Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 30th day of November, 2000 by and among LEATHER TAN ACQUISITION, INC., a
Texas corporation, or its assigns ("Purchaser") and TLC DIRECT, INC., a Texas
corporation, and TANDY LEATHER DEALER, INC., a Texas corporation, (both TLC
Direct, Inc. and Tandy Leather Dealer, Inc. shall be referred to as "Sellers").
Tandycrafts, Inc. signs this Agreement only to indicate its agreement to
Sections 1.7, 6.1(B and C) and 8.13 of this Agreement and The Leather Factory,
Inc. signs this Agreement only to indicate its agreement to Section 8.12 of this
Agreement. Nevertheless, Tandycrafts, Inc. and The Leather Factory, Inc. are not
parties to the Agreement or to any other Section of this Agreement and are not
liable thereunder, except for such Sections, in any other form or manner.
RECITALS:
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Sellers desire to sell to Purchaser and Purchaser desires to purchase
from Sellers substantially all of the assets and assume certain of the
liabilities of the Sellers in return for the purchase price set out hereinafter.
Sellers acknowledge that Purchaser is relying on the representations,
warranties, and covenants made herein by Sellers in pursuing financing for the
transaction contemplated herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises, the foregoing
recitals and the mutual covenants contained herein, and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS
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1.1 Acquired Assets. On and subject to the terms of this Agreement,
Purchaser agrees to purchase from Sellers and Sellers agree to sell,
transfer, convey and deliver to the Purchaser, all of the Acquired
Assets owned by Sellers and used by Sellers in the conduct of Tandy
Leather's leathercraft business as conducted by Tandy Leather Company
and its successors, at the closing for the consideration specified
below. "Acquired Assets" shall mean all of Sellers' right, title and
interest in and to all of the assets of the Sellers, except the
Excluded Assets, including, but not limited to:
(a) all tangible and personal property, such as
machinery, equipment, all materials and supplies,
inventory, trade booth inventory, catalog inventory,
fixtures, manufactured and purchased parts, goods in
process and finished goods, furniture, including but
not limited to the A Xxxxxx Ranch Oak furniture used
by X. X. Xxxxx, Xxxxxxx Xxxxx, and X. X. Xxxx,
automobiles, trucks, trailers, tools, racks, jigs,
and dyes;
(b) intellectual property and goodwill associated
therewith, intangibles, trade, business name,
goodwill, licenses, sub-licenses, and operating
agreements granted and obtained with respect thereto
and rights thereunder, remedies against infringements
thereof and rights to protection of interest therein
under the laws of all jurisdictions;
(c) Sellers' rights to the names "Tandy Leather", "Tandy
Leather Company", "Tandy Leather Dealer, Inc.", and
"TLC Direct, Inc.";
(d) Sellers' rights to all of Sellers' patents,
trademarks, and copyrights, including those to be
transferred to Sellers from TAC Holdings, Inc.
immediately prior to this transaction, registered or
unregistered, including, but not limited to, the
lists of patents and trademarks attached as Exhibit
"A" and the list of copyrights attached as Exhibit
"B";
(e) leases, subleases, and rights thereunder listed on
attached Exhibit "C";
(f) contracts, indentures, agreements, mortgages,
instruments of indebtedness, security interests,
guarantees, royalty agreements, dealer contracts,
other similar agreements and rights thereunder listed
on attached Exhibit "D";
(g) accounts, notes, other receivables, including any
uncollected claims listed on attached Exhibit "E";
(h) claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights
of setoff, rights of recoupment (including items
relating to the payment of taxes), franchises,
approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained
from governments and governmental agencies,
(i) copies of books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans,
drawings and specifications, creative materials,
advertising and promotional materials, studies,
reports and other printed or written materials;
(j) any non-local phone numbers owned by the Sellers;
(k) Sellers' rights to all of Sellers' Internet Domain
names and all rights related to said Internet Domain
names, including but not limited to xxxxxxxxxxxx.xxx,
xxxxxxxxx.xxx, xxxxxxx-x.xxx,
xxxxxxxxxxxxxxxxxxxxx.xxx, xxxxxxxxx.xxx,
xxxxxxxxxxxxxxxxxx.xxx, xxxxxxxxxxxxxx.xxx, web
sites, registrations, administrative and technical
rights to all Domain Names, passwords, codes, and any
shopping cart software rights;
(l) all original leathercraft art owned by Sellers
whether said art is in possession of Sellers or on
loan to others, including, but not limited to any
leathercraft art owned by Sellers which is on loan to
the King Museum in Sheridan, Wyoming, and whether by
Xx Xxxxxxxx, Xxxxx Xxx, Xx Xxxxxxx, Xxx Xxxxxxx, Lad
Haverty, Xxxxx Xxxxxxx, Xxxxxxxxx Xxxxxxx, or other
artists, a list of which leathercraft art is attached
hereto as Exhibit "G"; and all rights with respect to
said original leathercraft art; provided, however,
that Purchaser agrees to assume and abide by
agreements related to said leathercraft art,
including the Tandy Leather Company or Tandycrafts,
Inc.'s, dba Tandy Leather Company, agreement with Al
and Xxx Xxxxxxxx dated February 3, 1998;
(m) mailing lists (provided that Purchaser abides by
Sellers' privacy policies), publications, books,
pamphlets, catalogs, films, videos, magazines, doodle
page books/pattern packs, patterns, student manuals,
teacher's guides, visual aids, posters and other
visual aids, and flyers;
(n) the leathercraft art that was formerly contained in
the Xxx and Xx Xxxxxxxx museum and, to the extent
that such items exist, all inventory, equipment,
furniture, fixtures and supplies of said museum;
(o) Sellers' rights to all of Sellers' computer hardware
and software, including but not limited to: "Slammin"
server and its software, including NT and Site Link
Software, "Tcrafts 2" server and its software
including NT and MOM software and any other hardware
and software listed on Sellers' books.
1.2 Excluded Assets. The Acquired Assets shall not include any rights or
assets in regard to Sellers' employee benefit or retirement plans,
Sellers' corporate charters, minute books, stock transfer books, stock
certificates, corporate seals, qualifications to do business,
fictitious name filings, certificates of authority to do business,
arrangements with registered agents, tax payer and other identification
numbers, cash, stock in TAC Holdings, Inc. owned by Sellers, XX Xxxxxxx
software, "Internet One" server and software, "Corp" server and
software, Lotus Notes, local phone lines, equipment, computers,
servers, phone lines, equipment, software or other assets leased or
owned by Tandycrafts, Inc., IP addresses, the trademarks and rights to
the name "Tandycrafts" and its derivatives, including "Tandyarts", any
assets (except those solely used in the leathercraft business as
conducted by Tandy Leather Company and its successors), of Tandycrafts,
any rights under this Agreement, the Letter Agreement between Sellers
and The Leather Factory, Inc. dated on or about October 16, 2000, and
the confidentiality agreements between the parties, and any local 817-
telephone numbers that are part of Tandycrafts block of phone numbers
(all of which are referred to hereinafter as the "Excluded Assets").
Seller will use reasonable efforts to forward calls that come to said
local 817- telephone numbers to such numbers that Buyer shall
designate. Sellers will cooperate with Purchaser to accomplish the
migration of data from the computers, servers and software listed as
Excluded Assets to the computers, servers and software that are
Acquired Assets or that Purchaser subsequently purchases.
All Acquired Assets will be free and clear of any and all liens,
charges, encumbrances, and security interests of whatsoever nature or
type.
1.3 Assumed Liabilities. On and subject to the terms and conditions of this
Agreement, Purchaser agrees to assume and become responsible for
certain Assumed Liabilities as of the Closing Date. Purchaser will not
assume or have any responsibility for any obligations or liabilities of
the Sellers, except for the Assumed Liabilities. The "Assumed
Liabilities" will be defined as and include (a) all trade payables
incurred in ordinary course of business of the Sellers incurred within
ninety (90) days of Closing; (b) all liabilities relating to any
contract assumed by Purchaser herein, including the obligations of the
Sellers under the licenses, sub-licenses, leases, sub-leases,
contracts, and other arrangements referred to in the definition of
Acquired Assets or listed in Exhibits C or D, or in the other Exhibits
or Schedules hereto ("Assumed Contracts") after closing; (c) all
obligations and liabilities set forth in Schedule 1.3; and (d) any
transfer, assignment, recording or similar fees; and (e) any
liabilities arising on or after the date of this Agreement.
1.4 Excluded Liabilities. The Assumed Liabilities shall not include: (a)
any liability of the Sellers for income taxes, transfer taxes, sales
taxes, use taxes and other taxes owed by them and arising before the
date of this Agreement, or arising in connection with the consummation
of the transaction contemplated hereby, including any income taxes
arising because the Sellers are transferring the Acquired Assets, or
because the Sellers have deferred gain on any deferred inter company
transaction; (b) any liability of the Sellers for costs and expenses
incurred in connection with this Agreement or consummation of the
transactions contemplated hereby, or any liability or obligation of the
Sellers under this Agreement; (c) any ERISA or employment benefit plan
of Sellers; or (d) any contract of employment or other agreements with
Sellers' employees with Sellers; provided, however, that Purchaser
shall assume any liabilities arising on or after Closing relating to
certain employees of Sellers who are listed on Schedule 3.2(P); (e) any
charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand or litigation relating to breach of contract, breach of
warranty, tort, infringement, violation of law, or other matter which
arose prior to Closing; (f) liability for claims asserted against
Sellers by Black Fox Trading Company regarding copyright infringements
relating to certain bear claws relating to acts prior to Closing; (g)
the trademark infringement claims made by Xxxxxxx Fasteners regarding
alleged use of "dot", "sigma", and "durable dots" relating to acts
prior to Closing; (h) any claim or allegation by a governmental or
regulatory entity, arising prior to Closing; (i) the claim of the U.S.
