Exhibit 10.1

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

 

by and among

 

JOE’S JEANS INC.,

 

JOE’S HOLDINGS LLC

 

and

 

SEQUENTIAL BRANDS GROUP, INC.

 

dated as of

 

September 8, 2015

  

 

 

TABLE OF CONTENTS

 

    Page       Article I Definitions 1       Section 1.01 Defined Terms 1
Section 1.02 Construction 9 Section 1.03 Annexes, Exhibits, and Disclosure
Letters 10 Section 1.04 Knowledge 10     Article II Purchase and Sale 10      
Section 2.01 Purchase and Sale of Assets 10 Section 2.02 Excluded Assets 11
Section 2.03 Assumed Liabilities 11 Section 2.04 Excluded Liabilities 12 Section
2.05 Purchase Price 12 Section 2.06 Allocation of Purchase Price 13 Section 2.07
Transfer of Purchased Assets and Assumed Liabilities 13 Section 2.08 Required
Consents 13 Section 2.09 Reconciliation of Royalty Payments 14 Section 2.10
Withholding Rights 16     Article III Closing 16       Section 3.01 Closing 16
Section 3.02 Closing Deliverables 16     Article IV Representations and
Warranties of Seller 18       Section 4.01 Organization and Qualification of
Seller 18 Section 4.02 Authority of Seller 18 Section 4.03 No Conflicts;
Consents 19 Section 4.04 Absence of Certain Changes, Events and Conditions 19
Section 4.05 Material Contracts 20 Section 4.06 Intellectual Property 20 Section
4.07 Legal Proceedings; Governmental Orders 21 Section 4.08 Compliance with Laws
21 Section 4.09 Taxes 21 Section 4.10 Customers and Suppliers 23 Section 4.11
Brokers 23 Section 4.12 Solvency 23 Section 4.13 No Other Representations and
Warranties 23     Article V Representations and Warranties of Buyer 24      
Section 5.01 Organization of Buyer 24 Section 5.02 Authority of Buyer 24 Section
5.03 No Conflicts; Consents 24 Section 5.04 Brokers 25 Section 5.05 Legal
Proceedings 25 Section 5.06 Financing 25 Section 5.07 No Other Representations
and Warranties 26

 

 i

 

  

Article VI Covenants 26       Section 6.01 Access to Information Concerning
Purchased Assets and Records 26 Section 6.02 Confidentiality 27 Section 6.03
Conduct of Seller and the Business Pending the Closing Date 28 Section 6.04
Commercially Reasonable Best Efforts; Consents 29 Section 6.05 Intellectual
Property Title Matters 30 Section 6.06 Use of Transferred Marks; Transaction
Documents 30 Section 6.07 Notification of Certain Matters 30 Section 6.08 Public
Announcements 31 Section 6.09 Bulk Sales Laws 31 Section 6.10 Transfer Taxes 31
Section 6.11 Tax Matters 31 Section 6.12 Communication with Customers, Licensees
and Suppliers 31 Section 6.13 Financing 32 Section 6.14 Further Assurances 35
Section 6.15 Guarantee 35 Section 6.16 Miscellaneous. 37     Article VII
Indemnification 37       Section 7.01 Survival 37 Section 7.02 Indemnification
by Seller 37 Section 7.03 Indemnification by Buyer 38 Section 7.04 Certain
Limitations 38 Section 7.05 Indemnification Procedures 40 Section 7.06 Seller’s
Obligation to Cause Subsidiaries to Act 42 Section 7.07 Sole Remedy/Waiver 42  
  Article VIII Conditions Precedent 43       Section 8.01 Conditions to the
Obligations of Each Party 43 Section 8.02 Conditions to the Obligations of Buyer
43 Section 8.03 Conditions to the Obligations of Seller 44 Section 8.04
Frustration of Closing Conditions 44     Article IX Termination 44       Section
9.01 Termination Events 44 Section 9.02 Effect of Termination 45     Article X
Miscellaneous 46       Section 10.01 Expenses 46 Section 10.02 Notices. 46
Section 10.03 Headings 48 Section 10.04 Severability 48 Section 10.05 Entire
Agreement 48 Section 10.06 Binding Effect; Successors and Assigns 48 Section
10.07 Amendment and Modification; Waiver 49

 

 ii

 

  

Section 10.08 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 49
Section 10.09 Specific Performance 50 Section 10.10 Counterparts 51

 

 

 iii

 

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), dated as of September 8, 2015,
is entered into by and between Joe’s Jeans Inc., a Delaware corporation
(“Seller”), Joe’s Holdings LLC, a Delaware limited liability company (“Buyer”),
and solely for purposes of Section 6.15 and Article X, Sequential Brands Group,
Inc., a Delaware corporation (“Parent”).

 

RECITALS

 

WHEREAS, Seller wishes, for itself and on behalf of its applicable Subsidiaries,
to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller
and its applicable Subsidiaries, certain intellectual property assets used or
held for use in the Joe’s Business, together with certain contracts and other
related assets and liabilities of the Joe’s Business, subject to the terms and
conditions set forth herein;

 

WHEREAS, prior to or concurrently with the execution of this Agreement, and as a
condition and inducement to Seller’s and Buyer’s willingness to enter into this
Agreement, Seller is entering into an Asset Purchase Agreement (the “Operating
Asset Purchase Agreement”) with GBG USA Inc. (the “Operating Assets Purchaser”),
pursuant to which, among other things, the Operating Assets Purchaser will
purchase certain inventory, store leases and certain other assets and assume
certain liabilities from Seller and its applicable Subsidiaries related to the
Joe’s Business; and

 

WHEREAS, prior to or concurrently with the execution of this Agreement, Parent
is entering into a Consulting Agreement with Joe Dahan (“Dahan”) in the form
attached hereto as Exhibit E (the “Dahan Consulting Agreement”), pursuant to
which, among other things, Dahan will, after the Closing, provide certain
consulting services to Parent and/or its Subsidiaries.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Article I
Definitions

 

Section 1.01         Defined Terms. The following terms have the meanings
specified or referred to in this Article I:

 

“Accounting Arbitrator” has the meaning set forth in Section 2.09(c).

 

“Advances” has the meaning set forth in Section 2.09(a)(i).

 

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, such Person.

 

“Agreed Claims” has the meaning set forth in Section 7.05(c).

 

 1 

  

“Agreement” has the meaning set forth in the preamble.

 

“Alternative Financing” has the meaning set forth in Section 6.14(b).

 

“Alternative Financing Commitment Letter” has the meaning set forth in Section
6.14(b).

 

“Assigned Contracts” has the meaning set forth in Section 2.01(b).

 

“Assignment and Assumption Agreement” has the meaning set forth in Section
3.02(a)(iii).

 

“Assumed Liabilities” has the meaning set forth in Section 2.03.

 

“Bill of Sale” has the meaning set forth in Section 3.02(a)(ii).

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in New York, New York are authorized or required by Law
to be closed for business.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Disclosure Letter” means the Disclosure Letter delivered by Buyer
concurrently with the execution and delivery of this Agreement.

 

“Buyer Escrow Funds” has the meaning set forth in Section 2.05.

 

“Buyer Indemnitees” has the meaning set forth in Section 7.02.

 

“Claim Certificate” has the meaning set forth in Section 7.05(a).

 

“Closing” has the meaning set forth in Section 3.01.

 

“Closing Date” has the meaning set forth in Section 3.01.

 

“Code” means the United States Internal Revenue Code of 1986, as amended, and
the regulations promulgated and the rulings listed thereunder.

 

“Confidential Material” means all information (written or oral) that is
confidential or proprietary to Seller or any of its Subsidiaries or is not
otherwise generally available to the public regarding the Joe’s Business. The
term “Confidential Material” shall not include any information (written or oral)
(a) regarding Seller or any of its Subsidiaries, including, without limitation,
any information (written or oral) regarding the Hudson’s Business, other than,
in each case, to the extent relating to the Joe’s Business, (b) that is or
becomes generally available to the public or is or becomes generally known
within the industries in which the Joe’s Business is conducted, in each case
other than as a result of disclosure by Seller or its Representatives in
violation of this Agreement, (c) that becomes available to Seller or any of its
Subsidiaries or Representatives after the Closing Date from a Person other than
Buyer on a non-confidential basis, provided that such Person was not known by
Seller or its Representatives to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to Buyer
with respect to such materials, or (d) that is independently developed by Seller
or any of its Subsidiaries or Representatives without reference to or use of any
Confidential Material.

 

 2 

  

“Confidentiality Agreement” means that certain Confidentiality and Nondisclosure
Agreement, dated as of February 17, 2015, by and between Tengram Capital
Partners, L.P. and Seller to which Parent was made a party by that certain side
letter, dated April 23, 2015, between Parent and Tengram Capital Partners, L.P.

 

“Contracts” means all contracts, leases, mortgages, licenses, instruments,
notes, commitments, undertakings, indentures, bonds, guarantees, franchises, and
other legally binding agreements, understandings, arrangements and letters of
intent, and any amendments thereto, in each case whether written or oral.

 

“Control” (including the terms “controlled by” and “under common control with”),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
Contract or otherwise.

 

“Dahan” has the meaning set forth in the recitals.

 

“Dahan Consulting Agreement” has the meaning set forth in the recitals.

 

“Debt Commitment Letter” has the meaning set forth in Section 5.06.

 

“Deductible” has the meaning set forth in Section 7.04(a).

 

“Direct Claim” has the meaning set forth in Section 7.05(c).

 

“Disclosure Letters” means the Seller Disclosure Letter and the Buyer Disclosure
Letter.

 

“Encumbrances” means any liens, security interests, options, rights of first
refusal, claims, easements, mortgages, charges, indentures, deeds of trust,
rights of way, restrictions on the use of real property, encroachments, leases
to third parties, security agreements, or any other encumbrances, and other
restrictions or limitations on the ownership or use of property or assets or
irregularities in title thereto.

 

“End Date” has the meaning set forth in Section 9.01(b).

 

“Escrow Agent” shall mean Wilmington Trust, National Association.

 

“Escrow Agreement” has the meaning set forth in Section 3.02(a)(vi).

 

“Excluded Assets” has the meaning set forth in Section 2.02.

 

“Excluded Liabilities” has the meaning set forth in Section 2.04.

 

“Final Reconciliation” has the meaning set forth in Section 2.09(b).

 

 3 

  

“Financing” means the debt financing described in the Debt Commitment Letter.

 

“Financing Failure Event” means, for any reason, all or a portion of the
Financing becoming unavailable on the terms and conditions in the Debt
Commitment Letter (including, as necessary, any “flex” provisions contained in
the Debt Commitment Letter or any related fee letter).

 

“Fundamental Representations” means collectively, those representations and
warranties contained in Section 4.01 (Organization and Qualification of Seller),
Section 4.02 (Authority of Seller), Section 4.06(a) and Section 4.06(b)
(Intellectual Property), Section 4.11 (Brokers), Section 5.01 (Organization of
Buyer), Section 5.02 (Authority of Buyer), and Section 5.04 (Brokers).

 

“GAAP” means generally accepted accounting principles.

 

“Governmental Authority” means any United States or non-United States federal,
state, provincial or local government or political subdivision thereof, or any
agency, commission or instrumentality of such government or political
subdivision, or any self-regulated organization or other non-governmental
regulatory authority or quasi-governmental authority (to the extent that the
rules, regulations or orders of such organization or authority have the force of
Law), or any arbitrator, court or tribunal of competent jurisdiction or any
securities exchange.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Guaranteed Obligations” has the meaning set forth in Section 6.15(a).

 

“Hudson’s Business” means the business of Seller and its applicable Subsidiaries
operated as of the date hereof under the brand names “Hudson’s,” and “Hudson
Jeans”.

 

“Indemnified Party” has the meaning set forth in Section 7.04.

 

“Indemnifying Party” has the meaning set forth in Section 7.04.

 

“Intellectual Property” means any and all of the following in any jurisdiction
throughout the world: (a) logos, brand names, slogans, trade names, trademarks
and service marks, trade dress, and other indicia of origin, whether registered
or unregistered, including all applications for registration and registrations
of any of the foregoing and all renewals thereof, and, the goodwill connected
with the use of and symbolized by any of the foregoing (collectively,
“Trademarks”); (b) copyrights, including all applications for registration and
registrations, and works of authorship, registered or unregistered, and all
moral and economic and other similar rights of authors; (c) proprietary
inventions (whether or not patentable), trade secrets and confidential
information, know-how, concepts, processes, methods, techniques, technology and
formulae; (d) patents and patent applications, including divisionals,
continuations, continuations-in-part and foreign equivalents thereof; (e)
technology, Internet domain names and related registrations; (f) rights in
computer code and programs and all related documentation, and rights in all
databases, database rights and compilations; (g) rights of publicity (including
all rights in a Person’s name, voice, signature, biography, likeness, image and
persona); (h) rights in advertising material, molds, trade show booths,
displays, designs, design archives, patterns, prototypes, prints and samples;
and (i) all other intellectual property and industrial property rights and
assets.

 

 4 

  

“Intellectual Property Assets” has the meaning set forth in Section 2.01(a).

 

“IP Title Defect Correction Actions” has the meaning set forth in Section 6.05.

 

“Joe’s Business” means the business of Seller and its applicable Subsidiaries
operated as of the date hereof under the brand names “Joe’s Jeans,” “Joe’s”,
“Joe’s JD” and “else”.

 

“Key Customers and Suppliers” has the meaning set forth in Section 4.10.

 

“Key Jurisdictions” means the following jurisdictions: Argentina, Australia,
Brazil, Canada, Chile, European Community, Hong Kong, India, International
Registration, Japan, Korea (South), Kuwait, Malaysia, Mexico, Macau, New
Zealand, Norway, Peru, Russia, Singapore, Switzerland, Taiwan, Turkey, United
Arab Emirates, United States of America and Uruguay.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Lender” has the meaning set forth in Section 5.06.

 

“Losses” means without duplication (a) any and all claims, actions, cause of
actions, judgment, awards, losses, damages, liabilities, Taxes, costs or
expenses, including reasonable attorneys’, accountants’ and other professional
advisors’ fees and expenses and (b) any losses or costs incurred in
investigating, defending or settling any claim, action or cause of action
described in clause (a) whether or not the underlying claim, action or cause of
action is actually asserted or is merely alleged or threatened.

 

“Material Adverse Effect” means any change, event, circumstance, effect,
development, occurrence or state of facts that, individually or in the
aggregate: (i) has or would reasonably be expected to have a material adverse
effect on the business, condition, properties, assets, liabilities (contingent
or otherwise), results of operations or financial condition of the Joe’s
Business, taken as a whole; provided, that none of the following shall be deemed
in itself to constitute, and that none of the following shall be taken into
account in determining whether there has been or would reasonably be expected to
be, a Material Adverse Effect: (a) any change generally affecting the economy,
financial markets or political, economic or regulatory conditions in the United
States or any other geographic region in which the Joe’s Business is conducted
(except, in each case, to the extent that the Joe’s Business, taken as a whole,
is disproportionately adversely affected relative to other participants in the
industries in which the Joe’s Business is conducted), (b) general financial,
credit or capital market conditions, including interest rates or exchange rates,
or any changes therein (except, in each case, to the extent that the Joe’s
Business, taken as a whole, is disproportionately adversely affected relative to
other participants in the industries in which the Joe’s Business is conducted),
(c) conditions (or changes therein) in any industries in which the Joe’s
Business is conducted (excluding seasonal fluctuations) (except, in each case,
to the extent that the Joe’s Business, taken as a whole, is disproportionately
adversely affected relative to other participants in the industries in which the
Joe’s Business is conducted), (d) the taking of any action required by this
Agreement, the Operating Assets Purchase Agreement or the announcement of the
transactions contemplated hereby or thereby, (e) changes in applicable Law or
GAAP (or, in each case, any interpretations thereof) (except, in each case, to
the extent that the Joe’s Business, taken as a whole, is disproportionately
adversely affected relative to other participants in the industries in which the
Joe’s Business is conducted), (f) any acts of terrorism or war or any escalation
thereof or any weather related event, fire or natural disaster (except, in each
case, to the extent that the Joe’s Business, taken as a whole, is
disproportionately adversely affected relative to other participants in the
industries in which the Joe’s Business is conducted), or (g) any failure of the
Joe’s Business to meet internal or published projections, forecasts, performance
measures, operating statistics or revenue or earnings predictions for any period
(it being understood that the facts or occurrences giving rise to or
contributing to such failure may be taken into account in determining whether
there has been, or will be, a Material Adverse Effect); or (ii) has a material
adverse effect on Seller’s ability to, in a timely manner, perform its
obligations under this Agreement or consummate the transactions contemplated by
this Agreement.

