ASSIGNMENT AND ASSUMPTION AGREEMENT
Exhibit 10.6
This
Assignment and Assumption Agreement (this “Agreement”), dated as
of the 21st day of
March, 2008, by and among Zoots Corporation, a Delaware corporation (“Zoots”), Zoots
Holding Corporation, a Delaware corporation (“Holding”), Delivery
LLC, a Delaware limited liability company (“Delivery” and
together with Zoots and Holding, the “Companies,” each of
which may be referred to from time to time herein individually as a “Company”), USDC
Portsmouth, Inc., a California corporation (“Purchaser”) and U.S.
Dry Cleaning Corporation, a Delaware corporation (“Parent”).
WHEREAS, NewStar Financial,
Inc. (“Seller”), as
administrative agent and successor lender under the Credit Agreement (as
hereinafter defined) has a valid and duly perfected security interest in and
lien on substantially all of the assets of the Companies, to secure all
liabilities, obligations and indebtedness owing to Seller under that certain
Credit and Security Agreement, dated as of April 1, 2005, among Zoots as
borrower, Holding, Delivery and Xxxxxx’x, LLC as guarantors, and Seller (as
successor lender thereunder) (as amended from time to time, the “Credit Agreement”),
and the other agreements, documents and instruments entered into in connection
therewith (collectively, the “Credit
Documents”);
WHEREAS, simultaneously with
the execution and delivery of this Agreement, Seller and Purchaser are entering
into a Secured Party Sale Agreement, dated of even date herewith (the “Sale Agreement”),
providing for the purchase by Purchaser of certain assets of the Companies
pursuant to a private sale in accordance with Section 9-610 of the UCC (the
“Secured Party
Sale”);
WHEREAS, the Companies have
consented to the Secured Party Sale;
WHEREAS, Seller and Purchaser
desire that the transactions contemplated by the Sale Agreement be consummated
as promptly as possible, and, in such regard, have requested the cooperation and
assistance of the Companies in order to consummate those such transactions;
and
WHEREAS, in partial
consideration for Purchaser agreeing to execute and deliver the Sale Agreement,
and to consummate the transactions contemplated therein, and for other good and
valuable consideration, as set forth herein, the Companies desire to execute and
deliver this Agreement;
NOW, THEREFORE, in consideration
of the foregoing and the mutual covenants set forth in this Agreement, and to
induce Purchaser and Seller to execute and deliver the Sale Agreement, and to
consummate the transactions contemplated therein, the parties hereto hereby
agree as follows:
Capitalized
terms used but not otherwise defined in this Agreement are used with the
meanings given those terms in the Sale Agreement. In addition, as
used in this Agreement (including in the preamble and recitals above), the
following terms have the following definitions:
“Action” means any
suit, order, litigation, arbitration, mediation, action or other proceeding
before any Governmental Authority, arbitrator or mediator.
“Affiliate” means,
with respect to any specified Person, any other Person directly or indirectly
controlling, controlled by or under common control with such specified
Person.
“Business” means the
retail dry cleaning and laundry business engaged in by the Companies using the
“Portsmouth Network” (and related assets) and the locations covered by the
leases listed on Schedule 4(a) hereto
during the one (1) year period immediately prior to the date
hereof.
“Business Day” means any day (other than a
Saturday or Sunday) on which banks are not required or authorized to close in
The City of New York, New York.
“Code” means the
Internal Revenue Code of 1986, as amended, and any rules or regulations
promulgated thereunder
“Company Material Adverse
Effect” shall mean a material adverse effect on the assets, properties,
financial condition and/or prospects of the Business, taken as a whole, other
than as disclosed on Schedule 1 hereto;
provided, however, that in no
event shall any of the following be or be taken into account in the
determination of whether a Company Material Adverse Effect has occurred: (i) any
change resulting from conditions affecting the retail dry cleaning and laundry
industries or from changes in general business, financial, political, capital
market or economic conditions (including any resulting from any hostilities, war
or military or terrorist attack anywhere in the world); (ii) any change
resulting from the announcement or pendency of the transactions contemplated by
this Agreement or attributable to the fact that Purchaser and its Affiliates are
the prospective owners of the Companies’ assets; (iii) any change resulting from
the compliance by any Company with the terms of, or the taking of any action by
any Company contemplated or permitted by, this Agreement; or (iv) any condition
described in any Schedule to this Agreement; (v) any change in applicable
law.
