INTERIM OPERATING AGREEMENT
THIS INTERIM OPERATING AGREEMENT made as of January 6, 2002 (this
"Agreement") by and among TOY SOLDIER, INC., a Delaware corporation ("Buyer"),
THE RIGHT START, INC., a California corporation ("Parent"), KBB RETAIL ASSETS
CORP., f/k/a F.A.O. XXXXXXX, a New York corporation ("Seller"), and ROYAL VENDEX
KBB N.V., a Netherlands corporation ("Shareholder"). All capitalized terms
contained herein and not otherwise defined in this Agreement shall have those
meanings ascribed to them in the Purchase Agreement (as defined below).
WHEREAS, Parent, Buyer, Seller, Quality Fulfillment Services, Inc. ("QFS")
and Shareholder are parties to that certain asset purchase agreement dated
November 19, 2001 (the "Purchase Agreement"), pursuant to which, among other
things, Buyer purchased the Assets of Seller and QFS upon the terms and subject
to the conditions set forth therein; and
WHEREAS, Section 2.6(a) of the Purchase Agreement provides for the
execution and delivery by Seller, QFS, Shareholder and Buyer of an operating
agreement, pursuant to which Buyer shall provide operational and management
services to Seller and QFS for certain of Seller's retail toy stores (the "Other
Operated Stores") pursuant to the terms of the operating agreement in the form
annexed to the Purchase Agreement as Exhibit 2.6(a)(xi) (the "Other Operating
Agreement"); and
WHEREAS, the terms of the Other Operating Agreement do not address Seller's
needs with respect to the operation of Seller's store located at 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (the "Chicago Store"); and
WHEREAS, Buyer desires to provide such operational and management services
to Seller with respect to the Chicago Store and Seller desires to have such
services provided to ensure the orderly operation of the Chicago Store.
NOW, THEREFORE, in consideration of 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:
1. PROVISION OF SERVICES
1.1 Standard of Operations. Commencing on the date hereof, Buyer shall manage
and operate the Chicago Store in a manner consistent with the standards of
quality with respect to the Transferred Stores and Facilities. Buyer shall
apply substantially the same policies, practices and procedures as apply
generally to the Transferred Stores and Facilities with respect to
day-to-day operations, management, accounting, purchasing, control of
operating expenses and general administration, including marketing,
promotional activities and other matters, subject to the applicable terms
of this Agreement. Exceptions to general policies, practices and procedures
may be made by Buyer to deal with specific circumstances affecting the
Chicago Store if, in Buyer's reasonable judgment, there is an adequate
business justification for doing so. Notwithstanding any provision to the
contrary in this Agreement, Buyer shall not use, suffer or permit any
person to use the Chicago Store as a xxxx down, clearance or liquidation
outlet or conduct any auction or going-out-of business sale in the Chicago
Store unless otherwise requested or authorized by Seller in writing.
1.2 Contracts. Buyer shall have authority to enter into in Buyer's name, at
Buyer's cost and for Buyer's sole benefit such purchasing, service and
other contracts or agreements, which are in the ordinary course of
business, as are in Buyer's reasonable professional judgment necessary for
the operation, supply and maintenance of the Chicago Store as required by
this Agreement.
1.3 Maintenance. Buyer, at its own expense, shall be responsible for
maintaining the Chicago Store in good condition and repair. All repairs and
maintenance work shall be completed in accordance with the terms of the
real property lease for the Chicago Store (the "Lease").
1.4 Operating Expenses. Throughout the Term hereof, Buyer shall pay all
expenses incurred in connection with the operation of the Chicago Store,
including payments due under the Lease. Notwithstanding any provision to
the contrary contained in this Agreement, Seller reserves the right at any
time and from time to time, upon written notice to Buyer (each, a "Rent
Payment Option Notice"), to pay the base rent, additional rent and any
other charges and costs accruing under the Lease (the "Rent") directly to
the landlord under the Lease (the "Landlord"). Buyer hereby agrees, upon
receipt of a Rent Payment Option Notice, to promptly deliver any
information needed by Seller in connection with the payment of Rent (i.e.,
sales data used to calculate percentage rent) so as to enable Seller to pay
the Rent to Landlord on a timely basis in accordance with the terms of the
Lease. Seller shall have the right upon no less than thirty (30) days
written notice to revoke a Rent Payment Option Notice and direct Buyer to
resume paying Rent to the Landlord in accordance with the terms of the
Lease.
