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Exhibit
2.1
STOCK AND
ASSET PURCHASE AGREEMENT
BETWEEN:
- Warnaco
Netherlands BV, a corporation incorporated in the Netherlands, with
a capital of 254,470 euros, having its principal office at
Farantweg 4, Zone M452, 4791RR Klundert, the Netherlands,
represented by Helen McCluskey, duly authorized for
the purpose hereof (hereinafter referred to as " Warnaco
");
AND:
- Palmers
Textil Aktiengesellschaft, a stock corporation with a capital of
2,981,926.80 euros, having its principal office at Palmerstrasse
6-8, 2351 Wiener Neudorf, Austria (hereinafter referred to as the "
Purchaser "),
represented by Thomas Weber;
Table of Contents
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ARTICLE 1
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DEFINITIONS
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1.1
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Defined Terms.
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1
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1.2
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General Interpretive Principles.
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6
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ARTICLE 2
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PURCHASE AND SALE OF THE TRANSFERRED SUBSIDIARY STOCK
AND
PURCHASED ASSETS; ASSUMPTION OF LIABILITIES
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2.1
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Sale and Assignment.
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7
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2.2
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Transfer and Delivery of the Transferred Subsidiary Stock, the
Purchased Assets and the Assumed Liabilities.
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8
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ARTICLE 3
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PURCHASE PRICE AND ADJUSTMENTS
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3.1
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Purchase Price.
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8
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3.2
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Adjustment of Purchase Price.
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8
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3.3
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Payment of the Purchase Price.
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10
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3.4
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Allocation of Purchase Price.
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11
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3.5
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Taxes and Withholdings.
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11
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ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF WARNACO
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4.1
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Corporate Existence.
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12
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4.2
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Corporate Authority.
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12
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4.3
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Transferred Subsidiaries Stock.
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12
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4.4
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Brokers or Finders.
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13
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4.5
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Financial Statements.
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13
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4.6
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No Insolvency.
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13
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4.7
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No Undisclosed Liabilities.
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14
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4.8
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Absence of Certain Changes.
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14
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4.9
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Title to Properties.
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14
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4.10
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Real Property.
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14
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4.11
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Leases.
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14
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4.12
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Assets.
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14
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4.13
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Commercial and Other Related Contracts.
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15
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4.14
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Insurance.
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16
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4.15
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Company Litigation.
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16
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4.16
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Environmental Matters.
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17
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4.17
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Compliance with Laws.
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17
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4.18
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Employee Benefit Plans.
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17
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4.19
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Tax Matters.
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17
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4.20
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Intellectual Property.
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18
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4.21
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Labor Matters.
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18
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4.22
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Bank Accounts.
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19
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4.23
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No Other Representations.
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19
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ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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5.1
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Organization and Standing.
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19
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5.2
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Power and Authority.
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19
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5.3
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Valid and Binding.
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20
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5.4
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Financing.
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20
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5.5
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Absence of Litigation.
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20
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5.6
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Consents.
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21
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5.7
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Ability to Evaluate and Bear Risks.
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21
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5.8
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Investigation by the Purchaser; Sellers' Liability.
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21
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5.9
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Brokers or Finders.
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21
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ARTICLE 6
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COVENANTS
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6.1
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Interim Operations of the Company
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22
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6.2
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Access
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23
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6.3
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Other Intercompany Arrangements.
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23
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6.4
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Antitrust and Other Regulatory Filings
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23
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6.5
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Transition Services Agreement
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24
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6.6
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Insurance Policies
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24
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6.7
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Financing Commitment
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25
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6.8
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Efforts and Actions to Cause Closing to Occur and Post-Closing
Actions
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25
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6.9
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Notices of Certain Events Relating to Representations, Warranties
and Covenants
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25
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6.10
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Refinancing
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26
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6.11
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Taiwan Co. Ltd
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26
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6.12
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Warnaco Srl/Italy
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26
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6.13
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Rillieux Lease
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26
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6.14
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Knowledge of Breach; Prior Knowledge
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26
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6.15
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Update of Disclosure Schedule
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26
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ARTICLE 7
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CONDITIONS TO CLOSING
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7.1
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Conditions Precedent to Obligations of Purchaser and
Warnaco.
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27
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7.2
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Conditions Precedent to the Obligations of Warnaco.
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27
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7.3
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Conditions Precedent to Obligation of Purchaser.
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28
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ARTICLE 8
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CLOSING
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8.1 |
Date and Place of Closing |
28 |
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8.2
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Purchaser Obligations.
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29
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8.3
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Warnaco Obligations.
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29
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ARTICLE 9
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TERMINATION
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9.1
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Termination Events.
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30
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9.2
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Effect of Termination.
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30
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ARTICLE 10
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INDEMNIFICATION
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10.1
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Indemnification by Warnaco.
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31
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10.2
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Survival; Threshold; De Minimis Claims; Maximum
Amount.
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31
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10.3
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Computation of Purchaser Losses; General Limitations.
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32
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10.4
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Specific Matters.
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35
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10.5
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Notice of claims; Defense.
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35
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10.6
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Mitigation.
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36
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10.7
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Resolution of All Tax-Related Disputes.
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36
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10.8
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Sole Remedy.
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36
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10.9
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Indemnification by the Purchaser.
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36
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10.10
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Tax Effect of Indemnification Payments.
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36
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ARTICLE 11
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GENERAL PROVISIONS
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11.1
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Cooperation.
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37
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11.2
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Confidentiality.
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37
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11.3
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Announcements.
