyer with respect to such supplement or amendment and shall afford the Buyer
a reasonable opportunity to comment thereon prior to such mailing. Aris will
notify the Buyer at least forty-eight (48) hours prior to the mailing of the
Statement, or any amendment or supplement thereto, to its shareholders.
(c) Aris, as the sole shareholder of ECI, hereby consents to
the approval of this Agreement, the transactions contemplated hereby and all
matters related thereto pursuant to Section 14A: 5-6 of the Business
Corporation Act of the State of New Jersey.
(d) ECI, as the sole stockholder of XOXO Inc., hereby
consents to the approval of this Agreement, the transactions contemplated
hereby and all matters related thereto pursuant to Section 228 of the General
Corporation Law of the State of Delaware.
4.8 Publicity. All general notices, releases, statements and
communications to employees, suppliers, and customers of the Sellers or ECI
and to the general public and the press relating to the transactions covered
by this Agreement shall be made only at such times and in such manner as may
be mutually agreed upon by the Buyer and Aris; provided however, that any
party shall be entitled to make a public announcement of the proposed
transaction if, in the opinion of its counsel, such announcement is required
to comply with any law or rule or regulation of the Securities and Exchange
Commission or any securities exchange or securities quotation system and such
party shall, to the extent practicable, consult with the other parties with
respect to such announcement and give reasonable prior written notice of its
intent to issue such announcement.
4.9 Updates. Subject to Section 5.4 hereof, prior to the Closing
Date, the Sellers or ECI may update and supplement the Schedules to this
Agreement from time to time by written notice to the Buyer. If requested by
the Buyer, the Sellers shall meet and discuss with the Buyer any change or
changes in the Schedules made by the Sellers or ECI.
4.10 Temporary License Agreement. By this Agreement, Aris and XOXO
Inc. hereby grant to the Buyer the non-exclusive right and license (the
"Temporary License Agreement") to design, manufacture, promote, advertise,
sell and distribute women's junior sportswear products, women's junior dresses
and women's junior intimate apparel (the "Products") utilizing the Trademarks
(including incorporating the Trademarks on such products, labeling, tagging
and packaging and any displays and advertising that may be appropriate);
provided, however, that:
(a) no Products shall be shipped by the Buyer or any
permitted licensee of the Buyer to any retailers prior to October 1, 2003;
(b) in the event that the Closing does not occur for any
reason by August 31, 2003, this Temporary License Agreement shall terminate;
provided, however, that the Buyer and its permitted licensee shall have the
right to continue to design, manufacture, promote, advertise, sell and
distribute Products bearing the Trademarks for a period not to exceed six (6)
months after August 31, 2003;
(c) The Buyer shall pay to the Seller a royalty equal to
four (4%) percent of its Net Sales of all Products bearing the Trademarks,
unless the Sellers terminate this Agreement pursuant to Section 7.4(e) hereof,
in which event the royalty shall be paid at the same rate as Kellwood Company
("Kellwood") is obligated to pay the Buyer pursuant to the sublicense
described in subsection (d) of this Section 4.10, and all such payments of
royalties shall be due to the Sellers within forty-five (45) days after each
month of shipment of the Products by the Buyer (Net Sales shall mean the gross
sales of all Products less only (i) freight charges and taxes separately
billed on the face of the invoice; (ii) ordinary and customary trade discounts
separately shown on the invoice and/or actually taken by customers and allowed
by the Buyer; (iii) the amount of any refunds and credits for returns of
Products actually paid to or taken by customers and allowed by the Buyer; and
(iv) those credits, or allowances, if any, actually granted as an
accommodation to the Buyer's customers in the nature of ordinary and customary
"markdown chargebacks" or "stock adjustment returns," and (v) overbillings);
(d) The Temporary License Agreement shall not be assignable,
except that the Buyer shall have the right to sublicense to Kellwood its
rights to design, manufacture, promote, advertise, sell and distribute the
Products and the Buyer and/or Kellwood shall have the right to utilize
third-party manufacturers and sub-contractors for the purpose of manufacturing
the Products in all countries throughout the world;
(e) Upon the Closing, all of the Sellers' rights as the
licensor under this Temporary License Agreement are hereby assigned to the
Buyer;
(f) In order to effectuate the terms of this Temporary
License Agreement to the Buyer, simultaneously with the execution of this
Agreement, the Sellers shall enter into an amendment to the ▇▇▇▇▇▇▇ License
Agreement, providing that the ▇▇▇▇▇▇▇ License Agreement shall be non-exclusive
as to the Products and requiring ▇▇▇▇▇▇▇ to acknowledge the Buyer's rights to
design, manufacture, promote, advertise, sell and ship the Products and
related materials under the Trademarks.