“Company Transaction
Documents” means, collectively, this Agreement and the agreements,
instruments and documents contemplated herein contemplated therein, or otherwise
incidental hereto, to be executed by any Company.
“Consent” means any
consent, approval, authorization, qualification, waiver or notification of or to
a Governmental Authority or any other person or entity.
“Contract” means any
written or oral contract, agreement, license, commitment, undertaking or
arrangement, whether express or implied, and includes purchase and sale
orders.
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“Conveyed Assets”
means, collectively, the Assigned Contracts the Purchased Assets (as defined in
and to be acquired pursuant to the Sale Agreement) and the Company Purchased
Assets (as defined below in Section 4(c).
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
shall mean any entity which is a member of (1) a controlled group of
corporations (as defined in Section 414(b) of the Code), (2) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (3) an affiliated service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any of which includes or
within the six years preceding the date of this Agreement.
“Governmental
Authority” means any government or any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or
foreign.
“Law” means any law
(including, without limitation, principles of common law), statute, code,
regulation, treaty, permit, license, certificate, judgment, order, writ, decree,
award or other decision or requirement of any arbitrator or Governmental
Authority.
“License Agreement”
means a license agreement by and between one or more of the Companies and the
Purchaser, in form and substance satisfactory to the Companies and the
Purchaser, pursuant to which the Companies will grant to the Purchaser those
rights described in Section 9(f) hereof.
“Lien” means any
security interest, mortgage, lien, pledge, adverse claim, interest, charge,
option, pledge, right of first option, right of first refusal, obligation or
other restriction or encumbrance of any kind on title or transfer of any nature
whatsoever.
“Permit” means any
Consent, license, registration, permit, franchise or authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Law.
“Person” means an
individual, a corporation, a partnership, a limited liability company, a trust,
an unincorporated association, a governmental entity or any agency,
instrumentality or political subdivision of a governmental entity, or any other
entity or body.
“Required Consents”
means, collectively, written consents from the counterparties to the contracts
listed on Schedule
4(b), in form and substance reasonably satisfactory to
Purchaser.
“Tax Returns” means
returns, declarations, reports, claims for refund, information returns or other
documents (including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the determination,
assessment or collection of any Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any
Taxes.
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“Taxes” shall mean any
and all taxes, fees, levies, duties, tariffs, imposts and other similar charges
of any kind imposed by any governmental authority, including, without
limitation: taxes or other charges on or with respect to income, property,
sales, use, payroll, employment, social security, workers’ compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customs’ duties, tariffs and
similar charges.
“Transaction
Documents” means, collectively, the Sale Agreement, the agreements,
instruments and documents contemplated therein or otherwise incidental thereto,
and the Company Transaction Documents.
“Transactions” means,
collectively, the transactions contemplated in the Transaction
Documents.
“Virginia Property
Taxes” has the meaning set forth in Section 2(m).
“Virginia Property Tax
Liability” has the meaning set forth in Section 2(m).
The
Companies hereby represent and warrant, jointly and severally, as of the date
hereof and as of the Closing Date, to Purchaser as follows:
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(p) Employee Benefit
Plans. Schedule 2(p) lists
each of the Companies’ employee pension, profit sharing, deferred compensation,
severance, cafeteria, stock option, stock purchase, incentive, golden parachute,
bonus, group or individual medical and health benefits, welfare, insurance or
other employee benefit plan, program or arrangement (collectively, the “Company Plans”),
which is maintained or contributed to by any Company on behalf of any Relevant
Employee. Complete and correct copies of all such Company Plans have been made
available to Purchaser. There is no Company Plan, nor has any Company
at any time maintained, administered, contributed or been required to contribute
to any “employee pension benefit plan” as defined in Section 3(2) of ERISA,
which is subject to the minimum funding requirements of Section 412 of the Code
or Section 302 of ERISA, or the provisions of Title IV of ERISA. None
of the Company Plans is a “multiemployer pension plan” within the meaning of
Section 3(37) of ERISA. Each Company Plan and any related trust agreement that
is intended to be qualified under the provisions of Section 401(a) of the Code
has received a favorable determination from the IRS to that effect, and, to the
knowledge of each Company, no circumstance exists that will or could reasonably
be expected to result in revocation of any such favorable determination letter.
