EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
by and between
XXXXXXXX X. XXXXX
and
HAROLD'S STORES, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated February
18, 2000, is entered into by and between Harold's Stores, Inc.,
an Oklahoma corporation ("Harold's") and Xxxxxxxx X. Xxxxx, the
sole shareholder (the "Shareholder") of CMT Enterprises, Inc., a
New York corporation ("CMT"). Harold's and Shareholder are
referred to collectively herein as the "Parties" and individually
as a "Party."
RECITALS
A. Shareholder owns ten shares of common stock, without
par value, of CMT constituting of all of the issued and
outstanding capital stock of CMT.
B. Shareholder desires to sell to Harold's, and Harold's
desires to purchase from Shareholder, all of the issued and
outstanding shares (the "CMT Shares") of capital stock of CMT for
the consideration and on and subject to the terms and conditions
set forth herein.
C. Terms capitalized but not otherwise defined herein have
the meanings ascribed to them in Section 13.
TERMS AND CONDITIONS
In consideration of the foregoing recitals and the mutual
covenants, representations and warranties contained in this
Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
1. PURCHASE OF CMT SHARES.
1.1 CMT Shares. On and subject to the terms and conditions
of this Agreement and in reliance upon the representations made
herein by the Parties, at the Closing, Shareholder shall sell and
transfer the CMT Shares to Harold's, and Harold's shall purchase
the CMT Shares from Seller.
1.2 Purchase Price; Payment of the Purchase Price.
Harold's shall pay to CMT the purchase price for the CMT Shares
(the "Purchase Price"), which shall be an aggregate amount equal
to Two Million Seven Hundred Twenty Thousand Dollars
($2,720,000), inclusive of interest. Harold's shall pay the
Purchase Price at Closing by delivering to CMT a promissory note
of Harold's in the principal amount of $2,544,799.42, bearing
monthly interest at a rate of 0.465859% (the "Purchase Note"),
which shall be payable by Harold's to CMT in equal monthly
installments of $90,666.67 over a thirty (30) month period with
the first monthly payment made by Harold's at Closing. The form
of the Purchase Note is attached as Exhibit 1.2.
1.3 Adjustment of Purchase Price. If, on the Closing Date,
the net book value of the non-cash assets on CMT's balance sheet
is less than $400,000, the Purchase Price shall be decreased on a
dollar for dollar basis in an amount equal to the amount by which
such net book value of the non-cash assets is less than $400,000.
Any such reduction shall be effected by a reduction in the amount
of the Purchase Note, with any such reduction to be taken out of
next installment payment due under the Purchase Note until such
reduction is satisfied.
1.4 Harold's Note. As of the date of Closing, all payments
under the Harold's Note through and including the payment for
January, 2000, shall have been made, and the principal balance of
the Harold's Note shall be no greater than $1,385,567.22. At or
prior to Closing Harold's shall have delivered to CMT and
Shareholder one or more documents comprising the terms of the
Waiver, Consent and Agreement in the form annexed hereto as
Exhibit 1.4.
1.5 Office Lease. Shareholder and Harold's each
acknowledges to the other that a consent of the landlord to the
assignment of the CMT Office Lease may not be obtained or
obtainable without expense, and that failing such a consent, the
consummation of this transaction may constitute a default under
the CMT Office Lease. Accordingly, the failure to obtain such
consent or agreement, and any resulting default, shall not affect
the obligations of the parties under this Agreement.
1.6 Consulting Agreement. Harold's and PrimaTech
Corporation shall enter into a Consulting Agreement (the
"Consulting Agreement") in the form attached hereto as Exhibit
1.6.
1.7 Termination of Certain Agreements. Each of (i) the
Employment Agreement between CMT and Shareholder, (ii) the Stock
Pledge Agreement between CMT and Shareholder, and (iii) the
Guaranty, shall be terminated upon Closing.
2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. As a
material inducement to Harold's to enter into this Agreement and
consummate the transactions contemplated herein, Shareholder
represents and warrants to Harold's, as of the date of this
Agreement and as of the Closing Date (as if made on such date),
as follows:
2.1 Organization, Power and Qualification. CMT is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York. CMT has all
requisite corporate power and authority to own, lease and operate
its Assets and to carry on its business as presently conducted.
CMT has delivered to Harold's complete and correct copies of the
Organizational Documents of CMT, as currently in effect. Set
forth in Schedule 2.1 is a listing of each jurisdiction in which
CMT is qualified to do business as a foreign corporation. CMT is
duly qualified as a foreign corporation and is in good standing
to do business in every jurisdiction in which such qualification
is necessary because of the nature of the Assets owned, leased or
operated by it or the nature of the businesses conducted by it.
2.2 Subsidiaries. CMT has no Subsidiaries. CMT has no
interest, direct or indirect, and, has no commitment to purchase
any interest, direct or indirect, in any corporation or in any
partnership, joint venture or other business enterprise or
entity. The business carried on by CMT has not been conducted
through any other direct or indirect Subsidiary or Affiliate of
any Shareholder.
2.3 Authority; Power; Binding Effect. The execution,
delivery and performance of this Agreement by Shareholder have
been authorized by all necessary action on the part of
Shareholder and no other proceedings (corporate or other) on the
part of Shareholder are necessary to authorize the execution,
delivery and performance of this Agreement. Shareholder has the
requisite right, power, authority and capacity to execute and
deliver this Agreement and to carry out the transactions
contemplated hereby and to take any and all other actions
required to be taken by each of them pursuant to this Agreement.
This Agreement has been duly executed and delivered by
Shareholder and, assuming the due execution and delivery of this
Agreement by Harold's, constitutes the legal, valid and binding
obligation of Shareholder enforceable against Shareholder in
accordance with its terms and conditions.
2.4 No Violation; Consents. Neither the execution and
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, by Shareholder, after giving
effect to any waivers, will, directly or indirectly, with or
without notice or the passage of time, except as contemplated by
this Agreement or as set forth in Schedule 2.4: (a) violate or
conflict with any provision of the Organizational Documents of
CMT; (b) violate any provision of any law of any Governmental
Entity applicable to CMT or Shareholder; (c) conflict with,
violate or result in a breach of or constitute (with due notice
or lapse of time) a default under any contract, lease, loan
agreement, mortgage, security agreement, indenture, or other
agreement or instrument to which CMT or Shareholder is a party or
by which CMT or Shareholder is bound or to which any of their
respective Assets is subject; (d) result in the imposition of any
Encumbrance on CMT or any of its Assets; or (e) require any
authorization, consent, approval or other action by or notice to
or filing with any Person or Governmental Entity.
2.5 Ownership of CMT's Capital Stock. Shareholder is the
sole lawful record and beneficial owner of all of CMT's issued
and outstanding capital stock comprised solely of ten (10) shares
of common stock, without par value, free and clear of any
Encumbrances except as set forth on Schedule 2.5, and all of such
shares have been duly authorized and are validly issued, fully
paid and nonassessable. Shareholder has not sold, assigned,
transferred, conveyed or otherwise effected any disposition of
any of the CMT Shares and Shareholder shall not effect any such
disposition between the date hereof and the Closing Date. There
are, or as of Closing will be, no options, warrants, calls,
conversion or other rights, or any agreements or commitments of
any nature which obligate the CMT to issue any additional shares
of capital stock or any securities convertible into or
exchangeable for any such shares of capital stock and no
authorization therefor has been given.
2.6 Transactions with Certain Persons. Except as set forth
in Schedule 2.6: (i) CMT does not owe any amount to, or have any
contract with or commitment to, Shareholder, or any of CMT's
directors, officers, employees, consultants or Affiliates (other
than compensation for current services not yet due and payable
and reimbursement of expenses arising in the Ordinary Course of
Business), and none of such persons owes any amount to CMT; and
(ii) no part of the Assets of Shareholder or any direct or
indirect Affiliate of Shareholder is used by CMT.
