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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
BELK, INC.
AND
THE BON-TON STORES, INC.
DATED AS OF OCTOBER 25, 2006
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.............................................
1
Section 1.1
Definitions.............................................
1
Section 1.2
Interpretation..........................................
11
ARTICLE II
PURCHASE AND SALE.......................................
12
Section 2.1
Purchase and
Sale of Assets............................. 12
Section 2.2
Unassignable
Contracts.................................. 16
Section 2.3
Assumption of
Liabilities............................... 17
Section 2.4
Leased
Department Agreements and Equipment Lease
Agreements..............................................
20
ARTICLE III PURCHASE
PRICE.......................................... 21
Section 3.1
Purchase
Price.......................................... 21
Section 3.2
Allocation of
Purchase Price; Transfer Tax Valuation.... 23
ARTICLE IV
CLOSING.................................................
23
Section 4.1
Closing
Date............................................ 23
Section 4.2
Payment on the
Closing Date............................. 24
Section 4.3
Buyer's
Additional Closing Date Deliveries.............. 24
Section 4.4
Seller's Closing
Date Deliveries........................ 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER................
25
Section 5.1
Organization of
Seller; Power and Authority of Seller... 26
Section 5.2
Authority of
Seller; Conflicts.......................... 26
Section 5.3
Financial
Statements.................................... 27
Section 5.4
Operations Since
Financial Statements Date.............. 27
Section 5.5
Taxes...................................................
29
Section 5.6
Governmental
Permits.................................... 29
Section 5.7
Real
Property........................................... 29
Section 5.8
Personal
Property Leases................................ 30
Section 5.9
Intellectual
Property................................... 30
Section 5.10
Title to
Property....................................... 32
Section 5.11
No Violation,
Litigation or Regulatory Action........... 32
Section 5.12
[Intentionally
Blank]................................... 33
Section 5.13
Status of
Contracts..................................... 33
Section 5.14
ERISA...................................................
33
Section 5.15
Environmental
Compliance................................ 34
Section 5.16
Employee Relations and
Agreements....................... 35
Section 5.17
Sufficiency of
Assets................................... 36
Section 5.18
No
Brokers.............................................. 37
Section 5.19
No Investigation by
Buyer............................... 37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.................
37
Section 6.1
Organization of
Buyer................................... 37
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Section 6.2
Authority of
Buyer; Conflicts........................... 37
Section 6.3
No Violation,
Litigation or Regulatory Action........... 38
Section 6.4
Financing...............................................
38
Section 6.5
No
Brokers.............................................. 38
ARTICLE VII ACTION
PRIOR TO THE CLOSING DATE........................ 39
Section 7.1
Access to
Information................................... 39
Section 7.2
Notifications...........................................
39
Section 7.3
Consents of
Third Parties; Governmental Approvals....... 40
Section 7.4
Operations Prior
to the Closing Date.................... 41
Section 7.5
Ancillary
Agreements.................................... 43
Section 7.6
Private
Brands.......................................... 43
Section 7.7
Remittance of
Cash Receipts............................. 44
Section 7.8
Software
Issues......................................... 44
Section 7.9
No
Solicitation......................................... 45
ARTICLE VIII ADDITIONAL
AGREEMENTS................................... 46
Section 8.1
Use of
Names............................................ 46
Section 8.2
Tax
Matters............................................. 47
Section 8.3
Employees and
Employee Benefits......................... 49
Section 8.4
Insurance; Risk
of Loss................................. 53
Section 8.5
Consents................................................
53
Section 8.6
Fees and
Expenses....................................... 54
Section 8.7
Gift Cards, Etc;
Return Policies........................ 54
Section 8.8
HIPAA
Confidentiality................................... 56
Section 8.9
Mortgages and
Other Encumbrances........................ 56
Section 8.10
Lease
Proration......................................... 57
Section 8.11
Certain
Litigation...................................... 57
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............
59
Section 9.1
No
Order................................................ 59
Section 9.2
Representations
and Warranties.......................... 59
Section 9.3
Performance of
Obligations.............................. 59
Section 9.4
Consents,
Estoppels and Releases........................ 60
Section 9.5
Closing
Certificate..................................... 60
Section 9.6
Store Material
Adverse Effect........................... 60
Section 9.7
Partridge Creek
Amendment............................... 60
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...........
60
Section 10.1
No
Order................................................ 60
Section 10.2
Representations and
Warranties.......................... 60
Section 10.3
Performance of
Obligations.............................. 61
Section 10.4
Closing
Certificate..................................... 61
Section 10.5
Partridge Creek
Amendment............................... 61
ARTICLE XI
INDEMNIFICATION.........................................
61
Section 11.1
Indemnification by
Seller............................... 61
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Section 11.2
Indemnification by
Buyer................................ 62
Section 11.3
Notice of
Claims........................................ 64
Section 11.4
Determination of
Amount................................. 64
Section 11.5
Third Person
Claims..................................... 64
Section 11.6
Limitations.............................................
66
Section 11.7
Mitigation..............................................
66
ARTICLE XII
TERMINATION.............................................
67
Section 12.1
Termination.............................................
67
Section 12.2
Notice of
Termination................................... 68
Section 12.3
Effect of
Termination................................... 68
ARTICLE XIII
MISCELLANEOUS...........................................
68
Section 13.1
Survival of
Representations and Warranties.............. 68
Section 13.2
Governing
Law........................................... 68
Section 13.3
No Public
Announcement.................................. 68
Section 13.4
Notices.................................................
68
Section 13.5
Successors and
Assigns.................................. 69
Section 13.6
Access to Records
after Closing......................... 69
Section 13.7
Entire Agreement;
Amendments............................ 70
Section 13.8
Interpretation..........................................
70
Section 13.9
Waivers.................................................
71
Section 13.10
Partial Invalidity......................................
71
Section 13.11
Execution in Counterparts...............................
71
Section 13.12
Further Assurances......................................
71
Section 13.13
Disclaimer of Warranties................................
72
Section 13.14
Specific Performance....................................
72
Section 13.15
Waiver of Jury Trial....................................
72
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EXHIBITS
A Assignment and
Assumption Agreement (Real Estate)
B Bill of Sale,
Assignment and Assumption Agreement
C Seller
Registered IP
D Form of
Warranty Deed
E Contracts
F Register Cash
by Store
G Store
Employees
H Owned Real
Estate
I Leased Real
Estate
J Intellectual
Property Assets
K Customer
Information
L Software
M Excluded
Contracts
N Leased
Department Agreements
O Equipment
Agreements
P Form of
Section 1445 Affidavit
Q Transition
Services Agreement
R IP License
Agreement
S Private Brands
Agreement
T Retained Names
and Marks
U Inventory
Valuation
V Estoppel
Letters
iv
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SCHEDULES
1.1(b)
Permitted Encumbrances
1.1(c)
Title Policies and Commitments
5.2
No Conflicts
5.3
Specified Store Financial Statements
5.4
Operations Since Financial Statements Date
5.6
Government Permits
5.7(a)(i)
Leased Real Estate
5.7(a)(ii) Owned
Real Estate
5.7(b)
Zoning and Condemnation Matters
5.7(c)
Real
Estate Defaults
5.8
Personal Property Leases
5.9(a)
Registered Intellectual Property
5.9(b)
Software
5.9(c)
Intellectual Property Included in Assets
5.9(d)
Registrations of Registered Intellectual Property and Software
5.9(e)
Infringement of Intellectual Property
5.9(f)
Challenge to Registered Intellectual Property
5.11
Litigation
5.13
Status of Contracts
5.14(a) Seller
Plans
5.14(b) Welfare
and Benefit Plans
5.14(c)
Determination Letters for Qualified Plans
5.15
Environmental Compliance
5.16(a) Store
Employees
5.16(b) Employee
Compensation
5.16(c) Employee
Relations
5.16(d) Unions
5.16(e) Employment
Agreements
5.17
Excluded Assets
7.1
Access Contracts
7.4
Material Changes
7.4(b)(xvi) Private
Brand Orders
7.8
Software
8.7
Gift Programs
9.4(a)
Estoppel Certificates
9.4(b)
Encumbrances
v
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of October 25, 2006 (this
"Agreement"), by and between Belk, Inc., a Delaware corporation
("Seller"), and
The Bon-Ton Stores, Inc., a Pennsylvania corporation ("Buyer").
PRELIMINARY STATEMENT:
WHEREAS, Seller is engaged in the business of owning and
operating
retail department stores; and
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of August
1,
2006 (the "Stock Purchase Agreement"), between Seller and Saks
Incorporated, a
Tennessee corporation ("Saks"), Seller purchased from Saks, and
Saks sold to
Seller, all of the capital stock of the Saks subsidiaries Parisian
Stores, Inc.,
an Alabama corporation, Parisian Wholesalers, Inc., an Alabama
corporation, and
Parisian Alabama, Inc., a Delaware corporation (each, a "Company"
and,
collectively, the "Companies") (the "Saks Transaction"); and
WHEREAS, the assets of the Companies acquired by Seller in the
Saks
Transaction included the assets used in the operation of the
following five
Parisian department stores (the "Stores"): Fairfield Commons,
Beavercreek, Ohio;
Circle Center, Indianapolis, Indiana; Meadowbrook Mall, Rochester
Hills,
Michigan; Laurel Park Place, Livonia, Michigan; and Partridge Creek
Fashion
Park, Clinton Township, Michigan; and
WHEREAS, immediately following the consummation of the Saks
Transaction, the Companies were merged with and into Seller, with
Seller as the
surviving corporation; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, certain assets used in the operation of the
Stores, all on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between
Seller and Buyer
as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. In this Agreement, the following terms
have the
meanings specified or referred to in this Section 1.1.
"ACCOUNTS" shall have the meaning specified in the Program
Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
who
directly or indirectly, through one or more intermediaries,
controls, is
controlled by or is under common control with such Person. As used
herein,
"control" means the power to direct the management or affairs of a
Person, and
"ownership" means the beneficial ownership of more than 50% of the
equity
securities of the Person.
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"AGREEMENT" has the meaning specified in the first paragraph of
this
Agreement.
"ALLOCATION SCHEDULE" has the meaning specified in Section
3.2(a).
"ARBITRATOR" has the meaning specified in Section 3.1(b).
"ASSET ACQUISITION PROPOSAL" means any proposal or offer with
respect
to any purchase, directly or indirectly, of all or any significant
portion of
the Assets, whether by merger, consolidation, acquisition or
otherwise (other
than any transaction with Buyer or its Affiliates).