(g) During the term of the Temporary License Agreement, the
Buyer agrees to be bound by the provisions in paragraphs 13, 15 and 16 of the
▇▇▇▇▇▇▇ License Agreement. In the event that the Buyer grants a sublicense to
Kellwood, Buyer will obtain from Kellwood an agreement to be bound by the
provisions of paragraphs 13, 15 and 16 of the ▇▇▇▇▇▇▇ License Agreement.
Article V
Conditions Precedent to the Obligations of the Buyer
Each and every obligation of the Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to, or at the Closing, of the
following express conditions precedent (any or all of which the Buyer may
expressly waive except as to the approval of the Aris' shareholders):
5.1 Compliance with Agreement. The Sellers and ECI shall have
performed and complied with in all material respects all of their obligations
under this Agreement which are to be performed or complied with by them prior
to or on the Closing Date.
5.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Buyer and the Buyer's
counsel, and the Sellers and ECI shall have made available to the Buyer for
examination the originals or true and correct copies of all documents in their
possession, or which they can reasonably obtain, which the Buyer may
reasonably request in connection with the transactions contemplated by this
Agreement.
5.3 Absence of Litigation. There shall not have been issued and be in
effect on the Closing Date any order of any court or tribunal of competent
jurisdiction which (a) prohibits or makes illegal the purchase by the Buyer of
the Trademark Assets, the Trademark Applications and the Copyright Assets, (b)
would require the divestiture by the Buyer of all or a material portion of the
Trademark Assets, the Trademark Applications and the Copyright Assets or the
assets of the Buyer as a result of the transactions contemplated hereby, or
(c) would impose limitations on the ability of the Buyer to effectively
exercise full rights of ownership of the Trademark Assets, the Trademark
Applications and the Copyright Assets as a result of the transactions
contemplated hereby. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or
imposing any conditions on the consummation of the transactions contemplated
hereby which the Buyer deems unacceptable in its reasonable discretion. On the
Closing Date, no investigation, suit, action, or other proceeding shall, to
the knowledge of any of the parties, be pending or threatened by any
governmental agency that seeks the restraint, prohibition, damages, or other
relief in connection with this Agreement or the consummation of the
transactions contemplated by this Agreement.
5.4 Representations and Warranties. (a) The representations and
warranties made by the Sellers or ECI that are qualified with respect to
materiality or by reference to "material adverse effect" shall be true and
correct as of the date hereof and as of the Closing Date with the same force
and effect as though said representations and warranties had been made at such
times; and (b) the representations and warranties made by the Sellers or ECI
that are not so qualified shall be true and correct in all material respects
as of the date hereof and as of the Closing Date with the same force and
effect as though said representations and warranties had been made at such
times; provided, however, that, for purposes of this Section 5.4, any updates
and supplements to the Schedules delivered by the Sellers or ECI to the Buyer
after the date of this Agreement shall not be taken into account, except for
changes consented to in writing by the Buyer.
5.5 No Adverse Change. During the period from the date of this
Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date, any condition or
fact which is, or may be, materially adverse to the Trademark Assets, the
Trademark Applications and the Copyright Assets, taken as whole, other than
any condition or fact resulting from, or relating to, (a) the economy or
financial markets in general, (b) in general the industries in which the
Sellers and ECI operate and not specifically relating to the Sellers and ECI,
taken as a whole, (c) a worsening of current conditions caused by the acts of
terrorism or war (whether or not declared) on the United States and its
territories, occurring after the date of this Agreement, or (d) arising in
connection with the actions of the Buyer as contemplated in Section 4.10
hereof.