2.7 Financial Statements. True and complete copies of the
balance sheets of CMT, as of December 31, 1996, 1997 and 1998,
and the related statements of operations and cash flows for each
of the years in the three year period ended December 31, 1998,
together with the notes thereto and the audit reports thereon of
Xxxxxxxx, Xxxxxx & Green (collectively, the "Audited Financial
Statements"), are attached hereto as Schedule 2.7(A). The
unaudited interim balance sheet of CMT (the "Interim Balance
Sheet") as of December 31, 1999 (the "Interim Balance Sheet
Date") and the related statements of operations and cash flows
for the twelve months ended December 31, 1999 (collectively, the
"Interim Financial Statements") are attached hereto as Schedule
2.7(B). The Audited Financial Statements (including any related
schedules and/or notes thereto except as otherwise stated
thereon) have been prepared in accordance with GAAP that were,
except as otherwise stated therein, consistently followed
throughout the periods involved. The Interim Financial
Statements have been prepared in a manner consistent with the
unaudited interim financial statements furnished to Harold's in
1997, 1998 and 1999, do not include all of the notes thereto
which might be required by GAAP. The Interim Financial
Statements show all material liabilities, required to be shown in
accordance with GAAP. The Audited Financial Statements fairly
present the financial condition of CMT as of their respective
dates and fairly present the results of operations and cash flows
of CMT for the periods indicated.
2.8 Absence of Undisclosed Liabilities . CMT has no
Liabilities except:
(a) those Liabilities reflected or reserved against on
the face of the Interim Balance Sheet (excluding the notes
thereto) and not heretofore paid or discharged in the
Ordinary Course of Business;
(b) Liabilities arising in the Ordinary Course of
Business under any agreement, contract, commitment, lease or
plan specifically set forth in Schedule 2.9 (or not required
to be disclosed under Section 2.9 because of the term or
amount involved);
(c) current Liabilities incurred in the Ordinary
Course of Business since the Interim Balance Sheet Date; and
(d) Liabilities arising from matters disclosed in the
schedules hereto or as to which Harold's is indemnified
pursuant to Section 10.2.
2.9 Contracts and Commitments.
(a) Except as set forth in Schedule 2.9, CMT is not a
party to (or otherwise bound by) any written or oral:
(i) agreement, contract or commitment (other
than at will employment relationships) involving
payments in excess of $5,000; or
(ii) agreement, contract or commitment involving
payments less than $5,000 not made in the Ordinary
Course of Business.
(b) Each of the agreements, contracts and commitments
set forth in Schedule 2.9 is enforceable by and against CMT
in accordance with its terms. CMT is, and, to Shareholder's
Knowledge, all other parties thereto are, in compliance with
the provisions thereof and, to Shareholder's Knowledge, no
event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default
thereunder. Shareholder has delivered to Harold's true,
correct and complete copies of each of the written, and a
correct and complete summary of each of the oral,
agreements, contracts and commitments (other than at will
employee relationships) set forth in Schedule 2.9.
2.10 Title to Assets. CMT has and, following the Closing,
will have, good and marketable title to, or a valid leasehold
interest in, the Assets, free and clear of all Encumbrances
excepting only the Harold's Note and the CMT Office Lease.
2.11 Condition and Location of Assets. The Assets of CMT
are in good operating condition and repair, subject to normal
wear and maintenance, are adequate and usable in the Ordinary
Course of Business and materially conform to all applicable Laws
and Permits relating to their construction, use and operation.
2.12 Intellectual Property. Schedule 2.12 contains a
complete and accurate list of all of the Intellectual Property
other than software purchased "off the shelf" for office use.
Except as set forth in Schedule 2.12: (i) CMT owns royalty free
the entire right, title and interest in and to the Intellectual
Property (including, without limitation, the right to use and
license the same); and (ii) there are no pending or, to the
Knowledge of CMT, threatened actions of any nature affecting the
Intellectual Property.
2.13 Software. CMT has possession of complete and correct
copies of all material user and technical documentation related
to the computer software of CMT included in the Intellectual
Property (the "Software"). The Software is properly licensed in
favor of CMT and performs in accordance with the documentation
and other written materials provided in connection therewith.
2.14 Real Property.
(a) No Owned Real Property. CMT owns no legal or
beneficial interest in any real estate or real property, other
than the leasehold interest pursuant to Real Property Leases and
any amendments thereto identified in Schedule 2.14, true and
correct copies of which have been provided to Harold's.
(b) Leased Real Property. With respect to the Leased Real
Property:
(i) Schedule 2.14 describes each Real Property Lease,
including any amendment, modification or supplement, by
listing the name of the landlord or sublandlord, the address
of the leased premises, the commencement and expiration
dates of the current term, the security deposited by CMT
with the landlord or sublandlord, if any, and the monthly
rental (including base and all additional rents).
(ii) Each Real Property Lease (other than the CMT
Office Lease) is, and at Closing shall be, in full force and
effect and has not been assigned or further modified,
supplemented or amended; neither CMT nor the landlord or
sublandlord under any Real Property Lease (other than the
CMT Office Lease) is in default under any of the Real
Property Leases; and no circumstances or state of facts
presently exists which, with the giving of notice or passage
of time, or both, would permit the landlord or sublandlord
under any Real Property Lease to terminate any Real Property
Lease (other than the CMT Office Lease);
(iii) Other than CMT and BAI (as to Xxxxx Xxxxx),
no person will be leasing, using or occupying the premises
covered by the CMT Office Lease or any part thereof as of
the Closing Date;
(iv) The Leased Real Property is not subject to any
sublease or grant to any Person of any right to the use,
occupancy or enjoyment of the property or any portion
thereof, whether such right currently exists or may arise in
the future;
(v) All rents and other amounts payable with respect
to the Leased Real Property currently due have been paid
through January 31, 2000, and, at Closing, shall have been
paid; and
(vi) To Shareholder's Knowledge, the Leased Real
Property and the present uses thereof comply with all Laws
of all Governmental Entities having jurisdiction over the
Leased Real Property and all restrictive covenants affecting
the Leased Real Property, and CMT has received no notices,
oral or written, from any Governmental Entity, and has no
reason to believe, that the Leased Real Property or any
improvements erected or situated thereon, or the uses
conducted thereon or therein, violate any Laws of any
Governmental Entity having jurisdiction over the Leased
Real Property or any restrictive covenants affecting the
Leased Real Property.
(c) Improvements. The improvements located on the Leased
Real Property are in good condition and are structurally sound,
subject to normal wear, and all mechanical and other systems
located therein are in good operating condition, subject to
normal wear, and to Shareholder's Knowledge, no condition exists
requiring material repairs, alterations or corrections. CMT has
obtained any necessary certificates and permits necessary for the
operation and maintenance of the Leased Real Property, and all
improvements, fixtures and equipment located thereon that it was
required to obtain.
2.15 Insurance.
(a) Schedule 2.15 sets forth the following information with
respect to each insurance policy with respect to which CMT is a
party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address and telephone number of the
agent;
(ii) the name of the insurer, the name of the policy
holder and the name of each covered insured; and
(iii) the policy number and the period of coverage.
(b) With respect to each such insurance policy: (i) the
policy is legal, valid, binding, enforceable, and in full force
and effect in all material respects; (ii) neither CMT nor any
other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and
no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and
(iii) no party to the policy has repudiated any material
provision thereof. Schedule 2.15 describes any self-insurance
arrangements affecting CMT.
2.16 Conduct of CMT Since the Interim Balance Sheet Date.
Except as set forth in Schedule 2.16, or as permitted or
contemplated by Exhibit 1.4, since the Interim Balance Sheet
Date, CMT has conducted its business only in the Ordinary Course
of Business and has not, except in the Ordinary Course of
Business:
(a) incurred any Liabilities or assumed, guaranteed,
endorsed or otherwise become responsible for the Liabilities of
any Person, or discharged or satisfied any Encumbrance, or paid
any Liability, or failed to pay or discharge when due any
Liabilities of which the failure to pay or discharge has caused
or will cause any material damage or risk of material loss to CMT
or any of its Assets;
(b) sold, encumbered, assigned or transferred any Assets,
or made any contract or agreement for any of the foregoing;
(c) made any agreement, contract or commitment, including
an agreement to purchase or lease Assets, which includes an
aggregate payment or commitment on the part of either party of
more than $5,000 and which has not been fully paid prior to
Closing;
(d) increased the salaries or other compensation of any
Personnel or made any increase in, or any addition to, other
benefits to which any of its Personnel may be entitled by formula
or otherwise or as may be required under employment or severance
agreements in effect on the date of this Agreement;
(e) except as set forth in clause (d) above, instituted,
granted or modified in any respect any (A) bonus, incentive
compensation, service award, severance or other like benefit
granted, made or accrued, contingently or otherwise, for or to
the credit of any Personnel of CMT, (B) employee welfare,
pension, retirement, profit-sharing or similar payment or
arrangement made or agreed to by CMT for any Personnel of CMT, or
(C) new written employment agreement with any Personnel engaged
in the business of CMT to which CMT is a party which cannot be
terminated at will;
(f) made any advance (excluding advances for ordinary and
necessary business expenses) or loan to any of its Personnel;
(g) extended credit in the sale of Inventory, services,
collection of receivables or otherwise; or
(h) suffered any material adverse change in its business,
operations, Assets, prospects or condition (financial or
otherwise).