Department of Interior regarding violations of the Endangered Species
Act relating to acts prior to Closing and the claim of the Federal
Trade Commission ("FTC"), the Indian Arts and Crafts Board, and the
U.S. Department of the Interior regarding Indian Arts and Crafts
relating to acts prior to Closing; and (j) liability for claims
asserted against Tandycrafts, Inc. by Xxxx Xxxxxx and Xxxxxxx Xxxxxx
relating to a slip and fall at the former Tandy Leather store in Akron,
Ohio which occurred prior to Closing (collectively 1.4 (a) - (j) shall
be referred to herein as the "Excluded Liabilities").
1.5 Transfers of Acquired Assets by TAC Holdings, Inc. On or prior to the
Closing Date, TAC Holdings, Inc. will terminate the Assignment,
Operating and License Agreements by and between TAC Holdings, Inc. and
Sellers, and will transfer to the Sellers, free and clear of all liens,
and other encumbrances, any and all intellectual property of Sellers
which TAC Holdings, Inc. holds as a result of said Assignment,
Operating and License Agreements with or otherwise relating to Sellers.
A copy of the Assignment of Certain Trademarks and Intellectual
Property is attached hereto as Exhibit "H".
1.6 Assets to Be Supplied by Purchaser. Purchaser understands and agrees
that it will need to supply certain assets or services to run the
business presently conducted by Sellers. Such assets or services
include but are not limited to the services provided by Sellers' parent
company, the Excluded Assets, accounting software, T1 connection,
"Internet 1" server, Domino software (or other software to run web
hosting and interoffice Lotus Notes), Cisco 3810, and Cisco PIC
firewall.
1.7 Leathercraft Assets Owned by Tandycrafts. If Tandycrafts, Inc. owns any
assets set forth in Sections 1.1(d), 1.1(k), and 1.1(l) that relate
solely to the leathercraft business conducted by Sellers, and excepting
the Excluded Assets, Tandycrafts, Inc. hereby agrees to sell and
transfer its right, title and interest to such assets to Purchaser.
ARTICLE II
PURCHASE PRICE AND MANNER OF PAYMENT
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2.1 Purchase Price. The total "Purchase Price" for the Acquired Assets
shall be Two Million Eight Hundred Fifty Thousand Dollars
($2,850,000.00) payable, subject to adjustment as hereinafter stated,
in cash or immediately available funds at closing.
2.2 Adjustments to Purchase Price.
X. Xxxxxxx Money Deposit. Seller shall receive a credit to the
Purchase Price in the sum of One Hundred Thousand Dollars
($100,000.00), in addition to all accrued interest thereon,
which was deposited with the Seller by The Leather Factory,
Inc. as an xxxxxxx money deposit.
B. Adjustment to Purchase Price. The Purchase Price shall be
further adjusted, dollar for dollar, based on any change in
Net Assets Purchased (which shall be defined as current assets
purchased (Accounts Receivable less Allowance for Doubtful
Accounts, Inventory, and Prepaid Expenses) less current
liabilities purchased (Accounts Payable - Trade)), from
September 30, 2000 until closing, exceeding a ten percent
(10%) increase or decrease. The parties agree the Net Assets
Purchased as of September 30, 2000 shall be defined as
$2,461,256.51 based on the following account balances as
reflected on the balance sheets of TLC Direct, Inc. and TLC
Dealer, Inc., prepared in accordance with generally accepted
accounting principles, as of September 30, 2000.
TLC Direct, Inc. TLC Dealer, Inc. Combined
---------------- ---------------- --------
Accounts Receivable
Less Allowance 84,084.74 226,242.30 310,327.04
Inventory 2,280,072.06 -0- 2,280,072.06
Prepaid Expenses 83,807.40 195.78 84,003.18
Accounts Payable - Trade (213,145.77) -0- (213,145.77)
Net Assets Purchased 2,234,818.51 226,438.08 2,461,256.51
2.3 Allocation of Purchase Price. The parties agree to allocate the
Purchase Price among the acquired assets for all purposes including
financial, accounting and tax purposes in accordance with the
allocation schedule attached hereto as Exhibit "I".
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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3.1 General Statement. The parties make the representations and warranties
to each other that are set forth in this Article Three. The parties
shall cooperate with each other in the conduct by Purchaser of its due
diligence review and in preparing and accomplishing any and all
regulatory filings which are or have been required to be made by the
Sellers or Purchasers, including, but not limited to, any filings or
reports that must be made to the Securities and Exchange Commission.
Notwithstanding the foregoing, all such representations and warranties
that are set forth elsewhere in this Agreement and in any exhibit, or
schedule hereto or document delivered by or on behalf of a party
hereto, or the representative of the other party pursuant to this
Agreement shall survive the closing for a period of three years. No
specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty.
Representations and warranties of the parties are initially made as of
the date hereof and are to be true and correct as of the Closing Date.
For purposes of Article III of this Agreement, the term "knowledge"
shall mean what the officers or Directors of Sellers should know or
should have known with the exercise of due diligence.
3.2 Representations and Warranties of Sellers. To induce Purchaser to enter
into this Agreement and to perform Purchaser's obligations hereunder
and with full knowledge that Purchaser will rely thereon, Sellers,
jointly and severally, represent and warrant the truth and accuracy of
the following, subject only to the exceptions expressly and
specifically set forth in this Agreement and in the schedules provided
for by this Article III (collectively, the "Schedules").
A. Ownership of Acquired Assets. Sellers represent that Sellers
have good and marketable title and rightful possession of the
Acquired Assets and that the Acquired Assets shall be, upon
the delivery to Purchaser, free and clear of all liens,
charges, encumbrances, and security interests of whatsoever
nature or type.
B. Authorization of Transaction. Sellers have full power and
authority, including full corporate power and authority to
execute and deliver this Agreement and to perform the
obligations hereunder. Without limiting the generality of the
foregoing the Board of Directors of each of the Sellers have
duly authorized the execution, delivery and performance of
this Agreement by the Sellers. The Sellers have good and
marketable title to all of the Acquired Assets free and clear
of any security interest or restriction on transfer.
C. Enforceability. This Agreement and each of the agreements
referenced herein to which Sellers are a party have been duly
executed and delivered by the duly qualified officers of the
Sellers and constitute legal, valid and binding obligations of
the Sellers and are enforceable against each Seller in
accordance with their respective terms.
D. Conflicts, Consents. Except as disclosed in Schedule 3.2(D),
neither the execution and delivery of this Agreement, or any
of the other agreements referenced herein to which Sellers are
a party, nor the consummation of the transaction contemplated
hereby or thereby, will conflict with, violate, or result in a
material breach or default under (with or without the giving
of notice or the passage of time or both) (i) the Articles of
Incorporation or Bylaws and any amendment thereof of the
Sellers, (ii) any license, instrument, contract, or agreement
to which any Seller is a party by which any Seller is bound,
(iii) any law, order, rule, regulation, writ, injunction, or
decree that is applicable to any Seller. Except as disclosed
in 3.2(D), neither the execution nor the delivery by Sellers
of this Agreement, nor the consummation by Sellers of the
transactions contemplated hereby or thereby will result in the
creation of any lien, claim, right, charge, encumbrance, or
security interest of any nature or type whatsoever, with
respect to any of the Acquired Assets of the Sellers. Except
as disclosed in Schedule 3.2(D), neither the execution and
delivery of this Agreement by Sellers, nor the consummation by
the Sellers of the transaction contemplated hereby, will
require any consent, permit, license, approval of, or any
filing with, any governmental or private entity, body or other
person, firm or other entity. Except as disclosed in Schedule
3.2(D), the consummation of this Agreement will not result in
a breach of, constitute default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel or require any notice under, any
contract, lease, sub-lease, license, sub-license, franchise,
permit, indenture, agreement, mortgage, instrument of
indebtedness, security interest, or other arrangement to which
any of the Sellers is a party, or by which Sellers are bound
or by which any of their assets are subject, or result in the
imposition of any security interest upon any of the Acquired
Assets. The Sellers do not need to give any notice, make any
filing with, or obtain any authorization, consent or approval
of any government or governmental agencies in order for the
parties to consummate the transactions contemplated by this
Agreement, except as set forth in the Schedules.
E. Subsidiaries and Affiliates. Except for TAC Holdings, Inc.,
Sellers have no subsidiaries or any other equity investment in
any entity. Except for TAC Holdings, Inc., Sellers have no
investment in any affiliate. For the purposes of this
Agreement, the term "affiliate" shall mean all entities in
which Seller owns or controls ten percent (10%) or more of the
equity securities of the entity. The Sellers have delivered to
the Purchaser correct and complete copies of the charter and
bylaws of each Seller and subsidiaries, if any.
F. Organization. All Sellers are corporations duly organized,
validly existing and in good standing under the laws of the
State of Texas. Tandycrafts, Inc. is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. The Minutes or the Unanimous
Consents In Lieu of the Meetings of the Shareholders and the
Board of Directors of the Sellers have been delivered to
Purchaser and are true, complete, and correct copies of such
Minutes and Unanimous Consents and accurately reflect the
events that took place at or in lieu of such meetings.
G. Assets.
(i) All of the assets disposed of by Sellers on or after
September 30, 2000 were disposed of only in the
ordinary course of business and not in violation of
this Agreement.
(ii) The inventories of the Sellers reflected in the
September 30, 2000 balance sheet are stated at actual
costs. Since September 30, 2000, there have been no
material write downs on the value of the Sellers'
inventory or material write offs with respect to such
inventories.
