Francesca’s Acquisition - Chapter 11 APA Summary

Intellectual Property Asset Purchase Agreement Summary

Parties Involved

• Sellers: Francesca's Acquisition, LLC (a Delaware limited liability company); Francesca's Operations, Inc. (a Delaware corporation); Francesca's Administrative Management, Inc. (a Delaware corporation); and Francesca's IP Company, Inc. (a Delaware corporation)
• Purchaser: Stand Out For Good, Inc., a Tennessee corporation, or its designee (Stalking Horse Bidder)
• Buyer is not an insider of the Debtors, as that term is defined under section 101(31) of the Bankruptcy Code.
• No common identity of directors, managers, controlling shareholders, or members exists between the Debtors and Purchaser.

Assets Being Sold

• The Acquired Assets consist of:
  • All Trademarks, Copyrights and Domain Names listed on Schedule 2.1(a) and the right to sue for and recover damages, profits and any other remedy in connection therewith for past, present or future infringement, misappropriation or other violation related to any such assets (collectively, the "Acquired Intellectual Property")
  • The social media accounts listed on Schedule 2.1(b)
  • The brand and product design and digital collateral described on Schedule 2.1(c)
  • The toll-free telephone numbers set forth on Schedule 2.1(d)
  • All customer data listed on Schedule 2.1(e) (the "Customer Data")
  • All goodwill associated with the assets referenced above
• All assets, properties, rights, interests or claims of any kind or description of the Debtors other than the Acquired Assets are deemed "Excluded Assets."
• The Acquired Assets constitute property of the Debtors' estates within the meaning of section 541(a) of the Bankruptcy Code and title thereto is presently vested in the Debtors' estates.
• For the avoidance of doubt, neither the Sale Transaction nor the Acquired Assets shall include the transfer and sale to the Purchaser of the Debtors' and the estates' interests in any of the following: avoidance actions under state or federal law, claims and causes of action against the Debtors directors, managers, and officers, commercial tort claims, or the proceeds from any of the foregoing.

Stalking Horse Bid

• A deposit in the amount of $700,000 in cash (the "Deposit") in immediately available funds has been delivered to Seller by Buyer in connection with Buyer's bid for the Acquired Assets, after such bid was accepted by Debtors.
• The purchase price is comprised of:
  • An amount in cash equal to $7,000,000 (the "Purchase Price"); and
  • The assumption of the Assumed Liabilities.
• The consideration provided by Purchaser for the Acquired Assets pursuant to the Purchase Agreement: (a) is fair and reasonable, (b) will provide a higher or otherwise better return or recovery for the Debtors' estates than would be provided by any other practical available alternative, and (c) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and under the laws of each applicable state, territory, possession, or the District of Columbia.

Assumed Liabilities

• At the Closing, Buyer shall assume and agree to perform and discharge, when due (in accordance with their respective terms and subject to the respective conditions thereof) all Liabilities that arise after the Closing from Buyer's ownership and use of the Acquired Assets (collectively, the "Assumed Liabilities").
• Buyer shall only assume the Assumed Liabilities to the extent such Assumed Liabilities (i) arise, accrue or relate to the period after the Closing Date and do not arise from or relate to any breach, default, negligence, willful misconduct or fault by or of Seller and (ii) do not arise from or relate to any event, circumstance or condition occurring or existing on or prior to the Closing Date that, with notice or lapse of time would constitute or result in a breach, default, negligence, willful misconduct or fault by or of Seller.
• Buyer shall not assume and shall not be obligated to assume or be obliged to pay, perform, or otherwise discharge, and Seller shall be solely and exclusively liable with respect to, any Liability of Seller that is not an Assumed Liability (such Liabilities, collectively, the "Excluded Liabilities").