1.5 Recordkeeping. Buyer agrees to maintain all books of record, accounts and
other financial and operating data with respect to the Chicago Store during
the Term hereof. Seller shall have the right to audit Buyer's books and
record, accounts, financial and operating data upon prior notice to Buyer.
2. LANDLORD NEGOTIATIONS
2.1 Landlord Negotiations. Throughout the Term, Buyer acknowledges that Seller
shall continue (and Shareholder shall cause Seller to continue) to
negotiate with the Landlord for either (i) an early termination of the
Lease or (ii) an assignment of the Lease to Buyer under terms and
conditions satisfactory to Buyer in its sole and absolute discretion. Buyer
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shall cooperate with Seller at Buyer's election in connection with any
proposed assignment.
3. PERSONNEL
3.1 Personnel. Pursuant to Section 12.1 of the Purchase Agreement, Buyer shall
offer employment to the employees previously employed by Seller in the
Chicago Store. Accordingly, subject to the applicable terms of the Purchase
Agreement, Buyer is solely responsible for hiring, supervising, directing
the work of, promoting, discharging and determining the compensation and
other benefits of all personnel working in the Chicago Store. Buyer shall
be solely liable for the wages, salaries, benefits and other compensation
of its personnel, including but not limited to management personnel such as
district or regional managers that it chooses to employ to oversee the
Chicago Store.
4. INVENTORIES
4.1 Inventories. Pursuant to the Xxxx of Sale in the form attached hereto as
Exhibit A, Buyer has purchased the Inventories of the Chicago Store from
Seller, which Inventories have been valued using the average cost method of
accounting, in exchange for the Chicago Subordinated Note in the form
attached hereto as Exhibit B (the "Chicago Subordinated Note") and shall,
at its sole cost and expense, including distribution expenses, supply such
additional Inventories as are needed for sale in the Chicago Store, subject
to the limitations set forth in Section 7.2 hereof.
5. MONTH-END RECONCILIATION
5.1 Month-End Reconciliation. Buyer shall deliver a monthly profit and loss
report to Seller detailing Expenses (as hereinafter defined) and Net Sales
(as hereinafter defined) generated at the Chicago Store substantially in
the form attached hereto as Exhibit C (the "Monthly Store Operations
Report"). The Monthly Store Operations Report shall also disclose Annual
Net Sales and the Gross Margin Floor (each as hereinafter defined) for the
applicable fiscal month. In the event Expenses exceed Net Sales during any
fiscal month (the "Monthly Shortfall"), Seller shall reimburse Buyer for
the Monthly Shortfall within ten (10) business days of its receipt of the
Monthly Store Operations Report. Notwithstanding any provision to the
contrary contained in this Agreement, commencing the fiscal month of April,
2002 throughout the remaining Term of this Agreement, if the percentage
difference between Net Sales and the actual cost of goods sold during any
fiscal month (the "Store Margin") is less than the difference between (i)
the average Store Margin during the applicable fiscal month for the
flagship stores transferred by Seller to Buyer located in New York City,
Orlando, Las Vegas and at the Mall of Georgia and (ii) two percent (2%)
(the "Gross Margin Floor"), which shall be evaluated on an independent,
month-to-month basis, Seller shall only be obligated to fund the portion of
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the Monthly Shortfall that would have been payable by Seller if the Gross
Margin Floor had been satisfied. In the event Buyer demonstrates that the
average Store Margin, calculated on an annual basis commencing April 1,
2003 and on a proportionate basis at the time Buyer submits the Final Year
End Statement (as hereinafter defined), exceeds the average Gross Margin
Floor for the same period, Seller shall fund any remaining unpaid Monthly
Shortfall for the applicable period. Seller acknowledges that the
implementation of the Gross Margin Floor will restrict Buyer's ability to
liquidate the Aged Inventory (as such term is defined in the Purchase