(iii) The accounts receivable reflected in the September
30, 2000 balance sheet and those existing since that
date, or existing on the books of the Company at the
closing, are actual accounts receivable, net of
reserves for collectability thereof, and none of such
accounts receivable are subject to the return of the
merchandise or other property other than in the
ordinary course of business.
(iv) The furniture, fixtures and equipment of the Sellers
reflected on the September 30, 2000 balance sheet and
such items of furniture, fixtures, equipment acquired
since September 30, 2000 to the closing, are in
working condition and repair sufficient to allow the
Purchaser to conduct their usual business in a manner
consistent with past practices.
H. Ability to Conduct Business. Except for the Excluded Assets
and the assets and services referred to in Section 1.6, in
Sellers' commercially reasonable opinion, the Acquired Assets
or the assets leased or otherwise used by Sellers constitute
all assets and properties of the Sellers that are necessary to
permit Purchaser to constitute or conduct the business of
Sellers after the closing in the same manner and volume in
which such business is presently being conducted.
I. Real Property Leases. Sellers own no real property and have no
obligation under any real property lease.
J. Contracts. Schedule 3.2(J) sets forth a true, correct and
complete list of every material written agreement of the
following types (such list shall include the date of any and
all such agreements, the names of the parties to any and all
such agreements) and a memorandum listing the terms of any
material oral agreement:
(i) union, collective bargaining, or similar agreement,
together with all amendments thereto or
interpretations thereof, such as arbitration
decisions and the like, to which Seller is a party or
is bound;
(ii) employment agreements that are not terminable at will
and without penalty on thirty (30) days or less prior
written notice or that provide for payments upon or
after termination;
(iii) agencies, sales agencies, brokerage, wholesaling,
franchise, distribution or similar agreement or
contracts;
(iv) loan agreement or letter of credit;
(v) lease for personal and/or real property;
(vi) security or pledge agreement;
(vii) mortgage or deed of trust;
(viii) purchase commitment to or contract or agreement with
any supplier;
(ix) contract or agreement relating to research and
development;
(x) license, authority or permit granted by the Sellers
to any person or entity;
(xi) contract or agreement to which the Seller is a party
or by which any of its assets are bound which
reasonably are expected to involve future obligations
or benefits;
(xii) contracts or agreements to which the Sellers are a
party or by which the Sellers or any of their assets
are bound which individually or collectively are
material to the condition (financial or otherwise) of
the Acquired Assets, business, or prospects of the
Sellers; and,
(xiv) dealer contracts.
To Sellers' knowledge, there is not existing any default or
event or condition which, with the giving of notice of the
passage of time or both, would constitute an event of default
by the Sellers under any of the contracts or documents. No
party to any of the contracts or documents has given any
written notice of default or termination, nor do Sellers have
any reason to believe that such notice shall be given.
None of the agreements listed on Schedule 3.2(J) have been
changed, modified or amended, except as otherwise provided to
Purchaser.
K. Insurance. Sellers have been continuously, and are presently,
insured under the fire, liability, and property policies by
insurers unaffiliated with Sellers. At no time subsequent to
January 1, 2000 has any insurance carrier cancelled or reduced
any insurance coverage for the Sellers, nor have the Sellers
been given any notice or other indication of any insurance
carrier's intention to cancel or reduce any such coverage.
L. Intellectual Property. Sellers own or, to Sellers' knowledge,
have the right to use pursuant to license, sub-license,
agreement or permission, all intellectual property used in the
operation of the business of Sellers, as presently conducted.
Except for the Excluded Assets, each item of intellectual
property owned or used by Sellers immediately prior to the
closing hereunder will be owned or available for use by the
Purchaser on identical terms and conditions immediately
subsequent to the closing hereunder, subject to any
assignment, transfer or recordation requirements. None of the
Sellers have interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any intellectual property
rights of third parties, and none of the Sellers or their
directors or officers have ever received any charge,
complaint, claim, notice, or suit alleging any such
interference, infringement, misappropriation or violation,
except as set forth in Schedule 3.2(L) hereto. Exhibits "A"
and "B" identify each current trademark, patent and copyright
registration which have been issued to any of the Sellers with
respect to any of its or their intellectual property, and also
identifies each pending patent application or pending
application for copyright registration. Schedule 3.2 (L) also
identifies each license agreement or other permission which
any of the Sellers have granted to any third party with
respect to any of its intellectual property. The Seller has
delivered to Purchaser correct and complete copies of all such
patents, registrations, applications, license agreements,
copyrights, permissions as amended to date, and has made
available to the Purchaser correct and complete copies of all
other written documents evidencing ownership and possession,
if applicable, of each such item.
With respect to each item of intellectual property that the Sellers
own, to Sellers' knowledge:
(a) with regard to registered intellectual property, the
identified owner possesses all right, title and
interest in and to the item, subject to the
limitations, rights and terms of the registration and
any claims that may pre-exist the date of the
registration;
(b) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction or charge;
(c) no charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand is pending
or, to the knowledge of any of the Sellers is
threatened which challenge the legality, validity,
enforceability, use or ownership of the item; and,
(d) in the past four years, the Sellers have not agreed
to indemnify any person or entity against any
interference, infringement, misappropriation or other
conflict with respect to the item, except as set
forth in Sellers' standard terms, dealer agreements;
(e) Section 3.2(L) of the Disclosure Statement also
identifies each item of intellectual property that
any of the Sellers uses pursuant to license,
sub-license, agreement, or permission. The Sellers
have supplied the Purchaser with correct and complete
copies of all such licenses, sub-licenses, agreements
and permissions.
With respect to each item of intellectual property used but
not owned by Sellers, to Sellers' knowledge:
(a) the license, sub-license, agreement or permission
covering the item is enforceable in accordance with
its terms and in full force and effect;
(b) the license, sub-license, agreement or permission
will continue to be enforceable in accordance with
its terms and in full force and effect on identical
terms following the closing, subject to the
limitations, requirements, and terms of such license,
sub-license, agreement or permission;
(c) no party to the license, sub-license, agreement or
permission is in material breach or default, and no
event has occurred which with notice or lapse of time
would constitute a material breach or default
thereunder or permit termination, modification, or
acceleration thereof;
(d) no party to the license, sub-license, agreement or
permission has repudiated any provision thereof;
(e) Sellers are not obligated to make any royalty or
other payment with respect to any intellectual
property except as disclosed in Schedule 3.2(L).
M. Internet Rights. Subject to the terms of each registration,
license, purchase or other arrangement, Seller has the right
to all Internet domain names used by it including, but not
limited to, the domain names xxxxxxxxxxxx.xxx, xxxxxxxxx.xxx,
xxxxxxx-x.xxx, xxxxxxxxxxxxxxxxxx.xxx, xxxxxxxxx.xxx,
xxxxxxxxxxxxxxxxxx.xxx, and xxxxxxxxxxxxxx.xxx. In addition,
subject to the terms of each registration, license, purchase
or other arrangements, Sellers have the rights to all web
sites, registrations, administrative and technical rights,
domain names, passwords, codes and shopping cart rights
currently used in the business of Sellers ("Internet Rights").
Each of the Internet Rights owned by or used by Sellers
immediately prior to the closing hereunder will be owned or
available for use by the Purchaser on identical terms and
conditions immediately subsequent to the closing hereunder,
subject to the terms of such registration, license, purchase
or other arrangement and any assignment, transfer or
recordation requirements. None of the Sellers have ever
received any charge complaint, claim, or notice alleging any
such interference, infringement, misappropriation or violation
of the Internet Rights except as set forth in Schedule 3.2(M)
hereto.
Schedule 3.2M also identifies each Internet Right that any of
the Sellers uses pursuant to license, sub-license, agreement,
or permission. The Sellers have supplied the Purchaser with
correct and complete copies of all such licenses,
sub-licenses, agreements and permissions.
N. Taxes. All federal, state, county and local taxes, including
without limitation, income, information, excise, payroll,
sales, use, unemployment, social security, occupation,
franchise, property, and other taxes, duties, interest,
penalties and charges (collectively "Taxes") levied, assessed,
or imposed upon the Sellers and its business, assets, or
properties have been duly and fully paid by the due dates or
otherwise contested in good faith. In addition, all returns,
estimated and extension payments, and reports with respect to
taxes required by law or regulation to be filed by the Sellers
on or prior to the Closing Date shall have been duly and
timely filed. There are no agreements, waivers or other
arrangements (oral or written) providing for extensions of
time with respect to the assessment or collection of unpaid
taxes, nor are there any actions, suits, proceedings,
inquiries, investigations, or claims of any nature or kind
whatsoever now pending or, to the best knowledge and belief of
Sellers after due inquiry, threatened against the Sellers with
respect to any such returns or reports, or any such taxes or
any matters under discussion with any federal, state, county
or local authority relating to taxes, except for a waiver for
federal income taxes for fiscal years 1994-1996.
O. Labor Disputes: Unfair Labor Practices. Except as disclosed in
Schedule 3.2(O) hereto, there is neither pending nor, to the
knowledge of Sellers, threatened any labor dispute, grievance,
strike, or work stoppage involving any of the employees of the
Sellers. There is neither pending nor, to the knowledge of
Sellers threatened any charge or complaint involving the
Sellers or any of its directors or, officers, by the National
Labor Relations Board, the Occupational Health and Safety
Administration, the Department of Labor, or any similar
federal, state, or local board or agency, or any
representative thereof. There are no unfair employment or
labor practice charges presently pending or to the knowledge
of Sellers threatened by or on behalf of any employee of the
Sellers.