Each Company Plan and any related trust agreement complies in all material
respects and has been maintained in material compliance with its terms and, both
as to form and in operation, with the requirements prescribed by any and all
Laws that are applicable to such plans, including but not limited to ERISA and
the Code. No Company has any obligation to make any payment to or
with respect to any current or former employee pursuant to any severance
agreement or retiree medical benefit or other Company Plan, or would have any
obligation to make any severance or other payments to any employee if such
employee was terminated prior to, at or after the Closing. No
benefit, payment or other entitlement under any Company Plan, or under any
agreement relating to the employment of the Relevant Employees, will be
established or become accelerated, vested, payable or funded by reason of the
execution and delivery of this Agreement or the consummation of the
Transactions, and there are no claims pending, or to the knowledge of any
Company, threatened with respect to any Company Plan, other than
claims for the payment of benefits in the ordinary course of operation of such
Company Plan.
(i)
all of the tangible assets and all of the Companies’ rights in and to the
vehicle and personal property leases listed on Schedule 2(q)(i)
hereto;
(ii)
all customer and prospective customer lists used in connection with the
operation of the Business;
(iii) all
customer goodwill generated in the operation of the Business;
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(iv) all
inventories of the Companies in connection with the Business, including, without
limitation, all purchased parts, materials and supplies, as set forth on Schedule 2(q)(iv)
hereto;
(v)
all accounts receivable of the Companies in connection with the Business,
including, without limitation, all accounts receivable set forth on Schedule 2(i)
hereto;
(vi) all
personal property, machinery, furniture, fixtures, leasehold improvements, and
equipment situated at the Companies’ retail dry cleaning and laundry stores and
processing facilities, and used in connection with the operation of the
Business;
(vii) all
real property leases and other contracts listed on Schedule
4(a);
(viii) all
prepaid items or accounts of the Companies relating solely to the Business and
described on Schedule
2(q)(vii) hereto;
(ix) all
of the deposits may by any Company under any lease or other contract relating to
the Business listed on Schedule 2(q)(x)
hereto;
(x) all
computer equipment located at any of the premises located at the locations
covered by the leases listed on Schedule 4(a);
(xi) all
rights in the Intellectual Property described in Section 9(f)
below;
(xii) cash
of not less than $15,000;
(xiii) all
physical plans and designs of the Business’ labs and stores (including, without
limitation, blueprints and layouts); and
(xiv) all
books and records relating solely to the Business (if any).
(r) Other
Trademarks. The
Companies have good, valid and marketable title to the trademarks “Zoots” and “The Cleaner
Cleaner”.
(a) The
representations and warranties of the Companies contained in this Agreement, or
in any certificate or other instrument delivered in connection herewith, shall
survive the Closing and shall expire six (6) months after the Closing Date,
provided that if any party hereto, before expiration of a representation or
warranty given by another party hereto, delivers to such other party a written
notice alleging a breach of such representation or warranty, the applicable
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice.
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(b) From
and after the date hereof, each Company shall, jointly and severally, defend,
indemnify and hold harmless Purchaser, Parent and their respective Affiliates
(each a “Purchaser
Indemnified Party”) from, against and in respect of any and all claims,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies (including, without limitation, interest, penalties and reasonable
attorneys’ fees) (“Losses”), that such
Purchaser Indemnified Party may incur, sustain or suffer resulting from or
arising out of (directly or indirectly) or in connection with (i) any breach of
or any inaccuracy in any representation or warranty of any Company contained in
this Agreement, or any other certificate or other document delivered by Seller
pursuant to this Agreement, or in any Schedule or Exhibit hereto or thereto,
and/or (ii) any breach or failure to perform any covenant or agreement of any
Company contained in this Agreement.