 

 5 

  

“Material Contracts” means all Contracts (a) by which any of the Purchased
Assets or Assumed Liabilities are bound or affected or (b) to which Seller or
any of its Subsidiaries are parties or by which Seller or any of its
Subsidiaries are bound in connection with the Joe's Business, the Purchased
Assets or the Assumed Liabilities, in each case, (i) that relate to the
manufacture, design, marketing, promotion, production, distribution, sale or
licensing of any of the Purchased Assets, other than such Contracts that relate
solely to the sale of inventory in the ordinary course of business; (ii)
granting or evidencing an Encumbrance (other than Permitted Encumbrances) on any
Purchased Asset or any other property or asset of Seller or any of its
Subsidiaries and used in connection with the Joe’s Business; (iii) limiting the
ability of Seller or any of its Subsidiaries to (1) engage in the Joe’s Business
in any capacity or (2) compete with any Person or in any geographical area with
respect to the Joe’s Business; (iv) relating to the Joe’s Business (other than
this Agreement and any agreement or instrument entered into pursuant to this
Agreement) with (1) Seller or any of its Affiliates or (2) Seller or any of its
Subsidiaries or any current or former officer or director of Seller or any of
its Subsidiaries; (v) involving any joint venture, partnership, strategic
alliance, shareholders’ agreement, co-marketing, co-promotion, co-packaging,
joint development or similar arrangement; (vi) relating primarily to the Joe’s
Business involving aggregate consideration in excess of One Hundred Twenty-Five
Thousand Dollars ($125,000) and requiring performance by any party after the
Closing Date, which, in each case, cannot be cancelled without penalty or
without more than sixty (60) days’ notice; provided, that in no event shall any
Contract be deemed a Material Contract if, following the Closing, such Contract
will not be binding or otherwise affect any of the Purchased Assets or Assumed
Liabilities.

 

“Neutral Accounting Firm” means an independent accounting firm of nationally
recognized standing that is not at the time it is to be engaged hereunder
rendering services to any party hereto, or any Affiliate of either, and has not
done so within the two (2) year period prior thereto.

 

“Notice of Objections” has the meaning set forth in Section 2.09(b).

 

 6 

  

“Operating Asset Purchase Agreement” has the meaning set forth in the recitals.

 

“Operating Assets Purchaser” has the meaning set forth in the recitals.

 

“Overlap Period” shall mean any taxable year or other taxable period beginning
on or before and ending after the Closing Date.

 

“Paid-Up Fees” has the meaning set forth in Section 2.09(a)(ii).

 

“Parent” has the meaning set forth in the preamble.

 

“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001).

 

“Permits” means all permits, licenses, franchises, approvals, certificates,
rights, exemptions, authorizations and consents granted from or issued by
Governmental Authorities.

 

“Permitted Encumbrance” means each of the following: (i) Encumbrances approved
in writing by Buyer; and (ii) licenses of or with respect to Intellectual
Property that constitute an Assigned Contract.

 

“Person” means and includes an individual, corporation, partnership, joint
venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association, limited liability partnership, limited
partnership, group or other entity.

 

“Post-Closing Period” shall mean all taxable years or other taxable periods that
begin on the Closing Date and, with respect to any Overlap Period, the portion
of such taxable year or period beginning on the Closing Date.

 

“Pre-Closing Period” shall mean all taxable years or other taxable periods that
end on the date immediately before the Closing Date and, with respect to any
Overlap Period, the portion of such taxable year or period ending on the date
immediately before the Closing Date.

 

“Products” means clothing, jeans, activewear, pants, jeggings, trousers, tops,
tee shirts, tank tops, shirts, dresses, skirts, sweaters, hoodies, jackets,
outerwear, shorts, lingerie/intimates, underwear, loungewear, jumpsuits, shoes,
sandals, sneakers, hats, scarves, jewelry, belts, and other fashion accessories.

 

“Purchase Price” has the meaning set forth in Section 2.05.

 

“Purchased Assets” has the meaning set forth in Section 2.01.

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants,
agents, managers and other agents of such Person.

 

 7 

  

“Required Information” means all financial and other information regarding the
Purchased Assets or the Joe’s Business as is reasonably requested by Buyer or
the Lender in connection with the Financing as is customarily required in
connection with the execution of debt financings similar to the Financing
including, but not limited to, for any quarter ended after May 31, 2015 and at
least 45 days prior to the Closing Date, the interim consolidated financial
statements of Seller and its subsidiaries currently owning or holding any of the
Purchased Assets or Joe’s Business; provided that Seller will have no obligation
to prepare pro forma financial information or post-closing financial
information.

 

“Revolving Credit Agreement” means that certain Revolving Credit Agreement,
dated as of September 30, 2013, by and among Joe’s Jeans Subsidiary, Inc. and
Hudson Clothing, LLC, Joe’s Jeans Inc., certain subsidiaries of Joe’s Jeans Inc.
party thereto, The CIT Group/Commercial Services, Inc., as administrative agent,
collateral agent, documentation agent and syndication agent (“CIT”), CIT Finance
LLC, as sole lead arranger and sole bookrunner, and the lenders party thereto,
as amended by Omnibus Amendment 1 to Revolving Credit Agreement and Guarantee
and Collateral Agreement dated December 20, 2013, as further amended by
Amendment 2 to Revolving Credit Agreement dated April 23, 2015, and as further
amended by Forbearance Agreement and Amendment 3 to Revolving Credit Agreement
dated June 26, 2015.

 

“Royalties” has the meaning set forth in Section 2.09(b)(i).

 

“Seller” has the meaning set forth in the preamble.

 

“Seller Disclosure Letter” means the Disclosure Letter delivered by Seller
concurrently with the execution and delivery of this Agreement.

 

“Seller Indemnitees” has the meaning set forth in Section 7.03.

 

“Seller Royalty Statement” has the meaning set forth in Section 2.09(a).

 

“Seller Termination Fee” has the meaning set forth in Section 9.02(b).

 

“Seller’s Royalties” has the meaning set forth in Section 2.09(b)(ii).

 

“Special Damages” has the meaning set forth in Section 7.04(d).

 

“Subsidiary” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, is Controlled by such Person.

 

“Tax Contest” has the meaning set forth in Section 7.05(a).

 

“Tax Return” means any return, amended return, disclosure, election, estimate,
form, declaration, report, claim for refund, information return or statement or
other document required to be filed with respect to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.

 

 8 

  

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, value added, capital gain, capital stock, social security,
production, ad valorem, transfer, franchise, registration, profits, license,
lease, service, service use, withholding, payroll, employment, unemployment,
estimated, excise, severance, environmental, stamp, occupation, premium,
property (real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments, levies, or other governmental charges
in the nature of a tax, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties, and
any liability for such amounts as a result of a contractual obligation to
indemnify any Person.

 

“Term Loan Agreement” means that certain Term Loan Credit Agreement, dated as of
September 30, 2013, by and among Joe’s Jeans Subsidiary, Inc. and Hudson
Clothing, LLC, Joe’s Jeans Inc., certain subsidiaries of Joe’s Jeans Inc. party
thereto, Garrison Loan Agency Services LLC, as administrative agent, collateral
agent, lead arranger, documentation agent and syndication agent, and the lenders
party thereto (“Garrison”), as amended.

 

“Third Party Claim” has the meaning set forth in Section 7.05(a).

 

“Trademarks” has the meaning set forth in the definition of “Intellectual
Property”.

 

“Transaction Documents” means this Agreement, the Bill of Sale, the Assignment
and Assumption Agreement and the other agreements, instruments and documents
required to be delivered at the Closing, including all assignment documents
relating to the Intellectual Property Assets that are prepared by Buyer and
required for recordation with Governmental Authorities to effect or evidence the
assignment of such Intellectual Property Assets to Buyer.

 

“Transferred Marks” mean the trade name JOE’S JEANS and all Trademarks, websites
and domain names owned by Seller or its Subsidiaries that include the term
“Joe’s Jeans”, “Joe’s”, JD or any terms confusingly similar thereto, and all
other Trademarks that are used primarily in connection with the Joe’s Business,
including the Trademarks set forth in Section 4.06(a) of the Seller Disclosure
Letter.

 

“Withholding Amounts” has the meaning set forth in Section 2.09(b)(i).

 

Section 1.02         Construction. In this Agreement, unless the context
otherwise requires:

 

(a)          references to “writing” or comparable expressions include a
reference to facsimile transmission or comparable means of communication
(including e-mail, provided the sender complies with the provisions of Section
10.02);

 

(b)          the phrases “delivered” or “made available” shall mean that the
information referred to has been physically or electronically delivered to the
relevant parties;

 

(c)          words expressed in the singular number shall include the plural and
vice versa; words expressed in the masculine shall include the feminine and
neuter gender and vice versa;

 

 9 

  

(d)          the descriptive headings of the several Articles and Sections of
this Agreement, the Seller Disclosure Letter and the Buyer Disclosure Letter (as
applicable) are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement;

 

(e)          whenever this Agreement refers to a number of days, that number
shall refer to calendar days unless Business Days are specified and whenever any
action must be taken under this Agreement on or by a day that is not a Business
Day, then, unless otherwise indicated herein, that action may be validly taken
on or by the next day that is a Business Day;

 

(f)          the words “hereof”, “herein”, “hereto” and “hereunder”, and words
of similar import, shall refer to this Agreement as a whole and not to any
provision of this Agreement;

 

(g)          this “Agreement” or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to time be,
amended, varied, novated or supplemented;

 

(h)          “include”, “includes”, and “including” are deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of similar import; and

 

(i)          references to “Dollars”, “dollars” or “$”, without more are to the
lawful currency of United States of America.

 

Section 1.03        Annexes, Exhibits, and Disclosure Letters. The Annexes,
Exhibits, the Seller Disclosure Letter and the Buyer Disclosure Letter are
incorporated into and form an integral part of this Agreement.

 

Section 1.04         Knowledge. When any representation, warranty, covenant or
agreement contained in this Agreement is expressly qualified by reference to (i)
the “Knowledge of Seller” or words of similar import, it shall mean the actual
knowledge of Lori Nembirkow and Hamish Sandhu and the knowledge such individuals
would have after reasonable inquiry, and (ii) the “Knowledge of Buyer” or words
of similar import, it shall mean the actual knowledge of Gary Klein, Chad
Wagenheim and Yehuda Shmidman and the knowledge such individuals would have
after reasonable inquiry.

 

Article II
Purchase and Sale

 

Section 2.01         Purchase and Sale of Assets. On the terms and subject to
the conditions set forth herein, at the Closing, Seller shall (and shall cause
its applicable Subsidiaries to) sell, assign, transfer, convey and deliver, and
Buyer shall purchase, all of Seller’s and its applicable Subsidiaries’ right,
title and interest in, to and under the Purchased Assets free and clear of all
Encumbrances (other than Permitted Encumbrances). “Purchased Assets” means only
the following assets owned by Seller or its applicable Subsidiaries:

 

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(a)          the Transferred Marks, the other Intellectual Property set forth on
Section 4.06(a) of the Seller Disclosure Letter and all other Intellectual
Property primarily used in the Joe’s Business, together with all rights to
enforce such Intellectual Property with respect to past, present and future
infringements and misappropriations thereof (the “Intellectual Property
Assets”);

 

(b)          the Contracts set forth on Section 2.01(b) of the Seller Disclosure
Letter (collectively, the “Assigned Contracts”);

 

(c)          copies of all books, records, files (whether in paper or electronic
format) relating primarily to the assets described in Sections 2.01(a) through
2.01(b), including copies of all prosecution histories and legal files in the
possession of Seller’s or its applicable Subsidiaries’ legal departments
primarily related to or concerning the Intellectual Property Assets;

 

(d)          copies of all lists of commercial customers and licensees that (i)
are or (ii) have been used or held for use in the last five (5) years by Seller
or its applicable Subsidiaries in connection with the assets described in
Section 2.01(a) and primarily in connection with the assets described in Section
2.01(b);

 

(e)          to the extent transferrable, all express or implied warranties,
indemnities and guarantees to the extent primarily related to any of the assets
described in Sections 2.01(a) through 2.01(b);

 

(f)          any amounts to be paid to Buyer pursuant to Section 2.09; and

 

(g)          all goodwill associated with any of the assets described in
Sections 2.01(a) through 2.01(b).

 

Seller and Buyer shall review Sections 2.01(a), 2.01(b) and 4.06(a) of the
Seller Disclosure Letter to determine at least two (2) Business Days prior to
the anticipated Closing Date whether any updates thereto are necessary;
provided, that notwithstanding anything to the contrary contained herein, any
such update to the Seller Disclosure Letter pursuant to this sentence shall
require the prior written consent of Buyer.

 

Section 2.02         Excluded Assets. Buyer expressly understands and agrees
that it is not purchasing or acquiring, and neither Seller nor any of its
applicable Subsidiaries is selling or assigning, any properties, assets or
rights other than the Purchased Assets (such properties, rights and assets that
are not Purchased Assets, collectively, the “Excluded Assets”).

 

Section 2.03         Assumed Liabilities. On the terms and subject to the
conditions set forth herein, Buyer shall assume and agree to pay, perform and
discharge when due only the following liabilities and obligations of Seller or
any of its applicable Subsidiaries to the extent arising out of or relating to
the Purchased Assets and not included among the Excluded Liabilities
(collectively, the “Assumed Liabilities”):

 

(a)          all liabilities and obligations arising under or relating to the
Assigned Contracts in respect of periods on or after the Closing Date, provided,
that Buyer shall not assume or agree to pay, discharge or perform any
liabilities or obligations arising out of any breach by Seller or any of its
applicable Subsidiaries prior to the Closing of any provision of any Assigned
Contract;

 

 11 

  

(b)          any liabilities or obligations for Taxes for which Buyer is liable
pursuant to Section 6.10 and Section 6.11; and

 

(c)          subject to Section 2.03(a), all liabilities and obligations arising
out of or relating to (i) the ownership or operation of the Purchased Assets in
respect of periods on or after the Closing Date and (ii) expenses and filing
fees solely and exclusively related to Buyer’s recordation of Intellectual
Property Assets with applicable Governmental Authorities after Closing, but
excluding all expenses related to assignments or transfers of Intellectual
Property Assets made to Seller by Affiliates of Seller or
predecessors-in-interest of the Purchased Assets prior to Closing (or on or
after Closing in connection with any IP Title Defect Corrections Actions
required under and pursuant to Section 6.05), including all such legal expenses
and filing fees for recordation with applicable Governmental Authorities.

 

Section 2.04         Excluded Liabilities. Notwithstanding anything contained
herein to the contrary, Buyer shall not assume or cause to be assumed, or be
deemed to have assumed and shall not be liable or responsible to pay, perform or
discharge any liabilities or obligations (whether known or unknown, fixed,
absolute, matured, unmatured, accrued or contingent, now existing or after the
date hereof) of Seller or any of its Subsidiaries, other than Assumed
Liabilities, including, but not limited to, (i) all expenses related to
assignments or transfers of Intellectual Property Assets made to Seller by
Affiliates of Seller or predecessors-in-interest of the Purchased Assets prior
to Closing (or on or after the Closing Date in connection with any IP Title
Defect Corrections Actions required under and pursuant to Section 6.05),
including all such legal expenses and filing fees for recordation with
applicable Governmental Authorities, (ii) any liabilities or obligations for
Taxes for which Seller is liable pursuant to Section 6.10 and Section 6.11 and
(iii) any liabilities or obligations arising out of or relating to the
employment or termination of employment of any employee or consultant of Seller
or any of its Subsidiaries, including, without limitation, all liabilities or
obligations arising out of or relating to the termination of any such employee
on or after the Closing (such liabilities or obligations that are not Assumed
Liabilities, collectively, the “Excluded Liabilities”).

 

Section 2.05         Purchase Price. The aggregate purchase price for the
Purchased Assets shall be Sixty-Seven Million Dollars ($67,000,000.00) (the
“Purchase Price”). The Purchase Price shall be paid at Closing by wire transfer
of immediately available funds to accounts designated in writing by Seller to
Buyer at least two (2) Business Days prior to the Closing. In addition, Buyer
shall pay an additional amount equal to Two Million Five Hundred Thousand
Dollars ($2,500,000.00) (the “Buyer Escrow Funds”) by wire transfer of
immediately available funds to an account designated in writing by the Escrow
Agent, which Buyer Escrow Funds shall be governed by Section 6.16.

 

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Section 2.06         Allocation of Purchase Price. Seller and Buyer agree to
allocate the Purchase Price to be paid for the Assets including any Assumed
Liabilities and any other amounts treated as consideration for federal income
tax purposes in accordance with Section 1060 of the Code. Seller and Buyer agree
that Buyer shall prepare and provide to Seller a draft allocation of the
purchase price among the Assets within ninety (90) days after the Closing Date.
Seller shall notify Buyer within thirty (30) days of receipt of such draft
allocation of any objection Seller may have thereto. Seller and Buyer agree to
resolve any disagreement with respect to such allocation in good faith. In
addition, Seller and Buyer hereby undertake and agree to file timely any
information that may be required to be filed pursuant to Treasury Regulations
promulgated under Section 1060(b) of the Code, and shall use the allocation
determined pursuant to this Section 2.06 in connection with the preparation of
Internal Revenue Service Form 8594 as such form relates to the transactions
contemplated by this Agreement. Neither Seller nor Buyer shall file any Tax
Return or other document or otherwise take any position which is inconsistent
with the allocation determined pursuant to this Section 2.06 except as may be
adjusted by subsequent agreement following an audit by the IRS or by court
decision. If Seller and Buyer cannot agree on all or a portion of the allocation
within sixty (60) days of the Seller’s objection to the allocation, each party
shall use its own allocation of the unagreed portion as it deems appropriate.

 

Section 2.07         Transfer of Purchased Assets and Assumed Liabilities. At
the Closing, except as otherwise provided in Section 2.08, the Purchased Assets
shall be sold, conveyed, transferred, assigned and delivered to Buyer, free and
clear of all Encumbrances (other than Permitted Encumbrances), and the Assumed
Liabilities shall be assumed by Buyer, pursuant to transfer and assumption
Contracts, bills of sale, endorsements, assurances, conveyances, releases,
discharges, assignments, certificates, drafts, checks or other instruments in
such form as is necessary to effect a sale, conveyance, transfer and assignment
of the Purchased Assets and an assumption of the Assumed Liabilities as Buyer
and Seller shall reasonably deem necessary, or as required by Law in order to
consummate the transaction and, except as otherwise provided herein, to vest in
Buyer valid title to the Purchased Assets free and clear of any Encumbrances
(other than Permitted Encumbrances), which documents and instruments shall be
executed (upon the terms and subject to the conditions hereof) on the Closing
Date by Seller (and, as applicable, its Subsidiaries) and Buyer.

 

Section 2.08         Required Consents.

 

(a)          Absence of Consents, Obtaining Consents. Notwithstanding anything
to the contrary contained in this Agreement, to the extent that the sale,
conveyance, transfer, assignment or delivery or attempted sale, conveyance,
transfer, assignment or delivery to Buyer of any Purchased Asset or right is
prohibited by any applicable Law or would require any third party’s or any
Governmental Authority’s authorization, approval, consent, negative clearance or
waiver and such authorization, approval, consent, negative clearance or waiver
shall not have been obtained prior to the Closing, this Agreement shall not
constitute a sale, conveyance, transfer, assignment or delivery, or an attempted
sale, conveyance, transfer, assignment or delivery thereof. Following the
Closing, the parties hereto shall have a continuing obligation to use their
commercially reasonable best efforts to cooperate with each other and to obtain
promptly all such authorizations, approvals, consents, negative clearances or
waivers; provided, that neither Seller nor any of its Affiliates shall be
required to commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party to obtain such authorizations,
approvals, consents, negative clearances or waivers. Upon obtaining the
requisite authorization, approval, consent, negative clearance or waiver, Seller
or its applicable Subsidiary shall promptly convey, transfer, assign and
deliver, or cause to be conveyed, transferred, assigned and delivered, such
Purchased Asset or right to Buyer hereunder.

 

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(b)          Benefit of Purchased Assets. Pending, or in the absence of, such
authorization, approval, consent, negative clearance or waiver referenced in
Section 2.08(a), the parties hereto shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the economic
claims, rights and benefits and liabilities of use of such Purchased Asset or
right, and Seller or its applicable Subsidiary shall continue to use, exercise
or perform such Purchased Asset or right upon the reasonable direction of Buyer;
provided, that Seller shall bear the economic burden resulting from
implementation of any such alternative arrangement pursuant to this Section
2.08(b). If such arrangements with respect to any particular Purchased Asset or
right does not provide Buyer with all of the economic claims, rights, and
benefits under such Purchased Asset or right, Buyer shall not be responsible for
the Assumed Liabilities, if any, arising under such Purchased Asset or right.

 

Section 2.09         Reconciliation of Royalty Payments.

 

(a)          Within sixty days (60) following the Closing Date, Seller shall
provide Buyer with a statement (“Royalty Statement”) setting forth, with respect
to each Assigned Contract, its good faith calculation of the following, together
with reasonable supporting documentation for such calculations:

 

(i)          the amount of royalty advances and other payments (less applicable
prepaid commissions and agency fees) received by Seller or its Subsidiaries in
connection with an Assigned Contract but unearned as of the Closing Date
(“Advances”); and

 

(ii)         for Assigned Contracts that require the counterparty to pay a flat
fee, the amount of any fees fully paid before the Closing Date but expressly
applicable to periods on or after the Closing Date Date (“Paid-Up Fees”).

 

(b)          Within thirty (30) days after the later of (x) the last day of the
first full calendar quarter on or after the Closing Date and (y) the date the
Royalty Statement is delivered to Buyer, Buyer shall prepare in good faith,
subject to the review and approval by Seller, a written calculation with respect
to each Assigned Contract (the “Final Reconciliation”) of:

 

(i)          for Assigned Contracts that require the counterparty to pay a
percentage-based royalty, the actual amount of the license fees, franchise fees,
royalty fees, common marketing fund fees, or other fees, payments, consideration
or compensation with respect to each such Assigned Contract (“Royalties”) paid
to Buyer or its Affiliates on or after the Closing Date (but including amounts
of any tax withholding by a licensee that is a party to an Assigned Contract
(“Withholding Amounts”));

 

(ii)         any pro rata portion of the Royalties and Withholding Amounts (less
applicable commissions and agency fees) received by Buyer but attributable to
periods before the Closing Date (“Seller’s Royalties”);

 

(iii)        the Advances; and

 

(iv)        the Paid-Up Fees.

 

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Exhibit A sets forth examples of how the amounts described in this Section
2.09(b) will be determined. Seller will have thirty (30) days following delivery
of the Final Reconciliation by Buyer to review the Final Reconciliation and, if
applicable, deliver a written notice of objections to Buyer (the “Notice of
Objections”) specifying all disagreements with items, calculations or
methodologies utilized in preparing the Final Reconciliation. Buyer shall make
all Assigned Contracts, work papers and books and records relating to payments
under the Assigned Contracts, and any other information and materials reasonably
requested by Seller, available to Seller and its Representatives during such
review period. Buyer shall use the same efforts to collect Seller’s Royalties as
it uses to collect Royalties for its own account, and shall reasonably cooperate
with Seller in connection therewith. If Seller does not deliver a Notice of
Objections, the Final Reconciliation shall be final and binding on the parties
hereto.

 

(c)          If Buyer and Seller are unable to resolve any disagreements with
respect to the Final Reconciliation within ninety (90) days of delivery to Buyer
of the Notice of Objection, then either Buyer or Seller may submit such
disagreements for final and binding resolution to a Neutral Accounting Firm to
resolve such disagreements (the “Accounting Arbitrator”). Each of Buyer, on the
one hand, and Seller, on the other hand, shall be permitted to present
supporting documentation to the Accounting Arbitrator (which supporting
documentation shall also be concurrently provided to the other party(ies))
within fifteen (15) days of the appointment of the Accounting Arbitrator. Within
fifteen (15) days of receipt of supporting documentation, the receiving
party(ies) may present responsive documentation to the Accounting Arbitrator
(which responsive documentation shall also be concurrently provided to the other
party(ies)). The Accounting Arbitrator shall only consider the documentation of
the parties, and shall not conduct any independent review, in determining those
items and amounts disputed by the parties. The Accounting Arbitrator shall
select either the position of Buyer or Seller as a resolution for each item or
amount disputed and may not impose an alternative resolution with respect to any
item or amount disputed and must resolve the matter in accordance with the terms
and provisions of this Agreement. The Accounting Arbitrator shall deliver to
Buyer and Seller, as promptly as practicable and in any event within sixty (60)
days after its appointment, a written report setting forth the resolution of any
such disagreement determined in accordance with the terms of this Agreement. The
determination of the Accounting Arbitrator shall be final and binding on the
parties hereto. The fees of the Accounting Arbitrator shall be borne by Buyer,
on the one hand, and Seller, on the other hand, in such amount(s) as shall be
determined by the Accounting Arbitrator based on the proportion that the
aggregate number of disputed items submitted to the Accounting Arbitrator that
is unsuccessfully disputed by Buyer, on the one hand, or Seller, on the other
hand, as determined by the Accounting Arbitrator, bears to the total number of
such disputed items so referred to the Accounting Arbitrator for resolution.

 

(d)          If the amount set forth on the Final Reconciliation with respect to
Seller’s Royalties is greater than the aggregate amounts set forth with respect
to Advances and Paid-Up Fees, then Buyer shall pay the difference to Seller by
wire transfer within ten (10) days after the later of the date of the Final
Reconciliation or the date that the Accounting Arbitrator has delivered its
written report.

 

(e)          If the amount set forth on the Final Reconciliation with respect to
Seller’s Royalties is less than the aggregate amounts set forth with respect to
Advances and Paid-Up Fees, then Seller shall pay the difference to Buyer by wire
transfer within ten (10) days after the later of the date of the Final
Reconciliation or the date that the Accounting Arbitrator has delivered its
written report.

 

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Section 2.10         Withholding Rights. Buyer shall be entitled to deduct and
withhold from the consideration otherwise payable to Seller pursuant to Article
III hereof, such amount as it is required to deduct and withhold with respect to
the making of such payment any provision of U.S. federal, state, local or
foreign Tax law; provided that such Tax would not be the liability of Buyer
under this Agreement; and provided further that, at least five (5) Business Days
prior to such withholding, the Buyer will provide Seller with notice of such
withholding and the parties jointly discuss the necessity of or how to reduce or
eliminate such withholding. If Buyer so withholds amounts, such amounts shall be
treated for all purposes of this Agreement as having been paid to Seller in
respect of which Buyer made such deduction and withholding.

 

Article III
Closing

 

Section 3.01         Closing. On the terms and subject to the conditions of this
Agreement, the closing of the transactions contemplated hereby (the “Closing”)
shall take place on the date that is two (2) Business Days following the
satisfaction or waiver of all of the conditions set forth in Article VIII hereof
(other than those conditions to be satisfied on the Closing Date, but subject to
the satisfaction or waiver, if permissible, of such conditions) at the offices
of Akin Gump Strauss Hauer & Feld LLP, 1333 New Hampshire Avenue NW, Washington
DC 20036, or at such other time, date or place as the parties hereto shall agree
in writing; provided, that in no event shall Buyer be required to consummate the
Closing prior to September 4, 2015; provided, further, that the Closing shall be
consummated concurrently with the consummation of the transactions contemplated
by the Operating Asset Purchase Agreement. The date upon which the Closing
occurs is herein referred to as the “Closing Date”. Upon consummation of the
Closing, the purchase and sale of the Purchased Assets and the assumption of the
Assumed Liabilities hereunder, and the Closing, shall be deemed to have occurred
as of 12:01 a.m. (New York time) on the Closing Date.

 

Section 3.02         Closing Deliverables.

 

(a)         At the Closing, Seller shall deliver (or cause to be delivered) to
Buyer the following:

 

(i)          a certificate signed by an authorized officer of Seller, dated as
of the Closing Date, confirming the matters set forth in Sections 8.02(a), (b)
and (d);

 

(ii)         a counterpart to the bill of sale in the form of Exhibit B hereto
(the “Bill of Sale”), duly executed by Seller and/or its applicable
Subsidiaries;

 

(iii)        a counterpart to the assignment and assumption agreement in the
form of Exhibit C hereto (the “Assignment and Assumption Agreement”), duly
executed by Seller and/or its applicable Subsidiaries;

 

 16 

  

(iv)        a non-foreign person affidavit from Seller and/or its applicable
Subsidiaries dated as of the Closing Date as required by, and satisfying the
requirements of, Section 1445 of the Code;

 

(v)         counterparts to all assignments or documents of transfer to effect
the assignment of all patents, copyrights, trademarks and internet domain names,
and related registrations and applications, comprising Intellectual Property
Assets, duly executed by Seller and/or its applicable Subsidiaries, in the forms
attached hereto as Exhibit D or the forms that are prepared by Buyer and
required for recordation with Governmental Authorities to effect or evidence the
assignment of such Intellectual Property Assets to Buyer;

 

(vi)        a counterpart to the escrow agreement in the form of Exhibit F
hereto (the “Escrow Agreement”), duly executed by Seller and the Escrow Agent;

 

(vii)       a duly executed pay-off letter from Garrison, in a form reasonably
satisfactory to Buyer, certifying that all indebtedness under the Term Loan
Agreement with respect to the Joe’s Business owing to the lenders thereunder has
been fully paid and that all Encumbrances imposed by or in connection with the
Term Loan Agreement upon the Purchased Assets have been released;

 

(viii)      a duly executed pay-off letter from CIT, in a form reasonably
satisfactory to Buyer, certifying that all indebtedness under the Revolving
Credit Agreement with respect to the Joe’s Business owing to the lenders
thereunder has been fully paid and that all Encumbrances imposed by or in
connection with the Revolving Credit Agreement upon the Purchased Assets have
been released; and

 

(ix)         such other customary instruments of transfer, assumption, filings
or documents, in form and substance reasonably satisfactory to Buyer and Seller,
as may be required to give effect to this Agreement.

 

(b)          At the Closing, Buyer shall deliver (or cause to be delivered) to
Seller or its applicable Subsidiary the following:

 

(i)          an amount in cash equal to the Purchase Price (subject to any
withholding rights under Section 2.10), payable by wire transfer of immediately
available funds in accordance with Section 2.05;

 

(ii)         a certificate signed by an authorized officer of Buyer, dated as of
the Closing Date, confirming the matters set forth in Sections 8.03(a) and (b);

 

(iii)        a counterpart to the Bill of Sale duly executed by Buyer;

 

(iv)        a counterpart to the Assignment and Assumption Agreement duly
executed by Buyer;

 

(v)         a counterpart to the Escrow Agreement duly executed by Buyer; and

 

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(vi)        such other customary instruments of transfer, assumption, filings or
documents, in form and substance reasonably satisfactory to Buyer and Seller, as
may be required to give effect to this Agreement.

 

Article IV
Representations and Warranties of Seller

 

Except as set forth in the Seller Disclosure Letter, Seller represents and
warrants to Buyer that the statements contained in this Article IV are true and
correct.

 

Section 4.01         Organization and Qualification of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Seller and its applicable Subsidiaries have all
necessary corporate or other power and authority to own the Purchased Assets and
to carry on the Joe’s Business as currently conducted. Seller and its applicable
Subsidiaries are duly licensed or qualified to do business and are in good
standing in each jurisdiction in which the ownership of the Purchased Assets or
the operation of the Joe’s Business as currently conducted makes such licensing
or qualification necessary, except where the failure to be so licensed,
qualified or in good standing would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 4.02         Authority of Seller. Seller has all necessary corporate or
other power and authority to enter into this Agreement and the other Transaction
Documents to which Seller is a party, to carry out its respective obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Each applicable Subsidiary of Seller has all necessary corporate or
other power and authority to enter into the Transaction Documents to which such
Subsidiary is a party, to carry out its respective obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery by
Seller of this Agreement and any other Transaction Document to which Seller is a
party, the performance by Seller of its obligations hereunder and thereunder and
the consummation by Seller and its Subsidiary of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of Seller. The execution and delivery by each applicable Subsidiary
of Seller of any Transaction Document to which such Subsidiary is a party, the
performance by such Subsidiary of its obligations thereunder and the
consummation by such Subsidiary of the transactions contemplated thereby have
been duly authorized by all requisite corporate or other action on the part of
such Subsidiary. This Agreement has been duly executed and delivered by Seller,
and (assuming due authorization, execution and delivery by Buyer) this Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). At the Closing, each Transaction Document shall
have been duly executed and delivered by Seller and/or its Subsidiaries, as
applicable, and (assuming due authorization, execution and delivery by Buyer)
each such Transaction Document shall constitute a legal, valid and binding
obligation of Seller and/or such Subsidiary, enforceable against Seller and/or
such Subsidiary in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

 

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Section 4.03         No Conflicts; Consents. (a) The execution, delivery and
performance by Seller of this Agreement and the Transaction Documents to which
Seller is a party, and the consummation of the transactions contemplated hereby
and thereby and (b) the execution, delivery and performance by each applicable
Subsidiary of Seller of the Transaction Documents to which such Subsidiary is a
party, and the consummation of the transactions contemplated thereby do not and
will not: (i) result in a violation or breach of or conflict with any provision
of the certificate of incorporation or by-laws (or equivalent organizational
documents) of Seller or such Subsidiaries, as applicable, in each case, amended
to the date of this Agreement; (ii) create any Encumbrance (other than Permitted
Encumbrances) upon any Purchased Asset; (iii) result in a violation or breach of
or conflict with any provision of any Law or Governmental Order applicable to
Seller, any of such Subsidiaries, the Joe’s Business or the Purchased Assets; or
(iv) except as set forth in Section 4.03 of the Seller Disclosure Letter,
require the consent, notice or other action by any Person under, conflict with,
result in a material violation or breach of, constitute a material default under
or result in the acceleration of any Assigned Contract. Except as set forth on
Section 4.03 of the Seller Disclosure Letter, no material consent, approval,
Permit, or Governmental Order of, material declaration or filing with, or
material notice to, any Governmental Authority is required by or with respect to
Seller or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or any of the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby. Except as set forth in
Section 4.03 of the Seller Disclosure Letter, no consents or approvals of any
non-governmental Person are necessary for the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, including the transfer of all the
Purchased Assets.

