EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of this 5th day of June, 2002, by and between RDR Group, a California
corporation (or such affiliated entity formed for the purpose of consummating
the transactions contemplated hereby) (the "BUYER"), on the one hand, and Sweet
Factory Group, Inc., a Delaware corporation, Sweet Factory, Inc., a Delaware
corporation, SF Candy Company, a Delaware corporation and SF Properties, Inc., a
Delaware corporation, and Debtors and Debtors-In-Possession (collectively, the
"SELLER") under Case No. 01-11311 (RAB) (the "CASE") in the United States
Bankruptcy Court, for the District of Delaware (the "BANKRUPTCY COURT").
RECITALS
A. Seller is a company engaged in the business of selling bulk candy and
confectionery products through retail outlets across the United States, through
a self-service or "pick and mix" format (such business operated at such retail
locations is collectively referred to herein as the "BUSINESS").
B. Seller wishes to sell to Buyer the assets identified herein and used in
connection with the Business at the price and on the other terms and conditions
specified in detail below and Buyer wishes to so purchase and acquire such
assets from Seller.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. TRANSFER OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. On the Closing Date, as hereinafter
defined, in consideration of the covenants, representations and obligations of
Buyer hereunder, and subject to the conditions hereinafter set forth, to the
extent of their respective interests (if any) therein, each of the entities
comprising Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase from Seller, the following assets, which comprise all of
the assets necessary for the operation of the Business as presently being
conducted by the Seller, wherever located, whether or not identified or
disclosed on Seller's books and records (collectively, the "PROPERTY"):
1.1.1 LEASES AND CONTRACTS. All of Seller's right, title and
interest in: (i) to the extent permitted by applicable law, all rights as lessee
under those real property leases for up to ninety-three (93) retail locations of
Seller in the United States [and two (2) retail carts] (the "FACILITIES"), more
particularly described on EXHIBIT "A-1" and incorporated herein by this
reference (collectively, the "REAL PROPERTY LEASES"); (ii) to the extent
permitted by applicable law, all rights as lessee under those equipment,
personal property and intangible property leases, rental agreements, licenses
(including software licenses), contracts, agreements and similar arrangements as
more particularly described on EXHIBIT "A-2" hereto and incorporated herein by
this reference (collectively, the "OTHER LEASES"); and (iii) all rights as a
party to those other contracts, leases, orders, purchase orders, licenses,
contracts, agreements and similar arrangements described on EXHIBIT "A-3"
(collectively, the "OTHER CONTRACTS" and together with the Other Leases, the
"OTHER LEASES AND CONTRACTS").
1.1.2 IMPROVEMENTS. All improvements, and all appurtenances to
such improvements located on the real property occupied by Seller under the Real
Property Leases (the "LEASED REAL PROPERTY"), including, without limitation,
buildings, outside storage areas, driveways, walkways and parking areas, but in
all events only to the extent of Seller's interest, if any, in the same
(collectively, the "IMPROVEMENTS").
1.1.3 PERSONAL PROPERTY. All of those items of equipment and
tangible personal property owned by Seller, wherever located, and listed in
EXHIBIT "B" attached to this Agreement and incorporated herein by this reference
(collectively, the "PERSONAL PROPERTY"). As used in this Agreement, the Personal
Property shall not include the Inventory (as defined in Section 1.1.5 below).
The Personal Property shall also expressly exclude any equipment or other
tangible property held by the Seller pursuant to a lease, rental agreement,
contract, license or similar arrangement (a "CONTRACT") where Buyer does not
assume the underlying Contract relating to such personal property at the
Closing.
1.1.4 INTANGIBLE PROPERTY. All intangible personal property
owned or held by Seller and used exclusively in connection with the Business,
but in all cases only to the extent of Seller's interest and only to the extent
transferable, together with all books, records and like items pertaining to the
Business, including, without limitation, the name "SWEET FACTORY", the domain
name "XXXXXXXXXXXX.XXX", the goodwill of the Business, personnel files for all
employees to be hired by Buyer, trademarks, trade names, service marks, all
plans and specifications for the Improvements, all appraisals, engineering,
soils, pest control, and other reports relating to the Leased Real Property (if
any), and other databases, accounting books and records (including those related
to retail locations closed during the past three (3) years), correspondence with
present or prospective customers and suppliers, advertising materials, software
programs, and telephone exchange numbers identified with the Business
(collectively, the "INTANGIBLE PROPERTY"). As used in this Agreement, Intangible
Property shall in all events exclude, (i) employee medical records, documents
pertaining to insurance benefits received and claims filed by employees and any
other information or materials contained in an employee's personnel file, the
disclosure of which is prohibited by applicable law, and any other materials
which are subject to attorney-client or any other privilege, and (ii) any
software or other item of intangible property held by the Seller pursuant to a
license or other Contract that cannot as a matter of law be assumed and assigned
to Buyer.