"ASSETS" has the meaning specified in Section 2.1(a).
"ASSIGNMENT AND ASSUMPTION AGREEMENT (REAL ESTATE)" means the
Assignment and Assumption Agreement (Real Estate) in substantially
the form of
Exhibit A, with such modifications thereto as may be necessary to
conform to the
requirements of the applicable Leasehold Interest or Real Estate
Agreement (but
which in any event shall expressly disclaim any representation or
warranty by
Seller or its Affiliates (other than representations and warranties
made in this
Agreement) as provided in Exhibit A), with separate instruments for
each parcel
of Real Estate.
"ASSUMED LIABILITIES" has the meaning specified in Section
2.3(a).
"BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Bill
of
Sale, Assignment and Assumption Agreement in substantially the form
of Exhibit
B.
"BOOKS AND RECORDS" has the meaning specified in Section
2.1(a)(xiii).
"BUSINESS" means the Parisian Business as conducted at the
Stores.
"BUSINESS AGREEMENTS" has the meaning specified in Section
5.13.
"BUYER" has the meaning specified in the first paragraph of
this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments
and
documents being or to be executed and delivered by Buyer under this
Agreement or
in connection herewith.
"BUYER GROUP MEMBER" means (a) Buyer and its Affiliates, (b)
directors, officers and employees of Buyer and its Affiliates and
(c) the
successors and assigns of the foregoing.
"BUYER'S DC PLAN" has the meaning specified in Section 8.3(j).
"BUYER'S PLANS" has the meaning specified in Section
8.3(c)(ii).
"BUYER POS DATE" means the date on which all point-of-sale systems
in
the Stores shall have been converted to the Buyer's systems, which
is expected
to occur in February 2007.
"CHANGE IN LAW" means the adoption, promulgation, modification
or
reinterpretation of any law, rule, regulation, ordinance or order
or any other
Requirement of Law of any Governmental Body that occurs subsequent
to the date
of this Agreement.
"CLAIM NOTICE" has the meaning specified in Section 11.3.
2
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"CLOSING" means the closing of the transfer of the Assets from
Seller
and its Affiliates to Buyer or its permitted assignee.
"CLOSING DATE" has the meaning specified in Section 4.1.
"CLUB LIBBY LU AGREEMENT" means the Club Libby Lu Licensed
Departments
Agreement dated October 2, 2006 between Saks and Seller as in
effect on the date
hereof.
"COBRA" has the meaning specified in Section 8.3(h).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANIES" has the meaning specified in the recitals.
"CONFIDENTIAL INFORMATION" has the meaning specified in Section
8.13(a).
"CONTRACTS" has the meaning specified in Section 2.1(a)(vii).
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court, agency or tribunal
and any award
in any arbitration proceeding.
"CREDIT CARD AGREEMENT" has the meaning specified in Section
7.5(d).
"CUSTOMER INFORMATION" has the meaning specified in Section
2.1(a)(xii).
"CUT-OFF DATE" has the meaning specified in Section 4.1.
"DISCLOSING PARTY" has the meaning specified in Section
8.13(a).
"EFFECTIVE TIME" has the meaning specified in Section 4.1.
"EMPLOYMENT AGREEMENT" means any employment contract, termination
or
severance agreement, change of control agreement or any other
agreement
respecting the terms and conditions of employment or payment of
compensation in
respect to any current or former officer or employee of the
Stores.
"ENCUMBRANCE" means any lien, charge, claim, restriction,
security
interest, encumbrance, mortgage, pledge, easement, conditional sale
or other
title retention agreement, title exception, defect in title or
other restriction
of a similar kind.
"ENVIRONMENTAL LAW" means all Requirements of Law relating to
protection of surface or ground water, drinking water supply, soil,
surface or
subsurface strata or medium, ambient air, pollution control,
health, chemical
use, safety or sanitation or the handling, storage or disposal of
Hazardous
Materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses or
authorizations
required pursuant to any Environmental Law.
"EQUIPMENT" has the meaning specified in Section 2.1(a)(iii).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.1(b).
3
<PAGE>
"EXCLUDED CONTRACTS" means all agreements, arrangements and
understandings relating to the Excluded Liabilities.
"EXCLUDED LIABILITIES" has the meaning specified in Section
2.3(b).
"EXPENSES" means any and all reasonable out-of-pocket expenses
incurred in connection with defending or asserting any claim,
action, suit or
proceeding hereunder (including court filing fees, court costs,
arbitration fees
or costs, costs of investigation, witness fees and reasonable fees
and
disbursements of legal counsel, expert witnesses, accountants and
other
professionals).
"FINANCIAL STATEMENTS DATE" means January 28, 2006.
"FLSA" means the United States Fair Labor Standards Act, as
amended,
and the rules and regulations promulgated thereunder.
"FMLA" means the Family and Medical Leave Act, 29 U.S.C.
Sections
2601-54.
"GE MONEY BANK" means GE Money Bank, a federal savings bank.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other
governmental authority or any court, administrative or regulatory
agency,
department, instrumentality, body or commission.
"GOVERNMENTAL PERMITS" has the meaning specified in Section
5.6.
"GRANT DEEDS" means the warranty deeds in the form attached to
Exhibit
D.
"HAZARDOUS MATERIALS" means any waste, pollutant, contaminant,
hazardous substance, toxic, ignitable, reactive or corrosive
substance,
hazardous waste, hazardous chemicals, petroleum or
petroleum-derived substance
or waste or any constituent of any such substance or waste, the
use, handling or
disposal of which is in any way governed by or subject to any
applicable
Requirement of Law.
"HIPAA" has the meaning specified in Section 8.8.
"HSBC" has the meaning specified in Section 7.10.
"INDEMNIFIED PARTY" has the meaning specified in Section 11.3.
"INDEMNITOR" has the meaning specified in Section 11.3.
"INTELLECTUAL PROPERTY" means any or all of the following and
all
rights, arising out of or associated therewith: (i) all United
States,
international and foreign patents and applications therefor and all
reissues,
divisions, renewals, extensions, provisionals, continuations
and
continuations-in-part thereof; (ii) all inventions (whether
patentable or not),
improvements, technical data, Trade Secrets, and all documentation
relating to
any of the foregoing throughout the world; (iii) all copyrights,
copyright
registrations and applications therefor, and all other rights
corresponding
thereto throughout the world; (iv) all industrial designs and any
registrations
and applications therefor throughout the world; (v) all internet
uniform
resource locators, domain names, trade names, logos, slogans,
designs, common
law trademarks and service marks, trademark and service mark
registrations and
applications therefor throughout the world; (vi) all databases and
data
collections and all rights therein throughout the world; and (vii)
any similar
or equivalent rights to any of the foregoing anywhere in the
world.
4
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"INVENTORY" has the meaning specified in Section 2.1(a)(v).
"INVENTORY ADJUSTMENT" has the meaning specified in Section
3.1(b).
"INVENTORY SCHEDULE" has the meaning specified in Section
3.1(b).
"IP
LICENSE AGREEMENT" has the meaning specified in Section 7.5(b).
"KNOWLEDGE OF BUYER" means, as to a particular matter, the
current
actual knowledge of the executive officers of Buyer (as the term
"executive
officer" is defined in Rule 3b-7 under the Exchange Act).
"KNOWLEDGE OF SELLER" means, as to a particular matter, the
current
actual knowledge of the executive officers of Seller (as the term
"executive
officer" is defined in Rule 3b-7 under the Exchange Act). As to
representations
and warranties of Seller herein related to the Stores, the Assets,
Saks and
Affiliates of Saks, the Parisian Business and the Business given as
of the date
of the closing of the Saks Transaction or as of any date prior to
the closing of
the Saks Transaction, the "Knowledge of Seller" is limited to
information
obtained by or made available to Seller in connection with the
Stock Purchase
Agreement (including the disclosure schedules of Seller related
thereto and all
matters disclosed in or readily discernible from the materials,
documents and
reports made available to Seller in the virtual data room
maintained by Saks and
on the Chicago Title Insurance Company website).
"LABOR LAWS" means all Requirements of Law concerning labor
relations,
unions and collective bargaining, conditions of employment,
employment
discrimination and harassment, wages, hours or occupational safety
and health,
including ERISA, the United States Immigration Reform and Control
Act of 1986,
the United States National Labor Relations Act, the United States
Civil Rights
Acts of 1866 and 1964, the United States Equal Pay Act, the United
States Age
Discrimination in Employment Act, the United States Americans with
Disabilities
Act, the United States Family Medical Leave Act, the United States
Worker
Adjustment and Retraining Notification Act, the United States
Occupational
Safety and Health Act, the United States Davis Bacon Act, the
United States
Walsh-Healy Act, the United States Service Contract Act, United
States Executive
Order 11246, the United States Fair Labor Standards Act and the
United States
Rehabilitation Act of 1973, as each such act is amended, and all
rules and
regulations promulgated under such acts.
"LEASE AGREEMENTS" has the meaning specified in Section 5.7(c).
"LEASED REAL ESTATE" has the meaning specified in Section
2.1(a)(ii).
"LEASEHOLD INTERESTS" has the meaning specified in Section
2.1(a)(ii).
"LOSSES" means any and all liabilities, obligations, losses,
costs,
settlement payments, awards, judgments, fines, penalties, damages,
expenses,
deficiencies or other charges.
"MATERIAL ADVERSE EFFECT" means any change or effect that, when
taken
together with all other changes or effects, has or is reasonably
likely to have
a material adverse effect on the assets, results of operations or
financial
condition of the operation of the Stores, taken as a whole, other
than any
change or effect resulting from or relating to (a) economic
conditions, (b)
global financial or capital markets, (c) the retail department
store industry,
(d) the public disclosure of the transactions contemplated by this
Agreement,
(e) the consummation of the
5
<PAGE>
transactions contemplated by this Agreement or compliance with the
terms of this
Agreement, (f) any Excluded Asset, Excluded Liability or other
asset or property
of Seller or its Affiliates that is not being transferred pursuant
to this
Agreement, (g) any Change In Law or (h) acts of terrorism or war
(whether or not
declared); provided, however, that in the case of each of clauses
(a), (b), (c),
(g) and (h), only to the extent that the material adverse effect on
the Stores
is not materially disproportionate to the adverse effect on the
retail
department store industry generally and the Parisian Business
generally.
