EXHIBIT J
PRENTICE CAPITAL MANAGEMENT, LP GMM CAPITAL LLC
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October 23, 2005
GF Goods Inc.
c/o GMM Capital, LLC
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Gentlemen and Ladies:
Reference is made to that certain Acquisition Agreement and Agreement
and Plan of Merger Agreement (the "Agreement"), to be entered into among Goody's
Family Clothing, Inc. (the "COMPANY"), GF Goods Inc. ("AQCUISITIONCO") and GF
Acquisition Corp. ("MERGER SUB"). Terms used but not defined herein shall have
the meanings set forth in the Agreement.
This letter will confirm the commitment of Prentice Capital Management,
LP, on behalf of one or more of its affiliated funds or managed accounts
("PRENTICE") and GMM Capital, LLC ("GMM"), to provide equity and debt financing
(the "FINANCING") to AcquisitionCo in an amount in cash sufficient for the
payment of the aggregate Offer Price, at or prior to the Offer Payment Date (the
"OFFER CONTRIBUTION OBLIGATION"), and the aggregate Merger Consideration and
Option Consideration, at or prior to the Effective Time (the "MERGER
CONTRIBUTION OBLIGATION"). The proceeds to AcquisitionCo from this financing
will be used to provide the financing for the acquisition of the Company
pursuant to the Agreement (the "ACQUISITION").
As of the date hereof, Prentice has committed capital of not less than
$1.2 billion and GMM has net assets of not less than $100 million.
Prentice's and GMM's commitment is subject to (i) the satisfaction, or
waiver by AcquisitionCo, of all of the conditions to AcquisitionCo's obligations
(x) in the case of the Offer Contribution Obligation, to consummate the Offer as
set forth in Annex A of the Agreement, and (y) in the case of the Merger
Contribution Obligation, to consummate the Merger as set forth in Article 7 of
the Agreement, and (ii) there having been no termination of the Agreement
pursuant to Article 8 of the Agreement. Prentice and GMM further agree to be
liable for the failure by AcquisitionCo to consummate the transactions
contemplated by the Agreement, provided that all of the conditions to
AcquisitionCo's obligations contained in the Agreement are satisfied, or waived
by AcquisitionCo.
In the event that the transactions contemplated by the Agreement,
including the Offer and the Merger, are not consummated due to a breach of a
representation, warranty or covenant by AcquisitionCo or Merger Sub, Prentice
and GMM shall contribute to AcquisitionCo, upon the final and non-appealable
determination of such breach, all damages
GF Goods Inc.
October 23, 2005
Page 2
awarded therefor with respect to AcquisitionCo's and Merger Sub's liability to
the Company under Section 8.05 of the Agreement, in an aggregate amount (the
"DAMAGES AMOUNT") not to exceed (a) the amount of the Company Break Up Fee plus
(b) the lesser of the aggregate amount of the Company's Expenses and $3,000,000.
Notwithstanding the foregoing sentence, neither Prentice nor GMM will be liable
for any punitive damages nor do they guarantee any liability of AcquisitionCo or
Merger Sub for any punitive damages. This letter agreement relates solely to the
obligation of Prentice and GMM to provide the Financing or the Damages Amount,
as appropriate, to AcquisitionCo as set forth above and is not a guaranty of
collection or the performance of any other obligations of AcquisitionCo, Merger
Sub, Prentice or GMM or any other Person.
Prentice and GMM hereby acknowledge that this letter agreement is being
delivered and accepted as a material inducement to the Company to enter into the
Agreement, that the Company is an intended third party beneficiary of this
letter agreement, and that this letter agreement may not be amended or waived
without the prior written consent of the Company. Except as specifically
provided in the preceding sentence, nothing contained in this letter agreement
is intended, nor shall anything herein be construed, to confer any rights, legal
or equitable, in any person other than AcquisitionCo, Prentice and GMM.
This commitment will be effective upon AcquisitionCo's acceptance of
the terms and conditions of this letter agreement and will expire on the
earliest to occur of (i) the closing of the Acquisition or (ii) the termination
of the Agreement pursuant to its terms. Any claim against Prentice or GMM
arising under this letter agreement shall be barred if not brought in a court of
competent jurisdiction on or before the earlier of (a) 60 days following
termination of the Agreement or (b) February 28, 2006.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without giving effect to the conflict
of laws principles thereof). Each party to this letter agreement and the Company
hereby irrevocably and unconditionally agree that any action, suit or
proceeding, at law or equity, arising out of or relating to this letter
agreement or any agreements or transactions contemplated hereby shall only be
brought in any federal court of the Southern District of New York or any state
court located in New York County, State of New York, and hereby irrevocably and
unconditionally expressly submit to the personal jurisdiction and venue of such
courts for the purposes thereof and hereby irrevocably and unconditionally waive
(by way of motion, as a defense or otherwise) any and all jurisdictional, venue
and convenience objections or defenses that such party may have in such action,
suit or proceeding. Each party and the Company hereby irrevocably and
unconditionally consent to the service of process of any of the aforementioned
courts. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this section.
GF Goods Inc.
October 23, 2005
Page 3
Sincerely,
PRENTICE CAPITAL MANAGEMENT, LP
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
GMM CAPITAL, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
Accepted as of the date first above written:
GF GOODS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer