SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 26, 1999
PHILLIPS-VAN HEUSEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-724 13-1166910
(Commission file number) (IRS Employer Identification Number)
200 Madison Avenue, New York, New York 10016
(Address of principal executive offices)
Registrant's telephone number: (212) 381-3500
1290 Avenue of the Americas, New York, New York 10104
(Former name or former address, if changed since last Report)
Page 1 of 7 pages
Exhibit Index located on page 4
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
On February 26, 1999, Phillips-Van Heusen Corporation (the "Company") sold
the Gant, Hugger and Rugger trademarks and certain related assets associated
with the Company's Gant operations for $71.0 million cash to Pyramid
Sportswear AB ("Pyramid"), which is the brand's international licensee.
Pyramid is a wholly-owned subsidiary of Pyramid Partners AB, in which the
Company has a minority interest. The purchase price was negotiated between
the parties. As part of the transaction, Pyramid and an affiliated company
assumed certain obligations and liabilities associated with the Company's Gant
operations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information.
See page 4 for a listing of the pro forma financial information submitted
as part of this Report.
(c) Exhibits
See page 4 for a listing of the exhibits submitted as part of this Report.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
By
Name: Vincent A. Russo
Title: Vice President
and Controller
Date: March 10, 1999
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS INCLUDED
AS PART OF ITEM 7
Page
(b) Pro forma Financial Statements
(i) Explanatory Note 5
(ii) Phillips-Van Heusen Corporation Pro Forma Consolidated
Condensed Balance Sheet as of January 31, 1999 6
(iii) Phillips-Van Heusen Corporation Pro Forma Consolidated
Condensed Statement of Income for the Year Ended
January 31, 1999 7
(c) Exhibits
99.1 Asset Purchase Agreement, dated February 23, 1999, between
Phillips-Van Heusen Corporation and Pyramid Sportswear AB
99.2 Assignment and Assumption Agreement, dated
February 23, 1999, between Phillips-Van Heusen
Corporation and Pyramid Sportswear Acquisition Corporation
4
<PAGE>
PRO FORMA FINANCIAL STATEMENTS - EXPLANATORY NOTE
On February 26, 1999, Phillips-Van Heusen Corporation (the "Company")
sold the Gant, Hugger and Rugger trademarks and certain related assets
associated with the Company's Gant operations for $71.0 million cash to
Pyramid Sportswear AB ("Pyramid"), which is the brand's international
licensee. Pyramid is a wholly-owned subsidiary of Pyramid Partners AB, in
which the Company has a minority interest. The purchase price was negotiated
between the parties. As part of the transaction, Pyramid and an affiliated
company assumed certain obligations and liabilities associated with the
Company's Gant operations. The accompanying pro forma financial statements
reflect the Company's estimate of how the Company's consolidated balance sheet
as of January 31, 1999 (the date of the Company's most recently completed
fiscal year ("fiscal 1998")) and its consolidated statement of income for
fiscal 1998, would have been affected if the acquisition had occurred on
February 2, 1998, the first day of fiscal 1998.
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<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
Actual Pro forma
January 31, Pro forma January 31,
1999 Adjustments 1999
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . $ 10,957 $ 62,612 $ 73,569
Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . 88,038 (14,347) 73,691
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 232,695 (15,471) 217,224
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,327 36,327
Total Current Assets . . . . . . . . . . . . . . . . . . . . . 368,017 32,794 400,811
Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . 108,846 (16,366) 92,480
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,344 (27,648) 85,696
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,106 (9,539) 74,567
Total Assets $674,313 $(20,759) $653,554
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000 $(20,000)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 44,851 (5,676) $ 39,175
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 67,835 2,965 70,800
Total Current Liabilities. . . . . . . . . . . . . . . . . . . 132,686 (22,711) 109,975
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 248,723 248,723
Other Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 64,016 64,016
Stockholders' Equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . 27,288 27,288
Additional capital . . . . . . . . . . . . . . . . . . . . . . . 117,683 117,683
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . 83,917 1,952 85,869
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . 228,888 1,952 230,840
Total Liabilities & Stockholders' Equity . . . . . . . . . . . $674,313 $(20,759) $653,554
</TABLE>
The pro forma adjustments were developed based on the cash proceeds from
Pyramid Sportswear AB, the write-off of goodwill and other assets related
either to the Gant trademark or Gant's operations, and the liquidation of
Gant's working capital in connection with the sale. The pro forma
adjustments to cash also include the effect of pro forma adjustments to
the Company's fiscal 1998 consolidated condensed statement of income for
those items with a cash impact. The tax effect of the pro forma adjustments
to the Company's fiscal 1998 consolidated condensed statement of income is
recorded to other non-current assets as an adjustment to the Company's
deferred tax carryforward asset.
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<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Actual Pro forma
Year Ended Year Ended
January 31, Pro forma January 31,
1999 Adjustments 1999
<S> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,303,085 $(81,865) $1,221,220
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 856,160 (57,423) 798,737
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446,925 (24,442) 422,483
Selling, general and administrative expenses . . . . . . . . . . . . . 394,940 (23,539) 371,401
Year 2000 computer conversion expenses . . . . . . . . . . . . . . . . 8,500 8,500
Income before interest, taxes and extraordinary item . . . . . . . . . 43,485 (903) 42,582
Interest expense, net. . . . . . . . . . . . . . . . . . . . . . . . . 26,112 (3,750) 22,362
Income before taxes and extraordinary item . . . . . . . . . . . . . . 17,373 2,847 20,220
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . 4,486 895 5,381
Income before extraordinary item . . . . . . . . . . . . . . . . . . .$ 12,887 $ 1,952 $ 14,839
Basic and diluted income per share before
extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . .$ 0.47 $ 0.54
</TABLE>
The pro forma adjustments were developed based on the elimination of the
Company's Gant operations in fiscal 1998, reduced depreciation and
amortization from the write-off of goodwill and other assets related to
Gant's operations, and reduced interest expense resulting from the sale
proceeds and liquidation of Gant's working capital, net of associated
costs. Income tax was estimated at 39% on all items, excluding adjustments
to certain non-tax deductible goodwill amortization.
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ASSET PURCHASE AGREEMENT
Between
PHILLIPS-VAN HEUSEN CORPORATION
A Delaware Corporation
And
PYRAMID SPORTSWEAR AB
A Swedish Corporation
February 23, 1999
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated February 23, 1999, between
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation, with
offices at 200 Madison Avenue, New York, New York 10016 ("Seller"),
and PYRAMID SPORTSWEAR AB, a Swedish corporation, with offices at
Engelbrektsgatan 7, SE-114 32 Stockholm, Sweden ("Buyer").
RECITALS:
1. Seller is the owner of the trademarks "Gant",
"Hugger" and "Rugger" and all trademark rights, logos and
designs associated therewith, as described on Schedule 1
("the Trademarks"), which are used in various countries
throughout the world in connection with the advertising,
promotion, sale and distribution of apparel and
accessories and, to a lesser extent, eyewear and
fragrances ("the Products").
2. Seller has previously granted exclusive
licenses for the Trademarks covering certain of the
Products to Buyer. Buyer is a wholly-owned subsidiary of
Pyramid Partners AB ("Pyramid"), a Swedish corporation.
These licenses cover various territories outside of the
United States.
3. Buyer is desirous of obtaining worldwide rights
to the Trademarks by acquiring ownership of the
Trademarks and certain related assets from Seller.
In consideration of the above recitals, all of which
shall be deemed an integral part of this Agreement, and
the covenants and agreements contained in this Agreement,
Seller and Buyer agree as follows:
1. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Assets. Subject to the terms and conditions of this
Agreement, at the Closing (as hereinafter defined), Seller will
sell, assign, transfer and deliver to Buyer all of Seller's right,
title and interest in, and Buyer will purchase, acquire, accept and
pay for, all of the following assets of Seller, free and clear of
all security interests, liens, mortgages, charges, options,
licenses, adverse claims or restrictions of any kind, including but
not limited to, any restrictions on use, transfer, receipt of
income or other attributes of ownership, other than the rights of
the licensees under the Assumed Contracts (as hereinafter defined)
("Encumbrances"), all such assets being hereinafter referred to as
"the Assets":
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(a) The Trademarks and all Trademark registrations
and Trademark application files and records, other than the
Excluded Trademarks (as hereinafter defined) and the registrations,
applications, files and records connected with the Excluded
Trademarks;
(b) All license and distribution agreements
associated with the Trademarks, as listed on Schedule 2 ("the
Assumed Contracts"), and all rights, privileges and entitlements of
Seller under the Assumed Contracts;
(c) Copies of all books and historical records
relating to the Assets, including executed copies of the Assumed
Contracts;
(d) All goodwill associated with the Assets;
(e) All guarantees, warranties, indemnities and
similar rights of Seller with respect to any Asset;
(f) All rights, claims, credits, causes of action
or rights of set off of Seller against third parties relating to
the Assets; and
(g) The web-sites "Gant.com" and "Gant USA.com",
and the computer software constituting the web-sites designated by
such domain names.
1.2 Purchase Price. The purchase price ("the Purchase
Price") for the Assets is USD 71,000,000.
1.3 Closing. The purchase and sale ("the Closing") provided
for in this Agreement ("the Contemplated Transaction") will take
place at the offices of Alfred Berg, Birger Jarlsgatan 7,
Stockholm, Sweden, at 11:00 a.m. (local time) on February 26, 1999,
or, subject to Section 11, at such other time and place as the
parties may agree ("the Closing Date"). Subject to the provisions
of Section 11, failure to consummate the Contemplated Transaction
on the date and time and at the place determined pursuant to this
Section 1.3 will not result in the termination of this Agreement
and will not relieve any party of any obligation under this
Agreement.
1.4 Assumption of Liabilities and Obligations. As of 12:01
a.m. U.S.A. Eastern Standard Time on the Closing Date, Buyer shall
pay, assume, discharge and perform (i) all the obligations and
liabilities of Seller under the Assumed Contracts, insofar as they
relate to the time period beginning on and after the Closing Date,
and arise out of events occurring on or after the Closing Date, and
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(ii) except as otherwise provided in this Agreement, all
obligations and liabilities arising out of events occurring after
the Closing Date related to Buyer's ownership of the Assets after
the Closing Date ("the Assumed Liabilities"). All other obliga-
tions and liabilities of Seller, including but not limited to (y)
any obligations under any Assumed Contract relating to the time
period prior to 12:01 a.m. U.S.A. Eastern Standard Time on the
Closing Date, and (z) any claims or pending litigation or proceed-
ings relating to the Assets and arising or based on events
occurring prior to the Closing Date, shall, except as otherwise
provided in this Agreement, remain and be the obligations and
liabilities solely of Seller. Except to the extent specifically
set forth in this Agreement, Buyer is not assuming, and shall not
be bound by, any obligations or liabilities of Seller of any kind
or nature, known, unknown, expressed, implied, contingent or
otherwise, other than the Assumed Liabilities. In particular, but
not in limitation of the foregoing sentence, Buyer is not assuming
any obligations or liabilities with respect to which provision for
indemnification of Buyer has been made in this Agreement.
1.5 Allocation of Purchase Price. Schedule 3 sets forth the
allocation of the Purchase Price among the classes of assets set
forth in section 1060 of the United States Internal Revenue Code of
1986 or any successor law, and regulations issued pursuant to the
Internal Revenue Code or any successor law ("the IRC"). Subsequent
to the Closing, Seller and Buyer will cooperate in the preparation,
execution and filing with the Internal Revenue Service of all
information returns and supplements thereto required to be filed by
the parties under section 1060 of the IRC relating to the
allocation of such consideration, and Seller and Buyer agree to
file Form 8594 (or any substitute therefor) when and as required by
applicable law, consistent with the allocation set forth in
Schedule 3.
1.6 Assumed Contracts. Schedule 2 includes a list of all of
the Assumed Contracts and an historical summary of royalties
received by Seller under the Assumed Contracts, other than
royalties received from Buyer. Pursuant to Section 1.4 of this
Agreement, Buyer shall assume all benefits including royalties
payable under the Assumed Contracts as of 12:01 a.m. U.S.A. Eastern
Standard Time on the Closing Date. As of the Closing Date, Seller
and Buyer shall prorate all royalties payable under the Assumed
Contracts for the entire January 1, 1999 through June 30, 1999
quarterly periods based upon the number of days Seller and Buyer
own the Trademarks during such period. No later than September 30,
1999, Seller and Buyer shall determine the amount of royalties
payable to each under this Agreement and the net amount owed shall
be paid to the appropriate party at that time ("the Royalty
Adjustment"). In calculating the royalties owed to Seller and
Buyer hereunder, the parties shall take into account any advance
royalties paid to Seller under any of the Assumed Contracts.
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1.7 Trademarks. Schedule 1 includes a list of all of Seller's
Trademark registrations worldwide, and pending Trademark
applications, including the name of the record owner of each
Trademark, other than Trademarks that include both "Salty Dog" and
"Rugger", which Trademarks are not being sold to Buyer ("the
Excluded Trademarks").
2. REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Organization, Standing and Authority. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified to
conduct its business in New York. Seller has all requisite
corporate power and authority (i) to own, lease, license and use
the Assets as presently owned, leased, licensed and used, (ii) to
conduct the trade, business and operations of Seller associated
with the Assets, as presently conducted, and (iii) to execute and
deliver this Agreement and any other agreements executed and
delivered in connection with this Agreement and the transaction
contemplated hereby, and to perform and comply with all of the
terms, covenants and conditions to be performed and complied with
by the Seller hereunder.
2.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by the Seller have been
duly authorized by all necessary corporate actions on the part of
the Seller and its stockholders (if necessary). This Agreement has
been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller, enforceable
against it in accordance with its respective terms except as
enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-
applied equitable remedies.
2.3 Absence of Conflicting Agreements. Except as otherwise
provided in this Agreement, and except to the extent any violation
of this Section, other than of clause (ii), would not have a
material adverse effect on the Assets or the Contemplated
Transaction, the execution, delivery, and performance of this
Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) does not
require the consent of any third party; (ii) will not violate any
provision of the Certificate of Incorporation or Bylaws of the
Seller; (iii) will not violate, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance,
decree, rule, regulation or ruling of any court or governmental
instrumentality, which is applicable to the Seller and which would
affect Seller's ability to consummate the sale of the Assets to
Buyer; (iv) subject to Seller obtaining the Consents (as
hereinafter defined) will not violate, constitute grounds for
termination of, result in a breach of, constitute a default under,
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or accelerate or permit the acceleration of any performance
required by the terms of any agreement, instrument, license or
permit to which the Seller is a party or by which the Seller may be
bound and which is included in the Assets; or (v) will not create
any Encumbrance upon any of the Assets.
2.4 Licenses. Other than as reflected on Schedule 4, Seller
does not possess and is not required by any governmental or
regulatory authority to obtain, any licenses, permits and other
authorizations for its lawful ownership and use of the Assets,
except where the failure to possess any such license, permit or
other authorization would not have a material adverse effect on the
Assets or the Contemplated Transaction.
2.5 Assumed Contracts. The Assumed Contracts constitute all
license or distribution agreements affecting any of the Trademarks.
Seller has delivered to Buyer true and complete copies of all
Assumed Contracts (including any and all amendments and other
modifications to the Assumed Contracts). All of the Assumed
Contracts are in full force and effect, and are valid, binding and
enforceable in accordance with their terms, except as
enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-
appointed equitable remedies. Seller is not in material breach,
nor to Seller's knowledge is any other party in material breach, of
the terms of any of the Assumed Contracts except for the bankruptcy
of one of the licensees, namely Salant Corporation ("Salant") and
Salant's failure to meet its minimum sales requirements, or as
disclosed on Schedule 2. Except as disclosed on Schedule 2, Seller
is not aware of any facts which would extend the term of any of the
Assumed Contracts beyond the stipulated expiration date in each
Assumed Contract as disclosed on Schedule 2. Specifically, Seller
represents that it has not received any notice of intention to
extend the License Agreement dated April 1, 1996 between Seller and
Calvin Clothing Company, Inc., beyond its scheduled expiration date
of March 31, 1999, and that Salant cannot exercise a contractual
right to extend the term of the License Agreement, dated January 9,
1994, between Seller and Salant, beyond December 31, 1999. Except
for the Consents, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignments will not
affect the validity, enforceability and continuation of any of the
Assumed Contracts.
2.6 Consents. Other than with respect to the Trademarks
referred to in 4.2(h)(iii) or as reflected on Schedule 5, no
consent, approval, permit or authorization of, or declaration to or
filing with any third party or any governmental or regulatory
authority ("Consent") is required (i) to consummate this Agreement
and the Contemplated Transaction, and (ii) to permit Seller to
sell, assign and transfer the Assets to Buyer.
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2.7 Taxes. Seller has filed or caused to be filed all
federal income tax returns and to the best of Seller's knowledge
all other federal, state, county, local or city tax returns which
are required to be filed, or has secured extensions to file any
such returns, and it has paid or caused to be paid all taxes shown
on said returns or on any tax assessment received by it to the
extent that such taxes have become due, or is in good faith
contesting the payment of any such taxes. No events have occurred,
other than the transfer of Assets hereby, which could impose on
Buyer any transferee liability for any taxes, penalties, or
interest due or to become due from Seller. There are no tax liens
on any of the Assets; there are no deficiencies asserted against
Seller by any governmental authority that may result in a lien on
any of the Assets.
2.8 Claims and Legal Actions. Except as described on
Schedule 6, there is no legal action, counterclaim, suit,
arbitration, or other legal, administrative or tax proceeding, nor
any order, decree or judgment, in progress or pending, or to the
knowledge of Seller, threatened against or relating to any of the
Assets, nor does Seller know of any facts which would be reasonably
likely to provide any basis for the same. To the best of Seller's
knowledge, there is no pending or threatened claim or governmental
investigation affecting Seller or any of the Assets. Schedule 6
lists all prior legal actions, suits, arbitrations, administrative
proceedings, orders, decrees or judgments involving any of the
Trademarks, or any products sold bearing any Trademark, including
any product liability or similar claims, of which Seller has
knowledge. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental body pending
or, to the best knowledge of Seller, threatened against or
involving Seller and relating to any product alleged to have been
manufactured or sold by Seller and/or bearing any of the
Trademarks, and alleged to have been defective, or improperly
designed or manufactured, nor is Seller aware of any facts which
would be reasonably likely to provide any basis for any such
action, proceeding or investigation. All prior and pending
infringement actions or opposition proceedings affecting the
Trademarks are disclosed on Schedule 6.
2.9 Conduct of Trademark Business in Ordinary Course. Since
December 1, 1998, Seller has conducted its business with its
Trademark licensees and customers of products bearing any of the
Trademarks in the ordinary course and has not suffered any material
adverse change in the Assets and revenues and earnings of Seller
under the Assumed Contracts, including any damage, destruction or
loss affecting the Assets, except the bankruptcy filing by one of
Seller's licensees, namely Salant Corporation, and the anticipated
disclosure by Seller after the execution of this Agreement of its
intention to sell the Trademarks and discontinue its business
involving the Trademark-labeled products.
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2.10 No Conflict with Regard to Trademarks. Since acquired by
Seller, all Trademarks have been properly used by Seller in the
United States of America. To Seller's knowledge, the use of the
Trademarks in all jurisdictions where used has not been and is not
infringing any intellectual property rights owned or licensed by
any other person and Seller has no information or reason to believe
that there is any conflict with the rights of third parties
relating to the use of the Trademarks in any jurisdiction other
than as disclosed on Schedule 6. To Seller's knowledge, no other
person is infringing, appropriating, using any marks confusingly
similar or making any other unlawful use of any of the Trademarks,
except as disclosed on Schedule 6. Prior to the Closing, Seller,
at its expense, shall take whatever actions are commercially
reasonable to halt any such unlawful use and shall keep Buyer
advised of its efforts. Seller (including its subsidiaries and
affiliates) has not licensed any of its rights regarding the
Trademarks to any other person other than as disclosed in this
Agreement.
2.11 Trademarks. With respect to the Trademarks, Seller
represents and warrants as follows:
(a) All information included on Schedule 1 is complete,
true and accurate in all material respects as of the dates
indicated on Schedule 1.
(b) Seller is the owner of record or the beneficial
owner of all of the registrations and applications therefor
covering the Trademarks in the countries indicated on Schedule 1.
(c) To Seller's best knowledge, Schedule 6 contains a
complete and accurate list of all co-existence agreements affecting
the Trademarks and known to Seller as of the date indicated on
Schedule 6.
(d) There are no licenses of the Trademarks granted by
Seller or, to Seller's knowledge, any predecessor-in-interest of
Seller other than as set forth on Schedule 2.
2.12 Full Disclosure. No representation or warranty made by
Seller in this Agreement or in any certificate provided hereunder,
contains or will contain as of the date it is given, any untrue
statement of a material fact, or omits or will omit to state any
material fact known to Seller and required to make the statements
herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
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3.1 Organization, Standing and Authority. Buyer is a
corporation duly organized, validly existing, and in good standing
under the laws of Sweden. Buyer has all requisite corporate power
and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all
of the terms, covenants and conditions to be performed and complied
with by Buyer hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly
authorized by all necessary corporate actions on the part of Buyer.
This Agreement has been duly executed by Buyer and constitutes the
legal, valid, and binding obligations of Buyer, except as the
enforceability hereof may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-
applied equitable remedies.
4. COVENANTS OF SELLER AND BUYER
4.1 Pre-Closing Covenants. Except as contemplated by this
Agreement or with the prior written consent of Buyer, which consent
shall not be unreasonably withheld or delayed, between the date
hereof and the Closing Date, Seller shall operate the Assets in the
ordinary course of business in accordance with its past practices
(except where such would conflict with the following covenants or
with Seller's other obligations hereunder), and abide by the
following negative and affirmative covenants:
(a) Negative Covenants. Seller shall not do any of the
following:
(i) Contracts. Modify or amend any of the Assumed
Contracts or enter into any new license agreements, except as
approved prior to execution by the Buyer in writing;
(ii) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Assets;
(iii) Encumbrances. Create, assume or permit to
exist any Encumbrance upon the Assets, except for those in
existence on the date of this Agreement, all of which shall be
removed prior to or as of the Closing Date;
(iv) Rights. Waive any material right relating to
the Assets; or
(v) No Inconsistent Action. Take any action which
is materially inconsistent with its obligations hereunder or which
could hinder or delay the consummation of the Contemplated
Transaction.
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(b) Affirmative Covenants. Seller shall do the
following:
(i) Access to Information. Allow Buyer and its
authorized representatives reasonable access at Buyer's expense
during normal business hours to the Assets and to all other
properties, equipment, books, records, contracts and documents
relating to the Assets, for the purpose of audit and inspection,
and furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and
business of Seller as they relate to the Assets, as Buyer may
reasonably request, it being understood that the rights of Buyer
hereunder shall not be exercised in such a manner as to interfere
with the operations of the Seller; provided that, subject to
Section 5.7 hereof, neither the furnishing of such information to
Buyer or its representatives nor any investigation made heretofore
or hereafter by Buyer shall affect Buyer's right to rely on any
representation or warranty made by Seller in this Agreement, each
of which shall survive any furnishing of information or any
investigation;
(ii) Maintenance of Assets. Take such actions as
are commercially reasonable to maintain all of the Assets in their
present condition;
(iii) Consents. Take such actions as are
commercially reasonable, and at Seller's expense, to obtain all
Consents;
(iv) Books and Records. Maintain its books and
records as they relate to the Assets in accordance with past
practices;
(v) Notification. Promptly notify Buyer in writing
of any unusual or material developments with respect to the Assets,
and of any material change in any of the information contained in
Seller's representations and warranties contained in Article 2
hereof or in the Schedules hereto, provided that such notification
shall not relieve Seller of any obligations hereunder; and
(vi) Compliance with Laws. Comply in all material
respects with all material rules and regulations to which Seller
and the Assets are subject.
4.2 Post-Closing Covenants.
(a) Cooperation. After the Closing, Seller will take
such actions, and execute and deliver such further deeds, bills of
sale, or other transfer documents as, in the reasonable opinion of
counsel for Buyer, may be necessary to ensure, complete and
evidence the full and effective transfer of the Assets to Buyer
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pursuant to this Agreement. After the Closing, Buyer will take
such actions, and execute and deliver such further documents as, in
the reasonable opinion of counsel for Seller, may be necessary to
ensure, complete and evidence, the full and effective transfer of
the Assets to Buyer and the assumption of the Assumed Liabilities
by Buyer pursuant to this Agreement. Buyer and Seller shall
cooperate in good faith to determine and pay the Royalty Adjustment
and Design Agreement Adjustment (as hereinafter defined).
(b) Accounts Receivable or Other Money. Following the
Closing Date, if Buyer should receive payment of any accounts
receivable or other money belonging to Seller, Buyer shall promptly
pay same to Seller, and if Seller should receive payment of any
accounts receivable or other money belonging to Buyer, Seller shall
promptly pay same to Buyer.
(c) Change of Name of Seller. Within thirty (30) days
after the Closing Date, Seller shall change the name of any of its
subsidiaries or affiliates so that there are no references to or
use of the name "Gant", "Rugger" and "Hugger" and Seller shall
provide Buyer with evidence of such change of name no later than
forty-five (45) days after the Closing Date. As of the Closing
Date, Seller shall cease using any of the Trademarks, either alone
or in combination with any other marks or logos, except Seller may
continue to use the Trademarks after the Closing in accordance with
the terms of Section 4(e) and for the purpose of performing its
obligations under this Section 4.2(c) and under Section 4.2(f).
(d) Retention of Books and Records. Each party shall
retain its books and records relating to the Assets. In the event
that the party in possession of such books and records wishes to
destroy such records after the sixth anniversary of the Closing
Date, such party shall notify the other party in writing at least
thirty (30) days prior to such destruction. If within such thirty
(30) day period, the party receiving such notice shall inform the
sending party that the receiving party desires such records, or any
portion thereof, the sending party shall, at the expense of the
receiving party, copy such records or portions thereof and make
same available to the receiving party. If either party is notified
by a governmental authority of an inquiry, audit or investigation,
such party shall notify the other promptly of such inquiry, audit
or investigation, and such other party shall be obligated to
cooperate in connection with any such inquiry, audit or
investigation, without additional consideration, to the extent
reasonably requested.
(e) Liquidation Procedures.
(i) Buyer is not purchasing all of Seller's current
inventory of Trademark-labeled apparel and accessories ("the
Licensed Products") or assuming any of the purchase orders received
by Seller from its wholesale customers consistent with past
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practice prior to the Closing Date or its purchase orders for
Licensed Products to be sold in its outlet stores. As a result,
Seller will require, and Buyer hereby grants to Seller, a license
to use the Trademarks in order to allow Seller to liquidate its
inventory of Licensed Products and fulfill its pre-Closing Date
obligations to its customers.
(ii) Such license shall be in effect during the
period ("the Liquidation Period") commencing on the Closing Date
and terminating on the earlier of (x) the date that is eighteen
(18) months from the Closing Date and (y) the date of Seller's
written notification to Buyer of Seller's last shipment of Licensed
Products pursuant to this Section 4.2(e).
(iii) The license granted in this Section 4.2(e):
1. shall be royalty free;
2. shall be limited to the United States
of America and to the Licensed Products and shall be subject to the
Buyer's rights to operate the Gant Store and any other retail
stores it (or any of its affiliates) opens, and the rights of
existing licensees under the Assumed Contracts; and
3. shall be in addition to, and shall
not limit, the rights of Seller under Sections 4.2(c) and 4.2(f).
(iv) Except as otherwise provided herein, Seller
acknowledges that Buyer, from and after the Closing Date, shall be
the sole owner of the Trademarks and the goodwill associated
therewith and that all goodwill resulting from the use of the
Trademarks by Seller pursuant to this Section 4.2(e) shall inure
solely to the benefit of Buyer.
(v) As part of the liquidation, Seller shall have
the right during the Liquidation Period to sell (x) to its
wholesale department store customers not more than 125,000 dozens
of Licensed Products for the spring/summer 1999 season and not more
than 100,000 dozens of Licensed Products for the fall 1999 season
and (y) through its company-owned outlet stores not more than
60,000 dozens of Licensed Products. If Seller anticipates that its
sales will increase over the aforesaid projections it will
immediately notify Buyer in writing and will not sell any
additional Licensed Products in excess of such amounts without
Buyer's express written consent.
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(vi) Buyer covenants that during the period
commencing with the Closing Date and ending on October 1, 1999, it
will not market or promote the sale of Trademark-labeled
merchandise in the United States other than through its or its
affiliates' retail store or stores.
(vii) During the Liquidation Period, Seller:
1. will maintain manufacturing quality
standards with respect to Licensed Products not yet manufactured
consistent with past practice;
2. will sell and distribute the Licensed
Products to customers and monitor its customers use of the
Trademarks consistent with past practice;
3. will liquidate its inventory of Licensed
Products, consistent with past practice;
4. will market and promote sales of the
Licensed Products consistent with past practice;
5. will not export from the United States
(other than insignificant deliveries made for personal use and not
for resale), or sell to any third party if it has reasonable cause
to believe that the Licensed Products sold will be exported for
sale outside the United States;
6. will provide Buyer with information
regarding the Licensed Products and the liquidation as Buyer may
from time to time reasonably request, including, without
limitation, the approximate quantities of the various types of
Licensed Products being sold and the identification of its
customers (to the extent it is legally able to do so) but
specifically excluding the identification of Seller's manufacturing
sources; and
7. shall notify Buyer, as soon a
practicable, of any infringement of the Trademarks that comes to
Seller's attention and, upon Buyer's reasonable request and at
Buyer's cost, Seller shall cooperate with Buyer in any action or
proceeding brought to defend the Trademarks, including, without
limitation, by
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means of making available books, records and other information and
by making employees available (at reasonable times and upon
reasonable notice) for depositions or testimony.
(viii) In the event Buyer discovers counterfeit
products, Seller shall give Buyer information regarding the
identity and location of its manufacturers in order to assist Buyer
in finding the source of the counterfeit products and shall
otherwise cooperate with Buyer in such efforts. Seller's
obligation in this regard shall continue until December 31, 2001.
(ix) Notwithstanding anything herein to the
contrary, the license granted in this Section 4.2(e) shall
terminate (i) if Seller files a petition in bankruptcy or otherwise
seeks relief or protection under bankruptcy or similar laws, if a
petition in bankruptcy is filed against Seller, and such petition
is not removed within sixty (60) days thereafter or if Seller is
adjudicated or bankrupt, or (ii) if Seller assigns any of its
rights under this Section.
(x) If Buyer commences litigation or any
administrative proceedings to halt the sale outside the United
States of any Licensed Products sold by Seller during the
Liquidation Period, Seller shall pay one-half of Buyer's reasonable
costs incurred in connection with such activities provided Buyer
undertakes any such actions within twelve (12) months after the
expiration of the Liquidation Period.
(xi) After the Liquidation Period, Seller
undertakes to immediately cease the use of the Trademarks, which
undertaking includes but is not limited to the removal of the
Trademarks from all products and promotional materials bearing any
of the Trademarks and securing the return from any distributors,
wholesalers and from its own outlet stores of all products bearing
any of the Trademarks. If for any reason the Trademarks cannot be
removed, or the Trademark-labeled products not returned to Seller,
then Seller undertakes to destroy all products and materials
bearing the Trademarks either directly or by instructing those
parties in possession of such articles to destroy such products and
to certify such destruction to Seller in writing. Seller shall
further take all commercially reasonable actions to insure that all
manufacturers used by Seller within twelve (12) months before the
Closing and thereafter have returned to Seller as soon as
commercially reasonable but in no event later than twelve (12)
months after the Closing, all labels, hang tags, software,
packaging materials, hangers and like materials used by the
manufacturers to apply the Trademarks to any products, or have
destroyed such items and certified such destruction to Seller.
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(xii) Seller shall not either during or after the
Liquidation Period use any trademarks which are confusingly similar
to any of the Trademarks, except as provided in Sections 4.2(c) and
4.2(f).
(xiii) Any expenses incurred by Seller in
performing its obligations under this Section 4.2(e) shall not be
considered part of the deductible allowance under Section 10.2 and
must be paid in full by Seller.
(f) Salty Dog/Rugger Mark. With respect to the Excluded
Trademarks, namely the eight (8) "Salty Dog/Rugger" Trademarks
known to Seller, Seller undertakes with respect to each such
Excluded Trademark to seek diligently to amend such registration to
delete the reference to "Rugger" and failing in such efforts,
Seller shall expressly abandon and cancel the applicable
registration or application. During the period following the
Closing until Seller either amends or abandons and cancels the
applicable registration, Seller shall not use the "Salty
Dog/Rugger" mark other than in connection with its efforts to amend
or abandon such registrations.
(g) Pending Trademark Infringement Actions. With
respect to all pending infringement actions disclosed on Schedule
6, Buyer shall within six (6) months after the Closing Date decide
whether it wants to proceed with any such actions. If Buyer
decides to proceed with any action, it will within such 6-month
period assume control and all future costs associated with such
action and Seller shall pay all costs incurred prior to Buyer's
notice. If Buyer decides not to proceed with any such action, it
will so notify Seller and Seller shall, at its own cost,
discontinue any such proceeding at Seller's expense. During the
aforesaid 6-month period, Seller shall have no obligation to incur
any costs, other than those incidental to the continuation of any
such proceeding. In the event Seller anticipates that it will
incur any expenses in excess of USD 1,500 in order to maintain the
existence of any specific action, other than for pre-Closing Date
expenses, it will so notify Buyer and in such event Buyer shall,
within thirty (30) days thereafter, either assume control and all
future costs associated with that action, or it will direct Seller
to discontinue such action at Seller's expense.
(h) Pending Trademark Applications. As reflected on
Schedule 1, there are as of the date indicated on Schedule 1
fifteen (15) Trademark matters (including both registrations and
applications) beneficially owned by Seller for which assignments to
Seller have
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not been recorded. Further, there are sixty-five (65) pending
Trademark applications (including 4 of the aforementioned 15
Trademark matters) which have not as yet been registered.
(i) Seller will, at its own cost and in cooperation
with Buyer, use all commercially reasonable efforts to record
Seller's ownership of the aforementioned 15 Trademark matters. For
this purpose, commercially reasonable efforts shall take into
account the jurisdiction involved, the sales (actual and expected)
in such jurisdiction and the costs required for completion.
(ii) Seller shall retain the obligation to
prosecute and otherwise maintain the 4 aforementioned pending
Trademark applications, at Seller's cost, until such time as each
application shall have been recorded in the name of Buyer.
(iii) With respect to those of the other pending
applications which under the laws of the subject jurisdiction may
not be assigned pending the occurrence of a condition subsequent,
Seller also retains the obligation to prosecute and otherwise
maintain such applications, at Seller's cost. Buyer is hereby
granted an exclusive license to use each such Trademark for the
goods recited in each such pending application, within the
jurisdiction of each such pending application, and hereby is
granted options to purchase each such Trademark upon the occurrence
of the condition subsequent and upon payment of USD 10 to Seller in
each event.
(iv) With respect to any pending or future
opposition proceedings against any of the 65 pending applications,
Seller and Buyer shall cooperate in order to solve such problem
through appropriate and commercially reasonable efforts. Such
efforts include but are not limited to payment to any such third
party that shows a reasonable ground for its opposition and which
according to local counsel cannot be overcome by argumentation in
the local Trademark Office. Any such payment to a third party
shall be equally divided between Seller and Buyer. Seller's
obligation under this undertaking is, however, limited to an
aggregate maximum sum of USD 100,000.
(v) The undertakings made by the parties (i) with
respect to any of the aforementioned 65 pending Trademark
applications which remain subject to opposition before
registration, and (ii) with respect to the aforementioned 15
Trademark matters for so long as any of the registrations are not
properly recorded with clear chain of title to Seller, shall remain
in full force until registration.
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(vi) Any expenses incurred by Seller under this
Section shall not be considered part of the deductible allowance
under Section 10.2 and must be paid in full by Seller.
(i) UFO. Seller agrees to use commercially reasonable
efforts to resolve the claim by UFO, at Seller's cost.
5. OTHER COVENANTS
5.1 Seller Payment to Creditors. Seller shall pay or
otherwise satisfy all trade payables of Seller and shall fully pay
or otherwise satisfy all other liabilities and/or obligations
relating to the Assets incurred through the Closing Date. Seller
shall indemnify Buyer, pursuant to this Agreement, for any damages
resulting from or relating to (i) Seller's failure to pay or
otherwise satisfy any such liabilities, or (ii) noncompliance by
Buyer and Seller with any applicable provisions of any bulk
transfer laws (or any similar laws) of any relevant jurisdiction.
Any expense incurred by Seller under this Section shall not be
considered part of the deductible allowance under Section 10.2 and
must be paid in full by Seller.
5.2 Taxes, Fees and Expenses. Except as otherwise provided
in this Agreement, each party shall pay its own expenses incurred
in connection with the authorization, preparation, execution, and
delivery of this Agreement.
5.3 Brokers. Buyer and Seller each represents and warrants
that neither it nor any person or entity acting on its behalf has
incurred any liability for any finders' or brokers' fees or
commissions whatsoever in connection with the transaction contem-
plated by this Agreement.
5.4 Confidentiality. Except as necessary to consummate the
Contemplated Transaction, each party hereto will keep confidential
any information which is obtained from the other party in
connection with this Agreement and which is not readily available
to members of the general public. Any such information may be
disclosed only to those of each party's representatives who need to
know such information for the purpose of evaluating the
Contemplated Transaction on that party's behalf (it being
understood that any such representatives shall be informed of the
confidential nature of such information and shall be directed to
keep such information confidential). In the event this Agreement is
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terminated and the Contemplated Transaction abandoned, each party
shall return to the other party all documents, work papers and
other written material obtained by it in connection with this
Agreement.
5.5 Cooperation. Buyer and Seller shall cooperate fully with
each other and their respective counsel and accountants in
connection with any actions required to be taken as part of their
respective obligations under this Agreement, and Buyer and Seller
shall execute such other documents as may be necessary and
desirable to the implementation and consummation of this Agreement,
and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations hereunder.
5.6 Risk of Loss.
(a) The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause
whatsoever shall be borne by Seller at all times prior to the
Closing Date. In the event of any loss, damage or impairment,
confiscation or condemnation of any of the Assets prior to the
Closing Date, Seller shall expend such funds and take such other
actions as are necessary to repair, replace or restore such Assets
to their prior condition as soon as possible after such loss,
impairment, condemnation or confiscation.
(b) In the event of any damage or destruction of the
Assets described above, if such Assets have not been restored or
replaced promptly, Buyer may terminate this Agreement forthwith
without any further obligation hereunder by written notice to
Seller. Alternatively, Buyer may, at its option, proceed to close
this Agreement and complete the restoration and replacement of such
damaged Assets after the Closing Date, in which event Seller shall
deliver to Buyer all insurance proceeds received in connection with
such damage or destruction of the Assets without limitation as to
the costs and expenses arising in connection with such restoration
and replacement.
5.7 Notification. Between the date of this Agreement and the
Closing Date, Seller shall promptly notify Buyer in writing (i) if
Seller becomes aware of any fact or condition that causes or
constitutes a misrepresentation or omission in any of Seller's
representations and warranties as of the date of this Agreement, or
(ii) if Seller becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a
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misrepresentation or omission in any such representation or
warranty had such representation or warranty been made as of the
time of occurrence or discovery of such fact or condition. During
the same period, Seller shall promptly notify Buyer of the
occurrence of any breach of any covenant or agreement of Seller in
this Agreement or otherwise made in connection herewith or of the
occurrence of any event that may make the satisfaction of the
conditions in Article 6 impossible or unlikely. Between the date
of this Agreement and the Closing Date, Buyer shall promptly notify
Seller in writing if Buyer has actual knowledge of any breach by
Seller of any representation or warranty made by Seller under this
Agreement or of any other obligation of Seller hereunder.
5.8 No Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to Article 11, Seller shall not
directly or indirectly solicit, initiate, or encourage any
inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicit-
ed inquiries or proposals from, any person (other than Buyer)
relating to any transaction involving the sale of the Assets.
5.9 Public Announcements. Seller and Buyer shall consult
with each other regarding the issuance, timing and text of any
public announcements concerning this Agreement or the Contemplated
Transaction.
6. CONDITIONS
6.1 Conditions to Obligations of Buyer. All obligations of
Buyer at the Closing hereunder are subject to the fulfillment prior
to and at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller in this Agreement shall be true and
correct in all material respects as of the date given, and shall be
supplemented by Seller if necessary so that they are true and
correct in all material respects as of the Closing Date.
(b) Covenants and Conditions. Seller shall have in all
material respects performed and complied with all covenants,
agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
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(c) Consents. Each of the Consents described in
Schedule 5 shall have been duly obtained.
(d) Deliveries. Seller shall have made or stand willing
and able to make all the deliveries to Buyer set forth in Section
7.1.
(e) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse
change in the Assets.
(f) Shareholders Agreement. Pyramid shall have
finalized the Shareholders Agreement and the loan arrangements with
LV. Capital S.A. described in Section 8.2.
(g) Financing. Buyer shall have finalized the
additional credit facilities with its banks, as described in
Section 8.2.
6.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing hereunder are subject to the fulfillment
prior to and at the Closing Date of each of the following
conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer in this Agreement shall be true and correct
in all material respects as of the date given and shall be
supplemented by Buyer if necessary so that they are true and
correct in all material respects as of the Closing Date.
(b) Covenants and Conditions. Buyer shall have in all
material respects performed and complied with all covenants,
agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) The Shareholders Agreement. The Shareholders
Agreement described in Section 8.2 shall be in a form acceptable to
Seller.
(d) Consents. Seller shall have obtained the Consents.
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(e) Deliveries. Buyer shall have made or stand willing
and able to make all the deliveries set forth in Section 7.2.
7. CLOSING AND CLOSING DELIVERIES
7.1 Deliveries by Seller. Prior to or on the Closing Date,
Seller shall deliver to Buyer all of the following, in form and
substance reasonably satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
assignments, releases of liens, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets
in the name of Buyer or its permitted assignees, free and clear of
any Encumbrances, and take such other actions as are necessary to
deliver possession of the Assets to Buyer;
(b) Consents. Copies of the Consents;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by an officer of Seller, certifying:
(i) that the representations and warranties of the Seller contained
in this Agreement are true and correct in all material respects as
of the date given and have been supplemented so that they are true
and correct in all material respects as of the Closing Date; and
(ii) that the Seller has, in all material respects, performed all
of its obligations and complied with all of its covenants set forth
in this Agreement to be performed and complied with prior to or on
the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by the Seller's Secretary: (i)
certifying that the resolutions, as attached to such certificate,
were duly adopted by the Seller's Board of Directors and stockhold-
ers (if necessary), authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated
hereby and that such resolutions are remaining in full force and
effect, and attaching a Certificate of Good Standing of Seller
certified by an appropriate state official in the Office of the
Secretary of State of the State of Delaware, as of a date not more
than fifteen (15) days before the Closing Date, and a copy of the
Seller's Bylaws as in effect on the date hereof, certified by the
Seller's Secretary as of the Closing Date;
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(e) Assumed Contracts, Business Records, etc. All files
and records, which Seller has agreed to provide to Buyer in this
Agreement including all files and original documents concerning the
Trademarks;
(f) The Shareholders Agreement. The Shareholders
Agreement described in Section 8.2 duly executed by Seller and all
other parties to that Agreement.