"MICHIGAN STORES" means the Stores located in Meadowbrook Mall,
Rochester Hills, Michigan; Laurel Park Place, Livonia, Michigan;
and Partridge
Creek Fashion Park, Clinton Township, Michigan.
"MTO" means the 800 toll free number maintained by Seller for the
sale
of Parisian merchandise in Parisian catalogs.
"OWNED REAL ESTATE" has the meaning specified in Section
2.1(a)(i).
"OUTSTANDING GIFT CARDS" has the meaning specified in Section
8.7(a).
"PARISIAN AUDITED FINANCIAL STATEMENTS" has the meaning specified
in
Section 5.3.
"PARISIAN BUSINESS" means the business of owning and operating
retail
department stores under the nameplate Parisian.
"PARISIAN STORES" has the meaning specified in Section 5.3.
"PARTRIDGE CREEK AMENDMENT" means an amendment to the
Supplemental
Agreement dated July 2006 by and between Partridge Creek Fashion
Park LLC and
Parisian Stores, Inc. in a form reasonably acceptable to Seller and
Buyer.
"PARTRIDGE CREEK CONTRIBUTIONS" means any funds required to be
paid
(whether prior to, on or after the date of this Agreement) by
Partridge Creek
Fashion Park LLC, Partridge Creek Land LLC or Partridge Creek LLC,
or any of
their respective affiliates, successors or assigns, toward the
costs that have
or may in the future be incurred for constructing, fixturing and
equipping the
Store at The Mall at Partridge Creek, pursuant to Article 5 of that
certain
Supplemental Agreement, by and between Partridge Creek Fashion Park
LLC and
Parisian Stores, Inc., dated July 2006.
"PENSION PLAN" means any pension plan, as defined in Section 3(2)
of
ERISA, applied without regard to the exceptions from coverage
contained in
Sections 4(b)(4) or 4(b)(5) thereof.
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other
governmental charges and assessments that are not yet due and
payable or that
are being contested in good faith in accordance with applicable
Requirements of
Law; (b) liens of landlords and liens of carriers, warehousemen,
mechanics and
materialmen and other like liens arising in the ordinary course of
business for
sums not yet due and payable; (c) Encumbrances identified in
Schedule 1.1(b);
(d) source code escrow agreements for Software owned by Seller or
any of its
Affiliates only to the extent listed in Exhibit E; (e) Encumbrances
evidenced by
any security agreement, financing statement, purchase money
agreement,
conditional sales contract, capital lease or operating lease,
6
<PAGE>
or by any license, coexistence agreement, undertaking, declaration,
limitation
of use or consent to use, in each case that is described in Exhibit
E; and (f)
other Encumbrances or imperfections on property that are not
material in amount
or do not materially adversely affect the value, title, possession
or existing
use of the property affected by such Encumbrance or
imperfection.
"PERMITTED REAL PROPERTY EXCEPTIONS" means, collectively, (a)
liens,
charges, encumbrances and exceptions for Taxes and other
governmental charges
and assessments (including special assessments) that are not yet
due and
payable; (b) all Real Estate Agreements; (c) all matters and
exceptions set
forth in the title insurance policies or commitments set forth in
Schedule
1.1(c); (d) liens, charges, encumbrances or title exceptions or
imperfections
with respect to the Owned Real Estate created by or resulting from
the acts or
omissions of Buyer or any of its Affiliates, employees, officers,
directors,
agents, representatives, contractors, invitees or licensees; (e)
liens, charges,
encumbrances and/or title exceptions or imperfections created by
any of the
documents to be executed in connection with the Closing or this
Agreement
(including any reservations, easements, restrictions, covenants and
other
matters set forth in the Grant Deeds) whether prior to, at or after
the Closing;
(f) all matters that may be shown by a current, accurate survey or
physical
inspection of the Owned Real Estate that is available to Buyer on
or prior to
the date of this Agreement; (g) Requirements of Law, including
building and
zoning laws, ordinances and regulations now or hereafter in effect
relating to
the Owned Real Estate; (h) any and all service contracts and
agreements
affecting the Owned Real Estate as of the date hereof, and any and
all service
contracts and agreements entered into after the date of this
Agreement in
accordance with the provisions of this Agreement, in each case, to
the extent in
effect as of the Closing and made available to Buyer on or prior to
the date of
this Agreement; (i) violations of laws, regulations, ordinances,
orders or
requirements, if any, arising out of any Change in Law; (j) any
Permitted
Encumbrance to the extent applicable or relating to, or otherwise
affecting, the
Real Estate; and (k) easements, rights of way, restrictions,
covenants or other
similar matters that are not material in amount or do not
materially adversely
affect the value, title or existing use (or, with respect to the
Partridge Creek
Fashion Park Store, proposed use) of the Real Estate affected by
such easement,
right of way, restriction, covenant or other matter.
"PERSON" means an individual, a partnership, a corporation, a
limited
liability company, an association, a joint stock company, a trust,
a joint
venture, an unincorporated organization or a Governmental Body, or
any
department, agency or political subdivision thereof.
"PRIVATE BRAND MERCHANDISE" means merchandise sold at the
Stores
bearing the private label brands of Saks and other brands owned by
third parties
licensed to Saks.
"PROGRAM AGREEMENT" means that certain Credit Card Program
Agreement
dated as of November 21, 2005 and as amended on each of January 18,
2006 and
September 29, 2006, by and among Belk, Inc., Belk Stores of
Virginia LLC,
Belk-Simpson Company, Greenville, South Carolina, Belk Department
Stores LP,
Belk Accounts Receivable LLC and GE Money Bank.
"PURCHASE ORDERS" has the meaning specified in Section
2.1(a)(vi).
"PURCHASE PRICE" has the meaning specified in Section 3.1(a).
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"REAL ESTATE" has the meaning specified in Section 2.1(a)(ii).
"REAL ESTATE AGREEMENTS" has the meaning specified in Section
2.1(a)(ix).
"RECEIVING PARTY" has the meaning specified in Section 8.13(a).
"REGISTER CASH" means the "register" cash for each store of the
Business in the amount set forth on Exhibit F or vaults of the
stores of the
Business, in the aggregate amounts as set forth in Exhibit F.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including
provisional applications); (ii) registered trademarks and service
marks,
applications to register trademarks and service marks,
intent-to-use
applications or other registrations or applications related to
trademarks and
service marks; (iii) registered copyrights and applications for
copyright
registration; (iv) domain name registrations; and (v) any other
Intellectual
Property that is the subject of an application, certificate,
filing,
registration or other document issued, filed with or recorded with
any federal,
state, local or foreign Governmental Body or other public body.
"REQUIRED CONSENTS" has the meaning specified in Section 8.5.
"REQUIREMENTS OF LAW" means any foreign, federal, state and
local
laws, statutes, regulations, rules, codes or ordinances enacted,
adopted, issued
or promulgated by any Governmental Body.
"RETAINED NAMES AND MARKS" has the meaning specified in Section
8.1(a).
"SAKS" has the meaning specified in the recitals.
"SAKS GIFT PROGRAMS" has the meaning specified in Section
2.3(b)(vi).
"SAKS PLAN" means any Pension Plan or Welfare Plan that is
sponsored
by Saks in which any Store Employees are participating or under
which any
current or former employees of the Stores have accrued any benefits
while
employed by the Saks to which they remain entitled or with respect
to which Saks
has any liability.
"SAKS PRIVATE BRANDS AGREEMENT" means the Private Brands
Agreement
dated October 2, 2006 between Saks and Seller.
"SAKS RETURN POLICIES" has the meaning specified in Section
2.3(b)(vii).
"SAKS SEVERANCE PAY PLAN" means the Saks Incorporated Amended
and
Restated 2000 Change in Control and Material Transaction Severance
Plan.
"SAKS SOFTWARE LICENSE" means the License Agreement dated October
2,
2006, between Seller and Saks.
"SAKS TRANSACTION" has the meaning specified in the recitals.
"SAKS TRANSITION SERVICES AGREEMENT" means the Transition
Services
Agreement dated October 2, 2006 between Saks and Seller.
"SEC" means the United States Securities and Exchange
Commission.
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"SELLER" has the meaning specified in the first paragraph of
this
Agreement.
"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments
and
documents being or to be executed and delivered by Seller under
this Agreement
or in connection herewith.
"SELLER DISCLOSURE SCHEDULE" means the disclosure schedule
delivered
by Seller to Buyer concurrently with the execution of this
Agreement.
"SELLER GIFT PROGRAMS" has the meaning specified in Section
2.3(b)(vi).
"SELLER GROUP MEMBER" means (a) Seller and its Affiliates, (b)
directors, officers and employees of Seller and its Affiliates and
(c) the
successors and assigns of the foregoing.
"SELLER INTELLECTUAL PROPERTY" means any Intellectual Property that
is
owned by Seller or any of its Affiliates and used primarily or
exclusively in
connection with the Stores, including the Seller Software.
"SELLER PLAN" means any Pension Plan or Welfare Plan that is
sponsored
by Seller or any of its Affiliates in which any employees of the
Stores are
participating or under which any current or former employees of the
Stores have
accrued any benefits while employed by Seller or any of its
Affiliates to which
they remain entitled or with respect to which Seller or any of its
Affiliates
has any liability.
"SELLER REBRANDING DATE" means the date on which all of the
Parisian
Stores (other than the Stores) and any other Parisian department
stores not
operated by Seller and its Affiliates shall have been rebranded by
Seller as
Belk stores, which is expected to occur in September 2007.
"SELLER REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered
Intellectual Property owned by or filed in the name of Seller or
any of its
Affiliates and used primarily or exclusively in connection with the
Stores, and
which is identified in Exhibit C.
"SELLER RETURN POLICIES" has the meaning specified in Section
2.3(b)(vii).
"SELLER SOFTWARE" means all Software owned by Seller or any of
its
Affiliates and used primarily or exclusively in connection with the
Stores.
"SELLER'S DC PLAN" has the meaning specified in Section 8.3(j).
"SOFTWARE" means computer software programs and related
documentation
and materials, whether in source code, object code or human
readable form;
provided, however, that Software does not include software that is
available
generally through retail stores, distribution networks or is
otherwise subject
to "shrink-wrap" license or "click-through" agreements including
any software
installed in the ordinary course of business as a standard part of
hardware,
equipment or fixtures owned or operated by Seller or any of its
Affiliates;
provided further, however, that in each such case the use by Buyer
and its
Affiliates of such otherwise excluded software (other than
Microsoft software
for which Seller shall not have any responsibility) does not
require
expenditures, individually or in the aggregate, of $5,000 or more
in any fiscal
year of Buyer.
