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Exhibit 10.115 TRANSITION SERVICES AGREEMENT
by and between THE RUSS COMPANIES, INC. and
RUSS BERRIE AND COMPANY, INC. Dated as of
December 23, 2008
This Transition Services Agreement (this
"Agreement" ), dated as of December 23, 2008, is
entered into by and between Russ Berrie and Company, Inc., a New
Jersey corporation (" Seller " ), and The Russ
Companies, Inc., a Delaware corporation ( "Buyer" ).
Buyer and Seller are referred to herein collectively as the "
parties " and individually as a " party ."
RECITALS WHEREAS, Seller and Buyer entered into a Purchase
Agreement, dated as of December 23, 2008 (the " Purchase
Agreement "), pursuant to which Buyer has agreed to acquire
from Seller the Gift Business as defined therein; and WHEREAS,
Seller wishes that Buyer and its Affiliates provide certain support
services and accommodations to Seller and certain of its Affiliates
from and after the Closing under the Purchase Agreement, and Buyer
and its Affiliates wish to provide such services, all as more fully
set forth herein. WHEREAS, Buyer wishes that Seller provide certain
support services and accommodations to Buyer and certain of its
Affiliates from and after the Closing under the Purchase Agreement,
and Seller wishes to provide such services, all as more fully set
forth herein. AGREEMENT NOW THEREFORE, in consideration of
the premises and the mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows: ARTICLE I DEFINITIONS
Section 1.1 Specific Definitions. As used in this
Agreement, the following terms have the meanings set forth or
referenced below: "Agreement" means this Transition
Services Agreement, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.
"Buyer" has the meaning set forth in the preamble to
this Agreement. "Confidential Information" means any
trade secrets or other information which is confidential,
proprietary or otherwise not publicly available, including any
confidential data, know-how or information relating to the business
practices, products, distributors, customers, prospects, suppliers,
research and development, ideas, designs, discoveries, inventions,
techniques, equipment, marketing, sales, methods, manuals,
strategies, results of operations or financial affairs (whether
written or oral), and all analyses, compilations, forecasts,
studies or other documents prepared on the basis of such
information.
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"Direct Hourly Costs" means direct incremental
labor and supervision costs, calculated on an hourly basis. For
salaried employees, Direct Hourly Costs shall equal the result
obtained by (i) dividing the relevant individual’s annual
base salary by 52, and (ii) then dividing the result obtained
in clause (i) by 40. "Modification" has the
meaning set forth in Section 2.3 .
"Proceeding " means any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil,
criminal, administrative, judicial or investigative, whether formal
or informal, whether public or private) commenced, brought,
conducted or heard by or before, or otherwise involving, any
governmental body or arbitrator. "Purchase Agreement"
has the meaning set forth in the preamble to this Agreement.
"Representatives" means any director, officer,
employee, affiliate, representative (including without limitation,
attorneys, accountants and financial and other advisers) or agents
of either party hereto or its Affiliates. "Security
Regulations" has the meaning set forth in
Section 6.3 . "Seller" has the meaning
set forth in the preamble to this Agreement.
"Service" or "Services" means
(a) the applicable service or services or accommodations set
forth in Section 2.2 below, (b) any other services
that are not listed in Section 2.2 and which Seller and
Buyer mutually agree in writing (pursuant to
Section 2.3 ) to be provided or obtained hereunder, and
(c) any Modifications to a Service or Services provided
pursuant to clause (a) or (b) immediately foregoing to
which Buyer and Seller mutually agree in writing (pursuant to
Section 2.3 ) to be provided or obtained hereunder.
"Service Provider" means (a) Buyer or any
Affiliate of Buyer providing to or obtaining for Seller, or any
Affiliate of Seller, a Service pursuant to Section 2.1
hereof, and/or (b) Seller providing to or obtaining for Buyer, or
any Affiliate of Buyer, a Service pursuant to
Section 2.1 hereof, "Systems" has the
meaning set forth in Section 6.3 . "Term"
has the meaning set forth in Section 3.1 .
"Termination Date" has the meaning set forth in
Section 3.1 . Section 1.2 Other Definitional
Provisions . (a) All capitalized terms used herein, but
not otherwise defined herein, shall have the meanings ascribed to
such terms in the Purchase Agreement, which meanings are
incorporated herein by reference.
