ASSET PURCHASE AGREEMENT
dated as of
April 4, 2000
between
CHIC BY H.I.S, INC.,
CHIC BY H.I.S. LICENSING CORPORATION,
HENRY I. SIEGEL COMPANY, INC.
and
VF CORPORATION
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TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS....................................................1
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE..............................................2
SECTION 2.02. EXCLUDED ASSETS................................................4
SECTION 2.03. EXCLUDED LIABILITIES...........................................4
SECTION 2.04. PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE...................4
SECTION 2.05. CLOSING........................................................4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.01. CORPORATE EXISTENCE AND POWER..................................5
SECTION 3.02. CORPORATE AUTHORIZATION........................................5
SECTION 3.03. GOVERNMENTAL AUTHORIZATION.....................................5
SECTION 3.04. NONCONTRAVENTION...............................................5
SECTION 3.05. REQUIRED CONSENTS..............................................6
SECTION 3.06. MATERIAL CONTRACTS.............................................6
SECTION 3.07. LITIGATION.....................................................6
SECTION 3.08. PROPERTIES.....................................................6
SECTION 3.09. INTELLECTUAL PROPERTY..........................................6
SECTION 3.10. FINDERS' FEES..................................................7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.01. CORPORATE EXISTENCE AND POWER..................................7
SECTION 4.02. CORPORATE AUTHORIZATION........................................7
SECTION 4.03. GOVERNMENTAL AUTHORIZATION.....................................7
SECTION 4.04. NONCONTRAVENTION...............................................8
SECTION 4.05. LITIGATION.....................................................8
SECTION 4.06. FINDERS' FEES..................................................8
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ARTICLE 5
COVENANTS OF SELLER
SECTION 5.01. CHANGE OF NAME; USE OF MATERIALS...............................8
ARTICLE 6
COVENANTS OF BUYER AND SELLER
SECTION 6.01. BEST EFFORTS; FURTHER ASSURANCES...............................9
SECTION 6.02. CERTAIN FILINGS................................................9
SECTION 6.03. PUBLIC ANNOUNCEMENTS, CONFIDENTIALITY..........................9
SECTION 6.04. TRADEMARKS; TRADENAMES........................................10
ARTICLE 7
TAX MATTERS
SECTION 7.01. TAX DEFINITIONS...............................................10
SECTION 7.02. TAX MATTERS...................................................10
SECTION 7.03. TAX COOPERATION; ALLOCATION OF TAXES..........................11
ARTICLE 8
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligation of Buyer.............................12
SECTION 8.02. Conditions to Obligation of CHIC and Seller...................13
ARTICLE 9
SURVIVAL; INDEMNIFICATION
SECTION 9.01. SURVIVAL......................................................14
SECTION 9.02. INDEMNIFICATION...............................................14
SECTION 9.03. PROCEDURES....................................................15
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES.......................................................15
SECTION 10.02. AMENDMENTS AND WAIVERS........................................16
SECTION 10.03. EXPENSES......................................................16
SECTION 10.04. SUCCESSORS AND ASSIGNS........................................16
SECTION 10.05. GOVERNING LAW.................................................17
SECTION 10.06. DISPUTE RESOLUTION............................................17
SECTION 10.07. JURISDICTION..................................................17
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SECTION 10.08. WAIVER OF JURY TRIAL..........................................17
SECTION 10.09. COUNTERPARTS, THIRD PARTY BENEFICIARIES.......................17
SECTION 10.10. ENTIRE AGREEMENT..............................................18
SECTION 10.11. CAPTIONS......................................................18
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ASSET PURCHASE AGREEMENT
AGREEMENT dated as of April 4, 2000 between VF Corporation, a Pennsylvania
corporation ("BUYER"), and Chic by H.I.S, Inc., a Delaware corporation ("CHIC"),
Chic by H.I.S. Licensing Corporation, a Delaware corporation ("CHIC LICENSING")
and Henry I. Siegel Company, Inc., a Delaware corporation ("SIEGEL", and,
together with Chic Licensing, the "SELLER"),
W I T N E S S E T H:
WHEREAS, CHIC and Seller conduct a business in which they design,
manufacture and distribute moderately priced jeans, casual pants, shorts and
other items of apparel (the "BUSINESS");
WHEREAS, Buyer desires to purchase certain assets from Seller, and Seller
desires to sell certain assets to Buyer, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, simultaneously with the execution of this Agreement, Wrangler
Clothing Corp. ("WRANGLER"), a Delaware corporation and subsidiary of Buyer,
CHIC and Seller are executing an Interim License Agreement pursuant to which
Wrangler grants to CHIC and Seller a license to produce and sell certain "Core
Products", as defined below, utilizing the Purchased Assets, through April 30,
2000 and certain "Non-Core Products", as defined below, utilizing the Purchased
Assets, through June 30, 2000 (the "INTERIM LICENSE AGREEMENT"), VF Jeanswear,
Inc. ("JEANSWEAR"), an Alabama corporation and subsidiary of Buyer, and CHIC are
executing a Contract for Outside Purchase of Garments or C.M.T. Services
relating to the manufacture and distribution of certain products by CHIC for
Jeanswear (the "OUTSIDE PURCHASE CONTRACT"), and Buyer and CHIC are executing a
Letter Agreement relating to the acquisition by Buyer of H.I.S Sportswear AG
("HIS"), including the shares of H.I.S owned by CHIC (the "LETTER AGREEMENT");
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01 DEFINITIONS
(a) The following terms, as used herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.