Sale Free and Clear & Successor Liability

• One or more of the standards set forth in section 363(f)(1)-(5) of the Bankruptcy Code has been satisfied, and the Debtors have the power to transfer the Acquired Assets to Purchaser free and clear of all Encumbrances.
• Purchaser would not have entered into the Purchase Agreement and would not consummate the Sale Transaction if (i) the transfer of the Acquired Assets was not free and clear of all Encumbrances, or (ii) Purchaser would, or in the future could, be liable for or subject to any Encumbrances.
• Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code, and upon the Closing, the transfer of the Acquired Assets to Purchaser shall be a legal, valid, and effective transfer of the Acquired Assets, and shall vest Purchaser with all right, title, and interest of the Debtors in the Acquired Assets, free and clear of all Encumbrances, with all such Encumbrances attaching to the proceeds of the Sale Transaction to be received by the Debtors with the same validity, force, priority and effect which they now have as against the Acquired Assets, subject to any claims and defenses the Debtors or their estates may possess with respect thereto and subject to the Committee's Challenge rights.
• Any holders of any Encumbrances who did not object or who withdrew their objections to the Motion, are deemed to have consented to the Sale Transaction pursuant to section 363(f)(2) of the Bankruptcy Code.
• On the Closing Date, all right, title and interest in and to, and possession of, the Acquired Assets shall be immediately vested in Purchaser pursuant to sections 105(a), 363(b), and 363(f) of the Bankruptcy Code free and clear of any and all Encumbrances. Such transfer shall constitute a legal, valid, binding and effective transfer of, and shall vest Purchaser with, all right, title and interest in and to, and possession of, the Acquired Assets.
• As a result of any action taken in connection with the Purchase Agreement, the consummation of the transactions contemplated thereby, or the transfer or operation of the Acquired Assets, (i) neither Purchaser nor any of its affiliates shall be deemed to be a mere continuation of any of the Debtors or their estates, nor shall there be deemed to be a continuity or common identity among Purchaser, any of the Debtors, or any of their respective affiliates, or any continuity of enterprise among Purchaser, any of the Debtors, or any of their respective affiliates; (ii) neither Purchaser nor any of its affiliates shall be deemed to be holding themselves out to the public as a continuation of any of the Debtors; (iii) neither Purchaser nor any of its affiliates shall be deemed a successor to the of the Debtors or their estates; and (iv) none of the transactions contemplated by the Purchase Agreement, including, without limitation, the Sale Transaction, amounts to a consolidation, merger, or de facto merger of Purchaser or any of its affiliates with or into any of the Debtors.
• Without limiting the generality of the foregoing, and other than as may be set forth in the Purchase Agreement, none of Purchaser, its affiliates, the present or contemplated directors, officers, members or shareholders of Purchaser and its affiliates, nor the Acquired Assets shall have any liability whatsoever with respect to, or be required to satisfy in any manner, whether at law or equity, or by payment, setoff (except for setoffs exercised prior to the Petition Date), or otherwise, directly or indirectly, any claims or Encumbrances relating to any U.S. federal, state, or local income tax liabilities that the Debtors may incur in connection with consummation of the transactions contemplated by the Purchase Agreement or that the Debtors have otherwise incurred prior to the consummation of the transactions contemplated by the Purchase Agreement.
• Notwithstanding the entry of the Sale Order, the occurrence of the Closing Date, or any action taken in connection with the Purchase Agreement (including or as a result of the consummation of the transactions contemplated therein and in the Purchase Agreement nor the transfer or operation of the Acquired Assets), neither Purchaser nor any of its affiliates, successors, or assigns shall be deemed to (a) be a legal successor or successor employer to any Debtor (including with respect to any health or benefit plans) or otherwise be deemed a successor to any Debtor, and shall instead be, and be deemed to be, a new employer with respect to all federal or state unemployment laws, including any unemployment compensation or tax laws, or any other similar federal or state laws; (b) have, de facto or otherwise, merged or consolidated with or into any Debtor; or (c) be an alter ego or mere continuation or substantial continuation of any Debtor or the enterprise of any Debtor, including, in the case of each of (a)-(c), without limitation, (x) within the meaning of any foreign, federal, state, or local revenue law, pension law, the Employee Retirement Income Security Act, the Consolidated Omnibus Budget Reconciliation Act, the WARN Act (29 U.S.C. §§ 2101 et seq.), to the greatest degree allowed by applicable law, the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), to the greatest degree allowed by applicable law, the Fair Labor Standard Act, Title VII of the Civil Rights Act of 1964 (as amended), the Age Discrimination and Employment Act of 1967 (as amended), the Federal Rehabilitation Act of 1973 (as amended), the National Labor Relations Act, 29 U.S.C. § 151, et seq.; (y) in respect of (I) to the greatest degree allowed by applicable law, any environmental liabilities, debts, claims or obligations arising from conditions existing on or prior to the Closing Date (including, without limitation, the presence of hazardous, toxic, polluting, or contaminating substances or wastes), which may be asserted on any basis, including, without limitation, under CERCLA, and (2) any liabilities, penalties, costs, debts or obligations of or required to be paid by the Debtors for any taxes of any kind for any period, labor, employment, or other law, rule or regulation (including, without limitation, filing requirements under any such laws, rules or regulations), or (3) any products liability law or doctrine with respect to the Debtors' liability under such law, rule or regulation or doctrine; and (z) with respect to any law governing the use of intellectual property.
• Without limiting the generality of the foregoing, and except as otherwise provided in the Purchase Agreement and the Sale Order, neither Purchaser nor any of its affiliates shall have any responsibility for any (a) liability or other obligation of the Debtors related to the Acquired Assets, or (b) any claims against the Debtors or any of their predecessors or affiliates.
• Neither Purchaser nor any of its affiliates, successors, or assigns shall have any liability whatsoever with respect to the Debtors' (or their predecessors' or affiliates') respective businesses or operations or any of the Debtors' (or their predecessors' or affiliates') obligations based, in whole or part, directly or indirectly, on any theory of successor or vicarious liability of any kind or character, or based upon any theory of antitrust, to the greatest degree allowed by applicable law, environmental (including, but not limited to CERCLA), successor or transferee liability, de facto merger or substantial continuity, labor and employment (including, but not limited to, WARN), or products liability law, whether known or unknown as of the Closing Date, now existing or hereafter arising, asserted or unasserted, fixed or contingent, liquidated or unliquidated, including any liabilities or non-monetary obligations on account of the Debtors' employment agreements or health or benefit plans, any settlement or injunction or any liabilities on account of any taxes arising, accruing or payable under, out of, in connection with, or in any way relating to the operation of the Acquired Assets prior to the Closing Date (collectively with any other Encumbrances set forth herein, "Successor or Transferee Liability").
• Purchaser would not have acquired the Acquired Assets but for the foregoing protections against and release from any and all Successor or Transferee Liability.
• No bulk sales law or similar law of any state or other jurisdiction shall apply in any way to the transactions approved by the Sale Order, including, without limitation, the Purchase Agreement and the Sale Transaction.
• Nothing in the Sale Order or the Purchase Agreement shall require Purchaser or any of its affiliates to (a) continue or maintain in effect, or assume any liability in respect of any employee, former employee, collective bargaining agreement, pension, welfare, fringe benefit or any other benefit plan, trust arrangement or other agreements to which any Debtor is a party or have any responsibility therefor including, without limitation, medical, welfare and pension benefits payable after retirement or other termination of employment; or (b) assume any responsibility as a fiduciary, plan sponsor or otherwise, for making any contribution to, or in respect of the funding, investment or administration of any employee benefit plan, arrangement or agreement (including but not limited to pension plans) or the termination of any such plan, arrangement or agreement.

