EXHIBIT 99.2
CASH ESCROW AGREEMENT
CASH ESCROW AGREEMENT, dated as of May 7, 2003 (this "Cash
Escrow Agreement"), by and among Global Brand Holdings, LLC, a New York
limited liability company ("Global"), Aris Industries, Inc., a New York
corporation ("Aris"), XOXO Clothing Company, Inc., a Delaware corporation
("XOXO"), and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, as Escrow Agent (the
"Agent").
This Cash Escrow Agreement is being entered into in
connection with that certain Trademark Purchase Agreement, dated as of May 7,
2003 (the "Agreement"), by and among Aris, its wholly-owned subsidiary, Europe
Craft Imports, Inc., a New Jersey corporation ("ECI"), XOXO, ECI's
wholly-owned subsidiary Marcade Group Realty Corporation, a New York
corporation ("Marcade"), the wholly-owned subsidiary of XOXO, 8-3 Retailing
Inc., a California corporation ("8-3 Retailing"), Global, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇. Capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the foregoing, the
respective representations, warranties, covenants and agreements set forth in
the Agreement and herein and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, and intending to be
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
ESCROW FUNDS
1.1 Establishment of Escrow Funds.
(a) Simultaneously with the execution and delivery
of this Cash Escrow Agreement and in accordance with Section 1.6 of the
Agreement, Global is causing to be deposited U.S. $2,000,000 with the Agent to
secure the payment obligations of Global under Section 1.2 of the Agreement.
The Agent agrees to hold, as escrow agent, the U.S. $2,000,000 so deposited
(the "▇▇▇▇▇▇▇ Money Deposit") in escrow in an account (the "▇▇▇▇▇▇▇ Money
Escrow Account") separate from other amounts included in the Escrow Funds (as
defined herein) and in accordance with this Cash Escrow Agreement. The Agent
hereby acknowledges receipt of the ▇▇▇▇▇▇▇ Money Deposit by, or on behalf of,
Global. The ▇▇▇▇▇▇▇ Money Deposit, together with any other amounts
subsequently deposited with respect to the ▇▇▇▇▇▇▇ Money Deposit (including
any interest earned thereon) with the Agent to be held in escrow pursuant to
this Cash Escrow Agreement, are collectively referred to herein as the
"▇▇▇▇▇▇▇ Money Escrow Fund."
(b) On the Closing Date and in accordance with
Section 1.2(b) of the Agreement, the ▇▇▇▇▇▇▇ Money Escrow Fund shall remain in
escrow to secure the performance of certain obligations of the Sellers under
Section 1.2(b) of the Agreement (the "Escrow Deposit") and shall be deemed to
have been deposited by Global with the Agent as a portion of the Purchase
Price, thereby reducing the amount payable by the Buyer pursuant to Section
1.2(a) of the Agreement. The Agent agrees to hold, as escrow agent, the Escrow
Deposit in escrow in an account (the "Escrow Deposit Account") separate from
other amounts included in the Escrow Funds and in accordance with this Cash
Escrow Agreement. The Escrow Deposit, together with any other amounts
subsequently deposited with respect to the Escrow Deposit (including any
interest thereon) with the Agent to be held in escrow pursuant to this Cash
Escrow Agreement, are collectively referred to herein as the "Escrow Deposit
Fund."
(c) On the Closing Date and in accordance with
Section 1.2(c) of the Agreement, Global shall deposit a portion of the
Purchase Price equal to U.S. $1,000,000 with the Agent (the "Additional Escrow
Deposit") to secure certain obligations of Aris pursuant to Section 1.2(c) of
the Agreement. The Agent agrees to hold, as escrow agent, the Additional
Escrow Deposit in escrow in an account (the "Additional Escrow Deposit
Account") separate from other amounts included in the Escrow Funds and in
accordance with this Cash Escrow Agreement. The Additional Escrow Deposit,
together with any other amounts subsequently deposited with respect to the
Additional Escrow Deposit (including any interest thereon) with the Agent to
be held in escrow pursuant to this Cash Escrow Agreement, are collectively
referred to herein as the "Additional Escrow Deposit Fund." The ▇▇▇▇▇▇▇ Money
Escrow Fund, the Escrow Deposit Fund and the Additional Escrow Deposit Fund
are referred to herein as the "Escrow Funds."