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37
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11.4
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Absence of Third Party Rights – Assignment.
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37
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11.5
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Entire Agreement.
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38
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11.6
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Waivers and Amendments.
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38
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11.7
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Severability.
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38
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11.8
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Interest.
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38
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11.9
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Notices and Communications.
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38
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11.10
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Costs.
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39
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11.11
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Specific Performance.
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39
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11.12
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No Survival.
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39
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11.13
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Governing Law and Disputes.
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39
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RECITALS
WHEREAS Warnaco, through the Transferred Subsidiaries and the Asset
Sellers (as defined below), is engaged in the business of
manufacturing, selling, distributing, and marketing of products
bearing the Lejaby Trademark, the Rasurel Trademark and the Elixir
Trademark (as such terms are defined below) (the " Business
").
WHEREAS certain logistical and administrative functions and
business premises are shared by the Business and Warnaco and other
Warnaco affiliates.
WHEREAS, as part of the acquisition process, the Purchaser and its
representatives and advisors have had access to a data room and to
management presentations and have been able to review a number of
documents and information of a financial, accounting, fiscal,
environmental, social, legal and operational nature concerning the
Business (hereinafter collectively referred to as the "
Due
Diligence Information ") during a due diligence review
beginning October 18, 2007.
WHEREAS Warnaco desires to sell to Purchaser, and Purchaser desires
to purchase from Warnaco, the Transferred Subsidiaries, the
Purchased Assets and the Assumed Liabilities (as defined below),
for the consideration set forth below, subject to the terms and
conditions of this agreement (the " Agreement
").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth
herein, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
1.1
Defined
Terms . For the purposes of this Agreement, the
following terms and expressions will have the meanings ascribed to
them below:
" Antitrust
Clearance(s) " has the following meaning:
(a) the
issuance of a decision by the European Commission declaring the
Transaction (as defined below) compatible with the common market
pursuant to Article 6(1)(b), 8(1) or 8(2) of the EC Merger
Regulation or the deemed declaration of the compatibility of the
Transaction with the common market pursuant to Article 10(6) of the
EC Merger Regulation; and/or
(b) in
the event that the whole or any part of the Transaction is referred
to the competent authority of any Member State of the European
Union pursuant to Article 9(3)(b) or Article 4.4 of the EC Merger
Regulation or is deemed to be so referred pursuant to Article 9(5)
or Article 4.4 of the EC Merger Regulation, the clearance (or if
applicable under the relevant national Law, deemed clearance) of
the whole or relevant part of the Transaction that was so referred
or deemed to be referred.
" Asset
Sellers" has the meaning ascribed to it in Section 2.1(b)
hereof.
"Balance
Sheet Date" means the date set forth in Section
4.5(a).
" Business" has
the meaning set forth in the Recitals to the
Agreement.
" Business Day"
means any calendar day, except Saturdays, Sundays and official
holidays, on which banks generally are open for the transaction of
business in Paris, France, but shall include the Saturday
immediately preceding the Closing Date.
" Business Financial
Statements" has the meaning set forth in Section
4.5(a).
" Cash
and Cash Equivalent " shall mean cash plus the positive
balance of any bank account, other cash accounts, cash deposit
accounts and readily marketable securities, which are transferred
to Purchaser under this Agreement, minus the Litigation Reserve
Amount.
" Closing" has
the meaning ascribed to it in Section 8.1 hereof.
“ Closing
Cash” shall mean the Cash and Cash Equivalent at the
close of business on the Business Day immediately preceding the
Closing Date.
" Closing
Date" has the meaning ascribed to it in Section 8.1
hereof.
" Closing
Liabilities " shall mean the Liabilities at the close of
business on the Business Day immediately preceding the Closing
Date.
" Closing
Net Working Capital " shall mean the Net Working Capital at
the close of business on the Business Day immediately preceding the
Closing Date.
" Confidentiality
Agreement " has the meaning ascribed to it in Section 9.2
hereof.
" Contrac t"
means any contract, agreement, obligation, undertaking, binding
commitment, lease, license, mortgage, bond, note, indenture or
instrument, whether written or oral, that is legally binding, and
relates to the Business.
" Disclosure
Schedule " means the disclosure schedule of even date
herewith prepared and signed by Warnaco and delivered to the
Purchaser simultaneously with the execution hereof as amended or
supplemented by Warnaco pursuant to the terms hereof.
" Due
Diligence Information " has the meaning ascribed to it in
the recitals of this Agreement.
" Elixir
Trademark " means the ELIXIR trademark, including any and
all related applications and registration rights.
" Employee Benefit
Plan " means each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each medical,
surgical, hospitalization, life insurance and other "welfare" plan,
fund or program; each profit-sharing, stock bonus or other
"pension" plan, fund or program; and each other employee benefit
plan, fund, program,
agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by
the Transferred Subsidiaries or the Asset Sellers, in respect of
the Business, or to which any of the Transferred Subsidiaries or
the Asset Sellers is party, in respect of the Business, for the
benefit of any employee of the Business.
" Employment
Taxes " means all taxes, charges, fees, duties, levies,
penalties or other assessments relating to employment imposed by
any federal, state, local or foreign governmental authority,
including, without limitation, payroll, severance, social security,
disability, occupation, service, and shall include interests,
penalties or additions attributable thereto or attributable to any
failure to comply with any requirement regarding Employment Tax
returns.
" Encumbrances "
means any and all liens, charges, security interests, options,
claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions
on title or transfer of any nature whatsoever.
" Environmental
Law " means all applicable Laws governing pollution or the
protection of the environment.