P. Employees and Consultants. Sellers acknowledge and agree that
Purchaser shall not assume any pre-Closing employee or
employment-related liabilities, including but not limited to
employee bonuses for fiscal year 2000. Schedule 3.2(P) hereto,
contains a true and complete list of all of the employees of
the Seller to whom Purchaser intends to offer employment upon
or after Closing. Except as disclosed in Schedule 3.2(P)
hereto, there are no oral or written agreements with respect
to employees or consultants to which the Sellers are a party
or by which Sellers are bound and the employment of each
employee of each of the Sellers is termed "at will". Except as
disclosed in Schedule 3.2(P) hereto, the Company does not owe
any past or present employee any sum other than for accrued
wages or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay, sick leave rights,
and amounts payable under employee benefit plans, and all of
such sums that accrue from the date hereof until the closing,
and all of such sums accrued as of the Closing Date shall be
paid by the Sellers. Except as disclosed in Schedule 3.2(P),
the Sellers have not materially violated any employment law or
regulation, including but not limited to Occupational Health &
Safety law; Equal Employment Opportunity Commission laws; Fair
Employment practices, and sex, race, religion and age
discrimination laws, medicare, medicaid or other health care
activities. In the event of any employment related claim
arising from acts that occurred prior to closing, the Sellers
will be responsible for the payment of any such claim pursuant
to this paragraph. Purchaser and Sellers agree to cooperate in
the investigation of any such claim should such a claim be
made after closing relating to a period prior to the closing.
Purchaser will not be liable under any retention or severance
agreements Sellers may have made with its employees in
anticipation of Closing.
Q. Financial Statements.
(i) Sellers have previously furnished to Purchaser the
true, complete and correct copies of the following
unaudited financial statements of the Sellers:
a) Balance sheets for September 30, 2000,
October 31, 2000, and June 30, 2000 for the
periods reflected therein.
b) Income statements for the September 30,
2000, October 31, 2000, and fiscal years
ended June 30, 2000 for the periods
reflected therein.
c) Aged accounts receivable reports at
September 30, 2000 October 31, 2000, and
June 30, 2000.
d) Detailed inventory listing at September 30,
2000, October 31, 2000, and June 30, 2000.
e) Detailed property and equipment listing
including depreciation schedules at
September 30, 2000, October 31, 2000, and
June 30, 2000.
(ii) Sellers will furnish to Purchaser within a reasonable
time following Closing the following as of November
30, 2000:
a) Balance Sheet;
b) Income Statement;
c) Aged Account Receivable Report;
d) Detailed Inventory Listing;
e) Detailed Property and Equipment Listing,
including depreciation.
(iii) The Financial Statements and reports have been and
will be consistently prepared on an accrual basis
from the books and records of the Sellers and in
accordance with generally accepted accounting
principals. The Financial Statements and reports
accurately present the financial position of the
Sellers as of the date thereof, and also fairly
present the results of operations of the Company for
the three month periods ended September 30, 2000 and
November 30, 2000.
(iv) Except as provided in Schedule 3.2(S), Sellers, to
Sellers' knowledge, have no material liabilities or
obligations, fixed or contingent, accrued or
unaccrued, that are not reflected, or otherwise
disclosed on the Balance Sheets except for those
liabilities and obligations incurred by the Sellers
in the ordinary course of business between September
30, 2000 and the Closing Date, none of which
liabilities, individually or collectively, materially
violates this Agreement.
R. Books and Records. The Books and Records of the Sellers with
respect to the assets, business, operations, properties, and
prospects have been maintained in the usual, regular and
ordinary manner and all entries with respect thereto have been
made and all transactions have been properly accounted for.
All applicable, corporate and other laws relating to the
maintenance of such books and records have been materially
complied with by the Sellers.
S. Liabilities. Except as fully disclosed in Schedule 3.2(S)
hereto or in Sellers' books and records, including any
financial statements, the Sellers have no material debts,
liabilities, or obligations of a nature required to be
reflected or disclosed in financial statements and the notes
thereto prepared in accordance with generally accepted
accounting principals except those that are due or to become
due, relating to or arising out of any act, transaction,
circumstances, or state of facts which occurred or existed on
or after September 30, 2000. Since September 30, 2000, Sellers
have not incurred debts, liabilities, or obligations whether
accrued, absolute, contingent or otherwise, whether due or to
become due, other than debts, liabilities, and obligations
incurred in the ordinary course of business of the Sellers.
T. Subsequent Events. Since September 30, 2000, except as relates
to Xxxxx Fargo and Bank One, Sellers have not:
(i) created or suffered to exist any material liens or
encumbrances with respect to any of its assets which
have not been discharged;
(ii) other than in the ordinary course of business, sold
or transferred any of its assets or property;
(iii) suffered any material loss or material interruption
in use of any of its assets or properties (whether or
not covered by insurance) on account of fire, flood,
riot, strike, or other hazard or act of God;
(iv) suffered any material change in its business,
business activity, business prospects or condition;
(v) written off any equipment as unusable or obsolete or
for any reason other than in the ordinary course of
business;
(vi) waived any material right except for statute of
limitations and laches;
(vii) increased the compensation payable to any employee
except in the ordinary course of business;
(viii) paid or incurred any management or consulting fees,
except as set forth in the financial statements or in
the ordinary course of business;
(ix) hired any employee who shall have an annual salary in
excess of $25,000, other than in the ordinary course
of business.
(x) without limitation by the enumeration of any of the
foregoing, entered into any material transaction
other than in the usual and ordinary course of
business, other than the entry of the transactions
contemplated hereby.
U. No Material Change. To Seller's knowledge, the Sellers have
not suffered or been threatened with any material adverse
change in their business or financial condition, business
activities, or business prospects including without limitation
of the generality of the foregoing, the existence or threat of
any labor dispute or any material adverse change in or loss of
any material relationship between the Sellers and any of its
key customers, suppliers, distributors or employees, except
for Gay Xxxxxxx.
V. Employee Benefit Plans. Sellers maintain for the benefits of
its employees, ERISA plans known as the Tandycrafts Retirement
Savings Plan, and Tandycrafts medical, dental, and cafeteria
plans (the "Employee Benefit Plans"). All Employee Benefit
Plans and any related trust agreements or annuity contracts
have been operated in accordance with ERISA, the Internal
Revenue Code of 1986 as amended (the "Code"), other federal
statutes, state law, and regulations, and rules, promulgated
thereto. Sellers will not be transferring any of the assets of
said Employee Benefit Plans as a part of this Agreement, and
Sellers acknowledge, agree, represent, and warrant that the
Purchaser will have no responsibility whatsoever to the
Sellers or others in regard to the maintenance or operation of
the Employee Benefit Plans by the Sellers either prior to or
after closing.
W. Litigation. Except as disclosed in Schedule 3.2(W) hereto,
there is no litigation, proceeding, investigation or inquiry
(in law or in equity) pending and, to the best of the Sellers
knowledge and belief, there are no proceedings or
investigations or inquiries threatened, against the Sellers
with respect to or affecting the business or financial
condition of the Sellers, or the consummation of the
transactions herein contemplated or the use of the assets of
the Sellers.
X. Absence of Product Warranties, Service Warranties, Buy Back
Provisions or Return of Merchandise Provisions. Except for
standard warranties, standard terms and conditions in purchase
and sales orders, and its product and satisfaction guaranties,
neither the Sellers, nor any officer, employee or agent of the
Sellers, has made any written or oral warranties with respect
to the quality or absence of defects of the products or
services of the Sellers that the Sellers have sold or
performed, and that are in force as of the date hereof. To
Sellers' knowledge, there are no material claims pending or
threatened against Sellers with respect to the quality of or
absence of defects in such products or services.
Y. Environmental, Health and Safety. Sellers have complied with
all laws, including rules and regulations thereunder, of
federal, state, local and foreign governments (and all
agencies thereof) concerning the environmental, public health
and safety and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against
any of them alleging any failure to comply with any such law
or regulation.
Z. Regulatory Filings. Sellers and Tandycrafts have complied with
all regulatory reporting and filing requirements, including,
but not limited to the Securities and Exchange Commission's
requirements for filing Forms 8K, 10K, and 10Q except with
respect to the most recently required 10K and 10Q.
3.3 Representations and Warranties of Purchaser. To induce Sellers to enter
into this Agreement and to perform their obligations hereunder have a
full knowledge that Sellers will rely thereupon, Purchaser represents
and warrants the truth, accuracy and completeness of the following:
(a) Organization. Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of the
State of Texas;
(b) Power and Authority. Purchaser has full power and authority,
including full corporate power and authority, to execute and
deliver this Agreement and the other agreements referenced
herein to which Purchaser is a party (the "Other Purchaser
Agreements"), and to consummate and fully perform the
transactions contemplated hereby and thereby. The execution
and delivery by Purchaser of this Agreement and the Other
Purchaser Agreements referenced herein to which Purchaser is a
party, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized and approved by
Purchaser's board of directors, and no other corporate
proceedings on the part of Purchaser are required to authorize
the execution and delivery of this Agreement, the Other
Purchaser Agreements, or the consummation of the transactions
contemplated hereby. This Agreement and any related agreement
constitutes the valid and legally binding obligations of
Purchaser and is enforceable in accordance with its terms.
(c) Enforceability. This Agreement and the Other Purchaser
Agreements have been duly executed and delivered by Purchaser
and constitute legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with
their respective terms.
