ASSET PURCHASE AGREEMENT
by and among
ZANY BRAINY, INC., CHILDREN'S PRODUCTS, INC., CHILDREN'S DEVELOPMENT INC.,
NOODLE KIDOODLE, INC., CHILDREN'S DISTRIBUTION, LLC, and
ZANY BRAINY DIRECT LLC
THE RIGHT START, INC.
and
ZB COMPANY, INC.
August 31, 2001
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of August 31, 2001, is entered into
by and among Zany Brainy, Inc., a Pennsylvania corporation ("ZBI"), Children's
Products, Inc., a Delaware corporation ("CPI"), Children's Development Inc., a
Delaware corporation ("CDI"), Noodle Kidoodle, Inc., a Delaware corporation
("NKI"), Children's Distribution, LLC, a New Jersey limited liability company
("CDLLC"), and Zany Brainy Direct LLC, a Delaware limited liability company
("ZBD")(ZBI, CPI, CDI, NKI, CDLLC and ZBD hereinafter, collectively, the
"Transferor"), The Right Start, Inc., a California corporation ("Right Start"),
and ZB Company, Inc., a Delaware corporation (the "Transferee").
W I T N E S S E T H:
WHEREAS, Transferee is a newly-formed Delaware corporation wholly-owned by
Right Start;
WHEREAS, Transferor is primarily engaged in the sourcing and distribution
of children's toys, games, books and multimedia products principally through the
sale to retail customers in Transferor's retail stores (the "Business");
WHEREAS, on May 15, 2001 (the "Petition Date"), each of the constituent
entities of the Transferor filed a voluntary petition (collectively, the
"Petition") for relief under Chapter 11 of Title 11 of the United States Code,
11 U.S.C. ▇▇.▇▇. 101, et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), bearing
Case No. 01-1749 (SLR)(the "Bankruptcy Case"), which Bankruptcy Case is
currently pending; and
WHEREAS, upon the terms and subject to the conditions set forth herein, the
Transferor desires to sell, transfer, convey, assign and deliver to the
Transferee, and the Transferee desires to acquire from the Transferor, certain
assets of the Transferor, in accordance with the terms and subject to the
conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following terms, as used in this Agreement,
shall have the following meanings:
"363/365 Transaction Approval Order" shall mean the order, a copy of which
is attached as Exhibit "K" hereto, entered by the Bankruptcy Court on August 16,
2001, among other things, approving the acquisition by the Transferee of the
Transferred Assets on the terms and conditions set forth in this Agreement and
the Transaction Documents, approving the assumption by the Transferor and
assignment by it to the Transferee of all Assigned Contracts which are Executory
Contracts and/or Acquired Leases that are required to be assigned to Transferee
pursuant to the terms and conditions of this Agreement.
"Accounts Receivable" shall mean the Transferor's accounts receivable,
calculated in accordance with GAAP.
"Accrual Categories" shall mean those categories of Accruals listed in
Schedule 1.1 attached hereto and made a part hereof.
"Accruals" shall mean: (i) the Liabilities incurred through the Closing
Date for all outstanding gift certificates, (ii) other Liabilities incurred
through the Closing Date which arose or were incurred after the Petition Date
which are expected to be settled for cash, (iii) those other accrued expenses of
the Transferor through the Closing Date that are in the Accrual Categories, and
(iv) to the extent allowed, all post-Petition Date professional fees and other
case administrative costs and expenses (as set forth in Section 507(a)(1) of the
Bankruptcy Code) incurred through the Closing Date in excess of Professional
Retainers.
"Acquired Leases" shall mean those real property leases, executory leases
and other leases which Transferee has elected to have Transferor assume and
assign to Transferee pursuant to Section 2.3 hereof and which are listed in
Exhibit "A" hereto.
"Acquired Premises" shall mean all assets, including but not limited to the
furniture, fixtures and Equipment and Other Personalty, located at the
Transferor's Facilities.
"Action" shall mean any claim, dispute, demand, cause of action or action
asserted in any arbitration, litigation, mediation, suit, investigation or other
proceeding and any appeal therefrom.
"Additional Post-Closing Payments" shall have the meaning ascribed to such
term in Section 2.10 hereof.
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"Affiliate" shall mean, with respect to any Person, any Person which,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. As used in this
definition, the term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to (a) vote twenty percent (20%) or more of the outstanding voting securities of
such Person, or (b) otherwise direct the management policies of such Person by
contract or otherwise.
"Agreement" shall mean this Asset Purchase Agreement, including all of the
Schedules and Exhibits attached hereto.
"Approval" shall mean any approval, authorization, consent, license,
franchise, order or permit of or by, notice to, or filing or registration with,
a Person.
"Approved Excess Expenditures" shall mean any Excess Expenditures that have
been approved in advance in writing by Representatives of Transferee.
"Assets" shall mean both the Transferred Assets and the Excluded Assets.
"Assigned Contracts" shall mean all assignable Contracts and Leases which
Transferee has or will elect to have assumed by the Transferor and assigned to
the Transferee pursuant to Section 2.3 hereof, as set forth in Exhibit "A"
hereto, including the Acquired Leases listed therein and those other Contracts
entered into after the Petition Date which are also listed on Exhibit "A"
hereto.
"Assignment Agreements" shall mean the instruments of assignment and
assumption of the Assumed Liabilities by the Transferee, substantially in the
form attached hereto as Exhibit "B."
"Assumed Liabilities" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Bankruptcy Case" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Bankruptcy Code" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Bankruptcy Court" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Books and Records" shall have the meaning ascribed to such term in Section
2.1(h) hereof.
"Budget" shall mean the budget or budget(s), which will be submitted on or
before 30 days after the Closing Date, as supplemented from time to time
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thereafter, by counsel for the Transferor and the Creditors Committee and
approved by the Transferor for all Post-Closing Date Case Costs. The Budget
shall not exceed $1,000,000 (inclusive of the Evergreen Amount) unless any
increase above such amount has been approved in writing by the Transferee.
"Business" shall have the meaning ascribed to such term in the recitals to
this Agreement.
"Business Day" shall mean a day that is not a Saturday, a Sunday or a day
on which banks in the State of California are required or authorized to close
for regular banking business.
"California Court" shall have the meaning ascribed to such term in Section
15.6(c) hereof.
"Cap Ex Expenditures" shall mean all post-Petition Date capital
expenditures paid or incurred by the Transferor prior to the Closing Date up to
but not in excess of $486,251, plus Approved Excess Expenditures.
"Cash" shall have the meaning ascribed to such term in Section 2.1(a)
hereof.
"Closing" shall mean the consummation of the transactions contemplated by
this Agreement.
"Closing Date" shall mean a Business Day within three Business Days after
the 363/365 Transaction Approval Order becomes a Final Order, but in no event
later than September 5, 2001 unless otherwise agreed to by the parties.
"Closing Liabilities Assumption" shall have the meaning ascribed to such
term in Section 2.7(b) hereof.
"Closing Proceeds" shall have the meaning ascribed to such term in Section
2.7(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Contract" shall mean each instrument, contract, license and other
agreement, including unexpired leases of personal property, relating to the
Business to which the Transferor is a party or which affects any of the
Transferred Assets.
"Creditors Committee" shall mean the Official Committee of Unsecured
Creditors.
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"Cure Costs" shall mean all payments required to be made by the Transferee
in order to satisfy the requirements of Section 365(b) of the Bankruptcy Code
with respect to the Assigned Contracts.
"Deposits" shall have the meaning ascribed to such term in Section 2.1(m)
hereof.
"Designated Account" shall mean an account identified in writing by the
Transferor to the Transferee at least two (2) Business Days prior to the Closing
Date.
"DIP Facility" shall mean the Transferor's debtor in possession credit
facility with WFRF.
"DIP Facility Payoff Amount" shall have the meaning ascribed to such term
in Section 2.7(a)(i).
"Effective Date" shall mean the effective date of the Plan.
"Effective Time" shall mean 12:01 a.m. on the Closing Date.
"Employee Obligations" shall mean the Transferor's obligations with respect
to the Employment Agreements and the Retention Plan.
"Employee Plans" shall have the meaning ascribed to such term in Section
12.10 hereof.
"Employment Agreements" shall mean (i) the existing written employment
agreements of Management and (ii) the Conditional Employment Agreements for
Management attached hereto as Exhibit "C."
"Employment Notice" shall have the meaning ascribed to such term in Section
2.7(a)(iv) hereof.