Good Faith Purchaser

• Purchaser is a good faith purchaser within the meaning of section 363(m) of the Bankruptcy Code and is therefore entitled to the full protection of that provision in respect of the Sale Transaction.
• Purchaser proceeded in good faith in all respects in connection with each term of the Purchase Agreement (and any ancillary documents executed in connection with the foregoing) and the Sale Transaction.
• The Debtors were free to deal with any other party interested in buying some or all of the Acquired Assets.
• The protections afforded to Purchaser by section 363(m) of the Bankruptcy Code are integral to the Sale Transaction, and Purchaser would not consummate the Sale Transaction without such protections.
• The reversal or modification on appeal of the authorization provided herein to consummate the Sale Transaction shall not affect the validity of the Sale Transaction or any term of the Purchase Agreement and shall not result in the unwinding of the Sale Transaction.
• Purchaser, as a good faith purchaser within the meaning of section 363(m) of the Bankruptcy Code, is entitled to the full protections under section 363(m) of the Bankruptcy Code.

Arm's Length Negotiations

• The negotiations with respect to the Purchase Agreement were (a) non-collusive, (b) conducted by the Debtors, Hilco, and Purchaser at arm's length and in good faith, and (c) were substantively and procedurally fair to all parties in interest.
• Neither the Debtors nor Purchaser have engaged in any conduct that would cause or permit the Purchase Agreement or the Sale Transaction to be avoided.
• Neither the Debtors nor Purchaser have engaged in any conduct that would prevent the application of section 363(m) of the Bankruptcy Code or require imposition of costs or damages under section 363(n) of the Bankruptcy Code.

No Illegal Purpose

• The Purchase Agreement was not entered into, and neither the Debtors nor Purchaser propose to consummate the Sale Transaction for the purpose of (a) escaping liability for any of the Debtors' debts, or (b) hindering, delaying or defrauding the Debtors' present or future creditors.