2.17 Personnel Information.
(a) Except as set forth in Schedule 2.17, CMT is not a
party to, does not have any obligation with respect to, and is
not bound by any employment or consulting agreement or any
collective bargaining agreement or other labor or employment
agreement, or any incentive compensation, change in control,
severance, personal or sick days or paid time off, contract,
policy, plan or arrangement with respect to any Personnel or
director of CMT or other Person (the "Employee Arrangements").
(b) Schedule 2.17 contains a complete and accurate list of
all individuals employed by CMT, including name and date of hire
and individuals, if any, to whom offers of employment have been
made but not yet accepted, including anticipated date of hire and
a description of material compensation arrangements offered to
such individual (other than Employee Benefit Plans set forth in
Schedule 2.18).
(c) CMT has no plans or arrangements contemplating or
requiring CMT to provide to any retired employee or director of
CMT, or their dependents, any benefits in the future, including,
without limitation, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance
coverage, or other benefits.
(d) Except as listed or set forth in Schedule 2.17, CMT,
with respect to its Personnel: (i) has no written personnel
policy applicable to any Personnel, (ii) is and has been in
material compliance with all applicable Laws regarding employment
and employment practices, including, without limitation ERISA and
those laws relating to terms and conditions of employment, wages
and hours, occupational safety and health and workers'
compensation and is not engaged in any unfair labor practices,
(iii) has not committed any unfair labor practice (and
Shareholder does not believe that there exists any reasonable
basis therefore), (iv) has no grievances pending or, to the
Knowledge of Shareholder, threatened against it, (v) has no
charges or complaints pending or, to the Knowledge of
Shareholder, threatened before the Equal Employment Opportunity
Commission or any state or local agency responsible for the
prevention of unlawful employment practices, and (vi) has no
private agreement restricting CMT from relocating, closing or
terminating any of its facilities.
2.18 Employee Benefit Plans.
(a) Schedule 2.18 includes (i) a list of all of CMT's
material "employee benefit plans," as defined in Section 3
of ERISA, and all other material severance, termination,
change in control, sick leave, vacation pay, salary
continuation for disability, consulting, employment,
compensation, retirement, deferred compensation, bonus,
long-term incentive, stock option, stock purchase,
hospitalization, medical insurance, life insurance and
scholarship programs, plans, arrangements or agreements
maintained by CMT or any ERISA Affiliate or to which CMT or
any ERISA Affiliate contributes or is obligated to
contribute, or with respect to which CMT or any ERISA
Affiliate has or had any liability with respect to its
current or former Personnel (the "CMT Employee Benefit
Plans");and (ii) a true and correct list of all severance or
change in control payments payable to any employee or group
of employees of any of CMT payable upon any termination of
employment or as a result of the execution and delivery of
this Agreement or the consummation of the transactions
contemplated hereby, including the name and amount payable
for any officer and the aggregate amount payable to all
other employees.
(b) There is no violation of ERISA with respect to the
filing of applicable reports, documents and notices
regarding any CMT Employee Benefit Plan with any
Governmental Entity or the furnishing of such documents to
the participants or beneficiaries of the CMT Employee
Benefit Plans that is reasonably likely to have a material
adverse effect on CMT. With respect to the CMT Employee
Benefit Plans, there exists no condition or set of
circumstances in connection with CMT that could be expected
to result in liability reasonably likely to have a material
adverse effect on CMT under ERISA, the Code or any
applicable law. With respect to the CMT Employee Benefit
Plans, individually and in the aggregate, there are no
unfunded benefit obligations which have not been accounted
for by reserves, or otherwise properly footnoted in
accordance with GAAP, on the financial statements of CMT,
which obligations are reasonably likely to have a material
adverse effect on CMT, other than the disputed claim for
withdrawal liability as to which Harold's is indemnified
hereunder pursuant to Section 10.2(iv).
(c) The CMT Employee Benefit Plans have been
maintained in accordance with their terms and in accordance
with all applicable federal and state laws, and CMT has not
engaged in any "prohibited transaction" within the meaning
of Section 4975 of the Code, except where the violation of
any such term or law or the occurrence of a prohibited
transaction would not be reasonably likely to have a
material adverse effect on CMT.
2.19 Severance Arrangements. Without limiting Section 2.18
above, CMT has not entered into any severance or similar
arrangement in respect of any present or former Personnel that
shall result in any obligation (absolute or contingent) of CMT or
Harold's to make any payment to any present or former Personnel
following termination of employment, including the termination of
employment effected by the transactions contemplated by this
Agreement. The consummation of the transactions contemplated by
this Agreement will not trigger any severance or similar
arrangement of CMT payable by Harold's after the Closing.
2.20 Litigation; Decrees. To Shareholder's Knowledge, there
are no judicial or administrative actions, proceedings or
investigations pending or threatened that question the validity
of this Agreement or any action taken or to be taken by
Shareholder in connection with this Agreement. Except as set
forth in Schedule 2.20: (i) there are no lawsuits, claims,
administrative or other Proceedings or investigations pending or,
to Shareholder's Knowledge, threatened by, against or affecting
CMT or any of its Assets; (ii) no basis exists for any such
lawsuit, claim or Proceeding; and (iii) there are no judgments,
orders or decrees of any Governmental Entity binding on CMT or
any of its Assets. The matters set forth in Schedule 2.20 will
not have a material adverse effect on the business, operations,
Assets, prospects or conditions (financial or otherwise) of CMT
or Harold's.
2.21 Compliance With Law; Permits. To Shareholder's
Knowledge, CMT has materially complied with each Law of any
Governmental Entity to which CMT or its business, operations or
Assets is subject and is not currently in violation, or alleged
by any Governmental Entity to have violated, of any of the
foregoing. CMT owns, holds, possesses or lawfully uses in the
operation of its business all Permits which are required for it
to conduct its business as now conducted or for the ownership and
use of the Assets, in material compliance with all Laws. All
Permits currently held by CMT are set forth in Schedule 2.21.
CMT is not in default or violation, nor has it received any
notice of any claim of default or violation, of any terms or
conditions of any such Permits which would have a material
adverse effect on CMT's business, operations, Assets, prospects
or condition (financial or otherwise). Except as set forth in
Schedule 2.21, all Permits currently held by CMT are renewable by
their terms or in the Ordinary Course of Business without the
need to comply with any special qualification procedures or to
pay any amounts other than routine filing fees. To Shareholder's
Knowledge, except as set forth in Schedule 2.21, none of such
Permits will be adversely affected by consummation of the
transactions contemplated hereby.
2.22 Environmental Matters. Except as set forth in Schedule
2.22, each of CMT and any predecessors or Affiliates of CMT has
complied and is in compliance, each case in all material
respects, with all Environmental Laws applicable to the
ownership, use and/or operation of CMT's Assets or business.
2.23 Tax Matters.
(a) CMT has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by CMT (whether or not shown
on any Tax Return) have been paid, other than taxes accrued but
not yet due. CMT currently is not the beneficiary of any
extension of time within which to file any Tax Return.
(b) There is no material dispute or claim concerning any
Tax liability of CMT either (i) claimed or raised by any
authority in writing or (ii) as to which Shareholder and the
directors and officers of CMT has Knowledge based upon personal
contact with any agent of such authority.
(c) Schedule 2.23 contains a complete and accurate list of
all federal, state, local, and foreign Income Tax Returns filed
for the calendar years ending December 31, 1996, 1997 and 1998,
respectively, with respect to CMT, indicates those Income Tax
Returns that have been audited, and indicates those Income Tax
Returns that currently are the subject of audit. Shareholder has
delivered to Harold's correct and complete copies of all federal
Income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by CMT for the
calendar years ending December 31, 1996, 1997 and 1998,
respectively. CMT has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with
respect to an Income Tax assessment or deficiency. Shareholder
shall retain all other CMT tax returns in his possession and
shall make them available to Harold's upon request.