5.6 Deliveries at Closing. The Sellers shall have delivered to the
Buyer the following documents, each properly executed and dated as of the
Closing Date:
(a) the Assignment of Trademarks, the assignments and
the files as provided in subsections (b), (c) and (d) of Section 1.4 hereof;
(b) a certificate of an executive officer of Aris certifying
to the fulfillment of the conditions set forth in Sections 5.1, 5.3, 5.4, 5.5,
5.8, 5.10 and 5.11 hereof; provided, that the certificate with respect to
Section 5.3 will be made solely with respect to the knowledge of the Sellers;
and
(c) a copy of the resolutions of Aris' Board of Directors,
certified by Aris' Secretary, authorizing the execution and delivery of this
Agreement by Aris and the performance of Aris' obligations hereunder.
5.7 Commitment by ▇▇▇▇▇▇▇. The Sellers shall have obtained from
▇▇▇▇▇▇▇, and shall have delivered a copy thereof to the Buyer, a schedule of
▇▇▇▇▇▇▇'▇ inventory related to the use of the XOXO(R) trademark (the "▇▇▇▇▇▇▇
Inventory") as of a date not more than three (3) Business Days prior to the
Closing Date. On the Closing Date, the Buyer shall have the right to purchase
the ▇▇▇▇▇▇▇ Inventory at cost. In connection with any such sale, ▇▇▇▇▇▇▇ shall
deliver the labels, tags, packaging and all other materials bearing or
incorporating any of the Trademarks. If the Buyer does not exercise its right
to purchase the ▇▇▇▇▇▇▇ Inventory on the Closing Date, ▇▇▇▇▇▇▇ shall have the
right to, and shall, dispose of the ▇▇▇▇▇▇▇ Inventory during the period
commencing on the Closing Date and ending on the ▇▇▇▇▇▇▇ Effective Date. In
the event that the Buyer does not purchase the ▇▇▇▇▇▇▇ Inventory at the
Closing pursuant to this Section 5.7, then not later than three (3) Business
Days after the ▇▇▇▇▇▇▇ Effective Date, the Sellers shall obtain from ▇▇▇▇▇▇▇,
and deliver a copy to the Buyer, a schedule of the unsold items of the ▇▇▇▇▇▇▇
Inventory. The Buyer shall have the option, exercisable within three (3)
Business Days after receipt of such schedule, to purchase such unsold items at
▇▇▇▇▇▇▇'▇ cost. If the Buyer does not exercise such option to buy, the Sellers
shall arrange for ▇▇▇▇▇▇▇ to destroy such items unless they are saleable
without using any of the Trademarks.
5.8 Approvals and Consents. The Sellers and ECI shall have filed all
notices and obtained, in writing, and conveyed to the Buyer such permissions,
approvals, determinations, consents and waivers, if any, as may be required by
law, regulatory authorities, secured creditors of the Sellers or ECI or from
any third party pursuant to any contract to which any of the Sellers or ECI is
a party, in order to consummate the transactions contemplated by this
Agreement and to vest in the Buyer good, clear and marketable title to the
Trademark Assets, the Trademark Applications and the Copyright Assets as
contemplated by this Agreement, except for any failure to file or obtain any
notice, permission, approval, determination, consent or waiver which,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on the Trademark Assets, the Trademark Applications and
Copyright Assets, taken as a whole; provided, that, notwithstanding the
foregoing, the Buyer shall cooperate in good faith with the Sellers and ECI
and shall take all steps reasonably necessary in connection with the
satisfaction of the conditions set forth in this Section 5.8.
5.9 Change of Name. XOXO Inc. shall have delivered to the Buyer, and
shall have caused its wholly-owned subsidiary XOXO Outlets, Inc., a California
corporation ("Outlets") to deliver, all necessary certificates executed by the
appropriate officers of XOXO Inc. and Outlets, in proper form for filing with
the appropriate governmental agencies or officials, and duly authorized by the
Board of Directors of XOXO Inc. and ECI as the sole shareholder of XOXO Inc.
and XOXO Inc. as the sole shareholder of Outlets, to effect the change of the
names of each of XOXO Inc. and Outlets to a substantially dissimilar name so
that Buyer shall have the full and exclusive use of the name XOXO in such
manner as the Buyer may deem proper in its reasonable discretion. Anything in
this Section 5.9 or elsewhere in this Agreement to the contrary
notwithstanding, XOXO Inc. and the Other Subsidiaries may continue to use the
trade name XOXO as signage on the stores designated in writing to the Buyer at
the Closing on Schedule 1.4(g) hereto and on merchandise until the ▇▇▇▇▇▇▇
Effective Date; provided, however, that not later than one (1) Business Day
thereafter, XOXO Inc. and the Other Subsidiaries, whichever is applicable,
removes such signage and ceases to utilize the Trademark in any way.