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(b) The words " hereof ," " herein ,"
and " hereunder " and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. (c) The
terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa. (d) The words "
include ," " includes ," and "
including " when used in this Agreement, shall be deemed
to be followed by the words "without limitation," unless already so
followed. (e) The word "or" is not exclusive. ARTICLE
II SERVICES Section 2.1 Provision of
Services. (a) On the terms and conditions of this
Agreement, Buyer hereby agrees to provide, or cause one or more of
its Affiliates to provide, Services to Seller and/or certain of
Seller’s Affiliates for the Term of this Agreement, as
described in Section 2.2 below. Buyer shall, and shall cause
each Service Provider to, perform the Services exercising the same
degree of care as they exercise in performing the same or similar
Services for their own account, with priority equal to that
provided to their business operations. (b) On the terms and
conditions of this Agreement, Seller hereby agrees to provide
Services to Buyer and/or certain of Buyer’s Affiliates for
the Term of this Agreement, as described in Section 2.2 below.
Seller shall perform the Services exercising the same degree of
care as they exercise in performing the same or similar Services
for its own account, with priority equal to that provided to their
business operations. Section 2.2 Services. (a)
Space Requirements 1. Up to 12 individuals
employed by the Seller subsequent to the Closing will be entitled
to the continued use of: their offices, related furniture, personal
computers (with internet access), phones and equipment (as in
effect and on the same basis as prior to the Closing) at the
premises located at 111 Bauer Drive, Oakland, New Jersey 07436 or
the replacement facility therefor (the "Oakland Facility"),
including unrestricted access to the Oakland Facility, until
April 1, 2009 (with such extensions as are mutually agreed
between the parties). In lieu of the continued provision of the
specific offices occupied by the designated individual prior to the
Closing (or in the event that a replacement facility is occupied
subsequent to the Closing), Buyer may relocate all such individuals
to substantially similar offices in one location in the Oakland
Facility, provided that the remainder of the first sentence hereof
is complied with in full. The use of the Oakland Facility and other
Services provided in this Section 2.2(a)(1), as described
above, shall be without charge to the Seller. Notwithstanding the
foregoing, as a condition of these individuals’ access to the
Oakland Facility, they will abide by all reasonable rules and
regulations regarding use of the Oakland Facility that were
applicable to the employees of Seller at the Oakland Facility prior
to Closing and remain applicable to employees of Buyer or Buyer
Affiliates thereafter, as they may be reasonably amended by Buyer
from time to time.
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2. Kids Line Australia Pty Ltd. ("KL Australia") will be
permitted to continue to occupy the premises located at
Banksmeadow, Australia (the "Australian Facility") occupied prior
to the Closing together with the lessee of the Australian Facility,
Russ Australia Pty Limited ("Russ Australia") pursuant to the
Service Agreement dated February 21, 2008 between KL Australia
and Russ Australia (the "Service Agreement"), without consideration
through and including January, 2010, and thereafter in accordance
with the provisions of the Service Agreement in existence
immediately prior to the Closing for as long as Russ Australia or
any other subsidiary of Buyer occupies the Australian Facility,
provided , that notwithstanding any provision in the Service
Agreement to the contrary, either party will be entitled to modify
or terminate the arrangement and the Service Agreement with
6 month’s prior written notice to the other party (and
neither party will be entitled to modify or terminate the
arrangement or the Service Agreement with less than
6 month’s prior written notice to the other party,
unless the parties mutually agree to such modification or
termination. 3. Kids Line UK Limited will be permitted to
continue to occupy the premises located at Stoke Park, Tower Lane,
Eastleigh, Hampshire in the United Kingdom (the "UK Facility")
occupied prior to the Closing together with the lessee of the UK
Facility, Russ Berrie (U.K.) Limited ("Russ UK"), without
consideration through and including April, 2009, and thereafter in
accordance with the arrangements pertaining to the UK Facility
immediately prior to the Closing, for as long as Russ UK or any
other subsidiary of Buyer occupies the UK Facility, provided
, that notwithstanding any arrangement in existence immediately
prior to the Closing to the contrary, either party will be entitled
to modify or terminate the arrangement with 6 month’s
prior written notice to the other party (and neither party will be
entitled to modify or terminate the arrangement with less than 6
month’s prior written notice to the other party, unless the
parties mutually agree to such modification or termination). (b)
Access to Records 1. After the Closing and until
the date that the Seller files its Annual Report on Form 10-K for
the year ended December 31, 2008 ("the 2008 10-K") with the
Securities and Exchange Commission (the "SEC"), without charge to
the Seller, Buyer shall provide Seller and its Representatives
direct on-line access to the Seller’s historical financial
and business records on any hardware or software platform
transferred to Buyer at Closing (collectively, the "ERP System"),
to enable Seller to prepare its filings with the SEC, periodic
financial statements, closing information required by its auditors
and tax returns and/or deal with tax audits ("Needed
Information").