1.1.5 INVENTORY. All inventory owned by Seller (collectively,
the "INVENTORY") which, as to that portion of Seller's Inventory including only
bulk candy and confectionary products, but expressly excluding miscellaneous
office supplies, signs, small plastic bags provided to Seller's retail
customers, and similar supplies (the "BULK CANDY INVENTORY") shall have a book
value at Seller's cost of not less than $1,700,000.00 (the "INVENTORY BASE").
For purposes of determining the value of the Bulk Candy Inventory, the parties
agree that Seller shall perform a physical inventory thereof, as of June 30,
2002, to be performed in the ordinary course of Seller's business and consistent
with Seller's past practice, which shall be observed and verified by Buyer's
representative(s). Five (5) days prior to Closing, Seller shall prepare and
deliver to Buyer an officer's certificate of Seller setting forth Seller's
valuation of the Bulk Candy Inventory, as determined pursuant to this Section
1.1.5 (the "INVENTORY VALUATION"). Unless objected to by Buyer prior to the
Closing, such determination shall be conclusive and binding upon the parties
hereto for purposes of calculating any adjustment to the Cash Purchase Price
payable at Closing as more specifically provided in Section 2.3 below.
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1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, the Property shall be limited to the items identified or
described in Section 1.1 above and shall in any event exclude all of the
following (collectively, the "EXCLUDED ASSETS"): (a) those items excluded
pursuant to the provisions of Section 1.1.4 above; (b) all cash or cash
equivalents, other than xxxxx cash (the "XXXXX CASH") on-hand at each Facility
on the Closing Date (as defined in Section 3.2 below); (c) all preference or
avoidance claims and actions of the Seller, including, without limitation, any
such claims and actions arising under Sections 544, 547, 548, 549, and 550 of
the United States Bankruptcy Code; (d) the Seller's rights under this Agreement
and all cash and non-cash consideration payable or deliverable to the Seller
pursuant to the terms and provisions hereof; (e) insurance proceeds, claims and
causes of action with respect to or arising in connection with (i) any Contract
which is not assigned to Buyer at the Closing, or (ii) any item of tangible or
intangible property not acquired by Buyer at the Closing; (f) any Real Property
Lease, Other Lease, or Other Contract to which Seller is a party which is not
listed or described on EXHIBIT "A-1," EXHIBIT "A-2," or EXHIBIT "A-3."; (g)
instruments, receivables, accounts receivable and unbilled costs and fees, and
all causes of action relating or pertaining thereto (collectively the
"RECEIVABLES"); and (h) any refunds from tax authorities with regards to tax
periods prior to the Closing Date.
1.3 INSTRUMENTS OF TRANSFER. The sale, assignment, transfer,
conveyance and delivery of the Property to Buyer shall be made by assignments,
xxxx of sale, and other instruments of assignment, transfer and conveyance
provided for in Section 3 below and such other instruments as may reasonably be
requested by Buyer, or otherwise required in order to consummate the
transactions contemplated hereby, to transfer, convey, assign and deliver the
Property to Buyer, but in all events only to the extent that the same do not
impose any monetary obligations upon Seller or in any other material respect
increase in any material way the burdens imposed by the other provisions of this
Agreement upon Seller.
2. CONSIDERATION/BUYER'S OBLIGATIONS. As full and complete
consideration for the Property, the Buyer agrees to pay to the Seller the Cash
Purchase Price (determined and payable in accordance with Section 2.1 below) and
to assume the Assumed Liabilities (defined in Section 2.2 below).
2.1 CASH PURCHASE PRICE.
(a) Subject to adjustment as provided in Section 2.3 below,
the cash consideration to be paid by Buyer to Seller for the Property (the "CASH
PURCHASE PRICE") shall be Four Million Five Hundred Thousand ($4,500,000).
(b) The Cash Purchase Price shall be paid as follows:
(i) Seller acknowledges receipt on May 21, 2002 of
a cashier's check in the amount of Five Hundred Thousand Dollars ($500,000),
which is being held in a segregated trust account by Seller's counsel (the
"DEPOSIT"), and which will be credited towards the Cash Purchase Price. The
Deposit is refundable only in the event of: (i) Seller's material default, or
(ii) failure to obtain Bankruptcy Court approval of Buyer as the successful
bidder for the Property consistent with the terms of this Agreement. The Deposit
shall be returned to the Buyer within 48 hours of becoming refundable pursuant
to the foregoing provision.
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(ii) The balance of the Cash Purchase Price,
subject to adjustment in accordance with Section 2.3 below, will be due and
payable in cash on the Closing Date.