1.2 Release of Escrow Funds.
(a) ▇▇▇▇▇▇▇ Money Escrow Fund. The ▇▇▇▇▇▇▇ Money
Escrow Fund shall be released from escrow in accordance with the following
procedure: (1) in the event that the Closing occurs, the ▇▇▇▇▇▇▇ Money Escrow
Fund shall be released and shall be deemed to be deposited in the Escrow
Deposit Account pursuant to Section 1.1(b) hereof; or (2) (i) (x) in the event
that the Closing does not occur as a result of the failure of any one of the
conditions set forth in Article V of the Agreement (other than Section 5.3) to
be satisfied for a reason other than the default of Global under the
Agreement, or (y) in the event that the Sellers accept an Alternative
Transaction as permitted by Section 4.5 of the Agreement, or (z) in the event
that the Closing does not occur as a result of the litigation described in
Sections 5.3 and 6.3 of the Agreement, the ▇▇▇▇▇▇▇ Money Escrow Fund shall be
immediately returned to an account designated in advance by Global; or (ii) in
the event that the Closing does not occur as a result of the failure of any
one of the conditions in Sections 6.1, 6.4 and 6.5 of the Agreement to be
satisfied by Global for a reason other than the default of the Sellers and the
Sellers are not in default under the Agreement at the time of such failure,
the ▇▇▇▇▇▇▇ Money Escrow Fund shall be immediately transferred to an account
designated in advance by Aris and XOXO.
(b) Escrow Deposit Fund. The Escrow Deposit Fund
shall remain in the Escrow Deposit Account during the Escrow Period (as such
term is defined in Section 1.2(b) of the Agreement), and the Agent shall
release the Escrow Deposit Fund in accordance with the terms set forth in
Section 1.2(b) of the Agreement.
(c) Additional Escrow Deposit Fund. The Additional
Escrow Deposit Fund shall remain in the Additional Escrow Deposit Account
during the Additional Escrow Period (as such term is defined in Section 1.2(c)
of the Agreement), and the Agent shall release the Additional Escrow Deposit
Fund in accordance with the terms set forth in Section 1.2(c) of the
Agreement.
1.3 Escrow Funds Release Procedures. Notwithstanding
anything herein to the contrary, the Escrow Funds shall be held in escrow
under the terms of this Cash Escrow Agreement and shall be released by the
Agent in accordance with the following procedures and upon the terms set forth
in Section 1.2 hereof:
(a) Joint Instruction. Upon joint written notice
from Aris, XOXO and Global that (i) the ▇▇▇▇▇▇▇ Money Escrow Fund, or (ii) the
Escrow Deposit Fund, or (iii) the Additional Escrow Deposit Fund, or any
portion thereof, should be disbursed pursuant to Sections 1.2(a), 1.2(b) or
1.2(c) hereof (such notice to be given in substantially the form as attached
hereto as Exhibit A), the Agent shall make such disbursement in accordance
with the directions set forth in such joint written notice.
(b) Unilateral Instruction. If, at any time, the
Agent receives written notice (a "Release Notice") from one of the parties
(the "Demanding Party") requesting the release of any amount from any of the
Escrow Funds, and a copy of such Release Notice is received by the other
parties hereto (each, a "Notified Party"), in substantially the form as
attached hereto as Exhibit B, the Agent shall, after a period of ten (10)
Business Days following the latest date upon which the Release Notice is
received by any Notified Party (the "Objection Period"), disburse to the
Demanding Party such portion of the Escrow Funds as is requested in the
Release Notice, unless a Notified Party objects to such disbursement before
the Objection Period has elapsed, in which case the portion of the Escrow
Funds requested in the Release Notice (the "Disputed Funds") shall remain in
escrow as part of the Escrow Funds until the parties shall have mutually
agreed upon the procedures for disbursement of such Disputed Funds and
delivered a joint written instruction to the Agent to such effect or have
obtained an order of a court of competent jurisdiction ordering the
distribution of such Disputed Funds.
(c) Unilateral Instruction with Confirmation.
Notwithstanding anything herein to the contrary, if, at any time, the Agent
receives a Release Notice from Global with respect to the Escrow Deposit Fund
accompanied by either (i) a written consent by Aris and/or XOXO that a
chargeback claim should be paid or (ii) a final decision of an arbitrator
ruling that a chargeback claim is to be paid, then the Agent, without waiting
the ten (10)-Business Day period specified in subsection (b) of this Section
1.3, shall promptly disburse from the Escrow Deposit Fund to Global or its
designee the amount stated in the consent or arbitrator's ruling.
ARTICLE II
GENERAL PROVISIONS
2.1 Term of Agreement. This Cash Escrow Agreement shall be
in effect until the Escrows Funds are fully distributed in accordance with
Sections 1.2 and 1.3 hereof.
