EXHIBIT 10.3
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this “
Agreement ”) is made and
entered into as of __________ ___, 2008, by and
between Charming Shoppes of Delaware, Inc., a Pennsylvania
corporation (“ Charming ”), and Arizona Mail
Order Company, Inc, a Delaware corporation (“ AMO
”). Charming and AMO are at times referred to
herein individually as a “ Party ” and
collectively as the “ Parties ”.
WHEREAS, Crosstown Traders, Inc., a Delaware corporation (“
Seller ”) and Norm Thompson Outfitters, Inc. (“
NTO ”) have entered into that certain Stock Purchase
Agreement dated August 25, 2008, as amended on September ___, 2008
(the “ Purchase Agreement ”), pursuant to which
NTO has agreed to purchase all of the issued and outstanding stock
of AMO and its subsidiaries as more fully described in the Purchase
Agreement;
WHEREAS, capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the Purchase
Agreement; and
WHEREAS, as a condition to the Seller and NTO’s obligation to
consummate the transactions contemplated by the Purchase Agreement,
the Parties have entered into this Agreement pursuant to which each
Party will make available to the other Party certain transition
services for the time periods specified herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
ARTICLE 1
SERVICES PROVIDED
1.01
Transition Services . Upon the terms and subject
to the conditions set forth in this Agreement, each Party (in such
capacity, the “ Provider ”) will provide to the
other Party (in such capacity, the “ Recipient
”) for the use in the businesses of the Recipient and its
Affiliates each of the services listed in Appendix A ,
which is attached to and made part of this Agreement (hereinafter
referred to individually as a “ Transition Service
”, and collectively as the “ Transition Services
”), during the time period for each Transition Service set
forth on Appendix A (hereinafter referred to as the
“ Time Periods ” for all of the Transition
Services, and the “ Time Period ” for each
Transition Service).
1.02
Personnel . In providing the Transition Services,
the Provider, as it deems necessary or appropriate in its sole
discretion, may (a) use such personnel of the Provider or its
Affiliates and/or (b) employ the services of other third parties
(each such third party, a “ Subcontractor ”) to
the extent such Subcontractor’s services are routinely used
to provide similar services to the Provider’s business or are
reasonably necessary for the efficient performance of any of such
Transition Services. The Provider shall retain responsibility for
the provision of such Transition Services to the
Recipient. If the Provider elects to commence the
provision of specified Transition Services hereunder through a
Subcontractor that is not engaged with respect to the Transition
Services in question by the Provider as of the date hereof, then
the Recipient shall have the right to terminate such specified
Transition Services on 20 days prior written notice to the Provider
and to engage such Subcontractor to perform such specified
Transition Services
directly for the
Recipient and the Recipient shall have no further liability or
obligation to the Provider with respect to such terminated
Transition Services.
1.03
Level of Transition Services .
(a)
The Provider shall perform the Transition Services exercising the
same degree of care as it exercises in performing the same or
similar services for its own account, with priority equal to that
provided to its own businesses or those of any of its
Affiliates. Subject to the obligations under this
Agreement (including, without limitation, the other provisions of
this Section 1.03(a)), the Provider shall be responsible for the
proper management of and control over the provision
of the Transition Services (including, without limitation, the
determination or designation at any time of the equipment,
employees and other resources of the Provider to be used in
connection with the provision of the Transition Services), it being
expressly acknowledged and agreed that the Parties shall in good
faith and shall reasonably cooperate in the cost-effective
transition of each Party’s business units to stand alone
functionality and, in the case of AMO, the integration of AMO and
its business with the businesses operated by AMO and its
Affiliates. Accordingly, the Recipient may from time to
time request that the Provider implement plans, procedures and
other processes relating to the provision of Transition Services
which it in good faith believes will help achieve such objectives
and/or facilitate and expedite the Recipient's transition to
stand-alone functionality as well as such other plans, procedures
and other processes which it in good faith believes will improve
the operational efficiency of the Recipient's
business. The Provider shall consider in good faith and
implement any such commercially reasonable plans, procedures and
other processes requested by the Recipient, so long as the
Recipient agrees to bear capital expenditures and incremental
management expenses that the Parties mutually agree will be
required to be made in connection therewith.