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"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
Allocation 2.04
Closing 2.05
Damages 9.02
Excluded Assets 2.02
Excluded Liabilities 2.03
Indemnified Party 9.03
Indemnifying Party 9.03
Intellectual Property Assets 2.01
License Agreements 3.09
Permitted Liens 3.08
Pre-Closing Tax Period 7.01
Purchased Assets 2.01
Purchase Price 2.04
Required Consents 3.05
Tax 7.01
Taxing Authority 7.01
Transfer Taxes 7.03
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01 PURCHASE AND SALE. Except as otherwise provided below, upon
the terms and subject to the conditions of this Agreement, Buyer agrees to
purchase from Seller and Seller agrees to sell, convey, transfer, assign and
deliver, or cause to be sold, conveyed, transferred,
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assigned and delivered, to Buyer (or its designee) at the Closing, free and
clear of all Liens, other than Permitted Liens, all of Seller's right, title and
interest in, to and under the following assets:
(a) ______ the registered and unregistered trademarks, tradenames,
service marks, domain names, patents and patent applications of the Seller
listed on Schedule 2.01 (A), together with any other registered and
unregistered trademarks, tradenames, service marks, domain names, patents
and patent applications of the Seller related to the CHIC brand worldwide
and the H.I.S. brand everywhere in the world except for Europe, as well as
all copyrights, trade secrets and know-how (including, without limitation,
patterns, designs, fits, techniques, customer lists and preferences and
manufacturing tolerances), and all common law or use based rights in any of
the foregoing and all goodwill associated with the Business (the
"INTELLECTUAL PROPERTY ASSETS");
(b) ______ Seller's rights under or pursuant to the licenses listed on
Schedule 2.01(B) hereto (including any royalties or other monies paid by
any licensee thereunder that accrue on or after the Closing Date) (the
"ASSUMED, LICENSES") and all files and correspondence relating thereto;
(c) ______ all Seller's books, records, files, papers and archives,
whether in hard copy or computer (or other intangible) format, relating to
the utilization of the Intellectual Property Assets and Assumed Licenses,
including, without limitation, all advertising, sales records, sales and
promotional literature, manuals and data, sales and purchase
correspondence, lists of present and former suppliers and lists of present
and former customers in Seller's possession;
(d) ______ Seller's order book for all orders of core products, as set
forth in Schedule 2.01(C) (the "CORE PRODUCTs"), not shipped by May 1, 2000
or such later date as shall be mutually agreed by the parties hereto and
for all orders of non-core products, as set forth in Schedule 2.01(D) (the
"NON-CORE PRODUCTS"), not shipped by July 1, 2000 or such later date as
shall be mutually agreed by the parties hereto; and
(e) ______ upon election of Buyer, any inventory existing on or before
April 30, 2000 relating to the Core Products that Buyer elects to purchase
at Seller's standard cost and inventory existing on or before June 30, 2000
relating to the Non-Core Products that Buyer elects to purchase at a price
negotiated with Seller.
Those assets listed in (a) through (d) above are hereinafter referred to
collectively as the "PURCHASED ASSETS."
Notwithstanding the foregoing, Seller retains the right to use the patterns
and fits associated with the Intellectual Property Assets; PROVIDED, however,
that Seller shall not have the right to use and shall not use the patterns and
fits associated with the Intellectual Property Assets to solicit sales, orders
or business from any person.
