EX 2.1
ASSET PURCHASE AGREEMENT
by and among
The Walking Company
a Delaware Corporation
and
▇▇▇ ▇▇▇▇▇▇▇
an individual
BIANCA OF NEVADA, INC.
a Nevada corporation
Dated May 20, 2005
TABLE OF CONTENTS
Page
1. DEFINITIONS AND USAGE...................................................................................1
1.1 Definitions....................................................................................1
1.2 Usage..........................................................................................6
2. SALE AND TRANSFER OF ASSETS; CLOSING....................................................................7
2.1 Assets To Be Sold..............................................................................7
2.2 Excluded Assets................................................................................7
2.3 Consideration..................................................................................8
2.4 Liabilities....................................................................................8
2.5 Allocation.....................................................................................9
2.6 Closing........................................................................................9
2.7 Closing Obligations............................................................................9
2.8 Adjustment Amount and Payment.................................................................11
2.9 Adjustment Procedure..........................................................................11
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER...............................................11
3.1 Organization and Good Standing................................................................11
3.2 Enforceability; Authority; No Conflict........................................................11
3.3 Financial Statements..........................................................................12
3.4 Books and Records.............................................................................12
3.5 Sufficiency of Assets.........................................................................12
3.6 Description of Real Property..................................................................12
3.7 Real Property Leases..........................................................................12
3.8 Title to Assets; Encumbrances.................................................................12
3.9 Condition of Property.........................................................................13
3.10 [Intentionally Deleted].......................................................................13
3.11 Taxes.........................................................................................13
3.12 No Material Adverse Change....................................................................13
3.13 Employee Benefits.............................................................................14
3.14 Compliance With Legal Requirements; Governmental Authorizations...............................14
3.15 Legal Proceedings; Orders.....................................................................15
3.16 Contracts; No Defaults........................................................................15
3.17 Environmental matters.........................................................................16
3.18 Employees, Labor Disputes; Compliance.........................................................16
3.19 Intellectual Property Assets..................................................................17
3.20 Relationships With Related Persons............................................................17
3.21 Suppliers.....................................................................................17
3.22 Promissory Note...............................................................................18
3.23 Brokers Or Finders............................................................................18
3.24 Disclosure....................................................................................18
4. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................18
4.1 Organization And Good Standing................................................................18
4.2 Authority; No Conflict........................................................................18
4.3 Certain Proceedings...........................................................................18
4.4 Brokers Or Finders............................................................................19
5. COVENANTS OF SELLER PRIOR TO CLOSING...................................................................19
5.1 Access And Investigation......................................................................19
5.2 Operation Of The Business Of Seller...........................................................19
5.3 Negative Covenant.............................................................................20
5.4 Required Approvals............................................................................20
5.5 Notification..................................................................................20
5.6 Best Efforts..................................................................................20
5.7 Bulk Sales Law................................................................................20
6. COVENANTS OF BUYER PRIOR TO CLOSING....................................................................20
6.1 Required Approvals............................................................................20
6.2 Best Efforts..................................................................................20
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE....................................................21
7.1 Accuracy Of Representation....................................................................21
7.2 Seller's Performance..........................................................................21
7.3 Consents......................................................................................21
7.4 Additional Documents..........................................................................22
7.5 No Proceedings................................................................................22
7.6 No Conflict...................................................................................22
7.7 Governmental Authorizations...................................................................22
7.8 Bulk Sales....................................................................................22
7.9 Warn Act Notice Periods And Employees.........................................................22
7.10 Due Diligence.................................................................................22
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...................................................23
8.1 Accuracy Of Representations...................................................................23
8.2 Buyer's Performance...........................................................................23
8.3 Consents......................................................................................23
8.4 Additional Documents..........................................................................23
8.5 No Injunction.................................................................................23
8.6 Real Property Leases..........................................................................23
9. TERMINATION............................................................................................23
9.1 Termination Events............................................................................23
9.2 Effect Of Termination.........................................................................24
10. ADDITIONAL COVENANTS...................................................................................24
10.1 Employees And Employee Benefits...............................................................24
10.2 Payment Of All Taxes Resulting From Sale Of Assets By Seller..................................25
10.3 Houston Store Lease...........................................................................26
10.4 Assistance In Proceedings.....................................................................26
10.5 Customer And Other Business Relationships.....................................................26
10.6 Retention Of And Access To Records............................................................26
10.7 Further Assurances............................................................................26
11. INDEMNIFICATION; REMEDIES..............................................................................27
11.1 Survival......................................................................................27
11.2 Indemnification And Reimbursement By Seller And Shareholder...................................27
11.3 Indemnification And Reimbursement By Buyer....................................................27
11.4 [Intentionally Deleted].......................................................................28
11.5 Third-Party Claims............................................................................28
11.6 Other Claims..................................................................................29
12. CONFIDENTIALITY........................................................................................29
12.2 Restricted Use of Confidential Information....................................................29
12.3 Exceptions....................................................................................30
12.4 Legal Proceedings.............................................................................30
12.5 Return Or Destruction Of Confidential Information.............................................30
13. GENERAL PROVISIONS.....................................................................................30
13.1 Expenses......................................................................................30
13.2 Public Announcements..........................................................................31
13.3 Notices.......................................................................................31
13.4 Jurisdiction; Service Of Process..............................................................32
13.5 Waiver; Remedies Cumulative...................................................................32
13.6 Entire Agreement And Modification.............................................................32
13.7 Disclosure Letter.............................................................................32
13.8 Assignments, Successors And No Third-Party Rights.............................................33
13.9 Severability..................................................................................33
13.10 Construction..................................................................................33
13.11 Time Of Essence...............................................................................33
13.12 Governing Law.................................................................................33
13.13 Execution Of Agreement........................................................................33
13.14 Shareholder Obligations.......................................................................34
Exhibits
--------
Exhibit 2.3(b) - Escrow Agreement
Exhibit 2.5 - Tax Allocation
Exhibit 2.7(a)(i).- ▇▇▇▇ of Sale and Assignment of Contract Rights
Exhibit 2.7(a)(ii) - Assignment and Assumption Agreement
Exhibit 2.7(a)(iv) - Assignment of Marks and Copyrights
Exhibit 2.7(a)(vi) - Noncompetition, Nondisclosure And Nonsolicitation Agreement
Exhibit 2.7(b)(iii) - Promissory Note Secured By Letter Of Credit
Exhibit 7.3 - Material Consents
Exhibit 8.3 - Consents
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is dated May 20, 2005,
by and among The Walking Company, a Delaware corporation ("Buyer"), Bianca of
Nevada, Inc., a Nevada corporation ("Seller"), and ▇▇▇ ▇▇▇▇▇▇▇ ("Shareholder").
RECITALS
1. Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain liabilities of Seller relating to
the Business (as defined herein) for the consideration and on
the terms set forth in this Agreement.
2. Shareholder owns substantially all of the issued and
outstanding shares of capital stock of Seller.
The parties, intending to be legally bound, agree as follows:
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS AND USAGE
1.1 Definitions. For purposes of this Agreement, the following terms
and variations thereof have the meanings specified or referred to in this
Section 1.1:
"Adjustment Amount" -- as defined in Section 2.8.
"Assets" -- as defined in Section 2.1.
"Assignment and Assumption Agreement" -- as defined in Section
2.7(a)(ii).
"Assumed Liabilities" -- as defined in Section 2.4(a).
"Balance Sheet" -- as defined in Section 3.3.
"Basis" -- any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis of any
specific consequence.
"Best Efforts" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
"▇▇▇▇ of Sale" -- as defined in Section 2.7(a)(i).
"Business" -- the business of retail shoes and footwork through a
retail store chain carried out and operated under the name "Footworks."
"Breach" -- any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"Bulk Sales Laws" -- as defined in Section 5.7.
"Business" -- the business of the retail store chain conducted at the
facilities under the Real Property Leases and all business and activities
carried out under the name "Footworks."
"Business Day" -- any day other than (a) Saturday or Sunday or (b) any
other day on which banks in Los Angeles, California are permitted or required to
be closed.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Buyer Indemnified Persons" -- as defined in Section 11.2.
"Closing" -- as defined in Section 2.6.
"Closing Date" -- the date on which the Closing actually takes place.
"COBRA" -- Section 4980B of the Code and Sections 601 through 608,
inclusive, of ERISA.
"Code" -- the Internal Revenue Code of 1986.
"Confidential Information" -- as defined in Section 12.1.
"Consent" -- any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions" -- all of the transactions contemplated by
this Agreement.
"Contract" -- any agreement, contract, lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.
"Copyrights" -- as defined in Section 3.19(a)(ii).
"Damages" -- as defined in Section 11.2.
"Disclosure Letter" -- the disclosure letter delivered by Seller and
Shareholder to Buyer concurrently with the execution and delivery of this
Agreement.
"Effective Time" -- The time at which the Closing is consummated on the
Closing Date.
"Employee Benefit Plan" -- any "employee benefit plan" (as such term is
defined in ERISA ss.3(3)), and any other employee benefit plan, program, fringe
benefit, insurance programs, vacation policy, sick leave, severance, savings,
disability, welfare plan or arrangement of any such kind.
"Employee Pension Benefit Plan" -- has the meaning set forth in ERISA
ss.3(3).
"Employee Welfare Benefit Plan" -- has the meaning set forth in ERISA
ss.3(1).
"Encumbrance" -- any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or similar restriction, including any
restriction on use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute of ownership.
"Environmental, Health and Safety Liabilities" -- any cost, damages,
expense, liability, obligation or other responsibility arising from or under any
environmental Legal Requirement or Occupational Safety and Health Law.
"ERISA" -- the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" -- any Person that, together with the Seller, would
be treated as a single employer under Code ss. 414.
"Escrow Agreement" -- as defined in Section 2.3(b).
"Exchange Act" -- the Securities and Exchange Act of 1934.
"GAAP" -- generally accepted accounting principles for financial
reporting in the United States, applied on a basis consistent with the basis on
which the financial statements referred to in Section 3.4 were prepared.
"Governing Documents" -- (a) the articles or certificate of
incorporation and the bylaws, and (b) all equityholders' agreements, voting
agreements, voting trust agreements, joint venture agreements, registration
rights agreements or other agreements or documents relating to the organization,
management or operation of any Person or relating to the rights, duties and
obligations of the equityholders of any Person; and (c) any amendment or
supplement to any of the foregoing.
"Governmental Authorization" -- any Consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" -- any: (a) nation, state, county, city, town,
borough, village, district or other jurisdiction; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers); or (d) official of any of the foregoing.
"Houston Lease" -- as defined in Section 10.3.
"Houston Store" -- as defined in Section 10.3.
"Improvements" -- all trade fixtures, other fixtures and leasehold
improvements located at the Stores.
"Indemnified Person" -- as defined in Section 11.5(a).
"Indemnifying Person" -- as defined in Section 11.5(a).
"Intellectual Property Assets" -- as defined in Section 3.19(a).
"Interim Balance Sheet" -- as defined in Section 3.3.
"Inventories" -- all inventories of shoes and other merchandise
purchased by Seller for sale in the Stores, whether located in the Stores, the
Seller's distribution center, any other location or in transit from vendors.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Knowledge" -- an individual will be deemed to have Knowledge of a
particular fact or other matter if: (a) that individual is actually aware of
that fact or matter; or (b) a prudent individual could be expected to discover
or otherwise become aware of that fact or matter in the course of conducting a
reasonable inquiry regarding the accuracy of any representation or warranty
contained in this Agreement.