Assumption and Assignment

• Pursuant to sections 365 and 363, as applicable, of the Bankruptcy Code, the applicable Debtors are authorized to assume and transfer the Designated Contracts to Purchaser.
• All requirements or other conditions of section 365 of the Bankruptcy Code relating to the assumption and assignment of the Designated Contracts are hereby deemed satisfied.
• Purchaser shall have the right in its sole discretion, by written notice to the Debtors and counsel for the Official Committee of Unsecured Creditors (the "Committee"), at any time during the period from and after the date hereof until sixty (60) days after the Closing Date, to remove or add any Contract to the list of Designated Contracts, subject to the satisfaction of any Cure Amount(s) and provision of adequate assurance of future performance (if necessary); provided, however, that such Contract had not been previously rejected in the Chapter 11 Cases.
• Upon the addition of any Contract to the list of Designated Contracts, such Contract shall be a Designated Contract that is deemed assumed and assigned to Purchaser pursuant to the Sale Order; provided, that notice and opportunity to be heard is provided to the contract counterparty.
• Automatically upon the removal of any Contract from the list of Designated Contracts, such Contract shall be an Excluded Asset for all purposes of the Purchase Agreement and the Sale Order.
• Debtors shall file such notices, motions, or other documents as may be appropriate or necessary to assume and assign to Purchaser any Designated Contracts added.
• If, at any time within sixty (60) days after the Closing Date, it is discovered that a contract or lease should have been included in the Debtors' list of potential executory contracts and unexpired leases that may be assumed and assigned, but was not so listed (any such Contract, a "Previously Omitted Contract"), the Debtors shall, promptly following the discovery thereof, notify Purchaser in writing of such Previously Omitted Contract and provide Purchaser with a copy of such Previously Omitted Contract and the Cure Amount (if any) in respect thereof.
• Purchaser shall thereafter deliver written notice to the Debtors and counsel for the Committee, following notice of such Previously Omitted Contract from the Debtors, if Purchaser elects for such Previously Omitted Contract to be a Designated Contract.
• If Purchaser elects for a Previously Omitted Contract to be a Designated Contract, the Debtors shall (a) file and serve a further assignment and assumption notice on the counterparty to such Previously Omitted Contract, notifying such counterparty of the Debtors' intention to assume and assign to Purchaser such Previously Omitted Contract, including the proposed Cure Amount (if any); and (b) use commercially reasonable efforts to assume and assign to the Purchaser such Previously Omitted Contract pursuant to the Sale Order and sections 363 and 365 of the Bankruptcy Code.
• Such Previously Omitted Contract Assignment and Assumption Notice shall provide such counterparty with not less than ten (10) days to object to the assumption of the Previously Omitted Contract.
• If such counterparty objects to the proposed assumption and assignment or the Cure Amounts (if any) and such objection cannot be resolved consensually, the counterparty, Debtors, and Purchaser will seek to schedule the objection to be heard by the Court.
• To the extent a Cure Amount is owed to a counterparty to any Designated Contract (each, a "Counterparty"), Purchaser shall pay the Cure Amount within seven (7) days of the assumption of the Designated Contract.
• Any objection of a Counterparty to the assumption or assignment of any Designated Contact, any Cure Amount, or seeking adequate assurance of future performance, to the extent not otherwise resolved by agreement, or by separate order of the Court, is hereby overruled.
• There shall be no accelerations, assignment fees, increases, or any other fees charged to Purchaser as a result of the transfer of the Acquired Assets or the assumption and assignment of Designated Contracts or transfer of the other Assumed Liabilities.
• Upon payment of the Cure Amount in accordance with the Sale Order, the Debtors and Purchaser shall be released by the applicable Counterparty from any and all claims and causes of action of any nature whatsoever based on or relating to the Assumed Liabilities arising before the Closing Date, and the Debtors, and Purchaser shall have no liability for such claims or causes of actions.
• Except for the Assumed Liabilities, Purchaser is not assuming any of the Debtors' obligations.
• Counterparties of the Debtors' executory contracts are barred, estopped, and permanently enjoined from asserting against Purchaser or its successors and assigns or its property any assignment fee, acceleration, default, breach or claim or pecuniary loss (other than to the extent any of the foregoing constituted an Assumed Liability or Designated Contract).

Bid Protections

• Break-Up Fee: In the event that Seller consummates a sale of the Acquired Assets to a Successful Bidder, Seller shall pay to Buyer, upon and simultaneously with the closing of such sale to the Successful Bidder, a break-up fee in the amount of Two Hundred Ten Thousand Dollars ($210,000), representing three percent (3%) of the Purchase Price. The Break-Up Fee shall be payable by wire transfer of immediately available funds to an account designated by Buyer solely from proceeds of the sale of any or all of the Purchased Assets to a Person other than Buyer.
• Expense Reimbursement: In the event that Seller consummates a sale of the Acquired Assets to a Successful Bidder, Seller shall pay to Buyer, upon and simultaneously with the closing of such sale to the Successful Bidder, reimbursement of Buyer's actual, reasonable, documented out-of-pocket costs and expenses (including reasonable attorneys' fees and expenses, accounting fees and expenses, and due diligence costs) incurred by Buyer in connection with the negotiation, execution and performance of transactions contemplated hereby, in an amount not to exceed One Hundred Fifty Thousand Dollars ($150,000). Buyer shall provide Seller with reasonable documentation supporting such expenses. The Expense Reimbursement shall be payable by wire transfer of immediately available funds to an account designated by Buyer solely from proceeds of the sale of any or all of the Purchased Assets to a Person other than Buyer.
• The Parties acknowledge and agree that (A) the Parties have expressly negotiated the provisions of the bid protections and the payment of the Break-Up Fee and the Expense Reimbursement are an integral part of the Purchase Agreement, (B) in the absence of Seller's obligations to make these payments, Buyer would not have entered into the Purchase Agreement, and (C) the Expense Reimbursement shall constitute an allowed superpriority administrative expense claim pursuant to sections 105(a), 503(b), and 507(a)(2) of the Bankruptcy Code with priority over all other administrative expenses of the kind specified in section 503(b) of the Bankruptcy Code, and Seller shall obtain the consent, and the Bid Procedures Order shall ratify the consent, of all parties with an interest in the Purchased Assets to payment to Buyer of the Break-Up Fee and Expense Reimbursement, solely from proceeds of the sale of any or all of the Purchased Assets to a Person other than Buyer.
• The obligations of Seller to pay the Break-Up Fee or the Expense Reimbursement shall survive the termination of the Purchase Agreement, notwithstanding anything therein to the contrary.
• The Break-Up Fee and the Expense Reimbursement shall be deemed earned upon entry of the Bid Procedures Order.
• Seller shall not offer or provide a break-up fee, expense reimbursement or similar bid protection to any other Person with respect to any or all of the Purchased Assets.

