16-11275-shl
Doc 1046-2
Filed 12/16/16 Entered 12/16/16 14:40:42
November 10 Letter Pg 1 of 4
EXHIBIT B
November 10 Letter
Exhibit B -
16-11275-shl
Doc 1046-2
Filed 12/16/16
Entered 12/16/16 14:40:42
MATTHEW W. ABBOTT
PAUL, WEISS, RIFKIND, W H A R T O
N & GAR
S O N LLP
EDWARD T ACKERMAN
November
10R ILetter
Pg 2 of 4JACOB
A, ADLERSTEIN
1 2 8 5 A V E N U E OF THE AMERICAS
NEW YORK. NEW YORK 1 0 0 1 9 - 6 0 6 4
TELEPHONE (2 12)373-3000
LLOYD K. GARRISON
RANDOLPH E PAUL
StHON H RJFKiND
LOUIS S.WEISS
JOHN F. WHARTON
I 1946-1 991 (
(1946-1956)
(1930-1995)
11927-1950)
(1927-1977)
UNIT 3501 , OFFICE TOWER A, BEIJING FORTUNE PLAZA
NO, 7 DONGSANHUAN ZHONGLU
CHAOVANG DISTRICT
BEIJING 100020
PEOPLE'S REPUBLIC OF CHINA
TELEPHONE (86-1 O) 5828-6300
12TH FLOOR. HONG KONG CLUB BUILDING
3ACHATER ROAD. CENTRAL
HONG KONG
TELEPHONE (8521 2846-0300
WRITER'S DIRECT DIAL NUMBER
212-373-3545
WRITER'S DIRECT FACSIMiLE
212-492-0545
WRITER'S DIRECT E-MAIL ADDRESS
[email protected]
ALDER CASTLE
IO NOBLE STREET
LONDON EC2V 7JU, U.K.
TELEPHONE (44 20) 7367 1 600
FUKOKU SEIME! BUILDING
2-2 UCHISA1WAICHO 2-CHOME
CHIYODA-KU. TOKYO lOO-OO! I , JAPAN
TELEPHONE (81-3) 3697-8101
TORONTO-DOMINION CENTRE
77 KING STREET WEST, SUITE 31 OO
RO. BOX 226
TORONTO. ONTARIO MSK 1J3
TELEPHONE (4 16) S04-OS20
2001 K STREET. NW
WASHINGTON. DC 20006-1047
TELEPHONE i202i 223-7300
November 10,2016
500 DELAWARE AVENUE, SUITE 200
POST OFFICE BOX 3 2
WILMINGTON. DE 1 9 8 9 9 - 0 0 3 2
TELEPHONE (302) 655-44 I O
Exhibit B -
ALLAN J. ARFFA
ROBERT A ATKINS
DAVID J, BALL
SCOTT A. BARSHAY
JOHN F. BAUGHMAN
LYNN B. BAYARD
DANIEL J. BELLER
CRAIG A BENSON
MITCHELL L. BERG
MARK S. BERGMAN
DAVID M. BERN1CK
JOSEPH J. BIAL
BRUCE B1RENBOIM
H. CHRISTOPHER BOEHNING
ANGELO SONVINO
JAMES L. 8ROCH1N
RICHARD J BRONSTEIN
DAVID W. BROWN
SUSANNA M SUERGEL
PATRICK S C.AMPeELL»
JESSICA S. CAREY
JEANETTE K. CHAN
GEOFFREY R. CHEPIGA
ELLEN N CH1NG
WILLIAM A CLAREMAN
LEWIS R. CLAYTON
JAY COHEN
KELLEY A. CORNISH
CHRISTOPHER J. CUMMINGS
CHARLES E, DAVIDOW
THOMAS V. DE LA BASTIDE 111
ARIEL J. DECKELBAUM
ALICE BELISLE EATON
ANDREW J. EHRLICH
GREGORY A. EZRING
LESLIE GORDON FAGEN
MARC FALCONE
ROSS A, FIELDSTON
ANDREW C, FINCH
BRAD J FINKELSTEIN
BRIAN P FINNEGAN
ROBERTO F1NZI
PETER E. FISCH
ROBERTO. FLEDER
MARTIN FLUMENBAUM
ANDREW J. FOLEY
ANDREW J, FORMAN"
HARRIS B. FREIDUS
MANUEL S. FREY
ANDREW L GAINES
KENNETH A. GALLO
MICHAEL E, GERTZMAN
ADAM M. GIVERTZ
SALVATORE GOGLIORMELLA
ROBERT D. GOLD8AUM
NEIL GOLDMAN
ROBERTO J. GONZALEZ"
CATHERINE L. GOOOALL
ERIC GOODISON
CHARLES H GOOGE, JR.
