Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
MAZEL STORES, INC., SELLER
AND
MZ WHOLESALE ACQUISITION, LLC, BUYER
DATED AS OF FEBRUARY 11, 2002
TABLE OF CONTENTS
RECITALS
ARTICLE I - PURCHASE AND SALE OF ASSETS
1.1 Acquired Assets
1.2 Excluded Assets
1.3 Assumption of Liabilities
1.4 Excluded Liabilities
1.5 Purchase Price
1.6 Allocation of Purchase Price
1.7 Taxes
1.8 Purchase Orders
ARTICLE II - THE CLOSING
2.1 Time and Places of Closing
2.2 Deliveries at the Closing
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization of Seller
3.2 Authorization of Transaction
3.3 Noncontravention
3.4 Broker's Fees
3.5 Title to Assets
3.6 Legal Compliance
3.7 Tax Matters
3.8 Spaces Leases
3.9 Equipment Leases
3.10 Executory Contracts
3.11 Intellectual Property and Licenses
3.12 Litigation
3.13 Employee Benefits
3.14 Environmental, Health and Safety Matters
3.15 Labor Matters
3.16 Ordinary Course of Business
3.17 Disclaimer of other Representations and Warranties
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization of Buyer
4.2 Authorization of Transaction
4.3 Noncontravention
4.4 Broker's Fees
4.5 Ability to Consummate Transaction
4.6 No Knowledge By Reuven D. Dessler and Jacob Koval
ARTICLE V - KNOWLEDGE OF REUVEN D. DESSLER AND JACOB KOVAL
ARTICLE VI - POST-CLOSING COVENANTS
6.1 Assumption and Covenant to Perform
6.2 Employee Matters
6.3 Litigation Support
6.4 Consents
6.5 Use of "Mazel" Name
6.6 General
6.7 Covenant Not-to-Compete
6.8 Survival
ARTICLE VII - NON-SOLICITATION OF EMPLOYEES
7.1 Non-Solicitation by Seller
7.2 Non-Solicitation by Buyer
ARTICLE VIII - REMEDIES FOR BREACH OF THIS AGREEMENT
8.1 Survival of Representations and Warranties
8.2 Indemnification Provisions for Benefit of Buyer
8.3 Indemnification Provisions for Benefit of Seller
8.4 Application of the Threshold Deductible
8.5 Determination of Adverse Consequences
8.6 Matters Involving Third Parties
8.7 Exclusive Remedy
ARTICLE IX - OTHER AGREEMENTS
9.1 Other Agreements
9.2 Standstill Agreement
9.3 Trademark Joint Venture
ARTICLE X - MISCELLANEOUS
10.1 Press Releases and Public Announcements
10.2 No Third-Party Beneficiaries
10.3 Entire Agreement
10.4 Succession and Assignment
10.5 Counterparts
10.6 Headings
10.7 Notices
10.8 Governing Law
10.9 Arbitration
10.10 Amendments and Waivers
10.11 Severability
10.12 Expenses
10.13 Construction
10.14 Incorporation of Exhibits and Schedules
10.15 Bulk Transfer Laws
ARTICLE XI - DEFINITIONS
SCHEDULES AND EXHIBITS
SCHEDULES
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Schedule 1.1(i) Acquired Equipment
Schedule 1.1(ii) Acquired Inventory
Schedule 1.1(iii) Acquired Accounts Receivable
Schedule 1.1(iv)(1) Space Leases
Schedule 1.1(iv)(2) Equipment Leases
Schedule 1.1(iv)(3) Licenses
Schedule 1.1(iv)(4) Executory Contracts
Schedule 1.1(v) Intellectual Property
Schedule 1.1(vii) Acquired Prepaid Expenses
Schedule 1.1(viii) Permits and Approvals
Schedule 1.1(ix) Acquired Miscellaneous Assets
Schedule 1.1 (x) Acquired Notes
Schedule 1.3(i) Payables
Schedule 1.3(vii) Litigation
Schedule 1.5(i)(1) Estimated Closing Balance Sheet
Schedule 1.8 Letter of Credit backed Purchase Orders
Schedule 3.14 Exceptions to Environmental Representations
Schedule 3.15 Collective Bargaining Agreement
Schedule 6.2(ii) List of Union and Non-Union Employees
Schedule 6.7 Processing Charges and Calculation Methodology
Schedule 9.3 Joint Venture Trademarks and Tradenames
EXHIBITS
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Exhibit 1.1 Bill of Sale, Assignment and Assumption
Exhibit 2.2.(i)(3) Form of Lease Assignment and Assumption Agreement
Exhibit 2.2 (i)(4) Put JV Operating Agreement
Exhibit 2.2(i)(5) MZ TradeMark, LLC Operating Agreement
Exhibit 2.2(i)(6) Form of Executory Contract Assignment and Assumption
Agreement
Exhibit 2.2(i)(7) Assignment of Slaymaker to MZ TradeMark, LLC
Exhibit 2.2(i)(8) Assignment of Trademarks to Buyer
Exhibit 2.2(i)(9) Mazel Name License Agreement
Exhibit 2.2(i)(10) Short Term Trademark Licence Agreements
Exhibit 2.2(iii) Release between Seller and Reuven D. Dessler
Exhibit 2.2(iv) Release between Seller and Jacob Koval
Exhibit 6.2(ii) Consent to Assignment and Assumption of Collective
Bargaining Agreement
Exhibit 9.1(i) Polaroid Assignment of License
Exhibit 9.1(ii) Walmart Commissions and Polaroid Goods Supply Agreement
Exhibit 9.1(iii) Interim Services Agreement
Exhibit 9.2 Standstill Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is entered into as of February
11, 2002, effective as of 11 pm thereof, by and between MAZEL STORES, INC., an
Ohio corporation ("SELLER"), and MZ WHOLESALE ACQUISITION, LLC, an Ohio limited
liability company ("BUYER"). Seller and Buyer are referred to herein
individually as a "PARTY" and together as the "PARTIES."
R E C I T A L S
- - - - - - - -
WHEREAS, Seller is engaged in the business of operating
(i) a major regional closeout retail business and (ii) a closeout wholesale
business.
WHEREAS, Seller desires to sell to Buyer and Buyer desires
to purchase from Seller all of the assets described below pertaining to the
wholesale business (the "DIVISION") in accordance with and subject to the terms
and provisions of this Agreement and Buyer further agrees to assume all of the
liabilities and obligations of Seller as described below relating to the
Division, in accordance with and subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the premises,
covenants, agreements, representations and warranties contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
DEFINITIONS
All capitalized words or phrases used herein shall have the meanings ascribed to
such words or phrases in the definitions set forth in Article X hereof.
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 ACQUIRED ASSETS. On the Closing Date, Seller shall sell,
transfer, convey, assign and deliver to Buyer, by execution and delivery to
Buyer of (x) the Bill of Sale, Assignment and Assumption attached hereto as
EXHIBIT 1.1 (the "BILL OF SALE, ASSIGNMENT AND ASSUMPTION") and (y) the other
instruments hereinafter described and attached, and Buyer shall purchase,
acquire and accept from Seller, all of Seller's right, title and interest in and
to the Acquired Assets, subject to the terms and conditions hereof. "ACQUIRED
ASSETS" shall mean:
(i) the furniture, fixtures, equipment, machinery,
supplies, computers, tools, parts and other fixed assets of Seller used by
Seller in the operation of the Division and located as of the date hereof at
Seller's facilities at: 1) Solon, Ohio, 2) New York, New York, and 3) Chicago,
Illinois, including any leasehold improvements at such facilities, to the extent
owned by Seller (the "ACQUIRED EQUIPMENT");
(ii) such inventories of merchandise and goods used or
held for use primarily in the conduct of the Division's business, all as and to
the extent identified in a computer generated list previously delivered to the
Buyer, the first and last pages of which computer generated list are identified
on SCHEDULE 1.1(ii) hereto (the "ACQUIRED INVENTORY");
(iii) the notes and accounts receivable from customers
acquired by Seller in connection with the conduct of the Division's business
(together with all related agreements, collateral, guarantees, security
interests and other liens, if any) and all rights of, or amounts owing to,
Seller, all as and to the extent set forth on SCHEDULE 1.1(iii) hereto (the
"ACQUIRED ACCOUNTS RECEIVABLE");
(iv) to the extent assignable, all rights and interests of
Seller in and to the executory contracts, leases, licenses, agreements and
arrangements identified on SCHEDULE 1.1(iv)(1) THROUGH (4) hereto (the "ACQUIRED
CONTRACTS"). The Acquired Contracts consist of the following:
(1) all rights and interests of Seller under those
leasehold interests in the real estate as and to the extent set forth on
SCHEDULE 1.1(iv)(1) hereto under the heading "Space Leases" (collectively, the
"SPACE LEASES");
(2) all rights and interests of Seller under those
equipment and personal property leases as and to the extent set forth on
SCHEDULE 1.1(iv)(2) hereto under the heading "Equipment Leases" (collectively,
the "EQUIPMENT LEASES");
(3) all rights and interests of Seller under those
licenses (subject to the terms of any agreements between the Parties in
connection therewith), as and to the extent set forth on SCHEDULE 1.1(iv)(3)
hereto under the heading "Licenses" (collectively, the "LICENSES");
(4) all rights and interests of Seller under those
certain material executory contracts not terminable at will by Seller and that
involve sums in excess of $10,000.00, as and to the extent set forth on SCHEDULE
1.1(iv)(4) hereto under the heading "Executory Contracts," and all Purchase
Orders as described in Section 1.8 (collectively, the "EXECUTORY CONTRACTS").