2.2 ASSUMED LIABILITIES. Buyer shall, effective as of the Closing
Date, assume all of the Seller's liabilities and obligations: (i) under the Real
Property Leases, and the Other Leases and Contracts arising or incurred on and
after the Closing Date, (ii) arising or incurred in connection with the use and
operation of the Property and/or the Business from and after the Closing Date,
(iii) comprising the accounts payable and accrued liabilities of Seller as of
the Closing Date, incurred or arising in connection with the Business, as set
forth on SCHEDULE 2.2(III) attached hereto and incorporated herein by this
reference; and (iv) relating to pre-petition cure amounts with respect to Real
Property Leases and Other Leases and Contracts (collectively, the "CURE
AMOUNTS") in excess of $250,000 ("EXCESS CURE AMOUNTS"). Seller shall be
responsible for the payment of the Cure Amounts up to $250,000, required to be
paid to non-debtor parties in order for the assumption and assignment of the
Real Property Leases and Other Leases and Contracts pursuant Section 365 of the
Bankruptcy Code. In addition, provided the Cash Purchase Price has not increased
beyond $4,500,000, and provided further that Seller has contributed at least the
first $100,000.00 to such payments, Buyer shall pay up to $243,000.00 with
respect to severance payments to be paid by Buyer to certain of its employees
whose employment is terminated as a result of the transaction contemplated by
this Agreement.
2.2 ADJUSTMENTS TO CASH PURCHASE PRICE. At the Closing, the
Cash Purchase Price shall be:
2.2.1 Reduced by the amount of any Excess Cure Amounts; and
2.2.2 (i) In the event that the Inventory Valuation is less
than the Inventory Base, reduced by an amount equal to the difference between
the Inventory Base and the Inventory Valuation, or (ii) in the event that the
Inventory Valuation is greater than the Inventory Base, increased by an amount
equal to fifty percent (50%) of difference between the Inventory Base the
Inventory Valuation, up to a maximum increase of One Hundred Fifty Thousand
Dollars ($150,000).
2.3 BUYER OBLIGATION. Buyer shall be obligated to demonstrate to the
Bankruptcy Court "adequate assurance of future performance" (within the meaning
of section 365(f)(2) of the Bankruptcy Code) by Buyer as a condition to the
assignment to and the assumption by Buyer of the Real Property Leases and Other
Contracts and Leases.
3. CLOSING TRANSACTIONS.
3.1 CLOSING CONFERENCE. The Closing of the transactions provided for
herein (the "CLOSING") shall take place at the offices of Seller's counsel,
Xxxxxxxxx, Stang, Ziehl, Young & Xxxxx, PC, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxxxxxxx 00000.
3.2 CLOSING DATE. The Closing shall be held on the date (the
"CLOSING DATE") which is the later of eleven (11) days after entry of the Sale
Orders (as defined in Section 8.1 below), or July 30, 2002 (the "OUTSIDE DATE").
In the event the conditions to Closing have not been satisfied or waived by the
Outside Date, then any party who is not in default hereunder may terminate this
Agreement. Alternatively, the parties may mutually agree to an extended Closing
Date. Until this Agreement is either terminated or the parties have agreed upon
an extended Closing Date, the parties shall
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diligently continue to work to satisfy all conditions to Closing and the
transaction contemplated herein shall close as soon as such conditions are
satisfied or waived.
3.3 SELLER'S DELIVERIES TO BUYER AT CLOSING. On the Closing
Date, Seller shall make the following deliveries to Buyer:
3.3.1 An Assignment and Assumption of Leases and Contracts
substantially in the form and content attached as EXHIBIT "C" hereto, duly
executed by Seller, pursuant to which Seller assigns the Real Property Leases
and Other Contracts and Leases (the "ASSIGNMENT OF LEASES AND CONTRACTS").
3.3.2 A xxxx of sale, duly executed by Seller, in the form and
on the terms of the xxxx of sale attached hereto as EXHIBIT "D," pursuant to
which Seller transfers the Personal Property, and the Inventory to Buyer (the
"XXXX OF SALE").
3.3.3 A counterpart assignment of intangible property, duly
executed by Seller, in the form and content of the assignment of intangible
property attached as EXHIBIT "E," hereto, pursuant to which Seller assigns to
Buyer its interest, if any, in and to the Intangible Property to Buyer (the
"ASSIGNMENT OF INTANGIBLE PROPERTY").
3.3.4 Any such other documents (including all documents
comprising Intellectual Property not previously provided to Buyer), funds or
other things reasonably contemplated by this Agreement to be delivered by Seller
to Buyer at the Closing.
3.4 BUYER'S DELIVERIES TO SELLER AT CLOSING. On the Closing
Date, Buyer shall make or cause the following deliveries to Seller:
3.4.1 The balance of the Cash Purchase Price to be delivered
in good funds by Buyer directly to Seller at the Closing as set forth in Section
2.1(b)(iii) above.
3.4.2 A counterpart of the Assignment of Leases and
Contracts, duly executed by Buyer.
3.4.3 A counterpart of the Assignment of Intangible
Property, duly executed by Buyer.
3.4.4 Any such other documents, funds or other things
reasonably contemplated by this Agreement to be delivered by Buyer to Seller at
the Closing.
3.5 PRORATIONS. Rent, current taxes, prepaid advertising and other
items of expense (including, without limitation, any prepaid insurance under the
Real Property Leases or Other Leases and Contracts, or any of them) and income
relating to or attributable to the Business and/or the Property shall be
prorated between Seller and Buyer as of the Closing Date as set forth herein.