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SECTION 2.02 EXCLUDED ASSETS. Buyer expressly understands and agrees that
any asset of the Seller other than the Purchased Assets (the "EXCLUDED ASSETS")
shall be excluded from the Purchased Assets.
SECTION 2.03 EXCLUDED LIABILITIES. Notwithstanding any provision in this
Agreement or any other writing to the contrary, but subject to Article ?, Buyer
is not assuming any liability or obligation of CHIC or Seller (or any
predecessor of CHIC or Seller or any prior -owner of all or part of its
businesses and assets) of whatever nature, whether presently in existence or
arising hereafter, including but not limited to any liabilities with respect to
any employees or former employees of CHIC or Seller and any liabilities with
respect to any pending (or future, if arising from actions by CHIC or Seller)
litigation related to the Purchased Assets. All such liabilities and obligations
shall be retained by and remain obligations and liabilities of CHIC or Seller,
as the case may be (all such liabilities and obligations being herein referred
to as the "EXCLUDED LIABILITIES").
SECTION 2.04 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE. (a) The purchase
price for the Purchased Assets (the "PURCHASE PRICE") is $10,000,000 in cash.
The Purchase Price shall be paid as provided in Section 2.05.
(b) ______ The Purchase Price shall be allocated among the Purchased Assets
as set forth in Schedule 2.04(B) hereof, which allocation is intended to comply
with Code Section 1060 and the regulations promulgated thereunder, to the extent
applicable (the "ALLOCATION").
(c) ______ Each of Seller and Buyer agrees to (i) be bound by the
Allocation, (ii) act in accordance with the Allocation in the preparation of
financial statements and filing of all Tax returns (including, without
limitation, filing Form 8594 with its federal income Tax return for the taxable
year that includes the date of the Closing) and in the course of any Tax audit,
Tax review or Tax litigation relating thereto and (iii) take no position and
cause its Affiliates to take no position inconsistent with the Allocation for
Federal and State Tax purposes.
(d) ______ Upon request by either Buyer or Seller, Seller or Buyer, as the
case may be, shall deliver to the other party a copy of its Form 8594.
SECTION 2.05 CLOSING. The closing (the "CLOSING") of the purchase and sale
of the Purchased Assets hereunder shall take place at the offices of Davis Polk
& Wardwell, 450 Lexington Avenue, New York, New York, as soon as possible, but
in no event later than 10 business days, after satisfaction of the conditions
set forth in Article 8, or at such other time or place as Buyer and Seller may
agree. At the Closing:
(a) ______ Buyer shall deliver to Seller $ 10,000,000, less any
amounts owed to Buyer or any of its Affiliates by CHIC, Seller or any of
their Affiliates, in immediately available funds by wire transfer to an
account of Seller with a bank in New York City designated by Seller, by
notice to Buyer, not later than two business days prior to the Closing Date
(or if not so designated, then by certified or official bank check payable
in immediately available funds to the order of Seller in such amount);
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(b) Seller shall deliver to Buyer a Bill of Sale substantially in the
form attached hereto as Exhibit 2.05(b);
(c) Seller shall deliver to Buyer an Assignment of Trademarks,
Trademark Applications and Trademark Registrations substantially in the
form attached hereto as Exhibit 2.05(c); and
(d) ______ Seller shall deliver to Buyer such bills of sale,
endorsements, consents, assignments and other good and sufficient
instruments of conveyance and assignment as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest
in Buyer or its designated Affiliates all of Seller's right, title and
interest in, to and under the Purchased Assets or otherwise reasonably
necessary or appropriate to effect the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of CHIC and Seller represents and warrants to Buyer as of the date
hereof and as of the Closing Date that:
SECTION 3.01 CORPORATE EXISTENCE AND POWER. Each of CHIC, Chic Licensing
and Siegel is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.
SECTION 3.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by each of CHIC and Seller of this Agreement and the consummation of
the transactions contemplated hereby are within the corporate powers and have
been duly authorized by all necessary corporate action on the part of each CHIC
and Seller. This Agreement constitutes a valid and binding agreement of each
CHIC and Seller enforceable in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by each of CHIC and Seller of this Agreement and the consummation of
the transactions contemplated hereby require no action by or in respect of, or
filing with, any governmental body, agency or official.