(v) to the extent assignable, Seller's rights, title and
interest, if any, to certain trade secrets, computer software copyrights,
trademarks, service marks, patents, patent applications and other intellectual
property used by Seller primarily in the conduct of the Division's business all
as and to the extent set forth on SCHEDULE 1.1(v) hereto (collectively, the
"INTELLECTUAL PROPERTY"), subject to those license agreements set forth as
EXHIBIT 2.2(i)(9) and EXHIBIT 2.2(i)(10);
(vi) copies of all original books and records or original
books and records, as the case may be, to the extent in Seller's possession or
control, relating to the operation of the Division's business, including the
Acquired Assets, the Assumed Liabilities, customer lists and records, sales and
cost records, inventory records, employee and payroll records, lists of
suppliers, tax records and sales tax exemption certificates;
(vii) prepaid expenses, deposits and capitalized interest
expense in connection with the Seller's warehouse loan relating to the
Division's business, as and to the extent set forth on SCHEDULE 1.1(vii) hereto
(the "ACQUIRED PREPAID EXPENSES");
(viii) to the extent assignable, all rights and interests
of Seller under the permits and approvals used in the conduct of the Division's
business and identified on SCHEDULE 1.1(viii) hereto;
(ix) miscellaneous assets of Seller used in connection
with the Division's business, as and to the extent set forth on SCHEDULE 1.1(ix)
hereto (the "ACQUIRED MISCELLANEOUS ASSETS"); and
(x) notes receivable of Seller made by Reuven D. Dessler
and Jacob Koval, as and to the extent set forth on SCHEDULE 1.1(x) hereto (the
"ACQUIRED NOTES").
Notwithstanding the foregoing, the Parties recognize and agree
that certain of the Acquired Assets may change in cost and composition when the
Final Closing Balance Sheet is prepared in accordance with Section 1.5(i)(2)
hereof and therefore references to those certain Acquired Assets refer to such
Acquired Assets as determined in accordance with the Final Closing Balance
Sheet.
1.2 EXCLUDED ASSETS. The Acquired Assets shall not include any
assets not specifically identified on the Schedules of the Acquired Assets (the
"EXCLUDED ASSETS").
1.3 ASSUMPTION OF LIABILITIES. Buyer agrees that
simultaneously with the transfer of the Acquired Assets on the Closing Date in
accordance with this Agreement, it shall assume those debts, liabilities,
obligations and contracts of Seller relating to the Acquired Assets and the
conduct of the Division's business as hereinafter specified (the "ASSUMED
LIABILITIES") and shall execute and deliver to Seller the Bill of Sale.
(i) those accounts payable and accrued expenses of Seller
related to the Division as and to the extent set forth on SCHEDULE 1.3(i) hereto
(the "PAYABLES");
(ii) liabilities and obligations of Seller accruing at or
after the Closing under the Space Leases as set forth on SCHEDULE 1.1(iv)
hereto. In connection with Buyer's assumption of the Space Lease to Seller's
Ohio facility, Buyer, at Buyer's sole cost and expense, shall cause the landlord
of such facility to consent to the assignment by Seller and assumption by Buyer
of such Space Lease and the release of Seller from all obligations arising
thereunder on and after the Closing Date. In connection with Buyer's assumption
of the New York and Chicago Space Leases, Buyer and Seller, at Buyer's sole cost
and expense, shall use commercially reasonable efforts to cause the landlords of
such facilities to consent to the assignment by Seller and assumption by Buyer
of each such Space Lease and the release of Seller from all obligations arising
thereunder on and after the Closing Date.
(iii) liabilities and obligations of Seller accruing at or
after the Closing under the Equipment Leases as set forth on SCHEDULE 1.1(iv)
hereto;
(iv) liabilities and obligations of Seller accruing at or
after the Closing in connection with the Licenses as set forth on SCHEDULE
1.1(iv) hereto;
(v) liabilities and obligations of Seller accruing at or
after the Closing in connection with the Executory Contracts as set forth on
SCHEDULE 1.1(iv) hereto and the Purchase Orders;
(vi) liabilities and obligations of Seller accruing at or
after the Closing in connection with and/or arising from the employees of the
Division listed in SCHEDULE 6.2(ii), applicable collective bargaining
agreement(s) affecting same and Employee Benefits and Claims arising by reason
of this transaction or arising after the Closing Date, including but not limited
to all employee severance liabilities, if any;
(vii) all liabilities and obligations of Seller resulting
from claims and litigation as well as legal and/or regulatory requirements
and/or orders applicable to the Acquired Assets and the operation thereof and/or
Assumed Liabilities, accruing at or after the Closing (which, for purposes of
clarity, as an example, specifically excludes the pending litigation set forth
on SCHEDULE 1.3(vii) hereto); and
(viii) all liabilities and obligations of Seller accruing
at or after the Closing in connection with the Intellectual Property set forth
on SCHEDULE 1.1(v) hereto.
The Parties recognize that certain of the Assumed Liabilities
may be obligations or liabilities incurred prior to the Closing Date and Buyer
shall be liable for the continued performance of those obligations to the extent
that they accrue at or after the Closing;
Notwithstanding the foregoing, the Parties recognize and agree
that certain of the Assumed Liabilities may change in cost and composition when
the Final Closing Balance Sheet is prepared in accordance with Section 1.5(i)(2)
hereof and therefore that references to those certain Assumed Liabilities refer
to such Assumed Liabilities as determined in accordance with the Final Balance
Closing Sheet.
1.4 EXCLUDED LIABILITIES. The Assumed Liabilities shall not
include any liabilities not specifically enumerated above or on the Schedules of
the Assumed Liabilities (the "EXCLUDED LIABILITIES").
1.5 PURCHASE PRICE.
(i) Subject to the terms and conditions of this Agreement,
the aggregate cash consideration to be paid by Buyer (net of Buyer's assumption
of the Assumed Liabilities) to Seller for the Acquired Assets and for Seller's
covenants and agreements hereunder shall be $22,292,000.00 (the "ESTIMATED
PURCHASE PRICE"), subject to adjustment as set forth in this Subsection (i) (the
"FINAL PURCHASE PRICE"), and the Estimated Purchase Price and Final Purchase
Price shall be payable as per Subsections (ii) and (iii) below.
(1) The Estimated Purchase Price is calculated based
on a review of Seller's books and records conducted by the Chief Financial
Officer of Seller. Said Chief Financial Officer of Seller has produced an
estimated closing balance sheet of Seller as set forth on SCHEDULE 1.5(i)(1)
hereto (the "ESTIMATED CLOSING BALANCE SHEET") reflecting the estimated assets
and liabilities of the Division as of a date preceding the Closing Date,
prepared in accordance with generally accepted accounting principles ("GAAP")
applied in a manner consistent with past practices of Seller. Notwithstanding
the foregoing, by agreement of the parties:
(a) the reserve used when valuing Acquired
Accounts Receivable has been valued at $588,000;
(b) Acquired Inventory has been valued by
calculating the pre-reserve book value (such value consisting of, consistent
with Seller's historical accounting practices, Seller's cost plus labor charges
for repacking, if any, prior to applying any reserves (the "PRE-RESERVE BOOK
VALUE") in accordance with GAAP applied in a manner consistent with the past
practices of Seller, provided that Acquired Inventory purchased by Seller in
fiscal years 2000 and 2001 has been value by using the Pre-Reserve Book Value of
all such Acquired Inventory and Acquired Inventory purchased prior to fiscal
year 2000 has been valued at zero;
(c) the Acquired Notes have been valued at
$1,956,000.00 (an amount equal to the current outstanding principal balance plus
all accrued but unpaid interest); and
(d) the Acquired Equipment has been value at
$518,000.00 .
The Estimated Closing Balance Sheet and the
values set forth therein have been reviewed by and agreed upon by the Parties
and is annexed hereto as Schedule 1.5(i)(1).
(2) As soon as practicable, but not later than sixty
(60) days after the Closing Date, the Chief Financial Officer of Seller shall
prepare and deliver to the Parties, a final
closing balance sheet as of the Closing Date. Prior to the Chief Financial
Officer submitting the Final Closing Balance Sheet to KPMG, Buyer shall be
allowed an opportunity to provide reasonable input. Whether or not the Chief
Financial Officer accepts Buyer's input, Buyer shall be allowed an opportunity
to present its positions in regard to the Final Closing Balance Sheet to KPMG.
The Final Closing Balance Sheet shall be audited by KPMG LLP (or such other
independent certified public accounting firm mutually agreed to by the Parties)
("KPMG"), the scope and purpose of which shall be to update and correct, if
necessary, each line item of the Estimated Closing Balance Sheet (the "FINAL
CLOSING BALANCE SHEET"), consistent with past practices of Seller and subject to
generally accepted accounting principles ("GAAP"), and notwithstanding GAAP,
shall be subject to the following:
(a) in the case of the Acquired Accounts
Receivable, there shall be no adjustment in the figure used as a reserve in the
Estimated Closing Balance Sheet;
(b) in the case of the Acquired Inventory, such
calculation shall be determined in accordance with GAAP applied in a manner
consistent with the past practices of Seller, provided that Acquired Inventory
purchased by Seller in fiscal years 2000 and 2001 shall be valued as of the
Closing by using the Pre-Reserve Book Value of all such Acquired Inventory, and
Acquired Inventory purchased prior to fiscal year 2000 shall be valued at zero.