A Person (other than an individual) will be deemed to have Knowledge of
a particular fact or other matter if any individual who is serving as a director
or officer of that Person has Knowledge of that fact or other matter (as set
forth in (a) and (b) above), and any such individual (and any individual party
to this Agreement) will be deemed to have conducted a reasonable inquiry
regarding the accuracy of the representations and warranties made herein by that
Person or individual.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"Liability" -- with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"Marks" -- as defined in Section 3.19(a)(i).
"Material Consents" -- as defined in Section 7.3(f).
"Net Names" -- as defined in Section 3.19(a)(iv).
"Occupational Safety and Health Law" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, including the Occupational Safety and Health Act, and
any program, whether governmental or private (such as those promulgated or
sponsored by industry associations and insurance companies), designed to provide
safe and healthful working conditions.
"Order" -- any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if that action
is consistent in nature, scope and magnitude with the past practices of such
Person and is taken in the ordinary course of the normal, day-to-day operations
of such Person consistent with past practice or customs.
"Part" -- a part or section of the Disclosure Letter.
"Permitted Encumbrances" -- as defined in Section 3.8.
"Person" -- an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"Prohibited Transaction" -- has the meaning set forth in ERISA ss. 406
and Code ss. 4975.
"Proceeding" -- 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.
"Promissory Note" -- as defined in Section 2.7(b)(iii).
"Purchase Price" -- as defined in Section 2.3.
"Real Property Lease" -- all leasehold or subleasehold estates and
other rights to use or occupy the stores and any improvements, fixtures, or
other interest related thereto under the leases identified in Part 2.1(a).
"Record" -- information that is inscribed on a tangible medium or that
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Related Person" -- with respect to a particular individual: (a) each
other member of such individual's Family; (b) any Person that is directly or
indirectly controlled by any one or more members of such individual's Family;
(c) any Person in which members of such individual's Family hold (individually
or in the aggregate) a Material Interest; and (d) any Person with respect to
which one or more members of such individual's Family serves as a director,
officer, partner, executor or trustee (or in a similar capacity). With respect
to a specified Person other than an individual: (a) any Person that directly or
indirectly controls, is directly or indirectly controlled by or is directly or
indirectly under common control with such specified Person; (b) any Person that
holds a Material Interest in such specified Person; (c) each Person that serves
as a director, officer, partner, executor or trustee of such specified Person
(or in a similar capacity); (d) any Person in which such specified Person holds
a Material Interest; and (e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including
"controlling," "controlled by," and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and shall be construed as such term is
used in the rules promulgated under the Securities Act; (b) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree and (iv) any other natural person who resides with such
individual; and (c) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing at least ten percent (10%) of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
"Representative" -- with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"Retained Liabilities" -- as defined in Section 2.4(b).
"Seller" -- as defined in the first paragraph of this Agreement.
"Seller Contracts" -- the Contracts relating to the Business.
"Shareholder" -- as defined in the first paragraph of this Agreement.
"Securities Act" -- the Securities Act of 1933, as amended.
"Software" -- all computer software and subsequent versions thereof,
including source code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons and icons
and all files, data, materials, manuals, design notes and other items and
documentation related thereto or associated therewith.
"Stores" -- the Footworks stores identified in the Real Property Leases
listed in Part 2.1(a).
"Store Employees" -- all employees of Seller who work in the Stores.
"Subsidiary" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
"Tangible Personal Property" -- all trade fixtures, equipment,
furniture, computer hardware, supplies, materials, and other items of tangible
personal property (other than Inventories) of every kind owned or leased by
Seller (wherever located and whether or not carried on Seller's books), together
with any express or implied warranty by the manufacturers or sellers or lessors
of any item or component part thereof and all maintenance records and other
documents relating thereto.
"Tax" -- any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third Party" -- a Person that is not a party to this Agreement.
"Third-Party Claim" -- any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"Trade Secrets" -- as defined in Section 3.19(a)(iii).
"WARN Act" -- the federal Worker Adjustment and Notification Act, and
any similar state law.
1.2 Usage.
(a) Interpretation. In this Agreement, unless a clear contrary intention
appears: (i) the singular number includes the plural number and vice versa; (ii)
reference to any Person includes such Person's successors and assigns but, if
applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; (iii) reference to any gender
includes each other gender; (iv) reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof; (v)
reference to any Legal Requirement means such Legal Requirement as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder, and
reference to any section or other provision of any Legal Requirement means that
provision of such Legal Requirement from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision; (vi) "hereunder," "hereof,"
"hereto," and words of similar import shall be deemed references to this
Agreement as a whole and not to any particular Article, Section or other
provision hereof; (vii) "including" (and with correlative meaning "include")
means including without limiting the generality of any description preceding
such term; (viii) "or" is used in the inclusive sense of "and/or"; (ix) with
respect to the determination of any period of time, "from" means "from and
including" and "to" means "to but excluding"; and (x) references to documents,
instruments or agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
(c) Legal Representation of the Parties. This Agreement was negotiated by the
parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof.
2. SALE AND TRANSFER OF ASSETS; CLOSING.
2.1 Assets To Be Sold. Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing, but effective as of the Effective Time, Seller
shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall
purchase and acquire from Seller, free and clear of any Encumbrances other than
Permitted Encumbrances, all of Seller's right, title and interest in and to the
following real, personal or mixed, tangible and intangible, of every kind and
description, wherever located, or property and assets used in or related to the
Business including the following (but excluding the Excluded Assets):
(a) the Real Property Leases listed in Part 2.1(a);
(b) all Tangible Personal Property located within the Stores;
(c) all Inventories;
(d) all Seller Contracts;
(e) all Governmental Authorizations and all pending applications therefor or
renewals thereof, in each case to the extent transferable to Buyer, including
those listed in Part 3.14(b);
(f) all data and Records related to the Business, including customer lists and
Records, market studies, sales, reports, service and warranty Records, financial
and accounting Records, advertising materials, promotional materials, and other
studies, reports, correspondence and other similar documents and Records and,
subject to Legal Requirements;
(g) all of the intangible rights and property of Seller related to the Business,
including Intellectual Property Assets, going concern value, goodwill,
telephone, telecopy and e-mail addresses and listings including those items
listed in Part 3.19(c);
(h) all claims of Seller against third parties relating to the Assets, whether
▇▇▇▇▇▇ or inchoate, known or unknown, contingent or noncontingent, including all
such claims listed in Part 2.1(i); and
(i) all rights of Seller relating to deposits and prepaid expenses, claims for
refunds and rights to offset in respect thereof.
All of the property and assets to be transferred to Buyer hereunder are
herein referred to collectively as the "Assets." Buyer shall deliver to Seller
all Seller Contracts within ten (10) days after the Closing Date.
Notwithstanding the foregoing, the transfer of the Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a)
2.2 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, the following assets of Seller
(collectively, the "Excluded Assets") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets and shall remain the
property of Seller after the Closing:
(a) all cash, located at the Stores, unless Buyer elects to acquire all in-store
cash as of the Effective Date and pay Seller dollar-for-dollar for such cash;
(b) all of the Seller Contracts listed in Part 2.2(b);
(c) all personnel Records and other Records that Seller is required by law to
retain in its possession; and
(d) all claims for refund of Taxes and other governmental charges of whatever
nature arising prior to the Effective Date.
2.3 Consideration. (a) The consideration for the Assets (the "Purchase Price")
will be (a) Ten Million Dollars ($10,000,000) plus or minus the Adjustment
Amount, if any, (as determined in Section 2.8) and (b) the assumption of the
Assumed Liabilities. At the Closing, the Purchase Price, shall be delivered by
Buyer to Seller as follows: (a) Six Million Three Hundred Dollars ($6,000,000)
plus or minus the Adjustment Amount by wire transfer; (b) One Million Dollars
($1,000,000) by wire transfer paid by the escrow agent to Seller pursuant to the
Escrow Agreement; (c) Three Million Dollars ($3,000,000) payable in the form of
the Promissory Note and; (d) the execution and delivery of the Assignment and
Assumption Agreement.
(b) Upon execution of this Agreement, Buyer and Seller shall execute an Escrow
Agreement in the form of Exhibit 2.3(b) ("Escrow Agreement") pursuant to which
Buyer shall deliver One Million Dollars ($1,000,000) to the escrow agent for a
deposit into the escrow account ("Escrow Amount"). The Escrow Amount will be
payable to Seller at the Closing as part of the Purchase Price pursuant to
Section 2.3, or if the Closing shall not occur as a result of a Breach of this
Agreement by Buyer, the Escrow Amount shall be paid to the Seller as liquidated
damages in accordance with Section 9.2(b).
2.4 Liabilities.
(a) Assumed Liabilities. On the Closing Date, but effective as of the Effective
Time, Buyer shall assume and agree to discharge only the following Liabilities
of Seller (the "Assumed Liabilities"):
(i) any Liability arising after the Effective Time under the Seller Contracts
identified in Part 3.16(a) (other than any Liability arising out of or relating
to a Breach that occurred prior to the Effective Time) and not listed in Part
2.2(b); and
(ii) any Liability arising after the Effective Time under the Real Property
Leases identified in Part 2.1(a) (other than a Liability arising out of or
relating to a Breach that occurred prior to the Effective Time).
(b) Retained Liabilities. The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by Seller. "Retained Liabilities" shall mean every Liability of Seller other
than the Assumed Liabilities, including:
(i) any Liability under any Contract assumed by Buyer pursuant to Section 2.4(a)
that arises after the Effective Time but that arises out of or relates to any
Breach that occurred prior to the Effective Time;
(ii) any Liability for Taxes, including (a) any Taxes arising as a result of
Seller's operation of its Business or ownership of the Assets prior to the
Effective Time, (b) any Taxes that will arise as a result of the sale of the
Assets pursuant to this Agreement (c) any deferred Taxes of any nature and (d)
any Liability for Taxes of the Shareholder or any Related Person of the
Shareholder; (iii) any Liability under any Contract not assumed by Buyer under
Section 2.4(a);
(iv) any Environmental, Health and Safety Liabilities arising out of or relating
to the operation of Seller's business or Seller's leasing, ownership or
operation of real property;
(v) any Liability under any Employee Benefit Plan, Employee Welfare Plan, or
relating to payroll, vacation, sick leave, workers' compensation, unemployment
benefits, pension benefits, employee stock option or profit-sharing plans,
health care plans or benefits or any other employee plans or benefits of any
kind for Seller's employees or former employees or both;
(vi) any Liability under any employment, severance, retention or termination
agreement with any employee of Seller or any of its Related Persons;
(vii) any Liability arising out of or relating to any employee grievance whether
or not the affected employees are hired by Buyer;
(viii) any Liability of Seller to any shareholder or Related Person of Seller or
Shareholder;
(ix) any Liability for any trade account payable incurred by Seller relating to
the Business or otherwise in connection its business operations prior to the
Effective Time;
(x) any Liability arising out of any Proceeding pending as of the Effective
Time;
(xi) any Liability arising out of any Proceeding commenced after the Effective
Time and arising out of or relating to any occurrence or event happening prior
to the Effective Time;
(xii) any Liability arising out of or resulting from Seller's compliance or
noncompliance with any Legal Requirement or Order of any Governmental Body; and
(xiii) any Liability of Seller based upon Seller's acts or omissions occurring
after the Effective Time.
2.5 Allocation. The Purchase Price shall be allocated in accordance with Exhibit
2.5. After the Closing, the parties shall make consistent use of the allocation,
fair market value and useful lives specified in Exhibit 2.5 for all Tax purposes
and in all filings, declarations and reports with the IRS in respect thereof,
including the reports required to be filed under Section 1060 of the Code. In
any Proceeding related to the determination of any Tax, neither Buyer nor Seller
or Shareholder shall contend or represent that such allocation is not a correct
allocation.
2.6 Closing. The purchase and sale provided for in this Agreement (the
"Closing") will take place at the offices of Buyer's counsel at Buchalter,
Nemer, Fields & Younger, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, commencing at 10:00 a.m. (local time) on the date that is five
(5) Business Days following the completion of all of the conditions in Sections
7 and 8, unless Buyer and Seller otherwise agree. Subject to the provisions of
Article 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.6 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.7 Closing Obligations. In addition to any other documents to be
delivered under other provisions of this Agreement, at the Closing:
(a) Seller and Shareholder, as the case may be, shall deliver to Buyer,
together with funds sufficient to pay all Taxes necessary for the transfer,
filing or recording thereof:
(i) a ▇▇▇▇ of sale for all of the Assets that are Tangible Personal Property in
the form of Exhibit 2.7(a)(i) (the "▇▇▇▇ of Sale") executed by Seller;
(ii) an assignment of all of the Assets that are intangible personal property
in the form of Exhibit 2.7(a)(ii), which assignment shall also contain Buyer's
undertaking and assumption of the Assumed Liabilities (the "Assignment and
Assumption Agreement") executed by Seller;
(iii) for each Real Property Lease an Assignment and Assumption in a form
satisfactory to Buyer and its counsel and executed by Seller and the landlord
(and any other required party) under such Real Property Lease;
(iv) assignments of all Intellectual Property Assets and separate assignments of
all registered Marks and Copyrights in the form of Exhibit 2.7(a)(iv) executed
by Seller;
(v) such other deeds, bills of sale, assignments, certificates of title,
documents and other instruments of transfer and conveyance as may reasonably be
requested by Buyer, each in form and substance satisfactory to Buyer and its
legal counsel and executed by Seller;
(vi) noncompetition agreement in the form of Exhibit 2.7(a)(vi), executed by
Seller and Shareholder (the "Noncompetition Agreement");
(vii) instructions to the Escrow Agent to release the Escrow Amount to Seller by
wire transfer to an account specified by the Seller;
(viii) a certificate executed by Seller and Shareholder as to the accuracy of
their representations and warranties as of the date of this Agreement and as of
the Closing in accordance with Section 7.1 and as to their compliance with and
performance of their covenants and obligations to be performed or complied with
at or before the Closing in accordance with Section 7.2; and
(ix) certificate of the Secretary of Seller certifying, as complete and accurate
as of the Closing, attached copies of the Governing Documents of Seller,
certifying and attaching all requisite resolutions or actions of Seller's board
of directors and shareholders approving the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions.
(b) Buyer shall deliver to Seller and Shareholder, as the case may be:
(i) Six Million Dollars ($6,000,000) plus or minus the Adjustment Amount by wire
transfer to an account specified by Seller (in a writing delivered to Buyer at
least three (3) Business Days) prior to the Closing Date;
(ii) instructions to the Escrow Agent to release the Escrow Amount to Seller by
wire transfer to an account specified by Seller;
(iii) a promissory note executed by Buyer and payable to Seller in the principal
amount of Three Million Dollars ($3,000,000) in the form Exhibit 2.7(b)(iii)
(the "Promissory Note");
(iv) an irrevocable two-year letter of credit in the amount of Two Million
Dollars ($2,000,000) naming Seller as beneficiary as security for the Promissory
Note, in form provided in the Promissory Note and otherwise reasonably
acceptable to Seller.
(v) the Assignment and Assumption Agreement, executed by Buyer;
(vi) the Noncompetition Agreements, executed by Buyer;
(vii) a certificate executed by Buyer as to the accuracy of its representations
and warranties as of the date of this Agreement and as of the Closing in
accordance with Section 8.1 and as to its compliance with and performance of its
covenants and obligations to be performed or complied with at or before the
Closing in accordance with Section 8.2; and
(viii) a certificate of the Secretary of Buyer certifying, as complete and
accurate as of the Closing, attached copies of the Governing Documents of Buyer
and certifying and attaching all requisite resolutions or actions of Buyer's
board of directors approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions.
2.8 Adjustment Amount and Payment. The "Adjustment Amount" (which may be a
positive or negative number) will be equal to the amount determined by
subtracting $2,100,000 ("Base Inventory Value") from the Final Inventory Value.
If the Adjustment Amount is negative, the difference between the Final Inventory
Value less the Base Inventory Value shall be deducted from the Purchase Price
pursuant to Section 2.3. If the Adjustment Amount is positive, the difference
between the Final Inventory value and the Base Inventory Value shall be added to
the Purchase Price pursuant to Section 2.3.
2.9 Adjustment Procedure.
(a) Prior to Closing and on a date as close to the Closing Date as practicable
(the "Cut-Off Date"), Buyer shall cause an independent inventory valuation
service (selected by Buyer, in its sole discretion) to value the Inventory to
determine its cost as of the Cut-off Date and deliver its results to Seller (for
this purpose the inventory at the Houston Store shall be discounted 20%). If the
results are approved by Seller, such results will be the "Final Inventory
Value." If there is a disagreement, Seller and Buyer will in good faith seek to
resolve the calculation of the Final Inventory Value prior to the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. Seller and
Shareholder represent and warrant, jointly and severally, to Buyer as follows:
3.1 Organization and Good Standing.
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under the Seller Contracts and Real
Property Leases identified in Part 2.1(a).
(b) Sellers have delivered complete and accurate copies, of the Governing
Documents of Seller, as currently in effect.
3.2 Enforceability; Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding obligation of Seller
and Shareholder, enforceable against each of them in accordance with its terms.
Upon the execution and delivery by Seller and Shareholder of the Escrow
Agreement, the Noncompetition Agreement, and each other agreement to be executed
or delivered by any or all of Seller and Shareholder at the Closing
(collectively, the "Seller's Closing Documents"), each of Seller's Closing
Documents will constitute the legal, valid and binding obligation of each of
Seller and Shareholder, enforceable against each of them in accordance with its
terms. Seller has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and the Seller's Closing Documents to which
it is a party and to perform its obligations under this Agreement and the
Seller's Closing Documents, and such action has been duly authorized by all
necessary action by Seller's shareholders and board of directors. Shareholder
has all necessary legal capacity to enter into this Agreement and the Seller's
Closing Documents to which such Shareholder is a party and to perform his
obligations hereunder and thereunder.
(b) Except as set forth in Part 3.2(b), neither the execution and delivery of
this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time): (i) Breach (a) any provision of any of the Governing Documents of Seller
or (b) any resolution adopted by the board of directors or the shareholders of
Seller; (ii) Breach or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under any Legal Requirement or any Order to which Seller or
Shareholder, or any of the Assets or the Business, may be subject; (iii)
contravene, conflict with or result in a violation or breach of any of the terms
or requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by Seller or that otherwise relates to the Assets or to the Business; (iv)
Breach any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
payment under, or to cancel, terminate or modify, any Seller Contract or any
Real Property Lease; (v) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets.
(c) Except as set forth in Part 3.2(c), neither Seller nor Shareholder is
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 Financial Statements. Seller has delivered to Buyer: (a) an unaudited
balance sheet of Footworks as at December 31, 2004, (including the notes
thereto, the "Balance Sheet"), and the related unaudited statements of income,
changes in shareholders' equity and cash flows for the fiscal year then ended,
including in each case the notes thereto; and (b) an unaudited balance sheet of
Footworks as at March 31, 2005, (the "Interim Balance Sheet") and the related
unaudited statements of income, changes in shareholders' equity, and cash flows
for the three (3) months then ended. Such financial statements fairly present
the financial condition and the results of operations, changes in shareholders'
equity and cash flows of the Business as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP.
The financial statements referred to in this Section 3.3 reflect and will
reflect the consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such financial statements.
The financial statements referred to in this Section 3.3 are true and correct
and have been and will be prepared from and are in accordance with the
accounting Records of Seller.
3.4 Books and Records. The books of account and other financial Records of
Seller relating to the Business, all of which have been made available to Buyer,
are complete and correct and represent actual, bona fide transactions and have
been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
3.5 Sufficiency of Assets. Except as set forth in Part 3.5, (a) the Assets
constitute all of the assets, tangible and intangible, of any nature whatsoever,
necessary to operate the Business in the manner presently operated by Seller and
(b) include all of the operating assets of Seller relating to the Business.
3.6 Description of Real Property. The Real Property Leases
identified in Part 2.1(a) comprise all of the Stores used in the Business.
3.7 Real Property Leases. Seller has delivered to Buyer a true and complete copy
of each Real Property Lease used in the Business. Except as set forth in Part
3.7, with respect to each of the Real Property Leases: (i) such Real Property
Lease is legal, valid, binding, enforceable and in full force and effect; (ii)
the transactions contemplated by this Agreement do not require the Consent of
any other party to such Real Property Lease, will not result in a breach of or
default under such Real Property Lease, and will not otherwise cause such Real
Property Lease to cease to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing; (iii) Sellers has
possession and quiet enjoyment and there are no disputes with respect to such
Real Property Lease and there are no disputes with respect to such Real Property
Lease; (iv) neither Seller nor any other party to the Real Property Lease is in
Breach or default under such Real Property Lease, and no event has occurred or
circumstance exists which, with the delivery of notice, the passage of time or
both, would constitute such a Breach or default, or permit the termination,
modification or acceleration of rent under such Real Property Lease; (v) no
security deposits have been delivered by Buyer under such Leases; (vi) there are
no Encumbrances on the estate or interest created by such Real Property Lease;
(vii) such Real Property Lease constitutes the entire agreement to which Seller
is a party with respect to the leasehold estate demised pursuant thereto.
3.8 Title to Assets; Encumbrances.
(a) Seller owns good and transferable title to all of the Assets free and clear
of any Encumbrances other than those described in Part 3.8. Seller warrants to
Buyer that, at the time of Closing, all the Assets shall be free and clear of
all Encumbrances other than those specifically identified on Part 3.8 as
acceptable to Buyer ("Permitted Encumbrances"). 3.9 Condition of Property.
(a) To the Knowledge of the Shareholder and Seller: (i) all Improvements in the
Stores are in compliance with all applicable Legal Requirements, including those
pertaining to zoning, building and the disabled, are in good repair and in good
condition, ordinary wear and tear excepted, and are free from latent and patent
defects would, individually or in the aggregate, interfere in any respect with
the use or occupancy of the Stores or Improvements or any portion thereof in the
operation of the business as currently conducted thereon; (ii) the current use
and occupancy of the Stores and operation of the Business thereon do not violate
any Legal Requirements; (iii) Seller has not received any notice of violation of
any Legal Requirement relating to the Stores and there is no Basis for the
issuance of any such notice or the taking of any action for such violation; (iv)
there is no pending or anticipated change in any Legal Requirement that will
materially impair the ownership, lease, use or occupancy of any Store or any
portion thereof in the continued operation of the business as currently
conducted thereon; and (v) all Government Authorizations required or appropriate
for the use and occupancy of the Stores have been issued and are in full force
and effect.
(b) To the Knowledge of Shareholder and Seller: (i) each item of Tangible
Personal Property is in good repair and good operating condition, ordinary wear
and tear excepted, is suitable for immediate use in the Ordinary Course of
Business and is free from latent and patent defects, and (ii) no item of
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. Except as
disclosed in Part 3.9(b), all Tangible Personal Property used in the Business is
in the possession of Seller.
3.10 [Intentionally Deleted]
3.11 Taxes.
(a) Tax Returns Filed and Taxes Paid. Seller has filed or caused to be filed on
a timely basis all Tax Returns and all reports with respect to Taxes that are or
were required to be filed pursuant to applicable Legal Requirements. All Tax
Returns and reports filed by Seller are true, correct and complete. Seller has
paid, or made provision for the payment of, all Taxes that have or may have
become due and owing (whether not shown on any Tax Return), or pursuant to any
assessment received by Seller, except such Taxes, if any, as are listed in Part
3.11(a) and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the Balance Sheet and
the Interim Balance Sheet. There are no Encumbrances on any of the Assets that
arose in connection with any failure (or alleged failure) to pay any Tax, and
neither Seller nor Shareholder has Knowledge of any Basis for assertion of any
claims attributable to Taxes which, if adversely determined, would result in any
such Encumbrance.
(b) Information Regarding Audits and Potential Audits. To the Knowledge of
Seller and Shareholder, no undisclosed deficiencies are expected to be asserted
with respect to any ongoing audit. All deficiencies proposed as a result of such
audits have been paid, reserved against, settled or are being contested in good
faith by appropriate proceedings as described in Part 3.11(b). Except as
provided in Part 3.11(b), neither Seller nor Shareholder has Knowledge that any
Governmental Body is likely to assess any additional taxes for any period for
which Tax Returns have been filed. There is no dispute or claim concerning any
Taxes of Seller either (i) claimed or raised by any Governmental Body in writing
or (ii) as to which Seller or Shareholder has Knowledge.
3.12 No Material Adverse Change. Since the date of the Balance Sheet, there has
not been any material adverse change in the business, operations, prospects,
assets, results of operations or condition (financial or other) of the Business,
and no event has occurred or circumstance exists that may result in such a
material adverse change.
3.13 Employee Benefits.
(a) Part 3.13 lists each Employee Benefit Plan that Seller maintains, to which
Seller contributes or has any obligation to contribute, or with respect to which
Seller has any Liability or potential Liability.
(i) Each such Employee Benefit Plan (and each related trust, insurance contract,
or fund) has been maintained, funded and administered in accordance with the
terms of such Employee Benefit Plan and the terms of any applicable collective
bargaining agreement and complies in form and in operation in all respects with
the applicable requirements of ERISA, the Code, and other Legal Requirements.
(ii) All contributions (including all employer contributions and employee salary
reduction contributions) that are due have been made within the time periods
prescribed by ERISA and the Code to each such Employee Benefit Plan that is an
Employee Pension Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been made to each such
Employee Pension Benefit Plan or accrued in accordance with the past custom and
practice of Seller. All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each such Employee
Benefit Plan that is an Employee Welfare Benefit Plan.
(iii) There have been no Prohibited Transactions with respect to any such
Employee Benefit Plan or any Employee Benefit Plan maintained by an ERISA
Affiliate. No fiduciary has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of Seller or Shareholder,
Threatened.
(b) Neither the Seller nor any ERISA Affiliate contributes to, has any
obligation to contribute to, or has any Liability under or with respect to any
Employee Pension Benefit Plan that is a "defined benefit plan" (as defined in
ERISA ss.3(35)). No asset of the Seller is subject to any Encumbrances under
ERISA or the Code.
(c) Neither the Seller nor any ERISA Affiliate contributes to, has any
obligation to contribute to, or has any Liability (including withdrawal
liability as defined in ERISA ss.4201) under or with respect to any
Multiemployer Plan.
3.14 Compliance With Legal Requirements; Governmental Authorizations
(a) Except as set forth in Part 3.14(a) to the Knowledge of Shareholder and
Seller: (i) Seller is in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of the Business or the
ownership or use of any of the Assets; (ii) with respect to the Business and the
Assets, no event has occurred or circumstance exists that (with or without
notice or lapse of time) (a) may constitute or result in a violation by Seller
of, or a failure on the part of Seller to comply with, any Legal Requirement or
(b) may give rise to any obligation on the part of Seller to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature; and
(iii) with respect to the Business and the Assets, Seller has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (a) any actual, alleged, possible or
potential violation of, or failure to comply with, any Legal Requirement or (b)
any actual, alleged, possible or potential obligation on the part of Seller to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature.
(b) Part 3.14(b) contains a complete and accurate list of each material
Governmental Authorization that is held by Seller that relates to the Business
or the Assets. To the Knowledge of Shareholder and Seller. Each Governmental
Authorization listed or required to be listed in Part 3.14(b) is valid and in
full force and effect. Except as set forth in Part 3.14(b) to the Knowledge of
Shareholder and Seller:
(i) Seller is in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part
3.14(b). The Governmental Authorizations listed in Part 3.14(b) collectively
constitute all of the Governmental Authorizations necessary to permit Seller to
lawfully conduct and operate the Business in the manner in which it currently
conducts and operates Business and to permit Seller to own and use the Assets in
the manner in which it currently owns and uses the Assets;
(ii) no event has occurred or circumstance exists that may (with or without
notice or lapse of time) (a) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Part 3.14(b) or
(b) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.14(b);
(iii) Seller has not received, at any time since December 31, 2002, any notice
or other communication (whether oral or written) from any Governmental Body or
any other Person regarding (a) any actual, alleged, possible or potential
violation of or failure to comply with any term or requirement of any
Governmental Authorization or (b) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of or modification
to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Part 3.14(b) have
been duly filed on a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
3.15 Legal Proceedings; Orders
(a) Except as set forth in Part 3.15(a), there is no pending or, to the
Knowledge of Seller or Shareholder, Threatened Proceeding: (i) by or against
Seller that relates to or may affect the Business, or any of the Assets; or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated Transactions. To
the Knowledge of Seller or Shareholder, no event has occurred or circumstance
exists that is reasonably likely to give rise to or serve as a Basis for the
commencement of any such Proceeding. Seller has delivered to Buyer copies of all
pleadings, correspondence and other documents relating to each Proceeding listed
in Part 3.15(a). There are no Proceedings listed in Part 3.15(a) that could have
a material adverse effect on the business, operations, assets, condition or
prospects of the Business or upon the Assets.
(b) Except as set forth in Part 3.15(b), there is no Order to which the Business
or any of the Assets is subject.
(c) Except as set forth in Part 3.15(c): (i) Seller has been in compliance with
all of the terms and requirements of each Order to which the Business or any of
the Assets is or has been subject; (ii) no event has occurred or circumstance
exists that is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which the Business or any of the Assets is subject;
and (iii) Seller has not received since December 31, 2002 any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order to which the
Business or any of the Assets is or has been subject.
3.16 Contracts; No Defaults
(a) Part 3.16(a) contains an accurate and complete list, and Seller has
delivered to Buyer accurate and complete copies, of each Contract (i) that
involves performance of services or delivery of goods or materials by or to
Seller related to the Business, (ii) affecting the ownership of, leasing of,
title to, use of or any interest in any personal property used in the Business;
(iii) with any labor union or other employee representative of a group of
employees relating to wages, hours and other conditions of employment of
employees at the Stores; (iv) involving a sharing of profits, losses, costs or
liabilities by Seller with any employee at the Stores.
(b) Except as set forth in Part 3.16(a) each Seller Contract listed in Part
3.16(a):
(i) is in full force and effect and is valid and enforceable in accordance with
its terms;
(ii) is assignable by Seller to Buyer without the consent of any other Person;
and
(iii) will not, to the Knowledge of Seller or Shareholder, upon completion or
performance thereof have a material adverse affect on the Business or the
Assets.
(c) Except as set forth in Part 3.16(a): (i) Seller is in full compliance with
all applicable terms and requirements of each Seller Contract; (ii) each other
Person that has or had any obligation or liability under each Seller Contract is
in full compliance with all applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exist that (with or without notice
or lapse of time) may contravene, conflict with, or result in a violation or
breach of, or give Seller or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract identified in Part 3.16(a); and
(iv) has not given to or received from any other Person, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Contract.
(d) There are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any material amounts paid or payable to Seller under
current or completed Contracts relating to the Business (including past purchase
orders for inventory) with any Person and no such Person has made written demand
for such renegotiation.
3.17 Environmental matters. Except as disclosed in Part 3.17:
(a) Neither Seller nor Shareholder has received, any actual or Threatened order,
or notice from any Governmental Body of any actual or potential violation or
failure to comply with any environmental Legal Requirement, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any Store.
(b) There are no pending or, to the Knowledge of Seller or Shareholder,
Threatened claims, Encumbrances, or other restrictions of any nature resulting
from any Environmental, Health and Safety Liabilities or arising under or
pursuant to any environmental Legal Requirement with respect to or affecting any
Store.
(c) Seller has not received, any citation, directive, inquiry, notice, Order,
summons, warning or other communication that relates to any alleged, actual, or
potential violation or failure to comply with any environmental Legal
Requirement, or of any alleged, actual, or potential obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect
to any Store.
3.18 Employees, Labor Disputes; Compliance.
(a) Seller has complied in all respects with all Legal Requirements relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar Taxes and occupational
safety and health in regard to the Store Employees. Seller is not liable for the
payment of any Taxes, fines, penalties, or other amounts, however designated,
for failure to comply with any of the foregoing Legal Requirements.
(b) Except as disclosed in Part 3.18(b), with respect to Store Employees (i)
Seller has not been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) there has not been, there has not been,
there is not presently pending or existing, and to the Knowledge of Seller or
Shareholder, there is not Threatened, any strike, slowdown, picketing, work
stoppage or employee grievance process; (iii) there is not pending or, to the
Knowledge of Seller or Shareholder, Threatened against or affecting Seller any
Proceeding relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or complaint
filed with the National Labor Relations Board or any comparable Governmental
Body, and there is no organizational activity or other labor dispute against or
affecting Seller or its properties; (iv) no application or petition for an
election of or for certification of a collective bargaining agent is pending;
(v) no grievance or arbitration Proceeding exists that might have an adverse
effect upon Seller or the conduct of its business; (vi) there is no lockout of
any employees by Seller, and no such action is contemplated by Seller; and (vii)
to the Knowledge of Seller or Shareholder, there has been no charge of
discrimination filed against or Threatened against Seller with the Equal
Employment Opportunity Commission or similar Governmental Body.
(c) Employee Contracts. There are no existing employment Contracts with any
Store Employee.
3.19 Intellectual Property Assets.
(a) The term "Intellectual Property Assets" means all intellectual property
owned or licensed (as licensor or licensee) by Seller in which Seller has a
proprietary interest used in or related to the Business, including: (i) the
trademark and tradename FOOTWORKS and all registration thereof throughout the
world (collectively, "Marks"); (ii) all registered and unregistered copyrights
in signs, advertising and marketing materials, architectural plans and drawings
for stores, and similar items used for the Business (collectively,
"Copyrights"); (iii) all know-how, trade secrets, confidential or proprietary
information, customer lists, Software, technical information, data, process
technology, and plans (collectively, "Trade Secrets"); and (iv) all rights in
internet web sites and internet domain names used by the Business (collectively
"Net Names").
(b) There are no Contracts relating to any Intellectual Property Assets.
(c) Part 3.19(c) contains a complete and accurate list and summary description
of all Marks.
(i) All Marks have been registered with the United States Patent and Trademark
Office, are currently in compliance with all formal Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable and are
not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.
(ii) No ▇▇▇▇ has been or is now involved in any opposition, invalidation or
cancellation Proceeding and, to the Knowledge of Seller or Shareholder, no such
action is Threatened with respect to any of the Marks.
(iii) To the Knowledge Seller or Shareholder, there is no potentially
interfering trademark or trademark application of any other Person.
(iv) No ▇▇▇▇ is infringed or, to the Knowledge Seller or Shareholder, has been
challenged or Threatened in any way. None of the Marks used by Seller in the
Business infringes or is alleged to infringe any trade name, trademark or
service ▇▇▇▇ of any other Person.
3.20 Relationships With Related Persons. Except as disclosed in Part 3.20,
neither Seller nor Shareholder nor any Related Person of any of them has any
interest in any property (whether real, personal or mixed and whether tangible
or intangible) used in or pertaining to the Business.
3.21 Suppliers. Part 3.21 sets forth a list of the ten largest suppliers of
product to the Business for the three most recent fiscal years ("Major
Suppliers"). To the knowledge of the Seller or Shareholder, there is no
termination, cancellation or limitation of, or any material modification or
change in, the business relationships of Seller with any Major Supplier. To the
Knowledge of Seller or Shareholder, there will not be any such change in
relations with Major Suppliers of Seller or triggering of any right of
termination, cancellation or penalty or other payment in connection with or as a
result of transactions contemplated by this Agreement which would or could
reasonably be expected to have a material adverse effect on the Business.
3.22 Promissory Note. Seller is acquiring the Promissory Note for its own
account and not with a view to its distribution within the meaning of Section
2(11) of the Securities Act. Seller acknowledges that Buyer has made available
to Seller and its Representatives the opportunity to ask questions of the
officers and management employees of Buyer to acquire such additional
information about the Business and financial condition of Buyer as Seller has
requested, and all such information has been received. Seller is an accredited
investor as defined by Rule 501 of Regulation D of the Securities Act.
3.23 Brokers Or Finders. Neither Seller nor Shareholder nor any of their
Representatives have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payments in connection with the sale of the Business or the Assets or
the Contemplated Transactions.
3.24 Disclosure. No representation or warranty of Seller or Shareholder in this
Agreement, the Disclosure Letter, any supplement to the Disclosure Letter, the
certificates delivered pursuant to Section 2.7(a) contains any untrue statement
or omits to state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Seller and Shareholder as follows:
4.1 Organization And Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to conduct its business as it is now
conducted.
4.2 Authority; No Conflict
(a) This Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the execution and
delivery by Buyer of the Assignment and Assumption Agreement, the Promissory
Note, the Noncompetition Agreements, the Escrow Agreement, and each other
agreement to be executed or delivered by Buyer at Closing (collectively, the
"Buyer's Closing Documents"), each of the Buyer's Closing Documents will
constitute the legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its respective terms. Buyer has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and the Buyer's Closing Documents and to perform its obligations under this
Agreement and the Buyer's Closing Documents, and such action has been duly
authorized by all necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay or otherwise interfere with any
of the Contemplated Transactions pursuant to: (i) any provision of Buyer's
Governing Documents; (ii) any Legal Requirement or Order to which Buyer may be
subject; or (iii) any Contract to which Buyer is a party or by which Buyer may
be bound.
Buyer is not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions. To Buyer's Knowledge, no such
Proceeding has been Threatened.
4.4 Brokers Or Finders. Neither Buyer nor any of its Representatives have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection
with the Contemplated Transactions.
5. COVENANTS OF SELLER PRIOR TO CLOSING
5.1 Access And Investigation. Between the date of this Agreement and the Closing
Date, and upon reasonable advance notice received from Buyer, Seller shall (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer Group") reasonable access, during regular
business hours, to Seller's personnel and properties, Contracts, Governmental
Authorizations, books and Records and other documents and data used in and
related to the Business, such rights of access to be exercised in a manner that
does not unreasonably interfere with the operations of Seller and in a manner
designed not to disrupt store operations and until a public announcement,
maintains the confidentiality of the Contemplated Transactions; (b) furnish
Buyer Group with copies of all such Contracts, Governmental Authorizations,
books and Records and other existing documents and data as Buyer may reasonably
request used in and related to the Business; (c) furnish Buyer Group with such
additional financial, operating and other relevant data and information used in
an related to the Business as Buyer may reasonably request; and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer's
investigation of the properties, assets and financial condition related to the
Business.
5.2 Operation Of The Business Of Seller. Between the date of this
Agreement and the Closing, Seller shall:
(a) conduct the Business only in the Ordinary Course of Business;
(b) except as otherwise directed by Buyer in writing, and without making any
commitment on Buyer's behalf, use its Best Efforts to preserve intact its
current business organization, keep available the services of its officers,
employees and agents and maintain its relations and goodwill with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with the Business;
(c) confer with Buyer prior to implementing operational decisions of a material
nature related to the Business;
(d) otherwise report periodically to Buyer concerning the status of the Business
and its operations and finances;
(e) make no material changes in management personnel employed in the Business
without prior consultation with Buyer;
(f) maintain the Assets in a state of repair and condition that complies with
Legal Requirements and is consistent with the requirements and normal conduct of
Seller's business;
(g) keep in full force and effect, without amendment, all material rights
relating to the Business;
(h) comply with all Legal Requirements and contractual obligations applicable to
the operations of the Business;
(i) continue in full force and effect the insurance coverage of the Business and
Assets under the policies currently maintained or substantially equivalent
policies;
(j) cooperate with Buyer and assist Buyer in identifying the Governmental
Authorizations required by Buyer to operate the Business from and after the
Closing Date and either transferring existing Governmental Authorizations of
Seller to Buyer, where permissible, or obtaining new Governmental Authorizations
for Buyer;
(k) upon request from time to time, execute and deliver all documents, and do
all other acts that may be reasonably necessary or desirable in the opinion of
Buyer to consummate the Contemplated Transactions, all without further
consideration;
(l) maintain all books and Records of Seller relating to the Business in the
Ordinary Course of Business; and
(m) not remove or transfer any Inventory from the Houston Store (except
Inventory sold to retail customers in the Ordinary Course of Business); provided
further, that Seller and Shareholder represent that since April 22, 2005 no
Inventory has been removed or transferred from the Houston Store (except
Inventory sold to retail customers in the Ordinary Course of Business).
5.3 Negative Covenant. Except as otherwise expressly permitted herein, between
the date of this Agreement and the Closing Date, Seller shall not, without the
prior written Consent of Buyer, (a) make any modification to any material
Contract or Governmental Authorization relating to the Assets or the Business;
(b) allow the levels of Inventories to vary materially from the levels
customarily maintained; or (c) enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the Assets or
the Business.
5.4 Required Approvals. As promptly as practicable after the date of this
Agreement, Seller shall make all filings required by Legal Requirements to be
made by it in order to consummate the Contemplated Transactions. Seller and
Shareholder also shall cooperate with Buyer and its Representatives with respect
to all filings that Buyer elects to make or, pursuant to Legal Requirements,
shall be required to make in connection with the Contemplated Transactions.
5.5 Notification. Between the date of this Agreement and the Closing, executive
officers of Seller and Shareholder shall promptly notify Buyer in writing if any
of them becomes aware of (a) any fact or condition that causes or constitutes a
Breach of any of representations and warranties of Seller and Shareholder made
as of the date of this Agreement or (b) the occurrence after the date of this
Agreement of any fact or condition that would or be reasonably likely to (except
as expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had that representation or warranty been made as
of the time of the occurrence of, or Seller's or Shareholder's discovery of,
such fact or condition. Should any such fact or condition require any change to
the Disclosure Letter, Seller shall promptly deliver to Buyer a supplement to
the Disclosure Letter specifying such change. Such delivery shall not affect any
rights of Buyer under Section 9.2. During the same period, Seller and
Shareholder also shall promptly notify Buyer of the occurrence of any Breach of
any covenant of Seller or Shareholder in this Article 5 or of the occurrence of
any event that may make the satisfaction of the conditions in Article 7
impossible or unlikely.
5.6 Best Efforts. Seller and Shareholder shall use their Best Efforts to cause
the conditions in Article 7 and Section 8.3 to be satisfied.
5.7 Bulk Sales Law. Unless Buyer and Seller otherwise mutually waive compliance,
Seller shall comply (at its sole expense) with the bulk-transfer provisions of
the Uniform Commercial Code (or any similar law) ("Bulk Sales Laws") in
connection with the Contemplated Transactions.
6. COVENANTS OF BUYER PRIOR TO CLOSING
6.1 Required Approvals. As promptly as practicable after the date of
this Agreement, Buyer shall make, or cause to be made, all filings required by
Legal Requirements to be made by it to consummate the Contemplated Transactions.
6.2 Best Efforts. Buyer shall use its Best Efforts to cause the
conditions in Article 8 and 7.3 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to
purchase the Assets and to take the other actions required to be taken by Buyer
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Buyer, in whole
or in part):
7.1 Accuracy Of Representation.
(a) All of Seller's and Shareholder's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), shall have been accurate in all material
respects as of the date of this Agreement, and shall be accurate in all material
respects as of the time of the Closing as if then made, without giving effect to
any supplement to the Disclosure Letter.
(b) Each of the representations and warranties in Section 3.2(a), and each of
the representations and warranties in this Agreement that contains an express
materiality qualification, shall have been accurate in all respects as of the
date of this Agreement, and shall be accurate in all respects as of the time of
the Closing as if then made, without giving effect to any supplement to the
Disclosure Letter.
7.2 Seller's Performance. All of the covenants and obligations that Seller and
Shareholder are required to perform or to comply with pursuant to this Agreement
at or prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), shall have been duly
performed and complied with in all material respects.
7.3 Consents.
(a) Seller shall have obtained all required Consents for Buyer's assumption of
the Real Property Leases (including the options provided in the Real Property
Leases for the Stores at The Grand Canal Shoppes, Green Valley and Hard
Rock-Fort Lauderdale) on terms acceptable to Buyer.
(b) Seller shall have obtained a new ten-year lease on terms acceptable to Buyer
(in its sole discretion) for the Real Property Lease for the Store located in
the Forum Shops (Las Vegas, Nevada) ("Forum Shops Lease") provided, however,
that the non-economic terms of the new lease shall be substantially the same
terms provided by the Simon Property Group to Buyer under the most recent leases
between the Simon Property Group and the Buyer for other properties. Seller
agrees that it will use its Best Efforts to negotiate for and obtain from the
landlord of the Forum Shops Lease as an extension of the current lease
commencing with the Closing Date rather than a new lease (with the intent that
Buyer would benefit from the remaining term of the lease), provided however,
obtaining an extension of the lease instead of obtaining a new lease shall not
be a condition to Buyer's obligations under this Agreement.