Agreement) included in the Inventories of the Chicago Store that Buyer
purchased from Seller. Seller shall have the right to request reasonably
detailed supporting documentation in connection with any Monthly Store
Operations Report, which documentation shall be promptly delivered by Buyer
for Seller's review, however, payment of the Monthly Shortfall shall not be
subject to Seller's approval of such supporting documentation. Seller
anticipates reviewing the Monthly Store Operations Report on a quarterly
basis and expressly reserves all rights under this Section 5.1, including
the right to dispute the information contained in any Monthly Store
Operations Report, notwithstanding the fact that one (1) or more months may
have elapsed following payment of the applicable Monthly Shortfall
reflected in any particular Monthly Store Operations Report disputed by
Seller. In the event Seller disputes any information contained in the
Monthly Store Operations Report (the "Disputed Item(s)"), Seller shall
notify Buyer of such Disputed Item(s) in writing (the "Dispute Notice") in
the manner required under this Agreement. Buyer shall, within ten (10)
business days of receipt of any Dispute Notice either (i) amend the
applicable Monthly Store Operations Report and refund Seller's overpayment
of the Monthly Shortfall or (ii) provide Seller with additional supporting
documentation and other related information with respect to the Disputed
Item(s). In the event Buyer and Seller are unable to resolve the Disputed
Item(s) in a mutually satisfactory manner upon the request of Buyer or
Seller, such dispute shall be submitted to arbitration in accordance with
Section 14.9 hereof. In the event Net Sales exceed Expenses during any
fiscal month (the "Sales Overage"), Buyer shall be entitled to retain and
use the Sales Overage to offset future Monthly Shortfall amounts subject to
Buyer's obligation to reimburse Seller for any payment of Rent provided in
the next sentence hereof and reconciliation following the end of each
fiscal year of Buyer (the "Fiscal Year"). Notwithstanding any foregoing
provision to the contrary, following delivery of a Rent Payment Option
Notice, in the event any Sales Overage exists during any fiscal month in
which Seller has paid the Rent, Buyer shall promptly reimburse Seller for
the Rent paid by Seller up to the amount of the Sales Overage. Any excess
funds remaining from any Sales Overage following reimbursement of any Rent
paid by Seller shall thereafter be returned to Seller within thirty (30)
days following the end of any Fiscal Year, together with a reconciliation
statement for the applicable Fiscal Year. Any late payments shall accrue
interest on a daily basis at a rate of eight percent (8%) per annum. For
purposes of this Agreement, the term "Expenses" shall mean (i) the expenses
incurred exclusively in connection with Buyer's operation of the Chicago
Store (which shall, in the case of the non-allocated charges, be limited to
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the actual out-of-pocket expenses incurred and paid or to be settled in
cash by Buyer--i.e., actual cost of goods sold, cash payments under the
Lease, actual costs and expenses associated with operation and management
of the Chicago Store and all out-of-pocket costs of compliance with the
Lease plus the Chicago Store's pro-rata portion of royalties due for the
use of the FAO name and interest on the Chicago Subordinated Note) plus
(ii) one twelfth of six and one-half percent (6.5%) of Annual Net Sales,
which amount represents the allocable amount of certain variable overhead
costs associated with the operation of all of the stores and locations
being transferred to Buyer by Seller and QFS (i.e., warehouse, shipping and
labor costs, corporate and home office expenses and other charges), the
term "Annual Net Sales" shall mean total sales revenues generated by the
Chicago Store for the trailing twelve (12) month period net of customer
merchandise returns. Buyer acknowledges and agrees that Parent may exercise
Seller's rights under this Section 5.1, on Seller's behalf and the term
"Net Sales" shall mean the total sales revenue generated by the Chicago
Store during any fiscal month during the Term, net of customer merchandise
returns.