In the event, however, that the Pre-Reserve Book Value of all pre-2000 Acquired
Inventory is less than One Million Four Hundred Twenty-five Thousand
($1,425,000.00) Dollars, the Final Closing Balance Sheet shall reflect such
shortfall in the pre-2000 Acquired Inventory and a dollar for dollar adjustment
to the Estimated Closing Balance Sheet shall be made in favor of Buyer for the
difference between the Pre-Reserve Book Value of the pre-2000 Acquired Inventory
and $1,425,000.00;
(c) in the case of the Acquired Notes, there
shall be no adjustment in the figure used in the Estimated Closing Balance
Sheet;
(d) in the case of the Acquired Equipment, there
shall be no adjustment in the figure used in the Estimated Closing Balance
Sheet;
(e) any rents, prepaid items and other applicable
items with respect to the Assumed Liabilities shall be prorated as of the
Closing Date and a dollar for dollar adjustment to the Final Closing Balance
Sheet shall be made in favor of the appropriate party to the extent such
proration was not effectuated or inaccurately set forth in the Estimated Closing
Balance Sheet; Seller shall assign to Buyer all unused deposits with respect to
the Assumed Liabilities and shall receive a credit in the amount thereof on the
Final Closing Balance Sheet; and
(f) ad valorem real and tangible personal
property taxes with respect to the Acquired Assets (including any such taxes
payable under any Space Leases or Equipment Leases) for the calendar year 2002
shall be prorated between Seller and Buyer as of the Closing Date. Such taxes
shall be determined based on the taxes due with respect to such Acquired Assets
for the calendar year 2001 (or if such information is not available for calendar
year 2001, then on the basis of calendar year 2000) with known changes in
assessed valuation or millage applied. A dollar for dollar adjustment to the
Final Closing Balance Sheet shall be made in favor of the appropriate party to
the extent such proration was not effectuated or was inaccurately set forth in
the Estimated Closing Balance Sheet.
(3) The Estimated Purchase Price shall be updated
and corrected in accordance with the Final Closing Balance Sheet and the
difference between the Estimated Purchase Price and the Final Purchase Price
(the "POST CLOSING ADJUSTMENT") shall be remitted in accordance with Subsection
1.5(iii). Any and all schedules of the Acquired Assets or the Assumed
Liabilities annexed hereto, to the extent affected by adjustments made in
connection with preparation of the Final Closing Balance Sheet shall be updated
and corrected to reflect such adjustments, and such updated and corrected
schedules shall be deemed to be the final such schedules for purposes of
determining the Acquired Assets and Assumed Liabilities, where applicable. The
parties agree, however, that KPMG may not review, alter or revisit the parties'
agreed upon valuation methodologies set forth in Section 1.5(i)(2)(a),(b), (c)
and (d). The determination of KPMG shall be final and conclusive on both Parties
hereto. Seller and Buyer shall each
pay one-half (1/2) of all fees to outside parties in connection with preparation
of the Final Closing Balance Sheet. In the event that KPMG cannot serve as the
independent certified accounting firm herein, the parties shall choose another
"Big Five" accounting firm, other than Deloitte & Touche LLP, as the independent
certified accounting firm. If the Parties cannot agree on such successor
independent certified accounting firm, the parties shall use Ernst & Young as
such successor independent certified accounting firm.
(ii) The Estimated Purchase Price shall be paid
by wire transfer of immediately available funds to an account designated by
Seller (the "CLOSING PAYMENT") .
(iii) Within three (3) business days of receipt
of the Final Closing Balance Sheet and determination of the Post Closing
Adjustment, the Party liable for the Post Closing Adjustment shall remit the
Post Closing Adjustment to the Party entitled thereto, by wire transfer of
immediately available funds to an account designated by such Party, along with
interest on the Post Closing Adjustment from the Closing Date at an annual rate
of seven (7%) percent. In the event that any Party's Post Closing Adjustment is
not paid to the other Party within such period (the "PAYMENT PERIOD"), in
addition to the Post Closing Adjustment and accrued interest, the delinquent
Party shall be liable to the non-delinquent Party for interest on the Post
Closing Adjustment after the Payment Period at an annual rate of fourteen (14%)
percent until paid and such non-delinquent Party's cost of collection, including
all reasonable legal fees and court costs.
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Acquired Assets and the Assumed Liabilities in accordance
with the allocation set forth in the Final Closing Balance Sheet. Such
allocation shall be adopted for all purposes related to the sale of the Acquired
Assets hereunder, and Buyer and Seller shall report this transaction for all
federal and state tax purposes in accordance with this allocation of the
Purchase Price and agree not to otherwise take a position inconsistent with this
allocation. Upon request, Buyer and Seller agree to furnish each other and the
Internal Revenue Service ("IRS") with such applicable information as may be
required by the IRS with respect to the sale of Acquired Assets hereunder.
1.7 TAXES.
(i) Buyer shall pay all sales or use taxes and
assignment or transfer taxes, payable in connection with the transactions
contemplated hereby.
(ii) All federal and state income taxes, if any,
incurred by Buyer or Seller shall be borne by the party incurring such taxes.
1.8 PURCHASE ORDERS. The Parties acknowledge and agree that
Seller, in connection with the Division, has (i) accepted orders from customers
(for purposes hereof such orders shall not include orders received from
affiliates of Seller), and (ii) ordered goods from its suppliers, both in
connection with such orders and otherwise in connection with the operation of
the Division (collectively, the "Purchase Orders"). At Closing, Seller shall
assign, to the extent assignable, all of its rights and interest of Seller in
the Purchase Orders to Buyer and Buyer shall assume Seller's duties and
obligations in connection therewith, including, without limitation, timely
payment and delivery with respect thereto. The Parties acknowledge that Seller
has furnished letters of credit in connection with certain of the Purchase
Orders identified in Schedule 1.8. Simultaneously with the closing, Buyer shall
cause its lender to issue backstop standby letters of credit and such other
documentation necessary, if any, in favor of Seller's lender, "IBJ Whitehall
Bank and Trust Company" in order to facilitate the reversal of Seller's
utilization of its credit line. To the extent Buyer is unable to procure the
necessary backstop standby letters of credit, Buyer shall utilize its best
efforts to procure the same as soon as possible following the Closing. If said
backstop standby letters of credit are not all issued on or before February 15,
2002, Buyer shall pay to Seller, upon demand, the sum of $1,000.00 per day for
each day beyond February 15, 2002 that the same are not so issued. In the event
Seller has advanced any deposits under the Purchase Orders, said deposits shall
be reflected on the Final Closing Balance Sheet.
ARTICLE II
THE CLOSING
2.1 TIME AND PLACES OF CLOSING. The closing of the
transactions contemplated by this Agreement (the "CLOSING") shall take place at
the offices of the Parties' respective attorneys commencing at 10:00 a.m. EST on
the date hereof (the "Closing Date").
2.2 DELIVERIES AT THE CLOSING. At the Closing: (i) Seller and
Buyer will each execute, acknowledge and deliver (1) the Bill of Sale, (2) the
agreements specified in Article IX, (3) a Lease Assignment and Assumption
Agreement for each Space Lease in the form annexed hereto as EXHIBIT 2.2(i)(3);
(4) the MZ Put JV, LLC Operating Agreement in the form annexed hereto as EXHIBIT
2.2(i)(4), the MZ TradeMark, LLC Operating Agreement in the form annexed hereto
as Exhibit 2.2(i)(5), an Assignment and Assumption Agreement for each Executory
Contract in the form annexed hereto as EXHIBIT 2.2(i)(6); an Assignment of
Slaymaker Mark to MZ TradeMark, LLC in the form annexed hereto as EXHIBIT
2.2(i)(7); an Assignment of Trademarks to Buyer in the form annexed hereto as
EXHIBIT 2.2(i)(8); a Mazel Name License Agreement in the form annexed hereto as
EXHIBIT 2.2(i)(9) from Buyer to Seller; Short Term License Agreements for
certain trademarks in the form annexed hereto as EXHIBIT 2.2(i)(10) from Buyer
to Seller; the Assignment and Assumption of Collective Bargaining Agreement in
the form annexed hereto as 6.2(ii); (ii) Buyer will deliver to Seller the
consideration specified in Section 1.5(ii) by wire transfer; (iii) Seller and
Reuven D. Dessler will deliver to each other the release in form and substance
as set forth in EXHIBIT 2.2(iii); (iv) Seller and Jacob Koval will deliver to
each other the release in form and substance as set forth in EXHIBIT 2.2(iv);
(v) Seller shall deliver to Buyer a true and correct copy of the minutes of its
Board of Directors approving the execution, delivery and performance of this
Agreement, and (vi) the Parties shall execute and deliver any other documents
reasonably required to effectuate the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements
contained in this Article III are true and correct as of the date of this
Agreement, subject to corrections and adjustments made as a result of the
preparation of the Final Closing Balance Sheet and updated and corrected
schedules of the Acquired Assets and Assumed Liabilities resulting therefrom.
3.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of Ohio.
3.2 AUTHORIZATION OF TRANSACTION. Seller's Board of Directors
has approved the execution, delivery and performance of this Agreement and the
other instruments and agreements for which provision is made herein.
3.3 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
(a) will violate any provision of the certificate of incorporation, bylaws or
other charter documents of Seller, or (b) to the Knowledge of Seller will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller and the Division are subject, or
(c) to the Knowledge of Seller will result in the breach of, or constitute a
default under, any agreement or instrument to which Seller is a party or by
which Seller is bound (other than those where consents or waivers from the
appropriate parties are obtained, or where such consents or waivers are waived
by Buyer), and except in all cases, where the violation would not have a
material adverse effect on the Acquired Assets or on the ability of the Parties
to consummate the transactions contemplated by this Agreement .
3.4 BROKERS' FEES. Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer could become liable
or obligated.