(c) In
the event that any Purchaser Indemnified Party shall have incurred, sustained or
suffered any Loss with respect to which it is entitled to be indemnified under
Section 4(b) above resulting from or arising out of (directly or indirectly) or
in connection with any breach of or any inaccuracy in any representation or
warranty of any Company contained in [Section 2(m) (other than any
income or franchise Taxes),] Section 2(q) or Section 2(r)
above, Parent shall, in addition to any other rights Purchaser or
Parent may have against the Companies, have the right to set-off the
full amount of such Loss against the payments due under the Note, in which event
the Note shall be deemed to be automatically amended accordingly. In
addition, Parent shall have the right to set-off against the payments due under
the Note the full amount of the Losses contemplated in Section 9(f)(iv) below,
in which event the Note shall be deemed to be automatically amended
accordingly.
(i) the
real property leases and other contracts listed on Schedule 4(a);
and
(ii) the
vehicle, equipment and other personal property leases and loan agreements listed
on Schedule
2(q)(i) (representing outstanding payment liabilities (including, without
limitation, residual payments) of approximately $156,000 in the
aggregate).
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(i)
Not later than five (5) Business Days prior to the Closing, Schedule 2(o) shall
be updated by the Companies to reflect any additional individuals who become
Relevant Employees in the ordinary course of the conduct of the Business after
the date of this Agreement and prior to the Closing and to otherwise update the
information set forth thereon (including, without limitation, a description of
all accrued but unpaid salaries, unpaid benefits and unused vacation pay for all
such Relevant Employees, up to and including the Closing Date). The Companies
shall provide Purchaser with all other information reasonably requested by
Purchaser pertaining to the Relevant Employees.
(ii) Not
earlier than twenty (20) nor later than two (2) days prior to the Closing,
Purchaser shall offer all Relevant Employees then actively employed by the
Companies employment with Purchaser, conditioned upon the Closing, on terms of
employment that are substantially similar to the terms of their employment in
effect as of Closing, provided that such Relevant
Employees shall, if they accept such offer of employment, be eligible to
participate in employee benefit plans, programs, arrangements and policies of
the Purchaser (“Purchaser Employee Benefit
Plans”). All Relevant Employees who elect to become employees
of Purchaser are hereinafter referred to collectively as “Hired Employees” and
individually as a “Hired
Employee”. The Hired Employees who accept Purchaser’s offer of
employment shall become employees of Purchaser immediately following the
Closing. Purchaser shall, from and after the Closing Date, assume the
Companies’ obligations to the Hired Employees with respect to all unused
paid-time-accrued as listed on Schedule 2(o)
hereto.
(iii) From
and after the Closing Date, the Company shall remain solely responsible for any
and all liabilities in respect of continued coverage under COBRA, Section 4980B
of the Code and Part 6 of Subtitle of Title I of ERISA and the regulations
thereunder, and any similar state law, for all Relevant Employees who do not
become Hired Employees who are covered under any Purchaser Employee Benefit Plan
that is a group health plan.
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(iv) From
and after the Closing Date, the Company shall remain solely responsible for any
and all liabilities in respect of the Relevant Employees, including the Hired
Employees, related to the Company Plans. Purchaser and its Affiliates
are not assuming any obligation or liability of any Company or any of its ERISA
Affiliates, including any Company Plan, or any liability thereunder, to any
Hired Employee or other Person except to the extent such liability or obligation
is specifically assumed pursuant to this Section 5(c) or any other
provision of the Agreement.
(v)
Except as expressly set forth in this Section 5(c), after the Closing Date the
Companies shall remain solely responsible for any and all liabilities in respect
of all Relevant Employees (including, without limitation, all Hired Employee)
under or related to the Company Plans or otherwise in connection with their
employment with any such Company.
Purchaser
shall not be obligated to effectuate the Closing unless each of the following
conditions, any one or more of which may be waived by Purchaser, is satisfied as
of the Closing Date:
(a)
Representations and
Warranties and Covenants. (i)
The representations and warranties of the Companies set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date, (ii)
the Companies shall have performed and complied in all material respects with
the agreements contained in the Company Transaction Documents required to be
performed and complied with by the Companies on or before the Closing, and (iii)
the Companies shall have delivered to Purchaser at the Closing certificates,
dated the Closing Date, signed by a senior officer of the Companies certifying
as to compliance with clauses (i) and (ii) above.
(b)
No
Litigation. There
shall not be any Action pending seeking to enjoin, restrain or prohibit any of
the Transactions or that may (or be reasonably expected to) adversely affect the
ability of Purchaser to own, operate or otherwise enjoy the Conveyed Assets.