(d) Conflicts; Consents. Neither the execution and delivery of
this Agreement and the Other Purchaser Agreements, nor the
consummation of the transactions contemplated hereby, will
materially conflict with, violate or result in a breach or
default under (with or without the giving of notice or the
passage time, or both): (i) the Certificate of Incorporation
or the Bylaws of Purchaser; (ii) any license, instrument,
contract or agreement to which Purchaser is a party or by
which Purchaser is bound; or (iii) any law, order, rule,
regulation, writ, injunction or decree that is applicable to
Purchaser. Neither the execution and delivery of this
Agreement or the Other Purchaser Agreements by Purchaser, nor
the consummation by Purchaser of the transactions contemplated
hereby or thereby, will require any consent or approval of, or
any filing with, any governmental or private person, body,
firm, entity or other person Neither the execution nor the
delivery by Purchaser of this Agreement, nor the consummation
by Purchaser of the transactions contemplated hereby or
thereby will result in the creation of any lien, claim, right,
charge, encumbrance, or security interest of any nature or
type whatsoever, with respect to the Purchase Price or any
other consideration paid by Purchaser to the Sellers. The
consummation of this Agreement will not result in a breach of,
constitute default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel or require any notice under, any contract,
lease, sub-lease, license, sub-license, franchise, permit,
indenture, agreement, mortgage, instrument of indebtedness,
security interest, or other arrangement to which the Purchaser
is a party, or by which Purchaser is bound or by which any of
its assets are subject, or result in the imposition of any
security interest upon any of the Acquired Assets. The
Purchaser does not need to give any notice, make any filing
with, or obtain any authorization, consent or approval of any
government or governmental agencies in order for the parties
to consummate the transactions contemplated by this Agreement.
(e) Accuracy, Representations and Warranties. The copies of all
documents furnished to Sellers and their representatives by or
on behalf of Purchaser and its representatives are true,
complete and correct. No representation or warranty of
Purchaser contained in this Agreement or the Other Purchaser
Agreements, and no statement contained in the exhibits, the
schedules or the other documents delivered by or on behalf of
Purchaser or its representatives pursuant to or in connection
with this Agreement or the Other Purchaser Agreements or any
of the transactions contemplated hereby or thereby contains
any untrue statement of a material fact, or omits to state any
material fact required to be stated herein or therein in order
to make the statements contained herein or therein not
misleading.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
4.1 Conditions Precedent to Purchaser's Obligations to Close and Required
Deliveries at Closing. The obligations of Purchaser to consummate the
transactions contemplated hereby are subject to the fulfillment by
Sellers, or written waiver by Purchaser, of each of the following
conditions precedent on or prior to the Closing Date.
A. Representations and Warranties. Each and every representation
and warranty made by Seller shall be true and correct in all
material respects when made and shall be true and correct in
all material respects as if originally made on and as of the
Closing Date.
X. Xxxxxxx' Obligations Performed. All obligations of Sellers to
be performed hereunder through and including the Closing Date
shall have been performed in all material respects.
C. No Suit, Proceeding or Investigation. No suit, proceeding,
inquiry or investigation shall have been commenced or
threatened by any governmental authority or private person on
any grounds to restrain, enjoin, hinder, or to seek damages on
account of the consummation of the transactions herein
contemplated.
D. No Material Change. There has been no material change in the
financial condition, management or other affairs of the
Sellers that would cause the Purchaser to elect not to proceed
with the Closing as per the letter agreement between the
parties dated October 16, 2000.
E. Closing Certificate of Sellers. Sellers shall have delivered
to Purchaser a closing certificate dated the Closing Date, in
form and content reasonably acceptable to Purchaser ("Seller's
Closing Certificate"), pursuant to which Sellers, jointly and
severally, represent and warrant to Purchaser that, except as
otherwise expressly provided for in this Agreement:
(i) between September 30, 2000 and the closing date:
(a) there have been no material adverse changes
in the assets, business operations or
conditions of the Sellers;
(b) the Sellers shall not have incurred any
liabilities or obligations not reflected on
the Balance Sheet except in the ordinary
course of business, and not in violation of
this Agreement;
(c) there shall have been no material property
damage, destruction or otherwise (whether or
not covered by insurance) which materially
adversely affects the business or assets of
the Sellers, other than in the ordinary
course of business;
(d) no material suit, action or proceeding shall
have been instituted or, to the best of such
Sellers' knowledge and belief after due
inquiry, threatened against the Sellers that
threatens to enjoin the execution of this
Agreement
(ii) and that:
(a) such Sellers' representations and warranties
to Purchaser are true and correct as of the
Closing Date as if then originally made;
(b) all covenants and obligations required by
the terms hereof to be performed by such
Sellers on or before the Closing Date have
been fully performed, or waived by
Purchaser;
(c) all documents to be executed and delivered
by such Sellers at or prior to the Closing
have been executed by such Sellers.
F. Release of UCC-1 Financing Statements. Sellers will provide
Purchaser a properly executed release of all financing
statements filed by any lender or secured party of Sellers to
be effective upon payment by Purchaser and receipt by Sellers
of the Purchase Price.
G. Receipt of Documents. Purchaser shall have received from
Sellers executed Bills of Sale transferring all Acquired
Assets to the Purchaser.
H. Receipt of Opinion of Counsel for the Sellers. Purchaser shall
have received a favorable opinion of Sellers' general counsel.
Said opinion letter shall be in the form and substance
satisfactory to Purchaser's general counsel and Sellers'
counsel, dated the Closing Date, and confirming the following:
(i) The Sellers are corporations duly organized, validly
existing and in good standing under their respective
states of incorporation and have the corporate power
to own its or their assets and properties and to
carry on its or their business as it is now being
conducted.
(ii) TLC DIRECT, INC. and TANDY LEATHER DEALER, INC. are
each incorporated and in good standing under the laws
of the State of Texas.
(iii) TAC HOLDINGS, INC. and TANDYCRAFTS, INC. are each
incorporated and in good standing under the laws of
the State of Delaware.
(iv) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby
and the fulfillment of the terms hereof, will not
violate any provision of the Seller's Articles of
Incorporation or Bylaws, nor will they result in the
breach of any term or provision of, or constitute a
default under, or conflict with, or cause the
acceleration of any obligation under, any loan
agreement, note, debenture, indenture, mortgage, deed
of trust, lease, contract, agreement or other
obligation of any description to which the Sellers is
a party or by which any of them is bound, or any
judgment, decree, order or award of any court,
governmental body, or arbitrator, or any applicable
law, rule or regulation, except as otherwise set
forth in the Agreement, the exhibits thereto, the
Schedules or any related agreements.
(v) Sellers have full power and authority to execute,
deliver and perform this Agreement, and this
Agreement is the legal and binding obligation of
Sellers and is enforceable against them in accordance
with its terms.
(vi) Except for matters disclosed in this Agreement,
counsel has no knowledge of any suits, actions,
claims, arbitrations, administrative or other
proceedings or governmental investigations pending or
threatened against or affecting the Sellers that
threatens to enjoin the execution of this Agreement.
(vii) Sellers have, and at the Closing shall have,
effectively conveyed and transferred to Purchaser,
good and marketable title to the Acquired Assets,
free and clear of all liens, pledges, and
encumbrances.
I. Schedules. Purchaser shall have received from Sellers a draft
of the Schedules referred to in this Agreement, not less than
five (5) days prior to the Closing Date, and Purchaser shall
be reasonably satisfied with the nature and extent of the
disclosure made therein and the representations and warranties
of Sellers as modified by the disclosures contained in the
Schedules and any Supplemental Schedules.
J. Repayment of Indebtedness. The Sellers shall have obtained
UCC-1 releases from Xxxxx Fargo and Bank One or any other
lender that will be effective upon payment of the purchase
price by Purchaser to Sellers.
4.2 Conditions to Obligations to Sellers to Close. The obligations of the
Sellers to consummate the transactions to be performed by it in
connection with the Closing are subject to the satisfaction of the
following conditions:
A. The representations and warranties of the Purchaser set forth
in Article III shall be true and correct in all material
respects at and as of the Closing Date.
B. The Purchaser shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing.
C. No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction herein an
unfavorable judgment, order, decree, stipulation, injunction,
or charge would (i) prevent consummation of any the
transactions contemplated by this Agreement or (ii) cause any
of the transactions contemplated by this Agreement to be
rescinded following consummation.
D. All actions to be taken by the Purchaser in connection with
consummation of the transaction contemplated hereby and all
certificates, opinion, instruments, and other documents
required to effect the transaction contemplated hereby will be
reasonably satisfactory in form and substance to the Sellers.
E. Receipt of Opinion of Counsel for the Purchaser. Sellers shall
have received a favorable opinion of Purchaser's general
counsel. Said opinion letter shall be in the form and
substance satisfactory to Purchaser's general counsel and
Sellers' counsel, dated the Closing Date, and confirming to
the following:
(i) The Purchaser is a corporation duly organized,
validly existing and in good standing under its state
of incorporation and has the corporate power to own
its assets and properties and to carry on its
business as it is now being conducted.
(ii) LEATHER TAN ACQUISITION, INC. is incorporated under
the laws of the State of Texas.
(iii) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby
and the fulfillment of the terms hereof, will not
violate any provision of the Purchaser's Articles of
Incorporation or Bylaws, nor will they result in the
breach of any term or provision of, or constitute a
default under, or conflict with, or cause the
acceleration of any obligation under, any loan
agreement, note, debenture, indenture, mortgage, deed
of trust, lease, contract, agreement or other
obligation of any description to which the Purchaser
is a party or by which any of them is bound, or any
judgment, decree, order or award of any court,
governmental body, or arbitrator, or any applicable
law, rule or regulation, except as otherwise set
forth in the Agreement, the exhibits thereto, the
Schedule or any related agreements.
(iv) Purchaser has full power and authority to execute,
deliver and perform this Agreement, and this
Agreement is the legal and binding obligation of
Purchaser and is enforceable against them in
accordance with its terms.
(v) Except for matters disclosed in this Agreement,
counsel has no knowledge of any suits, actions,
claims, arbitrations, administrative or other
proceedings or governmental investigations pending or
threatened against or affecting the Purchaser that
threatens to enjoin the execution of this Agreement.