2.2 Expenses of the Agent. The Agent shall be entitled to be
reimbursed for all reasonable expenses, disbursements and advancements
incurred or made by it in performance of its services hereunder, which will be
shared equally by Global and Aris, and each of Global and Aris hereby agrees
to reimburse the other in the event the other pays such party's portion of
such expenses, disbursements and advances due hereunder.
2.3 Taxes on Escrow Funds. The party to whom any portion of
the Escrow Funds is distributed in accordance with Sections 1.2 and 1.3 hereof
shall bear in full all federal, state and local taxes based upon, or measured
by, net or gross income arising from such portion of the Escrow Funds and
shall provide the Agent with sufficient information so that the Agent can
comply with reporting obligations imposed under any laws relating to such
taxes.
2.4 The Agent. The obligations of the Agent under
this Agreement are subject to the following terms and conditions:
(a) The Agent is not a party to, and is not bound
by, any agreement other than as expressly set forth in this Cash Escrow
Agreement or, to the extent incorporated herein, in the Agreement;
(b) The Agent acts hereunder as a depository only
and is not responsible for or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any funds deposited with
it. Global, Aris and XOXO agree to and hereby do waive any suit, claim, demand
or cause of action of any kind which they may have or may assert against the
Agent arising out of, or relating to, the execution or performance by the
Agent of this Cash Escrow Agreement, unless such suit, claim, demand or cause
of action is based upon the willful misconduct or gross negligence of the
Agent. To the extent that the Agent delivers any funds in accordance with the
instructions described in this Cash Escrow Agreement, Global, Aris and XOXO
further agree to indemnify the Agent against and from any and all claims,
demands, costs, liabilities and expenses, including counsel fees, which may be
asserted against it or to which it may be exposed or which it may incur by
reason of its execution or performance of this Cash Escrow Agreement unless
arising from the Agent's willful misconduct or gross negligence. The Agent
shall not be required to defend any legal proceeding which may be instituted
against it with respect to the subject matter of this Cash Escrow Agreement
unless it is requested to do so by one of the parties hereto and is
indemnified by such requesting party to the Agent's satisfaction against the
cost and expenses (including reasonable attorney's fees) of such defense,
unless arising from the Agent's willful misconduct or gross negligence. The
Agent shall not be required to institute legal proceedings of any kind. The
Agent shall not be required to perform any acts which violate any law or
applicable rules of any governmental agency;
(c) The Agent shall not have any responsibility for
the genuineness or validity of any notice, evidence or other document or item
delivered to it, and the Agent shall be entitled to rely upon and shall be
protected in acting upon any written notice, waiver, consent, receipt or other
evidence or paper document which the Agent reasonably believes to be genuine
and to be signed by the proper person; and
(d) The Agent shall not be liable for any error of
judgment or for any acts done or steps taken or omitted or admitted by it or
for any mistake of facts or law or for anything which the Agent may do or
refrain from doing in connection herewith except for the Agent's own willful
misconduct or gross negligence.
2.5 Removal of Agent. The Agent agrees that Global and Aris
may, by mutual agreement at any time, remove the Agent as agent hereunder, and
substitute another therefor. In such event the Agent shall, upon receipt of
written notice of such removal, account for and deliver to such substituted
escrow agent the Escrow Funds and the Agent shall thereafter be discharged of
all liability hereunder.
2.6 Agreement and Modification. This Cash Escrow Agreement
may be amended, modified and supplemented only by written agreement of Global,
Aris, XOXO and the Agent.
2.7 Waiver of Compliance. Except as otherwise provided in
this Cash Escrow Agreement, any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party or parties entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure.
2.8 Waiver of Set-Off Rights. The Agent hereby absolutely
and irrevocably waives any and all rights it may have, under applicable laws
or otherwise, and agrees that it shall not exercise or assert any right (a) to
set-off and appropriate and apply any amounts on deposit from time to time in
the Escrow Funds, including, without limitation, any and all interest,
dividends, payments, earnings and other income realized pursuant to the
investment and reinvestment of such amounts from time to time pursuant hereto
(including, without limitation, any written, electronic or other evidence of
such investments), and any other amounts owing or to be credited to the Escrow
Funds (collectively, the "Deposited Interests") against, or on account of, any
obligations or liabilities whatsoever of Global or Aris or any subsidiary of
Global or Aris owing (or to become due to, whether contingent or otherwise) to
it and any claims of any nature it may have against Global or Aris or any
subsidiary of Global or Aris, in each case, whether arising under any existing
agreements to which either Global or Aris may be party to with the Agent or
otherwise, or (b) to establish, create, maintain, perfect, enforce and
foreclose on any lien, security interest or any other encumbrance whatsoever
(collectively, "Liens"), including, without limitation, banker's liens and any
other Liens arising by statute, operation of law or otherwise, on, against or
in respect of any of the Escrow Funds or the Deposited Interests.