(c) Seller shall allow Buyer to participate in the negotiation of the request
for consents from the landlords of the Real Property Leases required by Section
7.3(a) and the extension of the Forum Shops Lease in accordance with Section
7.3(b). Buyer shall be allowed to request and negotiate for modifications and
concessions to the Real Property Leases to bring the provisions of the leases
into conformance with the terms and provisions Buyer typically obtains in its
retail store leases; provided however, it shall not be a condition to Buyer's
obligations under this Agreement that such modifications an concessions are
agreed to by the landlords under the Real Property Leases.
(d) All costs and expenses including administrative fees and legal fees and
expense incurred by Seller to obtain the Consents required by this Section 7.3
(whether incurred directly by Seller or charged to Seller by the landlord under
a Lease) shall be the sole obligation of Seller, except for those fees and
expenses that are the direct result of Buyer's attempts to negotiate
modifications or concessions to an existing Lease.
(e) Notwithstanding the provisions of Section 7.3(a), if a landlord under a Real
Property Lease requires a substantial economic concession as a condition to
providing a Consent (or if applicable a waiver in the case of an automatic
substantial economic concession upon an assignment), including an increase in
rent, Seller and Buyer shall in good faith negotiate an equitable resolution
that reflects that impairment of the economic benefits of the Contemplated
Transactions to Buyer.
(f) Each of the Consents (in addition to the Consents required by Section
7.3(a)) identified in Exhibit 7.3 (the "Material Consents") shall have been
obtained and shall be in full force and effect.
7.4 Additional Documents. Seller and Shareholders shall have caused the
documents and instruments required by Section 2.7(a) and the following documents
to be delivered (or tendered subject only to Closing) to Buyer:
(a) Certificates dated as of a date not earlier than the third business day
prior to the Closing as to the good standing of Seller and payment of all
applicable state Taxes by Seller, executed by the appropriate officials of the
State of Nevada;
(b) Releases of all Encumbrances on the Assets, other than Permitted
Encumbrances; and
(c) Such other documents as Buyer may reasonably request for the purpose of: (i)
evidencing the accuracy of any of Seller's representations and warranties; (ii)
evidencing the performance by Seller or Shareholder of, or the compliance by
Seller or Shareholder with, any covenant or obligation required to be performed
or complied with by Seller or Shareholder; (iii) evidencing the satisfaction of
any condition referred to in this Article 7; or (iv) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
7.5 No Proceedings. Since the date of this Agreement, there shall not have been
commenced or Threatened against Buyer, or against any Related Person of Buyer,
any Proceeding (a) involving any challenge to, or seeking Damages or other
relief in connection with, any of the Contemplated Transactions or (b) that may
have the effect of preventing, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the Contemplated
Transactions.
7.6 No Conflict. Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), contravene or conflict with or result in a violation of or
cause Buyer or any Related Person of Buyer to suffer any adverse consequence
under (a) any applicable Legal Requirement or Order or (b) any Legal Requirement
or Order that has been published, introduced or otherwise proposed by or before
any Governmental Body, excluding Bulk Sales Laws.
7.7 Governmental Authorizations. Buyer shall have received such Governmental
Authorizations as are necessary or desirable to allow Buyer to operate the
Assets from and after the Closing.
7.8 Bulk Sales. Seller shall have complied with all Bulk Sales Laws.
7.9 Warn Act Notice Periods And Employees
(a) All requisite notice periods under the Warn Act shall have expired.
(b) Substantially all employees of Seller shall be available for hiring by
Buyer, in its sole discretion, on and as of the Closing Date.
7.10 Due Diligence. Buyer shall be reasonably satisfied that its due diligence
investigation of Seller verifies the information previously provided by Seller
and Shareholder to Buyer.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's obligation to
sell the Assets and to take the other actions required to be taken by Seller at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Seller in whole or in
part):
8.1 Accuracy Of Representations. All of Buyer's representations and warranties
in this Agreement (considered collectively), and each of these representations
and warranties (considered individually), shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the time of the Closing as if then made.
8.2 Buyer's Performance. All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been performed and complied
with in all material respects.
8.3 Consents. Each of the Consents identified in Exhibit 8.3 shall have
been obtained and shall be in full force and effect.
8.4 Additional Documents. Buyer shall have caused to be delivered (or tendered
subject only to Closing) to Seller and Shareholders the documents and
instruments required by Section 2.7(b) and such other documents as Seller may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer or (iii) evidencing the satisfaction of any
condition referred to in this Article 8.
8.5 No Injunction. There shall not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the consummation of the
Contemplated Transactions and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
8.6 Real Property Leases. Satisfaction of the actions, if required,
contemplated by Section 7.3(e).
9. TERMINATION.
9.1 Termination Events. By notice given prior to or at the Closing, subject
to Section 9.2, this Agreement may be terminated as follows:
(a) by Buyer if a material Breach of any provision of this Agreement has been
committed by Seller or Shareholder and such Breach has not been waived by Buyer
or cured by Seller after five business days' notice from Buyer;
(b) by Seller if a material Breach of any provision of this Agreement has been
committed by Buyer and such Breach has not been waived by Seller or cured by
Buyer after five business days' notice from Seller;
(c) by Buyer if any condition in Article 7 has not been satisfied (subject to
Section 7.3(e)) as of the Closing Date or if satisfaction of such a condition by
such date is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement), and Buyer has not waived such
condition on or before such date;
(d) by Seller if any condition in Article 8 (subject to Section 7.3(e)) has not
been satisfied as of the Closing Date or if satisfaction of such a condition by
such date is or becomes impossible (other than through the failure of Seller or
Shareholder to comply with their obligations under this Agreement), and Seller
has not waived such condition on or before such date;
(e) by mutual consent of Buyer and Seller;
(f) by either Buyer or Seller if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
with its obligations under this Agreement) on or before August 15, 2005, or such
later date as the parties may agree upon.
9.2 Effect Of Termination. (a) Each party's right of termination under Section
9.1 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of such right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
obligations of the parties under this Agreement will terminate, except that the
obligations of the parties in this Section 9.2 and Articles 12 and 13 (except
for those in Section 13.5) will survive, provided, however, that, if this
Agreement is terminated because of a Breach of this Agreement by the
nonterminating party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
(b) Notwithstanding the foregoing provisions of Section 9.2(a), if the Closing
shall not occur as a result of a Breach of the Agreement by Buyer, Seller shall
be paid from the Escrow Account the Escrow Amount as liquidated damages and not
as a penalty. Seller and Buyer acknowledge that the liquidated damages provided
by the Escrow Amount is reasonable and avoids the delay and expense of
protracted dispute resolution or litigation that could be instituted by the
parties, and provides a reasonable measure of the damages that would be incurred
by Seller. The remedy provided by this Section 9.2(b) shall be Seller's sole
remedy in case of a Breach by the Seller of this Agreement that results in this
Agreement being terminated.
10. ADDITIONAL COVENANTS.
10.1 Employees And Employee Benefits.
(a) Information on Active Employees. For the purpose of this Agreement, the term
"Active Employees" shall mean all employees employed on the Closing Date by
Seller for the Business who are employed exclusively at the Stores including
employees on temporary leave of absence, including family medical leave,
military leave, temporary disability or sick leave, but excluding employees on
long-term disability leave.
(b) Employment of Active Employees by Buyer.
(i) Buyer shall make an offer of employment to all Active Employees, provided
that based on interviews and personnel file reviews prior to the Closing, Buyer
may decline to extend an offer to particular Active Employees as Buyer
determines in its discretion. Buyer will provide Seller with a list of Active
Employees to whom Buyer has made an offer of employment that has been accepted
to be effective on the Closing Date (the "Hired Active Employees"). Subject to
Legal Requirements, Buyer will have reasonable access to the Stores and
personnel Records (including performance appraisals, disciplinary actions,
grievances and medical Records) of Seller for the purpose of preparing for and
conducting employment interviews with all Active Employees and will conduct the
interviews as expeditiously as possible prior to the Closing Date. Access will
be provided by Seller upon reasonable prior notice during normal business hours.
Effective immediately before the Closing, Seller will terminate the employment
of all of its Hired Active Employees.
(ii) Neither Seller nor Shareholder nor their Related Persons shall solicit the
continued employment of any Active Employee (unless and until Buyer has informed
Seller in writing that the particular Active Employee will not receive any
employment offer from Buyer) or the employment of any Hired Active Employee
after the Closing. Buyer shall inform Seller promptly of the identities of those
Active Employees to whom it will not make employment offers.
(iii) It is understood and agreed that (a) Buyer's expressed intention to extend
offers of employment as set forth in this section shall not constitute any
commitment, Contract or understanding (expressed or implied) of any obligation
on the part of Buyer to a post-Closing employment relationship of any fixed term
or duration or upon any terms or conditions other than those that Buyer may
establish pursuant to individual offers of employment, and (b) employment
offered by Buyer is "at will" and may be terminated by Buyer or by an employee
at any time for any reason (subject to any written commitments to the contrary
made by Buyer or an employee and Legal Requirements). Nothing in this Agreement
shall be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Active Employees after
the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such employees. No employee of Seller shall be
deemed a third-party beneficiary of this Agreement.
(c) Salaries and Benefits.
(i) Seller shall be responsible for (a) the payment of all wages and other
remuneration due to Active Employees with respect to their services as employees
of Seller through the close of business on the Closing Date, including pro rata
bonus payments and all vacation pay earned prior to the Closing Date; (b) the
payment of any termination or severance payments and the provision of health
plan continuation coverage in accordance with the requirements of COBRA and
Sections 601 through 608 of ERISA; and (c) any and all payments to employees
required under the WARN Act.
(ii) Seller shall be liable for any claims made or incurred by Active Employees
and their beneficiaries through the Closing Date under any Employee Benefit
Plan. For purposes of the immediately preceding sentence, a charge will be
deemed incurred, in the case of hospital, medical or dental benefits, when the
services that are the subject of the charge are performed and, in the case of
other benefits (such as disability or life insurance), when an event has
occurred or when a condition has been diagnosed that entitles the employee to
the benefit.
(d) Seller's Retirement and Savings Plans. All Hired Active Employees who are
participants in Seller's retirement plans shall retain their accrued benefits
under Seller's retirement plans as of the Closing Date, and Seller (or Seller's
retirement plans) shall retain sole liability for the payment of such benefits
as and when such Hired Active Employees become eligible therefor under such
plans.
(e) Neither Seller nor its respective Related Persons will make any transfer of
pension or other employee benefit plan assets to Buyer.
(f) Buyer will set its own initial terms and conditions of employment for the
Hired Active Employees and others it may hire, including work rules, benefits
and salary and wage structure, all as permitted by law.
(g) Buyer shall not have any responsibility, liability or obligation, whether to
Active Employees, former employees, their beneficiaries or to any other Person,
with respect to any employee benefit plans, practices, programs or arrangements
(including the establishment, operation or termination thereof and the
notification and provision of COBRA coverage extension) maintained by Seller.