ARTICLE V
CLOSING
-------
5.1 Time and Place of Closing. The Closing shall take place November 30,
2000 (which will be referred to as the "Closing Date"), at the offices
of Xxx, Warren, Rosenfield, Kaitcer & Xxxxx, PC, 0000 X. Xxxxxxx Xxxx.,
Xxxx Xxxxx, Xxxxx 00000.
5.2 Form of Documents. At the Closing, the parties shall deliver the
documents, and shall perform the other acts that are set forth in this
Article V. All documents which Sellers shall deliver shall be in form
and content reasonably satisfactory to Purchaser. All documents which
Purchaser shall deliver shall be in form and content reasonably
satisfactory to Sellers.
5.3 Purchaser's Deliveries. Subject to the fulfillment or written waiver of
the conditions precedent set forth in Article IV hereof, Purchaser
shall execute and/or deliver to Sellers at the Closing all of the
following:
A. Funds. Sellers will have received the Purchase Price as
adjusted in accordance with Article II herein.
B. Corporate Resolutions. A certified copy of resolutions of
Purchaser's Board of Directors authorizing the execution,
delivery and performance of this Agreement, the other
agreements referenced herein to be executed by Purchaser, and
the transactions contemplated hereby.
C. Other Documents. All other documents reasonably required to
consummate the transaction herein contemplated.
5.4 Sellers' Deliveries. Subject to the fulfillment or waiver of the
conditions set forth in Article IV hereof, Sellers shall deliver to
Purchaser at the offices of Xxx, Warren, Rosenfield, Kaitcer & Xxxxx,
PC the following:
A. Certificates of Existence. Certificates of Existence for each
of the Sellers by the Secretary of State of their respective
states of incorporation, such Certificates of Existence to be
issued at a date not earlier than three months prior to the
Closing Date.
B. Closing Certificate. Sellers' Closing Certificate executed by
Sellers.
C. Bills of Sale. All of the bills of sale, assignment,
transfers, schedules and exhibits referred to in this
Agreement.
D. Certificate of Good Standing. A Certificate of Good Standing
from the comptroller of Texas evidencing the filing of all tax
reports and the payment in full by the Sellers of all sales,
use, and franchise taxes imposed.
E. Other Documents. Without limitation by specific enumeration of
the foregoing, all other documents reasonably required to
consummate the transaction herein contemplated including,
without limitation, all documents and instruments reasonably
required by Purchaser in order to assure itself that it
receives good title to the Acquired Assets free and clear of
all liens, claims, charges, liabilities, encumbrances and
security interests of whatsoever kind and nature.
F. Opinion Letter. Opinion letter from Sellers' counsel in form
and substance acceptable to Purchaser's counsel.
G. Corporate Resolutions. A certified copy of resolutions of
Sellers' Board of Directors authorizing the execution,
delivery and performance of this Agreement, the other
agreements referenced herein to be executed by Sellers, and
the transactions contemplated hereby, and changing the name of
Sellers in accordance with this Agreement.
ARTICLE VI.
POST CLOSING OBLIGATIONS
------------------------
6.1 Obligations of Sellers and Purchaser.
A. For purposes of 6.1, "Sellers" will be defined as TLC DIRECT,
INC. and TANDY LEATHER DEALER, INC.
B. Covenant Not to Compete. In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration
of the Purchase Price, and as additional consideration
therefor, Sellers and Tandycrafts, Inc. and its subsidiaries
unconditionally agree that during the Restriction Period (as
defined below) Sellers will not directly or indirectly
(including, without limitation, as a partner, shareholder,
director, officer or employee of, or consultant to, any other
person or entity), or in any other capacity within, into or
from the Restricted Territory (as defined below) engage in the
leathercrafts business unless first authorized in writing by
Purchaser, which authorization may be withheld in the sole and
absolute discretion of Purchaser. For purposes of this
Agreement the term "Restricted Period" shall mean the period
ending five (5) years from the date of the Closing. For
purposes of this Agreement the term "Restricted Territory"
shall mean worldwide, including the United States. In the
event those restricted violate their obligations under this
Article VI, then the Restricted Period for the violators shall
be extended by the period of time equal to that period
beginning when the activities constituting such violation
commenced and ending when the activities constituting such
violation are terminated. Notwithstanding anything to the
contrary above, nothing contained herein shall restrict the
conduct of normal business by Tandycrafts, Inc. and its
subsidiaries nor shall restrict any natural avenues of
expansion by such companies excluding leathercraft related
businesses.
C. Nonsolicitation. In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration
of the payments by Purchaser of the Purchase Price, Sellers
and Tandycrafts agree that for a period of one (1) year
following the Closing, they will not, directly or indirectly,
solicit or cause others to solicit any of Sellers' employees
that have been hired by Purchaser and are listed on Schedule
3.2(P).
D. Trade Secrets and Other Information. After the Closing,
Sellers will not violate any trade secrets of Purchaser
involving trade secrets related to any Acquired Assets.
E. Disclosure. The parties agree, in the event a press release
has not been previously prepared, that upon the Closing, a
jointly prepared press release will be issued regarding this
transaction; provided, however, nothing in this Agreement
shall limit or restrict each party's and its parent's
disclosure of all material information regarding the
transactions described herein accordance with applicable
securities law and the requirements of applicable stock
exchanges.
F. Equitable Relief. Each Seller acknowledge the covenants
contained in each of paragraphs A, B, C, D, and E of this
Section are a material inducement for Purchaser to execute and
deliver to this Agreement and to consummate the transactions
contemplated hereby. Accordingly, all parties acknowledge the
restrictions contained in each of these paragraphs A, B, C, D,
and E of this Section (including, without limitation, the
Restricted Period and the Restricted Territory) are reasonable
and necessary for the protection of the business and the
Purchaser's investment in the business, and that a breach of
any such restriction could not adequately be compensated by
damages in an action at law. In the event of a breach or
threatened breach by any of the Sellers of any of the
provisions of any of paragraph A, B, C, D, and E of this
Section, Purchaser shall be entitled to obtain, without
necessity of posting bond therefor, an injunction (preliminary
or permanent, or a temporary restraining order) restraining
the breaching party from the activity or threatened activity
constituting, or that would constitute, a breach of this
Agreement, as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such a
violation, which right shall be cumulative and in addition to
any other rights or remedies to which Purchaser may be
entitled.
G. Severability. Each and every provision set forth in each of
paragraphs A, B, C, D, and E of this Article VI is independent
and severable from the others, and no provision shall be
rendered unenforceable by virtue of the fact that, for any
reason, any other or others of them may be unenforceable in
whole or in part. The parties hereto agree that if any
provision of any of these paragraphs A, B, C, D, and E of this
Article VI shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever,
the court may appropriately limit or modify such provision,
and such provision shall be given effect to the maximum extent
permitted by applicable law.
H Consents. The parties hereto shall use their commercially
reasonable efforts and make every good faith attempt to obtain
any and all consents reasonably required by Purchaser to, or
in connection with the assignment of, or alternate
arrangements satisfactory to Purchaser with respect to, any
contract, lease, license, permit, agreement or other
instrument, that is to used as an asset of the Purchaser, or
that may be necessary, appropriate or required in order to
permit the conduct of the business and operations after the
Closing to be in all respects the same as the conduct of the
business and operations of the business of Tandy Leather's
leathercraft business as conducted by Tandy Leather Company
and its successors immediately prior to the Closing.
I. Assumption of Liability. Purchaser shall fully and timely
discharge all of the Assumed Liabilities. Purchaser shall
fully assume and perform the Assumed Contracts, including the
Agreement, dated on or about February 3, 1998, between Xx
Xxxxxxxx, Xxx Xxxxxxxx, Xxxxx Leather Company and/or
Tandycrafts, Inc. Purchaser shall be responsible for and shall
assume and fully perform all obligations and liabilities on or
after Closing with respect to any employee of Sellers that is
hired by Purchaser, as listed in Schedule 3.2(P). As to any
such employee on Schedule 3.2(P), Purchaser will grant such
employee seniority based on their time of hire with Sellers or
Tandy Leather Company for purposes of vacation and insurance
benefits under The Leather Factory's policies and such
employees will be eligible to participate in The Leather
Factory, Inc. Employee Stock Ownership Plan and Trust. To the
extent that there are any discrimination or harassment claims
or EEOC or Department of Labor claims, the parties agree to
cooperate in good faith in the investigation of such claims
and Purchaser will be responsible for any such claims relating
to acts or omissions arising on or after Closing.
6.2 Obligations of Purchaser and Sellers; further Assurances. The parties
shall execute such further documents, and perform such further acts as
may be necessary to transfer and convey the Acquired Assets to
Purchaser, on the terms herein contained, and to otherwise comply with
the terms of this Agreement and consummate the transactions herein
provided.
6.3 Change of Name. Sellers agree that within thirty (30) days after the
Date of Closing, they will change the name of the Sellers to a name
that does not include the words or phrases "Tandy", "Leather", or
"Tandy Leather". The notice of change of said name shall be filed with
the Secretary of State of the State of Texas, and in all states in
which Sellers are registered to do business, and a copy of said change
of name served upon the attorney for the Purchaser. The parties agree
that, except as set forth in the Assignment of Certain Trademarks and
Intellectual Property of even date herewith, Tandycrafts retains all
rights to its trademarks, trade names and other intellectual property
rights, including "Tandycrafts", "Tandyarts" or other similar or
derivative names, and that such entities do not have to change their
names, nor does such use infringe upon the trademarks and other rights
being transferred to Purchaser in this Agreement.
6.4 Use of Premises. Sellers agree to allow Purchaser to have the use of
the office and warehouse area now being used by Sellers at 0000 Xxxxxxx
Xxxxxxx, Xxxx Xxxxx, Xxxxx for a period of up to thirty (30) days after
the Closing pursuant to the terms of the Lease, attached hereto as
Exhibit "J", which is incorporated herein be reference for all
purposes. Sellers and Purchaser shall cooperate in both the use of the
premises and in the relocation of the Sellers' employees who are hired
by Purchaser pursuant to the terms of this Agreement and of the
Acquired Assets.