(g) Opinions of Counsel. Opinion of Seller's counsel
reasonably satisfactory to Buyer, dated as of the Closing Date.
7.2 Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to Seller the following, in form and substance,
reasonably satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price payable at
Closing by wire transfer of immediately available funds to an
account that Seller shall designate no later than three (3)
business days prior to the Closing Date;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to
perform Seller's obligations under the Assumed Contracts arising on
or after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by the President of Buyer, certifying
(i) that the representations and warranties of Buyer contained in
this Agreement are true and correct in all material respects as of
the date given and have been supplemented so that they are true and
correct in all material respects as of the Closing Date, and (ii)
that Buyer has, in all material respects, performed all of its
obligations and complied with all of its covenants set forth in
this Agreement to be performed or complied with on or prior to the
Closing Date;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by Buyer's Officer certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution
of this Agreement and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force
and effect.
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(e) The Shareholders Agreement. The Shareholders
Agreement described in Section 8.2 duly executed by Buyer and all
other parties to that Agreement.
(f) Opinions of Counsel. Opinion of Buyer's counsel
reasonably satisfactory to Seller, dated as of the Closing Date.
8. RELATED AGREEMENTS; FINANCING THE CONTEMPLATED TRANSACTION
8.1 Related Agreements.
(a) Seller is currently the owner of 25% of the capital
stock of Pyramid and is a party to a certain Purchaser's Option
Agreement, dated January 10, 1996 ("the Option Agreement"), with
the other current shareholders of Pyramid, namely Lennart Bjork
("Bjork"), Klas Kall ("Kall") and Staffan Wittmark ("Wittmark"),
pursuant to which Seller, among other things, was granted an option
to acquire 75% of Pyramid's outstanding capital stock on terms and
conditions stipulated in the Option Agreement.
(b) In connection with the original acquisition by
Seller of shares of Pyramid, Seller and Bjork, Kall and Wittmark
executed a Stock Purchase Agreement, dated January 1996 ("the Stock
Purchase Agreement"), which among other things, specifically in
Sections 8, 9, 10 and 11 of the Stock Purchase Agreement, imposed
certain restrictions on the sale or other transfer of the Seller's
shares of Buyer, and which described certain rights and obligations
of Pyramid's shareholders.
(c) Buyer and Seller are parties to a so-called Heads of
Agreement, dated June 19, 1997, pursuant to which Buyer renders
design services to Seller ("the Design Agreement").
(d) Effective with the Closing:
(i) the Option Agreement shall be deemed terminated
and of no further force and effect, and Seller shall consent in
writing to the release from the escrow with Nordbanken of Pyramid
shares owned by Bjork, Kall and Wittmark,
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(ii) the Stock Purchase Agreement shall be deemed
terminated and of no further force and effect, but the purchase by
Seller of its equity interest in Pyramid shall not be affected
thereby, and
(iii) the Design Agreement shall be deemed
terminated and of no further force and effect, but John Hayes shall
continue to render services to Buyer until June 30, 1999, at
Seller's expense.
(e) Seller shall, at the same time as the Royalty
Adjustment is paid, pay Buyer a prorated portion of the $1,000,000
annual reimbursement due Buyer under the Design Agreement based on
the number of days during 1999 that the Design Agreement is in
effect.
8.2 Financing this Transaction.
(a) Pyramid is currently negotiating with LVMH (i) to
issue a minority equity interest in Pyramid to an LVMH affiliate,
LV. Capital S.A., and (ii) to borrow sufficient funds from LV.
Capital S.A. on acceptable terms to enable Buyer to consummate the
Contemplated Transaction. In that connection, all of the
shareholders of Pyramid, including Seller, shall not later than the
Closing be required to execute a shareholders agreement in the form
attached as Schedule 8 ("the Shareholders Agreement").
(b) Buyer has in principle reached agreements with its
banks to secure financing to enable Buyer to consummate the
Contemplated Transaction, subject to the execution of definitive
agreements between Buyer and its banks.
9. RIGHTS OF BUYER AND SELLER ON TERMINATION OR BREACH
9.1 Specific Performance. The parties recognize that in the
event either party should refuse to perform under the provisions of
this Agreement, monetary damages alone will not be adequate. The
aggrieved party shall therefore be entitled, in addition to any
other remedies, which may be available, including money damages, to
obtain specific performance of the terms of this Agreement. In the
event of any action to enforce this Agreement, both parties hereby
waive the defense that there is an adequate remedy at law. In the
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event of a default by either party which results in the filing of
a lawsuit for damages, specific performance, or other remedy, the
prevailing party shall be entitled to reimbursement by the other
party of reasonable legal fees and expenses incurred.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
10.1 Representations and Warranties. All representations,
warranties and covenants contained in this Agreement shall be
deemed continuing representations, warranties and covenants, and
shall survive the Closing as provided in this Agreement. Any
investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation,
warranty or covenant contained herein.
10.2 Indemnification by Seller.
(a) Notwithstanding the Closing, and, subject to Buyer's
obligations under Section 5.7, regardless of any investigation made
at any time by or on behalf of Buyer or any information Buyer may
have, Seller shall indemnify and hold Buyer harmless from and
against and with respect to, and shall reimburse Buyer for any and
all damages, liabilities, costs, settlements, fines, penalties,
diminution in value, losses, claims, actions, inquiries, demands,
suits, legal or administrative proceedings, and expenses including
reasonable legal fees ("Damages") which may be made, assessed or
otherwise incurred by the Buyer (collectively "Buyer's Losses")
arising from or in connection with any of the following:
(i) Any untrue representation, breach of warranty
or non-fulfillment or breach of any covenant by Seller contained
herein or in any certificate, document or instrument delivered to
Buyer hereunder;
(ii) Any and all obligations of Seller not assumed
by Buyer pursuant to the terms hereof;
(iii) Seller's ownership of the Assets prior to
12:01 a.m. USA Eastern Standard Time on the Closing Date and any
and all liabilities arising under the Assumed Contracts or
otherwise which relate to events occurring prior to the Closing
Date;
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(iv) Any products manufactured or sold or services
performed or promised but not performed by Seller prior to the
Closing or any products manufactured or sold or services performed
or promised but not performed by Seller during the Liquidation
Period;
(v) Any claim made by any licensee under any
Assumed Contract, or any customer of any such licensee, or any
direct customer or distributor of Seller, or any manufacturer of
any product bearing any of the Trademarks, in connection with the
sale of the Assets to Buyer, or any announcement by Seller that it
is selling the Assets and discontinuing its business involving
Trademark-labeled products to Buyer; or
(vi) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees and expenses, incident to any of
the foregoing or incurred in enforcing this indemnity.
(b) Notwithstanding the foregoing, any claim by Buyer
for indemnification by Seller under (i)-(vi) above ("Claim"),
except claims made with respect to the manufacture and/or sale by
Seller of Licensed Products pursuant to Section 4.2(e), may not be
made (unless otherwise provided in this Agreement) until and unless
the aggregate value of Buyer's Losses when aggregated with any of
Assignee's Losses (as defined in the Assignment and Assumption
Agreement between Seller and Pyramid Sportswear Acquisition
Corporation, dated February 23, 1999, "the Assignment and
Assumption Agreement") exceed USD 100,000, whereupon Buyer shall be
entitled to be indemnified for the full amount of Buyer's Losses.
(c) If the Closing occurs, Seller shall have no
liability (for indemnification or otherwise) with respect to any
representation or warranty, made as of the date of this Agreement
or as of the Closing Date, other than any representation or
warranty made in Sections 1.7 or 2.11, unless on or before December
31, 1999, Seller is given notice asserting a Claim with respect
thereto and specifying the factual basis of that Claim in
reasonable detail to the extent then known by the Buyer. A Claim
with respect to Sections 1.7 or 2.11 may be made at any time prior
to December 31, 2002. A Claim for indemnification based upon any
covenant or agreement to be performed by Seller after the Closing
Date may be made at any time within six (6) months after the time
for performance has elapsed.
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(d) No breach by Buyer of its obligations under Section
5.7 shall affect its right to indemnification hereunder unless the
Buyer's Losses for which it seeks indemnification are directly
related to the specific breach by Seller which Buyer did not
disclose to Seller pursuant to Section 5.7.
10.3 Indemnification by Buyer.
(a) Notwithstanding the Closing, and regardless of any
investigation made at any time by or on behalf of Seller or any
information Seller may have, Buyer shall indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller
for any and all Damages which may be made, assessed or otherwise
incurred by the Seller (collectively "Seller's Losses") arising
from or in connection with any of the following:
(i) Any untrue representation, breach of warranty
or non-fulfillment of any covenant by Buyer contained herein or in
any certificate, document or instrument delivered to Seller
hereunder;
(ii) Buyer's ownership of the Assets on and after
12:01 a.m. USA Eastern Standard Time on the Closing Date, including
any and all liabilities arising under the Assumed Contracts or the
Gant Store Lease or otherwise which relate to events occurring
after the Closing Date;
(iii) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees and expenses, incident to any of
the foregoing or incurred in enforcing this indemnity;
(b) Notwithstanding the foregoing, any claim by Seller
for indemnification by Buyer under (i)-(iii) above ("Claim"), may
not be made (unless otherwise provided in this Agreement) until and
unless the aggregate value of Seller's Losses when aggregated with
any of Assignor's Losses (as defined in the Assignment and
Assumption Agreement) exceed USD 100,000, whereupon Seller shall be
entitled to be indemnified for the full amount of Seller's Losses;
and
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(c) If the Closing occurs, Buyer shall have no liability
(for indemnification or otherwise) with respect to any
representation or warranty or covenant or agreement to be performed
or complied with under this Agreement unless on or before December
31, 1999, Buyer is given notice asserting a Claim with respect
thereto, and specifying the factual basis of that Claim in
reasonable detail to the extent then known by the Seller. A Claim
for indemnification based upon any covenant or agreement to be
performed by Buyer after the Closing Date may be made at any time
within six (6) months after the time for performance has elapsed.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification
is claimed (the "Indemnifying Party") of any Claim, whether between
the parties or brought by a third party, specifying (i) the factual
basis for such Claim, and (ii) the amount of the Claim. If the
Claim relates to an action, suit or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant
within thirty (30) days after written notice of such action, suit
or proceeding was given to Claimant.
(b) Following receipt of notice from the Claimant of a
Claim, the Indemnifying Party shall have sixty (60) days to make
such investigation of the Claim, as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation,
the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representative(s) the information relied upon
by the Claimant to substantiate the Claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said
sixty (60) day period (or any mutually agreed upon extension
thereof) to the validity and amount of such Claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the
Claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate legal remedy.
(c) With respect to any Claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the
Indemnifying Party shall have the right at its own expense, to
participate in or assume control of the defense of such Claim, and
the Claimant shall cooperate fully with the Indemnifying Party,
subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnifying
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Party. If the Indemnifying Party elects to assume control of the
defense of any third-party Claim, the Claimant shall have the right
to participate in the defense of such Claim at its own expense. If
the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third party Claim, it
shall be bound by the results obtained by the Claimant with respect
to such Claim.
(d) If a Claim, whether between the parties or by a
third party, requires immediate action, the parties will make every
effort to reach a decision with respect thereto as expeditiously as
possible.
(e) The indemnification rights provided in this Section
shall extend to the affiliates, shareholders, directors, officers,
employees and representatives of the Claimant although for the
purpose of the procedures set forth in this Section, any
indemnification claims by such parties shall be made by and through
the Claimant.
11. TERMINATION
11.1 Termination of this Agreement.
(a) Termination. This Agreement may be terminated prior
to the Closing only as follows:
(i) by written agreement of Buyer and Seller at any
time;
(ii) by Seller, by notice to Buyer at any time, if
one or more of the conditions specified in Article 6.2 is not
satisfied at the time at which the Closing would otherwise occur or
if satisfaction of such a condition is or becomes impossible,
provided that at the time of such notice Seller has fully complied
in all material respects with its material obligations under this
Agreement;
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(iii) by Buyer, by notice to Seller at any time, if
one or more of the conditions specified in Article 6.1 is not
satisfied at the time at which the Closing would otherwise occur or
if satisfaction of such a condition is or becomes impossible,
provided that at the time of such notice Buyer has fully complied
in all material respects with its material obligations under this
Agreement;
(iv) by either Seller or Buyer on March 31, 1999, if
the Closing should not have occurred by that date, provided that
the party seeking termination is not the cause of the failure to
close.
(b) Effect of Termination. In the event that this
Agreement is terminated pursuant to this Section, this Agreement
shall terminate without any liability or further obligation of
either party to the other, provided, however, that termination
under this Section shall not relieve any party of liability for any
intentional failure to perform or comply with any agreement prior
to the date of termination, or any misrepresentation or omission in
any of the representations and warranties made hereunder or any
breach of any covenants and agreements hereunder or constitute a
waiver of any claim with respect thereto. Liability under this
Section shall only attach in the event of an intentional act or
omission on the part of the party, which causes the termination of
this Agreement.
12. MISCELLANEOUS
12.1 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall
be (i) in writing, (ii) delivered by personal delivery, or sent by
commercial delivery service or registered or certified mail, return
receipt requested, (iii) deemed to have been given on the date of
personal delivery or the date set forth in the records of the
delivery service or on the return receipt, and (iv) addressed as
follows:
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If to Seller:
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016
Attention: Chairman of the Board
with a copy (which shall not constitute notice) to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Attention: Edward H. Cohen
If to Buyer:
Pyramid Sportswear AB
Engelbrektsgatan 7,
SE-114 32 Stockholm, Sweden
Attention: President
with a copy (which shall not constitute notice) to:
Abberley Kooiman LLP
521 Fifth Avenue, Suite 2200
New York, NY 10175
Attention: Michael L. Martell
and
Advokatfirman Sodermark
Strandvagen 1
Box 14055
SE-104 40 Stockholm, Sweden
Attention: Hakan Rockstrom
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section.
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12.2 Benefit and Binding Effect. Neither party hereto may
assign this Agreement without the prior written consent of the
other party hereto. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.3 Governing Law. This Agreement shall be governed,
construed, and enforced in accordance with the laws of the State of
New York without reference to its conflicts of laws provisions.
12.4 Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
12.5 Gender and Number. Words used herein, regardless of the
gender and number specifically used, shall be deemed and construed
to include any other gender, masculine, feminine or neuter, and any
other number, singular or plural, as the context requires.
12.6 Jurisdiction and Forum. To the fullest extent permitted
by law, each of the parties hereto (i) agree that the appropriate
forum for the resolution of all disputes hereunder shall be the
courts located in New York, (ii) submits to the personal
jurisdiction of such courts, and (iii) waives any objection to
venue in New York and any claim that the forum is inconvenient.
12.7 Entire Agreement. This Agreement, all Schedules hereto,
and all documents and certificates to be delivered by the parties
pursuant hereto collectively represent the entire understanding and
agreement between Buyer and Seller with respect to the subject
matter hereof. All schedules attached to this Agreement shall be
deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement
supersedes all prior negotiations between Buyer and Seller, and all
letters of intent and other writings relating to such negotiations,
and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case
may be, and which is signed by the party against which enforcement
of any such amendment, supplement or modification is sought.
12.8 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the party entitled
to the benefits thereof only by a written instrument signed by the
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party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or
on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section.
12.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid
or unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other persons or circumstances
shall not be affected thereby and shall be enforced to the greatest
extent permitted by law.
12.10 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signature on
each such counterpart were upon the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of February 23, 1999.
PHILLIPS-VAN HEUSEN CORPORATION
For the purpose of confirming
their rights and obligations
under Article 8 of this
Agreement:
By: /s/ Irwin W. Winter
Name: Irwin W. Winter
Title: Executive Vice President
/s/ Lennart Bjork
Lennart Bjork
PYRAMID SPORTSWEAR AB
/s/ Klas Kall
Klas Kall
By: /s/ Lennart Bjork
Name: Lennart Bjork
Title: President
/s/ Staffan Wittmark
Staffan Wittmark
PYRAMID PARTNERS AB
By: /s/ Lennart Bjork
Name: Lennart Bjork
Title: President
33
ASSIGNMENT AND ASSUMPTION AGREEMENT
Between
PHILLIPS-VAN HEUSEN CORPORATION
A Delaware Corporation
And
PYRAMID SPORTSWEAR ACQUISITION CORPORATION
A Delaware Corporation
February 23, 1999
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated February 23, 1999,
between PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation,
with offices at 200 Madison Avenue, New York, New York 10016
("Assignor"), and PYRAMID SPORTSWEAR ACQUISITION CORPORATION, a
Delaware corporation, with offices c/o Abberley Kooiman LLP, 521
Fifth Avenue, New York, New York 10175 ("Assignee").
RECITALS:
1. Assignor and Assignee's affiliate, Pyramid Sportswear AB,
a Swedish corporation ("Pyramid Sportswear"), are parties to an
Asset Purchase Agreement, dated February 23, 1999 ("the Asset
Purchase Agreement").
2. Pursuant to the Asset Purchase Agreement, Pyramid
Sportswear is acquiring certain assets from Assignor including the
trademark "Gant" and all rights associated with that mark.
3. Assignor currently operates the so-called flagship Gant
Store, located at 645 Fifth Avenue, in New York, New York, pursuant
to an Agreement of Lease, dated March 5, 1997, between Olympic
Tower Associates, as Landlord, and Assignor, as Tenant ("the Gant
Store Lease").
4. Provided the Asset Purchase Agreement closes and the
transactions contemplated by that agreement are consummated,
Assignor desires to assign and transfer to Assignee (i) the Gant
Store Lease and all of Assignor's obligations thereunder, as well
as (ii) certain other assets and obligations described in this
Agreement, in accordance with the terms and conditions contained
herein, and Assignee is agreeable to same.
In consideration of the above recitals, all of which
shall be deemed an integral part of this Agreement, and the
covenants and agreements contained herein, Assignor and Assignee
agree as follows:
1. TRANSFER OF THE GANT STORE LEASE AND
RELATED ASSETS AND LIABILITIES TO ASSIGNEE
1.1 Transfers. Subject to the terms and conditions of this
Agreement, at the Closing (as hereinafter defined), Assignor shall
assign, transfer and deliver to Assignee all of Assignor's right,
title and interest in, and Assignee will acquire, accept and
assume, all of the following assets of Assignor, free and clear of
all security interests, liens, mortgages, charges, options,
licenses, adverse claims or restrictions of any kind, including but
not limited to, any restrictions on use, transfer, receipt of
income or other attributes of ownership other than the rights of
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the Landlord under the Gant Store Lease and the rights of the
lessors under the Equipment Leases (as hereinafter defined)
("Encumbrances"), all such assets being hereinafter sometimes
referred to collectively as "the Assets":
(a) the Gant Store Lease and the Equipment Leases set
forth in Schedule 1 ("the Equipment Leases");
(b) the Gant Store Inventory, Outstanding Gant Store
Orders and Other Inventory (all as hereinafter defined);
(c) all equipment, telephones, telefax machines, fixed
assets, trade fixtures, leasehold improvements, cash registers and
furniture, located on the Closing Date in, and utilized in
connection with and otherwise needed to operate the Gant Store
without interruption ("the Gant Store Property"), other than
equipment covered by the Equipment Leases;
(d) the existing telephone and telefax numbers of the
Gant Store, including any "800" numbers;
(e) copies of all books and historical records relating
to the Assets, including an executed copy of the Gant Store Lease;
(f) all guarantees, warranties, indemnities and similar
rights of Assignor with respect to, and all rights, claims, causes
of action or rights of set off of Assignor against third parties
relating to the Gant Store Lease, the Gant Store Inventory, the
Outstanding Gant Store Orders, the Other Inventory and the Gant
Store Property, including without limitation, unliquidated rights
under manufacturers' or vendors' warranties;
(g) all goodwill associated with the Assets; and
(h) all displays, shipping supplies, boxes and like
materials and promotional, advertising and sales materials intended
for use in the Gant Store or located in the Gant Store on the
Closing Date ("Supplies and Promotional Materials"),
1.2 Consideration for Transfers. In consideration of the
above transfers, Assignee shall (a) as of 12:01 a.m. USA Eastern
Standard Time on the Closing Date (as hereinafter defined) pay,
assume, discharge and perform all the obligations and liabilities
of Assignor under (i) the Gant Store Lease, (ii) the Equipment
Leases, insofar as they relate to the time period on or after the
Closing Date, and arise out of events occurring on or after the
Closing Date, (iii) the Outstanding Gant Store Orders and (iv) all
orders for Supplies and Promotional Materials (provided same are in
reasonable quantities), and (b) pay, assume, discharge and perform
all obligations and liabilities arising out of events occurring
after the Closing Date and related to Assignee's operation of the
Gant Store after the Closing Date, and (c) purchase all Other
Inventory from Assignor as provided in Section 1.7 ("the Assumed
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<PAGE>
Liabilities"). Except to the extent specifically set forth in this
Agreement, Assignee is not assuming, and shall not be bound by, any
obligations or liabilities of Assignor, of any kind or nature,
known, unknown, expressed, implied, contingent or otherwise, other
than the Assumed Liabilities. In particular, but not in limitation
of the foregoing sentence, Assignee is not assuming any obligations
or liabilities with respect to which provision for indemnification
of Assignee has been made in this Agreement.
1.3 Closing. Subject to Sections 10.1 and 11.1 hereof, the
transfers and assumptions ("the Closing") provided for in this
Agreement ("the Contemplated Transaction") will take place at the
offices of Alfred Berg, Birger Jarlsgatan 7, Stockholm, Sweden, at
11:00 a.m. (local time) on the same day as, and simultaneously
with, the closing under the Asset Purchase Agreement ("the
Acquisition Date"). Subject to Section 10.1 hereof, if the Closing
under this Agreement cannot be effected on the Acquisition Date
because the Landlord's consent to an assignment or sublease of the
Gant Store Lease has not been received, the Closing shall take
place on the earlier of (i) three (3) business days after such
consent is received and (ii) March 31, 1999 ("the Closing Date").
Subject to the provisions of Section 10, failure to consummate the
Contemplated Transaction on the date and time and at the place
determined pursuant to this Section 1.3 will not result in the
termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
1.4 The Gant Store Lease.
(a) Prior to Closing, Assignor shall make available to
Assignee complete and accurate information regarding the
operations, financial and otherwise, of the Gant Store since its
opening. Pursuant to Section 1.2 of this Agreement, Assignee shall
assume all obligations and liabilities under the Gant Store Lease
as of 12:01 a.m. USA Eastern Standard Time on the Closing Date.
Assignor and Assignee shall adjust as of the Closing Date all
obligations under the Gant Store Lease, including but not limited
to, rent, additional rent, utility charges, and so forth ("the
Lease Adjustments"). The Lease Adjustments shall be made at the
same time as the Royalty Adjustment and the Design Agreement
Adjustment (both as defined in the Asset Purchase Agreement) are
made under the Asset Purchase Agreement. At the Closing, Assignor
shall assign to Assignee its cash security deposit paid under
Section 37.01 of the Gant Store Lease upon delivery to it of
Assignee's payment of a like amount ("the Cash Security Deposit").
Assignor shall continue to provide the irrevocable letter of
credit, as also required of Tenant under Section 37.01 of the Gant
Store Lease, subject to the provisions of Section 9.3 of this
Agreement and this Section 1.4, until August 31, 2002. Prior to
such date, Assignee shall secure and substitute another letter of
credit for the letter of credit provided by Assignor.
Notwithstanding the foregoing, in the event of any substantial
change in the ownership of Pyramid Partners AB ("Pyramid") (after
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<PAGE>
considering the acquisition of an equity interest in Pyramid by a
subsidiary of LVMH Moet Hennessy Louis Vuitton S.A. ("LVMH"),
namely LV. Capital S.A., as reflected in the Shareholders Agreement
(as defined in the Asset Purchase Agreement)), including, without
limitation, an initial public offering of the share capital of
Pyramid, a sale by LV. Capital S.A. of all or substantially all of
its equity interest in Pyramid, or a sale by two or more of the
Pyramid Partners (as defined in the Shareholders Agreement) of
their equity interests in Pyramid, Assignor's obligation to
maintain the letter of credit shall end and Assignee shall promptly
secure and substitute another letter of credit for the letter of
credit maintained by Assignor.
(b) If Assignor, after making all commercially
reasonable efforts, is unable to secure the Landlord's Consent (as
hereinafter defined) to the assignment of the Gant Store Lease to
Assignee, then Assignee will accept a sublease for the balance of
the term of the Gant Store Lease, provided the Landlord consents to
the sublease and the sublease is otherwise obtained in accordance
with the applicable terms and conditions of the Gant Store Lease.
In such event, the parties shall enter into a sublease agreement
consistent with the terms and conditions of this Agreement ("the
Sublease Agreement").
1.5 Gant Store Inventory. Subject to the provisions of
Section 2.14, "Gant Store Inventory" consists of all saleable
products in the Gant Store as of the Closing Date.
1.6 Outstanding Gant Store Orders. "Outstanding Gant Store
Orders" are commitments for the purchase of inventory for the Gant
Store, consisting of orders for the 1999 spring/summer season and
1999 fall season, which were placed through Assignee, and which are
pending and undelivered as of the Closing Date. Assignee is
assuming all of Assignor's obligations under and with respect to
the Outstanding Gant Store Orders. To the extent any Outstanding
Gant Store Orders have been paid by Assignor as of the Closing
Date, Assignee shall, upon delivery of such orders, reimburse
Assignor for such payments in the amount of Assignor's landed cost
plus any duties paid by Assignor in connection with such orders.
1.7 Other Inventory. "Other Inventory" consists of products
ordered through Assignee that are owned by Assignor and not as yet
delivered to the Gant Store on the Closing Date, but intended for
sale in the Gant Store. Subject to the provisions of Section 2.14,
Assignee shall purchase and Assignor shall sell to Assignee the
Other Inventory at Assignor's landed cost plus any duties paid by
Assignor.
2. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR
2.1 Organization, Standing and Authority. Assignor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified to
conduct its business in New York. Assignor has all requisite
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<PAGE>
corporate power and authority (i) to own, lease, license and use
the Assets as presently owned, leased, licensed and used, (ii) to
conduct the trade, business and operations of Assignor associated
with the Assets, as presently conducted, and (iii) to execute and
deliver this Agreement and any other agreements executed and
delivered in connection with this Agreement and the transaction
contemplated hereby, and to perform and comply with all of the
terms, covenants and conditions to be performed and complied with
by the Assignor hereunder.
2.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by the Assignor have
been duly authorized by all necessary corporate actions on the part
of the Assignor and its stockholders (if necessary). This
Agreement has been duly executed and delivered by the Assignor and
constitutes the legal, valid and binding obligation of the
Assignor, enforceable against it in accordance with its respective
terms except as enforceability may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally,
or by court-applied equitable remedies.
2.3 Absence of Conflicting Agreements. Except as otherwise
provided in this Agreement, and except to the extent any violation
of this Section, other than of clause (ii), would not have a
material adverse effect on the Assets or the Contemplated
Transaction, the execution, delivery, and performance of this
Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) does not
require the consent of any third party; (ii) will not violate any
provision of the Certificate of Incorporation or Bylaws of the
Assignor; (iii) will not violate, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance,
decree, rule, regulation or ruling of any court or governmental
instrumentality, which is applicable to the Assignor and which
would affect Assignor's ability to consummate the sale of the
Assets to Assignee; (iv) subject to Assignor obtaining the Consents
(as hereinafter defined) will not violate, constitute grounds for
termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance
required by the terms of any agreement, instrument, license or
permit to which the Assignor is a party or by which the Assignor
may be bound and which is included in the Assets; or (v) will not
create any Encumbrance upon any of the Assets.
2.4 Licenses. Other than as reflected on Schedule 2, Assignor
does not possess and is not required by any governmental or
regulatory authority to obtain, any licenses, permits and other
authorizations for the lawful operation of the Gant Store and its
lawful ownership and use of the Assets, except where the failure to
possess any such license, permit or other authorization would not
have a material adverse effect on the Assets or the Contemplated
Transaction.
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2.5 Consents. Other than as reflected on Schedule 3, no
consent, approval, permit or authorization of, or declaration to or
filing with any third party or any governmental or regulatory
authority ("Consent") is required (i) to consummate this Agreement
and the Contemplated Transaction, (ii) to permit Assignor to assign
or transfer the Assets to Assignee, or (iii) to Assignor's
knowledge, to enable Assignee to operate the Gant Store in
essentially the same manner as the Gant Store is presently
operated.