ANDREW G. GORDON
UDI GROFMAN
NICHOLAS GROOMBRIDGE
BRUCE A GUTENPLAN
GAINES GWATHMEY. Ill
ALAN S. HALPERIN
JUSTIN G. HAMILL
CLAUDIA HAMMERMAN
BRIAN S, HERMANN
MICHELE HIRSHMAN
MICHAEL S. HONG
DAVID S HUNTINGTON
AMRAN HUSSEIN
LORETTAA. iPPOLITO
JAREN JANGHORBANi
BRIAN M JANSON
MEREDITH J. KANE
JONATHAN S KANTER
ROBERTA A. KAPLAN
BRAD S KARP
PATRICK N KARSNITZ
JOHN C KENNEDY
BRIAN KIM
ALAN W KORNBERG
DANIEL J . KRAMER
DAVID K. LAKHDHIR
STEPHEN p. LAMB«
JOHN E LANGE
GREGORY F. LAUFER
DANIEL J . LEFFELL
XIAOYU GREG LIU
JEFFREY O MARELL
MARCO V MASOTTI
EDWIN S. MAYNARD
DAVID W MAYO
ELIZABETH R MCCOLM
MARK F. MENDELSOHN
CLAUDINE MEREDITH-GOUJON
WILLIAM S. MICHAEL
TOBY S. MVERSON
JUDIE NG SHORTELL*
CATHERINE NYARADY
JANE B O'BRIEN
ALEX YOUNG K. OH
BRAD R. OKUN
KELLEY D. PARKER
VALERIE E. RADWANER
CARL L, REISNER
LORIN L. REISNER
WALTER G RICCIARDI
WALTER RIEMAN
RICHARD A ROSEN
ANDREW N. ROSENBERG
JACQUELINE P. RUBIN
CHARLES F. 'RICK'1 RULE"
RAPHAEL M. RUSSO
ELIZABETH M. SACKSTEDER
JEFFREY D SAFERSTEIN
JEFFREY B. SAMUELS
DALE M. SARRO
TERRY E. SCHIMEK
KENNETH M. SCHNEIDER
ROBERT B SCHUMER
JOHN M. SCOTT
STEPHEN J. SHIMSHAK
DAVID R. SICULAR
MOSES SILVERMAN
STEVEN SIMKIN
JOSEPH J, SIMONS
AUDRA J. SOLOWAY
SCOTT H. SONTAG
TARUN M, STEWART
ERIC ALAN STONE
AIDAN SYNNOTT
MONICA K. THURMOND
DANIEL J , TOAL
LIZA M VELAZQUEZ
LAWRENCE G. WEE
THEODORE V, WELLS. JR.
STEVEN J. WILLIAMS
LAWRENCE I WITDORCHIC
MARK B. WLAZLO
JULIA MASON WOOD
JENNIFER H WU
BETTY YAP*
JORDAN E. YARETT
KAYE N. YOSHiNO
TONG YU
TRACEY A. ZACCONE
TAURIE M. ZEITZER
T. ROBERT ZOCHOWSKI, JR.
•NOT ADMI i VtD ( 0 frit, NLW V^RK i^AR
By Electronic Mail
Subject to FRE 408
Garrett Fail, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Dear Garrett:
I write as a follow up to the letter from Aero OpCo LLC ("Buyer") to Aeropostale, Inc.
("Aeropostale" and, together with certain of its subsidiaries, "Sellers"), dated October 10, 2016,
in which Buyer demanded reimbursement for certain severance payments advanced by Buyer. As
you may recall, on that date. Buyer made severance payments in an aggregate amount of
$457,799.48 to recently terminated Aeropostale employees, together with $35,021.66 in respect
of employment and withholding taxes (such payments, in the aggregate, the "Severance
Amount"). Sellers have yet to reimburse Buyer for the Severance Amount, notwithstanding that
the Severance Amount is the sole obligation of Sellers under that certain Asset Purchase
Agreement (as amended, the "Purchase Agreement"), dated September 12, 2016, among Buyer
and Sellers. Accordingly, Sellers must immediately remit the Severance Amount to Buyer.1
1
To the extent Sellers require an amendment to their cash collateral budget to make such remittance to
Buyer, they should obtain such amendment.
16-11275-shl
Doc 1046-2
Filed 12/16/16 Entered 12/16/16 14:40:42
November
10 Letter Pg
3 of 4
PAUL. WEISS, RIFKIND, WHARTON & GARRISON
LLP
Exhibit B -
Garrett Fail, Esq.