"Equipment" shall mean each item of machinery, equipment and fixture owned
by the Transferor.
"Escrow Agent" shall mean BNY Western Trust Company.
"Escrowed Deposit" shall have the meaning ascribed to such term in Section
2.6 hereof.
"Escrowed Funds" shall mean the Escrowed Deposit and all accrued and unpaid
interest thereon.
"Evergreen Amount" shall have the meaning ascribed to such term in Section
2.7(a)(iii) hereof.
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"Excess Claims" shall mean the amount, if any, by which the allowed
rejection claims, subject to Section 502(b)(6) of the Bankruptcy Code, with
respect to the Rejected Leases exceeds $2.5 million.
"Excess Claims Adjustment" shall have the meaning ascribed to such term in
Section 2.10(b) hereof.
"Excess Expenditures" shall mean the amount by which all Cap Ex
Expenditures exceed $486,251.
"Excluded Assets" shall mean all of the assets of the Transferor that do
not constitute Transferred Assets.
"Excluded Liabilities" shall have the meaning ascribed to such term in
Section 2.4 hereof.
"Executory Contracts" shall mean all Contracts, including equipment leases
and real estate leases for the Retail Stores, the headquarters office and the
distribution center(s), to which the Transferor is a party relating to the
Business, the Transferred Assets or the Acquired Leases entered into prior to
the Petition Date that constitute "executory contracts" as such term is used in
Section 365 of the Bankruptcy Code.
"Final Order" shall mean an order, judgment or other decree, the operation
or effect of which has not been reversed, stayed, modified or amended, and which
is no longer subject to appeal, certiorari proceeding, or other proceeding for
review or rehearing and as to which no appeal, certiorari proceeding or other
proceeding for review or rehearing shall then be pending.
"GAAP" shall mean generally accepted accounting principles in the United
States.
"Governmental Authority" shall mean any foreign, federal, state, local or
other governmental, administrative or regulatory authority, body, agency, court,
tribunal or similar entity including any arbitrator or arbitration panel.
"▇▇▇▇▇▇ 546(g)* Agreement" shall mean, in the form approved by an order
entered by the Bankruptcy Court, that certain letter agreement, dated July 11,
2001, pursuant to which ▇▇▇▇▇▇ Book Company has agreed to sell merchandise on
credit to and accept returns of merchandise from Transferor.
"Intangible Assets" shall mean all intangible property owned or used by the
Transferor relating to the Business or the Transferred Assets, including,
without limitation, the Intellectual Property, all warranties and similar
guarantees of quality or performance given by third parties in respect of goods
delivered or services performed, goodwill, Approvals, confidential or
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proprietary information, covenants not to compete, all designs and works of art
used on labels and other packaging of the Inventory, all advertising campaign
materials, all clinical studies, if any, performed with respect to any of the
Transferred Assets and any other Assets, identifiable or unidentifiable,
normally considered an "intangible asset" under GAAP.
"Intellectual Property" shall mean, all trademarks, tradenames, copyrights,
Internet web-sites, patents, domain names, software licenses and other similar
forms of intellectual property.
"Inventory" shall mean all inventories owned by the Transferor relating to
the Business. For the purposes hereof, inventories shall include, without
limitation, all packaging, finished goods, raw materials, supplies, work in
process, spare parts and other miscellaneous items of tangible property normally
considered a part of "inventory" owned by the Transferor under GAAP, items of
inventory in transit to Transferor and items of inventory located somewhere
other than Transferor's Facilities.
"IRS" shall mean the Internal Revenue Service.
"Law" shall mean any law, statute, rule, regulation, ordinance, standard,
requirement, administrative ruling, order or process promulgated by any
Governmental Authority as in effect from time to time (including, without
limitation, any zoning or land use law or ordinance, building code,
environmental law, securities, blue sky, civil rights or occupational health and
safety law or regulation and any court, administrative agency or arbitrator's
order or process).
"Lease" shall mean any agreement or lease with respect to the Transferor's
use or occupancy of Transferor's Facilities.
"Liability" shall mean any debt, liability, commitment and guaranty,
warranty or obligation of any kind, character or nature whatsoever, whether
known or unknown, secured or unsecured, accrued, fixed, absolute, potential,
contingent or otherwise, and whether due or to become due.
"Lien" shall mean any lien, statutory lien, pledge, mortgage, security
interest, charge, easement, right of way, covenant, claim, restriction, right,
option, conditional sale or other title retention agreement, or encumbrance of
any kind or nature.
"Management" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
"Master Sublease Agreement" shall mean the Master Sublease Agreements of
even date herewith between Transferee and ZBI, and between Transferee and NKI,
in the forms attached hereto as Exhibit "H".
"Material Adverse Effect" shall mean any one or more facts, events or
conditions which singularly or in the aggregate has or would reasonably be
deemed to give rise to an adverse effect of $2,750,000 or more on the financial
condition, operating results, business or prospects of the Transferor.
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"Operating Agreement" shall mean the Operating Agreement of even date
herewith between Transferor and Transferee in the form attached hereto as
Exhibit "I".
"Other Personalty" shall mean all personal property (including parts,
furniture, fixtures and furnishings), other than Equipment, Intangible Assets
and Inventory, wherever located, owned, held or leased by the Transferor and
which has been or is now used by the Transferor in connection with the Business
or the Transferred Assets.
"Person" shall mean any individual, general or limited partnership,
corporation, limited liability company, association, business trust, joint
venture, Governmental Authority, business entity or other entity of any kind or
nature.
"Petition Date" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Plan" shall mean a liquidating plan of reorganization.
"PNC Obligation" shall mean the secured claim of PNC Leasing Corp. in
respect of the lease dated June 26, 1998 with Children's Concept Inc. d/b/a Zany
Brainy, in an amount acceptable to the Transferee or as determined by the
Bankruptcy Court.
"Post-Closing Date Case Costs" shall mean all post-Closing Date and
pre-Effective Date allowed professional fees, to the extent in excess of
Professional Retainers available for the payment of such fees, and other case
administrative costs and expenses (as set forth in Section 507(a)(1) of the
Bankruptcy Code).
"Post-Closing Payments" shall have the meaning ascribed to such term in
Section 2.8 hereof.
"Professional Retainers" shall mean retainers paid to professionals prior
to the Petition Date, existing as of the Closing Date, for case administrative
costs and expenses as set forth in Section 507(a) of the Bankruptcy Code.
"Purchase Price" shall mean the Closing Proceeds, the Closing Liabilities
Assumption, the Post-Closing Payments and the Additional Post-Closing Payments.
"Registration Statement" shall mean either Form S-3 or its successor, or,
if at the time of the registration of the Right Start Shares as contemplated by
Section 7.6 herein Right Start does not then qualify for the use of Form ▇-▇,
▇▇▇▇ ▇-▇ or such other form appropriate for such registration under the rules of
the Securities and Exchange Commission in effect at the time of filing thereof.
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"Rejected Contracts" shall have the meaning ascribed to such term in
Section 2.3(a) hereof.
"Rejected Leases" shall mean any Lease which is a Rejected Contract as such
term is defined in Section 2.2(b) hereof.
"Representative" shall mean, with respect to a Person, any employee,
officer, director, stockholder, partner, accountant, attorney, investment
banker, broker, finder, investor, subcontractor, consultant or other authorized
agent or representative of such Person.
"Restricted Assets" shall have the meaning ascribed to such
term in Section 3.3 hereof.
"Retail Stores" shall mean the approximately 187 retail store locations
utilized by the Transferor in the operation of the Business as of June 30, 2001.
"Retention Escrow Account" shall have the meaning ascribed to such term in
Section 8.1 hereof.
"Retention Escrow Agent" shall mean Union Bank of California, N.A.
"Retention Escrow Agreement" shall have the meaning ascribed to such term
in Section 8.1 hereof.
"Retention Fund" shall have the meaning ascribed to such term in Section
8.1 hereof.
"Retention Plan" shall mean the Transferor's Severance Pay and Retention
Bonus Plan, as approved by the Bankruptcy Court, attached hereto as Exhibit "D."
"Retention Plan Payment Date" shall mean January 2, 2002.
"Right Start" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Right Start Shares" shall have the meaning ascribed to such term in
Section 2.7(a)(vi) hereof.
"Tax Return" shall mean any return, report, declaration, claim for refund,
estimate, election, or information statement or return relating to any Tax,
including any schedule or attachment thereto, and any amendment thereof.
