EXHIBIT 2.5
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 1
SCHOLASTIC BRANDS, INC.
c/o Castle Harlan, Inc.
150 East 58th Street
New York, New York 10155
December 16, 1996
Town & Country Corporation
25 Union Street
Chelsea, MA 02150
L.G. Balfour Company, Inc.
15 John Dietsch Boulevard
P.O. Box 1999
No. Attleboro, MA 02763
Gold Lance, Inc.
1920 North Memorial
Houston, TX 77007
Re: Amended and Restated Asset Purchase Agreement,
dated November 21,1996
Gentlemen:
Reference is made to the Amended and Restated Asset Purchase Agreement,
dated as of November 21, 1996 (the "Agreement"), by and among Scholastic Brands,
Inc. ("Buyer"), Town & Country Corporation ("T&C"), L. G. Balfour Company, Inc.
("Balfour", and together with T&C, individually a "Seller" and together the
"Sellers"), and for purposes of Article X and XI thereof, Gold Lance, Inc., a
wholly-owned subsidiary of T&C ("Gold Lance"). All capitalized terms used
herein which are not defined herein which are defined in the Agreement shall
have the meanings ascribed to them in the Agreement.
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 2
You and we hereby agree to amend the Agreement in accordance with
Section 11.11 thereof to provide as follows:
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 3
1. Notwithstanding anything contained in the Agreement to the contrary,
Buyer shall have the option to acquire any of the machinery, motor vehicles and
other equipment listed on Schedule 1.1(c)(viii) of the Agreement used in or held
for use in the Business at any time during the past two years for no additional
consideration at any time on or after the Closing Date and prior to the earliest
to occur of (i) 60 days after Buyer leaves its facilities in Massachusetts,
(ii) the date on which Sellers are required to vacate the premises where such
machinery, motor vehicle or equipment are stored pursuant to a binding agreement
between any Seller and an unaffiliated third party for the sale or lease of such
premises, or (iii) Buyer advises Sellers that it no longer desires to have the
right to acquire any such machinery, motor vehicles or other equipment..
2. The fourth paragraph of Section 1.4(a) of the Agreement is hereby
deleted and there is hereby added a new subsection 1.4(c) that provides as
follows:
"(c) Sellers shall have no liability to Buyer if the FTC Final Order
differs from the FTC Preliminary Order, or for any consequences of such
difference, except to the extent of a reduction in the Purchase Price payable
pursuant to Subsection 1.4(a) in an amount not to exceed $14,000,000 (and the
right to receive an amount equal to such reduction from the Escrow Fund held by
the Escrow Agent), except to the extent that Sellers would otherwise be liable
to Buyer pursuant to any other provision of this Agreement or any other Seller
Agreement without regard to any difference between the FTC Final Order and the
FTC Preliminary Order. Without limiting the foregoing, (i) in no event shall
the sale of the Assets and the Business and the assumption of the Assumed
Liabilities be rescinded, set aside, or unwound as a consequence of any
difference in the FTC Final Order from the FTC Preliminary Order; (ii) if Buyer
for any reason should be required to divest any portion of the Assets or the
Business, Sellers shall not be obligated to repurchase or reacquire same; and
(iii) in no event shall any portion of the Purchase Price paid under Subsection
1.4(a)(i) be refundable as a consequence of any difference in the FTC Final
Order from the FTC Preliminary Order."
3. Section 1.5(d) of the Agreement is hereby amended by deleting the
number "One Hundred Thousand ($100,000) Dollars" in the proviso contained in the
last sentence thereof and substituting therefor the number "Two Hundred Sixty
Thousand ($260,000) Dollars,"
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 4
and by adding the following to the end thereof "and provided further that Buyer
and Sellers shall only be entitled to recover disputed amounts in excess of an
aggregate of Two Hundred Thousand Sixty Thousand ($260,000) Dollars."