Minimum Overbid

• Seller shall not consummate a sale of the Acquired Assets to any Person other than Buyer (any such Person, a "Successful Bidder") unless the aggregate consideration to be received by Seller from such Successful Bidder equals or exceeds the sum of: (i) the Purchase Price, plus (ii) the Break-Up Fee, plus (iii) the maximum amount of the Expense Reimbursement (i.e., $150,000), plus (iv) Two Hundred Fifty Thousand Dollars ($250,000) (collectively, Seven Million Six Hundred Ten Thousand Dollars ($7,610,000)) (the "Minimum Overbid").
• For the avoidance of doubt, the Minimum Overbid amount represents a minimum topping bid that exceeds the Purchase Price by Six Hundred Ten Thousand Dollars ($610,000), which Minimum Overbid will be required pursuant to the Bid Procedures Order.

Deposit

• Prior to the date hereof, Buyer caused to be delivered the Deposit to the Seller in immediately available funds to be held in escrow.
• The Deposit shall not be subject to any Encumbrance, attachment, trustee process, or any other judicial process of any creditor of any Seller or Buyer.
• The Deposit shall be retained by the Seller at the Closing for payment to the Seller (and deducted from the Purchase Price due and payable at the Closing) or, if the Purchase Agreement is terminated, treated according to the termination provisions.
• If the Purchase Agreement is terminated pursuant to certain Buyer breach provisions, the Deposit shall be forfeited by the Buyer and be retained by the Seller.
• If the Purchase Agreement is terminated pursuant to any other provision (other than certain specified provisions), the Seller shall promptly (but in any event within five (5) Business Days of such termination) return the Deposit to Buyer by wire transfer of immediately available funds and the Bid Procedures Order shall authorize such transfer.
• If the Purchase Agreement is terminated because Seller consummates a sale of the Acquired Assets to a Successful Bidder, the Seller shall promptly (but in any event within five (5) Business Days of such termination) return the Deposit to Buyer by wire transfer of immediately available funds, in addition to paying the Break-Up Fee and the Expense Reimbursement and the Bid Procedures Order shall authorize such payments and transfer.

Bankruptcy Court Approvals

• Bid Procedures Order: The order of the Bankruptcy Court in substantially the form attached to the Purchase Agreement as Exhibit A. The Bid Procedures Order and any motion seeking entry thereof shall be in form and substance acceptable to Seller and Buyer.
• Sale Order: An order or orders of the Bankruptcy Court issued pursuant to sections 105, 363, and 365 of the Bankruptcy Code approving the Purchase Agreement and all of the terms and conditions thereof, and approving and authorizing Seller to consummate the transactions contemplated thereby and enter into the Transaction Documents. The Sale Order and any motion seeking approval thereof shall be in form and substance acceptable to Seller and Buyer.
• Seller shall use commercially reasonable efforts to seek and obtain entry of the Bid Procedures Order.

Notice and Opportunity to Object

• Due, proper, timely, adequate and sufficient notice of the Motion and the relief requested therein has been provided in accordance with the Bidding Procedures Order, sections 102(1), 363, and 365 of the Bankruptcy Code, Bankruptcy Rules 2002, 9006, 9007, and 9014, and Local Rules 2002-1 and 6004-1.
• A reasonable opportunity to object or be heard regarding the relief requested in the Motion and provided herein was afforded to all parties in interest.
• Any objections and responses to the Motion or the relief requested therein that have not been withdrawn, waived, settled, or resolved, and all reservations of rights included in such objections and responses, are overruled on the merits and denied with prejudice.
• All persons and entities given actual, constructive, or any other notice of the Motion that failed to timely object thereto are deemed to consent to the relief granted herein, including for purposes of sections 363(f)(2), 365(c)(1), and 365(e)(2) of the Bankruptcy Code.

Compelling Circumstances

• To maximize the value of the Acquired Assets, it is essential that the transactions contemplated by the Purchase Agreement occur within the respective time periods set forth therein.
• Time is of the essence in consummating the transactions contemplated by the Purchase Agreement.
• Accordingly, there is cause to waive any stays contemplated by the Bankruptcy Rules and Local Rules, including those under Bankruptcy Rules 4001, 6004 and 6006.
• The Debtors have demonstrated compelling circumstances and a good, sufficient, and sound business purpose and justification for the immediate approval and consummation of the transactions contemplated by the Purchase Agreement.
• The transactions contemplated by the Purchase Agreement do not impermissibly restructure the rights of the Debtors' creditors nor impermissibly dictate the terms of a chapter 11 plan for the Debtors, and therefore, do not constitute a sub rosa plan.

Fraudulent Conveyance

• The sale of the Acquired Assets to Purchaser under the Purchase Agreement shall not be avoided under any statutory or common law fraudulent conveyance and fraudulent transfer theories whether under the Bankruptcy Code or under the laws of the United States, any state, territory, possession, or the District of Columbia or any other applicable jurisdiction with laws substantially similar to the foregoing.