"Trade Payables" shall have the meaning ascribed to such term in Section
2.3(c) hereof.
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"Transaction Documents" shall mean, collectively, this Agreement, the
Assignment Agreements, the Transferee Subleases and all agreements, instruments,
certificates and other documents executed and delivered in connection herewith
or therewith or contemplated hereby or thereby.
"Transferee" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Transferee Allocated Costs" shall mean the amount of any professional fees
and other case administrative costs and expenses (as set forth in Section
507(a)(1) of the Bankruptcy Code) and all other out-of-pocket costs and expenses
that are incurred by Transferor in connection with (A) any executory Contract or
Lease that is the subject of a Transferee Sublease that would not have been
incurred if such executory Contract or Lease had been rejected or assumed and
assigned by Transferor, as applicable, prior to or at the Closing, or (B)
assisting Transferee to make the filings required by Section 6.9(d), or (C)
assisting Transferee in its efforts to arrange financing for the transactions
contemplated by this Agreement, or (D) seeking Bankruptcy Court approval for or
otherwise assisting Transferee to arrange any "going-out-of-business" sales at
any of Transferor's Facilities, or (E) any other matters as agreed by Transferor
and Transferee. "Transferee Allocated Costs" shall be determined either (i) by
the mutual agreement of Transferor and Transferee, or (ii) in the absence of
such prior approval or agreement, by determination of the Bankruptcy Court.
"Transferee Recipients" shall have the meaning ascribed to such term in
Section 7.1 hereof.
"Transferee Subleases" shall mean all sublease agreements between
Transferee and Transferor, effective as of the Effective Time, pursuant to which
Transferor grants to the Transferee all of its rights to the use and/or
occupancy of the real or personal property which are subject to the executory
Contracts and Leases identified on Schedule 2.3(g) and Transferee agrees to
reimburse Transferor during the term of the Transferee Subleases for all costs
and expenses incurred by Transferor pursuant to the terms of such executory
Contract or Lease or arising out of any claim or dispute related thereto.
"Transferor" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Transferor Recipients" shall have the meaning ascribed to such term in
Section 6.3 hereof.
"Transferor's Facilities" shall mean all real property owned or leased by
Transferor.
"Transfer" shall mean any sale, transfer, conveyance, assignment, delivery
or other disposition, and "Transfer" or "Transferred," used as a verb, shall
each have a correlative meaning.
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"Transferred Assets" shall have the meaning ascribed to such term in
Section 2.1 hereof.
"Transitional Services Agreement" shall have the meaning ascribed to such
term in Section 12.9 hereof.
"WFRF" shall mean ▇▇▇▇▇ Fargo Retail Finance LLC.
Section 1.2. Additional Definitions. In addition to the foregoing defined
terms, (i) other capitalized terms appearing in this Agreement shall have the
respective meanings ascribed to such terms where they first appear in the text
of this Agreement and (ii) all accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.
Section 1.3. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or provisions hereof.
Section 1.4. References to Articles, Etc. All references herein to
Articles, Sections, Exhibits and Schedules shall be to Articles and Sections of
and Exhibits and Schedules to this Agreement.
Section 1.5. References to "Herein," Etc. As used in this Agreement, the
words "herein," "hereof," "hereby" and "hereunder" shall refer to this Agreement
as a whole, and not to any particular section, provision or subdivision of this
Agreement.
ARTICLE II
TRANSFER OF THE ASSETS;
PURCHASE PRICE; PAYMENTS; ESCROW
Section 2.1. Transfer of the Assets. Except for (i) the Excluded Assets set
forth in Section 2.2 below or (ii) as set forth in the 363/365 Transaction
Approval Order and subject to the terms and conditions of this Agreement, at and
as of the Effective Time, the Transferor shall Transfer to the Transferee, and
Transferee shall accept from the Transferor, free and clear of all Liens and
encumbrances, all of the Transferor's right, title and interest in and to all
assets owned, held or utilized by the Transferor; provided, however, said
Transfer of assets shall be only to the extent (i) of Transferor's interest
therein and (ii) said assets are transferable or assignable by Transferor
("Transferred Assets") as set forth below:
(a) all cash and cash equivalents and all pre-paid inventory deposits
("Cash");
(b) subject to Section 2.2 below, all of Transferor's Facilities, including
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the Acquired Premises; provided, however, if any portion of Transferor's
Facilities is encumbered by a capital or operating Lease, the Transferee may at
its election acquire such Lease subject to its assumption pursuant to Section
2.3 below.
(c) all Accounts Receivable;
(d) all Equipment and Other Personalty, including but not limited to the
items set forth on Schedule 2.1(d);
(e) all Intangible Assets including but not limited to the items set forth
on Schedule 2.1(e);
(f) all Inventory;
(g) all rights of the Transferor under all Assigned Contracts;
(h) originals or copies of all books, financial and other records and
information which has been reduced to written, recorded or encoded form relating
to the Business or the Transferred Assets, including without limitation,
customer lists and related sales histories, credit policies and credit
information with respect to existing customers, distribution and sales lists,
existing cost and pricing data, existing business plans, advertising and
promotion plans and materials, product development plans, product advertisement
and packaging designs, forecasts, market research reports, competitor
information, reference catalogs and product efficacy research in each case in
existence as of June 30, 2001, as such items may be updated, modified or
augmented in the ordinary course of business (collectively, the "Books and
Records");
(i) without limiting the foregoing, and subject to all applicable third
party rights of licensors and others, all computer hardware, computer software,
computer software documentation, including source code, and systems
documentation used in the Business in each case in existence as of June 30,
2001, as such items may be modified or augmented in the ordinary course of
business;
(j) without limiting the foregoing, all prepaid expenses and security
deposits paid by the Transferor pursuant to the Assigned Contracts that are
validly assigned to the Transferee unless offset;
(k) all Actions, judgments, insurance proceeds and insurance claims in
favor of or on behalf of the Transferor related to property damage that relates
to the Business or the Transferred Assets;
(l) any warranties of third parties on any Transferred Assets;
(m) security, utility and all other deposits and other pre-paid costs
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relating to Transferred Assets and pre-paid rent relating to the Assigned
Contracts (the "Deposits"); and
(n) all rights of the Transferor under the ▇▇▇▇▇▇ 546(g)* Agreement.
Section 2.2. Excluded Assets. Notwithstanding anything to the contrary
contained herein, including Section 2.1 above, the Transferor shall retain all
of its right, title and interest in and to, and shall not Transfer to the
Transferee, solely the following Assets (collectively, the "Excluded Assets"):
(a) all claims for relief under the avoidance power provisions under
Sections 544 through 550 of the Bankruptcy Code;
(b) all Rejected Contracts and all rights and all security deposits and, to
the extent applicable, fixtures relating thereto;
(c) Professional Retainers; and
(d) First Union National Bank account no. 2000011048716.
Section 2.3. Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, at and as of the Effective Time, the Transferee shall assume
and agree to perform, discharge and satisfy when due only the following
Liabilities or obligations:
(a) Liabilities according to the terms of any Assigned Contract, which
relate to periods after the Effective Time or which arise after the Effective
Time and are to be paid, performed or satisfied after the Effective Time.
Transferee will also assume any Liabilities for the payment of any Cure Costs
due under the Assigned Contracts and Acquired Leases. Transferee, at its sole
option, may elect not to assume any executory Contract or Lease as follows: (i)
no later than the Effective Date, for any executory Contract or Lease which is
subject to a Transferee Sublease or (ii) August 15, 2001 with respect to all
other executory Contracts or Leases (collectively, the "Rejected Contracts").
(b) Employee Obligations;
(c) all Transferor's trade payables incurred through the Closing Date which
arose or were incurred after the Petition Date (the "Trade Payables");
(d) all Accruals;
(e) Post-Closing Date Case Costs in accordance with Section 12.7 below;
(f) Approved Excess Expenditures; provided that any portion of the Excess
Expenditures which are not Approved Excess Expenditures shall not be assumed or
paid by Transferee;
(g) all Liabilities of the Transferor pursuant to the executory Contracts
or Leases that are the subject of a Transferee Sublease incurred during the term
of any Transferee Sublease, set forth on Schedule 2.3(g). The Transferee
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Subleases shall be evidenced by one or more Master Sublease Agreement, with
respect to the Leases, and by the Operating Agreement, with respect to the
Executory Contracts. Pursuant to the directions of Transferee, Transferor shall
promptly file and prosecute, in accordance with the Bankruptcy Code, one or more
motions seeking to assume and assign or reject each of the Executory Contracts
and Leases that are the subject of a Transferee Sublease. The Transferee
Subleases shall have the term set forth in the Master Sublease Agreement or the
Operating Agreement, as the case may be;
(h) all Liabilities of the Transferor under the Employee Plans in
accordance with Section 12.10 of this Agreement;
(i) all other pre-Closing Liabilities of the Transferor other than (i)
pre-Petition general unsecured claims, and (ii) the $15,000 per month maximum
payment obligation of Transferor pursuant to the terms of the Transitional
Services Agreement; and
(j) all Liabilities of Transferor under the ▇▇▇▇▇▇ 546(g)* Agreement.