If total Expenses exceed Net Sales during a Fiscal Year of Buyer by an
amount less than Two Hundred Thousand Dollars ($200,000) (such excess
being defined as the "Aggregate Annual Threshold Shortfall"), Buyer shall
receive an incentive payment equivalent to the difference between the Two
Hundred Thousand Dollars ($200,000) and the Aggregate Annual Threshold
Shortfall (the "Incentive Payment"). Buyer expressly acknowledges and
agrees that any Rent paid directly by Seller shall be deemed included in
total Expenses and factored into the calculation of the Aggregate Annual
Threshold Shortfall, notwithstanding the fact that such amounts were not
actual out-of-pocket expenses incurred and paid in cash by Buyer. In the
event Net Sales for a Fiscal Year of Buyer are equivalent to the total
Expenses for such Fiscal Year (the "Break Even Point") Buyer shall receive
an Incentive Payment equivalent to Two Hundred Thousand Dollars
($200,000). Each Incentive Payment shall be paid within forty-five
45) days of the end of the relevant Fiscal Year provided no unresolved
Dispute Notice is outstanding with respect to the applicable Fiscal Year
at that time. In the event of an outstanding Dispute Notice, the
Incentive Payment shall be remitted to Buyer within fifteen (15) days of
resolution of the Disputed Item(s). At such time that the Break Even Point
is exceeded (such excess, the "Net Profit"), such Net Profit shall be
shared equally between Buyer and Seller until the Seller shall have
received Two Hundred Thousand Dollars ($200,000) (the "Second Break
Even Point"). Buyer shall be entitled to retain all Net Profits in excess
of the Second Break Even Point.
6. LICENSE OF FAO NAMES
6.1 License.
(a) Seller has retained, as of the Closing (and Buyer
acknowledges that Seller possesses), a royalty free,
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non-transferable, nonexclusive license, for the duration of
the Term hereof and solely in connection with matters related
to the Chicago Store as contemplated under this Agreement, to
use the names "FAO Xxxxxxx," any derivatives thereof, and any
trademarks, service marks or trade names used by Seller in the
operation of the Chicago Store prior to the Closing (the "FAO
Names").
(b) Seller agrees to use the FAO Names in accordance
with reasonable written guidelines delivered by Buyer to FAO
and in accordance with the amended and restated Xxxxxxx
Agreement.
7. DISPOSITION OF THE CHICAGO STORE
7.1 Transferred Store. In the event Landlord consents to the assignment of the
Lease to Buyer and Shareholder is released from its obligations under its
guaranty of the Lease (the "Shareholder Guaranty"), Buyer shall be
permitted to assume Seller's rights and obligations under the Lease. Seller
and Buyer hereby agree that, promptly following receipt of such consent
from the Landlord and confirmation of Landlord's release of the Shareholder
Guaranty, Buyer and Seller shall execute a Real Property Lease Assignment
with respect to the Chicago Store; provided that the terms of the Lease are
satisfactory to Buyer in its sole and absolute discretion. Upon delivery of
an executed Real Property Lease Assignment with respect to the Lease and
Landlord's release of the Shareholder Guaranty, the Chicago Store shall
become one of the Transferred Stores and Facilities under the Purchase
Agreement and this Agreement shall automatically terminate. The aggregate
principal amount of the Subordinated Notes shall also be increased by
$1,000 plus an amount equivalent to the then-outstanding principal balance
of the Chicago Subordinated Note (the "Additional Principal Amount"). In
the event the Subordinated Notes shall have been repaid or accelerated,
Buyer shall pay Seller a cash amount equivalent to the Additional Principal
Amount simultaneously with its delivery of the executed Real Property Lease
Assignment.
7.2 Closure Store. Unless Buyer, Seller and Landlord have executed a Real
Property Lease Assignment with respect to the Lease, on the date of
termination of this Agreement pursuant to Section 8.1 hereof, all of the
then-existing Inventories at the Chicago Store ("Chicago Inventory") shall
be immediately sold to Seller at a purchase price equal to the Cost of the
Chicago Inventory (as hereinafter defined), at the date of sale, payable by
decreasing the then-outstanding principal amount of the Chicago
Subordinated Note by the Cost of the Chicago Inventory. In no event shall
the Cost of the Chicago Inventory exceed the then-outstanding principal
balance of the Chicago Subordinated Note by more than Fifty Thousand
Dollars ($50,000.00). In the event the Cost of the Chicago Inventory is
less than the then-outstanding principal amount of the Chicago Subordinated
Note (the "Inventory Shortfall"), Buyer shall pay Seller a cash payment
equivalent to the Inventory Shortfall following its receipt of the results
of physical confirmation of the Chicago Inventory, which shall be conducted
by Seller as hereinafter described.