3.5 TITLE TO ASSETS. To the extent applicable, Seller has good
and marketable title to the Acquired Assets and will transfer the same to Buyer
at Closing free and clear of all mortgages, security interests and liens,
subject to any liens or encumbrances created by or in connection with the
Assumed Liabilities and Buyer's execution of the Assumption Agreement and
subject to specific limitations contained in this Agreement, and further subject
to the lien of IBM Credit Corporation as to computer, information processing and
other peripheral equipment and goods referenced in IBM Credit Corporation's
security filing(s) against Seller (which lien Seller is in the process of
causing the removal of promptly following the Closing). The Acquired Assets
constitute substantially all of the assets (other than cash or cash equivalent
reserves) used or held for use by Seller in its operation of the Division.
Seller makes no representations or warranties regarding the condition or fitness
for use of the Acquired Inventory and the Acquired Equipment.
3.6 LEGAL COMPLIANCE. With respect to the operation of the
Division, the Acquired Assets and the Assumed Liabilities, Seller has received
no written notice that the operation of the Division as presently conducted
violates any applicable order, law, ordinance, code or regulation, nor received
any written notice that an investigation is pending regarding the existence of
any such violation, except where the failure to comply would not have a material
adverse effect upon the financial condition of the Division, the Acquired Assets
or the Assumed Liabilities taken as a whole, or except as otherwise agreed to by
Seller and Buyer pursuant to this Agreement.
3.7 TAX MATTERS. Seller has filed or will file on a timely
basis (including extensions) all income tax returns and all other tax returns
("TAX RETURNS"), and has paid or will pay on a timely basis all income taxes and
all other taxes ("TAXES"), required in its conduct of the Division's business
for periods up to the Closing Date, except where the failure to file Tax Returns
or to pay Taxes would not have a material adverse effect on the financial
condition of the Division, the Acquired Assets or the Assumed Liabilities taken
as a whole, or on the ability of the Parties to consummate the transactions
contemplated in this Agreement. .
3.8 SPACE LEASES. SCHEDULE 1.1(iv) lists all of the Space
Leases. Seller has delivered to Buyer correct and complete copies of the Space
Leases listed in said Schedule. Said Space Leases are in full force and effect
and have not been amended or modified. Seller has received no written notice of
default from any landlord with respect to the Space Leases. To Seller's
Knowledge, Seller is not in default of any provision of any of the Space Leases,
the consequences of which would have a material adverse effect on the financial
condition of the Division. However, the Parties acknowledge that each Space
Lease requires the respective landlord's consent (or sublandlord's and prime
landlord's consent in the event of a sublease, as the case may be) to assign the
respective Space Lease to Buyer, and in the event a landlord's/sublandlord's/
prime landlord's consent is not obtained prior to Closing, Seller may or will be
in default of said Space Lease and shall only have the obligations contained in
Section 6.4 in connection therewith. Seller has not given written notice to any
landlord (deemed to include any applicable sublandlord) that such landlord is in
default of any of its material obligations under any of the Space Leases. No
landlord has in writing waived or extended the time for the performance of any
material obligation of Seller under any of the Space Leases. There are no
security deposits or prepaid rents with respect to such leases, other than as
reflected in the Final Closing Balance Sheet.
3.9 EQUIPMENT LEASES. SCHEDULE 1.1(iv) lists all of the
Equipment Leases. Seller has delivered to Buyer correct and complete copies of
the Equipment Leases listed in said Schedule. Said Equipment Leases are in full
force and effect and have not been amended or modified. To Seller's Knowledge it
is not in default of any provision of any of the Equipment Leases, the
consequences of which would have a material adverse effect on the financial
condition of the Division and Seller has received no written notice of default
from any lessor with respect to the Equipment Leases, however, the Parties
acknowledge that certain of the Equipment Leases may require the respective
lessor's consent to assign such respective Equipment Lease to Buyer, and in the
event a lessor's consent is not obtained prior to
Closing, Seller may or will be in default of said Equipment Lease and shall only
have the obligations contained in Section 6.4 in connection therewith. To
Seller's Knowledge (i) Seller has not given written notice to any lessor that
such lessor is in default of any of its material obligations under any of the
Equipment Leases, and (ii) no lessor has in writing waived or extended the time
for performance of any material obligation of Seller under any of the Equipment
Leases. There are no security deposits or prepaid rent with respect to such
leases, other than as reflected in the Final Closing Balance Sheet.
3.10 EXECUTORY CONTRACTS. SCHEDULE 1.1(iv) lists all of the
Executory Contracts. Seller has delivered to Buyer correct and complete copies
of the Executory Contracts listed in said Schedule where available. Said
Executory Contracts are in full force and effect and have not been amended or
modified. To Seller's Knowledge, it is not in default of any provision of any
Executory Contract, the consequences of which would have a material adverse
effect on the Acquired Assets or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Seller has received no written
notice of default from any contracting party with respect to the Executory
Contracts. However, the Parties acknowledge that certain of the Executory
Contracts may require the other respective contracting party's consent to assign
such respective Executory Contract to Buyer, and in the event a contracting
party's consent is not obtained prior to Closing, Seller may or will be in
default of said respective Executory Contract and shall only have the
obligations contained in Section 6.4 in connection therewith. To Seller's
Knowledge (i) Seller has not given written notice to any contracting party under
any Executory Contract that such contracting party is in default of any of its
material obligations under any of the Executory Contracts, and (ii) no
contracting party has in writing waived or extended the time for performance of
any material obligation of Seller under any of the Executory Contracts. There
are no security deposits or prepayments with respect to such Executory
Contracts, other than as reflected in the Final Closing Balance Sheet.
3.11 INTELLECTUAL PROPERTY AND LICENSES. SCHEDULES 1.1(iv) AND
1.1(v) list the Intellectual Property and Licenses sold or assigned to Buyer.
Seller has delivered to Buyer correct and complete copies of the Licenses listed
in said Schedules where available. To Seller's Knowledge, it is not in default
of any provision of any of the Licenses the consequences of which would have a
material adverse effect on the Acquired Assets. Seller has received no written
notice of default from any contracting party or licensor with respect to the
Licenses. However, the Parties acknowledge that certain of the Licenses may
require the respective licensor's consent to transfer or assign said respective
Intellectual Property or License to Buyer, and in the event such respective
licensor's consent is not obtained prior to Closing, Seller will be in default
of such respective license and shall only have the obligations contained in
Section 6.4 in connection therewith. To Seller's Knowledge (i) Seller has not
given written notice to any contracting party that such contracting party is in
default of any of its material obligations under any of the Licenses, and (ii)
no contracting party has in writing waived or extended the time for performance
of any material obligation of Seller under any of the Licenses.
There are no security deposits or prepayments with respect
to such Intellectual Property or Licenses, other than as reflected in the Final
Closing Balance Sheet. Seller makes no representation as to the quality,
duration, or validity of any of the Intellectual Property sold or assigned
herein.
3.12 LITIGATION. SCHEDULE 1.3(vii) hereto, sets forth each
instance in which Seller, with respect to its operation of the Division, the
Acquired Assets or the Assumed Liabilities is a party to any outstanding action,
suit, proceeding, hearing, judgment or injunction in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the same would not have a material adverse effect on
the financial condition of the Division, the Acquired Assets or the Assumed
Liabilities taken as a whole, or on the ability of the Parties to consummate the
transaction contemplated by this Agreement.
3.13 EMPLOYEE BENEFITS.
(i) Seller maintains an Employee Benefit Plan in
connection with its operation of the Division. Certain employees of the Division
are covered by collective bargaining agreement(s) as well as Employee Benefit
Plans.
(A) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been made to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan. All premiums or other payments which are due have been paid with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(B) Seller has delivered to Buyer complete copies of
Employee Benefit Plan documents.
(ii) With respect to each Employee Benefit Plan that
Seller maintains or has maintained during the prior six years or to which Seller
contributes, or has been required to contribute during the prior six years in
connection with its operation of the Division:
(A) No action, suit, proceeding or hearing 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,
except where the action, suit, proceeding, hearing, would not have a material
adverse effect on the financial condition of the Division, the Acquired Assets
or the Assumed Liabilities taken as a whole, or on the ability of the Parties to
consummate the transactions contemplated in this Agreement.
(B) With respect to the Division, to the Knowledge
of Seller, it has not incurred any liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA (including any withdrawal
liability) with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
3.14 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS.
(a) Except as disclosed in SCHEDULE 3.14:
(i) To Seller's Knowledge, Seller's operations are in material
compliance with all applicable Environmental Laws including, but not limited to,
the possession of all required permits and other governmental authorizations;
(ii) To Seller's Knowledge, there is no pending or threatened
investigation, claim, lawsuit or administrative proceeding against Seller under
any Environmental Law, nor has Seller received any written notice alleging a
violation of any applicable Environmental Law in connection with the ownership
or operation of the Business;
(iii) To Seller's Knowledge, during its occupancy of the
Division's properties, no friable asbestos-containing building materials have
been used in the construction, re-construction, remodeling, and/or repair of any
buildings on any of the Division's properties;
(iv) To Seller's Knowledge, during its occupancy of the
Division's properties, no underground storage tanks have been installed on any
of the Division's properties;
(v) To Seller's Knowledge, there has not been a Release of
Regulated Materials from, on or under any of the Division's properties at any
time during Seller's possession of such properties;
(vi) Seller has not engaged in any conduct which would
reasonably be expected to give rise to any liability under any Environmental
Law, or form the basis of any claim, action, or suit under such law.
(b) Seller has made all material, non-privileged information in its
possession and readily
available relating to its responsibilities under, and compliance with,
Environmental Law available to Buyer, including, without limitation, true,
correct and complete copies of all reports, audits, investigations,
correspondence and notices prepared or received by Buyer relating to the
presence or Release of any Regulated Materials or the violation of any
Environmental Law in conjunction with the Division or the Division's properties.