Additionally, Purchaser shall not have received any notice of any Action
relating in any manner to the sale or transfer of the Conveyed Assets hereunder,
including any such Action which questions the validity of any of the
Transactions or the commercial reasonableness of the sales contemplated by the
Transaction Documents.
(c)
New
Employment Agreement. Xxxxxxx
Xxxx shall have entered into a written employment agreement with Purchaser in
form and substance reasonably satisfactory to Purchaser; provided that Purchaser
shall have offered Xxxxxxx Xxxx employment on terms that are substantially
similar to or better than the terms of his employment with the
Companies.
(d)
Driver
Non-Compete Agreements. Any
written non-competition agreement between one or more of the Companies and a
vehicle driver that was formerly employed by any Company and who will, in
connection with the Closing, be employed as a vehicle driver by Purchaser shall
have shall have been assigned to Purchaser.
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(e)
Required
Lease Assignment. Purchaser
shall have received an executed lease assignment, in form and substance
reasonably satisfactory to Purchaser, from Commercial Bldg Assoc. LLC, with
respect to the Companies lease of 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx 0X-X,
Xxxxxxxxxx, Xxxxxxxx (the “Processing
Plant”).
(f)
Vehicle
and Personal Property Leases. All of
the Companies’ rights in and to the vehicle and personal property leases listed
on Schedule
2(q)(i) hereto shall have been transferred to Purchaser on the Closing
Date.
(g)
Tax
Returns and Financial Information.
Purchaser shall have received are true and complete copies of (x) the Companies’
Tax Returns filed by the Companies for the tax years ended December
31, 2004, December 31, 2005, December 31, 2006, and, if available, December 31,
2007, and (y) audited, unaudited, and reviewed financial information of the
Companies for the years ended December 31, 2004, December 31, 2005, December 31,
2006 and December 31, 2007 and for the each quarterly period
thereof.
(k)
Other Transaction
Documents. All
conditions to the closing of the Transactions contemplated by the other
Transaction Documents shall have been waived or satisfied, and the Transactions
contemplated by the other Transaction Documents shall be consummated
simultaneously with the transactions contemplated hereby.
The
Companies shall not be obligated to effectuate the Closing unless each of the
following conditions, any one or more of which may be waived by the Company, is
satisfied as of the Closing Date:
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(i)
by mutual written consent of Purchaser and the Companies;
or
(ii)
by Purchaser, if the Companies shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under this
Agreement, or if any of the representations and warranties of the Companies set
forth in this Agreement shall not be true and correct to the extent set forth in
Article 2, and such breach, failure or misrepresentation is not cured to
Purchaser’s reasonable satisfaction within 10 days after Purchaser gives the
Companies written notice identifying such breach, failure or
misrepresentation;
(iii)
by the Companies, if Purchaser shall have breached or failed to
perform in any material respect any of its obligations, covenants or agreements
under this Agreement, or if any of the representations and warranties of
Purchaser set forth in this Agreement shall not be true and correct, and such
breach, failure or misrepresentation is not cured to the Companies’ reasonable
satisfaction within 10 days after the Companies give Purchaser written notice
identifying such breach, failure or misrepresentation;
(iv)
by Purchaser, if the conditions set forth in Section 6 hereof become
incapable of satisfaction; or
(v)
by the Companies, if the conditions set forth in Section 7 hereof
become incapable of satisfaction;
except
that this Agreement may not be terminated under this Section by or on behalf of
any party that is in breach of any representation or warranty or in violation of
any covenant or agreement contained herein.
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(i) On
or prior to the Closing Date, Purchaser and the Companies shall enter into the
License Agreement, pursuant to which:
(x) Purchaser
shall, at no cost to Purchaser, be granted an exclusive license, in perpetuity,
to:
(1) use
the trademarks “Zoots”
and “The Cleaner
Cleaner” in the Commonwealth of Virginia and in the States of Georgia,
Maryland North Carolina and South Carolina, provided that the Companies shall
retain the right to use the Zoots trademark in such
jurisdictions for a period of thirty (30) days following the Closing in
connection with the transaction of their businesses; and
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(2) use
the domain name xxxxxxx.xxx, and to replicate
the information relating to the Business, the look, feel and the layout of the
Website (as defined below) on the xxxxxxx.xxx website;
and
(y) the
Companies shall agree, for a period of six (6) months after the Closing Date,
with respect to the website xxxxx.xxx and the related
domain name (the “Website”),
to:
(1)
maintain the Website, or cause the Website to be maintain, in accordance with
historical practice; and
(2)
maintain, or cause to be maintained, a prominent link on the Website to the
xxxxxxx.xxx website (in
connection with which Purchaser shall pay such transferee’s direct, reasonable
and documents costs relating to the maintenance of such link).