5.10 Shareholders' Approval. The shareholders of Aris shall have
approved this Agreement and the consummation of the transactions contemplated
hereby in accordance with Aris' Certificate of Incorporation and Bylaws, the
BCL and the Exchange Act.
5.11 Esteem Fashions Agreement. All amounts due and payable by XOXO
Inc. pursuant to that certain Agreement, dated as of November 11, 1999, by and
between XOXO Inc. and Esteem Fashions Inc., shall have been paid on or prior
to the Closing Date.
Article VI
Conditions Precedent to the Obligations of the Sellers
Each and every obligation of the Sellers to be performed on the
Closing Date shall be subject to the satisfaction prior to, or at the Closing,
of the following express conditions precedent (any or all of which Sellers may
expressly waive except as to the approval of the Aris' shareholders):
6.1 Compliance with Agreement. The Buyer shall have performed and
complied with in all material respects all of its obligations under this
Agreement which are to be performed or complied with by it prior to or on the
Closing Date.
6.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement by the Buyer, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to the Sellers
and the Sellers' counsel.
6.3 Absence of Litigation. There shall not have been issued and be in
effect on the Closing Date any order of any court or tribunal of competent
jurisdiction which prohibits or makes illegal the sale by the Sellers of the
Trademark Assets or the Copyright Assets. On the Closing Date there shall be
no effective injunction, writ, preliminary restraining order or any order of
any nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as so
provided. On the Closing Date no investigation, suit, action, or other
proceeding shall, to the knowledge of either of the parties, be pending or
threatened by any governmental agency that seeks the restraint, prohibition,
damages, or other relief in connection with this Agreement or the consummation
of the transactions contemplated by this Agreement.
6.4 Representations and Warranties. (a) The representations and
warranties made by the Buyer that are qualified with respect to materiality
shall be true and correct as of the date hereof and as of the Closing Date
with the same force and effect as though said representations and warranties
had been made at such times; and (b) the representations and warranties made
by the Buyer that are not so qualified shall be true and correct in all
material respects as of the date hereof and as of the Closing Date with the
same force and effect as though said representations and warranties had been
made at such times.
6.5 Payment of Purchase Price. The Buyer shall have paid to the
Sellers the Purchase Price as described in Section 1.2 of this Agreement.
6.6 Delivery at Closing. The Buyer shall have delivered to the
Sellers a certificate, properly executed and dated as of the Closing Date by
the Manager of the Buyer, certifying to the fulfillment of the conditions set
forth in Sections 6.1, 6.3 and 6.4 hereof; provided, that the certificate with
respect to Section 6.3 will be made solely with respect to the knowledge of
the Buyer.
6.7 Shareholders' Approval. The shareholders of Aris shall have
approved this Agreement and the consummation of the transactions contemplated
hereby in accordance with Aris' Certificate of Incorporation and Bylaws, the
BCL and the Exchange Act.
6.8 Absence of Dissenters' Rights. As of the date of the Special
Meeting, shareholders of Aris holding five (5%) or more of the outstanding
shares of its Common Stock, $.01 par value, shall not have notified Aris of
their intentions to assert their rights of appraisal pursuant to Sections 910
and 623 of the BCL.
6.9 Approvals and Consents. The Sellers shall have obtained, on or
before the Closing Date, the consents set forth on Schedule 5.8.