(d) Since 1987, CMT has been qualified as an S corporation
within the meaning of Code Section 1361(a)(1) (and any
predecessor provision) and under any comparable state law under
which CMT may be eligible for analogous treatment; and CMT and
Shareholder have taken or caused or permitted to be taken all
action for the purpose of electing S corporation treatment.
2.24 Certain Business Practices and Regulations; Potential
Conflicts of Interest.
(a) To Shareholder's Knowledge, except as set forth on
Schedule 2.24, neither CMT, nor any Personnel or any other Person
acting on behalf of CMT has made any unlawful payment which might
subject CMT to any damage or penalty in any civil, criminal or
governmental litigation or proceeding which could have a material
adverse effect on CMT's business, operations Assets, prospects or
condition (financial or otherwise).
(b) Except as set forth in Schedule 2.24, no officer or
director of CMT or Shareholder or any Person controlled by any of
the foregoing (i) owns, directly or indirectly, any interest in,
or is a director, officer, employee, consultant or agent of, any
Person which is a competitor, lessor, lessee or customer of, or
supplier of goods or services to, the business of CMT, (ii) has
any cause of action or other suit, action or claim whatsoever
against, or owes any amount to CMT, or (iii) is a party to any
contract or agreement or participates in any arrangement, written
or oral, pursuant to which CMT provides services of any nature to
any such Person, otherwise than in his capacity as an employee of
CMT. Except for transactions in the Ordinary Course of Business
and except as set forth in Schedule 2.24, or as permitted or
contemplated by Exhibit 1.4, there are no transactions presently
pending or planned, or initiated since the Interim Balance Sheet
Date, between CMT and Shareholder, or any officer, employee or
director of CMT, or any Person controlled by any of the
foregoing, including any contract, agreement or other arrangement
(x) providing for the furnishing of services by CMT, (y)
providing for the rental of real or personal property of CMT, or
(z) otherwise requiring payments from CMT (other than for
services as officers or directors of CMT) to any such Person.
(c) Neither CMT nor Shareholder, or to Shareholder's
Knowledge, directors, officers or employees of CMT has engaged in
any business practice (i) which may be considered dishonest or
unethical or (ii) not in compliance with industry custom and
standards, in connection with any of the operations of CMT.
(d) Shareholder has not received any personal income in any
form from any existing or future supplier or vendor of CMT other
than by reason of written contracts between CMT and such
suppliers or vendors.
2.25 Disclosure. With respect to this Agreement, the
Schedules and Exhibits to this Agreement and the other agreements
contemplated by this Agreement, to the Knowledge of Shareholder,
Shareholder has not made any untrue statement of a material fact
or omitted to state a material fact necessary in order to make
the statements made, in light of the circumstances under which
they were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF HAROLD'S. As a material
inducement to Shareholder to enter into this Agreement and
consummate the transactions contemplated herein, Harold's
represents and warrants to Shareholder, as of the date of this
Agreement and as of the Closing Date (as if made on such date),
as follows:
3.1 Organization. Harold's is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Oklahoma and has the requisite corporate power
and authority to own, lease and operate its Assets and to carry
on its business as presently conducted.
3.2 Authority; Power; Binding Effect. The execution,
delivery and performance of this Agreement by Harold's has been
authorized by all necessary corporate action on the part of
Harold's and no other proceedings (corporate or other) on the
part of Harold's are necessary to authorize the execution,
delivery and performance of this Agreement. Harold's has the
requisite power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and
thereby and to take any and all other actions required to be
taken by it pursuant to the provisions of this Agreement. This
Agreement has been duly executed and delivered by Harold's and,
assuming the due execution and delivery of this Agreement by
Shareholder, this Agreement constitutes the legal, valid and
binding obligation of Harold's enforceable against each in
accordance with its terms and conditions.
3.3 No Violation; Consents. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated herein by Harold's will, directly or
indirectly, with or without notice or the passage of time, except
as contemplated by this Agreement: (a) violate or conflict with
any provision of the Organizational Documents of Harold's; (b)
violate any provision of any Law of any Governmental Entity
applicable to Harold's; (c) conflict with, violate or result in a
breach of or constitute (with due notice or lapse of time) a
default under any contract, lease, loan agreement, mortgage,
security agreement, indenture, or other agreement or instrument
to which Harold's is a party or by which Harold's is bound or to
which any of their Assets is subject; (d) result in the
imposition of any Encumbrance on Harold's or any of their Assets;
or (e) require any authorization, consent, approval or other
action by or notice to or filing with any Person or Governmental
Entity.
3.4 Release and Return of Shareholder Collateral. Upon
Closing and the delivery of the instruments provided hereunder,
all Encumbrances created by Shareholder in favor of Harold's upon
the Shareholder Collateral (except for the CMT Shares purchased
by Harold's pursuant to this Agreement) will have been released,
removed or terminated and the Shareholder Collateral will be free
of any Encumbrance in favor of Harold's or Bank of America.
4. PRE-CLOSING COVENANTS.
4.1 General. Each of the Parties will use its reasonable
best efforts in good faith to take all action and to do all
things necessary, proper or advisable in order to consummate and
make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing
conditions set forth in Sections 5, 6 and 7), and no Party shall
take any action which is inconsistent with its obligations under
this Agreement.
4.2 No Inconsistent Action; Voting Agreement. No Party
shall take any action which is inconsistent with its obligations
under this Agreement, and Shareholder shall vote all voting
capital stock of CMT owned by him in favor of the approval of
this Agreement and the transactions contemplated herein.
4.3 Full Access to Information. Shareholder will permit
representatives of Harold's to have full access at all reasonable
times, and in a manner so as not to interfere with the normal
business operations of CMT, to all premises, properties,
personnel, books, records (including tax records), contracts and
documents of or pertaining to CMT.
4.4 Conduct of Business. Except as consented to by
Harold's in writing, or as permitted or contemplated by Exhibit
1.4 between the date hereof and the Closing Date, Shareholder
will:
(a) conduct the business of the CMT only in the Ordinary
Course of Business;
(b) use his reasonable best efforts to preserve intact the
current business organization of CMT, keep available the services
of the Personnel of CMT, and maintain the relations and good will
with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with CMT;
(c) confer with Harold's concerning operational matters of
a material nature;
(d) otherwise report periodically to Harold's concerning
the status of the business, operations and finances of CMT; and
(e) not take or omit to take any action that is
inconsistent with any representation or warranty of Shareholder
in Section 2 or that would cause any such representation or
warranty to be untrue or incorrect if such representation or
warranty were made immediately following the taking of or failure
to take such action.
4.5 Notification. Between the date hereof and the Closing
Date:
(a) Shareholder will promptly notify Harold's in writing if
Shareholder becomes aware of any fact or condition that causes or
constitutes a Breach of any of his representations and warranties
as of the date of this Agreement, or if he becomes aware of the
occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact
or condition. Should any such fact or condition require any
change in any of the Schedules if the Schedules were dated prior
to the date of the occurrence or discovery of any such fact or
condition, Shareholder will promptly deliver to Harold's a
supplement to its Schedules specifying such change; and
(b) Shareholder will promptly notify Harold's of the
occurrence of any Breach of any covenant of Shareholder in this
Section 4, or of the occurrence of any event that may make the
satisfaction of the conditions in Sections 5, 6 or 7 impossible
or unlikely.
4.6 Approvals; Filings. As promptly as practicable after
the execution of this Agreement, each Party shall use its
reasonable best efforts to obtain, and to cooperate with the
other Parties in obtaining, all authorizations, consents, orders
and approvals of any Governmental Entity or other Person that may
be or become necessary in connection with the consummation of the
transactions contemplated by this Agreement, and to take all
reasonable actions to avoid the entry of any order or decree by
any Governmental Entity prohibiting the consummation of the
transactions contemplated hereby.
4.7 Publicity. Prior to the Closing, Shareholder will not
issue or cause the publication of any press release or other
public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of
Harold's. Harold's will provide Shareholder with advance copies
of any press release or other public announcement Harold's
intends to make with respect to this Agreement or the
transactions contemplated hereby giving Shareholder an
opportunity to comment on the intended release or announcement
unless, consistent with Harold's public reporting obligations, it
is unable to do so.