2.6 Insurance. All Gant Store Property included in the
Assets is insured against loss or damage in commercially reasonable
amounts. All such policies of insurance are in full force and
effect and such policies provide for coverage on an occurrence
basis.
2.7 Taxes. Assignor has filed or caused to be filed all
federal income tax returns and to the best of Assignor's knowledge
all other federal, state, county, local or city tax returns which
are required to be filed, or has secured extensions to file any
such returns, and it has paid or caused to be paid all taxes shown
on said returns or on any tax assessment received by it to the
extent that such taxes have become due, or is in good faith
contesting the payment of any such taxes. Assignor has paid all
sales and use taxes that were due and owing, if any, upon its
acquisition of the Gant Store Property and no further sales or use
taxes are due and owing. No events have occurred, other than the
transfer of Assets hereby, which could impose on Assignee any
transferee liability for any taxes, penalties, or interest due or
to become due from Assignor. Assignor has collected and/or paid or
will timely pay all retail sales taxes it has been obligated to
collect in connection with the operation of the Gant Store. There
are no tax liens on any of the Assets; there are no deficiencies
asserted against Assignor by any governmental authority that may
result in a lien on any of the Assets.
2.8 Claims and Legal Actions. Except as described on Schedule
4, there is no legal action, counterclaim, suit, arbitration, or
other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending, or to the knowledge of
Assignor, threatened against or relating to any of the Assets,
including the Gant Store, nor does Assignor know of any reasonable
basis for the same. To the best of Assignor's knowledge, there is
no pending or threatened claim or governmental investigation
affecting Assignor or any of the Assets. Schedule 4 lists all
prior legal actions, suits, arbitrations, administrative
proceedings, orders, decrees or judgments involving any of the
Assets of which Assignor has knowledge.
2.9 Conduct of Gant Store Business in Ordinary Course. Since
December 1, 1998, Assignor has conducted business at the Gant Store
in the ordinary course and has not suffered any material adverse
change in the Assets, including any damage, destruction or loss
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materially and adversely affecting the Assets, except operating
losses at the Gant Store, all of which have been disclosed to
Assignee, the anticipated disclosure by Assignor after the
execution of this Agreement of its intention to sell the Trademarks
(as defined in the Asset Purchase Agreement) and discontinue its
business involving the Trademark-labeled products, and the
bankruptcy filing by one of Assignor's Trademark licensees, namely
Salant Corporation.
2.10 Labor Issues. With respect to the employees of the Gant
Store ("Gant Store Employees"), Assignor is in compliance in all
material respects with all applicable laws and regulations
respecting employment and employment practices, terms and condi-
tions of employment and wages and hours, including, without
limitation, all labor relations laws, equal employment opportunity
laws, employment discrimination laws, affirmative action laws,
Occupational Health and Safety Laws, wage and hour laws (including
the Fair Labor Standards Act and regulations thereunder), immigra-
tion laws, workers' compensation laws, disability laws and
unemployment compensation laws. There is not any pending, or to
Assignor's knowledge any threatened, claim for noncompliance or
violation of any obligations or matters referred to in the first
sentence of this Section, or otherwise arising out of any Gant
Store employee's employment relationship with Assignor or the
termination of such relationship. There are no employment
agreements concerning any Gant Store employees of Assignor. There
is no collective bargaining or union contract or agreement binding
on Assignor and covering any of the Gant Store employees, nor has
any labor organization been certified or recognized as the
exclusive collective bargaining agent of any Gant Store employees
of Assignor. With respect to the Gant Store, Assignor (i) is not
engaged in any unfair labor practice, and (ii) has not experienced
or been threatened by any labor strike, dispute, slowdown or
stoppage, and none of such events presently is pending or threat-
ened against or affecting Assignor. The transactions contemplated
by this Agreement are not subject to the Worker Adjustment and
Retraining Notification Act.
2.11 Full Disclosure. No representation or warranty made by
Assignor in this Agreement or in any schedule attached to this
Agreement or in any certificate provided hereunder, contains or
will contain as of the date it is given, any untrue statement of a
material fact, or omits or will omit to state any material fact
known to Assignor and required to make the statements herein or
therein not misleading.
2.12 Environmental Matters. To Assignor's knowledge, there
are no hazardous materials present on or in the Gant Store.
2.13 Gant Store Employees, Salaries and Benefit Plans.
(a) Schedule 5 sets forth, as of February 10, 1999, the
names of the Gant Store employees and their salaries, and each
bonus, deferred compensation, incentive compensation, stock
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purchase, stock option, severance or termination pay,
hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or
other retirement plan, program, agreement or arrangement,
maintained or contributed to or required to be contributed to by
Assignor for the benefit of any employee or former employee of the
Gant Store, whether formal or informal and whether legally binding
or not ("Plans").
(b) Except as set forth on Schedule 5, there are no
pending claims by or on behalf of any of the Plans, by any Gant
Store Employee, or Gant Store Employee beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
(c) Except with respect to Gant Store Employees on the
Closing Date, who are not offered employment by Assignee,
Assignor's severance policy does not require payment of severance
upon the consummation of the Contemplated Transaction.
2.14 Gant Store Inventory. All Gant Store Inventory consists
of new apparel or accessories in good and saleable condition. The
value (as determined under this Section 2.14) of the Gant Store
Inventory at the Closing shall be determined by a physical count of
the Gant Store Inventory taken jointly by Assignor and Assignee on
the day preceding the Closing Date. Following the physical count,
the parties shall prepare a joint schedule of the Gant Store
Inventory as of the Closing Date. Gant Store Inventory shall be
valued at its retail price (marked down where appropriate)
multiplied by 0.42. All fall 1998 and prior seasons merchandise
shall be removed from the Gant Store by Assignor prior to the
Closing (or as promptly thereafter as is practicable, at Assignor's
expense) and not be included in Gant Store Inventory. All so-
called basic, transition or holiday merchandise shall be
appropriately marked down in the ordinary course of business. Gant
Store Inventory shall have a value of at least USD 500,000 at the
Closing based upon the above valuation procedures, and any Gant
Store Inventory not ordered through Assignee shall constitute less
than five percent (5%) of the final Gant Store Inventory figure.
To the extent there is any shortfall at the Closing below the USD
500,000 figure, Assignor shall include in the Gant Store Inventory
a sufficient amount of Outstanding Gant Store Orders or Other
Inventory, valued as set forth in Section 1.6 or 1.7, as the case
may be, in order to meet the USD 500,000 minimum figure.
2.15 Gant Store Property. Except as described on Schedule 6,
Assignor owns and has good title to all of the Gant Store Property.
None of the Gant Store Property owned by Assignor is subject to any
Encumbrances except as described on Schedule 6 and all such
Encumbrances shall be removed prior to or at Closing. Except as
shown on Schedule 6, each item of Gant Store Property is in good
condition and repair (ordinary wear and tear excepted), and is
available for immediate use in the operation of the Gant Store. All
items of equipment included in the Gant Store Property have been
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maintained in a manner consistent with generally accepted standards
of good business practices. Assignor has not, since December 1,
1998, permanently removed from the Gant Store any property which on
the Closing Date would constitute Gant Store Property under the
terms of this Agreement, except in the ordinary course of business
or where removal would not materially and adversely affect the
operation of the Gant Store.
2.16 Gant Store Representations. All improvements and
alterations made by Assignor to the Gant Store have been made in
all material respects in accordance with the terms of the Gant
Store Lease. Assignor is not in breach of any material covenant or
obligation of the Gant Store Lease nor is it aware of any facts
that are reasonably likely to give rise to any claim by Landlord
that Assignor is in breach of any material covenant or obligation
of the Gant Store Lease. Except as described on Schedule 7, to
Assignor's knowledge, all elevators, air conditioning systems and
other building-wide systems located in the Gant Store are in good
order and repair and operating properly. All service contracts and
vendor and contractor warranties covering any equipment or
machinery included in the Gant Store Property are listed on
Schedule 7.
3. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE
Assignee represents and warrants to Assignor as follows:
3.1 Organization, Standing and Authority. Assignee is a
corporation duly organized, validly existing, and in good standing
under the laws of Delaware. Assignee has all requisite corporate
power and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all
of the terms, covenants and conditions to be performed and complied
with by Assignee hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Assignee have been
duly authorized by all necessary corporate actions on the part of
Assignee. This Agreement has been duly executed by Assignee and
constitutes the legal, valid, and binding obligations of Assignee,
except as the enforceability hereof may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally,
or by court-applied equitable remedies.
4. COVENANTS OF ASSIGNOR AND ASSIGNEE
4.1 Assignor's Pre-Closing Covenants. Except as contemplated
by this Agreement or with the prior written consent of Assignee,
which consent shall not be unreasonably withheld or delayed,
between the date hereof and the Closing Date, Assignor shall
operate the Gant Store in the ordinary course of business and in
accordance with its past practices (except where such would
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conflict with the following covenants or with Assignor's other
obligations hereunder), and abide by the following negative and
affirmative covenants, except that Assignee understands after the
execution of this Agreement Assignor shall not order any additional
inventory for the Gant Store:
(a) Negative Covenants. Assignor shall not do any of
the following:
(i) Contracts. Modify or amend the Gant Store
Lease, except as approved prior to execution by the Assignee in
writing;
(ii) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except for
sales made in the ordinary course of business at the Gant Store;
(iii) Encumbrances. Create, assume or permit to
exist any Encumbrance upon the Assets, except for those in
existence on the date of this Agreement, all of which shall be
removed prior to or as of the Closing Date;
(iv) Rights. Waive any material right relating to
the Assets; or
(v) No Inconsistent Action. Take any action which
is materially inconsistent with its obligations hereunder or which
could hinder or delay the consummation of the Contemplated
Transaction.
(b) Affirmative Covenants. Assignor shall do the
following:
(i) Access to Information. Allow Assignee and its
authorized representatives reasonable access at Assignee's expense
during normal business hours to the Assets and to all other
properties, equipment, books, records, contracts and documents
relating to the Assets, for the purpose of audit and inspection,
and furnish or cause to be furnished to Assignee or its authorized
representatives all information with respect to the affairs and
business of Assignor as they relate to the Assets, as Assignee may
reasonably request, it being understood that the rights of Assignee
hereunder shall not be exercised in such a manner as to interfere
with the operations of the Assignor; provided that, subject to
Section 5.9 hereof, neither the furnishing of such information to
Assignee or its representatives nor any investigation made
heretofore or hereafter by Assignee shall affect Assignee's right
to rely on any representation or warranty made by Assignor in this
Agreement, each of which shall survive any furnishing of informa-
tion or any investigation;
(ii) Maintenance of Assets. Take such actions as are
commercially reasonable to maintain all of the Assets (not sold in
the ordinary course of business) in their present condition
(ordinary wear and tear excepted);
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(iii) Insurance. Take such actions as are
commercially reasonable to maintain the existing insurance policies
on the Assets;
(iv) Consents. Take such actions as are commercially
reasonable, and at Assignor's expense, to obtain all Consents;
(v) Books and Records. Maintain its books and
records as they relate to the Assets in accordance with past
practices;
(vi) Notification. Promptly notify Assignee in
writing of any unusual or material developments with respect to the
Assets, and of any material change in any of the information
contained in Assignor's representations and warranties contained in
Article 2 hereof or in the Schedules hereto, provided that such
notification shall not relieve Assignor of any obligations
hereunder; and
(vii) Compliance with Laws. Comply in all material
respects with all material rules and regulations to which Assignor
and the Assets are subject.
4.2 Assignee's Pre-Closing Covenant. Assignee shall use its
best efforts to obtain a guaranty of the Tenant's obligations under
the Gant Store Lease, or, if applicable, under the Sublease
Agreement, from LVMH or any of LVMH's subsidiaries or affiliates.
4.3 Post-Closing Covenants.
(a) Cooperation. After the Closing, Assignor will take
such actions, and execute and deliver such further deeds, bills of
sale, or other transfer documents as, in the reasonable opinion of
counsel for Assignee, may be necessary to ensure, complete and
evidence the full and effective transfer of the Assets to Assignee
pursuant to this Agreement. After the Closing, Assignee will take
such actions, and execute and deliver such further documents as, in
the reasonable opinion of counsel for Assignor, may be necessary to
ensure, complete and evidence, the full and effective transfer of
the Assets to Assignee and the assumption of the Assumed
Liabilities by Assignee pursuant to this Agreement. Assignor and
Assignee shall cooperate in good faith to determine and pay the
Lease Adjustments referred to in Section 1.4.
(b) Accounts Receivable or Other Money. Following the
Closing Date, if Assignee should receive payment of any accounts
receivable or other money belonging to Assignor, Assignee shall
promptly pay same to Assignor, and if Assignor should receive
payment of any accounts receivable or other money belonging to
Assignee, Assignor shall promptly pay same to Assignee.
(c) Retention of Books and Records. Each party shall
retain its books and records relating to the Assets. In the event
that the party in possession of such books and records wishes to
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destroy such records after the sixth anniversary of the Closing
Date, such party shall notify the other party in writing at least
thirty (30) days prior to such destruction. If within such thirty
(30) day period, the party receiving such notice shall inform the
sending party that the receiving party desires such records, or any
portion thereof, the sending party shall, at the expense of the
receiving party, copy such records or portions thereof and make
same available to the receiving party. If either party is notified
by a governmental authority of an inquiry, audit or investigation,
such party shall notify the other promptly of such inquiry, audit
or investigation, and such other party shall be obligated to
cooperate in connection with any such inquiry, audit or
investigation, without additional consideration, to the extent
reasonably requested.
(d) Gant Store Lease Extension. Assignee shall not
renew or extend the Gant Store Lease without Assignor's written
consent, which consent shall not be unreasonably withheld or
delayed.
(e) Transition Period Services. At Assignee's request,
Assignor shall after the Closing Date perform various services for
Assignee until Assignee is able to perform such services on its own
("Transition Period Services"). Transition Period Services shall
include retaining all Gant Store Employees as employees of Assignor
on Assignor's payroll, providing credit card collection services at
the Gant Store, and any other similar services to enable Assignee
to operate the Gant Store until it establishes its payroll and
support services, including employee benefit plans, credit card
collection agreements, and so forth. Assignee shall use all
commercially reasonable efforts to establish its own arrangements,
policies and procedures to replace the Transition Period Services
and shall discontinue its use of a Transition Period Service and
shall no longer have a right to receive such service as soon as
practicable after a replacement service becomes available to it.