(ii) The
Companies hereby agree, for a period of ninety (90) days after the Closing Date,
to provide (or to cause their successor to provide) call forwarding services
with respect to the 1-800 telephone number used in the Business (to such number
as may be designated by Purchaser).
(iii) On
the effective date of any transfer of each of the “Zoots” and/or “The Cleaner Cleaner”
trademarks, the Website and the 1-800 telephone number used in the Business, the
Companies shall cause the relevant transferee (the “Transferee”) to enter
in an assignment and assumption agreement, in form and substance satisfactory to
Purchaser (the “License Assignment
Agreement”) with the Companies and Purchaser with respect to the License
Agreement (or, if applicable, the rights under the License Agreement relating to
the relevant transferred assets).
(iv) In
the event that Purchaser is unable to transition the Business onto the Westgate
hosting system (with respect to point-of-sale functions) by the Closing
Date, the Companies shall permit Purchaser to use the existing
point-of-sale system for a two (2) week period after the Closing
Date. In the event that Purchaser is unable to transition the
merchant services system (with respect to credit card transactions) to
Purchaser’s bank by the Closing Date, any credit card payments received by the
Companies in connection with the Business after the Closing Date shall promptly
(and in any event within two (2) Business Days of such receipt)
be transferred by the Companies to the bank account specified by
Purchaser (less customary expenses). In the event that Purchaser is
unable to transition the internet portals used at each location used in the
Business to its own service provider by the Closing Date, for a
period of thirty (30) days after the Closing Date, the Companies shall maintain,
and allow Purchaser to use, or cause the Transferee to maintain and allow the
Purchaser to use, the internet portals at each location used in the Business,
provided that the Purchaser shall reimburse the Companies (or the Transferee, if
applicable) for all direct costs associated with the Purchaser’s use of such
internet portals within five (5) days after receipt of an invoice for the
same.
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(v) In
the event that (x) any Company fails to comply with its obligations under this
Section 9(f) (including, without limitation, failing to cause the Transferee to
enter into the License Assignment Agreement), (y) any Company fails to comply
with its obligations under the License Agreement (prior to the assignment
thereof as contemplated in Section 9(f)(ii) above), or (z) the Transferee fails
to comply with its obligations under the License Agreement (after the assignment
thereof as contemplated in Section 9(f)(ii) above), Parent shall, in addition to
any other rights Purchaser or Parent may have against the Companies,
have the right to set-off the full amount of the Losses that Purchaser may
incur, sustain or suffer resulting from or arising out of (directly or
indirectly) or in connection with any such breach (in an aggregate amount not to
exceed $100,000) against the payments due under the Note, in which event the
Note shall be deemed to be automatically amended accordingly; provided, however, that (1)
the Companies shall have the right, but not the obligation, to transfer to the
Purchaser all of the Companies’ rights in the Website and the 1-800 number used
in connection with the Business, in which case the Purchaser shall no longer
have any right to setoff in connection with the Website and the 1-800 number
used in connection with the Business; and (2) in the event that the Companies
have not the caused the Transferee to enter into the License Assignment
Agreement on or before April 30, 2008, then the Companies shall transfer to the
Purchaser all of the Companies’ rights in the Website and the 1-800 number used
in connection with the Business, in which case the Purchaser shall no longer
have any right to setoff in connection with the Website and the 1-800 number
used in connection with the Business.
(g) Accounts Receivable Data
Transfer. Following the close of business on Saturday, March
22, 2008 and prior to 11:59 P.M. (Eastern time) on Sunday, March 23, 2008, the
Companies shall deliver to the Purchaser, via electronic mail, a schedule
setting forth the Companies’ accounts receivable arising from the Business as of
the close of business on March 22, 2008. Further, within two (2)
business days after Closing, the Companies will deliver to the Purchaser a hard
copy of a schedule setting forth the Companies’ accounts receivable arising from
the Business as of the close of business on March 22, 2008.