3.15 LABOR MATTERS.
(a) Seller has received no written notice from any
governmental authority that it is not in material compliance with all applicable
laws, whether federal, state or local, respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, or that it is engaged in any unfair labor
practice.
(b) Seller is not a party to, or subject to any obligation,
liability or commitment with respect to any written employment, compensation,
consulting, severance pay or similar agreement, express or implied with respect
to the employees listed on SCHEDULE 6.2(ii) other than the agreements listed on
SCHEDULE 1.1(iv) or SCHEDULE 3.15. SCHEDULE 3.15 sets forth a true and complete
copy of the collective bargaining agreement with the union representing certain
employees of the Division. Seller does not have any workers' compensation claims
or liabilities and has paid all workers' compensation and unemployment
compensation premiums due and payable to date. Seller makes no representations
as to the employee status of personnel used in its repacking operations under
agreements with Snider Blake Business Service, Inc. and Minute Men, Inc.
3.16 ORDINARY COURSE OF BUSINESS. To Seller's Knowledge
without investigation, subsequent to June 15, 2001, Seller has not, other than
in the ordinary course of business: (i) purchased inventory, (ii) booked
accounts receivable, or (iii) issued or accepted any Purchase Orders with
respect to the Division.
3.17 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
Except as expressly set forth in this Article III, Seller makes no
representation or warranty, express or implied, at law or in equity, in respect
of any of its assets (including, without limitation, the Acquired Assets),
liabilities (including without limitation, the Assumed Liabilities) or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Buyer hereby acknowledges and agrees
that it has had a full and complete opportunity to investigate the operations of
the Division, the Acquired Assets and the Assumed Liabilities, and except to the
extent specifically set forth in this Article III, Buyer is purchasing the
Acquired Assets on an "as-is, where-is" basis. Without limiting the generality
of the foregoing, Seller makes no representation or warranty regarding any
assets other than the Acquired Assets or any liabilities other than the Assumed
Liabilities, and none shall be implied at law or in equity.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements
contained in this Article IV are true and correct as of the date of this
Agreement, subject to corrections and adjustments made in the preparation of the
Final Closing Balance Sheet and updated and corrected schedules of the Acquired
Assets and Assumed Liabilities resulting therefrom.
4.1 ORGANIZATION OF BUYER. Buyer is a limited liability
company duly organized, validly existing, and in good standing under the laws of
Ohio.
4.2 AUTHORIZATION OF TRANSACTION. Buyer has approved in
accordance with its charter documents the execution, delivery and performance of
this Agreement and the other instruments
and agreements for which provision is made herein.
4.3 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
(a) will violate any provision of the Articles of Organization or other charter
documents of Buyer, or (b) to the Knowledge of Buyer, will violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Buyer is subject, or (c) to the Knowledge of Buyer, will result
in the breach of, or constitute a default under, any material agreement or
instrument to which Buyer is a party or by which Buyer is bound (other than
those where consents or waivers from the appropriate parties are obtained, or
where such consents or waivers are waived by Seller), except in all cases, where
the violation would not have a material adverse effect on the (i) Buyer's
ability to assume the Assumed Liabilities; or (ii) Parties' ability to
consummate the transactions contemplated by this Agreement.
4.4 BROKERS' FEES. Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
4.5 ABILITY TO CONSUMMATE TRANSACTION. Buyer has the ability,
including sufficient funds, in addition to its institutional financing, to pay
the Estimated Purchase Price and the Final Purchase Price, and to fulfill its
obligations with respect to the Assumed Liabilities and any claims which may
directly or indirectly arise with respect thereto. Buyer has received a
commitment for any financing needed to consummate this transaction.
Notwithstanding the foregoing, this transaction is not contingent in any respect
on Buyer's ability to obtain financing or retain any financing commitment now or
hereafter in effect.
4.6. OWNERSHIP OF ASSETS. Upon receipt of the Acquired Assets
from Seller, Buyer shall retain all or substantially all of the Acquired Assets
and not transfer or otherwise dispose of the same except in the ordinary course
of its wholesale business, provided, however, that Buyer may request Seller's
approval of a transaction not in the ordinary course of its business, and Seller
shall not unreasonably withhold or delay its consent thereto. Notwithstanding
the foregoing, Buyer may pledge the Acquired Assets to institutional lender(s)
as security for loans given to Buyer by such lender(s): (i) to effectuate the
financing of a portion of the Purchase Price, and (ii) for Buyer's asset based
borrowing for operation of its wholesale business in the ordinary course.
ARTICLE V
KNOWLEDGE OF REUVEN D. DESSLER AND JACOB KOVAL
Reuven D. Dessler, having served as Chairman of the Board and
Chief Executive Officer of Seller, and Jacob Koval, having served as a director
and executive vice president of Seller, and both parties having extensive
knowledge relating to the conduct of the Division's business, the Acquired
Assets and the Assumed Liabilities, each represents that (i) he has no Knowledge
that any representation or warranty made by Seller pursuant to this Agreement is
untrue, or may be misleading in any material respect and (ii) he has no
Knowledge of any obstacle or impediment to Seller's ability to perform its
covenants contained herein. Notwithstanding anything to the contrary contained
in Article III or elsewhere in this Agreement, Buyer agrees, that in light of
Reuven D. Dessler and Jacob Koval both having extensive knowledge relating to
the conduct of the Division's business, the Acquired Assets and the Assumed
Liabilities, that Seller shall not be deemed to have breached any
representations, warranties or covenants made in this Agreement to the extent
that either Reuven D. Dessler or Jacob Koval (i) has Knowledge that any
representation or warranty made by Seller pursuant to this Agreement may be
untrue, or may be misleading in any material respect or (ii) has Knowledge of
any obstacle or impediment to Seller's ability to perform its covenants
contained herein.
ARTICLE VI
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period
following the Closing:
6.1 ASSUMPTION AND COVENANT TO PERFORM. From and after the
Closing Date, Buyer hereby assumes and covenants: (i) to timely perform and
observe all terms and conditions of the Acquired Contracts to be performed at or
after the Closing, and (ii) to timely perform, observe and/or satisfy, as the
case may be, the Assumed Liabilities, including, without limitation, the full
and timely payment of all of the Payables.
6.2 EMPLOYEE MATTERS.
(i) Except for Employee Benefits and Claims arising prior
to the Closing, Buyer hereby waives any right, whether arising at law or in
equity, to seek contribution, cost recovery, damages, or any other recourse or
remedy from Seller, and hereby releases and indemnifies Seller, from and against
any claim, demand or liability, and with respect to employee severance claims
for the employees listed on SCHEDULE 6.2(ii) referenced below;
(ii) SCHEDULE 6.2(ii) sets forth a true and complete list
(subject to minor variations), as of the Closing Date, of each of the Division's
employees (other than Mark Hanners, whose employment is not being terminated by
Seller pursuant to this Agreement), and indicates which of the Division's
employees are, and which are not, subject to a union collective bargaining
agreement (such collective bargaining agreement hereinafter, the "Union
Agreement" and such union hereinafter, the "Union"). On or before the Closing
Date, Seller shall notify the Union of: (i) the contemplated sale of the
Division to Buyer; and (ii) that Buyer has agreed to assume the Union Agreement.
Buyer hereby agrees to assume the Union Agreement and all of the obligations
therein, including but not limited to participation in the Union's
multi-employer health plan, as per the Assignment and Assumption of Collective
Bargaining Agreement and Union Consent annexed hereto as EXHIBIT 6.2(ii), which
shall be executed by Buyer and Seller at Closing, and Buyer agrees to indemnify
Seller for any losses or damages incurred by Seller under the Union Agreement
accruing at or after the Closing. All such Union employees of Seller immediately
prior to the Closing shall become employees of Buyer on and as of the Closing,
and Buyer hereby agrees to hire all such Union employees, upon the same terms
and conditions of employment as immediately prior to Closing.
(iii) With regard to employees of the Division not covered
by the Union Agreement, on or before the Closing Date, Seller shall notify such
employees that a sale of the Division is being consummated and that such
employees will no longer be employed by Seller.
(iv) Buyer represents and covenants that it will not at
any time within 90 days (or such longer period provided by applicable law) after
the Closing engage in a "mass layoff" or "plant closing" as these terms are
defined in WARN or any similar conduct in violation of applicable state laws.
This provision is not intended to prohibit Buyer from reprimanding, terminating
or laying off employees in accordance with Seller's past practice. Buyer shall
indemnify and hold Seller harmless from and against any claims against Seller by
any employee or any claims and damages arising with respect to any employee
whose terms and conditions of employment have been changed by Buyer and with
respect to any claims and damages arising from Buyer's failure to abide by the
terms of its obligations as set forth in this Section 6.2 hereof.
(v) With regard to all employees of the Division, upon the
Closing, Buyer hereby assumes and agrees to fully pay when due and perform when
required all liabilities and obligations respecting the employees of Seller
arising from and after the Closing Date.
(vi) Buyer recognizes that Seller has utilized the
services of leased personnel in the repacking operations of the Division
pursuant to agreements with Snider Blake Business Service, Inc. and Minute Men,
Inc. Seller makes no representations as to the employee status of personnel used
in its repacking operations under agreements with Snider Blake Business Service,
Inc. and Minute Men, Inc.
6.3 LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Division, the Acquired Assets or the Assumed Liabilities, the other Party
will cooperate with the contesting or defending Party and its counsel in the
contest or defense, make available its personnel, and provide such testimony and
access to its books and records as shall be reasonably necessary in connection
with the contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article VIII below).