" Excluded
Assets " means the assets set forth on Exhibit
B.
" Financial
Statements " has the meaning set forth in Section
4.5(c).
" GAAP " means
US GAAP unless otherwise specified, in each case as described in
the accounting principles stated as Exhibit D.
" Governmental
Body " means any court or government (federal, state, local,
national, foreign or provincial) or any political subdivision
thereof, including without limitation, any department, commission,
board, bureau, agency or other regulatory, administrative or
governmental authority or instrumentality.
" Governing
Documents " means, with respect to any Person that is not a
natural Person, the certificate or articles of incorporation,
memorandum and articles of association, by-laws, deed of trust,
formation or governing agreement and other charter or
organizational documents or instruments governing the business or
affairs of such Person.
" Indebtedness "
means (a) all indebtedness for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable
in accordance with customary practices), (b) any other indebtedness
that is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations under financing leases and (d) all liabilities
secured by any lien on any property.
" Insurance
Policy " means any insurance policy maintained by Warnaco or
any of its Subsidiaries on behalf of the entities comprising the
Business other than those the premiums of which are paid directly
by the Transferred Subsidiaries (as defined below).
" Intellectual
Property " means all intellectual property including (i)
inventions and discoveries whether patentable or not, patents and
patent applications, and know-how, (ii) trademark and service mark
registrations and applications, logos, brand names, trade dress and
other indicia of source of origin and goodwill of any business
symbolized thereby, (iii) copyrightable works, copyright
registrations and applications and mask work
registrations and applications, databases, compilations, computer
software, (iv) domain names and (v) trade secrets, in each case as
may be owned by the Business on the date hereof.
" Knowledge of
Warnaco " means the knowledge of the persons listed on
Exhibit C.
" Law " means
any statute, law, ordinance, rule, regulation, order, judgment or
decree enacted, adopted, issued or promulgated by any Governmental
Body in effect on the date hereof.
" Lejaby
Trademark " means the LEJABY trademark, including any and
all related applications and registration rights.
" Liabilities "
means (i) bank loans and amounts due under credit facilities,
including accrued interest, (ii) loans/payables to Warnaco Inc. and
entities controlled directly or indirectly by Warnaco Inc. other
than the Transferred Subsidiaries net of loans/receivables from
Warnaco Inc. and entities controlled directly or indirectly by
Warnaco Inc. other than the Transferred Subsidiaries, and (iii) the
unfunded pension liabilities toward the employees of the
Transferred Subsidiaries including amounts in respect of long
service medal bonus awards at an agreed valuation of two million,
five hundred thousand (2,500,000) euros and (iv) bonuses and
related Employment Taxes due to the Supervisory Board and/or other
employees of the Business which depend on the consummation of the
Transaction or their continuance in office or employment for a
period after Closing pursuant to the Retention Agreements and (v)
liabilities under finance leases. For the avoidance of
doubt, Liabilities shall not include any amounts not transferred to
Purchaser under this Agreement.
" Litigation Reserve
Amount " shall mean one million, two hundred thousand
(1,200,000) euros.
" Material
Contract" has the meaning ascribed to it in Section 4.13(a)
hereof.
" Net
Working Capital " means account receivables net of
provisions, inventory net of provisions, prepaid expenses
(including other receivables and other current assets) less current
liabilities (accrued liabilities, excluding sums pertaining to long
service medal bonus awards already included in the unfunded pension
liability amount for the calculation of Liabilities, accounts
payable and income tax payable), but excluding any amount included
in the Liabilities, of the Transferred Subsidiaries and the Asset
Sellers in respect of the Business.
" Note " means
the twelve million, five hundred thousand (12,500,000) euros
non-interest promissory note due December 31, 2013, in the form
attached hereto.
" Person " means
and includes a natural person, a corporation, an association, a
partnership, a limited liability company, a trust, a joint venture,
an unincorporated organization or a Governmental Body.
" Proceeding "
means any action, audit (including but not limited to statutory or
administrative audit), hearing, inquiry, investigation, claim,
complaint, litigation or suit (whether civil, administrative or
criminal) commenced, brought, conducted or heard by or before any
Governmental Body or arbitrator.
" Purchase Price
" has the meaning ascribed to it in Section 3.1
hereof.
" Purchased
Assets " means the assets, contracts and employees set forth
on Exhibit E excluding any Excluded Asset.
" Purchaser "
has the meaning ascribed to it in the Recitals of this
Agreement.
" Purchaser Indemnified
Persons " means the Purchaser and each of its
Subsidiaries.
" Rasurel
Trademark " means the RASUREL trademark, including any and
all related applications and registration rights.
" Real
Property " means all real property that is owned or used by
the Transferred Subsidiaries or the Asset Sellers in respect of the
Business or that is reflected as an asset on the Financial
Statements.
" Reference Rate
" means, as of any date specified in this Agreement, the EUROS
Overnight Index Average (EONIA) rate published by the European
Central Bank or if no rate is published on such a date, the latest
rate published by the European Central Bank immediately preceding
the date specified.
" Retention
Agreements " means the letter dated October 11, 2007 from
Joseph R. Gromek to Jack McLauglin, and the letters dated October
1, 2007 from Jay A. Galluzo to Hervé Jacquin, Yann Le
Bornec, Eric Talbot, Roxane Chrétien and Andrea Mantegazza
(all of which were included in the Due Diligence
Information).
" Seller
Indemnified Persons " means Warnaco and each of its
Subsidiaries.