 

Section 4.04         Absence of Certain Changes, Events and Conditions. Except
as set forth on Section 4.04 of the Seller Disclosure Letter, since November 30,
2014, Seller and its Subsidiaries have operated the Joe’s Business in the
ordinary course of business in all material respects and there has not been any:

 

(a)          sale, assignment, abandonment, cancellation, transfer, license or
other disposition of any material assets or rights that would otherwise
constitute Purchased Assets hereunder, except in the ordinary course of business
consistent with past practice;

 

(b)          action taken or omitted to be taken by either Seller or any of its
Subsidiaries that would, individually or in the aggregate, constitute a breach
of Section 6.03, if such action had been taken or omitted to be taken after the
date hereof;

 

(c)          imposition of any Encumbrance (other than Permitted Encumbrances)
upon any of the Purchased Assets; or

 

(d)          event, circumstance, development, state of facts, occurrence,
change or effect which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

 19 

  

Section 4.05         Material Contracts. Section 4.05(a) of the Seller
Disclosure Letter sets forth an accurate and complete list as of the date hereof
of each of the Material Contracts. Other than the Assigned Contracts included
within the Material Contracts, there are no Contracts which license any of the
Intellectual Property Assets, including the Transferred Marks, to any other
Person or allow any Person to procure, distribute, import or sell any Product
branded with or offered for sale under any of the Transferred Marks or otherwise
limit the ability of Seller or any of its Subsidiaries to use any Intellectual
Property Assets in any capacity. Except as set forth on Section 4.05(b) of the
Seller Disclosure Letter, neither Seller nor any of its Subsidiaries is in
breach of, and there exists no default or event of default, nor any event,
occurrence, condition or act (including the transactions contemplated hereby)
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default thereunder
with respect to any provision under any Assigned Contract. Each Assigned
Contract has not been terminated or been repudiated by Seller or any of its
Subsidiaries nor, to the Knowledge of Seller, any other party thereto. Each
Assigned Contract is in full force and effect and is the legal, valid and
binding obligation of Seller and its Subsidiaries, as applicable, and, to the
Knowledge of Seller, each of the other parties thereto, enforceable in
accordance with the terms thereof, except to the extent that its enforceability
may be subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, fraudulent conveyance, moratorium and other similar Laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and implied
covenant of good faith and fair dealing. All the material covenants to be
performed by Seller or its Subsidiaries under any Assigned Contract have been
fully performed in all material respects. Except as set forth on Section 4.05(c)
of the Seller Disclosure Letter, to the Knowledge of Seller, all of the material
covenants to be performed by any other party to any Assigned Contract have been
fully performed in all material respects.

 

Section 4.06         Intellectual Property.

 

(a)          Section 4.06(a) of the Seller Disclosure Letter contains a complete
and accurate list of all patents, patent applications, registered copyrights and
applications for registration thereof, registered trademarks and service marks
and applications for registration thereof and Internet domain names that are
included in the Intellectual Property Assets. To the extent indicated on such
schedule, the Intellectual Property Assets listed on Section 4.06(a) of the
Seller Disclosure Letter have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, the United States Copyright Office, a
duly accredited and appropriate domain name registrar, or the appropriate
Governmental Authorities of other jurisdictions (foreign and domestic).

 

(b)          Except as set forth in Section 4.06(b) of the Seller Disclosure
Letter, Seller or one of its Subsidiaries owns, free and clear of all
Encumbrances (other than Permitted Encumbrances) or has the right to use all
Intellectual Property owned or used by Seller and/or its Subsidiaries in
connection with the Joe’s Business.

 

(c)          The Intellectual Property Assets represent (in all material
respects) all of the Intellectual Property necessary to manufacture, distribute
and sell Products consistent with the Products branded with or offered under any
of the Transferred Marks manufactured, distributed and sold as of Closing, and
conduct the Joe’s Business in substantially the same manner as currently
conducted.

 

 20 

  

(d)          Except as set forth in Section 4.06(d) of the Seller Disclosure
Letter, (i) the conduct of the Joe’s Business and the use of the Intellectual
Property Assets in the Joe’s Business (including the manufacturing, marketing,
licensing, sale or distribution of Products branded with or offered under any of
the Transferred Marks) do not infringe, violate, dilute or misappropriate the
Intellectual Property of any Person; and (ii) as of the date hereof, neither
Seller nor its Subsidiaries have received in the past three (3) years any notice
or claim (including threats or offers to license and cease and desist
communications) from any Person challenging the right of Seller or its
Subsidiaries, or any of their respective manufacturers, contractors or licensees
to use any of the Intellectual Property Assets, or alleging any infringement,
misappropriation, or violation of any Person’s Intellectual Property rights in
connection with the Joe’s Business; and (iii) neither Seller nor its Affiliates
have asserted in the past three (3) years any claim of a violation,
infringement, misappropriation or misuse by any Person of any Intellectual
Property Assets. To the Knowledge of Seller, except as set forth in Section
4.06(d) of the Seller Disclosure Letter, as of the date hereof, no Person is
infringing, violating, or misappropriating any Intellectual Property Assets.

 

(e)          Except as set forth in Section 4.06(e) of the Seller Disclosure
Letter, to the Knowledge of Seller as of the date hereof, there is no
jurisdiction among the Key Jurisdictions in which the tradename JOE'S JEANS is
not available for use and registration in connection with the Products currently
being sold in International Classes 14, 18, 25 or 35 by the Joe’s Business.

 

Section 4.07         Legal Proceedings; Governmental Orders.

 

(a)          Except as set forth in Section 4.07(a) of the Seller Disclosure
Letter, as of the date hereof there are no actions, suits, claims, litigations,
investigations, audits or other legal proceedings (including arbitration or
administrative proceedings, interferences, cancellation proceedings, oppositions
or other contested proceedings), at law or in equity, pending or, to the
Knowledge of Seller, threatened against or by Seller or any of its Subsidiaries
either (i) relating to the Joe’s Business, the Purchased Assets or the Assumed
Liabilities or (ii) that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement.

 

(b)          Except as set forth in Section 4.07(b) of the Seller Disclosure
Letter, there are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards against or affecting the Joe’s Business, the
Purchased Assets or the Assumed Liabilities.

 

Section 4.08         Compliance with Laws. Except as set forth in Section 4.08
of the Seller Disclosure Letter, Seller and each of its applicable Subsidiaries
are in compliance in all material respects with all Laws applicable to the
conduct of the Joe’s Business as currently conducted and the ownership and use
of the Purchased Assets.

 

Section 4.09         Taxes. Except as set forth in Section 4.09 of the Seller
Disclosure Letter,

 

(a)          Seller and its Subsidiaries have timely filed, or will timely file
(taking into account any valid extensions), all material Tax Returns with
respect to the Joe’s Business or the Purchased Assets required to be filed on or
prior to the Closing Date. Neither Seller nor any of its Subsidiaries is
currently the beneficiary of any extension of time within which to file any
material Tax Return other than extensions of time to file Tax Returns obtained
in the ordinary course of business.

 

 21 

  

(b)          All material Taxes due by or with respect to the income or
operations of the Joe’s Business or the ownership of the Purchased Assets for
all Pre-Closing Periods have been timely paid or will be timely paid in full.

 

(c)          (i) neither Seller nor any of its Subsidiaries has been, in the
past two (2) years, or is currently the subject of an audit or other examination
of Taxes by the tax authorities of any nation, state or locality with respect to
the Joe’s Business or the Purchased Assets and (ii) no such audit is
contemplated in writing or, to the Knowledge of Seller, pending.

 

(d)          Neither Seller nor its Subsidiaries, as of the Closing Date, (i)
has entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the payment
or collection of Taxes with respect to the income or operations of the Business
or the Purchased Assets that has not expired (other than extensions of time to
file Tax Returns obtained in the ordinary course) or (ii) is presently
contesting the Tax liability with respect to the income or operations of the
Business or the Purchased Assets before any Governmental Authority.

 

(e)          In the past two (2) years, no written claim has been made by any
Governmental Authority in a jurisdiction where Seller does not file Tax Returns
with respect to the income or operations of the Business or the ownership of the
Purchased Assets, which has not been resolved and remains outstanding, that
Seller is or may be subject to taxation by that jurisdiction with respect to the
income or operations of the Business or the ownership of the Purchased Assets.

 

(f)          There are no material Encumbrances on any of the Purchased Assets
that arose in connection with any failure (or alleged failure) to pay any Taxes,
other than Taxes not yet due and payable.

 

(g)          Seller and its Subsidiaries are in compliance in all material
respects with obligations to withhold or collect Taxes with respect to all
material Taxes that Seller or any of its Subsidiaries is (or was) required by
Law to withhold or collect with respect to the income or operations of the
Business or the Purchased Assets in connection with amounts paid or owing to any
employee, independent contractor, creditor, equity holder or other third party
have been duly withheld or collected, and such Taxes have been timely paid over
to the proper authorities to the extent due and payable.

 

(h)          None of the Purchased Assets is an equity interest in a partnership
or a corporation (or an entity treated as a partnership or a corporation) for
U.S. federal income tax purposes.

 

(i)          Seller is not a “foreign person” within the meaning of Section 1445
of the Code.

 

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The representations in this Section 4.09 shall constitute the sole and exclusive
representations in this Agreement concerning any Tax matters relating to Seller
or any of its Subsidiaries or the Purchased Assets.

 

Section 4.10         Customers and Suppliers. Section 4.10 of the Seller
Disclosure Letter sets forth an accurate and complete list of each supplier,
licensee and customer accounting for more than ten percent (10%) of the
consolidated purchases, royalties and sales, as the case may be, of Seller and
its applicable Subsidiaries in respect of the Joe’s Business, for the twelve
(12) month period ended May 31, 2015 (“Key Customers and Suppliers”). Except as
set forth in Section 4.10 of the Seller Disclosure Letter, since November 30,
2014 through the date hereof, no Key Customer or Supplier has cancelled or
otherwise terminated, or to the Knowledge of Seller, threatened to cancel or
otherwise terminate, its relationship with Seller or any of its Subsidiaries
with respect to the Joe’s Business. Since November 30, 2014, neither Seller nor
any of its Subsidiaries has received any written notice that any Key Customer or
Supplier may cancel or otherwise materially and adversely (i) modify its
relationship with Seller or any of its applicable Subsidiaries or (ii) limit its
(A) services, supplies, or materials to Seller or any of its applicable
Subsidiaries in respect of the Joe’s Business or (B) usage or purchase of the
services and products of Seller and its applicable Subsidiaries with respect to
the Joe’s Business.

 

Section 4.11         Brokers. Except as set forth on Section 4.11 of the Seller
Disclosure Letter, no broker, finder, firm or investment banker or any other
Person is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement or any other
Transaction Document based upon arrangements made by or on behalf of Seller.

 

Section 4.12         Solvency. Immediately prior to, and immediately subsequent
to, the consummation of the sale of the Purchased Assets pursuant to the
provisions of this Agreement, Seller will be solvent, with the ability to pay
its debts as they become due. For purposes of this Agreement, solvent shall mean
that the present fair saleable value of Seller’s assets is greater than the
amount that will be required to pay Seller’s liability on its existing debts as
they become absolute and matured.

 

Section 4.13         No Other Representations and Warranties. Except for the
representations and warranties contained in this Article IV (as qualified by the
Seller Disclosure Letter), neither Seller, nor any other Person on behalf of
Seller, has made or makes any other express or implied representation or
warranty, either written or oral, including any representation or warranty as to
the accuracy or completeness of any information regarding the Joe’s Business and
the Purchased Assets furnished or made available to Buyer and its
Representatives, or as to the future revenue, profitability or success of the
Joe’s Business, or any representation or warranty arising from statute or
otherwise in law. Any and all statements made or information communicated by
Seller, any of its Subsidiaries or any of their respective Representatives
outside of this Agreement (including by way of documents provided in response to
Buyer’s written diligence request(s) and any management presentation provided),
whether verbally, in writing or otherwise, are deemed to have been superseded by
this Agreement, it being intended that no such prior or contemporaneous
statements or communications outside of this Agreement shall survive the
execution and delivery of this Agreement.

 

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Article V
Representations and Warranties of Buyer

 

Except as set forth in the Buyer Disclosure Letter, Buyer represents and
warrants to Seller that the statements contained in this Article V are true and
correct.

 

Section 5.01         Organization of Buyer. Buyer is a limited liability company
duly organized, validly existing and in good standing under the Laws of the
state of Delaware and has all necessary limited liability company power and
authority to own, operate or lease the properties and assets now owned, operated
or leased by it and to carry on its business as currently conducted.

 

Section 5.02         Authority of Buyer. Buyer has all necessary limited
liability company power and authority to enter into this Agreement and the other
Transaction Documents to which Buyer is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Buyer of this Agreement and any other
Transaction Document to which Buyer is a party, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite limited liability company action on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer, and (assuming due authorization,
execution and delivery by Seller) this Agreement constitutes a legal, valid and
binding obligation of Buyer enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity). At the
Closing, each other Transaction Document shall have been duly executed and
delivered by Buyer and (assuming due authorization, execution and delivery by
Seller and/or its Subsidiaries, as applicable,) each such Transaction Document
shall constitute a legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

 

Section 5.03         No Conflicts; Consents. The execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not: (a) result in a violation or breach of
or conflict with any provision of the organizational documents of Buyer, in each
case, amended as of the date of this Agreement; (b) result in a violation or
breach of or conflict with any provision of any Law or Governmental Order
applicable to Buyer; or (c) except as set forth in Section 5.03 of the Buyer
Disclosure Letter, require the consent, notice or other action by any Person
under, conflict with, result in a violation or breach of, constitute a default
under or result in the acceleration of any agreement to which Buyer is a party,
except in the cases of clauses (b) and (c), where the violation, breach,
conflict, default, acceleration or failure to give notice would not reasonably
be expected to have a material adverse effect on Buyer’s ability to consummate
the transactions contemplated hereby. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Authority is
required by or with respect to Buyer in connection with the execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, except for
such consents, approvals, Permits, Governmental Orders, declarations, filings or
notices which would not have a material adverse effect on Buyer’s ability to
consummate the transactions contemplated hereby and thereby.

 

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Section 5.04         Brokers. No broker, finder, firm or investment banker or
any other Person is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement or
any other Transaction Document based upon arrangements made by or on behalf of
Buyer.

 

Section 5.05         Legal Proceedings. There are no actions, suits, claims,
investigations or other legal proceedings pending or, to the Knowledge of Buyer,
threatened against or by Buyer or any Affiliate of Buyer that challenge or seek
to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.