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"SPECIFIED STORE FINANCIAL STATEMENTS" has the meaning specified
in
Section 5.3.
"STOCK PURCHASE AGREEMENT" has the meaning specified in the
recitals.
"STORE ACCOUNTS" has the meaning specified in Section 7.10.
"STORE ACCOUNTS SALE" has the meaning specified in Section
7.10.
"STORE ACCOUNTS SALE DATE" has the meaning specified in Section
7.10.
"STORE EMPLOYEE" means each individual initially shown in Exhibit G
to
this Agreement at location number 125 (Laurel Park), 151 (Rochester
Hills), 126
(Beavercreek) and 137 (Circle Center), as an active employee on
June 15, 2006,
as such schedule is updated to reflect employees at each such
location as of the
Cut-Off Date and each individual shown as on a leave of absence
under FMLA,
including the date that the twelve week FMLA leave period expires,
with respect
to each such location on a list to be provided by Seller to Buyer
at the Closing
in accordance with Section 8.3(a).
"STORE FINANCIAL STATEMENTS" has the meaning specified in Section
5.3.
"STORE MATERIAL ADVERSE EFFECT" means any change or effect that,
when
taken together with all other changes or effects, has or is
reasonably likely to
have a material adverse effect on the assets, results of operations
or financial
condition of the operation of any of the Stores, individually,
other than any
change or effect resulting from or relating to (a) economic
conditions, (b)
global financial or capital markets, (c) the retail department
store industry,
(d) the public disclosure of the transactions contemplated by this
Agreement,
(e) the consummation of the transactions contemplated by this
Agreement or
compliance with the terms of this Agreement, (f) any Excluded
Asset, Excluded
Liability or other asset or property of Seller or its Affiliates
that is not
being transferred pursuant to this Agreement, (g) any Change In Law
or (h) acts
of terrorism or war (whether or not declared); provided, however,
that in the
case of each of clauses (a), (b), (c), (g) and (h), only to the
extent that the
material adverse effect on the Stores is not materially
disproportionate to the
adverse effect on the retail department store industry generally
and the
Parisian Business generally.
"STORES" has the meaning specified in the recitals.
"STRADDLE PERIOD" means any taxable year or period beginning
before
and ending after the Cut-Off Date.
"TAX" (and, with correlative meaning, "TAXES") means any
federal,
state, local or foreign income, gross receipts, property, sales,
use, license,
excise, franchise, employment, payroll, withholding, alternative or
add-on
minimum, ad valorem, value added, transfer or excise tax, or any
other tax,
custom, duty, governmental fee or other like assessment or charge
of any kind
whatsoever, together with any interest or penalty, imposed by any
Governmental
Body.
"TAX RETURN" means any return, report or similar statement required
to
be filed with respect to any Tax (including any attached
schedules), including
any information return, claim for refund, amended return or
declaration of
estimated Tax.
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<PAGE>
"TRADE SECRETS" means confidential ideas, trade secrets,
know-how,
concepts, methods, processes, formulae, reports, data, customer
lists, mailing
lists, business plans and other proprietary information that
provides the owner
with a competitive advantage.
"TRANSFERRED EMPLOYEES" has the meaning specified in Section
8.3(a).
"TRANSFER TAXES" has the meaning specified in Section
8.2(a)(iv).
"TRANSITION SERVICES AGREEMENT" has the meaning specified in
Section
7.5(a).
"UNASSIGNED CONTRACT" has the meaning specified in Section
2.2(a).
"WARN" means the United States Worker Adjustment and Retraining
Notification Act.
"WARRANTIES" has the meaning specified in Section 2.1(a)(iv).
"WELFARE PLAN" means any welfare plan, as defined in Section 3(1)
of
ERISA, applied without regard to the exceptions from coverage
contained in
Sections 4(b)(4) or 4(b)(5) thereof.
Section 1.2 Interpretation. In this Agreement (including the
exhibits and
schedules to this Agreement):
(a) words denoting the singular include the plural and vice versa,
and
words denoting any gender include all genders;
(b) "including" means "including without limitation;"
(c) "business day" means any day other than a Saturday, a Sunday or
a
day that is a statutory holiday under the laws of the United States
or the State
of New York;
(d) when calculating the period of time within which or
following
which any act is to be done or step taken, the date that is the
reference day in
calculating such period shall be excluded and, if the last day of
such period is
not a business day, the period shall end on the next day that is a
business day;
(e) all dollar amounts are expressed in United States dollars, and
all
amounts payable hereunder shall be paid in United States
dollars;
(f) money shall be tendered by wire transfer of immediately
available
federal funds to the account designated in writing by the party
that is to
receive such money;
(g) references herein to articles, sections, exhibits and
schedules
mean the articles and sections of, and the exhibits and schedules
attached to,
this Agreement; and
(h) the words "hereof," "hereby," "herein," "hereunder" and
similar
terms in this Agreement refer to this Agreement as a whole and not
only to a
particular section in which such words appear.
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<PAGE>
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Assets.
(a) Generally. On the terms and subject to the conditions of
this
Agreement, Seller agrees to, and to cause its Affiliates to,
assign, sell,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase
from Seller
and its Affiliates, all of Seller's and its Affiliates' right,
title and
interest as of the Effective Time in the following property and
assets
(collectively, the "Assets"):
(i) the real property listed on Exhibit H, together with the
buildings, structures, installations, fixtures, trade fixtures and
other
improvements situated thereon and all easements, rights of way and
other
rights, interests and appurtenances of Seller and its Affiliates
therein or
thereunto pertaining (collectively, "Owned Real Estate");
(ii) the leasehold and subleasehold interests of Seller and its
Affiliates in all real property listed on Exhibit I (collectively,
"Leased
Real
Estate" and, together with the Owned Real Estate, the "Real
Estate"),
together with all interests of Seller and its Affiliates in the
leases,
subleases, licenses, occupancy agreements, and other documents
or
agreements related thereto and any and all interests of Seller and
its
Affiliates in the buildings, structures, installations, fixtures,
trade
fixtures and other improvements situated thereon and all easements,
rights
of
way and other rights, interests and appurtenances of Seller and
its
Affiliates therein or thereunto pertaining (collectively with the
Leased
Real
Estate, the "Leasehold Interests");
(iii) the machinery, equipment, furniture, tools, computer
hardware and network infrastructure and spare parts related to
the
operation of the Stores and located on the Real Estate as of the
Effective
Time
(exclusive of Inventory (which is defined in, and subject to,
Section
2.1(a)(v)) (collectively, "Equipment")) and all motor vehicles
primarily or
exclusively for use by Store Employees to the extent primarily
or
exclusively related to the operation of the Stores;
(iv) all warranties or guarantees by any manufacturer, supplier
or
other vendor to the extent primarily or exclusively related to any
of
the
Assets ("Warranties");
(v) the inventory, packaging materials and supplies, in each
case
to
the extent primarily or exclusively related to the operation of
the
Stores and located on the Real Estate as of the Effective Time,
and
inventory, packaging materials and supplies on order or in transit
as of
the
Effective Time, in each case to the extent primarily or
exclusively
related to the operation of the Stores (collectively, the
"Inventory");
(vi) all purchase orders that were assumed by Seller in the
Saks
Transaction or issued by Seller or any of its Affiliates in the
ordinary
course to the extent primarily or exclusively related to the
operation of
the
Stores ("Purchase Orders");
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<PAGE>
(vii) all contracts, guarantees, leases, licenses (including
those relating to concessions or licensed departments), Software
licenses,
commitments and other agreements, in each case to the extent listed
on
Exhibit E and solely related to the operation of the Stores
(exclusive of
Leasehold Interests and Real Estate Agreements, which are subject
to
Section 2.1(a)(ii) and Section 2.1(a)(ix), respectively, exclusive
of the
equipment lease agreements which are subject to Section
2.1(a)(viii), and
exclusive of the Excluded Contracts, which are Excluded Assets)
("Contracts");
(viii) all equipment lease agreements identified on Exhibit O
to
the
extent assumed by Buyer pursuant to Section 2.4(b);
(ix) all reciprocal easement and operating agreements,
agreements
supplemental thereto, easements, Seller's and each of its
Affiliate's
interests as landlord under any leases or subleases, purchase
and
lease-termination options, rights of first refusal or first
offer,
subordination, non-disturbance and attornment agreements, and
other
agreements that run with the land and in each case are appurtenant
to the
Real
Estate and other agreements (other than Leasehold Interests)
that
relate solely to the occupancy or operation of the Real Estate
(collectively, "Real Estate Agreements");
(x) the Intellectual Property identified on Exhibit J;
(xi) the Governmental Permits to the extent solely related to
the
operation of the Stores;
(xii) the information described on Exhibit K ("Customer
Information"); provided, that if Buyer requests that Seller provide
any
Customer Information in any format that differs from the format in
which
Seller or any of its Affiliates maintains such Customer
Information, at the
Closing, Buyer shall pay Seller for any out-of-pocket costs of
Seller or
any
Affiliate of Seller associated with producing such Customer
Information
in
such format. Buyer understands and agrees that neither Seller nor
any of
its
Affiliates will produce any information that would violate any
contractual obligation, violate any Requirement of Law or cause
Seller or
any
of its Affiliates to become a "consumer reporting agency" as
defined in
the
Federal Fair Credit Reporting Act. Seller agrees to, and to cause
its
Affiliates to, retain information regarding customers of the Stores
in
accordance with its existing retention policies and procedures;
(xiii) all sales records, accounting records, purchase records,
supplier lists, advertising and promotional records, real estate
and
engineering data, blueprints and other property records, in each
case to
the
extent solely related to the operation of the Stores;
personnel,
benefits, payroll, medical and other records of all Transferred
Employees,
to
the extent permitted by Requirements of Law; and all other
material
books and records to the extent solely related to the operation of
the
Stores, exclusive of Excluded Customer Information (collectively,
"Books
and
Records"); provided that Seller and its Affiliates shall have the
right
to
keep and use a copy of all Books and Records where necessary to
comply
with
any Requirements of Law or necessary for use in connection with
the
business of Seller or any of its Affiliates, including the
preparation
13
<PAGE>
of
Tax Returns, the administration of Seller Plans, the preparation of
the
financial statements of Seller or any of its Affiliates, or in
connection
with
investigations or litigation; and provided, further, that Seller
shall
have
the right to make such Books and Records available to Saks as
required
by
the Stock Purchase Agreement. If any Books and Records contain
information not related to the Stores, Seller may, before
delivering such
Books and Records to Buyer, redact all information and data
therefrom that
relate to businesses of Seller or any of its Affiliates or the
businesses
of
Saks and its Affiliates other than the operation of the Stores;
(xiv) Register Cash (and cash, check and bank draft receipts on
or
after the Cut-Off Date);
(xv) all rights of Seller or any Company under any refunds,
deposits (other than customer deposits), claims, causes of action,
rights
of
set off and rights of recoupment, in each case to the extent
solely
related to the operation of the Stores (except to the extent that
any
claims, causes of action or rights of set off are specifically
related to
any
Excluded Liability);
(xvi) the Company
Software (including intellectual property
rights related thereto) and all databases and compilations,
including any
and
all data and collections of data, whether machine readable or
otherwise
listed on Exhibit L, and all telephone numbers, domain names and
URL
addresses, in each case to the extent solely related to the
operation of
the
Stores or the Assets, including those listed on Exhibit L;
(xvii) all goodwill of the Business to the extent solely
related
to
the operation of the Stores;
(xviii) the Private Brand Merchandise to the extent located at
the
Stores or on order for the Stores at the Effective Time; provided
that
with
respect to On Order Products (as such term is defined in the
Private
Brands Agreement), Seller shall not have any liability for any
failure or
refusal of a vendor of any such On Order Product to deliver such On
Order
Product to Buyer; and
(xix) all other assets (other than Excluded Assets) of the
nature
of
the assets reflected above to the extent solely related to the
operation
of
the Stores.