It is understood and agreed that, the Gant Store Employees shall be
terminated by Assignor upon Assignee's establishment of a medical
insurance plan. Upon such termination, Assignor's responsibility
with respect to the Gant Store Employees shall cease. During the
Transition Period (as hereinafter defined), Assignee shall have the
right to request Assignor to terminate a Gant Store Employee only
for cause and Assignee shall not hire any additional employees for
the Gant Store, unless they are hired as employees of Assignee.
Assignee shall reimburse Assignor for all its actual costs in
providing Transition Period Services, including but not limited to
payroll and other employee and fringe benefit expenses, and shall
indemnify and hold harmless Assignor from all losses, damages,
claims, costs and expenses (including but not limited to reasonable
legal fees) incurred in connection with its performance of the
Transition Period Services, without reference to the limitation set
forth in Section 9.3. Assignor shall not be obligated to provide
Transition Period Services for a period commencing on the earlier
of (i) the date on which the last of the Transition Period Services
are replaced by Assignee and (ii) 30 days after Closing Date ("the
Transition Period").
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5. OTHER COVENANTS
5.1 Gant Store Employees.
(a) Assignor shall terminate the employment of all the
employees of the Gant Store effective on the Closing Date.
(b) At the end of the Transition Period, Assignee shall,
subject to Assignee's rules and procedures, offer employment to
substantially all Gant Store Employees remaining as of such date at
substantially the same pay (but not necessarily with the same
benefits) in effect at the end of the Transition Period by
announcement or other notification in a form and at a time as
mutually agreed by Assignor and Assignee. The accrued vacation
benefits of any Gant Store Employees, on the Closing Date, employed
by Assignee thereafter shall be paid by Assignor to the employee.
Nothing in this Section is intended to create any claim or right on
the part of any employee and no such employee shall be entitled to
assert any claim or right hereunder.
(c) Assignee agrees to indemnify and hold harmless
Assignor of and from any and all actions, causes of action, suits,
debts, claims, complaints, charges, damages, cross-claims, claims
for contribution and/or indemnity claims, for or on account of the
employment interviews and hiring process to be conducted by
Assignee in connection with any employees of Assignor, including
claims involving the failure to hire, and to reimburse Assignor for
all expenses incurred by them, including reasonable legal fees and
expenses, in defending any such claims or actions as described
herein. Assignee may undertake representation on behalf of
Assignor in any such claims or actions, however, such
representation shall not decrease or in any way limit the
obligation of Assignee to indemnify and hold harmless Assignor, as
provided herein. Any fees and expenses incurred by Assignee under
this Section shall not be considered part of the deductible
allowance under Section 9.3 and must be paid in full by Assignee.
5.2 Benefit Plans. Subject to Section 4.3(e), Assignee shall
have no obligation or liability payable under any of Assignor's
plans that provide retirement benefits (whether qualified under
Section 401(a) of the IRC or not) or any of Assignor's plans,
programs or arrangements (including, but not limited to, any
reimbursement arrangement maintained by Assignor) that provide
health, medical, disability or dental insurance or other benefits
for the welfare of the Employees. Assignor shall indemnify
Assignee, pursuant to this Agreement, for any liability that
Assignee may incur with respect to or in connection with any
benefit plan maintained by Assignor and relating to the period
prior to the Closing Date.
5.3 Assignor Payment to Creditors. Assignor shall pay or
otherwise satisfy all trade payables of Assignor and shall fully
pay or otherwise satisfy all other liabilities and/or obligations
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relating to the Assets incurred through the Closing Date other than
Outstanding Gant Store Orders. Assignor shall indemnify Assignee,
pursuant to this Agreement, for any damages resulting from or
relating to (i) Assignor's failure to pay or otherwise satisfy any
such liabilities, or (ii) noncompliance by Assignee and Assignor
with any applicable provisions of any bulk transfer laws (or any
similar laws) of any relevant jurisdiction. Any expense incurred
by Assignee under this Section shall not be considered part of the
deductible allowance under Section 9.2 and must be paid in full by
Assignor.
5.4 Taxes, Fees and Expenses. Except as otherwise provided
in this Agreement, each party shall pay its own expenses incurred
in connection with the authorization, preparation, execution, and
delivery of the Agreement.
5.5 Brokers. Assignee and Assignor each represents and
warrants that neither it nor any person or entity acting on its
behalf has incurred any liability for any finders' or brokers' fees
or commissions whatsoever in connection with the transaction
contemplated by this Agreement.
5.6 Confidentiality. Except as necessary to consummate the
Contemplated Transaction, each party hereto will keep confidential
any information which is obtained from the other party in
connection with this Agreement and which is not readily available
to members of the general public. Any such information may be
disclosed only to those of each party's representatives who need to
know such information for the purpose of evaluating the
Contemplated Transaction on that party's behalf (it being
understood that any such representatives shall be informed of the
confidential nature of such information and shall be directed to
keep such information confidential). In the event this Agreement is
terminated and the Contemplated Transaction abandoned, each party
shall return to the other party all documents, work papers and
other written material obtained by it in connection with this
Agreement.
5.7 Cooperation. Assignee and Assignor shall cooperate fully
with each other and their respective counsel and accountants in
connection with any actions required to be taken as part of their
respective obligations under this Agreement, including but not
limited to determining and paying the Lease Adjustments, and
Assignee and Assignor shall execute such other documents as may be
necessary and desirable to the implementation and consummation of
this Agreement, and otherwise use their best efforts to consummate
the transaction contemplated hereby and to fulfill their
obligations hereunder.
5.8 Risk of Loss.
(a) The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause
whatsoever shall be borne by Assignor at all times prior to the
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Closing Date. In the event of any loss, damage or impairment,
confiscation or condemnation of any of the Assets prior to the
Closing Date, Assignor shall expend such funds and take such other
actions as are necessary to repair, replace or restore such Assets
to their prior condition as soon as possible after such loss,
impairment, condemnation or confiscation.
(b) In the event of any damage or destruction of the
Assets described above, if such Assets have not been restored or
replaced promptly, Assignee may terminate this Agreement forthwith
without any further obligation hereunder by written notice to
Assignor. Alternatively, Assignee may, at its option, proceed to
close this Agreement and complete the restoration and replacement
of such damaged Assets after the Closing Date, in which event
Assignor shall deliver to Assignee all insurance proceeds received
in connection with such damage or destruction of the Assets without
limitation as to the costs and expenses arising in connection with
such restoration and replacement.
5.9 Notification. Between the date of this Agreement and the
Closing Date, Assignor shall promptly notify Assignee in writing
(i) if Assignor becomes aware of any fact or condition that causes
or constitutes a misrepresentation or omission in any of Assignor's
representations and warranties as of the date of this Agreement, or
(ii) if Assignor becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a
misrepresentation or omission in any such representation or
warranty had such representation or warranty been made as of the
time of occurrence or discovery of such fact or condition. During
the same period, Assignor shall promptly notify Assignee of the
occurrence of any breach of any covenant or agreement of Assignor
in this Agreement or otherwise made in connection herewith or of
the occurrence of any event that may make the satisfaction of the
conditions in Article 6 impossible or unlikely. Between the date
of this Agreement and the Closing Date, Assignee shall promptly
notify Assignor in writing if Assignee has actual knowledge of any
breach by Assignor of any material representation or warranty made
by Assignor under this Agreement or of any other material
obligation of Assignor hereunder, and Assignor shall be given a
reasonable opportunity to cure any such breach.
5.10 No Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to Article 10, Assignor shall not
directly or indirectly solicit, initiate, or encourage any
inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicit-
ed inquiries or proposals from, any person (other than Assignee)
relating to any transaction involving the sale of the Assets.
5.11 Public Announcements. Assignor and Assignee shall
consult with each other regarding the issuance, timing and text of
any public announcements concerning this Agreement or the
Contemplated Transaction.
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6. CONDITIONS
6.1 Conditions to Obligations of Assignee. All obligations
of Assignee at the Closing hereunder are subject to the fulfillment
prior to or on the Closing Date of each of the following
conditions:
(a) Representations and Warranties. All representations
and warranties of Assignor in this Agreement shall be true and
correct in all material respects as of the date given, and shall be
supplemented by Assignor if necessary so that they are true and
correct in all material respects as of the Closing Date.
(b) Covenants and Conditions. Assignor shall have in
all material respects performed and complied with all covenants,
agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Consents. Subject to the provisions of Section 11,
each of the Consents described in Schedule 3 shall have been duly
obtained and delivered to Assignee, except if Assignor shall be
unable to secure a Consent from the Landlord to the assignment of
the Gant Store Lease to Assignee, the Assignee and Assignor shall
proceed with this Agreement provided the Assignor obtains the
Landlord's Consent to the Sublease Agreement in accordance with
Section 1.4.
(d) Condition of Assets. The Assets (other than Assets
sold in the course of business) shall be in the same condition as
on the date of this Agreement, normal wear and tear excepted.
(e) Asset Purchase Agreement. The execution and
consummation of the Asset Purchase Agreement.
(f) Deliveries. Assignor shall have made or stand
willing and able to make all the deliveries to Assignee set forth
in Section 7.1.
6.2 Conditions to Obligations of Assignor. All obligations
of Assignor at the Closing hereunder are subject to the fulfillment
prior to and at the Closing Date of each of the following
conditions:
(a) Representations and Warranties. All representations
and warranties of Assignee in this Agreement shall be true and
correct in all material respects as of the date given and shall be
supplemented by Assignee if necessary so that they are true and
correct in all material respects as of the Closing Date.
(b) Covenants and Conditions. Assignee shall have in
all material respects performed and complied with all covenants,
agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
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(c) Asset Purchase Agreement. The execution and
consummation of the Asset Purchase Agreement.
(d) Consents. Assignor shall have received the
Consents.
(e) Deliveries. Assignee shall have made or stand
willing and able to make all the deliveries set forth in Section
7.2.
7. CLOSING AND CLOSING DELIVERIES
7.1 Deliveries by Assignor. Prior to or on the Closing Date,
Assignor shall deliver to Assignee all of the following, in form
and substance reasonably satisfactory to Assignee and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
assignments, releases of liens, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets
in the name of Assignee or its permitted assignees, free and clear
of any Encumbrances, and Assignor shall take such other actions as
are necessary to deliver possession of the Assets to Assignee;
(b) Consents. Copies of the Consents;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by an officer of Assignor, certifying:
(i) that the representations and warranties of the Assignor
contained in this Agreement are true and correct in all material
respects as of the date given and, if necessary, have been
supplemented so that they are true and correct in all material
respects as of the Closing Date; and (ii) that the Assignor has, in
all material respects, performed all of its obligations and
complied with all of its covenants set forth in this Agreement to
be performed and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by the Assignor's Secretary: (i)
certifying that the resolutions, as attached to such certificate,
were duly adopted by the Assignor's Board of Directors and
stockholders (if necessary), authorizing and approving the
execution of this Agreement and the consummation of the transaction
contemplated hereby and that such resolutions are remaining in full
force and effect, and attaching a Certificate of Good Standing of
Assignor certified by an appropriate state official in the Office
of the Secretary of State of the State of Delaware, as of a date
not more than fifteen (15) days before the Closing Date, and a
copy of the Assignor's Bylaws as in effect on the date hereof,
certified by the Assignor's Secretary as of the Closing Date;
(e) Business Records, etc. All files and records which
Assignor has agreed to provide to Assignee in this Agreement; and
(f) Opinions of Counsel. Opinion of Assignor's counsel
reasonably satisfactory to Assignee, dated as of the Closing Date.
17<PAGE>
7.2 Deliveries by Assignee. Prior to or on the Closing Date,
Assignee shall deliver to Assignor the following, in form and
substance, reasonably satisfactory to Assignor and its counsel:
(a) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by an officer of Assignee, certifying
(i) that the representations and warranties of Assignee contained
in this Agreement are true and correct in all material respects as
of the date given and, if necessary, have been supplemented so that
they are true and correct in all material respects as of the
Closing Date, and (ii) that Assignee has, in all material respects,
performed all of its obligations and complied with all of its
covenants set forth in this Agreement to be performed or complied
with on or prior to the Closing Date;
(b) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by Assignee's Secretary certifying that
the resolutions, as attached to such certificate, were duly adopted
by Assignee's Board of Directors, authorizing and approving the
execution of this Agreement and the consummation of the
transactions contemplated hereby and that such resolutions remain
in full force and effect.
(c) Opinions of Counsel. Opinion of Assignee's counsel
reasonably satisfactory to Assignor, dated as of the Closing Date.
8. RIGHTS OF ASSIGNEE AND ASSIGNOR ON TERMINATION OR BREACH
8.1 Specific Performance. The parties recognize that in the
event either party should refuse to perform under the provisions of
this Agreement, monetary damages alone will not be adequate. The
aggrieved party shall therefore be entitled, in addition to any
other remedies, which may be available, including money damages, to
obtain specific performance of the terms of this Agreement. In the
event of any action to enforce this Agreement, both parties hereby
waive the defense that there is an adequate remedy at law. In the
event of a default by either party which results in the filing of
a lawsuit for damages, specific performance, or other remedy, the
prevailing party shall be entitled to reimbursement by the other
party of reasonable legal fees and expenses incurred.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND
INDEMNIFICATION
9.1 Representations and Warranties. All representations,
warranties and covenants contained in this Agreement shall be
deemed continuing representations, warranties and covenants, and
shall survive the Closing as provided in this Agreement. Any
investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation,
warranty or covenant contained herein.
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9.2 Indemnification by Assignor.
(a) Notwithstanding the Closing, and, subject to
Assignee's performance of its obligations under Section 5.9,
regardless of any investigation made at any time by or on behalf of
Assignee or any information Assignee may have, Assignor shall
indemnify and hold Assignee harmless from and against and with
respect to, and shall reimburse Assignee for any and all damages,
liabilities, costs, settlements, fines, penalties, diminution in
value, claims, actions, inquiries, demands, suits, legal or
administrative proceedings, losses and expenses, including
reasonable legal fees ("Damages") which may be made, assessed or
otherwise incurred by the Assignee (collectively "Assignee's
Losses") arising from or in connection with any of the following:
(i) Any untrue representation, breach of warranty
or non-fulfillment or breach of any covenant by Assignor contained
herein or in any Schedule, certificate, document or instrument
delivered to Assignee hereunder;
(ii) Any and all obligations of Assignor not assumed
by Assignee pursuant to the terms hereof;
(iii) Assignor's operation of the Gant Store or
ownership of the Assets prior to 12:01 a.m. USA Eastern Standard
Time on the Closing Date, including any and all liabilities arising
under the Assumed Liabilities or otherwise which relate to events
occurring prior to the Closing Date;
(iv) Any products manufactured or sold or services
performed or promised but not performed by Assignor prior to the
Closing or by Assignor after the Closing pursuant to Section 4.2(e)
of the Asset Purchase Agreement;
(v) The securing of any Consents by Assignor,
including any demands by the Landlord that it is owed any profit or
compensation under Section 12 of the Gant Store Lease; and
(vi) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees and expenses, incident to any of
the foregoing or incurred in enforcing this indemnity.