SECTION 3.04 NONCONTRAVENTION. The execution, delivery and performance by
each of CHIC and Seller of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate the certificate
of incorporation or bylaws of CHIC or Seller, (ii) violate any applicable
judgment, injunction, order or decree or any law, rule or regulation of the
United States or any State thereof, (iii) assuming the obtaining of all Required
Consents, constitute a material default under or give rise to any right of
termination, cancellation or
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acceleration of any right or obligation of CHIC or Seller under any provision of
any agreement or other instrument binding upon CHIC or Seller or by which any of
the Purchased Assets is or may be bound, or (iv) result in the creation or
imposition of any Lien on any Purchased Asset, other than Permitted Liens.
SECTION 3.05 REQUIRED CONSENTS. Schedule 3.05 sets forth each agreement,
contract or other instrument binding upon CHIC or Seller or any Permit requiring
a consent as a result of the execution, delivery and performance of this
Agreement (each such consent, a "REQUIRED CONSENT" and together the "REQUIRED
CONSENTS").
SECTION 3.06 MATERIAL CONTRACTS. Each Assumed License is a valid and
binding agreement of Seller and is in full force and effect, and none of Seller
or, to the knowledge of Seller, any other party thereto is in default or breach
in any material respect under the terms of any such Assumed License, and, to the
best knowledge of Seller, no event or circumstance has occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder. True and complete copies of each such Assumed License have been
delivered to Buyer.
SECTION 3.07 LITIGATION. Except as set forth in Schedule 3.07, there is no
action, suit, investigation, proceeding, opposition or cancellation pending
against, or to the knowledge of CHIC or Seller, threatened against or affecting,
any Purchased Asset or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement before any court or arbitrator or any governmental body, agency or
official. Except as disclosed on Schedule 3.07, neither CHIC nor Seller has any
outstanding claim, suit, opposition or cancellation for, and neither CHIC nor
Seller has any knowledge of, any continuing infringement of any Intellectual
Property Asset. No Intellectual Property Asset is subject to any outstanding
judgment, injunction, order, decree, opposition, cancellation or agreement
restricting the use thereof by CHIC or Seller with respect to the Business or
restricting the licensing thereof by Seller to any Person.
SECTION 3.08 PROPERTIES. Seller has good title to all Purchased Assets
(whether tangible or intangible). No Purchased Asset is subject to any Lien.
Upon consummation of the transactions contemplated herby, Buyer will have
acquired good and marketable title in and to each of the Purchased Assets, free
and clear of all Liens, except for Permitted Liens.
SECTION 3.09 INTELLECTUAL PROPERTY. (a) Except as set for in Schedule
3.09(A), the Intellectual Property Assets owned or licensed by Seller or any
Affiliate of Seller that are used or held for use in connection with the "CHIC"
brand worldwide and the "H.I.S" brand everywhere in the world except for Europe
are set forth in Schedule 2.01 (A), specifying as to each, as applicable: (i)
the nature of such trademark, tradename, service mark or domain name, (ii) the
owner of record of such trademark, tradename, service mark or domain name, (iii)
the jurisdictions by or in which such trademark, tradename, service mark or
domain name (A) is recognized (without regard to registration) or (B) has been
issued or registered or in which an application for registration is pending,
(iv) the registration or application numbers, (v) the termination or expiration
dates and (vi) whether there exist any restrictions on the scope of such
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marks, including, but not limited to, consent agreements, covenants not to sue,
coexistence agreements or undertakings which could have an equivalent effect.
The items set forth in Schedule 2.01 (A) constitute all of the Intellectual
Property Assets of Seller used or held for use in conducting the Business,
excepting any items set forth in Schedule 3.09(A). All rights to the
Intellectual Property Assets are held by the Seller and none are held by CHIC.
(b) ______ Schedule 3.09(B) sets forth a list of all licenses, sublicenses
and other agreements (the "LICENSE AGREEMENTS") as to which Seller or any of its
Affiliates is a party and pursuant to which any Person is authorized to use any
Intellectual Property Asset, including (i) the identity of all parties thereto,
(ii) a description of the nature and subject matter thereof, (iii) the
applicable royalty and (iv) the term thereof.
(c) ______ Neither CHIC nor Seller has entered into any agreement to
indemnify any other Person against any charge of infringement or
misappropriation of any Intellectual Property Asset.
SECTION 3.10 FINDERS' FEES. Except for The Blackstone Group, whose fees
will be paid by Seller, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
CHIC or Seller who might be entitled to any fee or commission in connection from
Buyer or any of its Affiliates with the transactions contemplated by this
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to CHIC and Seller as of the date hereof and
as of the Closing Date that:
SECTION 4.01 CORPORATE EXISTENCE AND POWER. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
Pennsylvania.