Jurisdiction and Venue

• The Bankruptcy Court has jurisdiction to hear and determine the Motion pursuant to 28 U.S.C. §§ 157 and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. § 157(b).
• Venue of the Chapter 11 Cases and proceeding is proper in this District and this Court under 28 U.S.C. §§ 1408 and 1409.
• The Purchase Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without reference to any conflict of laws provisions thereof, except where governed by the Bankruptcy Code.
• Each of the Parties irrevocably and unconditionally submits, for itself and its properties, to the exclusive jurisdiction of the Bankruptcy Court, in any action or proceeding arising out of or relating to the Purchase Agreement.
• The Bankruptcy Court shall retain jurisdiction to, among other things, interpret, implement, and enforce the terms and provisions of the Sale Order and the Purchase Agreement, all amendments thereto and any waivers and consents thereunder, and to adjudicate, if necessary, any and all disputes concerning or relating in any way to the Sale Transaction, including any and all disputes with any party that has, or asserts, possession, control or other rights in respect of any of the Acquired Assets; provided, however, that, in the event this Court abstains from exercising or declines to exercise jurisdiction with respect to the Purchase Agreement or the Sale Order, such abstention or refusal shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction of any other court having competent jurisdiction with respect to any such matter.
• The Bankruptcy Court retains jurisdiction to compel delivery of the Acquired Assets over any claims, including any successor and transferee liability brought against Purchaser, the Debtors, and their respective assets, regarding the Acquired Assets, and to enter orders, as appropriate, pursuant to sections 105(a) or 363 of the Bankruptcy Code (or other applicable provisions) necessary to transfer the Acquired Assets to Purchaser.

Final Order

• The Sale Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a).
• Notwithstanding Bankruptcy Rules 4001, 6004(h) and 6006(d) or any other Bankruptcy Rules or Local Rules, and to any extent necessary under Bankruptcy Rule 9014 and Rule 54(b) of the Federal Rules of Civil Procedure, as made applicable by Bankruptcy Rule 7054, the Court expressly finds there is no just reason for delay in the implementation of the Sale Order and the terms and conditions of the Sale Order shall be immediately effective and enforceable upon its entry.
• The Court expressly directs entry of judgment.
• The Sale Order constitutes a final order within the meaning of 28 U.S.C. § 158(a).
• Notwithstanding any provision in the Bankruptcy Rules, Local Rules, or other applicable rules to the contrary, including but not limited to Bankruptcy Rules 6004(h) and 6006(d), the Court expressly finds there is no reason for delay in the implementation of the Sale Order and, accordingly: (a) the terms of the Sale Order shall be immediately effective and enforceable upon its entry and the 14-day stay provided in Bankruptcy Rules 6004(h) and 6006(d) is hereby expressly waived and shall not apply; (b) the implementation, enforcement, or realization of the relief granted in the Sale Order is not subject to any stay; and (c) the Debtors and Purchaser may, each in its discretion and without further delay, take any action and perform any act authorized under the Sale Order, including the consummation of the Sale Transaction.

Closing Date Deliverables

• At the Closing, Buyer shall deliver to Debtors:
  • The Purchase Price (minus the Deposit) in accordance with Section 3.3
  • Each other Transaction Document not previously executed to which Buyer is a party, duly executed by Buyer
  • The certificates of Buyer to be received by Seller pursuant to Sections 10.1 and 10.2
  • Such assignments and other good and sufficient instruments of assumption and transfer, in form reasonably satisfactory to Seller, as Seller may reasonably request to transfer and assign the Acquired Assets and Assumed Liabilities to Buyer
• At the Closing, Seller shall deliver to Buyer:
  • Each other Transaction Document to which the Seller is a party, duly executed by Seller, including the Confirmatory Trademark Assignment Agreement and the Confirmatory Copyright and Domain Name Assignment Agreement
  • The certificates of the Seller to be received by Buyer pursuant to Sections 9.1 and 9.2
  • Such bills of sale, deeds, endorsements, assignments, consents, approvals, UCC terminations and other filings and other good and sufficient instruments, in form reasonably satisfactory to Buyer, to vest in Buyer all the right, title and interest of the Seller in the Acquired Assets free and clear of all Encumbrances, other than Permitted Encumbrances and the Assumed Liabilities
• The Debtors are authorized and directed to take any and all actions necessary, appropriate or reasonably requested by Purchaser to perform, consummate, implement and close the Sale Transaction, including, without limitation, (a) the sale to Purchaser of all Acquired Assets in accordance with the terms and conditions set forth in the Purchase Agreement and the Sale Order, and (b) execution, acknowledgment and delivery of such deeds, assignments, conveyances and other assurance, documents and instruments of transfer and any action for purposes of assigning, transferring, granting, conveying and confirming to Purchaser or reducing to its possession, the Acquired Assets, all without further order of the Court.
• The Debtors are further authorized to pay—whether before, on, or after the Closing Date—any expenses or costs that are required to be paid by the Debtors under the Purchase Agreement, the Bidding Procedures, or the Sale Order in order to consummate the Sale Transaction or perform their obligations under the Purchase Agreement, without any further order of the Court.