(b) Excluded Assets. Seller and its Affiliates are not selling,
and
Buyer is not purchasing, any property or assets not described in
Section 2.1(a)
(the "Excluded Assets"). Without limiting the generality of the
foregoing, the
following property and assets of Seller and its Affiliates
constitute Excluded
Assets, notwithstanding anything to the contrary provided in
Section 2.1(a):
(i) cash (except as provided in Section 2.1(a)(xiv), and
receivables from third-party credit card or debit card sales
transactions
before the Cut-Off Date (regardless of when posted); proceeds from
checks
and bank drafts
accepted before the Cut-Off Date (regardless of when
cleared); payments (including by check or bank draft,
14
<PAGE>
regardless of when cleared) on Accounts or related receivables
received by
Seller or any of its Affiliates before the Cut-Off Date; customer
deposits;
amounts in bank accounts and certificates of deposit, together with
all
other cash equivalents, securities (whether or not marketable)
and
investments;
(ii) all Employment Agreements;
(iii) all unpaid accounts, notes and other miscellaneous
account
receivables in favor of Seller or any of its Affiliates with
respect to the
Stores, together with all collateral security therefor;
(iv) all rights of Seller or any of its Affiliates under any
letters of credit, guaranties, performance or surety bonds or
cash
collateral posted by Seller or any of its Affiliates or Saks or any
of its
Affiliates and to any refunds (or credits) of Taxes to which Seller
is
entitled under Section 8.2 or otherwise with respect to Excluded
Assets;
(v) all Excluded Contracts, including: Seller's or any of its
Affiliate's rights under the contracts, guarantees, licenses,
personal
property leases, commitments and other agreements, warranties and
purchase
orders listed on Exhibit M; Seller's or any of its Affiliate's
rights under
the
contracts, guarantees, licenses, personal property leases,
commitments
and
other agreements, warranties and purchase orders that relate both
to
the
business conducted at the Stores and any other business of Seller
or
any
of its Affiliates conducted at any other location;
(vi) Seller's or any
of its Affiliate's rights under any policies
of
insurance purchased by Seller or any of its Affiliates or Saks or
any of
its
Affiliates, or any benefits, proceeds or premium refunds payable
or
paid
thereunder or with respect thereto (except as provided in
Section
8.4);
(vii) the corporate charter, qualifications to conduct business
as a
foreign corporation, arrangements with registered agents relating
to
foreign qualifications, taxpayer and other identification numbers,
Tax
Returns and other Tax records, seals, minute books, stock transfer
books
and
similar documents of Seller or any of its Affiliates or Saks or any
of
its
Affiliates;
(viii) the rights of Seller or any of its Affiliates under this
Agreement or any other agreement between Seller or any of its
Affiliates
and
Buyer or any of its Affiliates entered into prior to, on or after
the
date
of this Agreement;
(ix) all websites, website content and web images and all
computer software related thereto (including intellectual property
rights
related thereto) and all books and records related thereto, in each
such
case
to the extent not solely related to the business conducted at
the
Stores;
15
<PAGE>
(x) the Governmental Permits that are not transferable without
the
consent of a Governmental Body and with respect to which the
required
consent is not obtained;
(xi) any trademark or service mark that uses in whole or in
part
any
of the items set forth on Exhibit T or any derivative or
diminutive
form
of expansion thereof, whether or not stylized, and any trade
dress
that
is used by Seller or any of its Affiliates in any business
including
the
Parisian Business;
(xii) all assets (whether or not located on the Real Estate)
solely used in connection with the provision of services in respect
of
accounting, legal,
human resource, payroll, treasury, insurance,
transportation, tax or other general and administrative services
supplied
by
Seller or any of its Affiliates or Saks or any of its Affiliates
unless
such
services relate solely to the operation of the Stores;
(xiii) all information regarding customers of the Stores other
than
the Customer Information;
(xiv) the inventory, trade fixtures and other property of
concessionaires, business partners, licensees, lessors or lessees
of Seller
or
any of its Affiliates that are not owned by Seller or any of
its
Affiliates;
(xv) all equity interests of the subsidiaries of Seller;
(xvi) prepaid expenses (including prepaid advertising
expenses);
(xvii) any other assets relating to the operation of the Stores
that
prior to the closing of the Saks Transaction were owned by Saks or
one
of
its Affiliates but as to which neither Seller nor any of its
Affiliates
has
any rights following the Saks Transaction;
(xviii) any agreements, arrangements or understandings relating
to
the Business between Saks or its Affiliates and Seller and its
Affiliates, including the Stock Purchase Agreement, the Saks
Private Brands
Agreement, the Saks Transition Services Agreement, the Club Libby
Lu
Agreement and the Saks Software License; and
(xix) the Accounts and Seller's rights under the Program
Agreement.
Section 2.2 Unassignable Contracts.
(a) Notwithstanding anything to the contrary stated in this
Agreement,
if (i) any Contract, Warranty or Purchase Order is not capable of
being sold,
assigned, transferred or conveyed in the absence of the approval,
consent or
waiver of any other Person without conflicting with, violating,
constituting a
default under or breaching such Contract, Warranty or Purchase
Order, and (ii)
all necessary approvals, consents and waivers of all parties to
such Contract,
Warranty or Purchase Order have not been obtained at or prior to
the Closing,
then the performance obligations of Seller and its Affiliates under
each such
Contract, Warranty or
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<PAGE>
Purchase Order (each, an "Unassigned Contract") shall be deemed to
be subleased
or subcontracted to Buyer (to the maximum extent permitted by
Requirements of
Law or any applicable agreement) until such Unassigned Contract has
been
assigned or novated. All claims, rights and benefits of Seller or
any of its
Affiliates arising under such Unassigned Contract or resulting
therefrom after
the Cut-Off Date (but not such Unassigned Contract itself) shall
(to the maximum
extent permitted by Requirements of Law or any applicable
agreement) be included
in the Assets transferred to Buyer hereunder (and any such payments
or other
benefits received by Seller or any of its Affiliates therefrom
after the Cut-Off
Date shall immediately be transferred by Seller or any such
Affiliate to Buyer).
Following the Closing, Seller shall, and Seller shall cause its
Affiliates to,
and Buyer shall, use commercially reasonable efforts to obtain the
necessary
approvals, consents and waivers (provided that neither Buyer nor
Seller or any
of their respective Affiliates shall be required to make any
payments or offer
or grant any accommodation (financial or otherwise) to any third
party to obtain
any approval, consent or waiver), and shall promptly execute all
documents
necessary to complete the transfer of such Unassigned Contract to
Buyer if such
approvals, consents and waivers are obtained. Buyer shall not have
any
obligation to indemnify Seller or any of its Affiliates pursuant to
the terms of
this Agreement, and shall have no obligations whatsoever, with
respect to any
Unassigned Contract for which Buyer cannot receive all the benefits
of such
Unassigned Contract; provided that to the extent that Buyer
receives any benefit
under an Unassigned Contract prior to the transfer of such
Unassigned Contract
to Buyer, Buyer shall be responsible for any obligation under such
Unassigned
Contract that arises in respect of such benefit received by
Buyer.
(b) Following the Effective Time, (i) Seller shall, and Seller
shall
cause its Affiliates to, use commercially reasonable efforts to
take actions
that are necessary to allow Buyer to exercise any right of Seller
arising from
any Unassigned Contract (including the right to elect to terminate
such
Unassigned Contract in accordance with the terms thereof) and (ii)
neither
Seller nor any of its Affiliates shall take any action under any
Unassigned
Contract that would reasonably be expected to limit, restrict or
terminate the
benefits to Buyer of such Unassigned Contract unless, in good faith
and after
prior written notice to Buyer, Seller or any of its Affiliates is
(A) ordered
orally or in writing to do so by a Governmental Body of competent
jurisdiction,
or (B) otherwise required to do so by Requirements of Law;
provided, however,
that if any such order is appealable, Seller shall, or Seller shall
cause its
Affiliates to, at Buyer's cost and expense, take such actions as
are reasonably
requested by Buyer to file and pursue such appeal and to obtain a
stay of such
order; provided further that Seller and its Affiliates shall not be
required to
make any payments or offer or grant any accommodation (financial or
otherwise)
to any third party with respect to clause (i) or (ii) of this
Section 2.2(b)
except to the extent Buyer agrees to reimburse Seller for any such
payment made
by Seller at the request of Buyer; provided further that if Saks is
a party to
any Unassigned Contract, Seller shall not have any liability to
Buyer for any
action required to be taken by Seller with respect to such
Unassigned Contract
pursuant to the Stock Purchase Agreement.
Section 2.3 Assumption of Liabilities.