(b)
As more specifically set forth in Appendix A attached hereto, it is
the intention of the parties that the Recipient’s use of any
Transition Service shall not be higher than the level of use
required by the affected business unit prior to the Closing
Date. In no event shall the Recipient be entitled to any
new service (other than any additional services mutually agreed by
the Parties in a separate writing) or to increase its use of any of
the Transition Services above the level of use prior to the date
hereof without the prior written consent of the Provider.
(c)
In connection with the provision of Transition Services and subject
to Section 5.01 hereof, the Provider may undertake periodic
maintenance and other temporary shutdowns of its information
technology system, processing center equipment, call center
services or other system related to any Transition Service as
needed and in accordance with its own practices and procedures (but
not more frequently than one (1) four (4) hour period per month) so
long as the Provider makes commercially reasonable efforts to
minimize any disruption to the Recipient’s business as a
result thereof. The Provider shall give notice to the Recipient at
least 72 hours prior to any scheduled maintenance (and such notice
shall provide the estimated time such system is to be shut down for
maintenance) and will make commercially reasonable efforts to give
notice to the Recipient 24 hours prior to any non-scheduled
temporary shutdowns but in any event will give notice as soon as is
practicable. Notice under this subsection shall be given
pursuant to Section 6.04 herein.
(d)
The Parties acknowledge that the intent of this Agreement is to
provide for the orderly and efficient transition of each
Party’s respective business units to stand-alone
functionality and that the Parties are not in the business of
providing the Transition Services to third
parties. Accordingly, each Party agrees to use
commercially reasonable efforts to make a transition of each such
Transition Service to its own internal organization (or any other
third party suppliers for the Transition Services) as promptly as
practicable within (or at the conclusion of) the Time Period
applicable to such Transition
Service and shall
take such commercially reasonable actions (e.g., providing the
other Party reasonable access to operational information) in
furtherance of the foregoing. Each Party shall assist
the other Party’s efforts by (i) collaborating on changes to
operating procedure and third party providers (e.g. shipping
contracts), (ii) dedicating sufficient resources (including,
without limitation, personnel and materials) that are needed for
the transition of each Transition Service to a stand-alone
functionality (which shall include, without limitation, the
transition from the Provider’s distribution centers and call
center to the Recipient’s distribution centers and call
center), and (iii) other mutually agreeable practices before
termination of the Transition Service.
(e)
If a Transition Service expires or is terminated pursuant to this
Agreement, but information or other support related to
such service is still required to perform another Transition
Service that continues, provision of the continuing Transition
Service will be contingent upon the Recipient providing the
information and support needed from the expired or terminated
service to provide the Transition Service that continues.
1.04
Limitation of Liability and Warranty .
(a)
In the absence of gross negligence or reckless or willful
misconduct on the Provider’s part, subject to the indemnity
provisions of Article 5 of this Agreement, the Provider shall not
be liable for any claims, liabilities, damages, losses, costs,
expenses (including, but not limited to, settlements, judgments,
court costs and reasonable attorneys’ fees), fines and
penalties incurred by the Recipient, arising out of any actual or
alleged injury, loss or damage of any nature whatsoever by the
Recipient in the Provider’s providing or failing to provide
the Transition Services to the
Recipient. Notwithstanding anything to the contrary
contained herein, in the event the Provider commits an error with
respect to or incorrectly performs or fails to perform any
Transition Service, at the Recipient’s request, the Provider
shall use reasonable best efforts to correct such error, re-perform
or perform such Transition Service.
(b)
In no event shall the Provider be liable for any damages caused by
the Recipient’s failure to perform the Recipient’s
responsibilities hereunder. The Provider will not be
liable to the Recipient for any act or omission of any other entity
that is not an Affiliate or Subcontractor of the Provider
furnishing any Transition Service (other than due to a default or
breach by the Provider or any of its Affiliates or Subcontractors
of any agreement between the Provider or any of its Affiliates or
Subcontractors and such third party).
(c)
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR AT
LAW OR IN EQUITY, IN NO EVENT SHALL THE PROVIDER BE LIABLE FOR
PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
SUFFERED BY THE RECIPIENT (INCLUDING, WITHOUT LIMITATION, DAMAGES
FOR THE RECIPIENT’S LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING TO ANY
CLAIM MADE UNDER THIS AGREEMENT OR REGARDING THE PROVISION OF OR
THE FAILURE TO PROVIDE THE TRANSITION SERVICES, EVEN IF THE
PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
1.05
Obligation to Continue to Use Services .