Notwithstanding anything to the contrary contained herein, except for the
Assumed Liabilities, Transferee shall not assume any Liability of Transferor
which relates to any period of time, arises or is due prior to the Effective
Time. The Liabilities described in the foregoing clauses (a) through (j) are
collectively defined herein as the "Assumed Liabilities".
Section 2.4. Excluded Liabilities. Except for the Assumed Liabilities, the
Transferee shall not assume, and shall have no liability or obligation
whatsoever at any time for any or all Liabilities of the Transferor arising
prior to or after the Effective Time from the operation of, or any act or
omission occurring in respect of, the Business or the ownership of the
Transferred Assets (collectively, the "Excluded Liabilities").
Section 2.5. Purchase Price. The aggregate amount which the Transferee
shall provide to the Transferor for the Transferred Assets shall be (i) the
Closing Proceeds and (ii) the Closing Liabilities Assumption, as hereinafter
defined, and (iii) the Post-Closing Payments, as hereinafter defined, and (iv)
the Additional Post-Closing Payments, as hereinafter defined.
SECTION 2.6. Escrow. Transferee has caused to be delivered to the Escrow
Agent an amount equal to $4.0 million (the "Escrowed Deposit") for credit to
Transferor against the cash payable to Transferor hereunder.
Section 2.7. Payment of the Purchase Price. The Purchase Price shall be
paid by the Transferee as follows:
(a) At the Closing, the Transferee shall transfer the following to the
Transferor:
15
(i) cash in the amount necessary to pay all sums due and owing under the
DIP Facility on the Closing Date in order to terminate the DIP Facility (the
"DIP Facility Payoff Amount");
(ii) [INTENTIONALLY OMITTED]
(iii) $200,000 in cash (the "Evergreen Amount") which shall be credited
against Post-Closing Date Costs payable by Transferee;
(iv) To the Retention Escrow Account, an amount equal to the estimated
maximum amount of retention payments which would be due to employees under the
Retention Plan. Four (4) Business Days prior to the Closing Date, Transferee
shall identify those employees then known to it that will not be offered
comparable employment at Closing (the "Employment Notice"). Based on the
Employment Notice, Transferor shall calculate and deliver to Transferee two (2)
Business Days prior to the Closing the estimate of the Retention Fund amount;
(v) $4,200,000 in cash;
(vi) 1.1 million shares of Right Start common stock, no par value (the
"Right Start Shares").
Such consideration described above shall hereinafter be referred to as the
"Closing Proceeds."
(b) At the Closing, Transferee shall assume (the "Closing Liabilities
Assumption") Transferor's obligations with respect to the Assumed Liabilities
(including the payment of the Cure Costs). In connection therewith, the
Transferee shall satisfy the Transferor's obligations regarding the Employee
Obligations, the Trade Payables, and the Accruals in the ordinary course as such
obligations become due. With respect to the Cure Costs, the Transferee shall pay
such amounts as are agreed to by it and the affected creditor or as determined
by the Bankruptcy Court.
(c) After the Closing, the Transferee shall (A) pay the Post-Closing
Payments to the Transferor as set forth in Section 2.8 below, and (B) pay the
Additional Post-Closing Payments to the Transferor as set forth in Section 2.10
below, and (C) pay to Transferor amounts incurred after the Closing Date under
those Leases or executory Contracts that were the subject of a Transferee
Sublease on or before the time they are incurred and (D) pay to Transferor the
Transferee Allocated Costs on or before the time they are incurred by or payable
by Transferor in accordance with the provisions of Section 7.5 hereunder.
SECTION 2.8. Payment of the Post-Closing Payments. Transferee shall pay to
Transferor $2.5 million on or before December 15, 2001, $2.5 million on or
before February 15, 2002 and $2.5 million on or before April 15, 2002
(collectively, the "Post-Closing Payments").
16
Section 2.9. [Intentionally OMITTED]
Section 2.10. Additional Payments. The Transferee agrees that it shall pay
to Transferor the following amounts (collectively, the "Additional Post-Closing
Payments"):
(a) The amount of Post-Closing Date Case Costs up to One Million Dollars
($1,000,000) PLUS the amount of any Transferee Allocated Costs incurred on or
after the Closing Date (inclusive of the Evergreen Amount); provided that all
professional fees shall be required to be approved by the Bankruptcy Court and
Transferee shall be entitled to reasonable notice and an opportunity to be heard
in connection therewith. In connection with the calculation of the Post-Closing
Date Case Costs, the parties agree that Transferor shall submit a schedule of
all Post-Closing Date Case Costs to the Transferee no later than May 1, 2002.
(b) In the event there are Excess Claims, the additional amount required so
that the percentage recovery by the holders of allowed unsecured claims under
the Plan is not diminished as a result of the Excess Claims (the "Excess Claims
Adjustment").
ARTICLE III
THE CLOSING
Section 3.1. Time and Place of Closing. If all the conditions to Closing
set forth in this Agreement have been satisfied or waived in writing prior to
such date, the Closing shall take place at 10:00 a.m., Philadelphia time, no
later than September 5, 2001, unless the parties otherwise agree in writing, at
the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius, LLP in Philadelphia, PA or at such other
time or place as may be mutually agreed upon by the parties hereto. At the
Effective Time, except as provided elsewhere herein, the following shall be
deemed to occur: (i) Closing; (ii) the Transfer of the Transferred Assets; (iii)
the assumption of the Assumed Liabilities; (iv) the effectiveness of the
documents, agreements and certificates delivered in accordance with this
Agreement; and (v) the consummation of the transactions contemplated hereby.
Section 3.2. Payment of Purchase Price; Deliveries. At the Closing, the
Transferee shall pay and deliver, or cause to be paid or delivered, the Closing
Proceeds in accordance with Section 2.7 above, and the parties hereto shall
deliver such documents as required by Article IX and Article X hereof.
Section 3.3. Assignment of Assigned Contracts, Etc. Anything contained
herein to the contrary notwithstanding, this Agreement shall not constitute an
agreement to Transfer any Assigned Contract or any claim or right, or any
benefit arising thereunder or resulting therefrom (collectively, "Restricted
Assets"), if, notwithstanding the provisions of Sections 363 and 365 of the
Bankruptcy Code, a Transfer thereof, without the Approval of the non-debtor
party thereto, would excuse the non-debtor party thereto from accepting
17
performance from the Transferee, constitute a breach thereof or in any way
affect the rights of the Transferor or the Transferee, as the case may be,
thereunder. Any Transfer to the Transferee of any Restricted Asset which shall,
notwithstanding the provisions of Sections 363 and 365 of the Bankruptcy Code,
require the Approval of any non-debtor party for such Transfer as aforesaid
shall be made subject to such Approval being obtained. The Transferor will
advise the Transferee of any Restricted Assets that it becomes aware of prior to
the Closing.
SECTION 3.4. [intentionally omitted]
SECTION 3.5. Sales, Use and Other Taxes. Notwithstanding Section 1146(c) of
the Bankruptcy Code, to the extent that any governmental unit, any sales, use,
purchase, transfer, fixed asset, stamp, documentary stamp, use or other taxes
which may be payable by reason of the sale of the Transferred Assets under this
Agreement for the transactions contemplated herein any and all claims, charges,
interest or penalties assessed, imposed or asserted in relation to any such
taxes, shall be the responsibility and obligation of and timely paid by
Transferor.