All liabilities and obligations due in respect of periods prior to or as of the
Closing Date shall be paid in full or otherwise satisfied by Seller (except as
otherwise provided for in this Agreement), and all liabilities and obligations
due in respect of periods after the Closing Date shall be paid in full or
otherwise satisfied by Buyer. Rent shall be prorated on the basis of a thirty
(30) day month. Set forth on SCHEDULE 3.2, such may be amended by the parties
hereto from time to time prior to the Closing
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Date, is a list of all security or similar deposits with the landlords or other
contracting parties under the Real Property Leases and the Other Leases and
Contracts and the amount of any other deposits made by Seller relating to the
property to which the Other Leases and Contracts relate (collectively, the
"SECURITY DEPOSITS"). Buyer shall pay to Seller in cash on the Closing Date the
amount of the Security Deposits and an amount equal to the Xxxxx Cash.
3.6 SALES, USE AND OTHER TAXES. Except as provided in the Sale
Orders, any sales, purchases, transfer, stamp, documentary stamp, use or similar
taxes under the laws of the states in which any portion of the Property is
located, or any subdivision of any such state, which may be payable by reason of
the sale of the Property under this Agreement or the transactions contemplated
herein shall be borne and timely paid by Buyer.
3.7 POSSESSION. Right to possession of the Property shall transfer
to Buyer on the Closing Date. Seller shall transfer and deliver to Buyer on the
Closing Date such keys, locks and safe combinations and other similar items as
Buyer may reasonably require to obtain occupation and control of the Property,
and shall also make available to Buyer at their then existing locations the
originals of all documents in Seller's possession that are required to be
transferred to Buyer by this Agreement.
4. CONDITIONS PRECEDENT TO CLOSING.
4.1 CONDITIONS TO SELLER'S OBLIGATIONS. Seller's obligation to make
the deliveries required of Seller at the Closing Date shall be subject to the
satisfaction or waiver by Seller of each of the following conditions.
4.1.1 All of the representations and warranties of Buyer
contained herein shall continue to be true and correct at the Closing in all
material respects.
4.1.2 Buyer shall have executed and delivered to Seller
the Assignment of Leases.
4.1.3 Buyer shall have delivered, or shall be prepared to
deliver at the Closing, all cash and other documents required of Buyer to be
delivered at the Closing, including without limitation the balance of the Cash
Purchase Price in good funds.
4.1.4 Buyer shall have delivered to Seller appropriate
evidence of all necessary corporate action by Buyer in connection with the
transactions contemplated hereby, including, without limitation: (i) certified
copies of resolutions duly adopted by Buyer's board of directors approving the
transactions contemplated by this Agreement and authorizing the execution,
delivery, and performance by Buyer of this Agreement; and (ii) a certificate as
to the incumbency of officers of Buyer executing this Agreement and any
instrument or other document delivered in connection with the transactions
contemplated by this Agreement.
4.1.5 The Bankruptcy Court shall have entered the Sale Orders
in accordance with 8.1 below and the Sale Orders shall not have been stayed as
of the Closing Date.
4.1.6 Buyer shall have executed and delivered to Xxxxxxxxx
Xxxxx Corporation ("ACC") a license or other agreement (the "License") granting
to ACC and its successors
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and assigns the right to use the Sweet Factory trade name, trade dress and other
incidental rights and privileges at the eleven (11) locations currently operated
by ACC (as set forth on SCHEDULE 4.1.6 attached hereto) as Xxxxxx May or Xxxxx
Xxxxxx and Sweet Factory combination stores, for the remaining, current paid
term of the Seller's existing license to use such trade name, trade dress and
other incidental rights and privileges.
4.2 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligation to make
the deliveries required of Buyer at the Closing shall be subject to the
satisfaction or waiver by Buyer of each of the following conditions:
4.2.1 Seller shall have executed and be prepared to deliver to
Buyer the Assignment of Leases and Contracts; the Xxxx of Sale; and the
Assignment of Intangible Property.
4.2.2 Seller shall have delivered, or shall be prepared to
deliver at the Closing, all other documents required of Seller to be delivered
at the Closing.
4.2.3 The Bankruptcy Court shall have entered the Bidding
Procedures Order (as defined in and in accordance with Section 8.1 below) and
the Bidding Procedures Order shall not have been stayed as of the Closing Date.
4.2.4 The Bankruptcy Court shall have entered the Sale Orders
in accordance with Section 8.1 below and the Sale Orders shall not have been
stayed as of the Closing Date.
4.3 TERMINATION. If any of the above conditions is neither satisfied
nor waived on or before the date by which the condition is required to be
satisfied, a party who is not then in default hereunder may terminate this
Agreement by delivering to the other written notice of termination. Any waiver
of a condition shall be effective only if such waiver is stated in writing and
signed by the waiving party; provided, however, that the consent of a party to
the Closing shall constitute a waiver by such party of any conditions to Closing
not satisfied as of the Closing Date.
5. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby makes
the following representations and warranties to Buyer:
5.1 VALIDITY OF AGREEMENT. Upon obtaining the Sale Orders this
Agreement shall constitute the valid and binding obligation of Seller
enforceable in accordance with its terms.
5.2 ORGANIZATION, STANDING AND POWER. Subject to the applicable
provisions of bankruptcy law, Seller has all requisite corporate power and
authority to own, lease and operate its properties, to carry on its business as
now being conducted and, subject to the Seller's obtaining the Sale Orders to
execute, deliver and perform this Agreement and all writings relating hereto.
5.3 AUTHORIZATION OF SELLER. Upon obtaining the Sale Orders, the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated, and the performance of, fulfillment of and compliance with
the terms and conditions hereof by Seller do not and will not: (i) conflict with
or result in a breach of the articles of incorporation or the by-laws of Seller;
(ii) violate any statute, law, rule or regulation, or any order, writ,
injunction or decree of any court or governmental authority; or (iii) violate or
conflict with or constitute a default under any
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agreement, instrument or writing of any nature to which Seller is a party or by
which Seller or its assets or properties may be bound.
6. BUYER'S WARRANTIES AND REPRESENTATIONS. In addition to the
representations and warranties contained elsewhere in this Agreement, Buyer
hereby makes the following representations and warranties to Seller:
6.1 VALIDITY OF AGREEMENT. All action on the part of Buyer necessary
for the authorization, execution, delivery and performance of this Agreement by
Buyer, including, but not limited to, the performance of Buyer's obligations
hereunder, has been taken. This Agreement, when executed and delivered by Buyer,
shall constitute the valid and binding obligation of Buyer enforceable in
accordance with its terms.
6.2 ORGANIZATION, STANDING AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Buyer has all requisite corporate power and authority to own, lease
and operate its properties, to carry on its business as now being conducted and
to execute, deliver and perform this Agreement and all writings relating hereto.
6.3 AUTHORIZATION OF BUYER. The execution, delivery and performance
of this Agreement and all writings relating hereto by Buyer have been duly and
validly authorized. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, and the performance of,
fulfillment of and compliance with the terms and conditions hereof by Buyer do
not and will not: (i) conflict with or result in a breach of the articles of
incorporation or by-laws of Buyer; (ii) violate any statute, law, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental authority; or (iii) violate or conflict with or constitute a
default under any agreement, instrument or writing of any nature to which Buyer
is a party or by which Buyer or its assets or properties may be bound.
7. ACKNOWLEDGEMENT; INDEMNITY AND RELEASE.
7.1 "AS IS" TRANSACTION. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT
SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY MATTER RELATING TO THE PROPERTY (INCLUDING, WITHOUT
LIMITATION, INCOME TO BE DERIVED OR EXPENSES TO BE INCURRED IN CONNECTION WITH
THE PROPERTY, THE PHYSICAL CONDITION OF ANY PERSONAL PROPERTY COMPRISING A PART
OF THE PROPERTY OR WHICH IS THE SUBJECT OF ANY OTHER LEASE OR CONTRACT TO BE
ASSUMED BY BUYER AT THE CLOSING, THE ENVIRONMENTAL CONDITION OR OTHER MATTER
RELATING TO THE PHYSICAL CONDITION OF THE LEASED REAL PROPERTY, OR IMPROVEMENTS
AT THE CLOSING OR ANY OTHER REAL PROPERTY OR IMPROVEMENTS COMPRISING A PART OF
THE PROPERTY, THE ZONING OF ANY SUCH REAL PROPERTY OR IMPROVEMENTS, THE VALUE OF
THE PROPERTY (OR ANY PORTION THEREOF), THE TRANSFERABILITY OF PROPERTY, THE
TERMS, AMOUNT, VALIDITY, COLLECTIBILITY OR ENFORCEABILITY OF ANY ASSUMED
LIABILITIES OR REAL PROPERTY LEASE OR OTHER LEASE OR CONTRACT, THE TITLE OF THE
PROPERTY (OR ANY PORTION THEREOF), THE MERCHANTABILITY OR FITNESS OF THE
PERSONAL PROPERTY OR ANY OTHER PORTION OF THE PROPERTY FOR ANY PARTICULAR
PURPOSE, OR ANY OTHER MATTER OR THING RELATING TO THE PROPERTY OR ANY PORTION
THEREOF). WITHOUT IN ANY WAY LIMITING THE FOREGOING, SELLER HEREBY DISCLAIMS ANY
WARRANTY (EXPRESS OR IMPLIED) OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AS TO ANY PORTION OF THE PROPERTY. BUYER FURTHER ACKNOWLEDGES THAT BUYER
HAS CONDUCTED AN INDEPENDENT INSPECTION AND INVESTIGATION OF THE PHYSICAL
CONDITION OF ALL PORTIONS THE PROPERTY AND ALL SUCH
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OTHER MATTERS RELATING TO OR AFFECTING THE PROPERTY AS BUYER DEEMED NECESSARY OR
APPROPRIATE AND THAT IN PROCEEDING WITH ITS ACQUISITION OF THE PROPERTY, BUYER
IS DOING SO BASED SOLELY UPON SUCH INDEPENDENT INSPECTIONS AND INVESTIGATIONS.