4.8 Acquisition Proposals. Unless and until this Agreement
shall be terminated in accordance with Section 11, Shareholder
shall not authorize or permit any director or Personnel of, or
any investment banker, attorney, accountant or other
representative retained by CMT or Shareholder to, directly or
indirectly, solicit, initiate or encourage submission of
(including by way of furnishing information) any proposal or
offer from any Person which constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal, entertain any
discussions or negotiations with respect to an Acquisition
Proposal, or enter into any agreement or commitment providing for
or relating to an Acquisition Proposal.
5. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of each Party under this Agreement to consummate the
transactions contemplated hereby will be subject to the
satisfaction, at or prior to Closing, of all of the following
conditions, any one or more of which may be waived in whole or in
part at the option of Harold's or Shareholder:
5.1 Governmental and Third Party Consents and Approvals.
All consents, approvals, waivers permits and authorizations
required to be obtained prior to the Effective Time from, any
Governmental Entity or other Person (including, without
limitation, those set forth in Schedule 2.4) in connection with
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby shall have been made or
obtained (as the case may be), except where the failure to obtain
such consents, approvals, waivers, permits and authorizations
would not have a material adverse effect on Harold's or
materially adversely affects the consummation of the transactions
contemplated herein.
5.2 No Adverse Proceedings. No temporary restraining
order, preliminary or permanent injunction or other order
preventing the consummation of the transactions contemplated
herein shall have been issued by any Governmental Entity and
remain in effect, and no proceedings seeking the issuance of such
an order or injunction, or seeking relief against Harold's or CMT
if the transactions contemplated herein are consummated, shall be
pending or threatened which, in the good faith judgment of CMT's
or Harold's respective Board of Directors (acting upon the
written opinion of their respective outside counsel), has a
reasonable probability of resulting in such order, injunction or
relief and any such relief would have a material adverse effect
on such Party.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF HAROLD'S . The
obligations of Harold's under this Agreement to consummate the
transactions contemplated hereby will be subject to the
satisfaction, at or prior to Closing, of all of the following
conditions (any one or more of which may be waived in whole or in
part at the option of Harold's):
6.1 Representations and Warranties. The representations
and warranties of Shareholder made in this Agreement or in any
Exhibit, Schedule or document delivered pursuant hereto must have
been true and correct in all material respects as of the date
hereof and must be true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing
Date.
6.2 Performance by Shareholder. All of the covenants and
obligations that Shareholder is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing must
have been duly performed and complied with in all material
respects.
6.3 Absence of Material Adverse Changes. From the date of
this Agreement until the Closing, there must not have occurred
any material adverse change in the business operations, Assets,
prospects or condition (financial or otherwise) of CMT.
6.4 Certificate. Harold's shall have received a
certificate, dated as of the Closing Date, executed by
Shareholder, certifying that each of the conditions specified in
Sections 6.1, 6.2 and 6.3 have been satisfied and that, except as
set forth on a schedule to such certificate, all third party or
governmental consents, approvals, waivers, permits and
authorizations referred to in Section 5.3 required to obtained by
Shareholder have been obtained and are in full force and effect
as of the Closing.
6.5 Closing Documents. Shareholder must have delivered to
Harold's all of the documents set forth in Sections 8.2 and 8.4.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDER. The
obligation of Shareholder under this Agreement to consummate the
transactions contemplated hereby is subject to the satisfaction,
at or prior to the Closing, of each the following conditions (any
of which may be waived in whole or in part at the option of
Shareholder):
7.1 Representations and Warranties. All representations
and warranties of Harold's made in this Agreement or in any
Exhibit, Schedule or document delivered pursuant hereto must have
been true and correct in all material respects as of the date
hereof and must be true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing
Date.
7.2 Performance by Harold's. All of the covenants,
agreements and obligations that Harold's is required to perform
or to comply with pursuant to this Agreement at or prior to the
Closing must have been duly performed and complied with in all
material respects.
7.3 Certificate. Shareholder must have received a
certificate, dated as of the Closing Date, by a duly authorized
officer of Harold's, certifying that the conditions specified in
Sections 7.1, 7.2 and 7.3 have been satisfied.
7.4 Closing Documents. Harold's must have delivered to
Shareholder all of the documents set forth in Sections 8.3 and
8.4.
7.5 Release of Shareholder Collateral. Harold's shall have
released, terminated or removed all Encumbrances granted by
Shareholder in the Shareholder Collateral to secure the Harold's
Note and shall have caused Bank of America to do the same with
respect to any Shareholder Collateral securing any obligation of
Harold's to Bank of America.
7.6 Agreement, Waiver and Consent. At or prior to Closing
Harold's shall have delivered to CMT and Shareholder one or more
documents comprising the terms of the Waiver, Consent and
Agreement in the form annexed hereto as Exhibit 1.4.
7.7 Distribution of Cash. CMT shall have distributed to
Shareholder all of the CMT Cash prior to Closing.
8. CLOSING.
8.1 Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Harold's in Dallas, Texas, or at such other
location as the Parties shall agree, on February 18, 2000, or as
soon thereafter as all of the conditions precedent set forth
herein have been satisfied or waived or on such date as the
Parties shall otherwise agree (the "Closing Date").
8.2 Documents to be Delivered by CMT and Shareholder. At
the Closing, Shareholder will deliver to Harold's the following:
(a) Transfer of CMT Shares. Certificates evidencing the
CMT Shares and other supporting documents of transfer requested
by Harold's, duly executed by the Shareholder provided that the
Certificate delivered to Harold's as security for the Harold's
Note shall have been returned by Bank of America to Harold's on
behalf of Shareholder.
(b) Opinion. A written opinion of Xxxxx & Xxxxxx, counsel
to Shareholder, addressed to Harold's, dated the Closing Date,
in form and substance as set forth in Exhibit 8.2(b).
(c) Good Standing Certificates. Governmental certificates
showing that CMT is duly incorporated, validly existing and in
good standing in the state of its incorporation certified as of
a date not more than twenty-five (25) days before the Closing
Date.
(d) Evidence of Governmental and Third-Party Consents and
Approvals. Evidence in form reasonably satisfactory to Harold's
of the receipt of each of the governmental and third-party
consents, approvals and waivers set forth in Section 5.1,
including, without limitation, all third party consents to the
assignment of the contracts, agreements and commitments in
Schedule 2.9.
(e) Lien Searches. Lien searches for federal and state tax
liens, judgment liens, and other liens on standard form of
Request for Information (Uniform Commercial Code Form UCC-11) for
entries in the name of CMT and Shareholder (including any assumed
names) completed and certified by the Secretary of State in the
State of New York and New York County, dated no earlier than
twenty-five (25) days prior to Closing Date and showing the
absence of any Encumbrances not the subject of Shareholder's
indemnity to Harold's pursuant to Section 10.2, and other than
liens in favor of Harold's.
(f) Books and Records. All minute books, including the
Organizational Documents, stock transfer ledgers and corporate
seal of CMT.
(g) Other Documents. Such additional certificates,
instruments, documents, information and materials as Harold's may
reasonably request.
8.3 Documents to be Delivered by Harold's. At the Closing,
Harold's will deliver to Shareholder the following:
(a) Purchase Note. The Purchase Note in the form attached
as Exhibit 1.2.
(b) Certified Resolutions of Harold's. Certified
resolutions of the board of directors of Harold's approving the
execution, delivery and performance of this Agreement and
authorizing the consummation of the transactions contemplated
herein.
(c) Opinion. Written opinion of Xxxxx & Xxxxxxx, A
Professional Corporation, addressed to Shareholder, dated the
Closing Date, in form and substance as set forth in Exhibit
8.3(c).
(d) Evidence of Release of Collateral. Evidence reasonably
satisfactory to Shareholder that Harold's and Bank of America
have released the Shareholder Collateral in accordance with
Section 7.5.
(e) Other Documents. The Guaranty, the CMT/Shareholder
Promissory Note and such additional certificates, instruments,
documents, information and materials as Shareholder may
reasonably request.
8.4 Mutual Deliveries. At the Closing, each of Harold's
and Shareholder, as applicable, shall execute and deliver or
cause to be executed and delivered the Consulting Agreement in
the form attached hereto as Exhibit 1.6.
8.5 Concurrent Conditions. The performance or tender of
performance at Closing of all matters applicable to a Party under
this Agreement shall be deemed concurrent conditions and no Party
shall be required at Closing to perform, or tender performance
of, the obligations of such Party hereunder unless, coincident
therewith, each other Party from whom performance is required
under this Agreement performs or tenders performance of its
obligations hereunder.