(b) Notwithstanding the foregoing, any claim by Assignee
for indemnification by Assignor under (i)-(vi) above ("Claim") may
not be made (unless otherwise provided in this Agreement) until and
unless the aggregate value of Assignee's Losses when aggregated
with any of Buyer's Losses (as defined in the Asset Purchase
Agreement) exceed USD 100,000, whereupon Assignee shall be entitled
to be indemnified for the full amount of Assignee's Losses.
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(c) If the Closing occurs, Assignor shall have no
liability (for indemnification or otherwise) with respect to any
representation or warranty under this Agreement made as of the date
of this Agreement or as of the Closing Date, unless on or before
December 31, 1999, Assignor is given notice asserting a Claim with
respect thereto and specifying the factual basis of that Claim in
reasonable detail to the extent then known by the Assignee. A
Claim for indemnification based upon any covenant or agreement to
be performed by Assignor after the Closing Date may be made at any
time within six (6) months after the time for performance has
elapsed.
(d) No breach by Assignee of its obligations under
Section 5.9 shall affect its right to indemnification hereunder
unless the Assignee's Losses for which it seeks indemnification are
directly related to the specific breach by Assignor which Assignee
did not disclose to Assignor pursuant to Section 5.9.
9.3 Indemnification by Assignee.
(a) Notwithstanding the Closing, and regardless of any
investigation made at any time by or on behalf of Assignor or any
information Assignor may have, Assignee shall indemnify and hold
Assignor harmless against and with respect to, and shall reimburse
Assignor for any and all Damages which may be made, assessed or
otherwise incurred by the Assignor (collectively "Assignor's
Losses") arising from or in connection with any of the following:
(i) Any untrue representation, breach of warranty
or non-fulfillment or breach of any covenant by Assignee contained
herein or in any certificate, document or instrument delivered to
Assignor hereunder;
(ii) Assignee's ownership of the Assets on and after
12:01 a.m. USA Eastern Standard Time on the Closing Date, including
any and all liabilities arising under the Gant Store Lease or after
the Closing Date; and
(iii) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees and expenses, incident to any of
the foregoing or incurred in enforcing this indemnity.
(b) Notwithstanding the foregoing, any claim by Assignor
for indemnification by Assignee under (i)-(iii) above ("Claim") may
not be made (unless otherwise provided in this Agreement) until and
unless the aggregate value of Assignor's Losses when aggregated
with any of Seller's Losses (as defined in the Asset Purchase
Agreement) exceed USD 100,000, whereupon Assignor shall be entitled
to be indemnified for the full amount of Assignor's Losses.
9.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
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(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification
is claimed (the "Indemnifying Party") of any Claim, whether between
the parties or brought by a third party, specifying (i) the factual
basis for such Claim, and (ii) the amount of the Claim. If the
Claim relates to an action, suit or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant
within thirty (30) days after written notice of such action, suit
or proceeding was given to Claimant.
(b) Following receipt of notice from the Claimant of a
Claim, the Indemnifying Party shall have sixty (60) days to make
such investigation of the Claim, as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation,
the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representative(s) the information relied upon
by the Claimant to substantiate the Claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said
sixty (60) day period (or any mutually agreed upon extension
thereof) to the validity and amount of such Claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the
Claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate legal remedy.
(c) With respect to any Claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the
Indemnifying Party shall have the right at its own expense, to
participate in or assume control of the defense of such Claim, and
the Claimant shall cooperate fully with the Indemnifying Party,
subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the
defense of any third-party Claim, the Claimant shall have the right
to participate in the defense of such Claim at its own expense. If
the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third party Claim, it
shall be bound by the results obtained by the Claimant with respect
to such Claim.
(d) If a Claim, whether between the parties or by a
third party, requires immediate action, the parties will make every
effort to reach a decision with respect thereto as expeditiously as
possible.
(e) The indemnification rights provided in this Section
9 shall extend to the affiliates, shareholders, directors,
officers, employees and representatives of the Claimant although
for the purpose of the procedures set forth in this Section, any
indemnification claims by such parties shall be made by and through
the Claimant.
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10. TERMINATION
10.1 Termination of this Agreement.
(a) Termination. This Agreement may be terminated prior
to the Closing only as follows:
(i) by written agreement of Assignee and Assignor
at any time;
(ii) by Assignor, by notice to Assignee at any time,
if one or more of the conditions specified in Article 6.2 is not
satisfied at the time at which the Closing would otherwise occur or
if satisfaction of such a condition is or becomes impossible,
provided that at the time of such notice Assignor has fully
complied in all material respects with its material obligations
under this Agreement;
(iii) by Assignee, by notice to Assignor at any
time, if one or more of the conditions specified in Article 6.1 is
not satisfied at the time at which the Closing would otherwise
occur or if satisfaction of such a condition is or becomes
impossible, provided that at the time of such notice Assignee has
fully complied in all material respects with its material
obligations under this Agreement; or
(iv) by either party, if the Asset Purchase
Agreement should be terminated pursuant to Section 11.1(a)(i) or
(iv) of the Asset Purchase Agreement.
(b) Effect of Termination. In the event that this
Agreement is terminated pursuant to this Section, this Agreement
shall terminate without any liability or further obligation of
either party to the other, provided, however, that termination
under this Section shall not relieve any party of liability for any
intentional failure to perform or comply with any agreement prior
to the date of termination, or any misrepresentation or omission in
any of the representations and warranties made hereunder or any
breach of any covenants and agreements hereunder or constitute a
waiver of any claim with respect thereto. Liability under this
Section shall only attach in the event of an intentional act or
omission on the part of the party, which causes the termination of
this Agreement.
11. SPECIAL CIRCUMSTANCES
11.1 Failure to Obtain Lessor's Consent. In the event
Assignor should be unable to secure the Landlord's Consent to an
assignment or sublease of the Gant Store Lease to Assignee by the
Acquisition Date, the parties agree that, subject to all other
conditions of this Agreement, the Closing may be delayed until
March 31, 1999, during which time the Assignor shall pursue
obtaining the Landlord's Consent, at Assignor's expense, with all
22
<PAGE>
commercially reasonable efforts. In the event the Assignor is
unable to secure the Landlord's Consent by March 31, 1999, the
Closing Date shall be March 31, 1999, at which time this Agreement
shall close and the parties shall consummate the Contemplated
Transaction subject to all of the terms and conditions of this
Agreement, except as modified by the following provisions:
(a) After the Closing, Assignor shall continue with all
commercially reasonable efforts to seek to obtain the Landlord's
Consent to an assignment or sublease of the Gant Store Lease to
Assignee so long as it is reasonably likely that the Landlord's
Consent can be obtained.
(b) As of the Closing Date, Assignee shall assume and
pay all obligations of the Assignor under the Gant Store Lease
pursuant to Section 1.2, but without the benefit of an assignment
or sublease agreement, subject to the terms and conditions of this
Section. All payments of rent, additional rent or other money
obligations under the Gant Store Lease shall be paid by Assignee to
Assignor during such period as this arrangement continues. Subject
to Assignee performing its obligations hereunder, during the period
commencing on the Closing Date and ending on the earlier of (i) the
effective date of the Landlord's Consent and (ii) March 31, 2000,
Assignor shall continue to perform all of its obligations as Tenant
under the Gant Store Lease.
(c) As of the Closing Date, Assignee shall operate the
Gant Store for its own benefit and account as if the Landlord's
Consent to an assignment or sublease had been secured.
(d) Assignor shall indemnify and hold Assignee harmless
under the provisions of Section 9.2, for any expenses, including
attorneys' fees, incurred in connection with any effort by the
Landlord to interfere with Assignee's operation of the Gant Store.
(e) Assignor shall defend Assignee, at Assignor's cost,
in any action or proceeding commenced by the Landlord or any party
acting on the Landlord's behalf, naming Assignee as a party to such
action or proceeding.
(f) If the Landlord should obtain a temporary
injunction, a temporary restraining order or any other form of
extraordinary relief, the effect of which is to materially
interfere with Assignee's operation of the Gant Store for more than
five (5) consecutive days during which time the Gant Store would
otherwise be open for business and free of such interference,
Assignee may elect, assuming the interference has not ended, to
abandon the Gant Store, such election to be made within seven (7)
business days after such interference commences, in which event the
parties shall proceed as follows:
(i) Assignee's obligation to perform all of
Assignor's obligations under the Gant Store Lease shall end as of
the date of Assignee's notice that it is abandoning the Gant Store
("the Abandonment Date").
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(ii) All of Assignee's Gant Store employees on the
Abandonment Date shall immediately become employees of Assignor.
(iii) Assignor shall, as of the Abandonment Date,
assume control of the Gant Store for the sole purpose of winding up
its operations and liquidating the inventory in the Gant Store as
of the Abandonment Date.
(iv) Assignor shall promptly pay Assignee the value
of the inventory in the Gant Store on the Abandonment Date in
excess of USD 250,000 (such inventory to be valued as described in
Section 2.14).
(v) Assignor shall after the Abandonment Date
promptly but in a commercially reasonable manner and without
activities that may harm the "Gant" trademark, liquidate the Gant
Store within six (6) months of the Abandonment Date ("the Store
Liquidation Period").
Assuming Assignee has not previously abandoned the Gant
Store under the provisions of this subsection and the interference
should recur, Assignee may elect to abandon the Gant Store at any
time even if the interference has ended and in such event, the
parties shall proceed as described above. Any election by Assignee
under this subsection (f) shall not affect Assignor's obligations
under (d) and (e) above.
(g) In the event Assignor is unable to secure the
Landlord's Consent to an assignment or sublease of the Gant Store
Lease to Assignee by February 28, 2000, then Assignee may proceed
as described in (f) above, by electing to abandon the Gant Store,
such election to be made on or before March 31, 2000, whereupon the
parties shall proceed to fulfill their respective obligations as
defined in (f) above. If Assignee should not elect to proceed as
outlined in (f) above on or before March 31, 2000, then Assignee
shall have waived its rights to terminate the arrangements
described in this Section, and Assignee shall continue to operate
the Gant Store at its own risk. Any election by Assignee under
this subsection (g) shall not affect Assignor's obligations under
(d) and (e) above.
(h) Any expenses incurred by Assignor in performing its
obligations under this Section shall not be considered part of the
deductible allowance under Section 9.2 and must be paid in full by
Assignor. The failure of the Assignee to perform its obligations
under this Section shall not be included in the deductible
allowance described in Section 9.3 and must be paid in full.
(i) In the event the Closing Date should extend beyond
February 26, 1999, Pyramid Sportswear hereby grants Assignor a
royalty-free license to use the "Gant" Trademark in connection with
Assignor's operation of the Gant Store until the actual Closing
Date. If Assignee abandons the Gant Store pursuant to (f) or (g)
above, Pyramid Sportswear shall grant Assignor a royalty-free
license to use the "Gant" Trademark during the Store Liquidation
Period.
24<PAGE>
12. MISCELLANEOUS
12.1 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall
be (i) in writing, (ii) delivered by personal delivery, or sent by
commercial delivery service or registered or certified mail, return
receipt requested, (iii) deemed to have been given on the date of
personal delivery or the date set forth in the records of the
delivery service or on the return receipt, and (iv) addressed as
follows:
If to Assignor:
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016
with a copy (which shall not constitute notice) to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Attention: Edward H. Cohen
If to Assignee:
Pyramid Sportswear Acquisition Corporation
c/o Abberley Kooiman LLP
521 Fifth Avenue, Suite 2200
New York, NY 10175
Attention: Michael L. Martell
with a copy (which shall not constitute notice) to:
Advokatfirman Sodermark
Strandvagen 1
Box 14055
SE-104 40 Stockholm, Sweden
Attention: Hakan Rockstrom
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section.
12.2 Benefit and Binding Effect. Neither party hereto may
assign this Agreement without the prior written consent of the
other party hereto. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.3 Governing Law. This Agreement shall be governed,
construed, and enforced in accordance with the laws of the State of
New York without reference to its conflict of laws provisions.
25
<PAGE>
12.4 Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
12.5 Gender and Number. Words used herein, regardless of the
gender and number specifically used, shall be deemed and construed
to include any other gender, masculine, feminine or neuter, and any
other number, singular or plural, as the context requires.
12.6 Jurisdiction and Forum. To the fullest extent permitted
by law, each of the parties hereto (i) agree that the appropriate
forum for the resolution of all disputes hereunder shall be the
courts located in New York, (ii) submits to the personal
jurisdiction of such courts, and (iii) waives any objection to
venue in New York and any claim that the forum is inconvenient.
12.7 Entire Agreement. This Agreement, all schedules hereto,
and all documents and certificates to be delivered by the parties
pursuant hereto collectively represent the entire understanding and
agreement between Assignee and Assignor with respect to the subject
matter hereof. All schedules attached to this Agreement shall be
deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement
supersedes all prior negotiations between Assignee and Assignor,
and all letters of intent and other writings relating to such
negotiations, and cannot be amended, supplemented or modified
except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the
case may be, and which is signed by the party against which
enforcement of any such amendment, supplement or modification is
sought.
12.8 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the party entitled
to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or
on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section.
12.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid
or unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other persons or circumstances
shall not be affected thereby and shall be enforced to the greatest
extent permitted by law.
12.10 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signature on
each such counterpart were upon the same instrument.
26<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by
Assignor and Assignee as of February 23, 1999.
PHILLIPS-VAN HEUSEN CORPORATION
By: /s/ Irwin W. Winter
Name: Irwin W. Winter
Title: Executive Vice President
PYRAMID SPORTSWEAR
ACQUISITION CORPORATION
PYRAMID SPORTSWEAR AB By: /s/ Lennart Bjork
for the purpose of confirming Name: Lennart Bjork
its obligation under Title: President
Section 11.1(i)
By: /s/ Lennart Bjork
Name: Lennart Bjork
Title: President
27