Article VII
Post-Closing Covenants, Indemnity and Termination
7.1 No Further Use. Except as specifically provided in Sections 5.7
and 5.9 hereof, after the Closing Date, the Sellers and ECI shall not,
directly or indirectly, use or utilize in any manner whatsoever, the
Trademarks or any similar trademarks or trade names, logos, designs or
graphics or any of the Copyright Assets or any similar copyright. Moreover,
the Sellers and ECI agree that each shall never attack or question the
validity of, or assist any third party in attacking or questioning the rights
hereafter claimed by the Buyer, in the Trademarks, the Copyright Assets and
the other Trademark Assets.
7.2 Sellers' Indemnity.
(a) The Sellers shall, jointly and severally, indemnify and
hold the Buyer harmless from and against, and shall defend promptly the Buyer
from, and reimburse the Buyer for, any and all losses, damages, costs,
expenses, liabilities, obligations, and claims of any kind, including, without
limitation, reasonable attorneys fees, settlement proceeds, costs of procuring
a bond and other costs and expenses (collectively "Damages"), which the Buyer
may at any time suffer or incur, or become subject to, as a result of, or in
connection with:
(i) any suit, action or other proceeding, or any
other claim asserted by any third party or governmental authority that
challenges the validity of the Sellers' or the Buyer's right, title or
interest in and to the Trademark Assets, the Trademark Applications or the
Copyright Assets, subject to those rights granted in the Trademark License
Agreements and any interests granted therein by the Buyer subsequent to the
Closing Date;
(ii) any claim asserted by any current licensee of
the Sellers under the existing indemnification provisions contained in its
Trademark License Agreement, until the expiration of the license period in
effect under such Trademark License Agreement as of the Closing Date without
extension pursuant to any discretionary renewal periods thereunder;
(iii) any suit, action or other proceeding, or any
other claim asserted by any third party, including any licensee of the
Sellers, or governmental authority arising out of, or in connection with, the
Sellers' actions or omissions under the Trademark License Agreements or the
Terminated Licenses prior to the Closing Date; or
(iv) any liability for taxes of the Sellers or the
Other Subsidiaries for any period ending on or prior to the Closing Date or
which includes the Closing Date (other than taxes or fees which are the
responsibility of the Buyer pursuant to Section 8.11).
(b) The Sellers' indemnification obligations contained in
Section 7.2(a) hereof (other than Section 7.2(a)(iv)) shall not apply to any
claim, demand, action or proceeding for Damages until the aggregate of all
such Damages total One Hundred Thousand ($100,000) Dollars (the "Sellers'
Threshold Amount"), in which event the Sellers' indemnification obligations
contained in Section 7.2(a) (other than Section 7.2(a)(iv)) shall apply to all
claims, demands, actions or proceedings for Damages in excess of the Sellers'
Threshold Amount, subject to a maximum liability to all parties, in the
aggregate, equal to the Purchase Price for Damages under Section 7.2(a) (other
than Section 7.2(a)(iv)); provided, however, that the Sellers' Threshold
Amount shall not apply to any Damages arising out of, or in connection with,
the Adversary Proceeding.
(c) The Buyer shall promptly notify the Sellers of any
claim, demand, action, or proceeding for which indemnification will be sought
under subsection (a) of this Section 7.2 and, if such claim, demand, action,
or proceeding is a third party claim, demand, action, or proceeding, the
Sellers shall have the right at their expense to assume the defense thereof
using counsel reasonably acceptable to the Buyer. The Buyer shall have the
right to participate, at its own expense, with respect to any such third party
claim, demand, action, or proceeding. In connection with any such third party
claim, demand, action, or proceeding, the Buyer and the Sellers shall
cooperate with each other and provide each other with access to relevant books
and records in their possession. No such third party claim, demand, action, or
proceeding shall be settled without the prior written consents of the Sellers
and the Buyer. If a firm written offer is made to settle any such third party
claim, demand, action, or proceeding and the Sellers refuse to consent to such
settlement, then: (i) the Buyer shall be excused from, and the Sellers shall
be jointly and severally responsible for, all further defense of such third
party claim, demand, action, or proceeding; and (ii) the maximum liability of
the Buyer (subject to a claim over against the Sellers) relating to such third
party claim, demand, action, or proceeding shall be the amount of the proposed
settlement if the amount thereafter received from the Sellers on such third
party claim, demand, action, or proceeding is greater than the amount of the
proposed settlement.