SECTION 4.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby are within the corporate powers of Buyer and have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a valid and binding agreement of Buyer enforceable in
accordance with its terms, except as (i) the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
SECTION 4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency or official.
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SECTION 4.04 NONCONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) violate the certificate of incorporation or
bylaws of Buyer or (ii) assuming compliance with the matters referred to in
Section 4.03, violate any applicable judgment, injunction, order or decree or
any law, rule or regulation of the United States or any State thereof.
SECTION 4.05 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer, threatened against
Buyer, with challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement before any court or arbitrator
or any governmental body, agency or official.
SECTION 4.06 FINDERS' FEES. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission from Seller or
any of its Affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE 5
COVENANTS OF SELLER
Each of CHIC and Seller agrees that:
SECTION 5.01 CHANGE OF NAME; USE OF MATERIALS. As soon as practicable
following the Closing, each of CHIC and Seller shall itself and shall cause each
of its subsidiaries to, amend its certificate of incorporation and bylaws to
change its name such that it does not include any reference to any Intellectual
Property Asset, including without limitation the words "CHIC," "H.I.S.," Henry
I. Siegel" or any similar word or derivative of such words. Each of CHIC and
Seller shall, within 60 days after the Closing Date, discontinue its use of any
materials bearing any Intellectual Property Asset or any similar word or
derivative thereof, including without limitation, packaging, stationery and
labels, that is not acquired by Buyer pursuant to Section 2.01, PROVIDED
however, that Seller shall have the right to dispose of any inventory related to
the "Core Products" existing and owned by Seller as of April 30, 2000, or such
later date as shall be mutually agreed by the parties hereto, and any inventory
related to the "Non-Core Products" existing and owned by Seller as of June 30,
2000, or such later date as shall be mutually agreed by the parties hereto,
regardless of whether such inventory bears any Intellectual Property Asset,
without the approval of Buyer for any disposition to a purchaser listed in
Schedule 5.01(A) and subject to the approval of Buyer of the method of
disposition, which approval shall not be withheld unreasonably, for any
disposition to a purchaser not listed in Schedule 5.01(A).
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ARTICLE 6
COVENANTS OF BUYER AND SELLER
Buyer, CHIC and Seller agree that:
SECTION 6.01 BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions of this Agreement, Buyer, CHIC and Seller will use their best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. CHIC, Seller and
Buyer agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer good and marketable title to
the Purchased Assets.
SECTION 6.02 CERTAIN FILINGS. CHIC, Seller and Buyer shall cooperate with
one another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
SECTION 6.03 PUBLIC ANNOUNCEMENTS, CONFIDENTIALITY. (a) The parties agree
to consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation and mutual agreement among
the parties.
(b) ______ After the Closing, CHIC, Buyer, Seller and their Affiliates will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Business, except to the extent that such information
can be shown to have been previously known on a nonconfidential basis by the
party holding such information, in the public domain through no fault of the
party holding such information or later lawfully acquired by the party holding
such information from sources other than CHIC, the Seller or related to Seller's
prior ownership of the Business; provided that Buyer may disclose such
information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by Buyer of
the confidential nature of such information and are directed by Buyer to treat
such information confidentially. The obligation of Buyer, CHIC, Seller and their
Affiliates to hold any such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their
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own similar information. This Agreement shall supersede the Confidentiality
Agreement entered into by VF and CHIC on October 5, 1999.
SECTION 6.04 TRADEMARKS; TRADENAMES. After the Closing, none of CHIC,
Seller or Buyer shall be obligated to change the trademarks, tradenames, service
marks, domain names, patents and patent applications on any materials in the
hands of dealers, distributors and customers as of the Closing Date.
ARTICLE 7
TAX MATTERS
SECTION 7.01 TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"PRE-CLOSING TAX PERIOD" means (i) any Tax period ending on or before the
Closing Date and (ii) with respect to a Tax period that commences before but
ends after the Closing Date, the portion of such period up to and including the
Closing Date.
"TAX" means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, registration, recording, documentary, conveyancing,
gains, withholding on amounts paid to or by CHIC or Seller, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any governmental
authority (a "Taxing Authority") responsible for the imposition of any such tax
(domestic or foreign), and (ii) liability for the payment of any amounts of the
type described in (i) as a result of being party to any agreement or any express
or implied obligation to indemnify any other Person.