(h) General Employee Provisions.
(i) Seller and Buyer shall give any notices required by Legal Requirements and
take whatever other actions with respect to the plans, programs and policies
described in this Section 10.1 as may be necessary to carry out the arrangements
described in this Section 10.1.
(ii) Seller and Buyer shall provide each other with such plan documents and
summary plan descriptions, employee data or other information as may be
reasonably required to carry out the arrangements described in this Section
10.1.
10.2 Payment Of All Taxes Resulting From Sale Of Assets By Seller. Seller shall
pay in a timely manner all Taxes resulting from or payable in connection with
the sale of the Assets pursuant to this Agreement.
10.3 Houston Store Lease. As an accommodation to Seller, Buyer will agree to
assume the lease for Seller's store in the Houston Galleria (the "Houston
Lease") and operate the store (the "Houston Store") for the Remaining Term (as
defined below). Seller will reimburse Buyer for 100% of Buyer's rent and NNN
expenses incurred under the Houston Lease for the Remaining Term; including but
not limited to Minimum Annual Rent, Percentage Rent, Additional Rent, Common
Area Costs, Taxes, Promotional Fund Fixed Contribution, and Media Fund Charges
(as such terms are defined in the Houston Lease), as well as any repair and
maintenance expenses incurred by Buyer in the occupancy and operation of the
Houston Store during such period. Seller shall not be liable for Houston Store
employee salaries and benefits or utilities during such period. Buyer will
indemnify Seller against any liabilities arising from Seller's operation of the
Houston Store during such period for which Seller is not to be responsible.
Section 24.22 of the Houston Lease allows for the early termination of the
Houston Lease by the tenant if it does not have Gross Sale of at lease $1.5
million in the Third Lease Year (the "Kick-out"). The Third Lease Year ends
March 31, 2006, and such sales minimum is not expected to be met, which will
allow the exercise of the Kick-out. The earliest date by which the tenant can
vacate if the Kick-out is exercised is 60 days following the end of the 3rd
Lease Year (the "Early Termination Date"). Buyer will be responsible for
exercising the Kick out, and Buyer intends to exercise the Kick-out and operate
the Houston Store only from the Closing Date through the Early Termination Date
(the "Remaining Term"). Upon Buyer so terminating the Houston Lease, Seller will
reimburse Buyer (in addition to the occupancy costs) for all Buyer's
out-of-pocket costs incurred in closing the Houston store (including, but not
limited to, any required reimbursement of the tenant improvement allowance to
the landlord). All of the foregoing reimbursements required of Seller in
connection with the Houston Store and Houston Lease shall be paid for by Buyer
offsetting such amounts against future payments due under the Promissory Note.
The exercise of such right of setoff by Buyer will not constitute an event of
default under the Promissory Note or any instrument (including any letter of
credit) securing payment of the Promissory Note. The exercise or failure to
exercise such right of setoff will not constitute an election of remedies or
limit Buyer in any manner in the enforcement of any other remedies that may be
available to it.
10.4 Assistance In Proceedings. Seller will cooperate with Buyer and its counsel
in the contest or defense of, and make available its personnel and provide any
testimony and access to its books and Records in connection with, any Proceeding
involving or relating to (a) any Contemplated Transaction or (b) any action,
activity, circumstance, condition, conduct, event, fact, failure to act,
incident, occurrence, plan, practice, situation, status or transaction on or
before the Closing Date involving Seller or the Business or Shareholder.
10.5 Customer And Other Business Relationships. After the Closing, Seller will
and the Shareholders shall cause the Seller to, cooperate with Buyer in its
efforts to continue and maintain for the benefit of Buyer those business
relationships of Seller existing prior to the Closing and relating to the
Business, including relationships with lessors, employees, regulatory
authorities, licensors, customers, suppliers and others, and Seller will satisfy
the Retained Liabilities in a manner that is not detrimental to any of such
relationships. Seller will refer to Buyer all inquiries relating to the
Business. Neither Seller nor any of its officers, employees, agents or
shareholders shall take any action that would tend to diminish the value of the
Assets after the Closing or that would interfere with the Business, including
disparaging the name or business of Buyer.
10.6 Retention Of And Access To Records. After the Closing Date, Buyer shall
retain for a period consistent with Buyer's record-retention policies and
practices those Records of Seller delivered to Buyer. Buyer also shall provide
Seller and Shareholder and their Representatives reasonable access thereto,
during normal business hours and on at least three days' prior written notice,
to enable them to prepare financial statements or tax returns or deal with tax
audits. After the Closing Date, Seller shall provide Buyer and its
Representatives reasonable access to Records that are Excluded Assets, during
normal business hours and on at least three days' prior written notice, for any
reasonable business purpose specified by Buyer in such notice.
10.7 Further Assurances. Subject to the proviso in Section 6.1, the parties
shall cooperate reasonably with each other and with their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and deliver to each
other such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the Contemplated Transactions.
11. INDEMNIFICATION; REMEDIES
11.1 Survival. All covenants and obligations in this Agreement, the Disclosure
Letter, the supplements to the Disclosure Letter, the certificates delivered
pursuant to Section 2.7 and any other certificate or document delivered pursuant
to this Agreement shall survive the Closing and the consummation of the
Contemplated Transactions, provided, however, that none of the representations
and warranties of Seller and Shareholder set forth in Article 3 shall survive
the Closing except, (a) Section 3.8 (Title to Assets; Encumbrances), and (b)
Section 3.3 (Financial Statements) limited, however, to the accuracy of the
historical sales and margin (costs of goods) presented in the Financial
Statements, which shall survive for one (1) year from the Closing Date. The
waiver of any condition based upon the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations.
11.2 Indemnification And Reimbursement By Seller And Shareholder. Seller and
Shareholder, jointly and severally, will indemnify and hold harmless Buyer, and
its Representatives, shareholders, subsidiaries and Related Persons
(collectively, the "Buyer Indemnified Persons"), and will reimburse the Buyer
Indemnified Persons for any loss, liability, claim, damage, expense (including
costs of investigation and defense and reasonable attorneys' fees and expenses)
or diminution of value, whether or not involving a Third-Party Claim
(collectively, "Damages"), arising from, directly or indirectly, or in
connection with:
(a) any Breach of any representation or warranty made by Seller or Shareholder
referred to in Section 11.1(a) or (b) (without giving effect to any supplement
to the Disclosure Letter);
(b) any Breach of any covenant or obligation of Seller or Shareholder in this
Agreement;
(c) any Liability arising out of the ownership or operation of the Assets prior
to the Effective Time other than the Assumed Liabilities;
(d) any brokerage or finder's fees or commissions or similar payments based upon
any agreement or understanding made, or alleged to have been made, by any Person
with Seller or Shareholder (or any Person acting on their behalf) in connection
with any of the Contemplated Transactions;
(e) any noncompliance with any Bulk Sales Laws or fraudulent transfer law in
respect of the Contemplated Transactions;
(f) any liability under the WARN Act or any similar state or local Legal
Requirement that may result from an "Employment Loss", as defined by 29 U.S.C.
sect. 2101(a)(6), caused by any action of Seller prior to the Closing or by
Buyer's decision not to hire previous employees of Seller;
(g) any Employee Benefit Plan established or maintained by Seller;
(h) any Retained Liabilities; or
(i) from Seller's operation of the Houston Store pursuant to Section 10.3.
11.3 Indemnification And Reimbursement By Buyer. Buyer will indemnify and hold
harmless Seller, and will reimburse Seller, for any Damages arising from or in
connection with:
(a) any Breach of any covenant or obligation of Buyer in this Agreement or in
any other certificate delivered by Buyer pursuant to this Agreement;
(b) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on Buyer's behalf) in
connection with any of the Contemplated Transactions; or
(c) any Assumed Liabilities.
11.4 [Intentionally Deleted]
11.5 Third-Party Claims.
(a) Promptly after receipt by a Person entitled to indemnity under Section 11.2
and 11.3 (an "Indemnified Person") of notice of the assertion of a Third-Party
Claim against it, such Indemnified Person shall give notice to the Person
obligated to indemnify under such Section (an "Indemnifying Person") of the
assertion of such Third-Party Claim, provided that the failure to notify the
Indemnifying Person will not relieve the Indemnifying Person of any liability
that it may have to any Indemnified Person, except to the extent that the
Indemnifying Person demonstrates that the defense of such Third-Party Claim is
prejudiced by the Indemnified Person's failure to give such notice.
(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 11.5(a) of the assertion of a Third-Party Claim, the Indemnifying Person
shall be entitled to participate in the defense of such Third-Party Claim and,
to the extent that it wishes (unless (i) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the Indemnified Person
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Person fails to provide reasonable assurance to the
Indemnified Person of its financial capacity to defend such Third-Party Claim
and provide indemnification with respect to such Third-Party Claim), to assume
the defense of such Third-Party Claim with counsel satisfactory to the
Indemnified Person. After notice from the Indemnifying Person to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person shall not, so long as it diligently conducts such defense,
be liable to the Indemnified Person under this Article 11 for any fees of other
counsel or any other expenses with respect to the defense of such Third-Party
Claim, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such Third-Party Claim, other than reasonable
costs of investigation. If the Indemnifying Person assumes the defense of a
Third-Party Claim, (i) such assumption will conclusively establish for purposes
of this Agreement that the claims made in that Third-Party Claim are within the
scope of and subject to indemnification, and (ii) no compromise or settlement of
such Third-Party Claims may be effected by the Indemnifying Person without the
Indemnified Person's Consent unless (a) there is no finding or admission of any
violation of Legal Requirement or any violation of the rights of any Person; (b)
the sole relief provided is monetary damages that are paid in full by the
Indemnifying Person; and (c) the Indemnified Person shall have no liability with
respect to any compromise or settlement of such Third-Party Claims effected
without its Consent. If notice is given to an Indemnifying Person of the
assertion of any Third-Party Claim and the Indemnifying Person does not, within
ten (10) days after the Indemnified Person's notice is given, give notice to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-Party
Claim so defended for the purposes of this Agreement or any compromise or
settlement effected without its Consent (which may not be unreasonably
withheld).
(d) Notwithstanding the provisions of Section 13.4, Seller and each Shareholder
hereby consent to the nonexclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein and agree that process may be served on Seller and Shareholders with
respect to such a claim anywhere in the world.
(e) With respect to any Third-Party Claim subject to indemnification under this
Article 11: (i) both the Indemnified Person and the Indemnifying Person, as the
case may be, shall keep the other Person fully informed of the status of such
Third-Party Claim and any related Proceedings at all stages thereof where such
Person is not represented by its own counsel, and (ii) the parties agree (each
at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party Claim.
(f) With respect to any Third-Party Claim subject to indemnification under this
Article 11, the parties agree to cooperate in such a manner as to preserve in
full (to the extent possible) the confidentiality of all Confidential
Information and the attorney-client and work-product privileges. In connection
therewith, each party agrees that: (i) it will use its Best Efforts, in respect
of any Third-Party Claim in which it has assumed or participated in the defense,
to avoid production of Confidential Information (consistent with applicable law
and rules of procedure), and (ii) all communications between any party hereto
and counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
11.6 Other Claims. A claim for indemnification for any matter not involving a
Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.