2.9 Notices. All notices and other communications hereunder
shall be in writing and shall be sent by hand delivery or overnight courier,
in each case receipt acknowledged, or registered or certified mail, in each
case with postage prepaid and return receipt requested, to the respective
parties at the following addresses:
If to Global, to:
Global Brand Holdings, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Managing Member
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & Masyr, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
And
If to Aris or to XOXO, to:
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Chairman and Chief Executive Officer
c/o Aris Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. or
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. or
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for receiving notice by written notice given
to the other parties. All notices and other communications hereunder shall be
deemed to have been duly given as of the earlier of (a) the date received at
the address and in the manner provided above or (b) the date receipt is
acknowledged.
2.10 Assignment. This Cash Escrow Agreement and all of the
provisions hereof shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and permitted assigns, but
neither this Cash Escrow Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties.
2.11 Governing Law. This Cash Escrow Agreement shall be
governed by the laws of the State of New York (without giving effect to the
principles of conflicts of law thereof except for General Obligations Law
Section 5-1401 and, with respect to the exception to Section 2.13 of this Cash
Escrow Agreement, Section 5-1402) as to all matters, including, but not
limited to, matters of validity, construction, effect, performance and
remedies. The invalidity or unenforceability of any provision of this Cash
Escrow Agreement shall not affect the validity or enforceability of any other
provision.
2.12 Counterparts. This Cash Escrow Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and
the same instrument.
2.13 Dispute Resolution. Any dispute between Global and
Aris, or between Global and XOXO, arising out of this Cash Escrow Agreement
shall be decided by the state or federal courts located in the County and the
State of New York and each of the parties hereto expressly submits itself to
the non-exclusive jurisdictions of the state and federal courts located in the
County and the State of New York in any action, suit or proceeding relating to
any such breach or alleged breach of this Cash Escrow Agreement by the Agent
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such
action, suit or proceeding brought in such a court and any claim that any such
action, suit or proceeding brought in such a court has been brought in an
inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have caused this Cash
Escrow Agreement to be duly executed as of the day and year first above
written.
GLOBAL BRAND HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Member
ARIS INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
XOXO CLOTHING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, as Escrow Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
Exhibit A
JOINT NOTICE OF INSTRUCTION
[Date]
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Ladies and Gentlemen:
Reference is made to the Cash Escrow Agreement, dated as of
April __, 2003 (the "Cash Escrow Agreement"), by and among Global Brand
Holdings, LLC, Aris Industries, Inc., XOXO Clothing Company, Inc. and Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, as Escrow Agent. Capitalized terms used and
not otherwise defined herein have the respective meanings ascribed to them in
the Cash Escrow Agreement.
Pursuant to Section 1.2(a) [Section 1.2(b)] [Section 1.2(c)]
of the Cash Escrow Agreement, the undersigned hereby instruct you to
distribute the portion of the ▇▇▇▇▇▇▇ Money Escrow Fund [the Escrow Deposit
Fund] [the Additional Escrow Deposit Fund] indicated herein as follows: [ ].
Very truly yours,
GLOBAL BRAND HOLDINGS, LLC
By: __________________________
Name:
Title:
ARIS INDUSTRIES, INC
By: __________________________
Name:
Title:
XOXO CLOTHING COMPANY, INC
By: __________________________
Name:
Title:
Exhibit B
UNILATERAL NOTICE OF INSTRUCTION
[Date]
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Ladies and Gentlemen:
Reference is made to the Cash Escrow Agreement, dated as of
April __, 2003 (the "Cash Escrow Agreement"), by and among Global Brand
Holdings, LLC ("Global"), Aris Industries, Inc. ("Aris") , XOXO Clothing
Company, Inc. and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, as Escrow Agent.
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to them in the Cash Escrow Agreement.
Pursuant to Section 1.2(a) [Section 1.2(b)] [Section 1.2(c)]
of the Cash Escrow Agreement and in accordance with the procedures set forth
in Section 1.3(b) of such Cash Escrow Agreement, the undersigned hereby
requests that the Agent release the portion of the ▇▇▇▇▇▇▇ Money Escrow Fund
[the Escrow Deposit Fund] [the Additional Escrow Deposit Fund] indicated
herein as follows: [ ]
The undersigned certifies that a copy of this notice is
being delivered to [Aris][Global] as of the date first above written.
Very truly yours,
ARIS INDUSTRIES, INC. [GLOBAL
BRAND HOLDINGS, LLC]
By: __________________________
Name:
Title:
cc: Global Brand Holdings, LLC [Aris Industries, Inc.]