" Subsidiary "
or " Subsidiaries "
means, with respect to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such
Person. The term "control" shall be construed in
accordance with the provisions of Article L.233-3 of the French
Code de commerce.
" Substituted
Subsidiary " has the meaning ascribed to it in Section
11.4(b) hereof.
" Supervisory
Board " means John McLaughlin, Hervé Jacquin, Yann
Lebornec, Colette Candela and Eric Talbot.
" Surviving
Provisions " means the provisions of ARTICLE 1, Section 9.2,
ARTICLE 10 and ARTICLE 11 hereof.
" Target
Closing Net Working Capital " shall mean
€24,000,000.
" Tax " or "
Taxes " means
all taxes, charges, fees, duties, levies, penalties or other
assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise,
property, sales, gain, use, license, custom duty, unemployment,
capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, profit, gift, severance, value added,
disability, premium, recapture, credit, occupation, service,
leasing, employment, stamp and other taxes, and shall include
interest, penalties or additions attributable thereto or
attributable to any failure to comply with any requirement
regarding Tax Returns.
" Tax
Benefits " means the sum of any increased deduction, loss,
or credit then allowable or allowable in future years or decreases
in income, gains or recapture of tax credits then allowable
(including by way of amended Tax Returns) or allowable in future
years, multiplied by the applicable relevant corporate income tax
rate, and reduced, with respect to deductions, losses or credits
allowable only in future years, by applying a discount rate of 8%
from the earliest year in which such increased deductions, losses
or credits would possibly be available.
" Tax
Claim " means a claim for indemnification or defense arising
out of a breach of a representation contained in Section 4.19,
including reasonable attorneys' fees and expenses and reasonable
accountants' fees and expenses incurred in the investigation or
defense of any of the same or in asserting, preserving or enforcing
any of the rights of the Purchaser arising under Section
10.1.
" Taxing
Authority " means any Governmental Body responsible for the
imposition of any Tax.
" Tax
Return " means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any such document prepared on a consolidated, combined or
unitary basis and also including any schedule or attachment
thereto, and including any amendment thereof.
" Third-Party
Claim " has the meaning ascribed to it in Section
10.5.
" Transaction "
has the meaning ascribed to it in Section 2.1(c).
" Transferred
Subsidiaries Financial Statements " has the meaning set
forth in Section 4.5(c).
" Transfer Taxes
" means all sales, use, transfer, recording, ad valorem, privilege,
documentary, gains, gross receipts, registration, conveyance,
excise, license, stamp, duties or similar Taxes and
fees.
" Transition Services
Agreement " has the meaning set forth in Section
6.5.
1.2
General
Interpretive Principles . Unless the context
otherwise requires, as used in this Agreement: (i) "or" is not
exclusive; (ii) "including" and its variants mean "including,
without limitation" and its variants; (iii) words defined in the
singular have the parallel meaning in the plural and vice versa;
(iv) words of one gender shall be construed to apply to each
gender; (v) the terms "hereof," "herein," "hereby," "hereto," and
derivative or similar words refer to this entire Agreement,
including the Schedules and Exhibits hereto; (vi) the terms
"ARTICLE" "Section" "Exhibit" and "Schedule" refer to the specified
ARTICLE, Section, Exhibit or Schedule of or to this Agreement; and
(vii) any grammatical form or variant of a term defined in this
Agreement shall be construed to have a meaning corresponding to the
definition of the term set forth herein.
(a) A
reference to any Person includes such Person's successors and
permitted assigns.
(b) Any
reference to "days" means calendar days unless Business Days are
expressly specified. If any action under this Agreement
is required to be done or taken on a day that is not a Business
Day, then such action shall not be required to be done or taken on
such day but on the first succeeding Business Day
thereafter.
(c) The
Exhibits to this Agreement are incorporated herein by reference and
made a part hereof for all purposes.
(d) The
headings and captions of the various Articles, Sections and other
subdivisions hereof are for convenience of reference only and shall
not modify, define or limit any of the terms or provisions of this
Agreement.
(e) Warnaco
and the Purchaser, each represented by legal counsel, have each
participated in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or
interpretation should arise, this Agreement shall be construed as
if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or burdening either party by virtue of
the authorship of any of the provisions of this
Agreement.
ARTICLE 2
PURCHASE
AND SALE OF THE TRANSFERRED SUBSIDIARY STOCK
AND
PURCHASED
ASSETS; ASSUMPTION OF LIABILITIES
2.1
Sale and
Assignment . Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, at the
Closing and as of the Closing Date,
(a) Warnaco
shall sell, assign, transfer, convey and deliver to the Purchaser,
and Purchaser shall purchase and acquire, free and clear of all
Encumbrances, all of the outstanding shares of capital stock of the
Subsidiaries of Warnaco listed on Exhibit F (together with Euralis
SAS the " Transferred
Subsidiaries ") (such shares, the " Transferred
Subsi diary Stock ")
(such purchase, the " Entity
Purchase ");
(b) Warnaco
shall or shall cause its affiliates listed on Exhibit G
(collectively with Warnaco, the " Asset Sellers
" and, together with the Entity Sellers, collectively the "
Sellers ") to
sell, assign, transfer, convey and deliver to the Purchaser, and
Purchaser shall purchase and acquire, all of the Asset Sellers'
right, title and interest in the Purchased Assets; and
(c) Warnaco
shall assign, or shall cause the Asset Sellers to assign, and the
Purchaser shall assume and shall agree to pay, perform and
discharge when due, all liabilities and obligations of the Asset
Sellers relating to the Business or the Purchased Assets, whether
fixed, absolute, matured, unmatured, accrued or contingent, now
existing or arising after the date hereof, including all
liabilities and obligations under the Contracts assigned, to the
extent such Contracts are assigned, including to the extent such
liabilities and obligations are unpaid, undelivered or unperformed
on the Closing Date, excluding (i) any liability under
the
pension obligations owed to Mr. Bilher under the service agreement
dated June 13, 1991, and the managing director service agreement
dated July 1980, as amended, and (ii) any liability under the
Warners (United Kingdom) Limited’s pension scheme, and (iii)
any bank loans, amounts due under credit facilities and accrued
interest of the Asset Sellers and (iv) any loans/payables of the
Asset Sellers to Warnaco Inc. and entities controlled directly or
indirectly by Warnaco Inc. (the " Assumed
Liabilities "). (The sale of the Purchased Assets
and the Assumption of the Assumed Liabilities shall constitute the
" Asset
Purchase ". The Asset Purchase together with the
Entity Purchase, shall constitute the " Purchase ".