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2. After the Closing and for a period consistent with the
record-retention policies and practices of the Gift Entities prior
to the Closing, Buyer shall permit Seller or its Representatives to
request information from the Buyer or its applicable Affiliates
pertaining to the Seller’s historical financial and business
records on the ERP System, during normal business hours, to enable
Seller to prepare the Needed Information. Buyer agrees that it or
its Affiliates will provide the information requested (in the form
requested) in a timely fashion to Seller, taking into account the
circumstances of the request, including, but not limited to,
reporting deadlines under federal securities laws. For each item of
information requested (the "Requested Information"), Seller will
pay to Buyer the Direct Hourly Costs plus 20% associated with the
provision of such item of Requested Information. Buyer and its
Affiliates agree to cooperate, at the Seller’s request, in
transferring all of such Requested Information to a system
established by Seller or maintained for Seller by a third party.
(c) Personnel 1. Until the date that the Seller
files the 2008 10-K with the SEC, the members of the Seller’s
finance group employed by the Buyer as of the Closing Date (the
"Finance Group") will in good faith, for so long as they remain
employed by Buyer, be made available to the Seller for up to 80% of
their time, and other necessary employees employed by the Buyer as
of the Closing Date shall give their reasonable assistance, in each
case in order to enable the Seller to prepare, complete and file
the 2008 10-K, to prepare for the earnings call in connection
therewith, and to support the audit of the Gift Business and
related testing pursuant to the Sarbanes Oxley Act of 2002;
provided that such assistance does not unreasonably interfere with
Buyer’s ability to comply with all financial reporting
obligations imposed on it by its senior lender. In consideration of
the foregoing, Seller will pay to Buyer the Direct Hourly Costs
associated with the provision of such services plus 20%.
2. After the date that the Seller files the 2008 10-K, upon
the request of Seller and the agreement of Buyer (in Buyer’s
discretion), the reasonable assistance of the Finance Group and/or
other qualified personnel of Buyer will be provided to the Seller
on an as-needed basis in order to enable the Seller to prepare,
complete and file, as applicable, reports and statements required
to be filed by Seller with the SEC under federal securities laws,
financial statements, and closing records required by the
consummation of the transactions contemplated by the Purchase
Agreement. In consideration of the foregoing, Seller will pay to
Buyer the Direct Hourly Costs associated with the provision of such
services plus 20%. 3. Up to 3 individuals who, immediately
prior to the Closing, were employed by Russ Consulting Service
(Shenzhen) Co., Ltd. ("RCS") but did work primarily for Sassy,
Inc., will be permitted, following the Closing, to continue such
employment arrangements in accordance with their respective terms,
provided , that notwithstanding any arrangement in existence
immediately prior to the Closing to the contrary, Buyer will not
modify or terminate the applicable arrangement with less than 6
month’s prior written notice to the applicable individual,
unless Buyer and the applicable individual mutually agree to such
modification or termination, or Buyer determines in good faith to
terminate the employment of one or more of these individuals as a
result of: (a) such individual’s material breach of the
terms of such individual’s employment arrangement with RCS,
which material breach has not been cured within 10 days of
written notice thereof; (b) in carrying out such
individual’s duties, such individual engages in conduct that
constitutes gross neglect, willful misconduct, or fraud,
(c) the individual’s material failure to adhere to any
material written policy of RCS if such individual has not cured
such non-compliance within 10 days of written notice thereof
(provided that notice and an opportunity to cure need not be given
for a second offense of the same nature); (d) the
appropriation (or attempted appropriation) of a business
opportunity of RCS, including attempting to secure or securing any
personal profit in connection with any transaction entered into on
behalf of RCS; (e) the misappropriation (or attempted
misappropriation) of any of RCS’ funds or property; or (f)
(i) the conviction of, or the entering of a guilty plea or
plea of no contest with respect to a felony or the equivalent
thereof, or (ii) the conviction of, or the entering of a
guilty plea or plea of no contest with respect to any other crime
with respect to which imprisonment in excess of 3 days is
imposed, or (g) (i) the indictment (or its procedural
equivalent) for a felony or the equivalent thereof, or
(ii) the indictment (or its procedural equivalent) for any
other crime with respect to which imprisonment in excess of
60 days is a possible punishment (in the event of such
termination, Buyer will provide Seller with at least 10 days’
prior written notice. Seller will pay to Buyer the Direct Hourly
Costs associated with such arrangements plus 20%.