 

Section 5.06         Financing. Buyer or Parent has obtained a commitment letter
(the “Debt Commitment Letter”) from GSO Capital Partners LP (together with any
other lender that becomes a party thereto, the “Lender”), a true and complete
copy of which has been provided to Seller (together with each related fee letter
(subject to redaction so long as such redaction does not cover terms that would
adversely affect the conditionality, availability or term of the Financing)),
providing for, subject to the conditions and qualifications set forth therein,
all funds necessary, which, subject to fulfilment of the conditions set forth in
this Agreement, are available to Buyer, together with its cash on hand, to
consummate the transactions contemplated by this Agreement. As of the date of
this Agreement, the Debt Commitment Letter and the financing commitment
contained therein, (i) have not been amended, restated, withdrawn, rescinded or
otherwise modified or waived, and, no such amendment, restatement, withdrawal,
rescission or other modification or waiver of the Debt Commitment Letter is
contemplated and (ii) is in full force and effect, and constitute the legal,
valid and binding obligations of Buyer and, to the Knowledge of Buyer, the other
parties thereto, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar Laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). There are no conditions precedent related to the funding of the
financing described in the Debt Commitment Letter or contingencies that would
permit the Lender, Buyer or Parent to reduce the total amount of the Financing,
other than as set forth in the Debt Commitment Letter. Buyer has fully paid any
and all commitment fees or other fees or deposits required by the Debt
Commitment Letter to be paid on or before the date hereof. As of the date of
this Agreement, no event has occurred which, with or without notice, lapse of
time or both, that constitutes or would reasonably be expected to constitute a
default or breach on the part of Buyer and, to the Knowledge of Buyer, any other
parties thereto, under the Debt Commitment Letter. As of the date of this
Agreement, assuming the accuracy of Seller’s representations and warranties set
forth in this Agreement and performance by Seller of its obligations under this
Agreement, Buyer has no reason to believe that any of the conditions to the
Financing contemplated by the Debt Commitment Letter will not be satisfied or
that the Financing will not be available to Buyer on the Closing Date. As of the
date of this Agreement, there are no side letters or other agreements, Contracts
or written arrangements to which Buyer or any of its Affiliates is a party
related to the Financing other than as expressly set forth in the Debt
Commitment Letter and any customary fee letters (a redacted version of which has
been provided to Seller as described above) and non-disclosure agreements that
do not impact the conditionality or amount of the Financing.

 

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Section 5.07         No Other Representations and Warranties. Except for the
representations and warranties contained in this Article V, neither Buyer nor
any other Person has made or makes any other express or implied representation
or warranty, either written or oral, on behalf of Buyer. Buyer hereby disclaims
any other express or implied representations or warranties with respect to
itself or such other Person. Any and all statements made or information
communicated by Buyer, Parent or any of their respective Representatives outside
of this Agreement (including by way of documents provided in response to
Seller’s questions), whether verbally, in writing or otherwise, are deemed to
have been superseded by this Agreement, it being intended that no such prior or
contemporaneous statements or communications outside of this Agreement shall
survive the execution and delivery of this Agreement.

 

Article VI
Covenants

 

Section 6.01         Access to Information Concerning Purchased Assets and
Records.

 

(a)          Seller shall, and shall cause its Subsidiaries to, upon reasonable
prior notice and during regular business hours, afford Buyer and its
Representatives reasonable access to the Representatives, properties, books and
records of Seller and its Subsidiaries relating to the Joe’s Business, the
Purchased Assets and the Assumed Liabilities to the extent Buyer reasonably
believes necessary or advisable to familiarize itself with such properties and
other matters and, during such period, Seller shall furnish promptly to Buyer
all financial and operating data and other information concerning the Joe’s
Business as Buyer may reasonably request; provided, that such access shall not
unreasonably disrupt the operations of Seller or any of its Subsidiaries.
Notwithstanding the foregoing, neither Seller nor any of its Subsidiaries shall
be required to afford such access if it would cause a violation of any Contract,
would cause a loss of attorney/client privilege to Seller or any of its
Subsidiaries, would violate the privacy rights of or confidentiality obligations
to any Person or would constitute a violation under applicable Laws.

 

(b)          No review by Buyer or any knowledge acquired therefrom shall affect
the representations and warranties made by Seller pursuant to this Agreement or
the remedies of Buyer for breaches of those representations and warranties.

 

(c)          After the Closing Date, Buyer and Seller agree to furnish or cause
to be furnished to each other, upon request, as promptly as practicable, such
information and assistance (including access to books, records, work papers and
Tax Returns for Pre-Closing Periods) relating to the Purchased Assets or the
Joe’s Business for Pre-Closing Periods as is reasonably necessary for the
preparation of any Tax Return, claim for refund or audit, and the prosecution or
defense of any claim, suit or proceeding relating to any proposed Tax
adjustment.

 

 26 

  

(d)          Any request for information or documents pursuant to Section
6.01(c) shall be made by the requesting party in writing. The other party hereto
shall promptly (and in no event later than thirty (30) days after receipt of the
request) provide the requested information. The requesting party shall indemnify
the other party for any reasonable and documented out of pocket expenses
incurred by such party in connection with providing any information or
documentation pursuant to Section 6.01(c). Any information obtained under
Section 6.01(c) shall be kept confidential, except (i) as otherwise reasonably
may be necessary in connection with the filing of Tax Returns or claims for
refund or in conducting any Tax audit, dispute or contest, (ii) as required by
applicable Law and (iii) in connection with the enforcement or defense of this
Agreement.

 

Section 6.02         Confidentiality.

 

(a)          From and after the date of this Agreement until Closing, Buyer and
Seller agree they will be bound by and comply with the obligations of the
Confidentiality Agreement. After the Closing Date, the Confidentiality Agreement
shall, solely with respect to Confidential Material, be deemed to have been
terminated by the parties thereto and shall, solely with respect to Confidential
Material, no longer be binding.

 

(b)          Seller acknowledges that it is in possession of Confidential
Material. For three (3) years following the Closing (other than with respect to
Confidential Material relating to the Intellectual Property Assets and Assigned
Contracts, for which this provision shall apply in perpetuity), Seller shall,
and shall cause its Affiliates and Representatives to, treat confidentially and
not disclose any portion of such Confidential Material and will use such
Confidential Material solely for the purpose of consummating the transactions
contemplated by this Agreement and for no other purpose; provided, that Seller
and its Subsidiaries may also use the Confidential Material for the purpose of
operating their respective businesses in the ordinary course; provided, further,
that Seller and its Subsidiaries may also disclose Confidential Material, to the
extent necessary, in connection with (x) the negotiation of the Operating Asset
Purchase Agreement and the consummation of the transactions contemplated
thereby, (y) the performance of Seller’s obligations thereunder and (z) any
disputes that may arise in connection herewith or therewith. Seller acknowledges
and agrees that such Confidential Material is proprietary and confidential in
nature and may be disclosed to its Representatives only to the extent necessary
for Seller to consummate the transactions contemplated by this Agreement, for
purposes of operating their respective businesses in the ordinary course or in
connection with the enforcement or defense of this Agreement (it being
understood that Seller shall be responsible for any disclosure by any such
Representative not permitted by this Agreement). If Seller or any of its
Affiliates or Representatives are requested or required to disclose (after, to
the extent legally permitted, Seller has used its commercially reasonable best
efforts to avoid such disclosure and after, to the extent legally permitted,
promptly advising and consulting with Buyer about Seller’s intention to make,
and the proposed contents of, such disclosure) any of the Confidential Material
(whether by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process), Seller shall, or shall cause such
Affiliate or Representative, to provide, to the extent legally permitted, Buyer
with prompt written notice of such request so that Buyer may seek an appropriate
protective order or other appropriate remedy. At any time that such protective
order or remedy has not been obtained or Buyer waives Seller’s obligations
hereunder, Seller or such Affiliate or Representative may disclose only that
portion of the Confidential Material which such Person is legally required to
disclose or of which disclosure is required to avoid sanction for contempt or
any similar sanction, and Seller shall exercise its commercially reasonable best
efforts to obtain assurance that confidential treatment will be accorded to such
Confidential Material so disclosed. Seller further agrees that, from and after
the Closing Date, Seller and its Affiliates and Representatives, upon the
request of Buyer, promptly will deliver to Buyer all documents, or other
tangible embodiments, constituting Confidential Material or other information
with respect to the Joe’s Business, without retaining any copy thereof, and
shall promptly destroy all other information and documents constituting or
containing Confidential Material; provided, that Seller and its Affiliates and
Representatives shall be entitled to retain copies of Confidential Material for
legal and regulatory compliance purposes and in connection with any applicable
document retention policies, and shall not be required to identify or delete
Confidential Material held electronically in archive or back-up systems in
accordance with general systems archiving or backup policies.

 

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Section 6.03         Conduct of Seller and the Business Pending the Closing
Date.

 

(a)          Seller agrees that, during the period commencing on the date hereof
and ending on the Closing Date, except as set forth in Section 6.03(a) of the
Seller Disclosure Letter (but subject to Section 6.16(a) of the Seller
Disclosure Letter), it shall, and shall cause its applicable Subsidiaries to,
conduct the Joe’s Business only in the ordinary course of business consistent
with past practice and to use their commercially reasonable best efforts to
preserve intact the Joe’s Business and the Purchased Assets and maintain
satisfactory relationships with licensors, licensees, suppliers, distributors,
clients and others having business relationships with the Joe’s Business.

 

(b)          In furtherance and not in limitation of Section 6.03(a) (but
subject to Section 6.16(a) of the Seller Disclosure Letter), Seller agrees that
during the period commencing on the date hereof and ending on the Closing Date,
it shall not, and shall cause each of its applicable Subsidiaries not to, effect
any of the following (as each pertains to or is related to the Joe’s Business,
the Purchased Assets or the Assumed Liabilities) without the prior written
consent of Buyer (which consent shall not be unreasonably withheld, conditioned
or delayed):

 

(i)          amend, renew or terminate any Assigned Contract;

 

(ii)         sell, transfer, lease, abandon, cancel, license or otherwise
dispose of any Intellectual Property Asset;

 

(iii)        sell, transfer, lease, abandon, cancel, license or otherwise
dispose of any Purchased Assets (other than any Intellectual Property Asset)
other than in the ordinary course of business consistent with past practices;

 

(iv)        pay, discharge, settle or satisfy any Assumed Liabilities other than
in the ordinary course of business, consistent with past practice;

 

(v)         other than in the ordinary course of business, consistent with past
practice, enter into any transaction that would constitute an Assumed Liability;

 

 28 

  

(vi)        subject any of the Purchased Assets to any Encumbrance (other than
Permitted Encumbrances); or

 

(vii)       subject to the foregoing clause (ii), enter into any Contract
involving aggregate consideration in excess of Fifty Thousand Dollars ($50,000)
which, if entered into prior to the date hereof would be required to be set
forth in Section 4.05(a) of the Seller Disclosure Letter or commit or agree
(whether or not such Contract, commitment or agreement is legally binding) to
do, or authorize, any of the foregoing.

 

(c)          During the period from the date of this Agreement to the Closing
Date, Seller shall and shall cause its Subsidiaries to, upon request of Buyer,
confer with one (1) or more designated Representatives of Buyer to report
material operational matters and to report the general status of ongoing
operations, in each case, solely with respect to the Joe’s Business.

 

(d)          Seller shall keep, or cause its Subsidiaries to keep, all material
insurance policies currently maintained with respect to the Joe’s Business, or
suitable replacements or renewals, in full force and effect until the Closing.

 

Section 6.04         Commercially Reasonable Best Efforts; Consents.

 

(a)          Subject to the terms and conditions contained in this Section 6.04,
Seller and Buyer shall, and Seller shall cause each of its Subsidiaries to,
cooperate and use their respective commercially reasonable best efforts to take,
or cause to be taken, all appropriate action, and to make, or cause to be made,
all filings necessary, proper or advisable under applicable Laws and to
consummate and make effective the transactions contemplated by this Agreement,
including their respective commercially reasonable best efforts to obtain, prior
to the Closing Date, all Permits, consents, approvals, authorizations,
qualifications and Governmental Orders as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to
consummation of the transactions contemplated hereby set forth in Article VIII
hereof; provided, that no indebtedness for borrowed money shall be repaid,
except as otherwise required pursuant to the terms of the applicable loan
agreement, and no Assigned Contract shall be amended to increase the amount
payable thereunder or otherwise to be materially more burdensome to Seller or
any of its Subsidiaries (or Buyer after the Closing), to obtain any such
consent, approval or authorization, without first obtaining the written approval
of Buyer; provided, further, that neither Seller nor any of its Affiliates shall
be required to offer or grant any accommodation (financial or otherwise) to any
third party to obtain any such Permit, consent, approval, authorization,
qualifications or Governmental Order.

 

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Section 6.05         Intellectual Property Title Matters. To the extent that any
Intellectual Property Assets set forth on Section 4.06(a) of the Seller
Disclosure Letter are not in the current legal name of Seller or one of its
Subsidiaries (including any such asset or license agreement that is used by or
in connection with the Joe’s Business that is in the name of an Affiliate of
Seller (which is not also a Subsidiary of Seller), or any predecessor to Seller
or its Subsidiaries), is subject to a chain of title defect, or is subject to
any form of Encumbrance (other than Permitted Encumbrances), Seller shall, and
shall cause each of its applicable Subsidiaries to, prior to Closing, prepare,
execute and file for record such instruments and documents necessary to cure
such title defects, provide for current ownership of the asset by Seller or one
of its Subsidiaries and remove the Encumbrance (other than Permitted
Encumbrances) in such Intellectual Property Asset prior to Closing so as to
allow for the assignment thereof to Buyer as part of the transactions
contemplated herein (all such actions, the “IP Title Defect Correction
Actions”); provided, that if Seller or its applicable Subsidiaries are unable to
cure such title defect, provide for current ownership of the asset by Seller or
one of its Subsidiaries or remove the Encumbrance (other than Permitted
Encumbrances) in such Intellectual Property prior to the Closing and Buyer
waives the requirement of such IP Title Defect Correction Actions as a condition
precedent to the Closing, Seller and each of its applicable Subsidiaries shall
have a continuing obligation following the Closing to use commercially
reasonable best efforts to take IP Title Defect Correction Actions to promptly
resolve such issue. Seller and each of its Subsidiaries shall be responsible for
and pay its own expenses incurred in connection with any IP Title Defect
Correction Actions, and shall deliver all documentation that is filed concerning
the IP Title Defect Correction Actions to Buyer at such time the IP Title Defect
Correction Actions are taken.

 

Section 6.06         Use of Transferred Marks; Transaction Documents. From and
after the Closing, Seller shall not, and shall cause its Subsidiaries not to,
use any of the Intellectual Property Assets or any Trademarks confusingly
similar to the Transferred Marks (except for references in historical, tax, and
similar records, other permissible fair use and as otherwise required by Law);
provided, that Seller shall change its name (and amend its certificate of
incorporation to reflect such change) to a name that does not use any of the
Intellectual Property Assets or any Trademarks confusingly similar to the
Transferred Marks as promptly as practicable after the Closing, but in no event
later than fifteen (15) days after the Closing. Seller shall, and shall cause
its Subsidiaries to, comply with the terms of the Transaction Documents (except
as otherwise required by Law).

 

Section 6.07         Notification of Certain Matters. Seller shall promptly
notify Buyer of (a) any material actions, suits, claims or proceedings in
connection with the transactions contemplated by this Agreement commenced or, to
the Knowledge of Seller, threatened, against Seller or any of its Subsidiaries
relating to the Joe’s Business, the Purchased Assets or the Assumed Liabilities,
or Buyer, as the case may be, (b) the occurrence or non-occurrence of any fact
or event which would be reasonably likely to cause any condition set forth in
Article VII hereof not to be satisfied, (c) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default under any Contract disclosed (or required to be
disclosed) on Section 4.05 of the Seller Disclosure Letter, (d) the occurrence
or existence of any fact, circumstance or event of which Seller obtain Knowledge
which would reasonably be likely to result in any representation or warranty
made by Seller in this Agreement to be materially untrue or inaccurate, (e) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated by
this Agreement, or (f) the occurrence of any event, circumstance, development,
state of facts, occurrence, change or effect which has had a Material Adverse
Effect or the occurrence or non-occurrence of any event, circumstance,
development, state of facts, occurrence, change or effect which would reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect; provided, that no such notification, nor the obligation to make such
notification, shall affect the representations, warranties or covenants, or the
conditions to the obligations of, Seller.

 

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Section 6.08         Public Announcements. Seller and Buyer each shall (a)
consult with each other before issuing any press release or otherwise making any
public statement with respect to the transactions contemplated by this
Agreement, (b) provide to the other party for review a copy of any such press
release or public statement and (c) not issue any such press release or make any
such public statement prior to such consultation and review and the receipt of
the prior consent of the other party to this Agreement, unless required by
applicable Law or regulations of any applicable stock exchange.

 

Section 6.09         Bulk Sales Laws. The parties hereby waive compliance with
the provisions of any bulk sales, bulk transfer or similar Laws of any
jurisdiction that may otherwise be applicable with respect to the sale of any or
all of the Purchased Assets to Buyer. If requested by Seller, Buyer agrees to
provide applicable resale certificate(s) to Seller. In the event any claim is
made by any creditor of Seller against Buyer or related to the transactions
contemplated hereby which could have been asserted under any bulk sales, bulk
transfer or similar Laws of any jurisdiction, Buyer shall notify Seller of such
claim and Seller shall have thirty (30) days in which to satisfy or discharge
such claim, or to take appropriate defensive action to dispute such claim in
accordance with Article VII hereof. Seller shall indemnify Buyer for all Losses
(including any Tax liabilities) resulting from non-compliance with any such
Laws.