The Purchase together with the other transactions contemplated by
this Agreement shall constitute the " Transaction
".)
2.2
Transfer
and Delivery of the Transferr ed Subsidiary Stock,
the Purcha sed Assets and the
Assumed Liabilities . The transfer documents to
be executed, delivered and/or filed at Closing in connection with
the Entity Purchase in each relevant jurisdiction shall be
substantially in the form attached hereto as Exhibit
H. The conveyance, transfer and assumption documents to
be executed, delivered and/or filed at Closing in connection with
the Asset Purchase in each relevant jurisdiction shall be
substantially in the form attached hereto as Exhibit
I.
ARTICLE 3
PURCHASE
PRICE AND ADJUSTMENTS
3.1
Purchase
Price .
(a) The
consideration to be paid for the Transferred Subsidiary Stock, the
Purchased Assets and the Assumed Liabilities (hereafter referred to
as the " Purchase Price
") shall be the aggregate of:
(i) thirty
two million, five hundred thousand (32,500,000) euros;
(ii) plus
the Note;
(iii) plus
the Estimated Closing Cash as adjusted pursuant to Section 3.3(b)
below;
(iv) minus
the amount of the Estimated Closing Liabilities as adjusted
pursuant to Section 3.3(b) below,
as adjusted by the Net Working Capital Adjustment referred to in
Section 3.2(c) below, all to be paid pursuant to the provisions of
3.3.
3.2
Adjustment of
Purchase Price .
(a) No
later than seven (7) Business Days prior to the Closing Date,
Warnaco shall deliver to Purchaser a statement setting forth the
amount of Cash and Cash Equivalents expected to be outstanding as
of the close of business on the Business Day immediately preceding
the Closing Date (the " Estimated Closing Cash
"). The statement of Estimated Closing Cash shall be
prepared in accordance with the accounting principles stated as
Exhibit D hereof.
(b) No
later than seven (7) Business Days prior to the Closing Date,
Warnaco shall deliver to Purchaser a statement setting forth the
amount of Closing Liabilities expected to be outstanding as of the
close of business on the Business Day immediately preceding the
Closing Date (the " Estimated Closing Liabilities
"). The statement of Estimated Closing Liabilities shall
be prepared in accordance with the accounting principles stated as
Exhibit D hereof.
(c) No
later than seven (7) Business Days prior to the Closing Date,
Warnaco shall deliver to Purchaser a statement setting forth the
amount of the difference between the expected Closing Net Working
Capital (the " Estimated
Closing Net Working Capital ") and the Target Closing Net
Working Capital (the " Estimated Closing Net Working Capital
Adjustment "). This statement shall be prepared
in accordance with the accounting principles stated as Exhibit D
hereof.
(d) Within
ninety (90) days after the Closing Date, Warnaco shall prepare and
deliver to Purchaser statements setting forth the actual Closing
Cash, Closing Liabilities and Closing Net Working Capital (the "
Statement
"). The Statement shall be prepared in accordance with
the accounting principles stated as Exhibit D
hereof. Exhibit J sets out an illustrative calculation
of the Estimated Closing Net Working Capital. Purchaser
shall provide Warnaco and its representatives with reasonable
access, during normal business hours, to the facilities, personnel
and accounting records of the Business, to the extent reasonably
necessary to permit Warnaco to prepare the Statement.
(e) Warnaco
and Purchaser shall have sixty (60) days after the delivery of the
Statement during which to review such Statement. Unless
either party notifies the other in writing within such sixty (60)
day period of any good faith objection to any such Statement,
specifying in reasonable detail the items and amounts subject to
such objection (the " Disputed Items "), the
Statement to which no such objection shall have been so made shall
be conclusive and binding on Warnaco and Purchaser. If,
within such sixty (60) day period, a party notifies the other in
writing of any such objection, then the parties shall use
reasonable efforts for sixty (60) days after the expiration of such
initial sixty (60) day period to resolve in good faith their
differences and agree upon any adjustments to the Statement, as the
case may be. Any Disputed Item which are not resolved by
the mutual agreement of Purchaser and Warnaco within such sixty
(60) day period shall be submitted for resolution to an
internationally recognized independent certified public accounting
firm that may be mutually acceptable to Warnaco and Purchaser (the
" Independent Accounting
Firm "). If the Independent Accounting Firm shall
have refused its mission and Warnaco and Purchaser shall not have
succeeded within a ten (10) day period in naming a mutually
acceptable replacement, either party shall be entitled to request
the designation of an Independent Accounting Firm by the President
of the Commercial Court ( Tribunal
de commerce ) of Paris.