6.4 CONSENTS. To the extent any Acquired Contracts may not be
assigned without the prior written consent of any third party thereto or may
only be assigned upon providing notice to a third party, Seller and Buyer will
cooperate with each other in giving any such notices to third parties, and
Seller and Buyer will both use reasonable efforts to obtain any third party
consents required in connection with the assignment of any such Acquired
Contracts, provided that Seller shall not be required to commence any action or
suit, or expend any monies (other than nominal administrative fees) in
connection with its obligations herein. In the event that an Acquired Contract
is assigned without its required respective third party consent, and such
assignment is deemed a breach of such Acquired Contract by the respective third
party, Buyer shall assume all liability for such breach and shall indemnify and
hold Seller harmless for any and all such liability pursuant to Sections 8.3 and
8.6 hereof. With respect only to that certain executory contract with National
Wholesale Liquidators, Inc., NWL Holdings, Inc., and National Wholesale
Liquidators of Union, Inc. (collectively, "NWL") identified in Schedule
1.1(iv)(4) (the "NWL Contract"), as to which Seller is assigning only its rights
with respect to NWL's obligation to purchase certain merchandise as provided in
section 1.1(b) thereof), Seller agrees that if NWL refuses to purchase the
merchandise supplied by Buyer in connection with said Section 1.1(b) on the
basis that the NWL Contract may not be assigned or performed by Buyer, then
Seller agrees to cooperate, at Buyer's sole cost and expense, with such
reasonable requests as Buyer may make to facilitate the delivery of such
merchandise to, and collection of the price therefor from, NWL under the NWL
Contract.
6.5 USE OF "MAZEL" NAME. Notwithstanding the assignment of the
trademarks "MAZEL'S" and "MAZEL STORES" to Buyer in Section 1.1(v) hereof,
Seller may continue to operate closeout retail locations using forms of the name
"Mazel" and may open and operate additional closeout retail locations using
forms of the name "Mazel" for a period not to exceed five (5) years following
the Closing Date, pursuant to the License Agreement for Registered Trademark
annexed hereto as EXHIBIT 2.2(i)(9), after which time Seller shall cease using
forms of the name "Mazel" in its closeout retail
locations. In connection with Seller's continued use of forms of the name
"Mazel" in the operation of its retail business as permitted pursuant to this
section, the Parties shall use their reasonable efforts to avoid confusion among
their respective suppliers and other third parties after the Closing Date and
shall cooperate with each other to rectify any delivery, billing or other errors
resulting from use of the name "Mazel". Seller may continue to use the name
"Mazel" in its corporate name. However, subject to shareholder, regulatory and
other reasonably necessary approvals, Seller shall remove "Mazel" from its
corporate name within two (2) years from the Closing Date.
6.6 GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party, other than
the Parties' respective legal fees (unless the requesting Party is entitled to
indemnification therefor under Article VIII below).
6.7 COVENANT NOT-TO-COMPETE. (A) For a period ending the
earlier to occur of: 1) acquisition of a majority of the stock or assets of
Seller by a third party; or 2) the third anniversary of the Closing Date, Seller
will not, directly or indirectly, alone or together with another individual or
organization, as a shareholder, partner, member, agent and/or consultant,
compete with Buyer in the conduct of a "Wholesale Business". "Wholesale
Business" is defined as the sale at wholesale prices of goods and inventory to
entities which are themselves engaged, in the ordinary course of their business,
in reselling said goods to others in the United States. This non-competition
covenant shall not apply to ZS Fund L.P. or any of its affiliates, nor shall it
apply to the following: 1) the wholesale selling by Seller, from time to time,
of goods imported by Seller from the Orient to Roses Stores; 2) the wholesale
selling by Seller, from time to time, of close-outs and imports to Schottenstein
Stores Corporation, VCD, VCM or of their respective affiliates, or to Buyer,
provided that with respect to this subdivision 2), such sales shall be at
Seller's actual cost of inventory plus (i) directly related costs (it being
understood and agreed however that for imported goods, directly related costs
shall be deemed to be four (4%) percent of the actual cost of such inventory
regardless of the actual directly related costs, plus (whether or not imported
inventory) (ii) shipping charges; and 3) the wholesale selling by Seller, from
time to time, to third parties in bona fide, arms length transactions, of excess
inventory (meaning the remaining in-store inventory and warehouse inventory of
items Seller intends to discontinue selling in Seller's retail locations),
provided that a portion of said item(s) has been offered for sale in multiple
retail locations for a period of not less than six (6) months prior to such
sale.
(B) Buyer expressly acknowledges and agrees that nothing
herein is intended to directly or indirectly prohibit or restrict Seller in any
manner from purchases of any goods of whatever kind or nature, at wholesale or
otherwise, for sale in its retail locations. If, however, Seller intends to
purchase close-out goods which are regularly carried by Buyer in its Wholesale
Business ("Subject Close-Out Goods"), in a quantity greater than Seller
anticipates needing for its retail purposes, Seller shall have the unilateral
right, during Seller's non-compete period only, to "put" to a joint venture
owned jointly by Buyer and Seller (with Buyer being the managing member) (the
"Put JV") up to $3.5 Million worth of such excess quantity, based on the
acquisition costs of such excess quantity, in each calendar year (the "Excess
Goods") on the following terms and conditions:
In the event of a prospective purchase of Subject Close-Out
Goods involving Excess Goods, Seller at its option, may (i) complete the
purchase itself and then, within three (3) business days, sell the Excess Goods
to the Put JV at cost plus shipping, or (ii) require that the Put JV directly
purchase the Excess Goods. In either event, no later than three (3) business
days after submission by Seller to Buyer of a purchase order for the Subject
Close-Out Goods, Buyer and Seller shall each deposit with the Put JV 50% of the
funds necessary to acquire the Excess Goods. The Excess Goods shall be placed
and processed in the warehouse of Buyer, and all actual costs and expenses in
connection with the Excess Goods shall be charged to the Put JV, provided,
however, that all such costs shall not exceed 20% of the sales proceeds of the
Excess Goods ("Processing Charges"). The items of expense comprising the
Processing Charges and the method of calculating and allocating the Processing
Charges are set forth in SCHEDULE 6.7
Alternatively, either party may elect to warehouse and process
the Excess Goods in a public warehouse, the charges of which shall be borne by
the Put JV, in which instance, the Put JV shall not be entitled to include in
the Processing Charges what it would have charged for warehousing. Profits and
losses of the Put JV shall be shared equally between Buyer and Seller.
(C) During Seller's non-compete period, Buyer, Reuven D.
Dessler ("Dessler") and Jacob Koval ("Koval") will not, directly or indirectly,
alone or together with another individual or organization, as a shareholder,
partner, member, director, officer, employee, agent and/or consultant, compete
with Seller in the conduct of a closeout "Retail Business"in the Northeastern
and Midwestern United States. "Retail Business" is defined as the sale of goods
and inventory directly to consumers. This covenant not-to-compete shall not
apply to Schottenstein Stores Corporation or any its affiliates ("Schottenstein
Affiliates"), it being agreed, however, that for purposes hereof Schottenstein
Affiliates shall not include Buyer, Dessler and Koval or other entities in which
Buyer, Dessler and/or Koval have any interest. Notwithstanding the foregoing,
Seller acknowledges and agrees that (i) Dessler and Koval may consult with any
Schottenstein Affiliate that currently conducts a Retail Business with respect
solely to such Retail Business; (ii) Dessler and Koval may consult with any
third party that conducts a Retail Business (x) solely in furtherance of Buyer's
Wholesale Business (i.e. with respect to any items sold or to be sold by Buyer
to such third parties for use in such Retail Business) for no consideration from
such third party (other than the arm's length purchase price of the sold goods),
or (y) so long as none of the stores of such Retail Business are not located
within a five (5) mile radius from any of Seller's existing or then existing
Retail Business stores and such services are confined to such third party's
Retail Business; (iii) Dessler and Koval may perform services for Schottenstein
Affiliates for which the primary purpose is as a liquidation entity of another
company ("Schottenstein Liquidation Company") provided that such services may
not relate to the liquidation of Consolidated Stores, National Wholesale
Liquidators, Webers, Ocean States, Big Lots and Closeout Connection, and Dessler
and Koval shall not be prohibited from owning interests in any such
Schottenstein Liquidation Company, provided such interests do not, in the
aggregate, at any time exceed fifteen (15%) percent of the total interests in
any such Schottenstein Liquidation Company; and (iv) Dessler and Koval shall not
be prohibited from owning passive interests in an entity or entities which
compete with Buyer, provided such passive interests in any such entity do not,
in the aggregate, at any time exceed five (5%) percent of the total interests in
such entity.
6.8 SURVIVAL. All covenants contained in this Article VI shall
survive the Closing.
ARTICLE VII
NON-SOLICITATION OF EMPLOYEES
7.1 NON-SOLICITATION BY SELLER. For a period of three (3)
years following the Closing Date, Seller shall not hire any non-union,
managerial person who is or was an employee of the Division immediately prior to
Closing and became an employee of Buyer at Closing or a management employee
whose employment for Buyer was terminated by Buyer.