6.5 Continued Access. For any computers, servers, phone lines, equipment or
software that is used by Sellers but that are not Acquired Assets,
Sellers shall provide Purchaser with continued access to such items for
a period of ninety (90) days following the Closing Date.
6.6 IP Address Transfer. Sellers shall cooperate with Purchaser to transfer
the Internet Domain Names from Sellers' IP addresses to Purchaser's IP
addresses.
6.7 Records. Notwithstanding anything to the contrary above, Seller and/or
Seller's parent company may keep and retain copies of such records as
may be necessary, required or desirable by law, to assist Seller in
making and filing SEC and other public filings or reports and tax
reports or filings and to fulfill other legal or contractual
obligations and duties of Seller or Division, to pursue claims against
third parties or Buyer or to dispute claims from third parties or
Buyer, to discuss, respond and communicate effectively with Seller's
accountants, lawyers, bankers, auditors, and other advisors and as
otherwise deemed appropriate by Seller or its parent company, in good
faith, in order to fulfill any legal obligations and duties of the
Seller and/or its parent company. In addition, Seller and/or Seller's
parent company may keep and retain the originals of all records
pertaining to the Excluded Assets. Seller, however, will make the
original records available to Purchaser to permit the audit of Sellers'
financial statements to allow Purchaser to comply with its SEC filing
requirements in a timely manner.
6.8 Period to Adjust Purchase Price. In the event it becomes necessary to
adjust the Purchase Price pursuant to Article 2.2(B), the parties agree
that the calculation and any corresponding payment will be made within
ninety (90) days of Closing.
ARTICLE VII
INDEMNIFICATION
---------------
7.1 Indemnification by Sellers.
A. Each Seller (hereinafter defined as "Indemnitors"), covenant
and agree to defend, indemnify and hold Purchaser harmless
for, from and against any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and
expenses (including without limitation, reasonable counsel
fees and costs and expenses incurred in the investigation,
defense or settlement of any claim covered by this indemnity)
with respect to or arising out of any claim, proceeding,
action and/or cause of action which Purchaser may suffer or
incur by reason of:
(i) the inaccuracy of any of the representations or
warranties of Sellers contained in this Agreement, or
any of the agreements, exhibits or schedules
delivered in connection with this Agreement;
(ii) the failure to comply with, or the breach or default
by a Sellers of any of the covenants, warranties, or
agreements made by Sellers contained in this
Agreement, or any of the agreements, exhibits, or
schedules delivered in connection with this
Agreement;
(iii) any liability or obligations of Seller not reflected
on the Closing Balance Sheet, in the financial
statements, in the exhibits or schedules hereto or
otherwise disclosed to Purchaser.
(iv) any liabilities related to charges, complaints,
actions, suits, proceedings, hearings,
investigations, claims, demands or litigation brought
by Steel Partners or any other minority shareholder
of Sellers or by any other person or entity before or
after Closing.
7.2 Indemnification by Purchaser.
A. Purchaser (hereinafter defined as "Indemnitors"), covenant and
agree to defend, indemnify and hold Sellers harmless for, from
and against any and all damages, losses, liabilities (absolute
and contingent), fines, penalties, costs and expenses
(including without limitation, reasonable counsel fees and
costs and expenses incurred in the investigation, defense or
settlement of any claim covered by this indemnity) with
respect to or arising out of any claim, proceeding, action
and/or cause of action which Sellers may suffer or incur by
reason of:
(i) the inaccuracy of any of the representations or
warranties of Purchaser contained in this Agreement,
or any of the agreements, certificates, documents,
exhibits or schedules delivered in connection with
this Agreement;
(ii) the failure to comply with, or the breach or default
by Purchaser of any of the covenants, warranties, or
agreements made by Purchaser contained in this
Agreement, or any of the agreements, certificates,
documents, exhibits, or schedules delivered in
connection with this Agreement;
(iii) any liability or obligations of Purchaser not
reflected on the Closing Balance Sheet.
(iv) any liabilities related to charges, complaints,
actions, suits, proceedings, hearings,
investigations, claims, demands or litigation brought
by any minority shareholder of Purchaser or by any
other person or entity before or after Closing.
7.3 Notice and Right to Defend Third-Party Claims. Promptly upon receipt of
notice of any claim, demand or assessment or the commencement of any
suit, action or proceeding with respect to which indemnity may be
sought pursuant to this Agreement, the party seeking to be indemnified
or held harmless (the "Indemnitee") shall notify in writing, if
possible, within sufficient time to respond to such claim or answer or
otherwise plead in such action (but in any event within thirty (30)
days, the party from whom indemnification is sought (the "Indemnitor").
In case any claim, demand or assessment shall be asserted, or suit,
action or proceeding commenced against the Indemnitee, the Indemnitor
shall be entitled, at the Indemnitor's expense, to participate therein,
and, to the extent that it may wish, to assume the defense, conduct or
settlement thereof, at its own expense, with counsel of Indemnitor's
choice shall not be unreasonably withheld or delayed, provided that the
Indemnitor confirms to the Indemnitee that it is a claim to which its
rights of indemnification apply. The Indemnitor shall have the right to
settle or compromise monetary claims; however, as to any other claim,
the Indemnitor shall first obtain the prior written consent from the
Indemnitee, which consent shall be exercised in the sole discretion of
the Indemnitee. After notice from the Indemnitor to the Indemnitee of
Indemnitor's intent so to assume the defense, conduct, settlement or
compromise of such action, the Indemnitor shall not be liable to the
Indemnitee for any legal or other expenses (including, without
limitation, settlement costs) subsequently incurred by the Indemnitee
in connection with the defense, conduct or settlement of such action
while the Indemnitor is diligently defending, conducting, settling or
compromising such action. The Indemnitor shall keep the Indemnitee
apprised of the status of the suit, action or proceeding and shall make
Indemnitor's counsel available to the Indemnitee, at the Indemnitor's
expense, upon the request of the Indemnitee. The Indemnitee shall
cooperate with the Indemnitor in connection with any such claim and
shall make personnel, books and records and other information relevant
to the claim available to the Indemnitor to the extent that such
personnel, books and records and other information are in the
possession and/or control of the Indemnitee. If the Indemnitor declines
to participate, the Indemnitee shall be entitled, at the Indemnitor's
expense, to defend, conduct, settle or compromise such matter with
counsel satisfactory to the Indemnitor, whose consent to the selection
of counsel shall not be unreasonably withheld or delayed.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Schedules. The Schedules referred to in this Agreement reflect
information supplied to Purchaser in the course of its investigation of
the Sellers. Except with respect to Financial Statements, Sellers may
supplement to or amend any Schedule from time to time prior to or at
the Closing, by notice in accordance with the terms of this Agreement,
including by delivering one or more supplements or amendments to
correct any matter which would constitute a breach of any
representation or warranty contained herein.
8.2 Assignability. Purchaser may assign all or part of its rights under
this Agreement to any entity that it controls, is controlled by or is
under common control with, and which entity shall assume all of
Purchaser's obligations hereunder with respect to the rights so
assigned and such assignment shall not release Purchaser of any
obligation created herein.
8.3 Brokers and Finders. Purchaser and Sellers each represent and warrant
to each other that the respective party has not dealt with and is not
aware of any dealings with any person, firm or corporation who is or
may be entitled to a broker's commission, finder's fee, investment
banker's fee or similar payment from the other party for arranging
these transactions or introducing the parties to each other.
8.4 Costs and Expenses. Purchaser and Sellers shall each be responsible for
their own fees and expenses incurred in connection with the
negotiation, execution and consummation of this transaction, including
without limitation, legal and accounting fees and expenses.
8.5 Notices. All notices required to be given hereunder shall be in writing
and shall be deemed given when delivered in person, or three (3)
business days after being placed in the hands of courier service
prepaid, or faxed, provided that a confirming copy is delivered
forthwith as herein provided as follows:
Xxxxxxx Xxxxx Leather Dealers, Inc.
TLC Direct, Inc.
c/o Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Purchaser Leather Tan Acquisition, Inc.
XX Xxx 00000
Xxxx Xxxxx, Xxxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx, Attorney
0000 X. Xxxxxxx Xxxx.
Xxxx Xxxxx, Xxxxx 00000
Tandycrafts, Inc. Xxxxxxx Xxxxx
0000 Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
8.6 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives,
successors and permitted assigns. Each exhibit and schedule shall be
considered incorporated into this Agreement. This Agreement may not be
amended, modified, supplemented or otherwise altered in any respect
except by an agreement in writing signed by the parties hereto. There
are no other representations, warranties, promises, agreements,
covenants, or other statements other than those contained herein. This
Agreement supersedes all prior written or oral agreements among the
parties hereto. Neither party is relying upon any representations,
warranties, promises, agreements, covenants or other statements of the
other parties other than those contained herein.
8.7 Waivers. The failure in any one or more instances of a party to insist
upon performance of any of the terms, covenants of this Agreement, to
exercise any right or privilege conferred in this Agreement or the
waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent
waiver of any such terms, covenants, conditions, rights or privileges,
but the same shall continue and remain in full force and effect as if
no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party. A breach of any representation,
warranty or covenant shall not be affected by the fact that a more
general or more specific representation, warranty or covenant was not
also breached.
8.8 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
8.9 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other
provision of this Agreement or the remaining portion of the applicable
provision.
8.10 Applicable Law, Jurisdiction and Venue. This Agreement shall be
governed and controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal laws of
the State of Texas applicable to contracts made in that state without
regard to the conflicts of laws and principles of such state.