ACCORDINGLY, EXCEPT ONLY FOR SUCH SURVIVING REPRESENTATIONS, BUYER WILL ACCEPT
THE PROPERTY AT THE CLOSING "AS IS, "WHERE IS," AND "WITH ALL FAULTS."
7.2 BUYER'S RELEASE OF SELLER. Effective as of the Closing Date,
Buyer and anyone claiming by, through or under Buyer hereby waives its right to
recover from and fully and irrevocably releases Seller, and its employees,
officers, directors, representatives, agents, servants, attorneys, affiliates,
parent, subsidiaries, successors and assigns, and all persons, firms,
corporations and organizations in its behalf ("Released Parties") from any and
all claims, responsibility and/or liability that it may now have or hereafter
acquire against any of the Released Parties for any costs, loss, liability,
damage, expenses, demand, action or cause of action arising from or related to
the condition, valuation, salability or utility of the Property, or its
suitability for any purpose whatsoever, and any information furnished by the
Released Parties under or in connection with this Agreement. This release
includes claims of which Buyer is presently unaware or which Buyer does not
presently suspect to exist which, if known by Buyer, would materially affect
Buyer's release to Seller. In this connection and to the extent permitted by
law, Buyer hereby agrees, represents and warrants that Buyer realizes and
acknowledges that factual matters now unknown to it may have given or may
hereafter give rise to causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are presently unknown, unanticipated
and unsuspected, and Buyer further agrees, represents and warrants that the
waivers and releases herein have been negotiated and agreed upon in light of
that realization and that Buyer nevertheless hereby intends to release,
discharge and acquit Seller from any such unknown causes of action, claims,
demands, debts, controversies, damages, costs, losses and expenses. Buyer
specifically waives the provision of California Civil Code Section 1542, which
provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXCUTING THE
RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE
SETTLEMENT WITH THE DEBTOR"
---------------- -----------------
Buyer's Initials Seller's Initials
8. BANKRUPTCY COURT APPROVAL OF SALE PROCEDURES.
8.1 SALES ORDERS. Within five (5) days following the Execution Date,
the Seller will make a motion (the "SALE MOTION") for the following orders,
which are hereinafter collectively referred to as the "SALE ORDERS":
(A) an order in form reasonably acceptable to Buyer and Seller (the
"APPROVAL ORDER") from the Bankruptcy Court which (i) approves the sale to Buyer
of the Property other than the Section 365 Contracts (as defined below) on the
terms and conditions set forth in this Agreement and authorizes the Seller to
proceed with this transaction, (ii) includes a specific finding that Buyer is a
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good faith buyer of the Property, and (iii) states that the sale of the Property
to Buyer shall be free and clear of all liens, claims, interests and
encumbrances whatsoever.
(B) an order in form reasonably acceptable to Buyer and Seller (the
"CONTRACTS ASSUMPTION ORDER") which approves the Seller's assumption and
assignment of the pre-petition Real Property Leases and Other Leases and
Contracts (collectively, the "SECTION 365 CONTRACTS") pursuant to Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Bankruptcy Code and orders the Seller to pay any Cure Amounts
(other than the Excess Cure Amounts which shall be paid by Buyer) payable to the
other parties to the Section 365 Contracts as a condition to such assumption and
assignment; provided, however, in no event shall Buyer have the right to
disapprove the Contracts Assumption Order or terminate this transaction by
reason of the failure to assign all of the Section 365 Contracts so long as the
Contracts Assumption Order authorizes Seller to assume and to assign to Buyer
all Real Property Leases and all material Other Leases and Contracts. Following
the filing of the Sale Motion, the Seller shall use its reasonable best efforts
to obtain the Sale Orders. Both Buyer's and Seller's obligations to consummate
the transactions contemplated in this Agreement which the Buyer and Seller may
hereafter enter into shall be conditioned upon the Bankruptcy Court's entry of
the Sale Orders. If (xx) the Bankruptcy Court refuses to issue the Sale Orders
(except as otherwise provided in this clause (B)), (yy) a third party buyer for
the Property or any material portion thereof is approved by the Court at the
hearing on the Sale Motion, or (zz) the Sale Orders are for any other reason not
entered on or before eleven (11) days prior to the Outside Date, then in any
such event, this transaction shall automatically terminate and the Seller and
the Buyer shall be relieved of any further liability or obligation hereunder and
the Deposit shall be returned to Buyer within 48 hours. Upon timely entry of the
Sale Orders (such entry date being referred to herein as the "SALE APPROVAL
DATE"), the condition set forth in this Section 8.1 shall conclusively be deemed
satisfied.