Post-Closing Arrangements

• After the date hereof and until a specified date in 2026, Seller and its agents may continue to use the Acquired Intellectual Property in connection with the sale of Seller's merchandise by means of a "going out of business," "store closing," "sale on everything," "everything must go," or similar sale, and including the advertising and promotion of the Store Closing Sales utilizing the Acquired Intellectual Property (including Seller Trademarks, websites, social media accounts and domain names) and the conduct of the Store Closing Sales through the Sellers' websites and e-commerce channels.
• Nothing in the Purchase Agreement shall prohibit or otherwise restrict Seller from winding down their operations and affairs or dissolving their business entities following the Closing.
• To the extent the Closing occurs prior to the conclusion of the Store Closing Sales, Buyer grants to Sellers an irrevocable, royalty free license to utilize all of the Acquired Intellectual Property, solely for purposes of conducting and completing the Store Closing Sales.
• Buyer acknowledges that the Seller is conducting the Store Closing Sales and nothing in the Purchase Agreement shall be deemed to limit the Seller's conduct of the Store Closing Sales in the manner contemplated by the Consulting Agreement (including, without limitation, the use of "going out of business" language) through the conclusion of the Store Closing Sales at all of the Stores.
• If Buyer requires additional transition services not otherwise covered following the Closing, Seller hereby agrees to provide such services that are mutually agreed in writing on a month-to-month basis, at the mutually agreed rate.

Proceeds Distribution

• All proceeds generated from the Sale Transaction shall be subject to and paid in accordance with the Interim Order (I) Authorizing the Debtors to Use Cash Collateral; (II) Granting Adequate Protection to the Prepetition Secured Parties; (III) Modifying the Automatic Stay; and (IV) Scheduling a Final Hearing; and (V) Granting Related Relief [Docket No. 52] (the "Interim Cash Collateral Order"), subject to any and all rights granted to the Committee and other parties in interest under the Interim Cash Collateral Order (as amended by stipulation and/or any final cash collateral order).
• In the event a final non-appealable order is entered with respect to a timely filed and successful Challenge (as defined under the Interim Cash Collateral Order), then to the extent applicable, the Court may fashion any remedy it deems appropriate, including the disgorgement of any amounts received by the Prepetition Secured Parties (as defined under the Interim Cash Collateral Order) after the Petition Date.
• Additionally, paragraph 17(c) of the Interim Cash Collateral is hereby amended to provide, and any final order entered thereon shall also provide, that the Committee is vested and conferred standing and authority, without need to request or obtain further order from the Court, to pursue any Challenge.
• Nothing herein shall vest or confer to any person (as defined in the Bankruptcy Code), other than the Committee, standing or authority to pursue any cause of action belonging to the Debtors or their Estates, including without limitation, any Challenge with respect to the Prepetition Loan Documents or the Prepetition Loan Obligations.

Survival and Binding Effect

• The terms and provisions of the Sale Order and any actions taken pursuant hereto shall survive entry of an order which may be entered: (a) confirming any chapter 11 plan in any of these Chapter 11 Cases; (b) converting any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code; (c) dismissing any of the Chapter 11 Cases; or (d) pursuant to which the Court abstains from hearing any of the Chapter 11 Cases.
• The terms and provisions of the Sale Order, notwithstanding the entry of any such orders described above, shall continue in these Chapter 11 Cases, or following dismissal of these Chapter 11 Cases and nothing contained in any chapter 11 plan hereafter confirmed or any order confirming such chapter 11 plan or any other order of the Court shall conflict with or derogate from the provisions and terms of the Purchase Agreement (or any Transaction Documents thereunder) or the Sale Order.
• The Sale Order and the Purchase Agreement shall be binding in all respects upon all pre-petition and post-petition creditors of the Debtors, all interest holders of the Debtors, any Court-appointed committee, all successors and assigns of the Debtors and their affiliates and subsidiaries, and any trustees, examiners, "responsible persons" or other fiduciaries appointed in these Chapter 11 Cases or upon a conversion of these Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, including a chapter 7 trustee, and the Purchase Agreement and the Sale Transaction shall not be subject to rejection or avoidance under any circumstances by any party.
• If any of the Chapter 11 Cases are dismissed under section 1112 of the Bankruptcy Code, the Sale Order and the rights granted to Purchaser hereunder shall remain effective and, notwithstanding such dismissal, shall remain binding on all parties in interest.
• For the avoidance of doubt, the Debtors' inability to satisfy in full all administrative expense claims of the Debtors' estates shall not be a basis for termination, rejection or avoidance (as applicable) of the Purchase Agreement or the Sale Transaction.
• Nothing contained in any chapter 11 plan to be confirmed in these Chapter 11 Cases or any order to be entered in these Chapter 11 Cases (including any order entered after conversion of these Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code) shall alter, conflict with, or derogate from, the provisions of the Purchase Agreement or the Sale Order.
• In the event there is a direct conflict between the terms of the Sale Order and the terms of any subsequent chapter 11 plan or any order entered in these Chapter 11 Cases (including any order entered after conversion of these Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code), the terms of the Sale Order shall control.
• All covenants and agreements contained herein that by their terms are to be performed in whole or in part, or which prohibit actions, subsequent to the Closing shall survive the Closing in accordance with their terms.
• All other covenants and agreements contained herein, and all representations and warranties contained herein or in any certificated deliveries hereunder, shall not survive the Closing, and shall thereupon terminate.