The Purchase Agreement clearly and unambiguously provides that Buyer "shall not be obligated
to assume, and does not assume, and hereby disclaims" all "Excluded Liabilities." Purchase
Agreement § 1.1 (Definition of Excluded Liabilities). The list of Excluded Liabilities includes,
among other things:
[A] 11 Liabilities (i) related to the WARN Act, to the extent
applicable, with respect to the termination of employment of
Sellers' employees on or prior to December 31, 2016, resulting
from or related to the transactions contemplated hereby (the
"Company WARN Payments"), (ii) for any action resulting from
Sellers' employees' separation of employment on or prior to
December 31, 2016, resulting from or related to the transactions
contemplated hereby (the "Company Severance Payments"), and
(iii) for vacation, sick leave, parental leave, and other paid time
accrued by Sellers' employees for the period through Closing
(the "Company PTQ Payments"), in an aggregate amount among
clauses (i), (ii) and (iii) payable in cash by the Sellers up to
$12,500,000 (the "Employee Payment Cap") . . . .
Purchase Agreement § 1.1 (Definition of Excluded Liabilities, clause (h)). The Purchase
Agreement further provides that, "for the avoidance of doubt, all amounts in respect of the
Company WARN Payments, Company Severance Payments and Company PTO Payments up
to the Employee Payment Cap, to the extent actually incurred, shall be paid by Sellers . . . ." Id.
(emphasis added).
Additionally, the Purchase Agreement provides that, other than liabilities that were expressly
assumed by Buyer, Sellers "will have the sole and absolute responsibility for any financial or
other commitments to their employees for the period prior to Closing, including, any and all
claims or obligations for severance pay and any and all claims and obligations arising under any
collective bargaining agreement, employee benefit plan (including, any withdrawal liability) or
any local, state or federal law, rule or regulation (including, the WARN Act) . . . ." Purchase
Agreement § 6.4(b). Consistent with clause (h) of the definition of "Excluded Liabilities,"
Section 6.4(b) confirms that Buyer and Sellers intended that Sellers would be solely responsible
for severance and other employee-related payments other than those expressly assumed by Buyer.
Pursuant to the plain language of the Purchase Agreement, the Severance Amount is the sole
obligation of Sellers. Buyer advanced the Severance Amount on October 10, 2016, with the
understanding that it would be reimbursed in accordance with the Purchase Agreement, in order
to timely honor Aeropostale's severance obligations to recently terminated employees given that
Sellers had not finalized a cash collateral arrangement with their secured lenders and, thus, were
unable to pay the Severance Amount themselves. Sellers should not receive a windfall at Buyer's
expense for obligations that very clearly are Sellers' sole responsibility under the Purchase
Agreement. That Buyer advanced the Severance Amount, rather than having Sellers pay the
Severance Amount out of pocket, to avoid an unnecessary delay in the timing of severance
payments to employees does not absolve Sellers of their obligation to pay Company Severance
Payments up to the Employee Payment Cap.
We are hopeful that we can resolve this matter consensually. However, if Sellers do not
immediately reimburse Buyer for the Severance Amount, Buyer is prepared to take all available
16-11275-shl
Doc 1046-2
Filed 12/16/16
Entered 12/16/16 14:40:42
4
Exhibit B -
10A R
Letter
4 of
P A U L , W E I S S , R I F K I N D . W H ANovember
RTON & G
R I S O NPg
LLP
Garrett Fail, Esq.
actions at law or in equity. This letter is not intended to be a complete statement of Buyer's
rights, and shall not be construed as a waiver or relinquishment of any legal or equitable rights or
remedies, all of which are expressly reserved. 2
Very truly yours,
|?. i^iiimi
Brian S. Hermann
cc:
Marc Schuback
Stanley Shashoua
Steven Fivel
Additionally, as you previously confirmed, (a) if the proposed Final Order or the Final Budget (each as
defined in the Motion of Debtors Pursuant to 11 U.S.C. §§ 105, 361, 362, and 363 and Fed. R. Bankr.
P. 2002, 4001, and 9014 for Entry of an Order (I) Authorizing Use of Cash Collateral by the Debtors,
(II) Providing Adequate Protection to Prepetition Term Loan Parties, (III) Modifying the Automatic
Stay, and (IV) Scheduling a Final Hearing [Docket No. 898]) are filed with the court on or before
November 17, 2016, Buyer's rights to object to the Final Order or the Final Budget are reserved and
Sellers waive the right to argue that such objection is untimely, and (b) if the proposed Final Order or
the Final Budget are not filed with the court on or before November 17, 2016, Buyer's rights to object
to the Final Order or the Final Budget are reserved and Sellers waive the right to argue that such
objection is untimely subject to the new, to-be-determined objection deadline.