8.2 BIDDING PROCEDURES ORDER. As part of the Sale Motion, the Seller
shall also request and use reasonable good faith efforts to obtain from the
Bankruptcy Court, an order in form reasonably acceptable to Buyer and Seller
(the "BIDDING PROCEDURES ORDER") which approves the following bidding procedures
and expense reimbursements (the "BIDDING PROCEDURES"): (i) Buyer will be
entitled to receive from the Seller a payment in the amount of $150,000.00, in
cash or other immediately available good funds, in the event the Buyer is not
the successful bidder for the Property (said payment to be made within 48 hours
of the closing of such a sale or sooner if reasonably practicable) provided
that: (a) Buyer is ready, willing and able to close the transaction contemplated
by this Agreement; and (b) Buyer is not in default of its obligations hereunder
(including, without limitation, the obligations set forth in section 2.3 above);
and (ii) no prospective buyer will be permitted to bid at the Sale Hearing
unless such party has been deemed "financially qualified" by the Seller. Should
overbidding take place, the Buyer shall have the right, but not the obligation,
to participate in the overbidding and to be approved as the overbidder at the
hearing on the Sale Motion based upon any such overbid.
9. MISCELLANEOUS.
9.1 ATTORNEYS' FEES. In the event that either party hereto brings an
action or other proceeding to enforce or interpret the terms and provisions of
this Agreement, the prevailing party in that action or proceeding shall be
entitled to have and recover from the non-prevailing party all such fees, costs
and expenses (including, without limitation, all court costs and reasonable
attorneys' fees) as the prevailing party may suffer or incur in the pursuit or
defense of such action or proceeding.
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9.2 REASONABLE ACCESS TO RECORDS AND CERTAIN PERSONNEL. So long as
the Case is pending, (i) the Buyer shall permit Seller's counsel and other
professionals employed in the Case reasonable access to the financial and other
books and records relating to the Property or the Business (whether in
documentary or data form) for the purpose of the continuing administration of
the Case (including, without limitation, the pursuit of any avoidance,
preference or similar action), which access shall include (xx) the right of such
professionals to copy, at the Seller's expense, such documents and records as
they may request in furtherance of the purposes described above, and (yy)
Buyer's copying and delivering to the Seller or its professionals such documents
or records as they may request, but only to the extent the Seller or its
professionals furnishes Buyer with reasonably detailed written descriptions of
the materials to be so copied and the Seller reimburses the Buyer for the
reasonable costs and expenses thereof), and (ii) Buyer shall provide the Seller
and such professionals (at no cost to the Seller) with reasonable access to
Buyer during regular business hours to assist the Seller in the continuing
administration of the Case, provided that such access does not unreasonably
interfere with the Buyer's business operations.
9.3 ACCESS TO RECORDS AND PROPERTIES OF SELLER. Subject to any
confidentiality agreements heretofore entered into between Buyer and Seller,
from and after the date of this Agreement until the Closing Date, Seller shall
afford to Buyer's officers, independent public accountants, counsel, lenders,
consultants and other representatives, reasonable access for examination at all
reasonable times to the Property and all records pertaining to the Property or
the Business. Buyer, however, shall not be entitled to access to any materials
containing privileged communications or information about employees, disclosure
of which is prohibited by law. Buyer expressly acknowledges that nothing in this
Section 9.3 is intended to give rise to any contingency to Buyer's obligations
to proceed with the transactions contemplated herein.
9.4 NOTICES. Unless otherwise provided herein, any notice, tender,
or delivery to be given hereunder by either party to the other may be effected
All notices, requests, demands and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given, made and received only when transmitted if: (i)
transmitted by telecopy, upon printed confirmation of complete transmission by
facsimile; (ii) delivered (personally, by courier service such as Federal
Express, or by other messenger) or (iii) when deposited in the United States
mails, registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below. Mailed notices shall be addressed as set forth
below, but each party may change his address by written notice in accordance
with this paragraph.
To Seller: Sweet Factory Group, Inc.
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxxxx
With a copy to: Xxxxxxxxx Xxxxx Xxxxx Xxxxx & Xxxxx P.C.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
To Buyer: RDR Group
0000 Xxxxx Xxxxxx, 0xx Xxxxx
00
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxx, CEO
With a copy to: Xxxxxxx, Xxxxx & Xxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
9.5 ENTIRE AGREEMENT. This instrument and the documents to be
executed pursuant hereto contain the entire agreement between the parties
relating to the sale of the Property. Any oral representations or modifications
concerning this Agreement or any such other document shall be of no force and
effect excepting a subsequent modification in writing, signed by the party to be
charged.
9.6 MODIFICATION. This Agreement may be modified, amended or
supplemented only by a written instrument duly executed by all the parties
hereto.
9.7 CLOSING DATE. All actions to be taken on the Closing pursuant to
this Agreement shall be deemed to have occurred simultaneously, and no act,
document or transaction shall be deemed to have been taken, delivered or
effected until all such actions, documents and transactions have been taken,
delivered or effected.