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Buyer agrees to execute a xxxx of sale and take such other action
reasonably requested by Seller to effect such sale and liquidation of the
Chicago Inventory. Buyer shall cooperate with Seller and assist in
coordinating the closure of the Chicago Store in any manner deemed
appropriate by Seller. The "Cost of the Chicago Inventory" shall be the
value of the inventory as of date of the Real Property Lease Assignment or
the termination of this Agreement (the "Effective Date"), which value shall
be determined using the average cost method of accounting. Subject to the
inventory cap and any cash adjustments required under this Section 7.3,
Buyer shall adjust the Cost of the Chicago Inventory based on the results
of a physical inventory which shall be conducted by Seller. In the event
Buyer disputes the results of Seller's physical inventory, Buyer may submit
such dispute to arbitration in accordance with the procedure described in
Section 14.9 hereof and, to the extent KPMG LLP or its successor ("KPMG")
subsequently recommends adjustment of the results of Seller's physical
inventory, Buyer and Seller shall take all actions necessary to implement
such decision within the timeframe provided in Section 14.9 hereof. Seller
shall pay all reasonable expenses incurred by Buyer in cooperating with
Seller in connection with any sale or liquidation of the Chicago Inventory.
7.3 Final Store Operations Report. Buyer shall deliver a final Monthly Store
Operations Report for the period from the date of the immediately prior
Monthly Store Operations Report up to and including the effective date of
the Real Property Lease Assignment or the date of termination pursuant to
Section 8.1 hereof (the "Final Monthly Store Operations Report"), together
with a year-to-date reconciliation statement for the Fiscal Year (or
portion thereof) (the "Final Year End Statement"). Seller's review and
dispute rights with respect to the Final Monthly Store Operations Report as
well as well as the Final Year End Statement shall mirror Seller's rights
described in Section 5.1 hereof with respect to Monthly Store Operations
Reports and Fiscal Year statements. In the event the Final Monthly Store
Operations Report and/or the Final Year End Statement (collectively, the
"Final Statements") evidences any amounts due from Seller or Buyer, the
party from whom such amounts are due shall remit the balance payable within
ten (10) business days of receipt of the Final Statements.
8. TERMINATION
8.1 Term. This Agreement shall automatically terminate upon the earlier of (i)
the three (3) year anniversary of the Closing Date (or, in the event such
date is not a business day, the first business day immediately following
the three (3) year anniversary of the Closing Date), which date may be
extended upon mutual agreement by Seller and Buyer or (ii) the assignment
of the Lease to Buyer pursuant to Section 7.1 hereof (the "Term").
Notwithstanding any provision of this Agreement to the contrary, Seller
shall have the right, in its sole discretion, to terminate this Agreement
and accelerate the expiration of the Term upon sixty (60) days prior
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written notice to Buyer. The obligations of Buyer hereunder with respect to
COBRA shall not terminate until the minimum statutory obligation to provide
such coverage shall terminate.
9. COVENANTS, LIABILITY AND INDEMNITY
9.1 Buyer hereby covenants that it shall operate the Chicago Store in
accordance with the terms of the Lease and comply with all terms and
conditions of the Lease. Parent and Buyer, jointly and severally, agree to
indemnify Seller and Shareholder from and against any costs, claims or
damages (including reasonable attorneys' fees and reasonable actual costs)
("Losses") arising out of (i) any breach of Buyer's covenant in this
Section 9.1, (ii) events resulting from or occurring in connection with
Buyer's operation of the Chicago Store in a manner that does not comply
with the terms of the Lease (except as otherwise contemplated under Section
9.2(iii) hereof), this Agreement and/or any occurrence covered under the
insurance policies required to be maintained by the tenant under the terms
of the Lease, (iii) events resulting from or occurring in connection with
Buyer's wrongful or intentional misconduct and (iv) Buyer's or Parent's
breach of their respective obligations under this Agreement.