SECTION 7.02 TAX MATTERS. Each of CHIC and Seller hereby represents,
warrants and covenants to Buyer that:
(a) ______ as of the date hereof and as of the Closing Date, each of
CHIC and Seller has timely paid all Taxes payable by it for all Pre-Closing
Tax Periods which are required to have been paid on or prior to the Closing
Date, the non-payment of which would result in a Lien on any Purchased
Asset or would result in Buyer becoming liable or responsible therefor.
(b) ______ Each of CHIC and Seller will timely pay all unpaid Tax
liabilities or assessments which arise from or with respect to the
Purchased Assets or the operation of the Business and are incurred in or
attributable to any Pre-Closing Tax Period, the non- payment of which would
result in a Lien on any Purchased Asset or would result in Buyer becoming
liable therefor.
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It is the parties' understanding that all Tax liabilities or obligations of
CHIC, Seller and their Affiliates are Excluded Liabilities.
SECTION 7.03 TAX COOPERATION; ALLOCATION OF TAXES. (a) Buyer, CHIC, and
Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the
Purchased Assets (including, without limitation, access to books and records) as
is reasonably necessary for the filing of all Tax returns, the making of any
election relating to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax. Buyer and Seller shall retain all books and records with
respect to Taxes pertaining to the Purchased Assets for a period of at least six
years following the Closing Date. At the end of such period, each party shall
provide the other with at least ten days, prior written notice before destroying
any such books and records, during which period the party receiving such notice
can elect to take possession, at its own expense, of such books and records.
CHIC, Seller and Buyer shall cooperate with each other in the conduct of any
audit or other proceeding relating to Taxes involving the Purchased Assets.
(b) ______ All personal property taxes and similar AD VALOREM obligations
levied with respect to the Purchased Assets for a taxable period which includes
(but does not end on) the Closing Date shall be apportioned between Seller and
Buyer based on the number of days of such taxable period included in the
Pre-Closing Tax Period and the number of days of such taxable period after the
Closing Date. Seller shall be liable for the proportionate amount of such taxes
that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable
for the remainder of such taxes. Upon receipt of any bill for such taxes
relating to the Purchased Assets, each of Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which each
is entitled under this Section 7.03(b), 7.03(c) together with such supporting
evidence as is reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other within 10 days
after delivery of such statement.
(c) ______ All excise, sales, use, value added, business and occupation,
registration, stamp, recording, documentary, conveyancing, franchise, property,
transfer, gains and similar Taxes, levies, charges and fees (collectively,
"TRANSFER TAXES") incurred in connection with the transactions contemplated by
this Agreement shall be borne by Seller. Buyer and Seller shall cooperate in
providing each other with any appropriate resale exemption certifications and
other similar documentation. The party that is required by applicable law to
make the filings, reports, or returns with respect to any applicable Transfer
Taxes shall do so, and the other party shall cooperate with respect thereto as
necessary, including, without limitation, in any audit or assessment proceeding.
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ARTICLE 8
CONDITIONS TO CLOSING
SECTION 8.01 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following
conditions:
(a) ______ (i) Each of CHIC and Seller shall have performed in all
material respects all of its obligations hereunder required to be performed
by it on or prior to the Closing Date, (ii) the representations and
warranties of each of CHIC and Seller contained in this Agreement and in
any certificate or other writing delivered by CHIC or Seller pursuant
hereto shall be true in all material respects at and as of the Closing Date
and (iii) Buyer shall have received certificates signed by the President
and Secretary of each of CHIC and Seller to the foregoing effect.
(b) ______ There shall not be threatened or pending any action or
proceeding by any Person before any court or governmental authority or
agency, domestic or foreign, (i) seeking to restrain, prohibit or otherwise
interfere with the ownership or operation by Buyer or any of its Affiliates
of all or any material portion of the Purchased Assets or the business or
assets of Buyer or any of its Affiliates or to compel Buyer or any of its
Affiliates to dispose of all or any material portion of the Purchased
Assets or of Buyer or any of its Affiliates or (ii) seeking to require
divestiture by Buyer or any of its Affiliates of any Purchased Assets.
(c) ______ There shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the purchase of the Purchased
Assets, by any court, government or governmental authority or agency,
domestic or foreign, that, in the reasonable judgment of Buyer could,
directly or indirectly, result in any of the consequences referred to in
clauses 8.01(b)(i) and 8.01(b)(ii) above.