9.8 SEVERABILITY. Should any term, provision or paragraph of this
Agreement be determined to be illegal or void or of no force and effect, the
balance of the Agreement shall survive except that, if Buyer cannot acquire and
Seller cannot sell substantially all of the Property, either party may terminate
this Agreement, and it shall be of no further force and effect, unless both
parties agree in writing to the contrary.
9.9 CAPTIONS. All captions and headings contained in this Agreement
are for convenience of reference only and shall not be construed to limit or
extend the terms or conditions of this Agreement.
9.10 FURTHER ASSURANCES. Each party hereto will execute, acknowledge
and deliver any further assurance, documents and instruments reasonably
requested by any other party hereto for the purpose of giving effect to the
transactions contemplated herein or the intentions of the parties with respect
thereto.
9.11 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of other provisions, whether or
not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
9.12 BROKERAGE OBLIGATIONS. Seller and the Buyer each represent and
warrant to the other that, such party has incurred no liability to any real
estate broker or agent with respect to the payment of any commission regarding
the consummation of the transaction contemplated hereby. It is agreed that if
any claims for commissions, fees or other compensation, including, without
limitation, brokerage fees, finder's fees, or commissions are ever asserted
against Buyer or the Seller in connection with this transaction, all such claims
shall be handled and paid by the party whose actions
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form the basis of such claim and such party shall indemnify, defend (with
counsel reasonably satisfactory to the party entitled to indemnification),
protect and save and hold the other harmless from and against any and all such
claims or demands asserted by any person, firm or corporation in connection with
the transaction contemplated hereby.
9.13 PAYMENT OF FEES AND EXPENSES. Except as provided in Section 9.2
above, each party to this Agreement shall be responsible for, and shall pay, all
of its own fees and expenses, including those of its counsel, incurred in the
negotiation, preparation and consummation of the Agreement and the transaction
described herein.
9.14 SURVIVAL. The respective representations, warranties, covenants
and agreements of Seller and Buyer herein, or in any certificates or other
documents delivered prior to or at the Closing, shall not be deemed waived or
otherwise affected by the Closing.
9.15 ASSIGNMENTS. This Agreement shall not be assigned by either
party hereto without the prior written consent of the other party hereto.
9.16 BINDING EFFECT. Subject to the provisions of Section 9.15
above, this Agreement shall bind and inure to the benefit of the respective
heirs, personal representatives, successors, and assigns of the parties hereto.
9.17 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any choice of law or conflict of law provision which would cause the
application of the laws of any jurisdiction other than those of the State of
Illinois.
9.18 GOOD FAITH. All parties hereto agree to do all acts and execute
all documents required to carry out the terms of this Agreement and to act in
good faith with respect to the terms and conditions contained herein before and
after Closing.
9.19 CONSTRUCTION. In the interpretation and construction of this
Agreement, the parties acknowledge that the terms hereof reflect extensive
negotiations between the parties and that this Agreement shall not be deemed,
for the purpose of construction and interpretation, drafted by either party
hereto.
9.20 COUNTERPARTS. This Agreement may be signed in counterparts. The
parties further agree that this Agreement may be executed by the exchange of
facsimile signature pages provided that by doing so the parties agree to
undertake to provide original signatures as soon thereafter as reasonable in the
circumstances.
9.21 TIME IS OF THE ESSENCE. Time is of the essence in this
Agreement, and all of the terms, covenants and conditions hereof.
9.22 BANKRUPTCY COURT JURISDICTION. BUYER AND SELLER AGREE THAT THE
BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ALL DISPUTES AND OTHER
MATTERS RELATING TO (i) THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT OR
ANY ANCILLARY DOCUMENT EXECUTED PURSUANT HERETO; AND/OR (ii) THE PROPERTY AND/OR
ASSUMED
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LIABILITIES, AND BUYER EXPRESSLY CONSENTS TO AND AGREES NOT TO CONTEST SUCH
EXCLUSIVE JURISDICTION.
9.23 JURY TRIAL: TO THE EXTENT THAT THE PARTIES HERETO MAY HAVE THE
RIGHT TO TRIAL BY JURY, EACH OF SELLER AND BUYER HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF Buyer and Seller have executed this Asset Purchase
Agreement as of the day and year first above written.
"BUYER"
RDR GROUP,
a California corporation
By: /s/ Xxxxx X. Xxx
-----------------
Name: Xxxxx X. Xxx
Its: President
"SELLER":
SWEET FACTORY GROUP, INC
a Delaware corporation
and Debtor and Debtor-In-Possession
By: /s/ Xxx X. Xxxxxxxx
--------------------
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
SWEET FACTORY, INC
a Delaware corporation
and Debtor and Debtor-In-Possession
By: /s/ Xxx X. Xxxxxxxx
--------------------
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
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SF CANDY COMPANY
a Delaware corporation
and Debtor and Debtor-In-Possession
By: /s/ Xxx X. Xxxxxxxx
--------------------
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
SF PROPERTIES, INC.
a Delaware corporation
and Debtor and Debtor-In-Possession
By: /s/ Xxx X. Xxxxxxxx
--------------------
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
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