Warnaco and Purchaser shall instruct the Independent Accounting
Firm to limit its examination to the unresolved Disputed Items, to
resolve any such unresolved Disputed Items in accordance with the
requirements of this Agreement for any such items, and to use its
best efforts to make its determination thereon within sixty (60)
days after the referral of the Disputed Items to it in accordance
herewith. The resolution of any such unresolved Disputed
Items by such Independent Accounting firm shall be made in a
writing delivered to Warnaco and Purchaser and shall be final,
conclusive and binding upon Warnaco and the
Purchaser. The fees and expenses charged by the
Independent Accounting Firm shall be borne by the parties in a
manner that is proportionate to the final decision of the
Independent Accounting Firm: (For illustration purposes: in the
event Purchaser were to propose adjustments totaling one hundred
(100) euros, if the Independent Accounting Firm were to conclude
that adjustments of one hundred (100) euros were warranted, Warnaco
would bear 100% of the Independent Accounting Firm fees and
disbursements; if the Independent Accounting Firm were to conclude
that no adjustments were warranted, Purchaser would bear 100% of
the Independent Accounting Firm fees and disbursements; and if the
Independent Accounting Firm were to conclude that adjustments of
thirty (30) euros were warranted, Warnaco would bear 30% of the
Independent Accounting Firm fees and disbursements and Purchaser
would bear 70% of the Independent Accounting Firm fees and
disbursements). At a reasonable time and place in advance of a
hearing before the Independent Accounting Firm: (i) Purchaser and
Warnaco shall each provide access to all business records or
documents in its respective possession, custody or control that the
other party believes in good faith to be relevant to the resolution
of any disputed amount; and, (ii) Purchaser and Warnaco shall
provide access for examination to any current employee, advisor or
agent that the other party believes in good faith to have
information relevant to any disputed amount. Any delay
in providing such access shall toll the respective periods set
forth above. For purposes of Section 3.3 hereof, the
amounts agreed or determined following the procedures set forth in
this Section shall constitute the Closing Liabilities, the Closing
Cash and the Closing Net Working Capital Adjustment.
3.3
Payment
of the Purchase Price .
(a) On
the Closing Date, for same day value, Purchaser shall deliver the
Note and pay to Warnaco the amount equal to the sum
of (i) thirty two million, five hundred thousand
(32,500,000) euros, (ii) plus the Estimated Closing Cash, (iii)
less the Estimated Closing Liabilities and (iv) plus or minus the
Estimated Closing Net Working Capital Adjustment, by wire transfer
of immediately available funds to the bank account notified by
Warnaco to Purchaser (such notification to be made no later than
three (3) Business Days prior to the Closing Date).
(b) (i)
If the Closing Cash is greater than the Estimated Closing Cash,
then Purchaser shall pay to Warnaco the amount corresponding to the
difference between the Closing Cash and the Estimated Closing Cash
and if the Closing Cash is less than the Estimated Closing Cash,
then Warnaco shall pay to Purchaser the amount corresponding to the
difference between the Estimated Closing Cash and the Closing
Cash; (ii) If the Closing Liabilities are greater than
the Estimated Closing Liabilities, then Warnaco shall pay to
Purchaser the amount corresponding to the difference between the
Closing Liabilities and the Estimated Closing Liabilities and if
the Closing Liabilities are less than the Estimated Closing
Liabilities, then Purchaser shall pay to Warnaco the amount
corresponding to the
difference between the Estimated Closing Liabilities and the
Closing Liabilities; (iii) If the difference between the
Closing Net Working Capital and the Target Closing Net Working
Capital (the " Closing Net Working
Capital Adjustment ") is greater than the Estimated Closing
Net Working Capital Adjustment, then Purchaser shall pay to Warnaco
the amount corresponding to the difference between the Closing Net
Working Capital Adjustment and the Estimated Closing Net Working
Capital Adjustment and if the Closing Net Working Capital
Adjustment is lesser than the Estimated Closing Net Working Capital
Adjustment, then Warnaco shall pay to Purchaser the amount
corresponding to the difference between the Closing Net Working
Capital Adjustment and the Estimated Closing Net Working Capital
Adjustment. The amounts owed by each party to the other
party under this Section 3.3(b)shall be offset and only net
adjustment shall be paid by either party, as the case may be, to
the other party.
(c) Any
net amount required to be paid to Purchaser or to Warnaco, as the
case may be, pursuant to 3.3(b) shall be paid within five (5)
Business Days of the determination referred to in Section 3.2(e) by
the wire transfer of immediately available funds to the bank
account designated by Warnaco or Purchaser, as applicable, at least
three (3) Business Days prior to the due date.
3.4
Allocation of
Purchase Price . The Purchase Price allocations
among the Purchased Assets and the Transferred Subsidiaries shall
be made as set forth in Exhibit K. For the purposes of
all Taxes, Purchaser and Warnaco agree to report the transactions
contemplated by this Agreement as set forth in the allocations
under this Section 3.4 and Exhibit K, and that none of them will
take any position inconsistent with such allocations on any Tax
Return, in any refund claim, in any litigation, or otherwise,
without the consent of the other party, except as required by
applicable Law.