(a) Assumed Liabilities. In partial consideration for the sale,
assignment, transfer and delivery of the Assets, Buyer shall
assume, and hereby
agrees to pay, perform and observe fully and timely, effective as
of the
Effective Time, (i) all liabilities and obligations of
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Seller and its Affiliates arising after the Effective Time under or
in respect
of the Real Estate, Real Estate Agreements, Leasehold Interests,
Equipment,
Inventory, Contracts, Warranties and Purchase Orders, (ii) all
liabilities and
obligations arising after the Effective Time with respect to
Transferred
Employees, and (iii) all liabilities and obligations with respect
to Taxes for
which Buyer is liable under Section 8.2 (collectively, the
liabilities and
obligations so assumed being referred to as the "Assumed
Liabilities"). To the
extent that Seller or any of its Affiliates pays any Assumed
Liability following
the Cut-Off Date in the ordinary course of business, Buyer shall
reimburse
Seller for any amount so paid immediately upon demand and upon
receipt of
reasonable documentation in support of such demand; provided that
if any such
payment is not made in the ordinary course, Buyer shall reimburse
Seller for
such amount when such payment would have been made if such payment
had been made
in the ordinary course. To the extent that Buyer pays any Excluded
Liability
from and after the Cut-Off Date in the ordinary course of business,
Seller shall
reimburse Buyer for any amount so paid immediately upon demand and
receipt of
reasonable documentation supporting such demand; provided that if
any such
payment is not made in the ordinary course, Seller shall reimburse
Buyer for
such amount when such payment would have been made if such payment
had been made
in the ordinary course.
(b) Liabilities Not Assumed by Buyer. Anything in this Agreement
to
the contrary notwithstanding, Seller shall be responsible for all
of its
liabilities and obligations not hereby expressly assumed by Buyer
and Buyer
shall not assume, or in any way be liable or responsible for, any
liabilities or
obligations of Seller except as specifically provided in Section
2.3(a)
(collectively, the liabilities and obligations that are not assumed
being
referred to as the "Excluded Liabilities"). Without limiting the
generality of
the foregoing, Buyer shall not assume the following:
(i) all liabilities and obligations of Seller or Saks or any of
their Affiliates arising on or prior to the Effective Time under or
in
respect of the Real Estate, Real Estate Agreements, Leasehold
Interests,
Equipment, Inventory, Contracts, Warranties and Purchase Orders,
including
all
liabilities and obligations due to a breach of any of the foregoing
on
or
prior to the Effective Time;
(ii) all unpaid accounts payable of Seller or Saks or any of
their Affiliates and all accrued expenses of Seller or Saks or any
of their
Affiliates;
(iii) except as expressly assumed by Buyer pursuant to Section
8.3,
all liabilities and obligations with respect to Store
Employees,
Seller Plans, Saks Plans or other employee benefit policies and
practices
of
Seller, Saks or any of their Affiliates, including liabilities
and
obligations under the Saks' Severance Pay Plan, retention bonuses
called
for
under the retention arrangements described in Schedule 5.16(e) of
the
Seller Disclosure Schedule or otherwise, any entitlements under
COBRA with
respect to termination of employment of any Store Employee by
Seller, Saks
or
any of their respective Affiliates and compensation and benefits
under
any
state workers' compensation or similar law payable following
the
Effective Time to or with respect to any Transferred Employee, or
to any
former employee of the Stores, who in either case was employed at
the
Stores on any date, on or prior to the Effective Time, that the
claim arose
or
the incident on which the claim is based occurred;
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(iv) all payment obligations relating to compensation and
commissions that have been earned but have not been paid as of
the
Effective Time to Transferred Employees;
(v) all liabilities and obligations arising from litigation,
arbitration, administrative or other proceedings to the extent
related to
the
Assets or the Stores or the operation of the Parisian Business
generally on or prior to the Closing Date (other than the
obligations of
Buyer pursuant to Section 8.11), including, without limitation,
any
customer liability claims, and all performance obligations under
any
product recall or any non-financial settlement obligation to the
extent
related to the operation of the Stores on or prior to the Closing
Date;
(vi) all liabilities and obligations arising from all gift
certificate, gift card, merchandise voucher, coupon, refund or
other
loyalty, frequent shopper or similar program of Saks (collectively,
the
"Saks Gift Programs") or Seller (collectively, the "Seller Gift
Programs")
reward redemptions submitted by customers of the Stores for
gift
certificates, gift cards, merchandise vouchers, coupons, refunds or
other
loyalty, frequent shopper or similar program rewards purchased,
issued or
earned in connection with the Stores on or prior to the Cut-Off
Date except
to
the extent assumed by Buyer pursuant to Section 8.7;
(vii) all liabilities and obligations arising from all return
policies of Saks (the "Saks Return Policies") or Seller (the
"Seller Return
Policies") for merchandise purchased in the Stores on or prior to
the
Cut-Off Date except to the extent assumed by Buyer pursuant to
Section 8.7;
(viii) any claims (including product-liability and infringement
claims) relating to goods sold or services provided at the Stores
on or
prior to the Cut-Off Date (other than the obligations of Buyer
pursuant to
Section 8.11);
(ix) any claims asserted by Store Employees or by dependents of
such
Store Employees, for acts or omissions occurring on or prior to
the
Cut-Off Date (other than claims of Transferred Employees expressly
assumed
by
Buyer pursuant to Section 8.3);
(x) all liabilities and obligations relating to the ownership
or
condition of the Assets (including environmental conditions) on or
prior to
the
Cut-Off Date;
(xi) all liabilities and obligations with respect to Taxes for
which Seller is liable under Section 8.2;
(xii) any liability or obligation for money borrowed (it being
understood that the liabilities and obligations under any capital
lease set
forth in Exhibit E is an Assumed Liability);
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(xiii) any liability or obligation for costs and expenses
(other
than
Transfer Taxes as set forth in Section 8.2 and as set forth in
Section
8.6
or as otherwise expressly set forth in this Agreement) in
connection
with
the negotiation and execution of this Agreement or the consummation
of
the
transactions contemplated hereby;
(xiv) any liability or obligation of Seller under this
Agreement
or
under any other agreement between Seller or any of its Affiliates,
on
the
one hand, and Buyer or any of its Affiliates, on the other
hand,
entered into on or after the date of this Agreement in accordance
with the
terms hereof;
(xv) any liability or obligation to the extent related to the
Excluded Assets (except as provided in Section 2.2 or 2.4) or any
other
assets not transferred to and not purchased by Buyer; and
(xvi) any liability or obligation relating to, resulting from
or
arising out of any former operations or properties of Saks or any
of its
Affiliates or of Seller or any of its Affiliates that have been
discontinued or disposed of prior to the Cut-Off Date.
Seller shall, or shall cause its Affiliates to, pay, perform and
fully
observe all Excluded Liabilities.
Section 2.4 Leased Department Agreements and Equipment Lease
Agreements.
(a) Exhibit N sets forth each leased department agreement relating
to
the Stores. Buyer agrees to use commercially reasonable efforts to
enter into
new leased department agreements with the parties identified in
Exhibit N that
relate exclusively to the Stores. If such new leased department
agreements are
not in effect as of the Effective Time, Buyer agrees that, to the
maximum extent
permitted by Requirements of Law or any applicable leased
department agreement,
the performance obligations of Seller and its Affiliates thereunder
after the
Cut-Off Date shall be deemed to be subleased or subcontracted to
Buyer until
such new leased department agreement is in effect. In consideration
thereof,
Buyer shall receive all claims, benefits and rights under each such
leased
department agreement to the extent related to the Stores. Each
party agrees to
use commercially reasonable efforts to effect the foregoing
(provided that
neither Buyer nor Seller or any of their respective Affiliates
shall be required
to make any payments or offer or grant any accommodation (financial
or
otherwise)). Buyer shall not have any obligation to indemnify
Seller or any of
its Affiliates pursuant to the terms of this Agreement, and shall
have no
obligations whatsoever, with respect to any leased department
agreements for
which Buyer cannot receive all the benefits of such leased
department
agreements; provided that to the extent that Buyer receives any
claim, benefit
or right under any such leased department agreement prior to the
execution of a
new leased department agreement with the parties identified in
Exhibit N that
relates exclusively to the Stores, Buyer shall be responsible for
any obligation
under any such leased department agreement that arises in respect
of such claim,
benefit or right received by Buyer. In respect of the Club Libby Lu
Agreement,
Seller agrees that so long as the Club Libby Lu departments are
operated in the
Stores, Buyer will receive the benefits of the Club Libby Lu
Agreement as to the
Stores and Buyer agrees that Buyer will be responsible for the
obligations of
Seller under the Club Libby Lu Agreement in
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respect of the Stores. In the event that Buyer elects to terminate
the Club
Libby Lu department in any Store, Buyer shall give written notice
to Seller.
Upon receipt of such notice, Seller shall promptly exercise such
rights as are
available to Seller under the Club Libby Lu Agreement to terminate
the Club
Libby Lu Agreement as to such Store or Stores as may be designated
in Buyer's
termination notice. Buyer shall remain liable for all of its
obligations under
the Club Libby Lu Agreement until the effective termination date of
the Club
Libby Lu Agreement as to any such Store or Stores. Following
termination of the
Club Libby Lu Agreement as to any Store or Stores or in its
entirety, as
applicable, Buyer shall remain liable for any accrued but unpaid
obligation of
Buyer as of the effective termination date of the Club Libby Lu
Agreement in
respect of such Store or Stores and shall be responsible for and
shall indemnify
Seller against any costs or expenses incurred by Seller in respect
of the
cessation of operation of the Club Libby Lu department in such
Store or Stores
and the removal of any equipment, fixtures or other improvements
from such Store
or Stores to the extent required by the Club Libby Lu
Agreement.
(b) Exhibit O sets forth equipment lease agreements relating to
the
Stores. The parties agree to use commercially reasonable efforts to
obtain the
necessary approvals, consents and waivers to assign to Buyer that
portion of the
equipment lease agreements (and any applicable schedules thereto)
that relate
exclusively to the Stores; provided, however, that neither Buyer
nor Seller or
any of their respective Affiliates shall be required to make any
payments or
offer or grant any accommodation (financial or otherwise) to any
third party to
obtain any approval, consent or waiver. If, prior to the Closing,
all necessary
approvals, consents and waivers are not obtained with respect to
any equipment
lease agreement, then (to the maximum extent permitted by
Requirements of Law or
any applicable equipment lease agreement) to the extent related to
the Stores,
the performance obligations of Seller and its Affiliates thereunder
after the
Cut-Off Date shall be deemed to be subleased or subcontracted to
Buyer until
such equipment lease agreement is assigned or novated. In
consideration thereof,
Buyer shall receive the claims, rights and benefits of Seller or
any of its
Affiliates arising under such equipment lease agreement or
resulting therefrom
after the Cut-Off Date (but not such equipment lease agreement
itself). Buyer
shall not have any obligation to indemnify Seller or any of its
Affiliates
pursuant to the terms of this Agreement, and shall have no
obligations
whatsoever, with respect to any equipment lease agreement for which
Buyer cannot
receive all the benefits of such equipment lease agreement;
provided that to the
extent that Buyer receives any claim, benefit or right under any
such equipment
lease agreement prior to the assignment of that portion of such
equipment lease
agreement (and any applicable schedules thereto) that relates
exclusively to the
Stores, Buyer shall be responsible for any obligation under any
such equipment
lease agreement that arises in respect of such claim, benefit or
right received
by Buyer.