9.2 Seller and Shareholder, jointly and severally, agree to indemnify Buyer and
Parent against (i) any losses to the extent provided and in accordance with
the terms of Section 5.1, (ii) any COBRA liabilities with respect to
Chicago Store employees (unless the Lease is assigned to Buyer), (iii)
Losses arising from litigation brought by the Landlord in connection with
execution or performance of this Agreement by Buyer or Seller or in
connection with Seller's negotiations with Landlord concerning the closure
of the Chicago Store and termination of the Lease, (iv) Losses arising out
of events resulting from or occurring in connection with Seller's wrongful
or intentional misconduct and (v) Losses arising out of Seller's or
Shareholder's breach of their respective obligations under this Agreement.
10. RELATIONSHIP OF PARTIES
10.1 Independent Contractors. The parties are independent contractors under this
Agreement. Except as expressly set forth herein, neither party has the
authority to, and each party agrees that it shall not, directly or
indirectly contract any obligations of any kind in the name of or
chargeable against the other party without such party's prior written
consent.
10.2 No Assignment of Lease. Nothing set forth in this Agreement is intended to
be, or shall be deemed to be, an assignment of any of Seller's interests in
the Lease or a sublease or license to Buyer to use or occupy the Chicago
Store.
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11. NOTICES
11.1 Notices. All notices or other communications hereunder shall be deemed to
have been duly given and made if in writing and (a) if served by personal
delivery upon the party for whom it is intended, on the day so delivered;
(b) if mailed by registered or certified mail, return receipt requested, on
the third business day following such mailing; (c) if deposited for
delivery by a reputable courier service, on the business day following
deposit with such courier; or (d) if sent by electronic facsimile
transmission, on the day the facsimile is transmitted electronically, or if
not a business day, the next succeeding business day to the person at the
address set forth below, or such other address as may be designated in
writing hereafter, in the same manner, by such person:
To Seller or Shareholder:
Royal Vendex KBB X.X.
Xx Xxxxxxx 0, XX-0000
Postbus 7997, 1008 AD
Amsterdam, The Netherlands
Attention: Drs. Xxx xx Xxxxxxx (RA)
with a mandatory copy to:
Kronish Xxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx, Esq.
Fax no.: (000) 000-0000
E-mail address: xxxxxxxxxx@xxxxxxxxxxx.xxx
To Buyer:
Toy Soldier, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx/Legal
Fax no.: (000) 000-0000
E-mail address: xxxxxxx@xxxxxxxxxx.xxx
xxxxxx@xxxxxxxxxx.xxx
with a mandatory copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxx
Fax no.: (000) 000-0000
E-mail address: xxxx@xxxxxxxxx.xxx
12. GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS
12.1 Any Proceeding arising out of or relating to this Agreement ("Proceeding")
may be brought in the courts of the State of New York, County of New York,
or, if it has or can acquire jurisdiction, in the United States District
Court for the Southern District of New York, and each of the parties
irrevocably submits to the exclusive jurisdiction of each such court in any
such Proceeding, waives any objection it may now or hereafter have to venue
or to convenience of forum, agrees that all claims in respect of the
Proceeding shall be heard and determined only in any such court and agrees
not to bring any Proceeding arising out of or relating to this Agreement in
any other court. The parties agree that either or both of them may file a
copy of this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably to waive
any objections to venue or to convenience of forum. Each party hereto
agrees that service of process in any Proceeding may be made upon it in any
manner permitted by the laws of the state of New York or the federal laws
of the United States or as follows: (i) by personal service or (ii) by
certified or registered mail to the party for which intended at its address
for notice pursuant to Section 11. Service of process upon any party in any
manner referred to in the preceding sentence shall be deemed in every
respect effective service of process upon such party.