(a)
Unless terminated pursuant to this Agreement, the Provider shall
provide, and the Recipient shall purchase, the Transition Services
for the Time Periods as is specified with respect to the applicable
Transition Service on Appendix A . The Recipient
may terminate any of the Transition Services that the Provider is
providing to the Recipient by giving the Provider prior written
notice of its
desire to terminate
such Transition Services in accordance with the termination notice
periods specified in Appendix A . Notwithstanding
anything to the contrary contained in this Agreement, if the
Recipient is able to procure from a third-party source services
similar to, and in substitution for, any particular Transition
Service (a “ Third Party Service ”) the
Recipient shall have the right to terminate such Transition Service
upon the provision of written notice of termination to the Provider
as set forth in Appendix A and shall thereupon utilize the services
of such third-party provider for such Third Party Service in lieu
of the particular Transition Service so terminated without
liability or obligation to the Recipient, including quarterly
true-up amounts set forth on Appendix A (other than the obligation
to compensate the Provider for services performed prior to the
effective date of termination). In the event that the
Recipient requires the provision of a Transition Service (other
than the Transition Service so terminated and replaced with such
Third Party Service) in order to facilitate its utilization of and
migration to a Third Party Service, the Provider agrees to provide
such Transition Service as promptly as is commercially reasonable
following the Recipient’s request therefor and shall use
commercially reasonable means to prioritize the same so as to
expedite the Recipient’s utilization of and migration to such
Third Party Service.
(b)
If any Transition Service is terminated by the Recipient, the
Recipient may not elect to reinstitute such Transition Service.
1.06
Provider Access . To the extent reasonably
required for the Provider’s personnel to perform the
Transition Services, the Recipient shall provide the
Provider’s personnel with access to its equipment, office
space, plants, telecommunications and computer equipment and
systems, and any other areas and equipment; provided that such
access shall not include the use thereof in the provision of any
Transition Service.
1.07
Title to Assets; Methods, etc; Ownership of Products .
(a)
All procedures, methods, systems, strategies, tools, equipment,
facilities and other resources used by Provider in connection with
the provision of Transition Services hereunder (including all
intellectual property rights whether existing or created in
connection with the provision of the Transition Services or
otherwise) shall remain the property of Provider and shall at all
times be under the sole direction and control of Provider.
(b)
Notwithstanding any other provision of this Agreement, and except
as otherwise expressly provided in Appendix A or in a separate
written agreement that is not, by its terms, superseded by this
Agreement, title to all products or other materials that are
transported, shipped, warehoused or otherwise held in the custody
of Provider on behalf of Recipient shall at all times remain with
Recipient, and Recipient shall at all times be the owner of record
of such products or other materials, and, subject to Section 5.01,
shall be solely responsible for any matters arising from or
relating to such products or other materials.
1.08
Review Meetings . The Parties shall hold review
meetings (“ Review Meetings ”) at least
bi-weekly or as otherwise mutually agreed by the Parties (in each
case, at mutually acceptable dates, times and locations) at which
representatives of Charming and AMO shall review and discuss any
operational, strategic or other issues raised by any participant
with respect to the provision of the Transition
Services. The Parties intend that the information
exchanged at such Review Meetings shall be in addition to ongoing
communication between representatives of Charming and AMO with
respect to the provision of Transition Services hereunder.
ARTICLE 2
COMPENSATION
2.01
Consideration .
(a)
As consideration for the Transition Services, the Recipient shall
pay to the Provider the amount specified for each Transition
Service as set forth in Appendix A ; provided, however, if a
Subcontractor delivers invoices to Recipient (rather than to the
Provider) for Transition Services rendered under this Agreement,
Recipient shall pay such Subcontractor directly and the Recipient
shall have no further liability or obligation to the Provider with
respect to the payment for the Transition Services covered thereby.
In such event, the Recipient shall notify Provider that such
invoices have been paid directly by Recipient. Upon
the termination of any Transition Service in accordance with this
Agreement, the compens