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price.
(a) The purchase price for the Assets shall be equal to (x) Twenty
Two
Million Dollars ($22,000,000.00) (y) less the amount of any
Partridge Creek
Contribution received by or credited to Seller or Saks or any of
their
respective Affiliates prior to the Cut-Off Date, and (z) plus or
minus any
Inventory Adjustment (the "Purchase Price"). The parties agree
21
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that the Twenty Two Million Dollars ($22,000,000.00) included in
the Purchase
Price pursuant to clause (x) of the preceding sentence has already
been adjusted
to reflect a credit to Seller pursuant to the Partridge Creek
Amendment of Three
Million Dollars ($3,000,000) against the Partridge Creek
Contribution in the
aggregate amount of Ten Million Dollars ($10,000,000) and that no
further
adjustment shall be made to the Purchase Price with respect to such
credit
pursuant to clause (y) of the preceding sentence. The Purchase
Price may be
further adjusted pursuant to paragraph (c) below. The Purchase
Price shall be
paid by Buyer pursuant to Section 4.2.
(b) Not later than two (2) Business Days prior to the Closing,
Seller
shall deliver to Buyer a schedule (the "Inventory Schedule") that
contains the
value of the inventory of the Business as of the date of the
closing of the Saks
Transaction, using the inventory data used by Saks to determine the
value of the
inventory of the Parisian Business for purposes of the calculation
of "Final
Working Capital" under the Stock Purchase Agreement. The value of
the inventory
as of the Cut-Off Date shall be determined by Seller in accordance
with the
principles set forth in Exhibit U. If Buyer has not given Seller
written notice
of its objection to the value of the inventory shown in the
Inventory Schedule,
which specifies the basis of Buyer's objection, within ten (10)
Business Days
after the Closing, then the value of the inventory shown in the
Inventory
Schedule shall be final and binding between the parties. If Buyer
timely gives
Seller a written notice of objection and the parties cannot resolve
such
objection within ten (10) Business Days of Seller's receipt of
Buyer's notice of
objection, then the issues in dispute shall be submitted for
resolution to an
independent certified public accounting firm agreed to by Buyer and
Seller that
does not have a relationship with Buyer or Seller (the
"Arbitrator"). If issues
in dispute are submitted to the Arbitrator for resolution: (i) the
only issues
for resolution by the Arbitrator shall be whether the specific
objection or
objections stated by the Buyer in its notice of objection to Seller
should
result in a change in the value of the inventory from the value
shown on the
Inventory Schedule; (ii) each party shall furnish to the Arbitrator
such
documents and information relating to the disputed issues as the
Arbitrator may
request and are available to that party and shall be afforded the
opportunity to
present to the Arbitrator any material relating to the
determination and to
discuss the determination with the Arbitrator; (iii) the
determination by the
Arbitrator, as set forth in a written notice delivered to both
parties by the
Arbitrator, shall be binding and conclusive on the parties; and
(iv) the fees of
the Arbitrator for such determination shall be borne 50% by Buyer
and 50% by
Seller. If the value of the inventory is finally determined to
differ from that
value used in calculating the Inventory Adjustment, then promptly
after such
final determination, but in no event more than two (2) Business
Days thereafter,
Seller shall pay to Buyer the amount, if any, by which the
inventory value used
in the Inventory Adjustment as of the Closing exceeds the final
inventory value
determination, or Buyer shall pay to Seller the amount, if any, by
which the
final inventory value determination exceeds the inventory value
used in the
Inventory Adjustment as of the Closing, in each case plus interest
from the
Closing to the date of payment at the prime rate as reported on the
Closing Date
by the Wall Street Journal. The amount of any adjustment to the
Purchase Price
in accordance with this Section 3.1(b) is referred to herein as the
"Inventory
Adjustment".
(c) In the event that Buyer elects not to purchase one or more of
the
Stores in accordance with the provisions of Section 9.6, then the
Purchase Price
shall be reduced by Five
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Million Dollars ($5,000,000.00) for each Store that is not acquired
by Buyer
plus or minus the Inventory Adjustment in respect of such Store;
provided,
however, that such adjustment shall be Two Million Dollars
($2,000,000.00) plus
the amount specified in clause (y) of Section 3.1(a) with respect
to the Store
located at Partridge Creek Fashion Park, Clinton Township,
Michigan.
Section 3.2 Allocation of Purchase Price; Transfer Tax
Valuation.
(a) During the 60 days following the Closing Date, Seller and
Buyer
shall use reasonable commercial efforts to draft a schedule (the
"Allocation
Schedule") allocating the Purchase Price (increased to take into
account the
Assumed Liabilities) among the Assets. The Allocation Schedule
shall be prepared
in accordance with Section 1060 of the Code and the regulations
thereunder.
Seller and Buyer each agrees that promptly upon agreement, if any,
upon such
Allocation Schedule it shall return an executed copy thereof to the
other party.
If Seller and Buyer agree upon the Allocation Schedule, then Seller
and Buyer
each agrees to file Internal Revenue Service Form 8594, and all
federal, state,
local and foreign Tax Returns, in accordance with the Allocation
Schedule.
Seller and Buyer each agrees to provide the other promptly with any
other
information required to complete Form 8594.
(b) Prior to or promptly following the Closing Date, Seller and
Buyer
shall jointly agree on the valuation of the Real Estate, Real
Estate Agreements
and other Assets to the extent that valuations are needed for
purposes of
determining the amount of Transfer Taxes. If a party disagrees with
respect to a
proposed valuation, the parties shall negotiate in good faith to
resolve the
issue. If they cannot resolve the issue prior to or promptly
following the
Closing Date, it shall be resolved by an accounting or appraisal
firm chosen by
and mutually acceptable to both parties after Closing. If payment
of a Transfer
Tax is due prior to any such resolution, payment shall be made in
accordance
with Section 8.2(a)(iv) based on Buyer's reasonable valuation and,
upon
resolution, the party responsible for filing the Tax Return with
respect to such
Tax shall make such corrective filings with the appropriate
Governmental Body.
Any additional Transfer Tax payable in connection with such
corrective filings,
and any refund of any Transfer Tax resulting from such corrective
filings, shall
be allocated to Buyer and Seller under Section 8.2(a)(iv).
ARTICLE IV
CLOSING
Section 4.1 Closing Date. The Closing shall be held at the offices
of King
& Spalding LLP, 1180 Peachtree Street, Atlanta, Georgia 30309,
at 10:00 a.m.,
New York time, on October 30, 2006 (or, if the conditions set forth
in Articles
IX and X have not been satisfied or waived (other than those
conditions that are
intended to be satisfied at the Closing, by the appropriate party
by such date,
subject to the provisions of Article XII, at 10:00 a.m., New York
time, on the
first Monday that is a business day to occur following the date on
which all of
the conditions to Closing set forth in Articles IX and X shall have
been so
satisfied or waived (other than those conditions that are intended
to be
satisfied at the Closing), or at such other place, time and day as
shall be
agreed upon by Buyer and Seller. The date on which the Closing is
actually held
is referred to herein as the "Closing Date," although the transfer
of Assets and
the assumption of
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the Assumed Liabilities shall be effective as of 12:01 a.m., New
York time (the
"Effective Time") on the Sunday immediately preceding the Closing
Date (the
"Cut-Off Date").
Section 4.2 Payment on the Closing Date. Subject to fulfillment or
waiver
(where permissible) of the conditions set forth in Articles IX and
X, at the
Closing Buyer shall pay Seller an amount equal to the Purchase
Price by wire
transfer of immediately available funds to the bank account or
accounts
specified by Seller at least three business days prior to
Closing.
Section 4.3 Buyer's
Additional Closing Date Deliveries. Subject to
fulfillment or waiver (where permissible) of the conditions set
forth in
Articles IX and X, at the Closing Buyer shall deliver to Seller all
of the
following:
(a) certificate of the secretary or an assistant secretary of
Buyer,
dated the Closing Date, in form and substance reasonably
satisfactory to Seller,
as to (i) no amendments to the certificate of incorporation of
Buyer since a
specified date; (ii) the bylaws of Buyer; (iii) the resolutions of
the Board of
Directors of Buyer authorizing the execution and performance of
this Agreement,
the Buyer Ancillary Agreements and the transactions contemplated
hereby and
thereby; and (iv) incumbency and signatures of the officers of
Buyer executing
this Agreement or any Buyer Ancillary Agreement;
(b) the certificate contemplated by Section 10.4, duly executed by
a
duly authorized officer of Buyer;
(c) the IP License Agreement, the Transition Services Agreement
and
the Private Brands Agreement, in each case duly executed on behalf
of Buyer;
(d) the Bill of Sale, Assignment and Assumption Agreement and
the
Assignment and Assumption Agreement (Real Estate) for each Store
that is
included in the Leased Real Estate (which shall be modified to
conform to the
particular requirements of the jurisdictions in which the Real
Estate is
located), in each case duly executed on behalf of Buyer; and
(e) any real estate transfer Tax declarations required to be
executed
or filed in connection with the transfer of the Real Estate.