4. Subsection 1.8(a) of the Agreement is hereby deleted and replaced in
its entirety with the following:
"(a) The Purchase Price shall be allocated among the Assets based on
their relative fair market value in accordance with Section 351 of the Code and
Revenue Ruling 68-55. Buyer shall prepare such an allocation of the Purchase
Price and deliver such allocation to Sellers not later than 45 days after the
Closing Date (the "Proposed Allocation"). Such allocation shall be binding and
conclusive if Sellers fail to object to such allocation within 5 days of its
delivery. If Sellers object to the Proposed Allocation, Buyer and Sellers shall
use their reasonable best efforts to resolve their differences within 5 days of
Buyer's delivery of the Proposed Allocation and any resolution reached during
such period shall thereafter be binding and conclusive. In the absence of any
such resolution, Buyer and Sellers shall immediately select an appraiser by lot
from among the "Big 6" accounting firms that audit neither Buyer nor any Seller
and deliver their respective proposed allocations to such appraiser. The
appraiser shall select as most reasonable either the allocation prepared by
Buyer or the allocation prepared by Sellers. The allocation so selected shall
thereafter be binding and conclusive. The fee of any appraiser selected
pursuant to this subsection 1.8(a) shall be paid by the party whose allocation
was not selected by such appraiser. Neither Buyer nor any Seller shall file any
tax return, report or form inconsistent with any allocation that becomes binding
and conclusive pursuant to this subsection 1.8(a)."
5. Pursuant to Section 2.3 of the Agreement, Buyer has advised
Seller that it desires to acquire all of the Equipment. In connection
therewith, Buyer and Sellers hereby agree that Buyer shall have the right to
return any of such Equipment to Sellers without any refunds therefor or payments
in connection therewith at any time prior to the earliest to occur of (i) 60
days after Buyer leaves the facility where such Equipment is located; (ii) the
date on which Sellers are required to vacate the premises where such Equipment
is stored pursuant to a binding agreement between any Seller and an unaffiliated
third party for the sale or lease of such
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 5
premises; or (iii) Buyer advises Sellers that it no longer desires to have the
right to return such Equipment. Sellers shall have no liabilities and no
obligation to secure, insure or maintain such Equipment or otherwise incur any
costs in connection with such Equipment; PROVIDED, that if any costs are imposed
on Sellers pursuant to applicable law arising from the storage or the ownership
of such Equipment (for example, for personal property taxes) upon notice to
Buyer by Sellers of the imposition of such costs and evidence of the amount
thereof, Buyer shall reimburse Sellers for such costs.
6. Gold Lance hereby agrees that, in addition to its covenants and
agreements set forth in Section 10.3 of the Agreement, Gold Lance shall not, for
a period of five years commencing on the Closing Date and ending on the fifth
anniversary thereof (or earlier upon the sale of all of the outstanding capital
stock of Gold Lance or all or substantially all of the assets and businesses of
Gold Lance to an unaffiliated third party in a bona fide sale transaction),
directly or indirectly, engage in any managerial, administrative, advisory,
operational or sales activities, or organize, establish, operate, own, manage,
control or have a direct or indirect investment or ownership interest in any
entity that engages in the manufacture or sale of licensed sports jewelry or
other licensed sports products anywhere in the United States. The parties
hereto acknowledge that the covenants and restrictions contained in this
paragraph are reasonable and agree that Buyer shall have the right and remedy to
have this paragraph specifically enforced, it being agreed that any breach or
threatened breach of this paragraph would cause irreparable injury to Buyer and
that money damages would not provide an adequate remedy to Buyer.
7. Concurrently herewith, Sellers are delivering to Buyer the consent of
the National Basketball League ("NBA") to the transfer of Balfour's licensing
arrangements and agreements with the NBA to Buyer and in connection therewith
Sellers shall have paid in full all required transfer fees to the NBA and shall
indemnify and hold harmless Buyer from and against any and all fees, claims and
expenses arising out of or in connection with such transfer.
8. The parties hereto acknowledge that as of the date hereof Sellers have
not obtained certain consents required to transfer certain of the Contracts to
Buyer as set forth on Exhibit A hereto. Pursuant to an Assignment and
Assumption Agreement of even date herewith, Sellers have assigned to Buyer all
Contracts included in the Assets or used in the Business and Buyer has assumed
liabilities under such Contracts to the extent (a) they have been validly
assigned to Buyer with consent, if necessary, or (b) following the Closing Date
Buyer continues to enjoy the benefits thereof.