(d) Notwithstanding anything in this Section 7.2 to the
contrary, in no event will the Sellers be liable in any way in connection with
their performance under this Agreement for any loss of profit or any other
special damages, including, but not limited to, special, incidental,
consequential, or other damages, except and to the extent that such damages
are paid by the Buyer to a third party.
(e) In calculating the amount of any indemnifiable Damages
pursuant to this Section 7.2, there shall be deducted any tax benefit
available to the Buyer and its affiliates as a result of the deduction of the
amounts so indemnified.
(f) All indemnity payments made by the Sellers to the Buyer
pursuant to this Section 7.2 shall be treated for all tax purposes as an
adjustment to the Purchase Price. Appropriate adjustments to the allocation of
the Purchase Price (including the Final Allocation) shall be made at the time
of such indemnity payments.
7.3 Buyer's Indemnity.
(a) The Buyer shall indemnify and hold the Sellers harmless
from and against, and shall defend promptly the Sellers from, and reimburse
the Sellers for, any and all Damages, which the Sellers may at any time suffer
or incur, or become subject to, as a result of, or in connection with any
suit, action or other proceeding, or any other claim asserted by any third
party or governmental authority arising out of, or in connection with, the
Buyer's actions following the Closing Date.
(b) The Buyer's indemnification obligations contained in
Section 7.3(a) hereof shall not apply to any claim, demand, action or
proceeding for Damages until the aggregate of all such Damages total One
Hundred Thousand ($100,000) Dollars (the "Buyer's Threshold Amount"), in which
event the Buyer's indemnification obligations contained in Section 7.3(a)
shall apply to all claims, demands, actions or proceedings for Damages in
excess of the Buyer's Threshold Amount.
(c) The Sellers shall promptly notify the Buyer of any
claim, demand, action, or proceeding for which indemnification will be sought
under subsection (a) of this Section 7.3 and, if such claim, demand, action,
or proceeding is a third party claim, demand, action, or proceeding, the Buyer
shall have the right at their expense to assume the defense thereof using
counsel reasonably acceptable to the Sellers. The Sellers shall have the right
to participate, at their own expense, with respect to any such third party
claim, demand, action, or proceeding. In connection with any such third party
claim, demand, action, or proceeding, the Buyer and the Sellers shall
cooperate with each other and provide each other with access to relevant books
and records in their possession. No such third party claim, demand, action, or
proceeding shall be settled without the prior written consents of the Sellers
and the Buyer. If a firm written offer is made to settle any such third party
claim, demand, action, or proceeding and the Buyer refuses to consent to such
settlement, then: (i) the Sellers shall be excused from, and the Buyer shall
be responsible for, all further defense of such third party claim, demand,
action, or proceeding; and (ii) the maximum liability of the Sellers (subject
to a claim over against the Buyer) relating to such third party claim, demand,
action, or proceeding shall be the amount of the proposed settlement if the
amount thereafter received from the Buyer on such third party claim, demand,
action, or proceeding is greater than the amount of the proposed settlement.
(d) In calculating the amount of any indemnifiable Damages
pursuant to this Section 7.3, there shall be deducted any tax benefit
available to the Sellers and their affiliates as a result of the deduction of
the amounts so indemnified.
(e) Notwithstanding anything in this Section 7.3 to the
contrary, in no event will the Buyer be liable in any way in connection with
its performance under this Agreement for any loss of profit or any other
special damages, including, but not limited to, special, incidental,
consequential, or other damages, except and to the extent that such damages
are paid by the Sellers to a third party.
(f) All indemnity payments made by the Buyer to the Sellers
pursuant to this Section 7.3 shall be treated for all tax purposes as an
adjustment to the Purchase Price. Appropriate adjustments to the allocation of
the Purchase Price (including the Final Allocation) shall be made at the time
of such indemnity payments.
