EXHIBIT 2.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment Agreement") is made
and entered into as of this 10th day of October, by and between ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, an individual, BDMAC, L.L.C., a Texas Limited Liability Company
(jointly referred to herein as the "Assignor"), and CD MANAGEMENT, INC., a
Delaware corporation with its principal address at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Assignee").
WITNESSETH
WHEREAS, the Partnerships and Limited Liability Company listed on Schedule
A hereto (collectively, including the Limited Liability Company, the
"Partnerships") are engaged in the business of buying, selling and trading new
and used audio compact discs, acting as franchisee of stores which buy, sell and
trade new and used audio compact discs and selling new and used audio compact
discs to its retail customers; and
WHEREAS, Assignor, the general partner, limited partner, partner, or member
of each of the Partnerships, is a party to certain agreements relating to the
Partnerships which, are identified on Schedule B attached hereto ("Agreements");
WHEREAS, Assignor has agreed to enter into this Assignment Agreement to
assign all of Assignor's right, title, interest, duties and obligations in and
to the Agreements to Assignee and, in consideration therefor, among other
things, Assignee has agreed to accept such assignment of the Agreements and
assume the duties and obligation of Assignor under the Agreements arising from
and after the date of this Assignment Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, covenants, warranties and agreements and upon the terms and
subject to the conditions hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
ASSIGNMENT AND ASSUMPTION
1.1 ASSIGNMENT. As of the Effective date (defined below) Assignor does
hereby grant, bargain, sell, transfer, convey, assign and deliver to Assignee
all of Assignor's right, title, interest, duties and obligations in and to the
Agreements for a consideration of fifty two thousand (52,000) shares of
Assignee's common stock.
1.2 ACCEPTANCE AND ASSUMPTION. Assignee does hereby irrevocably accept
such grant, bargain, sale, transfer, conveyance, assignment and delivery of all
of Assignor's right, title, interest, duties and obligations in and to the
Agreements, and does hereby assume all duties and obligations of Assignor under
the Agreements arising from and after the Effective Date for a consideration of
52,000 shares of Assignee's common stock, which shall be issued pursuant to the
Subscription
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Agreement between Assignor and Assignee, in substantially the form of Exhibit
A hereto (the "Subscription Agreement").
1.3 EFFECT OF ASSIGNMENT. Notwithstanding anything in this Assignment
Agreement to the contrary, this Assignment Agreement shall not constitute an
assignment of any of the Agreements if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach thereof or in
any way would adversely affect the rights of the Assignee thereunder. If such
consent is not obtained, or if an attempt at an assignment thereof would be
ineffective or would affect the rights of the Assignor thereunder so that
Assignee would not in fact receive all such rights, then Assignor will cooperate
with Assignee in any reasonable arrangement designed to provide for Assignee the
benefits under such Agreements including enforcement for the benefit of Assignee
of any and all rights of the Assignor against a third party thereto arising out
of the breach or cancellation by such third party or otherwise.
1.4 EFFECT OF ASSUMPTION. The assumption by Assignee of the duties and
obligations of the Assignor under the Agreements provided for herein shall in no
way expand the rights or remedies of any third party against Assignee as
compared to the rights and remedies which such third party would have had
against Assignor had Assignee not assumed such duties and obligations. Assignor
shall be responsible for and retains all liabilities for duties and obligations
incurred under the Agreements prior to the date of this Assignment Agreement.
1.5 EFFECTIVE DATE. The assignment of the Agreements by Assignor, and the
acceptance of such assignment and the assumption of the duties and obligations
of Assignor under the Agreements by Assignee, all pursuant to this Assignment
Agreement, shall be effective as of the closing date of Assignee's initial
public offering (the "Effective Date"). If the Effective date does not occur
before February 28, 1997, this Agreement will not become effective and will of
no force or effect, unless mutually extended by the parties in writing .
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR
The Assignor hereby makes the following representations and warranties,
which shall continue in effect after and survive the date of this Assignment
Agreement.
2.1 Subject to the approval of the partners or members of the
Partnerships, the execution, delivery and performance of this Assignment
Agreement are within the legal capacity and power of the Assignor and neither
violate nor constitute a default under the terms of any other agreement,
document, or instrument binding upon the Assignor. This Assignment Agreement is
a legal, valid and binding obligation of the Assignor enforceable in accordance
with its terms, except insofar as the enforcement hereof may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to equitable principles limiting the
availability of specific performance or other equitable remedies.
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2.2 The Assignor covenants to use his best efforts to obtain, on or before
November 30, 1996, all necessary consents of limited partners or other parties
to the Agreements, as may be necessary for Assignor to enter into or consummate
this Assignment Agreement. The name of each limited partner or other party to
the Agreements is listed in Schedule C attached hereto. Assignor will certify
to Assignee in writing on or before November 30, 1996, whether all necessary
consents have been obtained. In the event that Assignor has not obtained all
necessary consents by such date, or if Assignor cannot certify to Assignor by
such date that all necessary consents have been obtained, then Assignee shall
have the right, to be exercised on or before December 10, 1996, to terminate
this Agreement, the Asset Purchase Agreement, the Subscription Agreements
relating to this Agreement and the Asset Purchase Agreement, and the Employment
Agreement, all of which are between MacDonald and the Assignee, and all of which
are dated on or about the date hereof.
2.3 There are no actions, suits or proceedings, and the Assignor has no
knowledge of any actions, suits or proceedings threatened against the Assignor,
which would as of the date hereof prevent or substantially hinder the
consummation of the transactions contemplated by this Assignment Agreement. The
Assignor represents to the Assignee that, except as described in Schedule C,
none of the Agreements has been amended or modified and each of them is in full
force and effect. The Assignor has in all material respects substantially
performed all obligations required to be performed under the Agreements to date
and is not in default in any material respect under any of such Agreements.
Further, neither the Assignor nor, to the best of the Assignor's knowledge, any
of the other parties to the Agreements are in breach of, or default under, any
of the Agreements, and to the best of the Assignor's knowledge, no event has
occurred which, with the passage of time or the giving of notice or both, would
constitute a breach of, or default under, any of the Agreements.
2.4 The December 31, 1995 and August 31, 1996 financial information of the
Partnerships, which has been examined by the Assignee, is prepared in accordance
with generally accepted accounting principles for the periods therein specified,
except that there is no disclosure of items customarily contained in footnotes,
the depreciation has been accelerated as permitted under Section 179 of the
Internal Revenue Code , as amended and such financial statements are not
audited. To the knowledge of the Assignor, there will not be, as the date of
this Assignment Agreement, any liability or obligation of the Assignor
pertaining to any of the Agreements which are not reflected or reserved against
in the financial statements of the Partnerships, except liabilities and/or
obligations that do not have or might reasonably be expected not to have, in the
aggregate, a material and adverse effect on the Agreements.
2.5 All required federal, state and local tax returns or appropriate
extension requests of the Partnerships have been filed.
2.6 Partnerships are limited partnerships duly organized, validly existing
and in good standing under the laws of the state or states of their formation
and have all requisite partnership power and authority to carry on the business
of the Partnerships. The Partnerships are duly qualified and in good standing
in each jurisdiction where the ownership of property or the nature of the
business conducted by the Partnerships requires such qualification.
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2.7 Assignor shall execute and deliver to Assignee all assignments,
endorsements and instruments of transfer as shall be necessary or appropriate to
carry out the intent of this Assignment Agreement and as shall be sufficient to
vest in Assignee all of Assignor's right, title, interest, duties and
obligations in and to the Agreements.
2.8 Set forth in Schedule D is a description of Assignor's interest in
each of the Partnerships, including, but not limited to, the percentage of any
back-in arrangements to which the Assignor has any interest.
2.9 On or before the Effective Date, Assignor will prepare and furnish to
Assignee a description of the assets owned by the Partnerships, including, but
not limited to, contract rights, leaseholds and inventory which will be attached
hereto as Schedule E.
2.10 Except as set forth on Schedule F, the Assignor and the Partnerships
have complied in all material respects with all laws and regulations applicable
to the Agreements or with respect to which compliance is a condition of engaging
in the business of the Partnerships as currently conducted by the Partnerships,
including, but not limited to, state and federal securities laws and
regulations. The Assignor and the Partnerships are in compliance with all terms
and conditions in all material respects with, and are in possession of, from the
appropriate agency, commission, board and governmental body or authority,
whether federal, state or local, all of the required licenses, permits,
authorizations, approvals, franchises and rights which (a) are necessary for it
to engage in the business of the Partnerships as currently conducted, and (b) if
not possessed by the Assignor and the Partnerships would have a material and
adverse effect on the business of the Partnerships. The Assignor and the
Partnerships are also in compliance in all material respects with any and all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved by any appropriate
agency, commission, board or governmental body or authority, whether federal,
state or local. The Assignor has not received notice of or is aware of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans (other than changes of law, as to which
no representation is made) which may interfere with or prevent continued
compliance by the Assignor, Assignee or the Partnerships with such laws, or
which may give rise to any common law or legal liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation under
such laws or which would have a material and adverse effect on the financial
condition, properties, prospects or operations of the Partnerships.
2.11 Neither the Assignor nor any of the Partnerships has made any
commitment for the purchase of goods or services which is (a) outside the
ordinary course of business, or (b) at a price or on terms and conditions that
are less favorable than are commonly available in the industry. Neither the
Assignor nor any of the Partnerships has entered into any contracts for the
provisions of goods or services whereby it is committed to providing such goods
or services to any person or entity at a price or under terms and conditions
which are less favorable than its customary price or terms or conditions or that
will result in the Assignor or the Partnerships receiving less in revenues from
such person or entity than the Assignor or the Partnerships will expend in
connection with
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providing such goods and services.
2.12 As of the Effective Date, Assignee will acquire and hold, all of
Assignor's right, title, interest, duties and obligations in and to the
Agreements free and clear of any and all encumbrances and liens.
2.13 The consummation of the transactions contemplated by this Assignment
Agreement will not in any way limit or expand the rights, duties and obligations
of the limited partners under the Agreements. As to the limited partners, the
Agreements will remain in full force and effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE
The Assignee hereby makes the following representations and warranties,
which shall continue in effect and survive the date of this Assignment
Agreement:
3.1 Assignee is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution, delivery and
performance of this Assignment Agreement are within the legal capacity and power
of the Assignee; have been duly authorized by all requisite action on the part
of the Assignee; require the approval or consent of no other persons; and
neither violate nor constitute a default under the terms of any other agreement,
document, or instrument binding upon the Assignee. This Assignment Agreement is
a legal, valid and binding obligation of the Assignee enforceable in accordance
with its terms, except insofar as the enforcement hereof may be limited by
bankruptcy, insolvency, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and subject to equitable principles limiting the
availability of specific performance or other equitable remedies.
3.2 There are no actions, suits or proceedings, and the Assignee has no
knowledge of any actions, suits or proceedings threatened, against the Assignee
which would as of the date of this Assignment Agreement prevent or substantially
hinder the consummation of the transactions contemplated by this Assignment
Agreement.
3.3 As a condition of the execution of this Assignment Agreement in
Article I, the Assignee covenants and agrees to pay, perform, discharge and
satisfy when due all of Assignor's covenants, agreements and obligations under
the Agreements arising from and after the date of this Assignment Agreement
pursuant to, and in accordance with, the terms and conditions of the respective
Agreement. Further, Assignee agrees not to perform in derogation of the
Agreements as currently in force and effect or limit the rights of the partners
as they currently exist.
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ARTICLE IV
INDEMNIFICATION
4.1 The Assignor hereby agrees to indemnify, defend and hold harmless the
Assignee, its successors and assigns, from and against any and all loss, claims,
or damage, including reasonable attorney's fees, which the Assignee may suffer
either as a result of (a) the failure of the Assignor to transfer to the
Assignee, on the Effective Date, all right, title, and interest of Assignor in
and to the Agreements free and clear of all liens and encumbrances whatsoever;
or (b) the breach of any representation or warranty of the Assignor contained
herein. In the event the Assignee is required to make any payments hereunder or
suffers any actual loss or damage with respect to the matters set forth in this
Section 4.1, the Assignee shall be entitled to reimbursement by the Assignor.
4.2 Assignee agrees to indemnify, defend and hold harmless the Assignor,
his heirs, successors and assigns, from and against any and all loss, claims, or
damage, including reasonable attorney's fees, which the Assignor may suffer as a
result of any claims, demands, or causes of action whatsoever which may
hereafter be asserted against the Assignor arising out of the operation of the
Partnerships after the Effective Date. In the event the Assignor is required to
make any payments hereunder or suffers any actual loss or damage with respect to
the matters set forth in this Section 4.2, the Assignor shall be entitled to
immediate reimbursement by the Assignee.
4.3 With respect to Assignee's losses pursuant to Section 4.1, Assignee
shall be the Indemnified Party and Assignor shall be the Indemnifying Party.
With respect to Assignor's losses pursuant to Section 4.2, Assignor shall be the
Indemnified Party and Assignee shall be the Indemnifying Party. Notwithstanding
anything herein contained, Assignor and Assignee shall not have any liability
under the indemnity provisions of this Assignment Agreement with respect to a
particular matter unless a notice setting forth in reasonable detail the breach
which is asserted has been given to the Indemnifying Party and, in addition, if
such matter arises out of a suit, action, investigation or proceeding, such
notice is given promptly after the Indemnified Party shall have been given
notice of the commencement of a suit, action, investigation or proceeding.
ARTICLE V
MISCELLANEOUS
5.1 EXPENSES. Except as otherwise expressly provided herein, Assignee
and Assignor shall each pay their own expenses in connection with the
preparation of this Assignment Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, fees of their
respective counsel, auditors and other experts, whether or not such transactions
be consummated.
5.2 FURTHER ASSURANCES. Each of the parties hereto further agrees to
execute such additional documents from time to time at the request of the other
party as may be reasonably necessary to accomplish the assignment or assumption
made herein.
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5.3 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby or by law on such party, and the
exercise of any one remedy will not preclude the exercise of any other.
5.4 USE OF CERTAIN TERMS. As used in this Assignment Agreement, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph, subparagraph or
other subdivision.
5.5 AMENDMENT, MODIFICATION AND WAIVER. This Assignment Agreement may be
amended, modified, superseded, canceled or supplemented at any time by written
agreement of the parties hereto. Any failure by Assignor, on the one hand, or
Assignee, on the other hand, to comply with any term or provision of this
Assignment Agreement may be waived by Assignee or Assignor, respectively, at any
time by an instrument in writing signed by or on behalf of Assignee or Assignor,
but such waiver or failure to insist upon strict compliance with such term or
provision shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure to comply.
5.6 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Assignment Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally, by mail (certified or registered mail, return receipt requested), by
reputable overnight courier or by facsimile transmission (receipt of which is
confirmed):
(a) If to Assignee, to:
CD Management, Inc.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. Day, Esq.
Day, Edwards, Federman, Propester & ▇▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Assignor, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ - ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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with a copy to:
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice in
writing, given in accordance with this Section 5.6 to the other parties hereto.
All such notices, requests, demands, waivers and communications shall be deemed
to have been given on the date on which so hand-delivered, on the third business
day following the date on which so mailed, on the next business day following
the date on which delivered to such overnight courier and on the date of such
facsimile transmission and confirmation, except for a notice of change of person
or address, which shall be effective only upon receipt thereof.
5.7 GOVERNING LAW. THE PARTIES HEREBY AGREE THAT THIS ASSIGNMENT
AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS THEREOF.
THIS ASSIGNMENT AGREEMENT SHALL NOT BE CONSTRUED FOR OR AGAINST A PARTY BECAUSE
THAT PARTY PREPARED IT.
5.8 COUNTERPARTS. This Assignment Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.9 BINDING EFFECT; ASSIGNMENT. This Assignment Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, successors and permitted assigns,
but, except as contemplated herein, neither this Assignment Agreement nor any of
the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, by Assignee or Assignor without the prior written consent of the
other party hereto; provided, however, that Assignee may assign any or all of
its rights, interests or obligations hereunder to any one or more wholly owned
subsidiary of Assignee, provided, however, that no such assignment by Assignee
shall limit or affect Assignee's obligations hereunder.
5.10 SEVERABILITY. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation, or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Assignment Agreement affected thereby shall
be curtailed and limited only to the extent necessary to bring it within the
requirements of the law, and the remaining provisions of this Assignment
Agreement shall remain in full force and effect.
5.11 ENTIRE AGREEMENT. This Assignment Agreement constitutes the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior oral or written agreements, arrangements,
and understandings with respect thereto. No representation, promise,
inducement, statement or intention has been made by any party hereto that is not
embodied
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herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement, or statement not so set forth herein.
5.12 THIRD-PARTY BENEFICIARIES. Except as otherwise expressly provided
herein, this Assignment Agreement is not intended, and shall not be deemed, to
confer upon or give any person except the parties hereto and their respective
successors and permitted assigns, any remedy, claim, liability, reimbursement,
cause of action or other right under or by reason of this Assignment Agreement.
The assumption by Assignee of Assignor's obligations under the Agreements shall
not create any third party beneficiary rights.
5.13 INTERPRETATION. The section headings contained in this Assignment
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Assignment Agreement.
5.14 BINDING ARBITRATION. PURSUANT TO Section 154.027(b) OF THE TEXAS
CIVIL PRACTICE AND REMEDIES CODE, THE PARTIES STIPULATE IN ADVANCE THAT ALL
DISPUTES OR CONTROVERSIES BETWEEN THE PARTIES ARISING FROM OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT WILL BE
SUBMITTED TO AND RESOLVED BY A BINDING ARBITRATION PROCEEDING HELD IN DALLAS
COUNTY, TEXAS AND CONDUCTED IN ACCORDANCE WITH THE THEN CURRENT RULES OF THE
AMERICAN ARBITRATION ASSOCIATION.
IN WITNESS WHEREOF, each of the parties hereto has caused this Assignment
Agreement to be duly executed as of the day and year first set forth above.
ASSIGNOR:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ASSIGNEE:
CD MANAGEMENT, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Chairman of the Board
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ASSIGNMENT & ASSUMPTION AGREEMENT
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule A List of Partnerships and Limited Liability Companies
Schedule B Partnership Agreements
Schedule C Limited Partners
Schedule D Assignor's Interest in Partnerships
Schedule E Partnership Assets
Schedule F Compliance with Laws and Licenses, Franchises
Permits and Governmental Authorizations
EXHIBIT:
Exhibit A Subscription Agreement
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