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 6
9. Sellers hereby reconfirm that all royalty payments due under Balfour's
contractual arrangements with the Atlanta Olympic Committee are, and shall
remain, the sole obligation of Sellers and that Buyer shall assume no obligation
or liabilities in connection therewith or arising therefrom. In addition,
Sellers agree to pay or reimburse Buyer promptly upon demand for any royalties
owed to Buyer on account of Olympic merchandise returned to Buyer after the
Closing Date. Sellers shall indemnify and hold harmless Buyer and its
successors and assigns from and against any and all losses, liabilities, claims
or expenses, including, without limitation, the costs of collection and
attorney's fees) incurred by any of them arising from or resulting from or
relating to Sellers' failure to fulfill its obligations hereunder.
10. Buyer and Sellers agree that there shall be established a special
additional fixed minimum reserve against the Atlanta Olympic Inventory of
$300,000 for purposes of the Statement of Estimated Working Capital as of the
Closing Date (in addition to a $50,000 reserve previously established against
the Atlanta Olympic Committee) which $300,000 reserve amount shall not be
adjusted downward in connection with any adjustment to the Estimated Working
Capital for purposes of the Statement of Net Working Capital but may be adjusted
upward. As a result of such adjustment, Seller's good faith estimate of the
Estimated Working Capital as of the Closing Date is $23,529,853. Except as
otherwise provided herein, such adjustment shall not amend or alter in any way
the Estimated Working Capital Statement or the obligations of the parties under
the Agreement.
11. Buyer shall indemnify and hold harmless Sellers and their affiliates
from and against any and all liabilities, claims or expenses (including, without
limitation, reasonable attorney's fees) incurred by either of them arising from
or relating to the trademark infringement and unfair competition action
commenced against Balfour, Buyer and others in the United States District Court
for the Southern District of New York, on or about December 13, 1996, by
Scholastic, Inc. seeking injunctive and other relief against the use of the name
"Scholastic" by Buyer.
12. Sellers hereby represent and warrant that all Uniform Commercial Code
UCC-1 filings covering any of the Assets which represent valid liens or security
interests in or claims against Balfour have been released today. Sellers hereby
agree to indemnify and hold harmless Buyer and its successors and assigns from
and against any and all damages, liabilities, costs or expenses arising from or
in connection with or relating to any liens or security interests which are the
subject of any such UCC filings with respect to any of Sellers' Assets which are
the subject of
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 7
any such UCC filings on the date hereof or to any secured party named therein
(or assignee thereof), other than any liens placed thereon by Buyer.
13. Sellers hereby agree that from and after the Closing Date and until
the later of (a) six months after the Closing Date and (b) the earlier to occur
of (i) 60 days after Buyer leaves the facilities where any of such furniture or
furnishings are located or (ii) the date on which Sellers are required to vacate
the premises where such furniture or furnishings are stored pursuant to a
binding agreement between Sellers and an unaffiliated third party, any and all
furniture and furnishings which are the subject of that certain Master Lease
Agreement, No. 136, 331, dated as of August 2, 1994, between T&C and Computer
Sales International, Inc. shall remain on the premises being leased or subleased
to Buyer by Seller today. In connection therewith, Buyer agrees that it will
reimburse T&C for the rental payments under such Master Lease Agreement in the
amount of $25,000 per month for a period of six months from and after the
Closing Date whether Buyer uses the furniture for six months or less than six
months or more than six months.
Town & Country Corporation
L.G. Balfour Company, Inc.
Gold Lance, Inc.
December 16, 1996
Page 8
If you are in agreement with the foregoing, please sign this letter in the
space below and return a copy to the undersigned. Except as otherwise expressly
amended hereby all provisions of the Agreement shall remain the same and the
Agreement shall remain in full force and effect.
Very truly yours,
SCHOLASTIC BRANDS, INC.
By: /s/ David B. Pittaway
ACCEPTED AND AGREED TO
This 16th day of December, 1996:
TOWN & COUNTRY CORPORATION
By: /s/
L.G. BALFOUR COMPANY, INC.
By: /s/ George Agle
GOLD LANCE, INC.
By: /s/