SECTION 3.6. Possession. Right to possession of the Transferred Assets and
the Acquired Leases shall transfer to Transferee on the Closing Date. Transferor
shall transfer and deliver to Transferee on the Closing Date such keys, lock and
safe combinations and other similar items as Transferee shall require to obtain
immediate and full occupation and control of the Transferred Assets and Acquired
Leases, and shall also make available to Transferee all Books and Records or
other documents that are required to be transferred to Transferee by this
Agreement. Transferee agrees to pay all costs of removal of Books and Records
and will not remove any fixtures from any leased premises which is not an
Acquired Lease, unless Transferee restores such premises to a broom clean,
undamaged condition.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
[INTENTIONALLY OMITTED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE
As an inducement to Transferor to enter into this Agreement, Transferee
hereby represents and warrants as follows:
Section 5.1. Organization and Good Standing. Transferee is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation and has the requisite corporate power and authority to
18
own, operate and lease its properties and assets and to conduct its business as
they are now being owned, operated, leased and conducted.
Section 5.2. Power and Authority. Transferee has the corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents, perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Transferee of this Agreement and the other Transaction Documents to which it is
a party, the performance by it of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate actions on the part of
Transferee. This Agreement and each other Transaction Document to which
Transferee is a party will constitute upon the mutual execution and delivery
thereof the legal, valid and binding obligation of Transferee, enforceable
against it in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity.
SECTION 5.3. S-3 Eligibility. Right Start meets the requirements set forth
in Section I. A. of Form S-3 under the Securities Act of 1933, as amended.
For the purposes of this ARTICLE V, the representations and warranties
contained herein shall terminate and be of no further force and effect on and
after the Closing.
ARTICLE VI
COVENANTS OF THE TRANSFEROR
Each of ZBI, CPI, CDI, NKI, CDLLC and ZBD hereby jointly and severally
represents, covenants and agrees, as applicable, that, subject to the effect of
the Bankruptcy Case and Orders of the Bankruptcy Court and except as otherwise
consented to in writing by the Transferee or as otherwise contemplated by this
Agreement, from and after July 10, 2001 until the Closing:
Section 6.1. Conduct of Business. The Transferor has, through the date
hereof, and shall, continue to operate its business in the ordinary course,
substantially in the manner as conducted prior to the date hereof.
SECTION 6.2 Access to the Transferor. The Transferor has, through the date
hereof, and shall use reasonable efforts to afford the Transferee and its
Representatives reasonable access, upon such prior notice to the Books and
Records, files, pleadings, data base, documents, properties, facilities and
employees of the Transferor relating to the Business, the Retail Stores or the
Transferred Assets, as the Transferee may reasonably request; provided that such
reasonable access shall not unduly interfere with Transferor's ongoing business,
operations or Bankruptcy Case obligations.
19
Section 6.3. Confidentiality. The Transferor has, through the date hereof,
and shall, and shall cause each of its Representatives (collectively, the
"Transferor Recipients") to keep confidential and not use or disclose to others
any proprietary information of or obtained from, the Transferee or its
Representatives, to the extent that such proprietary information is not or does
not become readily available to the public other than as a result of disclosure
by the Transferee or its Representatives or is not required to be disclosed by
applicable Law, court order or to the extent necessary in a proceeding before
the Bankruptcy Court to consummate this Agreement. Promptly after the Closing or
in the event of the termination of this Agreement without a Closing, the
Transferor shall, and shall cause each of the other Transferor Recipients to,
promptly destroy or return to the Transferee all, and not retain any copies of,
such written, recorded or encoded proprietary information. Transferor shall be
responsible for any breach of this Section 6.3 by any of the Transferor
Recipients and agrees, at its sole expense, to take all reasonable measures
(including, without limitation, court proceedings) to restrain the Transferor
Recipients from prohibited or unauthorized disclosure or use of such proprietary
information.
Section 6.4 [intentionally omitted]
SECTION 6.5 [intentionally omitted]
SECTION 6.6 Notification of Certain Events. The Transferor shall give the
Transferee immediate notice of the occurrence of any event or events which
constitute a violation of any of the provisions of Article VI.
SECTION 6.7 [intentionally omitted]
SECTION 6.8 Conduct of Business. Except as specifically consented to (in
each instance) in writing by Transferee in advance (which consent may be
withheld in Transferee's sole and absolute discretion), from the date hereof to
the Closing Date, Transferor shall not, directly or indirectly:
(a) Hire and/or fire any employee, consultant or advisor;
(b) Enter into (i) any financial commitment on behalf of Transferor
involving more than $5,000 individually or $50,000 in the aggregate other than
purchase orders entered into in the ordinary course consistent with past
practice, or (ii) any purchase order in the ordinary course consistent with past
practice involving more than $1,000,000 individually or $5,000,000 in the
aggregate;
(c) Increase any compensation or enter into or amend any agreement with any
of its employees, advisors or consultants other than as previously required by
any written agreement in effect on the Closing Date or any Employee Plan in
effect on the Closing Date;
(d) Sell, mortgage, pledge or subject to Lien any of the Transferred
Assets;
20
(e) Take any actions which are reasonably expected to have a Material
Adverse Effect on the Transferred Assets;
(f) (i) Make or agree to make any loans or advances or guarantee or agree
to guarantee any loans or advances to any party whatsoever to the extent such
loans, advances or guarantees would be Assumed Liabilities; (ii) cancel, waive
or release or agree to cancel, settle, waive or release any debts, rights or
claims included in the Transferred Assets against third parties; (iii) sell,
assign, pledge, mortgage or otherwise transfer, or suffer any material damage,
destruction or loss (whether or not covered by insurance) to, any of the
Transferred Assets (except in the ordinary course of the Business); (iv) make a
commitment to pay any severance or termination payment to any employee or
consultant engaged by Transferor other than as previously required by any
written agreement in effect on the date hereof or as required under the terms of
this Agreement; (v) amend any material contract, agreement, lease, franchise or
permit to which Transferor is a party and which will be transferred to
Transferee; or (vi) enter into any other material transactions with respect to
the operation of the Transferred Assets or the Business;
(g) Conduct any sale or otherwise offer discounted merchandise other than
in ordinary course of Transferor's business and in a manner that is in
accordance with customary industry practice;
(h) Enter into any arrangement or transaction pursuant to section 546(g)*
of the Bankruptcy Code except with Transferee's prior consent; provided that
Transferee hereby consents to the transactions contemplated in the ▇▇▇▇▇▇
546(g)* Agreement; or
(i) Directly or indirectly agree to do any of the foregoing.
SECTION 6.9 Affirmative Covenants. From the date hereof to the Closing
Date, Transferor shall:
(a) provide Transferee with full and complete access to all of Transferor's
books and records, including, but not limited to all books, records, accounts,
and other reasonably requested information;
(b) maintain all liability and other insurance policies of the Transferor
consistent with Transferor's historical practices;
(c) pay when due all accounts payable, bills and invoices relating to the
operation of the Business; and
(d) cooperate with Transferee in making governmental filings in connection
with the transaction contemplated by this Agreement.
SECTION 6.10 GOB Sales. From and after the Closing, the Transferor shall
21
use its best efforts to assist the Transferee in seeking approval of the
Bankruptcy Court authorizing Transferee to conduct "going-out-of-business" sales
at one or more of the Transferor's Facilities identified on Schedule 6.10
hereto.
ARTICLE VII
COVENANTS OF THE TRANSFEREE
The Transferee hereby covenants and agrees with respect to the following
Sections 7.1 through 7.5 that, except as otherwise consented to in writing by
the Transferor, from and after the date hereof until the Closing:
Section 7.1 Confidentiality. The Transferee shall as requested, and shall
cause each of its Representatives (collectively, the "Transferee Recipients")
to, keep confidential, and not use or disclose to others, any proprietary
information of or obtained from the Transferor or its Representatives, to the
extent that such proprietary information is not or does not become readily
available to the public other than as a result of disclosure by the Transferee
or its Representatives or is not required to be disclosed by applicable Law or
court order. In the event of the termination of this Agreement without a
Closing, the Transferee shall, and shall cause each of the other Transferee
Recipients to, promptly destroy or return to the Transferor all, and not retain
any copies of, such written, recorded or encoded proprietary information.
Transferee shall be responsible for any breach of this Section 7.1 by any of the
Transferee Recipients and agrees, at its sole expense, to take all reasonable
measures (including, without limitation, court proceedings) to restrain the
Transferee Recipients from prohibited or unauthorized disclosure or use of such
proprietary information.
Section 7.2 Notification of Certain Events. The Transferee shall give the
Transferor immediate notice of the occurrence of any event or events which
constitute a violation of any of the provisions of Articles V or VII.