(h) POS Data
Transfer. Following the close of business on Saturday, March
22, 2008 and prior to 11:59 P.M. (Eastern time) on Sunday, March 23, 2008, the
Companies shall deliver to the Purchaser or to Purchaser’s designee the
Companies’ point of sale data for the seven (7) calendar days preceding March
22, 2008.
(i) Financial
Data. Within thirty (30) days after the Closing Date, the
Companies shall deliver to the Purchaser (1) financial schedules relating to the
Business for the 2006 and 2007 fiscal years and the year to date ending on the
Closing Date; (2) a list of Companies’ fixed assets relating to the Business;
(3) a trial balance relating to the Business; and (4) the general ledger as it
relates to the Business.
(j) Receivables Received
Post-Closing. In the event that, after the Closing Date, any
one of the Companies or a successor to one or more of the Companies receives (1)
a payment with respect to the accounts receivable of the Companies arising from
the Business or (2) an invoice relating to the Business arising for a period
beginning on or after the Closing Date, then the Companies shall deliver such
payment or invoice, or shall cause their successor to deliver such payment or
invoice, within five (5) days after receipt of same by the Companies (or the
Companies’ successor, as applicable), to the Purchaser at the following
address: 0000 Xxxxxxx Xxxxx, Xxxxx 0X, Xxxxxxxxxx,
Xxxxxxxx 00000.
19
10. MISCELLANEOUS.
(a) Notices. All
notices, requests, demands, consents and other communications required or
permitted under this Agreement shall be in writing and shall be considered to
have been duly given when (i) delivered by hand, (ii) sent by telecopier or
facsimile (with receipt confirmed), provided that a copy is mailed (on the same
date) by certified or registered mail, return receipt requested, postage
prepaid, or (iii) received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested), in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may from time to time
designate as to itself by notice similarly given to the other party in
accordance herewith). A notice of change of address shall not be
deemed given until received by the addressee.
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If
to any Company, to it at:
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Xxxx
Xxxxxxx
ZOOTS
Corporation
000
Xxxxxxx Xxxxxx, Xxxxxxxx 0
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telecopier: 617)558-9667
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With
copies to:
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Xxxxxxx
Xxxxxx
FTI
Consulting
000
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telecopier: 000-000-0000
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and
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Xxxxxx
X. Xxxxxxxx, III
Xxxxxx
Xxxx & Xxxxxxx, LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telecopier: 000-000-0000
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If
to Purchaser, to it at:
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U.S.
Dry Cleaning Corp.
0000
XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000)
000-0000
Attn: Xx.
Xxxxxx X. (Xxxxxx) Xxx, Chief Executive
Officer
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20
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With
copies (which shall not constitute notice) to:
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Xxxxxx,
Neale, Bender, Xxxxxx & Xxxxx L.L.P.
00000
Xxxxxxxxxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Telecopier: (000)
000-0000
Attn.: Xx.
Xxxxxx Xxxxx
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and
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Xxxxxxxxx
Xxxxxxx, LLP
The
Met Life Building
000
Xxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telecopier: (000)
000-0000
Attn: Xxxxxxx
X. Xxxxxxx, Esq.
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(b) Entire
Agreement. This Agreement and the instruments, agreements,
exhibits and other documents contemplated hereby (including, without limitation,
the Sale Agreement) supersede all prior discussions and agreements between the
parties with respect to the matters contained herein and this Agreement and the
instruments, agreements and other documents contemplated hereby (including,
without limitation, the Sale Agreement) contain the entire agreement between the
parties hereto with respect to the transactions contemplated
hereby.
(c) Further Assurances and
Transitional Services.
(i) After
the Closing, each of the parties hereto shall hereafter, at the reasonable
request of the other party hereto, execute and deliver such other instruments of
transfer and assumption and further documents and agreements, and do such
further acts and things as may be necessary to carry out the provisions of this
Agreement.
(ii) After
the Closing, Purchaser will permit the Companies or their respective
successors-in-interests and/or assigns access to the books and records acquired
by Purchaser on reasonable notice.