Representations and Warranties

• Seller is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization.
• Seller has the requisite corporate or similar power and authority to designate that acquiror of the Acquired Assets.
• Seller is not in material default under or in violation of any provision of its organizational documents.
• Subject to the entry of the Sale Order by the Bankruptcy Court, Seller has, as applicable, the requisite corporate power and authority necessary to enter into and perform its obligations under the Purchase Agreement and the other Transaction Documents to which Seller is a party, to sell, assign and transfer all of Seller's right, title and interest in and to the Acquired Assets to Buyer free and clear of Encumbrances (other than Permitted Encumbrances) under the Purchase Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.
• Subject to the entry of the Sale Order by the Bankruptcy Court, the Purchase Agreement has been duly and validly executed and delivered by Seller and each other Transaction Document required to be executed and delivered by Seller at the Closing will be duly and validly executed and delivered by Seller at the Closing.
• Subject to the entry of the Sale Order by the Bankruptcy Court, the Purchase Agreement and, when executed, the other Transaction Documents will, constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms.
• Seller owns all right, title and interest in and to the Acquired Intellectual Property (including record title) and has valid rights in and to, including all rights to use, reproduce, publish, distribute, transmit, perform, display, and create derivative works of, as applicable, such Acquired Intellectual Property as is used in the Seller's ordinary course of business, in each case, free and clear of all Encumbrances (other than Permitted Encumbrances).
• Seller owns all right, title and interest in and to all of the other Acquired Assets and has valid rights to use such assets as historically used in the Seller's ordinary course of business, in each case, free and clear of all Encumbrances (other than Permitted Encumbrances).
• There are no claims (including any oppositions, interferences or re-examinations) settled, pending or, to the Knowledge of Seller, threatened in writing (including in the form of offers to obtain a license) challenging the validity, enforceability, registrability or ownership of any Acquired Assets or the Seller's rights with respect to any Acquired Assets.
• Seller is not subject to any outstanding or prospective Order (including any motion or petition therefor) that does or would restrict or impair the use of the Acquired Assets.
• Buyer is a limited liability company, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.
• Buyer has the requisite power and authority to own or lease and to operate and use Buyer's properties and to carry on Buyer's business as now conducted.
• Buyer has the requisite power and authority necessary to enter into and perform its obligations under the Purchase Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.
• The execution, delivery and performance of the Purchase Agreement by Buyer and the consummation by Buyer of the transactions contemplated herein have been duly and validly authorized by all requisite corporate or similar actions in respect thereof.
• The Purchase Agreement has been duly and validly executed and delivered by Buyer and each other Transaction Document to which Buyer is a party will be duly and validly executed and delivered by Buyer at the Closing.
• The Purchase Agreement constitutes and, when executed, the other Transaction Documents to which Buyer is a party will constitute, the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally or general principles of equity.

Taxes

• Any sales or property transfer Tax (including, for certainty, goods and services tax, harmonized sales tax and land transfer tax) payable in connection with the sale or transfer of the Acquired Assets ("Transfer Taxes") shall be borne by Buyer and, to the extent Seller is required by applicable Law to pay Transfer Taxes, such Transfer Taxes shall be paid by Buyer to Seller at Closing.
• Seller and Buyer shall use reasonable efforts and cooperate in good faith to exempt the sale and transfer of the Acquired Assets from any such Transfer Taxes.
• Seller shall prepare and file all necessary Tax Returns or other documents with respect to all such Transfer Taxes (at no cost or expense to Buyer); provided, however, that in the event any such Tax Return requires execution by Buyer, Seller shall deliver to Buyer a copy of such Tax Return at least three (3) Business Days before the due date thereof, and Buyer shall promptly execute such Tax Return and deliver it to Seller, which shall cause it to be filed.
• For the avoidance of doubt, Buyer is not obligated for any gains or similar tax related to the sale or transfer of the Acquired Assets.
• Notwithstanding any other provisions in the Purchase Agreement, Buyer and Seller hereby waive compliance with all "bulk sales," "bulk transfer" and similar laws that may be applicable with respect to the sale and transfer of any or all of the Acquired Assets to Buyer.

Key Dates

• The Bankruptcy Court shall have entered the Bid Procedures Order by no later than fourteen (14) days after the Petition Date, and such Order shall be in full force and effect and shall not have been reversed, modified, amended or stayed
• The Bankruptcy Court shall have entered the Sale Order by no later than forty-five (45) days after the Petition Date, and such Order shall be in full force and effect, shall be final and unappealable, and shall not have been reversed, modified, amended or stayed or otherwise be subject to any appeals
• Outside Date: April 10, 2026 (the Closing shall occur by the close of business on this date; provided, however, that the right to terminate the Purchase Agreement pursuant to this provision shall not be available to any Party whose breach of any of such Party's representations, warranties, covenants, or agreements contained herein results in the failure of the Closing to be consummated by such time)
• The Sale Order is not entered within forty-five (45) days after the date the Debtors commenced the Bankruptcy Cases