SECTION 7.3 Transferee Capital. At Closing, the Transferee shall have
equity capital of at least Fifteen Million Dollars ($15,000,000).
SECTION 7.4 [intentionally omitted]
SECTION 7.5 Reimbursement of Certain Expenses. Transferee agrees to
reimburse the Transferor for all Transferee Allocated Costs incurred by the
Transferor either before or after the Closing.
SECTION 7.6 Registration of the Right Start Shares. Right Start hereby
covenants and agrees that in order to enable the resale of the Right Start
Shares by the creditors of Transferor or, as applicable, a liquidating trust for
the benefit of such creditors or as otherwise contemplated by the Plan, it shall
use its best efforts to effect the registration of the Right Start Shares on or
before the Effective Date on a Registration Statement and to cause that
Registration Statement to remain effective until such resales of such Right
Start Shares are completed. Notwithstanding the foregoing, to the extent that
22
the resale of the Right Start Shares as contemplated above may be effected
pursuant to a valid exemption from the registration requirements of the
Securities Act of 1933, as amended, and Transferor receives a reasonably
satisfactory opinion of outside counsel to Transferee to such effect, Right
Start shall not be required to effect the contemplated registration of the Right
Start Shares.
ARTICLE VIII
RETENTION PLAN
SECTION 8.1 Retention Escrow Account. On the Closing Date, Transferee
agrees to deliver an amount equal to the estimated maximum amount of retention
payments which would be due to employees under the Retention Plan, which amount
shall be no more than $2,056,739 (the "Retention Fund") to the Retention Escrow
Agent to be held in an interest bearing escrow account (the "Retention Escrow
Account"). Transferee shall be entitled to receive interest on the Retention
Fund PLUS any amounts no longer payable to employees pursuant to the Retention
Plan. The Transferee shall, in accordance with the terms of the Retention Plan,
cause the Retention Escrow Agent to make the payments to eligible employees on
the Retention Plan Payment Date out of the Retention Fund pursuant to the terms
of an escrow agreement, substantially in the form as set forth in Exhibit "F"
attached hereto and made a part hereof (the "Retention Escrow Agreement").
ARTICLE IX
CONDITIONS PRECEDENT TO THE TRANSFEREE'S OBLIGATIONS
The obligations of the Transferee to purchase and accept transfer and
delivery of the Transferred Assets and assume the Assumed Liabilities are
subject to the satisfaction on or, where appropriate, prior to, the Closing
Date, of the following conditions, except to the extent that any such condition
may have been waived in writing by the Transferee on or prior to the Closing
Date:
Section 9.1 [INTENTIONALLY OMITTED].
Section 9.2 [INTENTIONALLY OMITTED].
SECTION 9.3 [INTENTIONALLY OMITTED].
Section 9.4 Deliveries. The Transferor shall have executed and/or delivered
to the Transferee, at or prior to the Closing, the following:
(a) the Transaction Documents;
(b) Transferor's representation letter to Right Start in connection with
the issuance of Right Start Shares in a form agreed to by the parties; and
23
(c) such other bills of sale, assignments and instruments of transfer in
form and substance satisfactory to the Transferee, as shall be necessary to vest
in the Transferee all the Transferor's right, title and interest in, to and
under the Transferred Assets and for Transferee's assumption of the Assumed
Liabilities.
Section 9.5 [intentionally omitted]
SECTION 9.6 [intentionally omitted]
SECTION 9.7 Final Order. The 363/365 Transaction Approval Order shall have
become a Final Order.
ARTICLE X
CONDITIONS PRECEDENT TO THE TRANSFEROR'S OBLIGATIONS
The obligations of the Transferor to sell, transfer and deliver the
Transferred Assets are subject to the satisfaction on or, where appropriate,
prior to the Closing Date, of the following conditions, except to the extent
that any such condition may have been waived in writing by the Transferor on or
prior to the Closing Date:
Section 10.1 Truth of Representations and Warranties. The representations
and warranties of the Transferee contained in this Agreement or in any of the
other Transaction Documents shall be true and correct in all material respects
when made and in addition shall be true and correct in all respects at and as of
the Closing and with the same effect as though made at and as of the Closing
(except as otherwise contemplated by this Agreement).
Section 10.2 Performance. The Transferee shall have performed and complied
in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement and the other Transaction Documents to be
performed or complied with by it at or prior to the Closing.
Section 10.3 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority with respect to the
Transferee which seeks to (i) invalidate or set aside, in whole or in part, this
Agreement or any of the other Transaction Documents or (ii) restrain, prohibit,
invalidate or set aside, in whole or in part, the consummation of the
transactions contemplated hereby or thereby.
Section 10.4 Deliveries. The Transferee shall have executed and/or
delivered to the Transferor, at or prior to the Closing, the following:
(a) the Closing Proceeds;
(b) Retention Escrow Agreement;
24
(c) the Transaction Documents;
(d) such certificates of the Chief Executive Officer of the Transferee to
evidence compliance with the conditions set forth in Sections 10.1 through 10.4
hereof and any other certificates to evidence compliance with the conditions set
forth in this Article X as may be reasonably requested by the Transferor or its
counsel; and
(e) such other agreements, undertakings and instruments of assumption, in
form and substance reasonably satisfactory to the Transferor, as shall be
necessary to cause the Assumed Liabilities to be binding on the Transferee and
such other documents or certificates as shall be reasonably requested by the
Transferor or its counsel.
ARTICLE XI
CONDITIONS PRECEDENT TO THE TRANSFEROR'S AND
THE TRANSFEREE'S OBLIGATIONS
SECTION 11.1 Bankruptcy Court Orders.
(a) The Transferor's and the Transferee's obligations to proceed with the
Transaction are subject to and conditioned upon the 363/365 Transaction Approval
Order becoming a Final Order.
(b) Nothing in this Section 11.1, or any other section of this Agreement,
shall preclude Transferor or Transferee from consummating the transactions
contemplated herein prior to the 363/365 Transaction Approval Order becoming a
Final Order if the Transferee, in its sole discretion, waives such requirement.
No notice of such waiver of this or any other condition to Closing need be given
except to Transferor or the Transferee, as explicitly required in this
Agreement, it being the intention of the parties hereto that the Transferee
shall be entitled to, and shall not waive thereby, the protection of Section
363(m) of the Bankruptcy Code, the mootness doctrine and any similar statute or
body of law if the Closing occurs prior to the time that any such order has
become a Final Order.
ARTICLE XII
COVENANTS AND AGREEMENTS SUBSEQUENT TO THE CLOSING
Section 12.1 Books and Records; Access. Unless otherwise consented to in
writing by Representatives of the Transferor, for a period of three (3) years
after the Closing Date, the Transferee shall not destroy or otherwise dispose of
any original Books and Records in its possession as of the Closing Date relating
to the Business or the Transferred Assets prior to the Closing or the Assumed
Liabilities without first offering to surrender such Books and Records to the
Transferor, and shall maintain such Books and Records in good condition in a
reasonably accessible location. During such period and upon reasonable prior
25
notice, the Transferee shall afford the Representatives of the Transferor
reasonable access during normal business hours to examine and copy such Books
and Records and to Transferee's employees and other Representative's for any
reasonable purpose relating to the Business through the date of the conclusion
of the liquidation of Transferor's estate.
Section 12.2 Confidentiality. From and after the Closing, the provisions of
Sections 6.3 and 7.1 shall continue in effect; provided that the Transferee
shall not be restricted with respect to any proprietary information relating to
the Transferred Assets or the Business and the Transferor shall be restricted
with respect to such proprietary information as if it had originally been the
property of, and been acquired by the Transferor from, the Transferee.
Notwithstanding the foregoing, following the Closing, the Transferor shall be
entitled to disclose such information as may reasonably be required in
connection with its year-end accounting requirements, the preparation of Tax
Returns and reports or documents to be filed with any regulatory agency or for
any other reasonable purpose, including, without limitation, in connection with
tax audits for periods prior to and including the Closing Date.
Section 12.3 Specific Performance; Injunctive Relief. Each of the parties
hereto acknowledges, understands and agrees that any breach or threatened breach
by it or any of its Representatives of Sections 6.3 or 7.1, hereof will cause
irreparable injury to the other party and that money damages will not provide an
adequate remedy therefore. Accordingly, in the event of any such breach or
threatened breach, the non-breaching party shall have the right and remedy (in
addition to any other rights or remedies available at law or in equity) to have
the provisions of such Sections specifically enforced by, and to seek injunctive
relief and other equitable remedies in, any court having competent jurisdiction.