 

Section 6.10         Transfer Taxes. All transfer, documentary, sales and use,
value added, stamp, registration and similar Taxes and fees (including any
penalties and interest) (collectively, “Transfer Taxes”) incurred in connection
with this Agreement and the other Transaction Documents shall be split equally
between Buyer and Seller. The parties shall cooperate in good faith in preparing
and filing all Tax Returns or other applicable documents in connection with
Transfer Taxes and to apply for and establish exemptions from or otherwise
reduce Transfer Taxes.

 

Section 6.11         Tax Matters. All Taxes and Tax liabilities with respect to
the income or operations of the Joe’s Business or the ownership of the Purchased
Assets that relate to the Overlap Period shall be apportioned between Seller and
Buyer as follows: (i) in the case of Taxes, other than income, sales and use,
withholding, gross receipt and other similar Taxes, on a per diem basis; and
(ii) in the case of income, sales and use, withholding, gross receipt and other
similar Taxes, as determined as if there was a closing of the books and records
at the end of the date immediately preceding the Closing Date. Seller shall be
liable for any Taxes with respect to the income or operations of the Joe’s
Business or the ownership of the Purchased Assets that are, in each case,
attributable to all Pre-Closing Periods. Buyer shall be liable for any Taxes
with respect to the income or operations of the Joe’s Business or the ownership
of the Purchased Assets that are attributable to all Post-Closing Periods.

 

Section 6.12         Communication with Customers, Licensees and Suppliers.
Prior to the Closing, upon reasonable advance notice, Seller and its
Subsidiaries will permit Buyer and its Representatives to discuss, and will, if
requested by Buyer, assist Buyer and its Representatives (including by making
introductions) in any discussions of, the affairs, finances and accounts of the
Joe’s Business with customers, licensees, distributors and suppliers of or to
the Joe’s Business. Notwithstanding the foregoing, Buyer acknowledges and agrees
that, prior to the Closing, other than in the ordinary course of business
consistent with past practices of Buyer or its Subsidiaries, Buyer shall not,
and shall cause each of its Representatives not to, contact or otherwise
communicate with any current or known potential customer, licensee, distributor
or supplier of Seller or any of its Subsidiaries regarding the Joe’s Business,
the Purchased Assets or the Assumed Liabilities, without the prior written
consent of Seller (which shall not be unreasonably withheld, conditioned or
delayed).

 

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Section 6.13         Financing.

 

(a)          Prior to the Closing, Buyer shall use its commercially reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things, in each case, within its control, necessary, proper or
advisable to arrange financing on the terms and conditions described in the Debt
Commitment Letter. Buyer shall not permit any amendment or modification to be
made to, or any waiver of any provision or remedy under, the Debt Commitment
Letter without Seller’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed) if such amendment, modification
or waiver (i) reduces the aggregate amount of the Financing, when taken together
with Buyer’s cash on hand, to an amount below the amount required to satisfy
Buyer’s obligations under this Agreement, (ii) impairs in any material respect
the availability of the Financing, or (iii) amends the conditions precedent to
the Financing in a manner that would reasonably be expected to delay in any
material respect or prevent the Closing (provided that Buyer may, after
consultation with Seller, replace or amend the Debt Commitment Letter to add
lenders, lead arrangers, bookrunners, syndication agents or similar entities who
had not executed the Debt Commitment Letter as of the date hereof so long as
such action would not reasonably be expected to materially delay or prevent the
Closing), including using its commercially reasonable best efforts to
(a) maintain in effect the Debt Commitment Letter, (b) satisfy on a timely
basis, to the extent within its control, all terms and conditions applicable to
Buyer to obtaining the debt financing set forth therein, (c) negotiate and enter
into definitive agreements with respect to the Debt Commitment Letter on the
terms and conditions contained in the Debt Commitment Letter, and (d) comply
with its obligations under the Debt Commitment Letter.

 

(b)          In the event of any Financing Failure Event (other than a Financing
Failure Event caused by the breach by Seller of this Agreement), to the extent
any portion of the Financing is required to fund the Purchase Price and any
other amounts required to be provided by Buyer for the consummation of the
transactions contemplated hereby, Buyer shall use its commercially reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things reasonably necessary for and obtain as promptly as
practicable following the occurrence of any such Financing Failure Event
alternative debt financing (the “Alternative Financing”), on substantially
equivalent or more favorable terms in the aggregate from the same or other
sources and which do not include any incremental conditionality to the
consummation of such alternative debt financing that are materially more onerous
to Buyer (in the aggregate) than the conditions set forth in the Debt Commitment
Letter in effect as of the date of this Agreement in an amount sufficient,
which, subject to fulfilment of the conditions set forth in this Agreement, are
available to Buyer, together with its cash on hand, to consummate the
transactions contemplated hereby and to pay related fees and expenses earned,
due and payable as of the Closing Date, it being understood and agreed that if
Buyer proceeds with any Alternative Financing, Buyer shall be subject to the
same obligations with respect to such Alternative Financing as set forth in this
Agreement with respect to the Financing. In the event that Alternative Financing
is obtained, Buyer shall promptly provide Seller with a true and correct copy of
the new financing commitment letter that provides for such Alternative Financing
(the “Alternative Financing Commitment Letter”), together with each fee letter
(subject to redaction so long as such redaction does not cover terms that would
adversely affect the conditionality, availability or term of the Financing). If
applicable, any reference in this Agreement to “Financing” shall include
“Alternative Financing”, and any reference to “Debt Commitment Letter” shall
include the “Alternative Financing Commitment Letter”.

 

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(c)          Notwithstanding the foregoing, in no event shall the commercially
reasonable best efforts of Buyer be deemed or construed to require Buyer to, and
Buyer shall not be required to (i) pay in the aggregate any fees in excess of
$25,000 more than the fees contemplated by the Debt Commitment Letter or any
related fee letter, (ii) agree to conditionality terms in connection with the
Financing that are materially less favorable than those contemplated by the Debt
Commitment Letter, (iii) agree to economic terms of the Financing (including
cost of capital, maturity and fees) that are less favorable than those
contemplated by the Debt Commitment Letter or any related fee letter (including
any “flex” provisions therein), (iv) waive any terms or conditions of this
Agreement or of the Debt Commitment Letter or (v) require Buyer to initiate,
prosecute or maintain any action, suit, claim, arbitration or other legal
proceeding against the Lender, other potential lenders or other Persons
providing the Financing under the Debt Commitment Letter.

 

(d)          During the period from the date of this Agreement to the Closing
Date, Seller shall use its commercially reasonable best efforts, and to cause
its Representatives to, provide Buyer all cooperation that is reasonably
requested by Buyer in connection with the Financing, the proceeds of which shall
be used to consummate the transactions contemplated hereby, which cooperation
shall include, in any event:

 

(i)          participation in a reasonable number of meetings, presentations,
road shows, due diligence sessions (including accounting due diligence
sessions), drafting sessions, sessions with prospective lenders and sessions
with rating agencies;

 

(ii)         making Seller’s officers reasonably available to assist the Lender;

 

(iii)        cooperating reasonably with the Lender’s due diligence, to the
extent customary and reasonable, including delivery of corporate organizational
documents, and lien searches contemplated by the Debt Commitment Letter;

 

(iv)        assisting Buyer and the Lender with the preparation of customary
materials for rating agency presentations (and assisting in the obtaining of
corporate, credit and facility ratings from ratings agencies), offering
documents, bank information memoranda (including the delivery of customary
authorization and representation letters authorizing the distribution of
information to prospective lenders or investors and containing a representation
that the public side versions of such documents, if any, do not include material
non-public information regarding Purchased Assets and the Joe’s Business), and
all other material required in connection with the Financing and all
documentation and other information reasonably required in connection with
applicable “know your customer” and anti-money laundering rules and regulations,
including the PATRIOT Act; provided that, at least 5 Business Days prior to the
Closing, Seller shall provide all such documentation and information about the
Purchased Assets and the Joe’s Business as is reasonably requested in writing by
Buyer at least 7 Business Days prior to the Closing to the extent required under
applicable “know your customer” and anti-money laundering rules and regulations
including the PATRIOT Act;

 

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(v)         assisting with the preparation of, and executing and delivering, any
pledge and security documents, any loan agreement, notes, other definitive
financing documents, legal opinions, or any other documents that facilitate the
preparation of the definitive documentation for the Financing or the creation,
perfection of liens securing the Financing as may be reasonably requested by
Buyer in connection therewith;

 

(vi)        facilitating the pledging of collateral and providing reasonable
access in connection with any collateral audits and appraisals required in
connection with the Financing;

 

(vii)       assisting Buyer in preparing customary financial information and
disclosures regarding the Purchased Assets or the Joe’s Business, as may be
reasonably requested by Buyer and identifying any portion of such information
that constitutes material non-public information;

 

(viii)      instructing its independent accountants to cooperate with and assist
Buyer in preparing customary and appropriate information packages and offering
materials as the Lender or other prospective lenders may reasonably request for
use in connection with the Financing and using commercially reasonable best
efforts to cause such accountants to consent to the use of their reports in any
material relating to the Financing (including, but not limited to, the audited
financial statements referred to in the definition of “Required Information” set
forth herein);

 

(ix)         using commercially reasonable best efforts to obtain customary
payoff letters, lien releases, instruments of termination, waivers, consents,
estoppels, approvals or discharge, in each case reasonably requested by Buyer in
connection with the Financing and collateral arrangements; and

 

(x)          taking such corporate or entity actions, subject to the occurrence
of the Closing, reasonably requested by Buyer to permit the consummation of the
Financing and to permit the proceeds thereof to be made available at the
Closing;

 

provided, that (A) no such requested cooperation may unreasonably interfere with
the ongoing operations of Seller, (B) no obligation of Seller under any
certificate, agreement, notice or other document or instrument shall be
effective until the Closing, and Seller shall not be required to pay or incur
any liability for any commitment or other similar fee, pay or incur any
liability for any expense (other than as provided in this Agreement) or incur
any other obligation or liability in connection with the Financing prior to the
Closing unless promptly reimbursed by Buyer (provided that notice of such fee,
liability or expense is provided to Buyer) and (C) neither Seller nor its
directors or officers shall be required to take any action to authorize or
approve the Financing (or any Alternative Financing).

 

 34 

  

(e)          Seller shall use reasonable best efforts to, as promptly as
practicable, update or correct any Required Information determined to contain
any untrue statement of material fact or omit to state any material fact
necessary to make the statements contained therein not materially misleading.
Seller hereby consents to the reasonable use of its and its Subsidiaries’ logos
in connection with the Financing, provided that such logos are used solely in a
manner that is not intended to or reasonably likely to harm or disparage Seller
or its Subsidiaries or the reputation or goodwill of Seller or its Subsidiaries
or any of their logos.

 

(f)          Seller shall prepare and furnish to Buyer and Parent, as promptly
as reasonably practicable (and, in any event, no later than the time periods (if
applicable) specified in the definition of “Required Information”), the Required
Information.

 

Section 6.14         Further Assurances  Following the Closing, without further
consideration, each of the parties hereto shall, and shall cause their
respective Subsidiaries to, execute and deliver such additional documents,
instruments, conveyances and assurances and take such further actions as may be
reasonably required to carry out the provisions hereof and give effect to the
transactions contemplated by this Agreement and the other Transaction Documents,
including (a) such further actions, at Buyer’s expense, as may be reasonably
required to register in the name of Buyer the assignment of the Intellectual
Property Assets in any appropriate governmental agency or registrar, (b) such
further actions, at Buyer’s expense, as may be reasonably required to substitute
Buyer as a party in the actions, suits, claims, investigations, audits and other
legal proceedings identified on Section 4.07(a) of the Seller Disclosure Letter
and (c) the use of reasonable best efforts to provide information reasonably
requested by Buyer pertaining to the Intellectual Property Assets in order for
Buyer to prosecute, maintain and enforce the Intellectual Property Assets.

 

Section 6.15         Guarantee.

 

(a)          Parent irrevocably guarantees each payment obligation of Buyer to
Seller (and the full and timely performance thereof) under Section 6.16, Article
II, Article VI and Article VII of this Agreement, if, as and when those
obligations become payable under this Agreement (the “Guaranteed Obligations”).
This is a guaranty of payment, and not of collection and a separate action or
actions may be brought and prosecuted against Parent to enforce this guaranty,
irrespective of whether any action is brought against Buyer or whether Buyer or
any other Person is joined in any such action or actions or whether Parent or
Buyer was primarily responsible for causing the payment obligations of Parent or
Buyer under this Agreement. Notwithstanding anything to the contrary herein,
Parent reserves the right to assert any and all defenses which Buyer may have to
payment of the Guaranteed Obligations.

 

 35 

  

(b)          Parent acknowledges and agrees that this guarantee is full and
unconditional, and no release or extinguishments of Buyer’s payment obligations
hereunder (other than in accordance with the terms of this Agreement), whether
by decree in any bankruptcy proceeding or otherwise, will affect the continuing
validity and enforceability of this guarantee. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein. Parent hereby waives, for the benefit of Seller, (i) any right to
require Seller as a condition of payment by Parent to proceed against Buyer or
pursue any other remedies against any other Person and (ii) to the fullest
extent permitted by Law, any defenses or benefits that may be derived from or
afforded by Law that limit the liability of or exonerate guarantors or sureties,
except to the extent that any such defense is available to Buyer.

 

(c)          The liability of Parent under this guaranty shall, to the fullest
extent permitted under applicable law, be absolute and unconditional
irrespective of:

 

(i)          the value, genuineness, validity, regularity, illegality or
enforceability of this Agreement or any other agreement or instrument referred
to herein other than by reason of fraud by Seller;

 

(ii)         any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Parent, Buyer or any other person or their assets;

 

(iii)        any amendment or modification of this Agreement, or any change in
the manner, place or terms of payment or performance, or any change or extension
of the time of payment or performance of, renewal or alteration of, any
Guaranteed Obligation, any escrow arrangement or other security therefor, any
liability incurred directly or indirectly in respect thereof, or any amendment
or waiver of or any consent to any departure from the terms of this Agreement or
the documents entered into in connection therewith;

 

(iv)        any other circumstances that might otherwise constitute a legal or
equitable discharge of a surety or guarantor;

 

(v)         the existence of any claim, set-off or other right that Parent may
have at any time against Buyer or Seller, whether in connection with any
Guaranteed Obligation or otherwise;

 

(vi)        the addition, substitution, or release of any person now or
hereafter liable with respect to the Guaranteed Obligations or otherwise
interested in the transactions contemplated hereby; or

 

(vii)       the adequacy of any other means Seller may have of obtaining
repayment of any of the Guaranteed Obligations.

 

(d)          Parent acknowledges that it will receive substantial direct and
indirect benefits from the transactions contemplated by this Agreement and that
the waivers set forth in this Section 6.15 are knowingly made in contemplation
of such benefits.

 

(e)          Parent understands that Seller is relying on this guarantee in
entering into this Agreement.

 

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Section 6.16         Miscellaneous. The parties agree to comply with Section
6.16 of the Seller Disclosure Letter.

 

Article VII
Indemnification

 

Section 7.01         Survival. Subject to the limitations and other provisions
of this Agreement, the representations and warranties contained herein shall
survive the Closing and shall remain in full force and effect until the date
that is eighteen (18) months from the Closing Date except that (a) the
Fundamental Representations shall survive indefinitely, (b) the representations
and warranties contained in Section 4.09 shall survive until thirty (30) days
following the expiration of the applicable statute of limitations (giving effect
to any extensions and waivers thereof), and (c) the representations and
warranties contained in Sections 4.06(c), 4.06(d) and 4.06(e) shall survive
until the date that is two (2) years from the Closing Date. Each covenant and
other agreement contained in this Agreement which by their terms contemplate
actions or impose obligations following the Closing shall survive the Closing
until the full performance of such covenant or agreement in accordance with its
terms; provided, that, for the avoidance of doubt, each covenant and other
agreement contained in this Agreement which by their terms contemplate actions
or impose obligations prior to or at the Closing shall terminate on the date
that is the six (6) month anniversary of the Closing Date. Notwithstanding the
foregoing, any claims asserted in accordance herewith in good faith with
reasonable specificity (to the extent known at such time) and in writing by
notice from the non-breaching party to the breaching party prior to the
expiration date of the applicable survival period shall not thereafter be barred
by the expiration of such survival period and such claims shall survive until
finally resolved, whether or not the amount of the Losses resulting from such
breach has been finally determined at the time the notice is given.