7.2 NON-SOLICITATION BY BUYER. For a period of three (3) years
following the Closing Date, Buyer shall not hire any non-union, managerial
person who is or was an employee of Seller other than employees of the Division
immediately prior to Closing, or a management employee whose employment for
Seller was terminated by Seller.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Parties shall survive the Closing (unless
the other Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and shall continue in full force and effect for
a period of fifteen (15) months thereafter. All covenants of the Parties shall
not be limited by said fifteen (15) month time period, but shall continue in
full force and effect for that period of time specifically
indicated in the Agreement, or if not so indicated, as provided by law.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the
event Seller breaches any of its representations, warranties, and covenants
contained in this Agreement, and, if there is an applicable survival period
pursuant to Section 8.1 above, provided that Buyer makes a written claim for
indemnification against Seller within such survival period, then Seller agrees
to indemnify Buyer from and against the entirety of any Adverse Consequences
Buyer shall suffer through and after the date of the claim for indemnification
(but EXCLUDING any Adverse Consequences Buyer shall suffer after the end of any
applicable survival period) caused by the breach; PROVIDED, HOWEVER, that Seller
shall not have any obligation to indemnify Buyer from and against any Adverse
Consequences caused by the breach of any representation or warranty of Seller
pursuant to Article III hereof unless and until Buyer has suffered Adverse
Consequences by reason of all such breaches in excess of a One Hundred Fifty
Thousand ($150,000) Dollar aggregate deductible (after which point Seller will
be obligated only to indemnify Buyer from and against further Adverse
Consequences under this Section 8.2 and Section 8.6). Covenants of Seller shall
not be subject to the threshold deductible limitation contained herein.
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the
event Buyer breaches any of its representations, warranties, and covenants
contained in this Agreement, and, if there is an applicable survival period
pursuant to Section 8.1 above, provided that Seller makes a written claim for
indemnification against Buyer within such survival period, then Buyer agrees to
indemnify Seller from and against the entirety of any Adverse Consequences
Seller shall suffer through and after the date of the claim for indemnification
(but excluding any Adverse Consequences Seller shall suffer after the end of any
applicable survival period) caused by the breach PROVIDED, HOWEVER, that Buyer
shall not have any obligation to indemnify Seller from and against any Adverse
Consequences caused by the breach of any representation or warranty of Buyer
pursuant to Article IV hereof unless and until Seller has suffered Adverse
Consequences by reason of all such breaches in excess of a One Hundred Fifty
Thousand ($150,000) Dollars aggregate deductible (after which point Buyer will
be obligated only to indemnify Seller from and against further Adverse
Consequences under this Section 8.3 and Section 8.6). Covenants of Buyer shall
not be subject to the threshold deductible limitation contained herein.
8.4 APPLICATION OF THE THRESHOLD DEDUCTIBLE. As above
provided, neither Party shall pursue any claim or claims against the other
unless and until such claim or claims, in the aggregate, exceed $150,000 (the
Threshold Deductible"). Notwithstanding the foregoing, if a Party claims to have
exceeded such Threshold Deductible, then, and in such event, the other Party
shall be entitled to pursue any claim or claims, regardless of whether the same,
in the aggregate, exceed the Threshold Deductible. If, after the Parties
respective claim(s) have been finally determined in accordance with Section
10.9, the net difference between their respective claim(s) is less than the
Threshold Deductible, no award shall be made to either party, subject however,
to the continuing right of each Party to aggregate any finally determined future
claims with such prior determined claims to exceed the Threshold Deductible or
offset such claims against the other Party's claim(s). To facilitate the
operation of the Threshold Deductible, the Parties agree to use reasonable
efforts to cooperate in causing claims made to be heard and determined in a
single arbitration hearing, to the extent reasonably practicable, provided,
however, that a Party's failure to so cooperate shall not be deemed to bar or
otherwise affect any claim or claims it may make.
8.5 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
make appropriate adjustments for tax benefits and insurance coverage in
determining Adverse Consequences for purposes of this Article VIII.
8.6 MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which
may give rise to a claim for indemnification against the other Party (the
"INDEMNIFYING PARTY") under this Article VIII, then the Indemnified Party shall
promptly (and in any event within five (5) business days after receiving notice
of the Third Party Claim) notify the Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right at any
time to assume and thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party;
PROVIDED, HOWEVER, that the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be
unreasonably withheld) unless the judgment or proposed settlement involves only
the payment of money damages and does not impose an injunction or other
equitable relief, result in an increase of insurance premiums or have other
adverse impact upon the Indemnified Party. In the event the Indemnifying Party
assumes and thereafter conducts the defense of the Third Party Claim with
counsel of its choice as provided above, the Indemnified Party shall have the
right to have counsel of its choice monitor the Third Party Claim and the
Indemnifying Party and its counsel shall provide access to all documents,
pleadings and correspondence in connection therewith. The Indemnifying Party
shall pay the reasonable legal fees for monitoring performed by counsel for the
Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in Section 8.6(ii) above, however,
the Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate, and shall be reimbursed by the Indemnifying
Party for its legal fees.
(iv) So long as the Indemnifying Party is proceeding with
its defense of the Third Party Claim in good faith and with due diligence, the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, not to be unreasonably withheld.
8.7 EXCLUSIVE REMEDY. Buyer and Seller acknowledge and agree
that the foregoing indemnification provisions in this Article VIII shall be the
exclusive remedy of Buyer and Seller with respect to their representations,
warranties and covenants in connection with the Division, the Acquired Assets,
the Assumed Liabilities, and the transactions contemplated by this Agreement.
Neither Party shall have the right of rescission of this Agreement for any
claim, nor shall either Party be liable for incidental or consequential damages
arising out of any claim made pursuant to this Agreement.
ARTICLE IX
OTHER AGREEMENTS; TRADEMARK JOINT VENTURE
9.1 AGREEMENTS. The Parties hereby agree to execute and
deliver at Closing, the following agreements:
(i) the Assignment of Licenses and Assumption Agreement in
the form annexed hereto s EXHIBIT 9.1(i);
(ii) the Walmart Commission and Polaroid Good Supply
Agreement in the form annexed hereto as EXHIBIT 9.1(ii); and
(iii) the Interim Services Agreement in the form annexed
hereto as EXHIBIT 9.1(iii).
9.2 STANDSTILL AGREEMENT. Each of the relevant parties to the
Standstill Agreement, annexed hereto as Exhibit 9.2, have agreed that
simultaneous with the execution and delivery of this Agreement by the Parties,
they shall execute and deliver the respective Standstill Agreement.
9.3 TRADEMARK JOINT VENTURE. To the extent assignable, Seller
hereby agrees to transfer all of its rights, title and interest, if any, in and
to the trademarks identified in SCHEDULE 9.3 hereto ("Slaymaker marks") to a
newly formed Ohio limited liability company, MZ TradeMark, LLC, the members of
which shall be Buyer and Seller, in equal shares. The operating agreement of MZ
TradeMark, LLC is annexed hereto as Exhibit 2.2(i)(5). Pursuant to the operating
agreement, MZ TradeMark, LLC shall grant to Buyer a license (annexed hereto as
Exhibit 9.3(i) to use the Slaymaker marks in the operation of its wholesale
business, and to Seller a license (annexed hereto as Exhibit 9.3(ii) to use the
Slaymaker marks in the operation of its closeout retail business (including
additional closeout retail locations hereafter opened).
ARTICLE X
MISCELLANEOUS
10.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other Party;
PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable efforts to advise the other Party prior to making the
disclosure).
10.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
10.3 ENTIRE AGREEMENT. This Agreement (including the documents
and other Agreements referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
10.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party.
10.5 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.6 HEADINGS. The Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.7 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or
transmitted by facsimile, or mailed by qualified overnight mail service such as
Federal Express, D.H.L., UPS or Airborne Express to the persons at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Seller:
Mazel Stores, Inc.
200 Helen Street
South Plainfield, New Jersey 07080
Attention: Peter J. Hayes, CEO
Copy to:
Stern, Levy & Pellegrino, LLP
950 Third Avenue, 17th Floor
New York, New York 10022
Attention: Irwin Levy, Esq.
If to Buyer:
MZ Wholesale Acquisition, LLC
31000 Aurora Road
Solon, Ohio 44139
Attention: Reuven D. Dessler
Copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114
Attention: David Zagore, Esq.; and
Dessler & Schottenstein Group
Value City
1800 Moler Road
Columbus, Ohio 43207
Attention: Tod Friedman, Esq.
10.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Ohio without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Ohio or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Ohio.
10.9 ARBITRATION. Any controversy, claim or dispute between
the Parties, directly or indirectly, concerning this Agreement or the breach
hereof, or the subject matter hereof, shall be finally settled by arbitration as
provided herein, subject to the right to seek equitable relief in a court of
competent jurisdiction as hereinafter provided. In the event a dispute is to be
submitted to arbitration, the dispute shall be settled by arbitration in the
City of Columbus, Ohio, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof. Except as specifically provided herein,
the arbitration shall proceed in accordance with the laws of the State of Ohio.
The Party requesting arbitration shall give a written demand for arbitration to
the other Party by registered or certified mail. The demand shall set forth a
statement for the nature of the dispute, the amount involved and the remedies
sought. No later than ten (10) calendar days after the demand for arbitration is
served, each Party shall select one person to act as arbitrator and the two
selected shall select a third arbitrator within ten (10) days of their
appointment. If the arbitrators selected by the Parties are unable or fail to
agree upon the third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association. As rules for the arbitration, the arbitrator
shall apply the Commercial Arbitration Rules of the American Arbitration
Association. No later than ten (10) calendar days after the arbitrators are
appointed, the arbitrators shall schedule the arbitration for a hearing to
commence on a mutually convenient date. The hearing shall commence no later than
ninety (90) calendar days after the arbitrators are appointed and n shall
continue from day to day until completed. All discovery shall be completed no
later than the commencement of the arbitration hearing, or ninety (90) calendar
days after the date that a proper demand for arbitration is served, whichever
occurs earlier, unless upon a showing of good cause the arbitrators extend or
shortens such period. The arbitrators shall issue their award in writing no
later than twenty (20) calendar days after the conclusion of the hearing. The
arbitration award shall be final and binding regardless of whether one of the
Parties fails or refuses to participate in the arbitration. The results of such
arbitration shall be conclusive and binding, provided, however, that both
Parties shall have the right to apply to a court of competent jurisdiction for
such equitable relief, including, without limitation, injunctive relief and
specific performance, as is necessary to preserve and enforce their rights under
this Agreement. Notwithstanding any of the foregoing provisions, either Party
may join the other Party to any action, suit or proceeding with respect to which
the Party seeking such joinder is a defendant, if the other Party is required to
defend, indemnify, and hold harmless such defendant in accordance with the terms
and provisions hereof.