(d) ______ Buyer shall have received an opinion of Proskauer Rose LLP,
counsel to CHIC and Seller, dated the Closing Date substantially in the
form of Exhibit 8.01(d).
(e) ______ CHIC and Seller shall have received all Required Consents
in form and substance reasonably satisfactory to Buyer, and no such
consent, authorization or approval shall have been revoked.
(f) ______ Buyer shall have received all documents it may reasonably
request relating to the existence of CHIC and Seller and the authority of
CHIC and Seller for this Agreement, all in form and substance reasonably
satisfactory to Buyer.
(g) ______ CHIC and Seller shall have executed simultaneously
herewith, in forms satisfactory to Buyer, the Interim License Agreement,
and CHIC shall have executed
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simultaneously herewith, in forms satisfactory to Buyer, the Outside
Purchase Contract and the Letter Agreement.
SECTION 8.02 CONDITIONS TO OBLIGATION OF CHIC AND SELLER. The obligation of
CHIC and Seller to consummate the Closing is subject to the satisfaction of the
following conditions:
(a) ______ (i) Buyer shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Closing Date, (ii) the representations and warranties of Buyer
contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date and (iii)
CHIC and Seller shall have received a certificate signed by the President
or any Vice President of Buyer to the foregoing effect.
(b) ______ there shall not be threatened or pending any action or
proceeding by any Person before any court or governmental authority or
agency, domestic or foreign, (i) seeking to restrain, prohibit or otherwise
interfere with the ownership or operation by CHIC, Seller or any of their
Affiliates of all or any material portion of the Purchased Assets or the
business or assets of CHIC, Seller of any of their Affiliates or to compel
Seller or any of their Affiliates to dispose of all or any material portion
of the Purchased Assets or CHIC, of Seller or any of their Affiliates or
(ii) seeking to require divestiture by CHIC, Seller of any of their
Affiliates of any Purchased Assets.
(c) ______ There shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the purchase of the Purchased
Assets, by any court, government or governmental authority or agency,
domestic or foreign, that, in the reasonable judgment of Seller could,
directly or indirectly, result in any of the consequences referred to in
clauses 8.01(b)(i) and 8.01(b)(ii) above.
(d) CHIC and Seller shall have received, dated as of the Closing Date,
an opinion of Candace S. Cummings, Esq., substantially in the form of
Exhibit 8.02(d) and an opinion of Davis Polk & Wardwell, substantially in
the form of Exhibit 8.02(e).
(e) ______ Buyer shall have received all consents, authorizations and
approvals required as a result of Buyer's execution, delivery and
performance of this Agreement in form and substance reasonably satisfactory
to CHIC and Seller, and no such consent, authorization or approval shall
have been revoked.
(f) ______ CHIC and Seller shall have received all documents they may
reasonably request relating to the existence of Buyer and the authority of
Buyer for this Agreement, all in form and substance reasonably satisfactory
to CHIC and Seller.
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(g) ______ Buyer shall have executed simultaneously herewith, in forms
satisfactory to CHIC and Seller, the Interim License Agreement, the Outside
Purchase Contract and the Letter Agreement.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
SECTION 9.01 SURVIVAL. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
until three years following the Closing Date; PROVIDED that the representations,
warranties and covenants contained in Article 7 shall survive until expiration
of the statute of limitations applicable to the matters covered thereby (giving
effect to any waiver, mitigation or extension thereof, if later. Notwithstanding
the preceding sentence, any representation or warranty in respect of which
indemnity may be sought under this Agreement shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence, if a claim of
indemnity shall have been given to the party against whom such indemnity may be
sought prior to such time.
SECTION 9.02 INDEMNIFICATION. (a) Each of CHIC and Seller hereby
indemnifies Buyer and its Affiliates against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
("DAMAGES") incurred or suffered by Buyer or any of its Affiliates arising out
of or relating to:
(i) any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by CHIC or Seller pursuant to this Agreement;
(ii) any Excluded Liability; or
(iii) ____ any License Agreement to the extent such Damages arise from
conduct of CHIC or Seller on or prior to the Closing Date, provided that
(A) CHIC and Seller shall not be liable under Section 9.02(a) unless the
aggregate amount of Damages with respect to all matters referred to in
Section 9.02(a)(i) (determined without regard to any materiality
qualification contained in any representation, warranty or covenant giving
rise to the claim for indemnity hereunder) exceeds $250,000 and then only
to the extent of such excess and (B) CHIC and Sellers maximum liability
under the Agreement shall not exceed $10,000,000.