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4. After the date that the Seller files the 2008 10-K, upon
the request of Buyer and the agreement of Seller (in Seller’s
discretion), the reasonable assistance of Guy Paglinco and/or
Robert Parks (for so long as either is employed by the Seller, as
applicable) will be provided to the Buyer or its Affiliates on an
as-needed basis in order to enable the Buyer to prepare and
complete consolidated financial statements as well as closing
records required by the consummation of the transactions
contemplated by the Purchase Agreement. In consideration of the
foregoing, Buyer will pay to Seller the Direct Hourly Costs
associated with the provision of such services plus 20%.
5. After the date that the Seller files the 2008 10-K, upon
the request of Buyer and the agreement of Seller (in Seller’s
discretion), the reasonable assistance of Anthony Cappiello and
Marc Goldfarb (for so long as either is employed by the Seller, as
applicable) will be provided to the Buyer or its Affiliates on an
as-needed basis in order to support the Buyer with respect to
certain operational and legal matters. In consideration of the
foregoing, Buyer will pay to Seller the Direct Hourly Costs
associated with the provision of such services plus 20%. (d)
IT As of the Closing Date and for a period of
90 days thereafter, Buyer and its Affiliates will provide to
Seller and its Affiliates reasonable access to the IT professionals
of the Buyer or its Affiliates (either members of the
Seller’s IT group employed by the Buyer as of the Closing
Date, or other qualified personnel of Buyer or its Affiliates), on
an as-needed basis, to separate data with respect to Seller’s
operations from data with respect to the operation of the Gift
Entities transferred to Buyer at Closing (e.g., separating website
data, creating data extracts of Seller information). In
consideration of the foregoing, Seller will pay to Buyer the Direct
Hourly Costs associated with the provision of such services plus
20%. Any server created to contain such separated Seller data may
be housed in the Oakland Facility without charge to the Seller, for
so long as any employees of the Seller retain office space in such
facility pursuant to Section 2.2(a)(1) hereof. (e) Employee
Benefits 1. With respect to all employee benefit plans
other than the medical plan and any equity plans provided by Russ
Berrie U.S. Gift, Inc. ("US Gift") prior to the Closing
("Non-Medical Plans"), up to 12 individuals employed by the Seller
subsequent to the Closing (the "Participants") will be entitled to
continued participation in all such Non-Medical Plans subsequent to
the Closing until the earlier of, with respect to each Participant,
(i) the termination of the employment of such Participant,
(ii) such time as Seller enrolls such Participant in
Seller-sponsored Non-Medical Plans, and (iii) the termination
of such Non-Medical Plans by US Gift, provided that subject
to the provisions of Article X of the Purchase Agreement, US
Gift will be permitted to terminate any Non-Medical Plan with
90 days’ prior written notice to the Participants. In
consideration for the foregoing, Seller will reimburse Buyer for
all direct costs incurred by Buyer or US Gift in connection with
such participation.
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2. With respect to the medical plan provided by US Gift
prior to the Closing ("Medical Plan"), (x) Seller will either
pay the COBRA premiums of the Participants with respect thereto (or
US Gift shall make such premium payments and be directly reimbursed
therefor by Seller), and (y) US Gift will pay any medical
claims or expenses of the Participants covered by such COBRA
premiums until the earliest of, with respect to each Participant,
(i) the termination of COBRA benefit applicability,
(ii) the termination of the employment of such Participant and
(iii) such time as Seller enrolls such Participant in a
Seller-sponsored Medical Plan. In consideration for the foregoing,
Seller will reimburse Buyer for all payments made by Buyer or US
Gift in connection therewith. Section 2.3 Other Services or
Modifications. Subject to the terms and conditions otherwise
set forth herein, (i) Seller may request th
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