Section 4.4 Seller's Closing Date Deliveries. Subject to
fulfillment or
waiver (where permissible) of the conditions set forth in Articles
IX and X, at
the Closing Seller shall deliver to Buyer all of the following:
(a) certificate of the secretary or an assistant secretary of
Seller,
dated the Closing Date, in form and substance reasonably
satisfactory to Buyer,
as to (i) no amendments to the amended and restated charter of
Seller since a
specified date; (ii) the amended and restated bylaws of Seller;
(iii) the
resolutions of the Board of Directors of Seller authorizing the
execution and
performance of this Agreement, the Seller Ancillary Agreements and
the
transactions contemplated hereby and thereby; and (iv) incumbency
and signatures
of the officers of Seller executing this Agreement or any Seller
Ancillary
Agreement;
24
<PAGE>
(b) certificate of an executive officer of Seller, dated the
Closing
Date, in form and substance reasonably acceptable to Buyer, as to
the amount of
the Partridge Creek Contributions received by or credited to Saks
or Seller or
any of their Affiliates prior to the Cut-Off Date;
(c) the certificate contemplated by Section 9.5, duly executed by
a
duly authorized officer of Seller;
(d) the IP License Agreement, the Transition Services Agreement
and
the Private Brands Agreement, in each case duly executed on behalf
of Seller;
(e) the Bill of Sale, Assignment and Assumption Agreement, Grant
Deeds
(with respect to the Owned Real Estate and which shall be modified
to conform to
the particular requirements of the jurisdictions in which the Owned
Real Estate
is located) and the Assignment and Assumption Agreement (Real
Estate) for each
Store that is included in the Leased Real Estate (which shall be
modified to
conform to the particular requirements of the jurisdictions in
which the Real
Estate is located), in each case duly executed on behalf of Seller
or one or
more of its Affiliates;
(f) any other assignments and endorsements, without recourse or
representation (other than as set forth herein), that may be
reasonably
necessary to transfer the Assets to Buyer in proper form and
suitable for filing
with the appropriate Governmental Body;
(g) any real estate transfer Tax declarations required to be
executed
or filed in connection with the transfer of the Real Estate;
(h) real estate estoppel letters in substantially the form of
Exhibit
V from the landlords of the Leased Real Estate described
therein;
(i) such other certificates, documents and instruments as Buyer
reasonably requests related to the transactions contemplated
hereby; and
(j) an affidavit, substantially in the form of Exhibit P, made
under
penalties of perjury and duly executed by Seller that provides
Seller's United
States taxpayer identification number and states that Seller is not
a foreign
person for purposes of Section 1445 of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents
and warrants
to Buyer as follows (it being understood that Seller makes no
representation or
warranty regarding matters that do not arise out of or relate to
the Parisian
Business or the Business, as the case may be (other than with
respect to
Seller's organization, power and authority in Section 5.1 and 5.2
and other than
with respect to tax matters to the extent set forth in Section
5.5), and that to
the extent that any such representation or warranty made by Seller
relates to
Saks or any of its Affiliates or the operation
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of the Stores or the Parisian Business or the Business on or prior
to October 2,
2006, such representation or warranty shall be deemed to be made on
October 2,
2006:
Section 5.1 Organization of Seller; Power and Authority of Seller.
Seller
is a corporation duly organized, validly existing and in good
standing under the
laws of the State of Delaware. Seller is duly qualified to transact
business and
is in good standing in each jurisdiction where the character of its
properties
owned or held under lease or the nature of its activities makes
such
qualifications necessary, except where the failure to be so
qualified or in good
standing would not, individually or in the aggregate, reasonably be
expected to
have a Material Adverse Effect. Seller has the corporate power and
authority to
own or lease and operate its assets and to carry on its business in
the manner
that it was conducted immediately prior to the date of this
Agreement.
Section 5.2 Authority of Seller; Conflicts.
(a) Seller has all requisite corporate power to enter into this
Agreement and the Seller Ancillary Agreements and to consummate the
transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement
and the Seller Ancillary Agreements by Seller and the consummation
by Seller of
the transactions contemplated hereby and thereby have been duly
authorized by
all necessary corporate action on the part of Seller (no
stockholder approval
being required). This Agreement has been duly executed and
delivered by Seller
and (assuming the valid authorization, execution and delivery of
this Agreement
by Buyer and the validity and binding effect of this Agreement on
Buyer)
constitutes the valid and binding obligation of Seller enforceable
against
Seller in accordance with its terms, and each of the Seller
Ancillary
Agreements, upon execution and delivery by Seller will be (assuming
the valid
authorization, execution and delivery by Buyer, where Buyer is a
party, and any
other party or parties thereto) a legal, valid and binding
obligation of Seller
enforceable in accordance with its terms, subject, in the case of
this Agreement
and each of the Seller Ancillary Agreements, to bankruptcy,
insolvency,
reorganization, moratorium and similar laws of general application
relating to
or affecting creditors' rights and to general equity
principles.
(b) Except as set forth in Schedule 5.2, the execution and delivery
of
this Agreement or any of the Seller Ancillary Agreements by Seller,
the
consummation of any of the transactions contemplated hereby or
thereby by Seller
or compliance with or fulfillment of the terms, conditions and
provisions hereof
or thereof by Seller will not:
(i) assuming the receipt of all necessary consents and
approvals
and
the filing of all necessary documents as described in Section
5.2(b)(ii), result in a breach of the terms, conditions or
provisions of,
or
constitute a default, an event of default or an event creating
rights of
acceleration, termination or cancellation or a loss of rights
under, or
result in the creation or imposition of any Encumbrance upon any of
the
Assets, under (1) the charter, bylaws or similar organizational
documents
of
Seller, (2) any Contract, Real Estate Agreement, Warranty,
Purchase
Order or other Business Agreement, (3) any Court Order to which
Seller is a
party or by which Seller or any Asset is bound or (4) any
Requirements of
Law
affecting Seller or any Asset, other than, in the case of clauses
(2),
(3)
and (4) above, any such breaches, defaults, rights, loss of rights
or
Encumbrances that
26
<PAGE>
would not, individually or in the aggregate, reasonably be expected
to have
a
Material Adverse Effect or would not prevent the consummation of
any of
the
transactions contemplated hereby, or
(ii) require the approval, consent, authorization or act of, or
the
making by Seller or any of its Affiliates of any declaration,
filing or
registration with, any Governmental Body, except (1) the filing
with the
SEC
of such reports under the Exchange Act as may be required in
connection
with
this Agreement and the transactions contemplated hereby, (2)
such
consents, approvals, filings and notices as may be required under
any
Requirements of Law with respect to environmental matters
pertaining to any
notification, disclosure or required approval triggered by the
transactions
contemplated by this Agreement, (3) such filings as may be required
in
connection with the Taxes described in Section 8.2(a)(iv), and (4)
such
approvals, consents, authorizations, declarations, filings or
registrations
the
failure of which to be obtained or made would not, individually or
in
the
aggregate, reasonably be expected to have a Material Adverse Effect
or
would not prevent the consummation of any of the transactions
contemplated
hereby.
Except as provided in Section 5.2(b)(ii), no representation or
warranty is made as to whether any new approvals, consents,
licenses, permits,
orders, authorizations, declarations, filings or registrations will
be required
as a result of the sale of the Assets to Buyer in order for Buyer
to continue to
own the Assets and operate the Stores following the Cut-Off Date in
the manner
in which the Assets were owned and the Stores were operated on or
before the
Cut-Off Date.
Section 5.3 Financial Statements. Seller has reviewed the unaudited
profit
and loss statements for the 2005 fiscal year for the Parisian
stores acquired by
Seller in the Saks Transaction (the "Parisian Stores") that were
prepared by
Saks and provided to Seller in connection with the Saks
Transaction
(collectively, the "Store Financial Statements"). Seller has also
reviewed the
audited statement of income for the Parisian Business for the 2005
fiscal year
that was prepared by Saks and provided to Seller in connection with
the Saks
Transaction ("Parisian Audited Financial Statement"), which
includes the results
of operations of the Parisian Stores for such fiscal year. Seller
has tracked
the "store profit" as reflected in the Store Financial Statements
for the 2005
fiscal year to the Parisian Audited Financial Statement and
believes that the
"store profit" reflected in the Parisian Audited Financial
Statements for the
2005 fiscal year are consistent in all material respects with the
aggregate
store profit of the Parisian Stores as reflected in the Store
Financial
Statements. Schedule 5.3 of the Seller Disclosure Schedule contains
the
unaudited profit and loss statements for the 2003, 2004 and 2005
fiscal years
for the Circle Center, Meadowbrook Mall and Laurel Place Stores and
the
unaudited profit and loss statement for the 2005 fiscal year for
the Fairfield
Commons, Beavercreek Store (collectively, the "Specified Store
Financial
Statements"). Seller has no Knowledge of any material inaccuracies
in the
Specified Store Financial Statements.
Section 5.4 Operations Since Financial Statements Date. Except as
set forth
in Schedule 5.4 of the Seller Disclosure Schedule, since the
Financial
Statements Date, there has been no Material Adverse Effect. Except
as set forth
in Schedule 5.4 of the Seller Disclosure
27
<PAGE>
Schedule, to the Knowledge of Seller, since the Financial
Statements Date, the
Business has been conducted in the ordinary course substantially
consistent with
past practice. Without limiting the generality of the preceding
sentence, to the
Knowledge of Seller, since the Financial Statements Date through
the closing of
the Saks Transaction, neither Saks nor its Affiliates, and since
the closing of
the Saks Transaction, neither Seller nor any of its Affiliates
have:
(a) made any material change in the Business or its operations,
except such changes as may be required to comply with any
applicable
Requirements of Law;
(b) purchased or otherwise acquired any assets or made any
capital
expenditures, in each case that are material, individually or in
the aggregate,
to the Business (other than (i) purchases of inventory in the
ordinary course of
business consistent with past practice, (ii) capital expenditures
in the
ordinary course of business consistent with past practice or as
contemplated by
the fiscal 2006 capital budget of the Parisian Business and (iii)
capital
expenditures required under any Real Estate Agreement or Lease
Agreement for
capital improvements that are not controlled exclusively by Saks or
Seller or
their respective Affiliates);
(c) granted to any Transferred Employee any material increase
in
compensation or other benefit (excluding any retention agreements
that do not
involve payments by Buyer to any such employee after the Closing)
except as may
be required under existing agreements or in the ordinary course of
business
consistent with past practice;
(d) acquired by merging or consolidating with, or by purchasing
a
substantial portion of the stock or assets of, any business or any
corporation,
partnership, association or other business organization or division
thereof;
(e) sold or otherwise disposed of any assets of the Business
(including by transfer or other disposition of other portions of
the Business)
that are material, either individually or in the aggregate, to the
Parisian
Business prior to October 2, 2006 or to the Business thereafter
(other than
sales of inventory in the ordinary course of business consistent
with past
practice);
(f) materially adversely modified, amended or terminated any
Contract,
Real Estate Agreement, Warra