(b) ______ Buyer hereby indemnifies CHIC, Seller and their Affiliates
against and agrees to hold each of them harmless from any and all Damages
incurred or suffered by CHIC, Seller or any of their Affiliates arising out of
(i) any misrepresentation or breach of warranty, covenant or agreement made or
to be performed by Buyer pursuant to this Agreement, or (ii) any Assumed
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Liability but only to the extent such Damages arise from conduct of the Buyer
after the Closing Date with respect to such Assumed Liability.
SECTION 9.03 PROCEDURES. The party seeking indemnification under Section
9.02 (the "INDEMNIFIED PARTY") agrees to give prompt notice to the party against
whom indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of which
indemnity may be sought under such Section. The failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder, except to the extent such failure shall have adversely prejudiced the
Indemnifying Party. The Indemnifying Party shall participate in and control the
defense of any such suit, action or proceeding at its own expense, PROVIDED,
that the Indemnified Party shall have the right to participate in the defense of
such suit, action or proceeding and to employ counsel at its own expense; and
PROVIDED FURTHER, that Indemnifying Party shall not enter into any settlement or
judgment of any claim, litigation or proceeding involving the Indemnified Party
without the Indemnified Party's consent unless such settlement or judgment (i)
provides for a release of all claims against the Indemnified Party and (ii)
requires no action other than the payment of money. The Indemnifying Party shall
not be liable under Section 9.02 for any settlement effected without its consent
of any claim, litigation or proceeding in respect of which indemnity may be
sought hereunder.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Buyer, to:
VF Corporation
628 Green Valley Road
Suite 500
Greensboro, NC 27408
Attention: Candace S. Cummings
Fax: (336) 547-7630
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William L. Rosoff
Fax: (212) 450-4800
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if to CHIC or Seller, to:
Chic By H.I.S, Inc.
1372 Broadway
New York New York 10018
Attention: Daniel Rubin
Fax: (212) 302-6636
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Arnold S. Jacobs
Fax: (212) 969-2900
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
SECTION 10.02 AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) ______ No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.03 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
SECTION 10.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to purchase all or a portion of the Purchased Assets, but
no such transfer or assignment will relieve Buyer of its obligations hereunder.
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SECTION 10.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York without regard to
the conflicts of law rules of such state.
SECTION 10.06 DISPUTE RESOLUTION. If a dispute relating to this Agreement
arises between the parties, the following procedure shall be implemented before
either party pursues other available remedies. The parties shall hold a meeting
promptly, attended by the persons with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of the dispute. If
not resolved at such meeting, the parties shall continue to attempt in good
faith to negotiate a resolution of the dispute for 10 days after such meeting.
If within 10 days after such meeting the parties have not succeeded in
negotiating a resolution of the dispute, Buyer, CHIC and Seller shall mutually
agree upon and select an independent businessman who will be required to analyze
the nature of the dispute and mediate between the parties all within a 90 day
period. Seller (or CHIC) and Buyer will bear equally the costs of the mediation.
The parties agree to participate in good faith in the mediation and negotiations
related thereto. If the parties are not successful in resolving the dispute
through the mediation, then the parties may agree to submit the matter to
binding arbitration or a private adjudicator, or any party may seek to resolve
the dispute by litigation in an appropriate court of jurisdiction.
SECTION 10.07 JURISDICTION. Except as otherwise expressly provided in this
Agreement, any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in the United States
District Court for the Southern District of New York or any other New York State
court sitting in New York City, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 10.01
shall be deemed effective service of process on such party.
SECTION 10.08 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
BETWEEN THE PARTIES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.09 COUNTERPARTS, THIRD PARTY BENEFICIARIES. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
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SECTION 10.10 ENTIRE AGREEMENT. This Agreement, the Bill of Sale and the
Assignment of Trademarks, Trademark Applications and Trademark Registrations
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
SECTION 10.11 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
VF CORPORATION
By: /S/ MACKEY J. MCDONALD
--------------------------
Name: Mackey J. McDonald
Title: Chairman, President and CEO
CHIC BY H.I.S, INC.
By: --------------------------
Name:
Title:
CHIC BY H.I.S. LICENSING
CORPORATION
By: --------------------------
Name:
Title:
HENRY I. SIEGEL COMPANY, INC.
By: --------------------------
Name:
Title:
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