 

Section 7.02         Indemnification by Seller. On the other terms and subject
to the other conditions of this Article VII, from and after the Closing, Seller
agrees to indemnify Buyer, its Affiliates and its and their respective
Representatives (the “Buyer Indemnitees”) against, and shall hold each of them
harmless from and against, any and all Losses suffered, incurred, paid,
sustained by, or imposed upon, any Buyer Indemnitee arising out of or resulting
from:

 

(a)          any failure of any representation or warranty made by Seller in
Article IV of this Agreement to be true and correct in all respects (without
giving effect to any “material”, “materially”, “materiality”, “Material Adverse
Effect”, “material adverse effect”, “material adverse change” or similar
qualification contained in any such representation or warranty) on and as of the
Closing Date as if made at and as of such time (other than those made on a
specified date, which shall be true and correct in all respects as of such
specified date);

 

(b)          any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Seller or any of its Subsidiaries pursuant to this
Agreement or any Transaction Document (including, without limitation, any
covenants, agreements or obligations contained in Section 6.16 of the Seller
Disclosure Letter);

 

(c)          any Excluded Asset or any Excluded Liability; or

 

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(d)          any failure by Seller or any of its Subsidiaries, or claim by a
creditor of Seller or any of its Subsidiaries that any of them has failed, in
each case, to comply with the provisions of any bulk sales, bulk transfer or
similar Laws of any jurisdiction.

 

Section 7.03         Indemnification by Buyer. On the other terms and subject to
the other conditions of this Article VII, Buyer shall indemnify Seller, its
Affiliates and its and their respective Representatives (the “Seller
Indemnitees”), and shall hold each of them harmless from and against, any and
all Losses suffered, incurred, paid, sustained by, or imposed upon, any Seller
Indemnitee arising out of or resulting from:

 

(a)          any failure of any representation or warranty made by Buyer in
Article V of this Agreement to be true and correct in all respects on and as of
the Closing Date as if made at and as of such time (other than those made on a
specified date, which shall be true and correct in all respects as of such
specified date);

 

(b)          any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Buyer pursuant to this Agreement or any
Transaction Document (including, without limitation, any covenants, agreements
or obligations contained in Section 6.16 of the Seller Disclosure Letter); or

 

(c)          any Assumed Liability.

 

Section 7.04         Certain Limitations. The party making a claim under this
Article VII is referred to as the “Indemnified Party”, and the party against
whom such claims are asserted under this Article VII is referred to as the
“Indemnifying Party”. The indemnification provided for in Section 7.02 and
Section 7.03 shall be subject to the following limitations:

 

(a)          The Indemnifying Party shall not be liable to the Indemnified Party
for indemnification under Section 7.02(a) or Section 7.03(a), as the case may
be, until the aggregate amount of all Losses in respect of indemnification under
Section 7.02(a) or Section 7.03(a) exceeds Five-Hundred Thousand Dollars
($500,000.00) (the “Deductible”), in which event the Indemnifying Party shall
only be required to pay or be liable for Losses in excess of the Deductible. The
parties agree that any claim for any individual Loss or group of related Losses
indemnifiable pursuant to Section 7.02(a) or Section 7.03(a), as applicable, in
an amount less than Twenty-Five Thousand Dollars ($25,000.00) shall not count
towards the applicable Deductible. Notwithstanding anything herein to the
contrary, the limitations set forth in this Section 7.04(a) shall not apply to
Losses described in Section 7.02(b)-(d) or Section 7.03(b)-(c), or to Losses
incurred by (i) any Buyer Indemnitee in connection with or arising from any
breach of any Fundamental Representation of Seller or any representation or
warranty of Seller in Section 4.09, and (ii) any Seller Indemnitee in connection
with or arising from any breach of any Fundamental Representation of Buyer.

 

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(b)          The aggregate amount of all Losses for which an Indemnifying Party
shall be liable pursuant to (x) Section 7.02(a) and Section 7.02(b) or (y)
Section 7.03(a) and Section 7.03(b), as the case may be, shall not exceed Seven
Million Five-Hundred Thousand Dollars ($7,500,000.00); provided, that the
limitation set forth in the first clause of this Section 7.04(b) shall not apply
to (i) Losses described in Section 7.02(b) or Section 7.03(b) as a result of any
willful or intentional breach or non-fulfillment, (ii) Losses resulting from any
breach or non-fulfillment of any covenant, agreement or obligation contained in
Section 6.16 of the Seller Disclosure Letter, or (iii) Losses incurred by (A)
any Buyer Indemnitee in connection with or arising from any breach of any
Fundamental Representation of Seller or any representation or warranty of Seller
in Section 4.09, or (B) any Seller Indemnitee in connection with or arising from
any breach of any Fundamental Representation of Buyer; provided, further, that
the maximum aggregate amount of all Losses for which an Indemnifying Party shall
be liable pursuant to Section 7.02 or Section 7.03, as the case may be, shall
not exceed the Purchase Price.

 

(c)          Payments by an Indemnifying Party pursuant to Section 7.02 or
Section 7.03 in respect of any Loss shall be limited to the amount of any
liability or damage that remains after deducting therefrom any insurance
proceeds (net of any costs of investigation of the underlying claim and
collection), any Tax benefit realized, contribution or other similar payment
actually received by the Indemnified Party in respect of such Loss. If the
Indemnified Party receives or realizes such insurance proceeds, Tax benefit,
indemnity, contribution or similar payments after being indemnified and held
harmless by an Indemnifying Party with respect to a Loss, the Indemnified Party
shall promptly return such indemnification up to the amount of such insurance
proceeds, Tax benefit, indemnity, contribution or similar payments.

 

(d)          No Indemnifying Party shall be liable to any Indemnified Party for
any punitive, incidental, consequential, special or indirect damages or damages
based on any type of multiple (collectively, “Special Damages”); provided, that
Special Damages shall be indemnifiable pursuant to Section 7.02 or Section 7.03,
as applicable, to the extent Special Damages are (i) actually paid to a third
party pursuant to any settlement entered into by the Indemnified Party in
accordance with Section 7.05, provided that the Indemnifying Party has consented
in writing to any such settlement, or (ii) ordered, by a court of competent
jurisdiction, to be paid by the Indemnified Party to a third party.

 

(e)          Each Indemnified Party shall take, and cause its Subsidiaries to
take, commercially reasonable steps to mitigate any Loss as soon as reasonably
practicable upon becoming aware of any event or circumstance that would be
reasonably expected to, or does, give rise thereto, such Loss.

 

 39 

  

Section 7.05         Indemnification Procedures

 

(a)          Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any action, suit, claim or other legal proceeding
made or brought by any Person who is not a party to this Agreement (a “Third
Party Claim”) against such Indemnified Party with respect to which the
Indemnifying Party is obligated to provide indemnification under this Agreement,
the Indemnified Party shall deliver as promptly as practicable a written notice
(a “Claim Certificate”), which Claim Certificate shall describe the Third Party
Claim (or Direct Claim, if delivered pursuant to Section 7.05(c)) in reasonable
detail, shall include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the Loss that has
been or may be sustained by the Indemnified Party. The failure to provide such
Claim Certificate shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure or is materially
prejudiced thereby. The Indemnifying Party shall have the right to participate
in or, by giving written notice to the Indemnified Party within thirty (30)
Business Days after its receipt of a Claim Certificate, to assume the defense
of, the Third Party Claim described in such Claim Certificate at the
Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and
the Indemnified Party shall cooperate in good faith in such defense; provided,
that in the event that the Indemnifying Party assumes the defense of any Third
Party Claim, then (x) subject to Section 7.05(b), it shall have the right to
take such action as it deems necessary to avoid, dispute, defend, appeal or make
counterclaims pertaining to any such Third Party Claim in the name and on behalf
of the Indemnified Party and (y) the Indemnified Party shall have the right, at
its own cost and expense, to participate in the defense of any Third Party Claim
with counsel selected by it. Notwithstanding anything to the contrary contained
in this Agreement, the Indemnifying Party shall not be entitled to assume
control of the defense of a Third Party Claim and shall pay, subject to the
limitations of liability set forth in Section 7.04, the fees and expenses of
counsel retained by the Indemnified Party if: (i) such Third Party Claim is
reasonably likely to give rise to Losses which are more than 100% of the amount
indemnifiable by such Indemnifying Party pursuant to this Article VII; (ii) such
Third Party Claim for indemnification relates to or arises in connection with
any criminal proceeding, action, indictment, allegation or investigation; (iii)
such Third Party Claim seeks a material injunction or equitable relief against
the Indemnified Party, (iv) the named parties to such Third Party Claim
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and such Indemnified Party has been advised in writing by
such counsel that there is one (1) or more legal defenses available to the
Indemnified Party which are not available to the Indemnifying Party, or are
available to the Indemnifying Party but the assertion of which would be adverse
to the interests of the Indemnified Party or (v) upon petition by the
Indemnified Party, the appropriate court rules that the Indemnifying Party
failed or is failing to prosecute or defend such Third Party Claim.
Notwithstanding any other provision of this Agreement, with respect to any
audit, assessment, inquiry, claim, adjustment or proposed adjustment with
respect to Taxes (a “Tax Contest”), (A) Seller shall have the right to control
such Tax Contest if, but only if, such Tax Contest relates to Taxes (1)
attributable to the Purchased Assets or the Joe’s Business with respect to any
Pre-Closing Period or (2) imposed on Seller, and (B) if such Tax Contest could
reasonably be expected to increase the Taxes for any Post-Closing Period for
which Buyer is responsible, Seller shall not consent to have any settlement or
compromise of any such Tax Contest without the written consent of Buyer, which
consent shall not be unreasonably withheld, delayed or conditioned. If the
Indemnifying Party elects not to compromise or defend such Third Party Claim,
the Indemnified Party may, subject to Section 7.05(b), pay, compromise, defend
such Third Party Claim and seek indemnification for any and all Losses based
upon, arising from or relating to such Third Party Claim. Seller and Buyer shall
cooperate with each other in all commercially reasonable respects in connection
with the defense of any Third Party Claim, including making available records
relating to such Third Party Claim.

 

 40 

  

(b)          Settlement of Third Party Claims.

 

(i)          Any Indemnified Party shall have the right to employ separate
counsel and to participate in the defense of any Third Party Claim (including
any Tax Contest), but the fees and expenses of such counsel shall not be at the
expense of the Indemnifying Party unless (A) the Indemnifying Party shall have
failed, or is not entitled, to assume the defense of such Third Party Claim in
accordance with Section 7.05(a), (B) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Party or (C) the named
parties to any such action (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such Indemnified Party shall
have been advised in writing by such counsel that there is one (1) or more legal
defenses available to the Indemnified Party which are not available to the
Indemnifying Party, or are available to the Indemnifying Party but the assertion
of which would be adverse to the interests of the Indemnified Party. So long as
the Indemnifying Party is reasonably contesting any such Third Party Claim in
good faith, the Indemnified Party shall not pay or settle any such Third Party
Claim. Notwithstanding the foregoing, the Indemnified Party shall have the right
to pay or settle any such Third Party Claim; provided that in such event it
shall waive any right to indemnity therefor by the Indemnifying Party for such
Third Party Claim unless the Indemnifying Party shall have consented to such
payment or settlement.

 

(ii)         If the Indemnifying Party does not notify the Indemnified Party
within thirty (30) Business Days after the receipt of a Claim Certificate with
respect to a Third Party Claim hereunder that it elects to undertake the defense
thereof, or if the Indemnified Party assumes the defense of such Third Party
Claim pursuant to Section 7.05(a), the Indemnified Party shall have the right to
contest, settle or compromise the Third Party Claim but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement; provided, that the
Indemnified Party shall not agree to any settlement without the written consent
of the Indemnifying Party (which consent shall not be unreasonably withheld,
conditioned or delayed).

 

(iii)        Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, enter into any settlement of a Third Party Claim that is not
entirely indemnifiable by the Indemnifying Party pursuant to this Article VII
and does not include as an unconditional term thereof the giving by the Person
or Persons asserting such Third Party Claim to all Indemnified Parties of an
unconditional release from all liability with respect to such Third Party Claim
or consent to entry of any judgment.

 

 41 

  

(c)          Direct Claims. Any claim by an Indemnified Party on account of a
Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof in a Claim Certificate. The failure to provide
such Claim Certificate shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure or is materially
prejudiced thereby. In the event that the Indemnifying Party objects to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Claim Certificate, the Indemnifying Party shall, within thirty
(30) days after receipt by the Indemnifying Party of such Claim Certificate,
deliver to the Indemnified Party a notice to such effect, specifying in
reasonable detail the basis for such objection, and the Indemnifying Party and
the Indemnified Party shall, within the sixty (60) day period beginning on the
date of receipt by the Indemnified Party of such objection, attempt in good
faith to agree upon the rights of the respective parties with respect to each of
such claims to which the Indemnifying Party shall have so objected. During such
sixty (60) day period, the Indemnified Party shall allow the Indemnifying Party
and its Representatives to investigate the matter or circumstance alleged to
give rise to the Direct Claim, and whether and to what extent any amount is
payable in respect of the Direct Claim and the Indemnified Party shall assist
the Indemnifying Party’s investigation by giving such reasonable information and
assistance (including a copy of any accounts, documents or records) as the
Indemnifying Party or any of its Representatives may reasonably request. If the
Indemnified Party and the Indemnifying Party shall succeed in reaching agreement
on their respective rights with respect to any of such claims, the Indemnified
Party and the Indemnifying Party shall promptly prepare and sign a memorandum
setting forth such agreement. Should the Indemnified Party and the Indemnifying
Party be unable to agree as to any particular item or items or amount or amounts
within such time period, then the Indemnified Party shall be permitted to submit
such dispute to the courts set forth in Section 10.08. Claims for Losses (i)
specified in any Claim Certificate to which an Indemnifying Party claims for
Losses covered by a memorandum of agreement of the nature described above and
(ii) the validity and amount of which have been the subject of judicial
determination as described above and in Section 10.08 or shall have been settled
with the consent of the Indemnified Party, as described in Section 7.05(b) are
hereinafter referred to, collectively, as “Agreed Claims”. Within ten (10)
Business Days of the final determination of the amount of any Agreed Claim, the
Indemnifying Party shall pay to the Indemnified Party an amount equal to the
Agreed Claim by wire transfer in immediately available funds to the bank account
or accounts designated by the Indemnified Party in a notice to the Indemnifying
Party not less than two (2) Business Days prior to such payment.

 

(d)          Right of Offset. Notwithstanding anything to contrary contained in
this Agreement, Buyer acknowledges and agrees that in the event that it is
obligated to make an indemnification payment to any Seller Indemnitee under
Section 7.03, (i) such Seller Indemnitee shall have the right to offset all or
any portion of the amount of such indemnification obligation against any amounts
owed to Buyer or any of its Subsidiaries or licensees under any Transaction
Documents and (ii) Seller may, and may cause each Seller Indemnitee to, effect
any such offset.

 

Section 7.06         Seller’s Obligation to Cause Subsidiaries to Act. Seller
acknowledges and agrees that, to the extent any provision of this Agreement
requires any of Seller’s Subsidiaries, or Seller agrees on behalf of its
Subsidiaries, to perform, take or refrain from taking any action, (a) Seller
shall have an obligation to cause such Affiliate to perform, take and/or refrain
from taking such action, as applicable, and (b) the failure of such Affiliate to
perform, take or refrain from taking such action shall constitute a breach by
Seller of such provision (notwithstanding any lack of an express obligation on
the part of Seller to cause such Affiliate to take such action).

 

Section 7.07         Sole Remedy/Waiver. Except in the case of fraud, the
parties hereto acknowledge and agree that, in the event that the Closing occurs,
the remedies provided for in this Article VII shall be the sole and exclusive
remedies for any breach of the representations and warranties or covenants
contained in this Agreement or any claims relating to this Agreement, other
documents, certificates or agreements delivered in connection with this
Agreement, the Joe’s Business, the Assumed Liabilities, the Purchased Assets,
the Excluded Liabilities or otherwise. The parties hereto expressly intend that
the remedies provided for in this Article VII shall apply to direct claims
between the parties hereto for breach of this Agreement (whether or not
involving a third party).

 

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Article VIII
Conditions Precedent

 

Section 8.01         Conditions to the Obligations of Each Party. The respective
obligations of Buyer and Seller to consummate and cause the consummation of the
transactions contemplated herein at the Closing are subject to the satisfaction
or waiver in writing by Seller and Buyer at or before the Closing Date of each
of the following conditions:

 

(a)          Injunctions; Illegality. No Governmental Authority shall have
issued, enacted, entered, promulgated or enforced any Law or Governmental Order
(that is final and non-appealable and that has not been vacated, withdrawn or
overturned) restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement.

 

(b)          Consummation of the Operating Asset Purchase Agreement. The
transactions contemplated by the Operating Asset Purchase Agreement shall have
been consummated, or all conditions to the consummation thereof shall have been
satisfied or waived (or shall be satisfied or waived contemporaneously with the
Closing).