12. CONFIDENTIALITY.
12.1 Definition of Confidential Information.
(a) "Confidential Information" includes any and all of the following information
of a Seller, Buyer or Shareholder that has been or may hereafter be disclosed in
any form, whether in writing, orally, electronically or otherwise, or otherwise
made available by a party (Buyer on the one hand or Seller and Shareholder,
collectively, on the other hand) or its Representatives (collectively, a
"Disclosing Party") to the other party or its Representatives (collectively, a
"Receiving Party"):
(i) all information that is a trade secret under applicable trade secret or
other law;
(ii) all information concerning product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer hardware, Software and database
technologies, systems, structures and architectures; and
(iii) all information concerning the business and affairs of the Disclosing
Party (which includes historical and current financial statements, financial
projections and budgets, tax returns and accountants' materials, historical,
current and projected sales, capital spending budgets and plans, business plans,
strategic plans, marketing and advertising plans, publications, client and
customer lists and files, contracts, the names and backgrounds of key personnel
and personnel training techniques and materials, however documented), and all
information obtained from review of the Disclosing Party's documents or property
or discussions with the Disclosing Party regardless of the form of the
communication.
(b) Any trade secrets of a Disclosing Party shall also be entitled to all of the
protections and benefits under applicable trade secret law and any other
applicable law.
12.2 Restricted Use of Confidential Information.
(a) Each Receiving Party acknowledges the confidential and proprietary nature of
the Confidential Information of the Disclosing Party and agrees that such
Confidential Information (i) shall be kept confidential by Receiving Party; (ii)
shall not be used for any reason or purpose other than to evaluate and
consummate the Contemplated Transactions; and (iii) without limiting the
foregoing, shall not be disclosed by the Receiving Party to any Person, except
in each case as otherwise expressly permitted by the terms of this Agreement or
with the prior written consent of an authorized representative of Sellers with
respect to Confidential Information of a Seller or Shareholder (each, a "Seller
Contact") or an authorized representative of Buyer with respect to Confidential
Information of Buyer (each, a "Buyer Contact"). Each of Buyer and Sellers and
Shareholder shall disclose the Confidential Information of the other party only
to its Representatives who require such material for the purpose of evaluating
the Contemplated Transactions and are informed by Buyer, Sellers, or
Shareholder, as the case may be, of the obligations of this Article 12 with
respect to such information. Each of Buyer, Sellers, and Shareholder shall (iv)
enforce the terms of this Article 12 as to its respective Representatives; (v)
take such action to the extent necessary to cause its Representatives to comply
with the terms and conditions of this Article 12; and (vi) be responsible and
liable for any breach of the provisions of this Article 12 by it or its
Representatives.
(b) Unless and until this Agreement is terminated, Sellers and Shareholder shall
maintain as confidential any Confidential Information (including for this
purpose any information of Seller or Shareholder of the type referred to in
Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of
Seller or Shareholder relating to the Business, any of the Assets or the Assumed
Liabilities. Notwithstanding the preceding sentence, a Seller may use any
Confidential Information of Seller before the Closing in the Ordinary Course of
Business in connection with the transactions permitted by Section 5.2.
(c) From and after the Closing, the provisions of Section 12.2(a) above shall
not apply to or restrict in any manner Buyer's use of any Confidential
Information of Seller or Shareholder relating to the Business any of the Assets
or the Assumed Liabilities.
12.3 Exceptions. Sections 12.2(a) and (b) do not apply to that part of the
Confidential Information of a Disclosing Party that a Receiving Party
demonstrates (a) was, is or becomes generally available to the public other than
as a result of a breach of this Article 12 or the confidentiality provisions of
the Letter of Intent by the Receiving Party or its Representatives; (b) was or
is developed by the Receiving Party independently of and without reference to
any Confidential Information of the Disclosing Party; or (c) was, is or becomes
available to the Receiving Party on a nonconfidential basis from a Third Party
not bound by a confidentiality agreement or any legal, fiduciary or other
obligation restricting disclosure. Neither any Seller nor the Shareholder shall
disclose any Confidential Information of a Seller or Shareholders relating to
any of the Assets or the Assumed Liabilities in reliance on the exceptions in
clauses (b) or (c) above.
12.4 Legal Proceedings. If a Receiving Party becomes compelled in any Proceeding
or is requested by a Governmental Body having regulatory jurisdiction over the
Contemplated Transactions to make any disclosure that is prohibited or otherwise
constrained by this Article 12, that Receiving Party shall provide the
Disclosing Party with prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate remedy or waive
compliance with the provisions of this Article 12. In the absence of a
protective order or other remedy, the Receiving Party may disclose that portion
(and only that portion) of the Confidential Information of the Disclosing Party
that, based upon advice of the Receiving Party's counsel, the Receiving Party is
legally compelled to disclose or that has been requested by such Governmental
Body, provided, however, that the Receiving Party shall use reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded by any
Person to whom any Confidential Information is so disclosed. The provisions of
this Section 12.4 do not apply to any Proceedings between the parties to this
Agreement.
12.5 Return Or Destruction Of Confidential Information. If this Agreement is
terminated, each Receiving Party shall (a) destroy all Confidential Information
of the Disclosing Party prepared or generated by the Receiving Party without
retaining a copy of any such material; (b) promptly deliver to the Disclosing
Party all other Confidential Information of the Disclosing Party, together with
all copies thereof (including electronic or other computer files), in the
possession, custody or control of the Receiving Party or, alternatively, with
the written consent of a Seller Contact or a Buyer Contact (whichever represents
the Disclosing Party) destroy all such Confidential Information; and (c) certify
all such destruction in writing to the Disclosing Party, provided, however, that
the Receiving Party may retain a list that contains general descriptions of the
information it has returned or destroyed to facilitate the resolution of any
controversies after the Disclosing Party's Confidential Information is returned.
13. GENERAL PROVISIONS
13.1 Expenses. Except as otherwise provided in this Agreement, each party to
this Agreement will bear its respective fees and expenses incurred in connection
with the preparation, negotiation, execution and performance of this Agreement
and the Contemplated Transactions, including all fees and expense of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
13.2 Public Announcements. Any public announcement, press release or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Seller and Buyer
mutually determine, provided, however, that Buyer may proceed with a public
announcement if in the opinion of its legal counsel, disclosure of this
Agreement and the Contemplated Transactions is required under any Legal
Requirement, including the rules an regulations of the Securities and Exchange
Commission or NASDAQ. Except with the prior consent of Buyer or as permitted by
this Agreement, neither Seller, Shareholder nor any of their Representatives
shall disclose to any Person (a) the fact that any Confidential Information of
Seller or Shareholder has been disclosed to Buyer or its Representatives, that
Buyer or its Representatives have inspected any portion of the Confidential
Information of Seller or Shareholder, that any Confidential Information of Buyer
has been disclosed to Seller, Shareholder or their Representatives or that
Seller, Shareholder or their Representatives have inspected any portion of the
Confidential Information of Buyer or (b) any information about the Contemplated
Transactions, including the status of such discussions or negotiations, the
execution of any documents (including this Agreement) or any of the terms of the
Contemplated Transactions or the related documents (including this Agreement).
Shareholder and Buyer will consult with each other concerning the means by which
Seller's employees, customers, suppliers and others having dealings with Seller
will be informed of the Contemplated Transactions, and Buyer will have the right
to be present for any such communication.
13.3 Notices. All notices, Consents, waivers and other communications required
or permitted by this Agreement shall be in writing and shall be deemed given to
a party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail with confirmation of transmission by the transmitting equipment; or (c)
received or rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the following addresses, facsimile numbers or e-mail
addresses and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, e-mail address or
person as a party may designate by notice to the other parties):
Seller: Bianca of Nevada, Inc.
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Fax no.:------------------
E-mail address:-----------
Shareholder: ▇▇▇ ▇▇▇▇▇▇▇
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Attention: ▇▇▇ ▇▇▇▇▇▇▇
Fax no.:------------------
E-mail address:-----------
In either instance with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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A Law Corporation
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Fax no.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail address: ▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Buyer: The Walking Company
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇,General Counsel
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E-mail address: ▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
with a copy to: Buchalter, Nemer, Fields & Younger,
A Professional Corporation
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax no.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail address: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
13.4 Jurisdiction; Service Of Process. Any Proceeding arising out of or relating
to this Agreement or any Contemplated Transaction may be brought in the courts
of the State of California County of Los Angeles, or, if it has or can acquire
jurisdiction, in the United States District Court for the Central District of
California, 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 or any Contemplated Transaction 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. Process in any Proceeding referred to in the first
sentence of this section may be served on any party anywhere in the world.
13.5 Waiver; Remedies Cumulative. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither any failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
any of the documents referred to in this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or any of the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of that party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
13.6 Entire Agreement And Modification. This Agreement supersedes all prior
agreements, whether written or oral, between the parties with respect to its
subject matter (including any letter of intent and any confidentiality agreement
between Buyer and Seller) and constitutes (along with the Disclosure Letter,
Exhibits and other documents delivered pursuant to this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented,
or otherwise modified except by a written agreement executed by the party to be
charged with the amendment.
13.7 Disclosure Letter
(a) The information in the Disclosure Letter constitutes (i) exceptions to
particular representations, warranties, covenants and obligations of Seller and
Shareholder as set forth in this Agreement or (ii) descriptions or lists of
assets and liabilities and other items referred to in this Agreement. If there
is any inconsistency between the statements in this Agreement and those in the
Disclosure Letter (other than an exception expressly set forth as such in the
Disclosure Letter with respect to a specifically identified representation or
warranty), the statements in this Agreement will control.
(b) The statements in the Disclosure Letter, and those in any supplement
thereto, relate only to the provisions in the Section of this Agreement to which
they expressly relate and not to any other provision in this Agreement.
13.8 Assignments, Successors And No Third-Party Rights. No party may assign any
of its rights or delegate any of its obligations under this Agreement without
the prior written consent of the other parties, except that Buyer may assign any
of its rights and delegate any of its obligations under this Agreement to any
Subsidiary of Buyer and may collaterally assign its rights hereunder to any
financial institution providing financing in connection with the Contemplated
Transactions. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement, except such rights as shall
inure to a successor or permitted assignee pursuant to this Section 13.8.
13.9 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.10 Construction. The headings of Articles and Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Articles," "Sections" and "Parts" refer to
the corresponding Articles, Sections and Parts of this Agreement and the
Disclosure Letter.
13.11 Time Of Essence. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
13.12 Governing Law. This Agreement will be governed by and construed under the
laws of the State of California without regard to conflicts-of-laws principles
that would require the application of any other law.
13.13 Execution Of Agreement. 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.
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13.14 Shareholder Obligations. The liability of Shareholder
hereunder shall be joint and several with Seller. Where in this Agreement
provision is made for any action to be taken or not taken by Seller, Shareholder
jointly and severally undertakes to cause Seller to take or not take such
action, as the case may be. Without limiting the generality of the foregoing,
Shareholders shall be jointly and severally liable with Seller for the
indemnities set forth in Article 11.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
SHAREHOLDER:
____________________________
▇▇▇ ▇▇▇▇▇▇▇
SELLER:
Bianca of Nevada, Inc.,
a Nevada corporation
By:
____________________________
▇▇▇ ▇▇▇▇▇▇▇, President
BUYER:
The Walking Company,
a Delaware corporation
By:
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Executive Officer