10.10 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.11 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
10.12 EXPENSES. Each of Seller and Buyer will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
10.13 CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
10.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
10.15 BULK TRANSFER LAWS. Seller and Buyer agree that at
Buyer's request, the Parties will not notify any creditors of Seller pursuant to
any bulk sales law notification requirement, if any, to the transactions
contemplated by this Agreement. Buyer shall have no claims against Seller for
any creditors' claims made in connection with the Assumed Liabilities.
ARTICLE XI
DEFINITIONS
"ACQUIRED ACCOUNTS RECEIVABLES" shall have the meaning ascribed to it
in Section 1.1(iii) hereof.
"ACQUIRED ASSETS" shall have the meaning ascribed to it in
Section 1.1 hereof.
"ACQUIRED CONTRACTS" shall have the meaning ascribed to it in
Section 1.1(iv) hereof. "
ACQUIRED EQUIPMENT" shall have the meaning ascribed to it in
Section 1.1(i) hereof.
"ACQUIRED INVENTORY" shall have the meaning ascribed to it in
Section 1.1(ii) hereof.
"ACQUIRED MISCELLANEOUS ASSETS" shall have the meaning ascribed to it
in Section 1.1(ix) hereof.
"ACQUIRED NOTES" shall have the meaning ascribed to it in
Section 1.1(x).
"ACQUIRED PREPAID EXPENSES" shall have the meaning ascribed to it in
Section 1.1(vii) hereof.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and expenses, and reasonable
attorneys' fees.
"AGREEMENT" shall mean this Asset Purchase Agreement by and between
Mazel Stores, Inc. and MZ Wholesale LLC, dated as of February 1, 2002.
"ASSUMED LIABILITIES" shall have the meaning ascribed to it in Section
1.3 hereof. "
BILL OF SALE" shall have the meaning ascribed to it in Section 1.1
hereof.
"BUYER" has the meaning set forth in the preface above.
"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Estimated Closing Balance Sheet.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
"CLOSING" has the meaning set forth in Section 2.1 hereof.
"CLOSING DATE" has the meaning set forth in Section 2.1 hereof.
"CLOSING PAYMENT" has the meaning set forth in Section 1.5(ii) hereof.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Seller, Buyer or the Division that is not already
generally available to the public.
"DIVISION" means the wholesale business as historically conducted by
Seller.
"EMPLOYEE BENEFITS AND CLAIMS" means with respect to the employees of
the Division as of the Closing Date, all wages, benefits, vacation days, sick
days, holidays, insurance plans, Employee Benefit Plans, Employee Pension
Benefit Plans, Employee Welfare Benefit Plans, union contracts and associated
benefits, and any other like plans or benefits provided by Seller to such
employees immediately prior to the Closing.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as such term
is defined in ERISA Section 3(3)) and any other material employee benefit plan,
program or arrangement of any kind sponsored by Seller in its operation of the
Division.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ENVIRONMENTAL, HEALTH AND SAFETY MATTERS" shall have the meaning
ascribed to it in Section 3.14 hereof.
"ENVIRONMENTAL LAW" includes any federal, state or local law,
regulation, rule, standard, order or decree, relating to protection of health or
the environment and applicable to the business or activities of Seller or
conditions resulting therefrom, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., the Resource Conservation Recovery Act, 42 U.S.C. Section 6901 et seq.,
the Clean Water Act 33 U.S.C. Section 1251 et seq., the Safe Drinking Water Act,
42 U.S.C. Section 300 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et.
seq., the Occupational Health and Safety Act, 29 U.S.C. Section 651 et seq., the
Toxic Substances Control Act, 15 U.S.C Section 2601 et seq., and the Emergency
Planning and Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.
"EQUIPMENT LEASES" shall have the meaning ascribed to it in Section
1.1(iv)(2) hereof.
"ESTIMATED CLOSING BALANCE SHEET" shall have the meaning ascribed to it
in Section 1.5(i).
"ESTIMATED PURCHASE PRICE" shall have the meaning ascribed to it in
Section 1.5(i)(1) hereof.
"EXCLUDED ASSETS" shall have the meaning ascribed to it in Section 1.2
hereof.
"EXCLUDED LIABILITIES" shall have the meaning ascribed to it in Section
1.4 hereof.
"EXECUTORY CONTRACTS" has the meaning set forth in Section 1.1(iv)(4)
hereof.
"FINAL CLOSING BALANCE SHEET" shall have the meaning ascribed to it in
Section 1.5(i)(2) hereof.
"FINAL PURCHASE PRICE" has the meaning set forth in Section 1.5(i)(1)
hereof. "GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8.6(i) hereof.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8.6(i)
hereof.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 1.1(v)
hereof.
"IRS" shall have the meaning ascribed to it in Section 1.6 hereof.
"KNOWLEDGE" means actual knowledge without independent investigation;
when applied to Seller it shall mean the Knowledge of the following persons:
Edward Cornell, Peter Hayes; when applied to
Buyer it shall mean Knowledge of Reuven Dessler and Jacob Koval; and when
applied to either Seller or Buyer, it shall mean the outside directors or
members, as the case may be.
"KPMG" has the meaning set forth in Section 1.5(i)(2) hereof.
"LICENSES" shall have the meaning set forth in Section 1.1(iv)(3)
hereof.
"ORDINARY COURSE OF BUSINESS" means, with respect to the Division, the
ordinary course of business consistent with Seller's past custom and practice
(including with respect to quantity and frequency).
"PARTY" or "PARTIES" has the meaning set forth in the preface above.
"PAYABLES" has the meaning set forth in Section 1.3(i) hereof.
"PAYMENT PERIOD" has the meaning set forth in Section 1.5(iii) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" shall have the meaning ascribed to it in Section 3.12
hereof.
"PERSON" means an individual, a general or limited partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, or a governmental
entity (or any department, agency, or political subdivision thereof).
"POLAROID LICENSES" has the meaning as set forth in Section 9.1(i)
hereof.
"POST CLOSING ADJUSTMENT" has the meaning set forth in Section
1.5(i)(2) hereof.
"PRE-RESERVE BOOK VALUE" has the meaning set forth in 1.5(i)(1) hereof.
"PURCHASE PRICE" has the meaning set forth in Section 1.5(i) hereof.
"REGULATED MATERIALS" includes any chemical, pollutant, contaminant,
petroleum or petroleum products, hazardous or toxic substance, and any other
substance, material or waste defined as such or subject to regulation for its
hazardousness or toxicity under any applicable Environmental Law.
"RELEASE" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Regulated Materials through or in the
air, surface water, groundwater or property which release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching
or migration violates any Environmental Law.
"SELLER" has the meaning set forth in the preface above.
"SPACE LEASES" has the meaning set forth in Section 1.1(iv)(1) hereof.
"STANDSTILL AGREEMENT" has the meaning set forth in Section 9.2 hereof.
"SUCCESSOR PLAN" has the meaning set forth in Section 6.2(xi) hereof.
"TAXES" shall have the meaning ascribed to it in Section 3.6 hereof.
"TAX RETURNS" shall have the meaning ascribed to it in Section 3.6
hereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8.6(i) hereof.
"UNION" has the meaning set forth in Section 6.2(v) hereof.
"UNION AGREEMENT" has the meaning set forth in Section 6.2(v) hereof.
"WARN ACT" shall mean the Worker Adjustment and Retraining and
Notification Act.
"WARN ACT INDEMNITY" has the meaning set forth in Section 6.2(iv)
hereof.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date first above written. Each of the signatories below
agrees that facsimile signatures shall be deemed original signatures for all
purposes of this Agreement (including the documents and other Agreements
referred to herein).
MAZEL STORES, INC. MZ WHOLESALE ACQUISITION, LLC
By: /s/ Peter Hayes By: /s/ Jeffry D. Swanson
- ----------------------------- ----------------------------------
Name: Peter Hayes, President Name: Jeffry D. Swanson
---------------------------------
Title: Vice President
-------------------------------
Agreed as to release provided for in Exhibit 2.2(iii),
representation contained in Article V hereof, and
restrictions in Section 6.7(C) Non-Compete
/s/ Reuven D. Dessler
- ---------------------------
Reuven D. Dessler
Agreed as to release provided for in Exhibit 2.2(iv),
representation contained in Article V hereof, and
restrictions in Section 6.7(C) Non-Compete
/s/ Jacob Koval
- ---------------------------
Jacob Koval
Agreed as to Standstill Agreement pursuant
to Section 9.2 hereof.
/s/ Reuven D. Dessler
- ---------------------------
Reuven Dessler
/s/ Jacob Koval
- ---------------------------
Jacob Koval
Schottenstein Stores Corporation
By: /s/ Jeffry D. Swanson
------------------------------
Name: Jeffry D. Swanson
----------------------------
Title: Sr. Vice President
---------------------------
ZS Fund L.P
By: NL Sherwood & Co. L.P
By: /s/ Robert A. Horne, V.P.
-------------------------
Robert A. Horne, V.P.