(iii) If
any Company receives any cash, checks or other property constituting Conveyed
Assets after the Closing, such Company will promptly forward the same to
Purchaser. If Purchaser receives any cash, checks or other property
of the Companies that does not constitute Conveyed Assets hereunder after the
Closing, Purchaser will promptly forward the same to the Companies.
(d) Post-Closing Obligations of
Companies. Nothing in this Agreement shall require the
Companies to retain personnel after Closing or continue business operations
after Closing, and, whether or not expressly set forth elsewhere in this
Agreement, the Companies’ obligations to perform hereunder after Closing shall
only require the Company to use commercially reasonable efforts to perform such
obligations, taking into account the Companies’ staffing and financial
capabilities at the time post-Closing performance is requested or
required. Purchaser acknowledges that, after Closing, the Companies
may not have any employees or material resources and may only be able to provide
minimal assistance to Purchaser.
21
(e) Non-Solicitation By
Purchaser. Purchaser shall not knowingly solicit any current
customers of the Companies or any purchaser of the Companies’ assets in the
areas that comprise the Companies’ former Philadelphia and New Jersey networks
(as defined by the geographical areas corresponding to the postal codes
identified on Schedule 10(e) hereto) for a period of two (2) years after
Closing.
(f) Waiver. Any
term or condition of this Agreement may be waived at any time by the party
thereto which is entitled to the benefit thereof, but such waiver shall only be
effective if evidenced by a writing signed by such party. A waiver on
one occasion shall not be deemed to be a waiver of the same of any other breach
on a future occasion.
(g) Amendment. Except as
otherwise expressly provided herein, this Agreement may be amended only by a
writing signed by all the parties hereto.
(h) Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument. Each party hereto may deliver its signature page by
facsimile transmission, and any such facsimile of a signature page to this
Agreement shall be treated as an original signature page for all purposes under
this Agreement.
(i) Binding Agreement;
Assignment; No Third Party Beneficiaries. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may not
be assigned by any party hereto, without the prior written consent of the other
party. Any purported assignment without such consent shall be
void.
(j) Headings. The
headings in this Agreement are for convenience of reference only and should not
be deemed a part of this Agreement.
(k) Fees and
Expenses. Each party shall bear the costs and expenses
incurred by it in connection with the preparation, execution and performance of
this Agreement.
11. CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER.
22
THE VALIDITY OF THIS AGREEMENT, THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK, AND EACH PARTY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS. EACH PARTY
HEREBY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS. EACH PARTY REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
12. WAIVER
AND CONSENT
Each
Company hereby irrevocable waives, to the fullest extent permitted by Law, any
right it may have (including, without limitation, under the UCC) to (a) object
or challenge any of the Transactions, including, without limitation, the Secured
Party Sale, and (b) to notice or consultation with respect to the consummation
of the Transactions, including, without limitation, the Secured Party
Sale. Each Company hereby irrevocable consents to the consummation of
each of the Transactions, including, without limitation, the Secured Party
Sale.
[Signatures on Next Page]
23
IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this
Assignment and Assumption Agreement as of the date first above
written.
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Zoots
Corporation
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By:
Name:
Title:
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Zoots
Holding Corporation
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By:
Name:
Title:
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Delivery
LLC
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By:
Name:
Title:
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USDC
Portsmouth, Inc.
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By:
Name:
Title:
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U.S.
Dry Cleaning Corporation
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By:
Name:
Title:
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List of
Schedules:
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Schedule
1
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Company
Material Adverse Effect
|
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Schedule
2(f)
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Exceptions
to Sufficiency of Assets
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Schedule
2(i)
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Accounts
Receivable
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Schedule
2(j)
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Litigation
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Schedule
2(l)
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Permits
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Schedule
2(m)
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Taxes
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Schedule
2(o)
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Employees
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Schedule
2(p)
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Employee
Benefit Plans
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Schedule
2(q)(i)
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Tangible
Assets/Vehicle and Personal Property Leases
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Schedule
2(q)(iv)
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Inventories
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Schedule
2(q)(vii)
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Prepaid
Items/Accounts
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Schedule
2(q)(x)
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Deposits
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Schedule
4(a)
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Assigned
Contracts
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Schedule
4(b)
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Nonassignable
Contracts
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Schedule
10(e)
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Philadelphia
and New Jersey Networks
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