3.5
Taxes and
Withholdings . All payments to be made by the
Purchaser under this agreement shall be paid free and clear of any
deduction, withholdings for, or on account of tax, set-offs or
counterclaims; in particular, the price as formulated in Section
3.1 is before value added taxes and any other similar taxes as well
as any transfer taxes and other similar taxes. If any
deduction or withholding which is required by law, in which case,
the sum payable by the Purchaser in respect of such deduction or
withholding which is required to be made shall be increased to the
extent necessary to ensure that, after making such deduction or
withholding, Warnaco or the Asset Sellers receive and retain (free
from any liability in respect of any such deduction or withholding)
a net sum equal to the sum they would have received had not such
deduction or withholding been made or required to be made. If
Warnaco or the Asset Sellers subsequently receive a credit of such
deduction or withholding, they shall immediately pay the amount of
such credit to the Purchaser. No credit shall be deemed received by
the Purchaser unless it has relieved Warnaco or the Asset Sellers
of a present obligation to pay tax. The provisions of this Section
3.5 shall apply mutatis mutandis to payments that may be due by
Warnaco or the Asset Sellers to the Purchaser under this ARTICLE
3.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF WARNACO
Warnaco represents and warrants to the Purchaser that, except as
set forth in the Disclosure Schedule, all of the statements
contained in this ARTICLE 4 are true as of the date of this
Agreement and the Closing Date (or, if made as of a specified date,
as of such date).
4.1
Corporate
Existence . Each of Warnaco and the Transferred
Subsidiaries is duly organized and validly existing and, where
applicable, in good standing under the Laws of the jurisdiction of
its organization. Each of the Asset Sellers and the
Transferred Subsidiaries (a) has the requisite corporate or similar
power and authority to own, lease and operate its properties and
assets, including in the case of the Asset Sellers the properties
and assets included in the Purchased Assets, and to carry on the
Business as the same is now being conducted by it, and (b) is duly
authorized, qualified or licensed to do business in every
jurisdiction wherein, by reason of the nature of the Business, the
same is required, except where the failure of the foregoing to be
true and correct would not, individually or in the aggregate, have
a material adverse effect on the business, financial condition or
operations of the Business, taken as a whole, or materially impair
the Warnaco's ability to consummate the transactions contemplated
hereby.
4.2
Corporate
Authority . Warnaco and the Asset Sellers have
the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereunder. This Agreement and the other agreements, instruments and
documents to be executed, delivered and/or filed in connection
herewith (collectively with this Agreement, the " Transaction
Documents ") by Warnaco and the other Sellers and the
consummation of the transactions contemplated hereby and thereby
involving such persons have been or, in the case of the other
Sellers and the Transaction Documents other than this Agreement,
will be prior to the Closing, duly authorized by the Board of
Directors (or a duly authorized committee or representative
thereof) of Warnaco, and will be duly authorized by such other
Sellers, by all requisite corporate, shareholder or other action
prior to the Closing, and each of Warnacos has or will have at or
prior to the Closing full power and authority to execute, deliver
and/or file the Transaction Documents to which it is a party and to
perform its obligations hereunder or thereunder. This
Agreement has been duly executed and delivered by Warnaco, and the
other Transaction Documents will be duly executed, delivered and/or
filed by each of the Sellers party thereto and this Agreement
constitutes, and each of the other Transaction Documents when so
executed, delivered and/or filed will constitute, a valid and
legally binding obligation of the applicable selling party thereto,
enforceable against it in accordance with its terms except as
enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at Law).
4.3
Transferred
Subsidiaries Stock . Except as set forth in the
Disclosure Schedule, all of the outstanding shares of capital stock
of the Transferred Subsidiaries, have been validly issued and, to
the extent applicable, are fully paid and nonassessable and are
owned by Warnaco or one or more of its Subsidiaries free and clear
of all Liens. Section 4.3 of the Disclosure Schedule
sets forth as of the date of this Agreement, for each of the
Transferred Subsidiaries the authorized capital stock, the number
of shares of outstanding capital stock or the nominal amount of the
shares, the number of shares of such outstanding
capital stock owned by Warnaco and its Subsidiaries and the name of
each such owner. Except as set forth in the Disclosure
Schedule, there are no outstanding options, warrants, calls or
other rights of any kind relating to the sale, transfer,
registration, issuance or voting of any Transferred Subsidiary
Stock or any securities convertible into or exercisable or
exchangeable for Transferred Subsidiary Stock.
4.4
Brokers
or Finders . Warnaco has not entered into any
agreement or arrangement entitling any agent, broker, investment
banker, financial advisor or other firm or Person to any broker's
or finder's fee or any other commission or similar fee in
connection with the Transaction, except Goldman Sachs, whose fees
and expenses will be paid by the Warnaco in accordance with its
agreement with such firm.
4.5
Financial
Statements .
(a) Section
4.5(a) of the Disclosure Schedule contains copies of the combined
balance sheets of the Business as of December 30, 2006, and
December 31, 2007 (the " Balance Sheet
Date "), and the related combined statements of operations
and combined statements of cash flows for the fiscal year ended on
December 30, 2006, and December 31, 2007 (collectively, the "
Business
Financial Statements "). Subject to Section
4.5(b), the Business Financial Statements have been prepared in
good faith, with due care and attention, in compliance with
Warnaco’s procedures and with GAAP and consistently
applied.
(b) All
of the Business Financial Statements are qualified by the fact that
the Business has not operated as a separate "stand alone"
entity. As a result, the Business received certain
allocated charges and credits. Such charges and credits
do not necessarily reflect the amounts which would have resulted
from arms-length transactions or which the Business would have
incurred had it been operated as a stand-alone entity.