7.4 Termination. Unless otherwise agreed to in writing, this
Agreement may be terminated and the transactions contemplated by this Agreement
may be abandoned at any time as follows:
(a) by mutual written agreement of the Sellers and the
Buyer;
(b) by the Buyer (provided that it is not otherwise in
breach hereof) if any of the conditions set forth in Article V of this
Agreement shall not have been fulfilled on, or prior to, August 31, 2003;
(c) by the Sellers (provided that it is not otherwise in
breach hereof) if any of the conditions set forth in Article VI of this
Agreement shall not have been fulfilled on, or prior to, August 31, 2003;
(d) by the Buyer or the Sellers if a court of competent
jurisdiction shall have issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and non-appealable;
(e) by the Sellers if the Buyer (i) breaches its
representations and warranties in any material respect, (ii) fails to comply
in any material respect with any of its covenants or agreements contained
herein which failure is not cured within twenty (20) days of written notice
thereof; or (iii) fails to meet at the Closing any conditions set forth in
Article VI hereof and such failure has not been waived in writing by the
Seller;
(f) by the Buyer if either the Sellers or ECI (i) breach
their representations and warranties in any material respect, (ii) fail to
comply in any material respect with any of their covenants or agreements
contained herein which failure is not cured within twenty (20) days of
written notice thereof; or (iii) fail to meet at the Closing any condition
set forth in Article V hereof and such failure has not been waived in
writing by the Buyer;
(g) by the Buyer or the Sellers if the shareholders of Aris
fail to approve this Agreement and the consummation of the transactions
contemplated hereby in accordance with Aris' Certificate of Incorporation
and Bylaws, the BCL and the Exchange Act; or
(h) by the Sellers if the Board of Directors of Aris has
recommended an Alternative Transaction pursuant to Section 4.5(b) hereof.
7.5 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 7.4 hereof, all further obligations of the parties under
or pursuant to this Agreement shall terminate without further liability of
either party to the other, except that: (a) the Buyer's obligations contained
in Section 4.2 of this Agreement shall survive any such termination, (b) in
the event that the Agreement is terminated on account of the failure of any of
the conditions set forth in Section 4.5(a) or Section 5.10 hereof to be
satisfied, the Sellers shall pay Buyer as liquidated damages the amount
provided in Section 4.5(c) hereof and (c) each party shall retain any and all
remedies which it may have for breach of contract provided by law based on the
other party's failure to comply with the terms of this Agreement. If any of
the conditions set forth in Article V of this Agreement (other than Section
5.10 hereof) have not been satisfied, the Buyer may nevertheless elect to
proceed with the consummation of the transactions contemplated by this
Agreement and, if any of the conditions set forth in Article VI of this
Agreement (other than Section 6.7 hereof) have not been satisfied, the Sellers
may nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement.
7.6 Survival of Indemnities. All obligations of the Sellers pursuant
to Section 7.2 hereof (other than Section 7.2(a)(iv)) shall survive the
Closing Date and the consummation of the transactions contemplated by this
Agreement for a period of three (3) years from the Closing Date, except for
the obligations of the Sellers pursuant to Section 7.2(a)(ii) and (iii) hereof
which shall survive the Closing Date, or any termination of this Agreement.
The obligations of the Sellers pursuant to Section 7.2(a)(iv) shall survive
the Closing Date and the consummation of the transactions contemplated by this
agreement for a period of ninety (90) days after the expiration of the statute
of limitations applicable to the assessment or collection of taxes covered by
Section 7.2(a)(iv). All obligations of the Buyer pursuant to Section 7.3
hereof shall survive the Closing Date, or any termination of this Agreement.
Article VIII
Miscellaneous
8.1 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at
the earlier of (a) the date when actually delivered to an officer of a party,
(b) the second business day after having deposited the notice of communication
in the United States mail, certified or registered mail, postage prepaid,
return receipt requested, or (c) upon delivery by courier or facsimile, and
addressed as follows, unless and until any of such parties notifies the others
in accordance with this Section 8.1 of a change of address:
If to the Sellers:
c/o Aris Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and Chief
Executive Officer
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇-▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇:
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇, Managing Member
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & Masyr, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
8.2 Further Assurances. At any time, and from time to time, each of
the parties hereto, at the request of the other, shall execute, deliver and
acknowledge or cause to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as may be
reasonably requested in order to fully implement the purpose of this
Agreement.