9. POST-CLOSING AND OTHER COVENANTS.
9.1 General. In case, at any time after the Closing, any
further action is necessary or desirable to carry out the
transactions contemplated herein and the other purposes and
intent of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably
may request.
9.2 Payments Received. Shareholder agrees that after the
Closing he will hold and will promptly transfer and deliver to
Harold's, from time to time as and when received by him, any
cash, checks with appropriate endorsements (using his best
efforts not to convert such checks into cash), or other property
that he may receive on or after the Closing to which Harold's
shall be entitled as a result of the transactions contemplated
herein, including without limitation any insurance proceeds, and
will account to Harold's for all such receipts.
9.3 Post-Closing Notifications. Harold's will, and will
cause its respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable
to such Party, of any antitrust, trade competition, investment or
control, export or other Law of any Governmental Entity having
jurisdiction over Harold's, CMT or Shareholder.
9.4 Payment of Expenses. Each Party and CMT shall pay
their own expenses incident to preparing for, entering into and
carrying out this Agreement and the transactions contemplated
hereby, whether or not the Closing occurs.
9.5 Taxes. All Taxes imposed by any taxing authority,
domestic or foreign, with respect to the sale of the CMT Shares
or otherwise on account of this Agreement or the transactions
contemplated hereby shall be borne by Shareholder.
9.6 Filing of Certain Tax Returns Following the Closing.
Shareholder shall prepare or cause to be prepared and shall
submit to Harold's not less than twenty (20) days before the due
date thereof all Tax Returns for CMT (i) for all Tax periods
ended on or before the Closing Date which are to be filed after
the Closing Date and (ii) for all Tax periods beginning before
and ending after the Closing Date reflecting the operations and
activities of CMT through the Closing Date. Shareholder shall
make or cause to be made any revisions to such Tax Returns as are
reasonably requested by Harold's, whereupon Harold's shall file
or cause the filing of such Tax Returns. The Parties'
preparation, review or filing of such Tax Returns will not affect
any rights of either Party to indemnification, payment of Damages
or other remedies based on any representations, warranties,
covenants or obligations concerning Taxes pursuant to this
Agreement.
10. INDEMNIFICATION.
10.1 Survival; Right to Indemnification Not Affected by
Investigation. All representations, warranties, covenants and
obligations in this Agreement, any Schedules attached hereto
pursuant to Section 2 or otherwise, the certificates delivered
pursuant to Sections 6.4 and 7.3 and any other certificate or
agreement delivered pursuant to this Agreement will survive the
Closing. The right to indemnification based on Breach of the
representations, warranties, covenants and obligations of a Party
in this Agreement will not be affected by any investigation
conducted by the other Party; provided however, notwithstanding
anything herein to the contrary, a Party shall not be liable for
any damages arising from a Breach which the other Party, or any
of their respective officers, had actual Knowledge was incorrect
or false prior to the Closing Date.
10.2 Indemnification and Payment of Damages by Shareholder.
(a) Shareholder will indemnify and hold harmless Harold's
and its directors, officers, employees, agents, advisors,
stockholders, controlling persons and Affiliates, for and will
pay to such persons the amount of any Damages (as defined below).
(b) Damages means the amount of any loss, liability,
obligation, debt, claim, damage or expense (including costs of
investigation and defense and reasonable attorneys' fees but not
including the costs incurred in entering into this Agreement and
consummating the transactions contemplated hereby), whether or
not involving a Third-Party Claim, incurred by Harold's or its
directors, officers, employees, agents, advisors, stockholders,
controlling persons, and Affiliates arising, directly or
indirectly, from and in connection with:
(i) any Breach of any representation or warranty made
by Shareholder in this Agreement, the Schedules (without
giving effect to any supplement to the Schedules) or any
other certificate or document delivered by Shareholder
pursuant to this Agreement;
(ii) any Breach by Shareholder of any covenant or
obligation of Shareholder in this Agreement;
(iii) any Liability of CMT incurred with respect to
the operation of CMT prior to January 31, 2000 and not paid
prior to that date;
(iv) any Liability of CMT associated with the claims of
the ILGWU National Retirement Fund asserted against CMT with
respect to alleged withdrawal liability ; and
(v) the amount of any loss, Liability, obligation,
debt, claim, damage or expense (including costs of
investigation and defense and reasonable attorneys' fees)
incurred by Harold's or its directors, officers, employees,
agents, advisors, stockholders, controlling persons, and
Affiliates after the Closing Date arising from the defense,
compromise, settlement or disposition (including any
judgment of a court of competent jurisdiction or award of an
arbitrator) of each of the proceedings, claims, actions,
threatened claims and disputes identified in Schedule 2.20.
(c) The liability of Shareholder for indemnification under
this Agreement shall not exceed $2,720,000.
10.3 Third-Party Claim Procedures.
(a) Within 20 days (or such earlier time as might be
required to avoid prejudicing Shareholder's position) after
receipt of notice of commencement of any action evidenced by
service of process or other legal pleading, Harold's shall give
Shareholder written notice thereof together with a copy of such
claim, process or other legal pleading, and Shareholder shall
have the right to undertake the defense thereof by
representatives of its own choosing (subject to approval of such
representatives by Harold's which consent shall not be
unreasonably withheld) and at its own expense; provided that
Harold's may participate in the defense with counsel of its own
choice, the fees and expenses of which counsel shall be paid by
Harold's. If the named parties to any such action (including any
impleaded parties) include both any of Shareholder and Harold's,
and Harold's has been advised by counsel that there may be one or
more legal defenses available to it that are different from or
additional to those available to Shareholder and that joint
representation would be inappropriate under applicable standards
of professional conduct, then if Harold's informs Shareholder in
writing that it elects to employ separate counsel, the fees and
expenses of such counsel shall be at the expense of Shareholder,
and Shareholder shall not have the right to assume the defense of
such action on behalf of Harold's (it being understood, however,
that Shareholder shall not, in connection with any one such
action or separate but substantially similar related actions in
the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys at any time for
Harold's, which firm shall be designated in writing by Harold's
and it further being understood and agreed that Harold's may not
settle any such action without the prior written consent of
Shareholder, which consent shall not be unreasonably withheld).
(b) In the event that Shareholder, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th
day preceding the day on which an answer or other pleading must
be served in order to prevent judgment by default in favor of the
person asserting such claim), does not elect to defend against
such claim, Harold's will (upon further notice to Shareholder)
have the right to undertake the defense, compromise or settlement
of such claim on behalf of and for the account and risk of
Shareholder (with all costs and expenses of Harold's being
Damages to the extent provided in Section 10.2), subject to the
right of Shareholder to assume the defense of such claims at any
time prior to settlement, compromise or final determination
thereof.
(c) Notwithstanding the foregoing, Shareholder shall not
settle any claim without the consent of Harold's unless such
settlement involves only the payment of money and the claimant
provides to Harold's a release from all liability in respect of
such claim. If the settlement of the claim involves more than
the payment of money, Shareholder shall not settle the claim
without the prior written consent of Harold's.
(d) In the event Shareholder assumes the defense of any
Third-Party Claim, it shall be conclusively established that such
Third-Party Claim is subject to indemnity for Damages as provided
in Section 10.
(e) Harold's and Shareholder will each cooperate with all
reasonable requests of the other.
10.4 Indemnification By Harold's. If the Closing occurs,
Harold's will indemnify and will pay to Shareholder the amount of
any loss, liability, obligation, debt, claim, damage, expense
(including costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a Third-Party Claim,
arising, directly or indirectly, from and in connection with (a)
any Breach of any representation or warranty made by Harold's in
this Agreement or any Schedule delivered by Harold's or in any
certificate delivered by Harold's pursuant to this Agreement, or
(b) any Breach by Harold's of any covenant or obligation of
Harold's in this Agreement, or (c) any liability incurred with
respect to the operation of CMT from and after January 31, 2000.
10.5 Right of Set-Off. In the event of a dispute over
Harold's right to indemnification, Harold's shall continue to
make all payments provided for in the Purchase Note, in full and
without delay, offset or reduction until the dispute has been
resolved as provided herein. If the dispute is resolved in favor
of Harold's, Harold's may set off any amount to which it may be
entitled under this Section 10 against amounts otherwise payable
under the Purchase Note. The exercise of such right of set-off by
Harold's in good faith, whether or not ultimately determined to
be justified, will not constitute an event of default under the
Purchase Note. Neither the exercise of nor the failure to
exercise such right of set-off will constitute an election of
remedies or limit Harold's in any manner in the enforcement of
any other remedies that may be available to it.