 

Section 8.02         Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate and cause the consummation of the transactions contemplated
herein are subject to the satisfaction or waiver by Buyer on or prior to the
Closing Date of the following further conditions:

 

(a)          Performance. All of the agreements and covenants of Seller to be
performed prior to the Closing pursuant to this Agreement shall have been duly
performed in all material respects.

 

(b)          Representations and Warranties. (i) The Fundamental Representations
applicable to Seller shall be true and correct in all respects as of the Closing
Date as if made at and as of such time (other than those representations and
warranties made as of a specified date, which such representations and
warranties shall be true and correct in all respects as of such specified date)
and (ii) all other representations and warranties of Seller contained in Article
IV hereof shall be true and correct (without giving effect to any “material”,
“materially”, “materiality”, “Material Adverse Effect”, “material adverse
effect”, “material adverse change” or similar qualifiers contained in any of
such representations and warranties) as of the Closing Date as if made at and as
of such time (other than those representations and warranties made as of a
specified date, which such representations and warranties shall be true and
correct in all respects as of such specified date), except for such failures to
be true and correct that do not have and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

(c)          Closing Deliverables. Seller shall have delivered or caused to be
delivered to Buyer the items set forth in Section 3.02(a).

 

(d)          No Material Adverse Effect. Since the date hereof there shall not
have occurred any event, circumstance, development, state of facts, occurrence,
change or effect that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

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(e)          IP Title Defect Correction Actions. Seller and its Subsidiaries
shall have completed all of the IP Title Defect Correction Actions and delivered
documentary evidence thereof to Buyer.

 

Section 8.03         Conditions to the Obligations of Seller. The obligations of
Seller to consummate and cause the consummation of the transactions contemplated
herein are subject to the satisfaction or waiver by Seller, on or prior to the
Closing Date, of the following further conditions:

 

(a)          Performance. All of the agreements and covenants of Buyer to be
performed prior to the Closing pursuant to this Agreement shall have been duly
performed in all material respects.

 

(b)          Representations and Warranties. (i) The Fundamental Representations
applicable to Buyer shall be true and correct in all respects as of the Closing
Date as if made at and as of such time (other than those representations and
warranties made as of a specified date, which such representations and
warranties shall be true and correct in all respects as of such specified date)
and (ii) all other representations and warranties of Buyer contained in Article
V hereof shall be true and correct (without giving effect to any “material”,
“materially”, “materiality”, “Material Adverse Effect”, “material adverse
effect”, “material adverse change” or similar qualifiers contained in any of
such representations and warranties) and as of the Closing Date as if made at
and as of such time (other than those representations and warranties made as of
a specified date, which such representations and warranties shall be true and
correct in all respects as of such specified date), except for such failures to
be true and correct that do not have and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Buyer’s
ability to consummate the transactions contemplated hereby.

 

(c)          Closing Deliverables. Buyer shall have delivered or caused to be
delivered to Seller the items set forth in Section 3.02(b).

 

Section 8.04         Frustration of Closing Conditions. Neither Buyer nor Seller
may rely on the failure of any condition set forth in this Article VIII to be
satisfied if such failure were caused by such party’s failure to act in good
faith or such party’s failure to use its reasonable best efforts to cause the
Closing to occur, as required by Section 6.04.

 

Article IX
Termination

 

Section 9.01         Termination Events. This Agreement may be terminated and
the transactions contemplated herein may be abandoned, at any time prior to the
Closing:

 

(a)          by mutual written consent of Seller and Buyer;

 

 44 

  

(b)          by either Seller or Buyer, if: (i) the Closing Date shall not have
occurred on or prior to September 30, 2015 (the “End Date”); provided, that
neither party may terminate this Agreement pursuant to this Section 9.01 if such
party is in material breach of this Agreement (other than, in the case of
Buyer’s right under this Section 9.01(b), a failure by Buyer to perform its
obligation to consummate the Closing solely as a result of a failure to secure
the proceeds of the Financing in an amount sufficient to consummate the
transactions contemplated hereby (other than a Financing Failure Event arising
out of or related to Buyer’s breach) in which case Buyer shall pay the Seller
Termination Fee in accordance with Section 9.02(b)) or (ii) any court or other
Governmental Authority shall have issued, enacted, entered, promulgated or
enforced any Law or Governmental Order (that is final and non-appealable and
that has not been vacated, withdrawn or overturned) restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; provided,
that the party seeking to terminate pursuant to this Section 9.01(b) shall have
complied with its obligations, if any, under Section 6.04;

 

(c)          by Seller, if: (i) any of the representations and warranties of
Buyer contained in Article V hereof shall fail to be true and correct or (ii)
there shall be a breach by Buyer of any covenant or agreement of Buyer in this
Agreement that, in either case, (A) would result in the failure of a condition
set forth in Section 8.03(a) or Section 8.03(b) and (B) which is not curable or,
if curable, is not cured upon the occurrence of the earlier of (1) the thirtieth
(30th) day after written notice thereof is given by Seller to Buyer and (2) the
day that is five (5) Business Days prior to the End Date; provided that Seller
may not terminate this Agreement pursuant to this Section 9.01(c) if Seller is
in material breach of this Agreement; or

 

(d)          by Buyer, if: (i) any of the representations and warranties of
Seller contained in Article IV hereof shall fail to be true and correct or (ii)
there shall be a breach by Seller of any covenant or agreement of Seller in this
Agreement that, in either case, (A) would result in the failure of a condition
set forth in Section 8.02(a) or Section 8.02(b) and (B) which is not curable or,
if curable, is not cured upon the occurrence of the earlier of (1) the thirtieth
(30th) day after written notice thereof is given by Buyer to Seller and (2) the
day that is five (5) Business Days prior to the End Date; provided that Buyer
may not terminate this Agreement pursuant to this Section 9.01(d) if Buyer is in
material breach of this Agreement.

 

Section 9.02         Effect of Termination.

 

(a)          In the event of a termination of this Agreement pursuant to Section
9.01 by Buyer, on the one hand, or Seller, on the other hand, written notice
thereof shall forthwith be given to the other party specifying the provision
hereof pursuant to which such termination is made, and except as otherwise set
forth in this Section 9.02, this Agreement shall be terminated and become void
and have no effect and there shall be no liability hereunder on the part of
Seller or Buyer, except that this Section 9.02 and Article X hereof shall
survive any termination of this Agreement. Nothing in this Section 9.02 shall
relieve any party of liability for any willful breach of this Agreement.

 

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(b)          In the event that the conditions to the Closing set forth in
Section 8.03(a) or Section 8.03(b) herein (other than those conditions that by
their nature cannot be satisfied until the Closing) are satisfied or waived and
Buyer fails (whether or not intentionally) to effect the Closing pursuant to
Article III and make the payment pursuant to Section 2.05 because of a Financing
Failure Event, then, upon Seller’s termination of this Agreement pursuant to
Section 9.01(c) or the termination by either party pursuant to Section 9.01(b),
Buyer shall pay a termination fee of Three Million Two Hundred Fifty Thousand
Dollars ($3,250,000.00) (the “Seller Termination Fee”) to Seller or as directed
by Seller as promptly as reasonably practicable (and, in any event, within two
(2) Business Days following such termination). The parties acknowledge and agree
that the right of Seller to receive the Seller Termination Fee in accordance
with this Section 9.02(b) shall be the sole and exclusive remedy of Seller and
its Affiliates against Buyer or any potential source of Financing (including
without limitation any Lender) for any Loss suffered as a result of the failure
of the transactions contemplated hereby to be consummated due to a Financing
Failure Event (other than a Financing Failure Event arising out of or relating
to Buyer’s breach), and Buyer will have no further liability to, and no
potential source of Financing (including without limitation any Lender) shall
have any liability to, Seller or any of its Affiliates, or any of their
respective representatives, for any Loss suffered by any of them as a result
thereof, in each case whether based on contract, tort or strict liability, by
the enforcement of any assessment, by any action, suit, claim, arbitration or
other legal proceeding, by virtue of any Law, and whether by or through any
attempted piercing of the corporate veil, by or through a claim by or on behalf
of a party hereto or another Person, or otherwise. It is agreed that the Seller
Termination Fee is liquidated damages and not a penalty, and the payment of the
Seller Termination Fee in the circumstances specified herein is supported by due
and sufficient consideration. The parties acknowledge and agree that,
notwithstanding anything in this Agreement to the contrary, in no event and in
no circumstances will (x) Buyer be required to pay the Seller Termination Fee,
or any portion thereof, more than once or if specific performance has been
ordered and performed pursuant to Section 10.9, or (y) Buyer be required pay any
amount of damages if Seller has received the Seller Termination Fee in
accordance herewith or if specific performance has been ordered pursuant to
Section 10.9. Each of the parties hereto acknowledges and agrees that the
agreements contained in this Section 9.2 are an integral part of this Agreement,
and that without these agreements, the other parties would not enter into this
Agreement.

 

Article X
Miscellaneous

 

Section 10.01          Expenses. Except as otherwise expressly provided herein,
all costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred.

 

Section 10.02          Notices. All notices, requests, consents, claims,
demands, waivers and other communications hereunder shall be in writing and
shall be deemed to have been given (a) when received by the addressee if
delivered by hand or sent by a nationally recognized overnight courier (receipt
requested); (c) on the date sent by facsimile or e-mail of a PDF document if
sent between 9:00 A.M, and 6:00 P.M. New York City time on any Business Day, and
on the next Business Day if sent outside of such hours or (d) on the third day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. In the case of facsimile or e-mail of a PDF
document, such copies shall also be sent by overnight courier service or by
registered mail. Such communications must be sent to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 10.02):

 

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If to Seller to:

 

Joe’s Jeans Inc.
2340 S. Eastern Avenue
Commerce, CA 90040
Attention: Interim Chief Executive Officer
Facsimile: (323) 837-3791

 

with a copy (which shall not constitute notice) to:

 

Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue NW
Washington DC 20036
Attention:    Russell W. Parks, Jr.

Erica D. McGrady

Facsimile: (202) 887-4288

 

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California 90071

Attention:      Jeffrey H. Cohen

Andrew D. Garelick

Facsimile: (213) 687-5600

 

or to such other person or address as Seller shall furnish to Buyer in writing.

 

If to Buyer or Parent to:

 

c/o Sequential Brands Group, Inc.

5 Bryant Park, 30th Floor

New York, New York 10018
Attn: Chad Wagenheim
Email: CWagenheim@sbg-ny.com

 

with a copy (which shall not constitute notice) to:

 

White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Fax No.: 212.354.8113
Attn: Nazim Zilkha

Daren Orzechowski

Email: nzilkha@whitecase.com

do@whitecase.com

 

or to such other person or address as Buyer shall furnish to Seller in writing.

 

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Notices sent by multiple means, each of which is in compliance with the
provisions of this Agreement will be deemed to have been received at the
earliest time provided for by this Agreement.

 

Section 10.03          Headings. The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.

 

Section 10.04          Severability. If any term or provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

Section 10.05          Entire Agreement. This Agreement, together with the
Confidentiality Agreement, Exhibits hereto, the Seller Disclosure Letter, the
Buyer Disclosure Letter and the other Transaction Documents, constitute the sole
and entire agreement of the parties to this Agreement with respect to the
subject matter contained herein and therein, and supersede all prior and
contemporaneous representations, warranties, understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the other Transaction Documents, the Exhibits and Disclosure Letters (other than
an exception expressly set forth as such in the Seller Disclosure Letter), the
statements in the body of this Agreement will control.

 

Section 10.06          Binding Effect; Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Except with respect to (a)
Article VII hereof, which shall inure to the benefit of each Buyer Indemnitee
and Seller Indemnitee, and (b) Sections 9.02, 10.06, 10.07 and 10.08, which
shall inure to the benefit of any Lender (and each such Lender shall be entitled
to rely on such Sections), all of such Persons identified in the foregoing
clauses (a) and (b) are intended as express third-party beneficiaries thereof,
no other Person not party to this Agreement shall be entitled to the benefits of
this Agreement. Neither party may assign its rights or obligations hereunder
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, that after the Closing Date either
party may (i) assign its rights hereunder to any of its respective Subsidiaries,
(ii) assign its rights, interests and obligations hereunder in connection with a
merger, exchange, consolidation or sale of all or substantially of its stock or
assets or other similar transaction, and (iii) assign its rights hereunder as
collateral to its lenders and financing sources, in each case, without the prior
written consent of the other party hereto. Each party shall provide written
notice to the other party of any such assignment. Any attempted assignment in
violation of this Section 10.06 will be void. Notwithstanding any assignment by
any party pursuant to this Section 10.06, such party shall be responsible for
full performance of such party’s covenants, agreements and obligations
hereunder.

 

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Section 10.07          Amendment and Modification; Waiver. This Agreement may
only be amended, modified or supplemented by an agreement in writing signed by
each party hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and signed by the party so
waiving. No waiver by any party shall operate or be construed as a waiver in
respect of any failure, breach or default not expressly identified by such
written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. Notwithstanding anything herein to the contrary, any
amendment Section 9.02, 10.06, 10.07 or 10.08 shall not be made without the
prior written consent of such Lender or its respective Affiliate or
representative.

 

Section 10.08          Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.

 

(a)          This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without regard to its rules of
conflict of laws.

 

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE INSTITUTED IN THE COURT OF CHANCERY OF THE STATE OF
DELAWARE AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE
(OR, IF THE COURT OF CHANCERY OF THE STATE OF DELAWARE DECLINES TO ACCEPT
JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE
STATE OF DELAWARE), AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF
PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET
FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER
PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION
OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF
A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

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Section 10.09          Specific Performance.

 

(a)          The parties agree that irreparable damage would occur if any
provision of this Agreement were not performed in accordance with the terms
hereof and that an award of money damages would be inadequate in such event.
Accordingly, it is acknowledged that, subject to the limitations set forth in
Section 9.02(b) and Section 10.09(b), Seller and Buyer shall be entitled to
equitable relief without proof of actual damages, including an injunction or
injunctions or Governmental Orders for specific performance to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in accordance with its terms, in addition to any other remedy to which
they are entitled at law or in equity as a remedy for any such breach. Each
party further agrees that no other party hereto or any other Person shall be
required to obtain, furnish or post any bond or similar instrument in connection
with or as a condition to obtaining any remedy referred to in this Section
10.09, and each party hereto irrevocably waives any right it may have to require
the obtaining, furnishing or posting of any such bond or similar instrument.

 

(b)          Notwithstanding anything in this Agreement to the contrary,
including Section 10.09(a), it is acknowledged and agreed that Seller shall be
entitled to specific performance of Buyer’s obligation to satisfy its obligation
to make the payment pursuant to Section 2.05 and to consummate the transactions
contemplated herein if, and only if, each of the following shall have been
satisfied (i) all of the conditions set forth in Section 8.02 (other than those
conditions that by their terms or nature are to be satisfied at the Closing (but
subject to their satisfaction at Closing) have been satisfied or waived by Buyer
as of the time when Closing is required to have occurred pursuant to Section
3.01 and Seller is not then in breach of this Agreement, (ii) Buyer fails to
consummate the Closing by three (3) Business Days following the date on which
the Closing is required to have occurred pursuant to Section 3.01 or would have
been required to close but for breach hereof by Buyer, (iii) a Financing Failure
Event (other than a Financing Failure Event arising out of or related to a
Buyer’s breach) has not occurred, (iv) Seller has not terminated this Agreement
and (v) Seller has irrevocably confirmed in writing that, if (x) specific
performance is granted and (y) the Financing is funded in accordance with the
terms of the Debt Commitment Letter, the Closing will occur on the terms
contemplated by this Agreement.

 

(c)          For the avoidance of doubt, while Seller may pursue both a grant of
specific performance of Buyer’s obligations to consummate the Closing in
accordance with the provisions set forth in Section 10.09(b) prior to the
termination of this Agreement, and after the termination of this Agreement, the
payment of the Seller Termination Fee, in no event shall Seller be permitted or
entitled to receive both such grant of specific performance and payment of any
monetary damages, including all or any portion of the Seller Termination Fee in
accordance with the first sentence of Section 9.02(b).

 

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Section 10.10         Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

SELLER:   BUYER:       JOE’S JEANS INC.   JOE’S HOLDINGS LLC       By:   /s/
Hamish Sandhu   By:   /s/ Yehuda Shmidman Name:  Hamish Sandhu   Name:  Yehuda
Shmidman Title:  CFO   Title:  CEO           PARENT:     SEQUENTIAL BRANDS
GROUP, INC., solely for purposes of Section 6.15 and Article X           By:  
/s/ Yehuda Shmidman     Name:  Yehuda Shmidman     Title:  CEO          

 

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