(c) Section
4.5(c) of the Disclosure Schedule contains the balance sheets of
each Transferred Subsidiary as of December 30, 2006, and the
related audited statements of operations and statements of cash
flows for the fiscal year ended on December 30, 2006 (collectively,
the " Transferred
Subsidiaries Financial Statements " and together with the
Business Financial Statements, the " Financial
Statements "). The Transferred Subsidiaries Financial
Statements are true, correct and complete and fairly present in all
material respects the financial condition and the results of
operations of the Transferred Subsidiaries as of such dates and for
such periods in accordance with French and Italian GAAP
respectively.
4.6
No
Insolvency . No Transferred Subsidiary and no
Asset Seller (i) has suspended its payments or is unable or deemed
to be unable to pay its debts as they become due, (ii) has made an
amicable settlement with its creditors or entered into any
moratorium or other arrangement with its creditors generally, (iii)
is in judicial reorganization or judicial liquidation; (iv) is the
object of any proceedings for the reorganization or collective
discharge of its liabilities under the Laws of any jurisdiction,
(v) has filed any motion, request or petition of bankruptcy,
reorganization, suspension of lawsuits or claims by its creditors
or the equivalent thereof, or (vi) is under the threat of any such
proceedings. No Transferred Subsidiary is under
voluntary liquidation or winding-up or has ceased or proposed to
cease to carry on all or a substantial portion of its respective
businesses.
4.7
No
Undisclosed Liabilities . Except (a) as disclosed
in the Business Financial Statements and (b) for liabilities and
obligations incurred in the ordinary course of the Business since
the Balance Sheet Date, the Business and the Transferred
Subsidiaries have no material liability or obligation of any
nature, whether absolute, accrued, contingent or otherwise,
required by GAAP to be reflected on a consolidated balance
sheet.
4.8
Absence
of Certain Changes . Since the Balance Sheet
Date, the Business has been conducted in all material respects in
the ordinary course.
4.9
Title to
Properties .
(a) The
Transferred Subsidiaries and the Asset Sellers own, lease or
otherwise have full and legally enforceable rights to use, all
machinery, equipment, and other tangible assets (excluding Real
Property assets which are treated in Section 4.10) necessary for
the conduct of the Business as presently conducted.
(b) Except
for property sold since the Balance Sheet Date in the ordinary
course of the Business, each of the Transferred Subsidiaries and
the Asset Sellers has valid title to the other material properties
and assets reflected on the Financial Statements.
4.10
Real
Property . Section 4.10 of the Disclosure
Schedule sets forth a complete and correct list of all the Real
Property owned by the Transferred Subsidiaries or the Asset Sellers
in respect of the Business. The Transferred Subsidiaries
and the Asset Sellers have good, valid and marketable title to all
such Real Property, in each case free and clear of all Encumbrances
(other than immaterial Encumbrances). There are no
leases, subleases, licenses, concessions or other agreements,
written or oral, granting to any Person (other than the Transferred
Subsidiaries and the Asset Sellers) the right to use or occupy any
portion of the Real Property owned by the Transferred Subsidiaries
or the Asset Sellers. There are no outstanding options
or contractual rights of first refusal to purchase any portion of
or interest in such Real Property.
4.11
Leases
. A true and complete copy of each Real Property lease
with respect to the Business has heretofore been delivered, or made
available, to the Purchaser. Each such lease is valid, binding and
enforceable in accordance with its terms and is in full force and
effect and grants any Transferred Subsidiary or Asset Seller, as
applicable, the right to use and occupy the premises relating
thereto (subject to any immaterial Encumbrance). There
is no violation by any Transferred Subsidiary or Asset Seller of
any material covenant, condition, restriction or agreement, which
may affect the Real Property leased by any Transferred Subsidiary
or Asset Seller. Warnaco has received oral assurances
from a representative of the landlord of the premises located at
Les Manges, Rillieux La Pape, that the landlord is in principle
prepared to renew the lease of such premises, dated July 28, 2000,
on commercially reasonable terms, including a reasonable tri annual
or annual exit clause.
4.12
Assets
. Except as otherwise provided in this Transaction, the
assets of the Transferred Subsidiaries, together with the Purchased
Assets and the rights and assets made available pursuant to the
Transition Services Agreement, include all the rights and assets
necessary for the conduct of the Business, as the Business is
conducted on the date
hereof and as the Business will be conducted on the Closing Date;
to the exclusion of Cash and Cash Equivalents and the Excluded
Assets that are not transferred pursuant to this
Agreement. No contracts will be transferred to the
Purchaser under this Agreement which do not wholly or substantially
relate to the Business. Except for the persons listed in
Schedule 4.12, no employee has been transferred from any Warnaco
business to the Business since October 1, 2007.
4.13
Commercial and Other
Related Contracts .
(a) Section
4.13(a) of the Disclosure Schedule sets forth a true and complete
list of, and Warnaco has made available to the Purchaser true and
complete copies of, each of the following Contracts to which any
Transferred Subsidiary or Asset Seller, in respect of the Business,
is a party (each a " Material
Contract ") and neither the Transferred Subsidiaries nor the
Asset Sellers have entered into any other agreement, in respect of
the Business, oral or written, the purpose or the effect of which
would be identical or similar to those listed below and which is
not disclosed in the Disclosure Schedule:
(i) material
Contracts relating to distribution logistics that relates to the
Business;
(ii) material
partnership or joint-venture Contracts with respect to the
Business;
(iii) material
licenses, licensing arrangements and other Contracts providing in
whole or in part for the use of, or limiting the use of,
Intellectual Property, in respect of the Business;
(iv) &nbs
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