11. TERMINATION.
11.1 Termination Events. This Agreement may, by written
notices, be terminated:
(a) at any time prior to Closing by the mutual written
consent of Harold's and Shareholder;
(b) by Harold's if the Closing has not occurred on or
before February 25, 2000 or such later date as Harold's may agree
upon;
(c) by either Harold's or Shareholder if there shall have
been entered a final, nonappealable order or injunction of any
Governmental Entity restraining or prohibiting the consummation
of the transactions contemplated hereby;
(d) by Shareholder if, prior to the Closing Date, Harold's
is in material Breach of any representation, warranty, covenant
or agreement herein contained and such Breach shall not be cured
within fifteen (15) days of the date of notice of default
specifying in detail the alleged default served by Shareholder;
provided that Shareholder shall not also be in material Breach of
this Agreement at the time notice of termination is delivered;
(e) by Harold's if, prior to the Closing Date, Shareholder
is in material Breach of any representation, warranty, covenant
or agreement herein contained and such Breach shall not be cured
within the earlier of: (i) February 25, 2000 or (ii) fifteen (15)
days of the date of notice of default specifying in detail the
alleged default served by Harold's; provided that Harold's shall
not also be in material Breach of this Agreement at the time
notice of termination is delivered; or
(f) (i) by Harold's if any of the conditions in Sections 5
or 6 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other
than through the failure of Harold's to comply with its
obligations under this Agreement) and Harold's has not waived
such condition or before the Closing Date; or (ii) by
Shareholder, if any of the conditions in Sections 5 or 7 has not
been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the
failure of Shareholder to comply with his obligations under this
Agreement) and Shareholder has not waived such condition on or
before the Closing Date.
11.2 Effect of Termination. Each party's right of
termination under Section 11.1 is in addition to any other rights
it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 11.1, all
further obligations of the Parties under this Agreement will
terminate, except that the obligations in Sections 4.7, 9.4,
12.1, 12.6, 12.11 and 12.12 will survive; provided, however, that
if this Agreement is terminated by a Party because of the Breach
of the Agreement by the other Party or because one or more of the
conditions to the terminating Party's obligations under this
Agreement is not satisfied as a result of the other Party's
failure to comply with its obligations under this Agreement, the
terminating Party's right to pursue all legal remedies will
survive such termination unimpaired.
12. MISCELLANEOUS PROVISIONS.
12.1 Specific Performance. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are Breached. Accordingly, each of the Parties agrees that the
other Parties shall be entitled to an injunction or injunctions
to prevent Breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions
hereof, in addition to any other remedy to which they may be
entitled, at law or in equity. If any action is brought by a
Party to specifically enforce this Agreement, the Breaching Party
shall waive any defense that there is an adequate remedy at law.
12.2 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is
mailed by registered or certified mail, return receipt requested,
or (c) when received by the addressee, if sent by a nationally
recognized overnight 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 designate by notice to the other Parties):
(a) Harold's: Harold's Stores, Inc.
765 Asp
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxx, Chief
Financial Officer
With a Copy to: Xxxxx & Xxxxxxx
500 Xxxxxxx Building
000 Xxxxx Xxxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxx Xxxxxx, III
(b) Shareholder: Xxxxxxxx X. Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
With a Copy to: Xxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
12.3 Waiver. The rights and remedies of the Parties to this
Agreement are cumulative and not alternative. Neither the failure
nor any delay by any Party in exercising any right, power, or
privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by
the other Parties; (b) no waiver that may be given by a Party
will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one Party will be
deemed to be a waiver of any obligation of such Party or of the
right of the Party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or
the documents referred to in this Agreement.
12.4 Entire Agreement and Amendment. This Agreement
supersedes all prior agreements between the Parties with respect
to its subject matter (including, without limitation, the Term
Sheet between Harold's and CMT dated December 21, 1999 but not
including the Agreement, Waiver and Consent) and constitutes
(along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement
between the Parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement
executed by the Party to be charged with the amendment.
12.5 Further Assurances. The Parties agree (a) to furnish
upon request to each other such further information, (b) to
execute and deliver to each other such other documents, and (c)
to do such other acts and things, all as any other Party may
reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to herein.
12.6 Governing Law. This Agreement, including without
limitation, the interpretation, construction and validity hereof,
shall be governed by the laws of the State of Oklahoma, without
regard to its conflict of laws principles.
12.7 Severability. If any provision of this Agreement is
held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain
in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or
unenforceable.
12.8 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which will be
deemed an original copy of the Agreement and all of which, when
taken together will be deemed to constitute one and the same
agreement.
12.9 Assignments, Successors and No Third Party Rights. No
Party may assign any of its rights or obligations under this
Agreement without the prior consent of the other Party except
that Harold's may assign this Agreement to one of its
subsidiaries, provided that Harold's guarantees due, full and
timely performance by the subsidiary of its obligations
hereunder. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the Parties.
Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the Parties to this
Agreement any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this
Agreement, except as set forth immediately below with respect to
third party beneficiary rights of Shareholder. This Agreement and
all of its provisions and conditions are for the sole and
exclusive benefit of the Parties to this Agreement and their
successors and assigns.
12.10 Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all
references to Sections or Schedules are to Sections or
Schedules of or to this Agreement, (ii) each term defined in
this Agreement has the meaning assigned to it, (iii) each
accounting term not otherwise defined in this Agreement has
the meaning assigned to it in accordance with GAAP, (iv)
"or" is disjunctive but not necessarily exclusive, and (v)
words in the singular include the plural and vice versa.
All references to "$" or dollar amounts will be to lawful
currency of the United States of America.
(b) No provision of this Agreement will be interpreted
in favor of, or against, any of the Parties hereto by reason
of the extent to which any such Party or its counsel
participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
(c) Any reference to any Law shall be deemed also to
refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.
(d) The word "including" means "including, without
limitation," and does not limit the preceding words or
terms.
(e) All words used in this Agreement will be construed
to be of such gender or number as the circumstances require.
12.11 Jurisdiction, Venue and Waiver of Jury Trial. The
Parties intend that all disputes concerning this Agreement shall
be resolved by arbitration as provided below, unless arbitration
shall be held by a court of competent jurisdiction to be
unenforceable. In such event, the Parties agree that any suit,
action or proceeding with respect to this Agreement may be
brought in the Missouri state courts of competent jurisdiction in
St. Louis County, Missouri or in the United States District Court
in which the City of St. Louis is located. ALL PARTIES HEREBY
IRREVOCABLY WAIVE ANY OBJECTIONS WHICH THEY MAY NOW OR HEREAFTER
HAVE TO THE PERSONAL JURISDICTION OR VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT
IN ANY SUCH COURT AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HEREBY
FURTHER IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL IN ANY ACTION
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
12.12 Dispute Resolution. Except as otherwise provided
in this Section 12.12, in the event of any dispute, controversy
or claim arising out of or relating to this Agreement or the
Breach thereof, the Parties shall meet promptly (through
representatives with authority to resolve the dispute). If the
Parties cannot resolve the dispute within 30 days, the Parties
shall arbitrate the dispute in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, by a
sole arbitrator, but the arbitration proceeding may not revoke or
revise any provision of this Agreement. All arbitrators selected
shall be independent third parties and shall have knowledge and
experience in the matters addressed by the claim. Except as set
forth in this Section 12.12, arbitration shall be the sole and
exclusive remedy between the Parties with respect to any dispute,
protest, controversy or claim arising out of or relating to this
Agreement, provided, the arbitrator shall not have the power or
authority to award consequential, incidental or punitive damages.