8.3 Governing Law and Forum. This Agreement shall be construed (both
as to validity and performance) and enforced in accordance with, and governed
by, the laws of the State of New York applicable to contracts to be performed
entirely within that State, without giving effect to the principles of
conflicts of law, except that any questions governed by the statutes of the
United States of America shall be construed and enforced in accordance with,
and governed by, such statutes. The parties hereto agree that any action, suit
or other proceeding arising out of this Agreement, or the consummation of the
transactions contemplated hereby, shall be brought only in a federal or state
court located in the City, County and State of New York; provided, however,
that no party waives its or his right to request the removal of such action,
suit or proceeding from the state court to a federal court in such
jurisdiction or vice versa. The parties hereto each waive any claim that such
jurisdiction is not a convenient forum for any such action, suit or proceeding
and the defense of lack of personal jurisdiction. Each of the parties hereto
agrees that service of any process, summons, notice or document by U.S.
registered mail at its or his address set forth herein shall be effective
service of process for any action, suit or proceeding brought against it or
him in any such court. Each of the parties hereby further agrees that any such
court shall have in personam jurisdiction over it or him, and agrees that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner specified by law.
8.4 Headings. The headings used in this Agreement are for
convenience only and shall not be deemed to constitute a part hereof.
8.5 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and herein were
upon the same instrument.
8.6 Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors and assigns of the parties hereto.
8.7 Entire Agreement. This Agreement and the documents referred to
herein and to be delivered pursuant hereto constitute the entire agreement and
understanding of the parties hereto with respect to its subject matter hereof
and supersede any prior agreements and understanding between the parties with
respect thereto.
8.8 Amendments and Waivers. No amendment, supplement, modification,
waiver, or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
8.9 Expenses. Except as provided in Sections 1.3, 4.5(c), 7.5 and
8.11 hereof, whether or not the transactions contemplated by this Agreement
are consummated, each of the parties hereto shall pay the fees and expenses
incurred by it or him, including the fees of respective counsel, accountants,
brokers, investment bankers, and other experts incident to the negotiation and
preparation of this Agreement and consummation of the transactions
contemplated by this Agreement.
8.10 Assignment. This Agreement shall not be assigned by the Sellers
or the Buyer without the prior written consent of the other party; provided,
however, that the Buyer shall have the right to assign all or any portion of
its rights under this Agreement, or to delegate all or any portion of its
obligations under this Agreement, in each case with reference to all or any
portion of the Trademark Assets or the Copyright Assets, to an Affiliate of
the Buyer without the Sellers' consent. Any such assignment shall not release
the Buyer from its obligations herein.
8.11 Taxes and Fees. The Sellers and the Buyer shall each pay and be
responsible for 50% of all sales, use or other transfer taxes of any kind and
all escrow, documentary, stamp, recording and filing taxes or fees which arise
as a result of the conveyance of the Trademark Assets and the Copyright Assets
to the Buyer pursuant to this Agreement.
8.12 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such
provision, clause, or part under other circumstances, shall not be affected
thereby and this Agreement shall be construed in a manner which, as nearly as
possible, reflects the original intent of the parties.
8.13 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
8.14 Rules of Construction. Each party to this Agreement has been
represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waives any rule of construction that would
construe ambiguities against the party drafting this Agreement.
8.15 Bulk Transfers. The parties to this Agreement agree to waive
compliance with the requirements of the bulk sales tax laws of any
jurisdiction in connection with any of the transactions contemplated under
this Agreement, including, without limitation, the notice provisions of
Chapter 60, Article 28, Section 1141(c) of the consolidated laws of the State
of New York and any similar notice provisions of any other jurisdiction.
8.16 IRS Tax Forms. Immediately prior to the payment of any amounts
by the Sellers to the Buyer pursuant to this Agreement, the Buyer shall
provide the Sellers with a validly completed and executed IRS Form W-9
indicating that the Buyer is not subject to backup withholding. If the Buyer
fails to provide the Sellers with such form, the Sellers shall be entitled to
withhold the appropriate amount of tax that the Sellers reasonably determine
that they are required to withhold pursuant to applicable law.
[REMAINDER OF PAGE IS INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
ARIS INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
XOXO CLOTHING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
EUROPE CRAFT IMPORTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
8-3 RETAILING INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
MARCADE GROUP REALTY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
GLOBAL BRAND HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Member
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇
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