13. SPECIFIC PERFORMANCE
13.1 Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that, in the event of a breach or threatened breach of this
Agreement, the parties shall be entitled to specific performance,
injunctive or other equitable relief, in addition to any other remedy
available at law or in equity, without posting bond or other undertaking.
14. MISCELLANEOUS
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14.1 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
adjusted rather than voided, if possible, in order to achieve the intent of
the parties to this Agreement to the extent possible, without invalidating
or adjusting the remaining provisions hereof, and any such prohibition,
unenforceability or adjustment in any jurisdiction shall not invalidate,
render unenforceable or adjust such provision in any other jurisdiction.
14.2 Descriptive Headings. The descriptive headings of the several sections and
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
14.3 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the
same agreement. The exchange of copies of this Agreement and of signature
pages by facsimile transmission shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted
by facsimile shall be deemed to be their original signatures for all
purposes.
14.4 Assignment and Delegation. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written
consent of the other parties hereto. Notwithstanding the foregoing, Buyer
and Parent each expressly acknowledge and agree that no consent shall be
required in connection with any assignments or transfers associated with
the winding-up of Seller's and Shareholder's activities in the United
States.
14.5 Entire Agreement. This Agreement, including the Schedules, together with
the Purchase Agreement, contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such
matters.
14.6 Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Seller, Shareholder, Parent or Buyer
or their respective successors or permitted assigns any rights or
remedies under or by reason of this Agreement.
14.7 Amendment and Waiver. Any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the parties hereto, or in the
case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
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14.8 Parent's Obligations. Where in this Agreement provision is made for an
action to be taken or not taken by Buyer, Parent undertakes to cause
Buyer to take or not take such action, as the case may be.
14.9 Arbitration. In the event of any dispute between Seller and Buyer with
respect to matters under this Agreement, Seller and Buyer agree that:
(a) upon the request of either Seller or Buyer, the dispute shall be
submitted to KPMG for expedited disposition, which submission to KPMG shall
occur within five (5) business days of Seller's or Buyer's written notice
to the other party requesting arbitration (the "Arbitration Notice"); (b)
following delivery of the Arbitration Notice by either party, Seller and
Buyer shall each compile such documentation and information as may be
needed by KPMG to render a decision with respect to the disputed matter
(the "Supporting Documents"), which Supporting Documents shall be delivered
to KPMG together with the written request for KPMG's arbitration of the
matter in dispute (the "KPMG Notice") within the time period provided
hereinabove in Section 14.9(a); (c) following submission of the matter to
arbitration, upon request from KPMG, Seller and/or Buyer shall promptly
deliver such additional documentation and information as may be needed by
KPMG (the "Additional Documents"); (d) KPMG shall render a decision no
later than ten (10) business days (or as soon as reasonably practicable
thereafter) following its receipt of (i) the KPMG Notice and (ii) the
Supporting Documents and, if applicable, the Additional Documents; (e) the
decision of KPMG shall be final and all actions necessary to implement the
decision of KPMG shall be undertaken as soon as possible, but in no event
later than ten (10) business days after the rendering of such decision; (f)
judgment upon the dispute or any award rendered may be entered in any court
having jurisdiction thereof; and (g) all fees payable to KPMG for services
rendered in connection with its arbitration of the dispute shall be paid by
the party suffering the adverse decision of KPMG.
14.10 Authority. Buyer and Parent hereby warrant and represent that no
third party or lender consents are required in connection with the
execution, delivery and performance of this Agreement and all related
documents including, without limitation, the Chicago Subordinated Note.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
KBB RETAIL ASSETS CORP.
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Secretary
ROYAL VENDEX KBB N.V.
By: /s/ Xxxx ter Hark
Name: Xxxx ter Hark
Title: Director of Corporate Development
TOY SOLDIER, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
THE RIGHT START, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
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EXHIBIT A
Form of Xxxx of Sale
See Attached.
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EXHIBIT B
Form of Chicago Subordinated Note
See Attached.
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EXHIBIT C
Form of Monthly Store Operations Report
See Attached.