Unless all the Parties to an arbitration otherwise consent in
writing, the location of the arbitration hearings and the place
of entry of the award shall be in St. Louis, Missouri. The
Parties consent to jurisdiction of, and agree that venue will lie
in, any of the state and federal courts set forth in Section
12.11. The arbitration award shall be final and binding and
shall not be reviewable in any court on any grounds except
corruption, fraud or undue means of a Party or for evident
partiality or corruption of the arbitrator. The Parties intend
to eliminate all other court review of the award and the
arbitration proceedings. Except for a proceeding to enforce or
confirm an award or a proceeding brought by all Parties to the
dispute to vacate or modify an award, the initiation of any suit
relating to a dispute that is arbitrable under this Agreement
shall constitute a material Breach of this Agreement. However,
the Parties hereby acknowledge that Breach of this Agreement may
give rise to irreparable injury to the Parties, inadequately
compensable in monetary damages alone, and notwithstanding
anything to the contrary stated herein, the Parties shall be
permitted to seek and obtain specific performance as provided in
Section 12.1.
13. DEFINITIONS.
13.1 Definitions. Capitalized terms used in this Agreement
and not defined elsewhere in this Agreement shall have the
meanings ascribed to them in this Section 13.1 (such meanings
applicable to both the singular and plural forms of the terms
defined) as follows:
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of
1934, as amended.
"Assets" means assets, rights, properties and goodwill of
any kind or type, tangible and intangible, wheresoever located.
"Breach" means a "Breach" of a representation, warranty,
covenant, obligation or other provision of this Agreement or any
instrument delivered pursuant to this Agreement will be deemed to
have occurred if there is or has been (i) any inaccuracy in or
breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation or other
provision, or (ii) any claim (by any Person) or other occurrence
or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence or circumstance.
"CMT Cash" means all cash and cash equivalents owned or held
for the benefit of CMT on or before January 31, 2000, plus the
sum of $418,690.72 received after that date but prior to Closing.
"CMT Office Lease" means that certain Agreement of Lease,
dated January 22, 1997, between CMT and GLS Associates LLC, as
may have been amended to date.
"COBRA" means the Consolidated Omnibus Reconciliation Budget
Act of 1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor law, and the regulations promulgated thereunder.
"Encumbrance" means any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer,
mortgage, easement, servitude, right of way, encroachment,
receipt of income, or exercise of any other attribute of
ownership.
"Environmental Law" means any applicable federal, state,
local or foreign law (including common law), statute, code,
ordinance, rule, regulation or other requirement relating to the
environment, natural resources or public and employee health and
safety including, but not limited to, CERCLA, the Hazardous
Materials Transportation Act, the Resource Conservation and
Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, the Oil Pollution Act of 1990, the Federal Safe
Drinking Water Act, and the Occupational Safety and Health Act,
as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state
or local statutes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
AERISA Affiliate@ means any Person which together with CMT
would be treated as a single employer under Code Section 414.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Governmental Entity" means any domestic or foreign court,
government or governmental or regulatory agency, authority,
entity or instrumentality.
"Guaranty" means that certain Second Amended and Restated
Guaranty dated November 6, 1996 of Shareholder given to Harold's
in connection with the Harold's Note.
"Harold's Note" means the promissory note of CMT payable to
Harold's in original principal amount of $2,750,000.
"Income Tax" means any federal, state, local or foreign
income Tax, including any interest, penalty, or addition thereto,
whether disputed or not.
"Income Tax Return" means any return, declaration, report,
claim for refund or information return or statement relating to
Income Taxes, including any schedule or attachment thereto, and
including any amendments thereof.
"Intellectual Property" means all domestic or foreign
letters patent (including any reissue or re-examination thereof),
patent applications (including any continuation, division,
renewal or substitute thereof), patent licenses, inventions,
software licenses, know-how licenses, trade names, trademark
registrations and applications, service xxxx registrations and
applications, common law trademarks and service marks,
copyrights, copyright registrations and applications, trade
secrets, technical knowledge, know-how or other confidential
proprietary information capable of being set forth in Schedule
2.10 which is owned or used by CMT.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means an individual will be deemed to have
"Knowledge," whether or not such term is capitalized herein, of a
particular fact or other matter if such individual is actually
aware of such fact or other matter after conducting a reasonable
investigation. A person (other than an individual) will be
deemed to have "Knowledge" of a particular fact or other matter
if any individual who is serving, or who has served, as a
director, executive officer, partner, executor or trustee of such
person (or in any similar capacity) has, at any time prior to
Closing, had Knowledge of such fact or other matter. Shareholder
shall be deemed to have knowledge of any matter as to which CMT
has or is deemed to have Knowledge.
"Laws" means all foreign, federal, state, county and local
statutes, laws (including common law), ordinances, regulations,
rules, resolutions, orders, codes, determinations, writs,
injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified
Person or to the businesses or assets and properties thereof
(including, without limitation, Laws relating to securities
registration and regulation, the sale, leasing, ownership or
management of real property, employment practices, terms and
conditions, and wages and hours, building standards land use and
zoning, safety, health and fire prevention, and environmental
protection, including Environmental Laws).
"Leased Real Property" means all of CMT's rights and
incidents of interests with respect to all real property leased
or used by CMT, if any, including all structures, fixtures and
improvements located thereon.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other
administrative order, constitution, law, ordinance, principal of
common law, regulation, statute or treaty.
"Liabilities" means any direct or indirect, or matured or
unmatured, indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility,
whether absolute, fixed, contingent or otherwise, known or
unknown, asserted or unasserted, xxxxxx or inchoate, liquidated
or unliquidated, secured or unsecured; provided, however, that
such term does not include any liability or obligation of CMT
from the period on or after January 31, 2000 relating to the
Harold's Note.
"Ordinary Course of Business" means an action taken by a
Person will be deemed to have been taken in the "Ordinary Course
of Business" only if:
(a) such action is consistent with the past practices
of such Person and is taken in the ordinary course of the
normal day-to-day operations of such Person;
(b) such action is not required to be authorized by
the board of directors of such Person (or by any Person or
group of Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the
board of directors (or by any Person or group of Persons
exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in
the same line of business as such Person.
"Organizational Documents" means the articles or certificate
of incorporation and the bylaws of a corporation and any
amendment to any of the foregoing.
"OTC" means the Oklahoma Tax Commission.
"PBGC" means pension Benefit Guaranty Association.
"Permits" means all assignable franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate the properties and assets and
to carry on the business of any specified Person as it is now
being conducted.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, trust or
any other entity, association or organization including a
Governmental Entity.
"Personnel" means the officers, employees, independent
contractors or agents of CMT.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, suit (whether civil, criminal,
administrative, investigative or informal), commenced, brought,
conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Real Property Lease" means any agreement, contract,
commitment or lease pursuant to which CMT has a leasehold
interest in any Leased Real Property.
"Recitals" means the portion of this Agreement preceding
Section 1.
"Shareholder Collateral" means the following which was
pledged as collateral in connection with the Harold's Loan,
including the Shareholder's cash account and proceeds, the CMT
Shares, the judgment granted Shareholder and the mortgage in
favor of Harold's on Shareholder's real property.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" and any derivatives thereof, means and includes any
and all federal, state, county, local, and foreign income
(including gross, adjusted gross and supplemental net income),
payroll, Medicare, withholding, unemployment insurance, social
security, sales, use, service, service use, leasing, leasing use,
excise, recording, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and
personal property, stamp, transfer, workers' compensation,
severance, windfall profits, and environmental (including taxes
under Code Section 59(A)) and any other tax, charge, fee, levy or
assessment of the same or of a similar nature, including any and
all interest, penalties and additions thereto, whether disputed
or not.
"Third-Party Claim" means any claim, action or proceeding
made or brought by any Person who or which is not a party to this
Agreement or an Affiliate of a party to this Agreement.
13.2 Other Definitions. Each of the following terms is
defined in the Section set forth opposite such term.
"Agreement" Recitals
"Audited Financial Statements" Section 2.7
"Closing" Section 8.1
"Closing Date" Section 8.1
"CMT" Recitals
"CMT Shares" Recitals
"Consulting Agreement" Section 1.6
"Damages" Section 10.2(b)
"Financial Statements" Section 2.7
"Harold's" Recitals
"Interim Balance Sheet" Section 2.7
"Interim Balance Sheet Date" Section 2.7
"Interim Financial Statements" Section 2.7
"Party or Parties" Recitals
"Purchase Price" Section 1.2
"Purchase Note" Section 1.2
"Shareholder" Recitals
"Software" Section 2.13
[SIGNATURES ON FOLLOWING PAGE.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
"HAROLD'S"
HAROLD'S STORES, INC.
By: /s/ H. Xxxxxx Xxxxxx
H. Xxxxxx Xxxxxx
President
"SHAREHOLDER"
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
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