Jurisdiction and venue for any dispute associated with this Agreement
will be in the appropriate Federal or State District Court located
within Tarrant County, Texas where this Agreement is entered.
8.11 Construction. The parties hereto acknowledge and agree that each party
has participated in the drafting of this Agreement and that this
document has been reviewed by the respective legal counsel for the
parties hereto and that normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not
be applied to the interpretation of this Agreement. No inference in
favor of, or against, any party shall be drawn from the fact that one
party has drafted any portion hereof.
8.12 Release. In exchange for the consideration set forth herein, The
Leather Factory, Inc., Leather Tan Acquisition, Inc and their
subsidiaries, affiliates, parent corporations, divisions, officers,
directors, employees, agents, stockholders, affiliates, partners,
customers, distributors, suppliers, predecessors-in-interest,
successors, assigns, and attorneys (individually and collectively
referred to as "Claimant") hereby fully, completely and forever
release, settle, compromise, acquit, and discharge Sellers, Tandy
Leather Company, Tandycrafts, Inc. and their subsidiaries, affiliates,
parent corporations, divisions, officers, directors, employees, agents,
stockholders, affiliates, partners, customers, distributors, suppliers,
predecessors-in-interest, successors, assigns, and attorneys
(individually and collectively referred to as "Company"), from any and
all liability, damages, claims, actions, lawsuits, demands, fees,
costs, or other expenses which have or may have been asserted against
Company from any cause whatsoever, whether known or unknown, from
whatever source derived (past, present, or future), whether in tort or
contract or otherwise, including but not limited to any copyright,
trademark, patent, trade secret, or other intellectual property rights
infringement, any contract (express or implied) claims, any emotional
distress claims, including infliction of emotional distress, whether
intentional or negligent, any defamation, libel, slander or similar
claims, any false light claims, any unfair competition claims, any
tortious interference claims, any antitrust claims, any claims for lost
profits or other remuneration, any and all acts or failure to act in
contravention of any federal, state or local laws, ordinances, or
regulations, including but not limited to state or federal securities
laws, any claims of fraud, any breach of fiduciary duties claims, any
breach of any special trust or relationships claims, and any other
claims, charges, or demands of any sort which accrued or occurred on or
before the date of execution of this Agreement, asserted in or which
might have been asserted in, connected with, arising out of, or in any
way related to the facts, circumstances and/or transactions between
Company and The Leather Factory, Inc. and Leather Tan Acquisition, Inc.
("Claims"), except for any claims relating solely to this Agreement,
the Letter Agreement between Sellers and The Leather Factory, Inc.
dated October 16, 2000 and any confidentiality agreement between the
parties, Tandycrafts, Inc. or The Leather Factory, Inc.. Claimant
further covenants not to bring or assert or cause any third party to
bring or assert any claim, causes of action or liabilities whatsoever
arising from, relating to or pertaining to the Claims. It is the intent
of Claimant that this be a full and final release of matters of
controversy between Claimant and Company.
8.13 Release. In exchange for the consideration set forth herein,
Tandycrafts, Inc. and its subsidiaries, affiliates, parent
corporations, divisions, officers, directors, employees, agents,
stockholders, affiliates, partners, customers, distributors, suppliers,
predecessors-in-interest, successors, assigns, and attorneys
(individually and collectively referred to as "Claimant") hereby fully,
completely and forever release, settle, compromise, acquit, and
discharge Purchaser, The Leather Factory, Inc., and Leather Tan
Acquisition, and their subsidiaries, affiliates, parent corporations,
divisions, officers, directors, employees, agents, stockholders,
affiliates, partners, customers, distributors, suppliers,
predecessors-in-interest, successors, assigns, and attorneys
(individually and collectively referred to as "Company"), from any and
all liability, damages, claims, actions, lawsuits, demands, fees,
costs, or other expenses which have or may have been asserted against
Company from any cause whatsoever, whether known or unknown, from
whatever source derived (past, present, or future), whether in tort or
contract or otherwise, including but not limited to any copyright,
trademark, patent, trade secret, or other intellectual property rights
infringement, any contract (express or implied) claims, any emotional
distress claims, including infliction of emotional distress, whether
intentional or negligent, any defamation, libel, slander or similar
claims, any false light claims, any unfair competition claims, any
tortious interference claims, any antitrust claims, any claims for lost
profits or other remuneration, any and all acts or failure to act in
contravention of any federal, state or local laws, ordinances, or
regulations, including but not limited to state or federal securities
laws, any claims of fraud, any breach of fiduciary duties claims, any
breach of any special trust or relationships claims, and any other
claims, charges, or demands of any sort which accrued or occurred on or
before the date of execution of this Agreement, asserted in or which
might have been asserted in, connected with, arising out of, or in any
way related to the facts, circumstances and/or transactions between
Company and Tandycrafts, Inc. ("Claims"), except for any claims
relating solely to this Agreement or the Letter Agreement or any
Confidentiality Agreement between and among Sellers, The Leather
Factory, Inc., and/or Tandycrafts, Inc. dated October 16, 2000.
Claimant further covenants not to bring or assert or cause any third
party to bring or assert any claim, causes of action or liabilities
whatsoever arising from, relating to or pertaining to the Claims. It is
the intent of Claimant that this be a full and final release of matters
of controversy between Claimant and Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLERS: TLC DIRECT, INC.
By: /s/ Xxx Xxxxx
---------------------------------------------
Print Name: Xxx Xxxxx
-------------------------------------
TANDY LEATHER DEALER, INC.
By: /s/ Xxx Vollwock
---------------------------------------------
Print Name: Xxx Xxxxxxxx
-------------------------------------
TANDYCRAFTS, INC.
(as to Sections 1.7, 6.1(B and C), and 8.13 only)
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Print Name: Xxxxxxx X. Xxxxx
-------------------------------------
PURCHASER: LEATHER TAN ACQUISITION, INC.
By: /s/Xxxx Xxxxxxxx
---------------------------------------------
Print Name: Xxxx Xxxxxxxx, President
-------------------------------------
THE LEATHER FACTORY, INC.
(as to Section 8.12 only)
By: /s/Xxxx Xxxxxxxx
---------------------------------------------
Print Name: Xxxx Xxxxxxxx, President
-------------------------------------
Description of Exhibits and Schedules
Exhibit or Schedule Description
------------------- -----------
Exhibit A List of patents and trademarks, registered, common
law, unregistered and expired.
Exhibit B List of copyrights, registered, common law,
unregistered and expired.
Exhibit C List of leases, sublease and rights thereunder.
Exhibit D Contracts, indentures, agreements, mortgages,
instruments of indebtedness, security interest,
guarantees, royalty agreements, dealer contracts,
other similar agreements and rights thereunder.
Exhibit E Accounts, notes, other receivables, including any
uncollected claims.
Exhibit G List of leather craft art.
Exhibit H Assignment of certain trademarks and intellectual
property from TAC Holdings, Inc. to TLC Direct, Inc.
Schedule 1.3 Certain assumed obligations and liabilities.
Exhibit I Allocation of purchase price.
Schedule 3.2(D) Conflicts with Seller's Article of Incorporation,
bylaws, licenses, instruments, contracts or
agreements.
Conflicts with any law, order, rule, regulation,
writ, injunction or decree.
Liens, claims, rights, charges, encumbrances,
security interests with respect to the Acquired
Assets that result from the transaction.
Any consents, permits, licenses, approvals, filings
needed to accomplish the transaction.
Any contract, lease, sub-lease, license, sub-license,
franchise, permit, indenture, agreement, mortgage,
instrument of indebtedness, security interest, or
other arrangement that would be breached, defaulted,
accelerated, create a right to accelerate, terminate,
modify, cancel or require any notice in connection
with this transaction.
Schedule 3.2(J) List of certain material agreements of the Sellers.
Schedule 3.2(L) List of charges, claims, complaints and suits,
alleging any interference, infringement,
misappropriation or violation by the Sellers of any
Intellectual Property.
List of any interference, infringement or
misappropriation, alleged or actual, by any third
party of any of the Sellers' Intellectual Property.
Licenses of Intellectual Property created by the
Sellers as licensor.
Licenses of Intellectual Property granted to the
Sellers as licensee.
Any royalty or other payment obligations of the
Sellers with respect to Intellectual Property.
Schedule 3.2(M) Any charge, complaint, claim or notice alleging any
interference, infringement, misappropriation or
violation of each of the Sellers' Internet Rights.
Any Internet Right used by the Sellers pursuant to
license, sub-license, agreement or permission.
Schedule 3.2(O) List of any pending or threatened labor disputes,
grievances, strikes, work stoppages, involving
Sellers employees and any threatened charge or
complaint of the National Labor Relations Board, the
Occupational Safety and Health Administration, the
Department of Labor or any other board or agency.
Schedule 3.2(P) List of all employees of Sellers to whom the
Purchaser intends to offer employment upon or after
Closing.
All employment and arrangements, written or oral, by
Sellers with their employees and consultants.
Amounts owed to past or present employees of the
Sellers other than accrued wages and salaries for the
current payroll period, reimbursable expenses,
accrued vacation and holiday pay, sick leave rights,
amounts payable under employee benefit plans.
Any violations by Sellers of employment law or
regulation including OSHA, EEOC, Fair Employment
Practices, sex, race, religion, age discrimination,
Medicare or Medicaid laws and regulations.
Schedule 3.2(S) Debts, liabilities, or obligations, fixed or
contingent, of Sellers incurred on or after September
30, 2000 that should be disclosed in financial
statements in accordance with generally accepted
accounting principles.
Schedule 3.2(W) Sellers' pending and threatened litigation.
Exhibit J Lease agreement for office and warehouse located at
0000 Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxx.