Section 12.4 Further Assurances. In addition to the actions, documents,
files, pleadings and instruments specifically required to be taken or delivered
by this Agreement or the other Transaction Documents, whether on or before or
from time to time after the Closing, and without further consideration, each
party hereto shall take such other actions, and execute and/or deliver such
other documents, data, pleadings, files, information and instruments, as the
other party hereto or its counsel may reasonably request in order to effectuate
and perfect the transactions contemplated by this Agreement and the other
Transaction Documents, including without limitation, such actions as may be
necessary to Transfer to the Transferee and to place the Transferee in
possession or control of, all of the rights, properties, assets and businesses
intended to be sold, Transferred, conveyed, assigned and delivered hereunder, or
to assist in the collection of any and all such rights, properties and assets or
to enable the Transferee to exercise and enjoy all rights and benefits of the
Transferor with respect thereto.
Section 12.5 Collection of Payments. Following the Closing Date, except as
otherwise provided in this Agreement,
(a) the Transferee shall hold in trust and forward to the Transferor any
payments received by the Transferee related to the Excluded Assets and
Transferor shall hold in trust and forward to the Transferee any payments
26
received by the Transferor related to the Transferred Assets, including, but not
limited to, any Accounts Receivable, in each case within one (1) week of receipt
of any such payment by the Transferee or the Transferor, as the case may be, and
(b) the Transferee shall promptly deliver to the Transferor any mail or
communications received by the Transferee relating to Excluded Assets and
Excluded Liabilities and the Transferor shall promptly deliver to the Transferee
any mail or other communications received by the Transferor relating to the
Transferred Assets or the Assumed Liabilities.
Section 12.6 Name Change. From and after the Closing Date, the Transferor
shall cease use of the corporate name "Zany Brainy, Inc." or any names similar
thereto in the transaction of any business which shall not include proceedings
before the Bankruptcy Court or filings or dealings with Governmental Authorities
or other actions required by Law.
SECTION 12.7 Payment of Post-Closing Date Case Costs. From and after the
Closing Date, Transferee agrees to remit to the Transferor, promptly following
the receipt of notice from the Transferor of its payment of any Post-Closing
Date Case Costs, funds (specifically including the Evergreen Amount) to be used
to pay for Post-Closing Date Case Costs aggregating up to One Million Dollars
($1,000,000) PLUS the amount of any Transferee Allocated Costs incurred on or
after the Closing Date; provided that any payment by the Transferor of
professional fees is made after Bankruptcy Court approval and after the
Transferee had reasonable notice with the opportunity to be heard in connection
therewith.
SECTION 12.8 [intentionally omitted]
SECTION 12.9 Transitional Services Agreement. From and after the Closing
Date through the earlier of the 1st anniversary of the Closing Date or the
completion of the claims process in the Bankruptcy Case, Transferee shall allow
the Transferor to utilize certain facilities, personal computers, Books and
Records and the services of certain employees of Transferee pursuant to the
terms and conditions set forth in the an agreement in the form attached as
Exhibit "J" hereto between the Transferee and the Transferor dated as of the
Closing Date (the "Transitional Services Agreement"). Transferor agrees that all
reasonable costs due Transferee pursuant to the Transitional Services Agreement
shall be deemed to be Post-Closing Date Case Costs.
SECTION 12.10 Employee Plans.
(a) Transferor maintains the plans, insurance contracts and trusts, as
listed on Schedule 12.10 (the "Employee Plans"), for the benefit of its
"eligible employees," as that term or a similar term is defined in each of the
Employee Plans. Effective as of the Effective Time, Transferor hereby transfers
and assigns and Transferee hereby assumes and accepts the sponsorship of, and
obligations arising under or in connection with, the Employee Plans.
27
(b) As of the Effective Time, Transferee is hereby substituted for
Transferor as the employer and plan sponsor, pursuant to the terms of the
Employee Plans.
(c) Transferee agrees to amend the Employee Plans, effective as of the
Effective Time, by (i) changing all references to Transferor, in the title or
text thereof to Transferee, (ii) except as otherwise required by applicable law,
covering under the Employee Plans the otherwise eligible employees of Transferor
who become employees of Transferee as of the Effective Time and any other
otherwise eligible employees thereafter employed by Transferee, as determined by
the Transferee, (iii) except as otherwise provided in subsection (i) below,
taking all necessary action, including but not limited to amending the Employee
Plans to permit Transferor to be a participating employer in each of the
Employee Plans, and providing that otherwise eligible employees of Transferor
shall be "eligible employees" as that term or similar term is defined in each of
the Employee Plans, and (iv) making any other changes necessary or appropriate
to effectuate the changes provided for in subparagraphs (a) and (b) above.
(d) By way of specification and not limitation, Transferee expressly
acknowledges its assumption of any and all of Transferor's COBRA obligations
arising under or with respect to any of the Employee Plans, whether with respect
to employees of Transferor whose employment is terminated as of the Effective
Time, or individuals who, as of the Effective Time, are receiving or entitled to
receive COBRA benefits, and regardless of whether or not the COBRA qualifying
event giving rise to such obligation occurs before, on or after the Effective
Time.
(e) The employment of any employee of Transferor who is employed by
Transferee as of the Effective Time shall not be deemed to have been terminated
or severed for any purpose under the Employee Plans by reason of the
transactions contemplated by this Agreement.
(f) Transferee shall make, and be solely responsible for, any and all
contributions required to made to the Employee Plans on or after the Effective
Time related to periods of service occurring on or after the Effective Time.
(g) With respect to the Dependent Day Care (as defined on Schedule 12.10)
reimbursement accounts, Transferee agrees to give credit for any and all
deferrals made by eligible employees of Transferor thereunder or contributions
made thereto on or after August 1, 2001.
(h) From and after the Effective Time, Transferor shall establish and
maintain a self-insured medical plan for the benefit of its eligible employees
that shall contain substantially similar provisions to those set forth in the
Zany Brainy Associate Benefit Plan as of the Effective Time.
(i) From and after the Effective Time, Transferee hereby covenants and
agrees to indemnify Transferor with respect to, and be responsible for the
28
payment of, all claims under the plan to be established and maintained by
Transferor as described in subsection (h) above.
(j) Transferee and Transferor, each recognizing it to be in the best
interest of the participants and beneficiaries of the Employee Plans that the
transactions described in this section be effected in an orderly manner, agree
to devote their respective best efforts and to cooperate fully in completing
such transactions, and shall take all such actions as may be necessary or
desirable in order to effectuate the transfer of the Employee Plans from
Transferor to Transferee including, without limitation, obtaining any required
consent relating thereto from any and all applicable insurers or other third
party service providers.
12.11 [intentionally omitted]
ARTICLE XIII
SURVIVAL
The representations and warranties of the parties hereto contained in this
Agreement and such covenants and agreements that are to be fully performed prior
to the Closing Date shall not survive the Closing hereunder. The covenants and
agreements of the parties contained in this Agreement which are not to be fully
performed prior to the Closing Date shall survive until fully performed or
fulfilled (unless non-compliance with such covenants or agreements is waived in
writing by the party or parties hereto entitled to such performance).
ARTICLE XIV
TERMINATION
Section 14.1 Termination. This Agreement may be terminated at any time
prior to the Closing: (a) by the mutual written consent of the Transferee and
the Transferor;
(b) by the non-breaching party upon at least ten (10) days prior written
notice, if there shall have been a material breach by the other party of any of
the representations, warranties, covenants or other obligations under this
Agreement which shall not have been waived by the non-breaching party and the
party seeking to terminate hereunder is not in breach of this Agreement;
(c) by either Transferee or Transferor if the Closing shall not have
occurred on or before September 5, 2001 (provided, however, that the right to
terminate this Agreement under this Section 14.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Closing to occur on or before
such date); or
29
(d) by either the Transferee or the Transferor if any Governmental
Authority having competent jurisdiction shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement or the other Transaction
Documents.
Section 14.2 Effect of Termination. In the event of any termination of this
Agreement prior to the Closing, as between the Transferor and the Transferee,
such termination shall be the sole remedy, and, except with respect to Section
6.3, Section 7.1, this Section 14.2, Section 15.1, Section 15.2, Section 15.5
and Sections 15.7 through 15.11 hereof, (i) this Agreement shall forthwith
become void, (ii) there shall be no liability on the part of the Transferor, the
Transferee or any of their respective Representatives; provided, however, in the
event of the termination of this Agreement pursuant to Section 14.1(a) or
14.1(d) and as to 14.1(b) or 14.1(c), except where Transferee is in breach of
any of the Transactional Documents, Transferor and Transferee shall instruct the
Escrow Agent to deliver the Deposits, plus interest thereon to Transferee;
provided further however, that in the event of the termination of this Agreement
other than as contemplated by the preceding proviso, Transferor and Transferee
shall instruct the Escrow Agent to deliver the Deposits, plus interest thereon
to Transferor.
SECTION 14.3 Escrowed Funds. Except as expressly set forth in this
Agreement or any other Transaction Document, the disbursement or other
disposition of the Escrowed Funds shall occur at Closing and will offset the
cash amounts then due from Transferee.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Public Announcements. Except as required by applicable Law or
any Governmental Authority with competent jurisdiction, prior to the Closing,
none of the parties hereto, nor their Representatives, shall issue any press
release or make any public announcement or disclosure with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld or delayed.
Section 15.2 Amendment; Waiver. Neither this Agreement, nor any of the
terms or provisions hereof, may be amended, modified, supplemented or waived
except by a written instrument signed by all of the parties hereto (or, in the
case of a waiver, by the party granting such waiver). No waiver of any of the
terms or provisions of this Agreement shall be deemed to be or shall constitute
a waiver of any other term or provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver. No failure of a party hereto
to insist upon strict compliance by another party hereto with any obligation,
30
covenant, agreement or condition contained in this Agreement shall operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of a party
hereto, such consent shall be given in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 15.2.
Section 15.3 Fees and Expenses. Except as otherwise expressly provided in
this Agreement or any other Transaction Document, each of the parties hereto
shall bear and pay all fees, costs and expenses incurred by it or any of its
Affiliates in connection with the origin, preparation, negotiation, execution
and delivery of this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby (whether or not such transactions
are consummated).
Section 15.4 Notices.
(a) All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and mailed or facsimiled or
delivered by hand or courier service:
(i) If to the Transferor, to:
Zany Brainy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(ii) If to the Transferee, to:
c/o The Right Start, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, Neale, Bender, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
1801 Avenue of the Stars
Suite 1120
31
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Committee of Unsecured Creditors, to:
▇▇▇▇▇, Bonacquist & Fox LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
(b) All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 15.4 (i) if delivered
personally against proper receipt or by confirmed facsimile transmission shall
be effective upon delivery and (ii) if delivered (A) by certified or registered
mail with postage prepaid shall be effective five (5) Business Days or (B) by
Federal Express or similar courier service with courier fees paid by the sender,
shall be effective two (2) Business Days following the date when mailed or
couriered, as the case may be. Any party hereto may from time to time change its
address for the purpose of notices to such party by a similar notice specifying
a new address, but no such change shall be deemed to have been given until it is
actually received by the party sought to be charged with its contents.
Section 15.5 Assignment. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Prior to the Effective Time,
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by the Transferor or the Transferee. Any assignment made in
contravention of the terms of this Section 15.5 shall be void ab initio.
Section 15.6 Governing Law; Consent to Jurisdiction.
(a) This Agreement and the legal relations among the parties hereto shall
be governed by and interpreted in accordance with, the laws of the State of
Delaware applicable to agreements made and to be performed entirely within such
State.
32
(b) Until the entry of an order either closing or dismissing the Bankruptcy
Case, the parties hereto irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with the Agreement,
and consent to the exclusive jurisdiction of, the Bankruptcy Court in the
District of Delaware office.
(c) After the entry of an order either closing or dismissing the Bankruptcy
Case, each party to this Agreement hereby irrevocably submits to the exclusive
jurisdiction of any California state or federal court sitting or located in the
county of Los Angeles (a "California Court") in any Action arising out of or
relating to this Agreement or the other Transaction Documents, and each such
party hereby irrevocably agrees that all claims in respect of such Action shall
be heard and determined in such California Court. Each party, to the extent
permitted by applicable Laws, hereby expressly waives any defense or objection
to jurisdiction or venue based on the doctrine of forum non conveniens, and
stipulates that any California Court shall have in personam jurisdiction and
venue over such party for the purpose of litigating any dispute or controversy
between the parties arising out of or related to this Agreement or the other
Transaction Documents. In the event any party shall commence or maintain any
Action arising out of or related to this Agreement in a forum other than a
California Court, the other party shall be entitled to request the dismissal or
stay of such Action, and each such party stipulates for itself that such Action
shall be dismissed or stayed. To the extent that any party to this Agreement has
or hereafter may acquire any immunity from jurisdiction of any California Court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property, each such party hereby irrevocably waives such immunity.
(d) After the entry of an order either closing or dismissing the Bankruptcy
Case, each party irrevocably consents to the service of process of any of the
California Courts in any such Action by any means permitted by the rules
applicable in such California Court including, if permissible, personal delivery
of the copies thereof or by the mailing of the copies thereof by certified mail,
return receipt requested, postage prepaid, to it as its address specified in
accordance with Section 15.4 above, such service to become effective upon the
earlier of (i) the date ten (10) calendar days after such mailing or (ii) any
earlier date permitted by applicable Law.
SECTION 15.7 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
33
INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.7.
Section 15.8 Entire Agreement. This Agreement and the other Transaction
Documents embody the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements, commitments, arrangements, negotiations or understandings, whether
oral or written, between the parties hereto, their respective Affiliates or any
of the Representatives of any of them with respect thereto. There are no
agreements, covenants or undertakings with respect to the subject matter of this
Agreement and the other Transaction Documents, other than those expressly set
forth or referred to herein or therein, and no representations or warranties of
any kind or nature whatsoever, express or implied, are made or shall be deemed
to be made herein by the parties hereto, except those expressly made in this
Agreement and the other Transaction Documents.
Section 15.9 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or provision
hereof. In the event that any term or provision of this Agreement shall be
determined to be unenforceable, invalid or illegal in any respect, such
unenforceability, invalidity or illegality shall not affect any other term or
provision hereof, but this Agreement shall be construed as if such
unenforceable, invalid or illegal term or provision had never been contained
herein. Moreover, if any term or provision of this Agreement shall for any
reason be held to be excessively broad as to time, duration, activity, scope or
subject, the parties request that it be construed, by limiting and reducing it,
so as to be enforceable to the fullest extent permitted under applicable Law.
Section 15.10 No Third Party Beneficiaries. Except as and to the extent
otherwise provided herein, nothing in this Agreement is intended, nor shall
anything herein be construed, to confer any rights, legal or equitable, in any
Person other than the parties hereto and their respective successors and
permitted assigns.
Section 15.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
Section 15.12 Right Start Guarantee. Right Start hereby guarantees to and
for the benefit of Transferor the prompt payment, satisfaction and/or
performance of each of Transferee's obligations hereunder in accordance with the
terms and conditions hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement
to be duly executed as of the day and year first above written.
ZB Company, Inc.
a Delaware Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Secretary & Treasurer
The Right Start, Inc.
a California Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President & CFO
ZANY BRAINY, INC.,
as Debtor and Debtor-in Possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ZANY BRAINY DIRECT LLC
as Debtor and Debtor-in- Possession
By: Zany Brainy, Inc.,
its Sole Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
CHILDREN'S DEVELOPMENT INC.,
as Debtor and Debtor-in Possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
CHILDREN'S DISTRIBUTION, LLC.,
as Debtor and Debtor-in Possession
By: Zany Brainy, Inc., its Sole Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
CHILDREN'S PRODUCTS, INC.,
as Debtor and Debtor-in Possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
NOODLE KIDOODLE, INC.,
as Debtor and Debtor-in Possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Assigned Contracts
Exhibit B Form of Assignment Agreements
Exhibit C Employment Agreements
Exhibit D Retention Plan
Exhibit E [INTENTIONALLY OMITTED]
Exhibit F Form of Retention Escrow Agreement
Exhibit H Master Sublease Agreement
Exhibit I Operating Agreement
Exhibit J Form of Transitional Services Agreement
Exhibit K 363/365 Transaction Approval Order
Schedule 1.1 Accrual Categories
Schedule 2.1(d) Equipment and Other Personalty
Schedule 2.1(e) Intangible Assets
Schedule 2.3(g) Transferee Subleases
Schedule 6.10 GOB Locations
Schedule 12.10(a) Benefit Plans
