EXHIBIT 2.1
CONTRIBUTION AGREEMENT
This Contribution
Agreement (the "AGREEMENT") is made and entered into
effective as of July 1, 2008 (the "EFFECTIVE DATE"), by and among BELLA ROSE,
LLC, a California
limited liability
company ("BR"), J.
LINDEBERG USA CORP., a
New York corporation
("JLUS"), and J.
LINDEBERG USA, LLC, a California limited
liability company
(the "COMPANY"). BR, JLUS, and the Company are sometimes
individually referred to herein as a "PARTY" and collectively
referred to herein
as the "PARTIES."
RECITALS
A. The Company was formed by BR, a wholly-owned subsidiary of People's
Liberation, Inc., a
Delaware corporation ("PEOPLE'S LIBERATION"), and JLUS, a
wholly-owned
subsidiary of J. Lindeberg AB, a Swedish company ("JL SWEDEN"),
on
June 27, 2008, by the filing of the Articles of Organization of the
Company with
the Office of the Secretary of State of the State of
California.
B. Concurrently
herewith, the Company, BR and JLUS are entering into a
Limited Liability
Company Agreement (the
"OPERATING AGREEMENT")
to govern the
relationship between
BR and JLUS and the affairs of the Company and the conduct
of its business,
including its management and distribution of profits and
losses.
C. In connection with the formation of the Company, and as
contemplated
by the Operating
Agreement, the Parties
desire to enter into
this Agreement,
pursuant to which, among other transactions, (i) JLUS will
contribute $20,000 in
cash and certain assets relating to the J. Lindeberg(TM) branded apparel
business operated by
JLUS in the United States to the capital of the Company in
exchange for a fifty
percent (50.0%) limited liability company membership
interest in the
Company, and (ii) BR will contribute $20,000 in cash to the
capital of the Company in exchange for a fifty percent (50.0%)
limited liability
company membership interest in the Company.
AGREEMENT
NOW, THEREFORE, for
good and valuable
consideration, the
receipt and
legal sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
1. CERTAIN
DEFINITIONS.
Capitalized terms used herein and not defined
herein shall have the meanings given such terms in the Operating
Agreement.
2. CONTRIBUTIONS BY
BR. In exchange for fifty (50) Membership Units of
and a fifty percent
(50%) Percentage Interest in the Company,
and the other
rights and obligations set forth in the Operating Agreement, contemporaneously
with the execution
of this Agreement by the Parties, BR herby contributes
$20,000 in
cash as a capital contribution to the Company (the "BR
CONTRIBUTION"), which
contribution shall be
made by wire transfer or cashier's
check of immediately available funds.
3. CONTRIBUTIONS
BY JLUS. In exchange
for fifty (50) Membership Units
of and a fifty percent (50%) Percentage Interest in the Company,
and the other
rights and obligations set
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forth in the Operating Agreement, contemporaneously with the execution of this
Agreement by
the Parties, JLUS hereby contributes, assigns, transfers,
quitclaims and
delivers to the Company, as a capital contribution to the
Company, the following cash and assets (collectively, the "JLUS
CONTRIBUTION"):
3.1 $20,000 in cash, which contribution shall be made by
wire
transfer or cashier's
check of immediately
available funds (the "JLUS
CASH CONTRIBUTION");
3.2 all rights, title and interest of JLUS in and to all
existing finished goods inventory of J. Lindeberg(TM) branded apparel
owned by JLUS on the date hereof and described on SCHEDULE 3.2(A)
attached hereto (the "EXISTING INVENTORY") and all rights, title and
interest of JLUS
in and to the new
finished goods inventory of J.
Lindeberg branded
apparel, which inventory is described on
SCHEDULE
3.2(B) attached hereto (the "NEW INVENTORY" and collectively with the
Existing Inventory, the "INVENTORY");
3.3
all production,
shipping and packaging supplies owned and
used by JLUS in
connection
with the sale and distribution of J.
Lindeberg(TM) branded apparel (the "PACKING SUPPLIES");
3.4 all open
purchase orders placed by customers for J.
Lindeberg(TM) branded
apparel for which products have not been shipped
as of the date hereof (the "PURCHASE ORDERS");
3.5 all accounts,
notes or other
receivables of JLUS arising
from the sale of J. Lindeberg(TM) branded apparel described on
SCHEDULE
3.5 attached hereto (the "ACCOUNTS RECEIVABLE");
3.6 the personal
property listed on SCHEDULE 3.6, and the
trade show booth for J. Lindeberg(TM) branded apparel ("PPE");
3.7 all books,
records, files, manuals and other similar
materials, including,
advertising
materials,
marketing materials,
brochures, business and marketing plans and proposals, production
data,
pricing data, sales and promotional materials and records,
purchasing
materials and
records, files for past, existing and contemplated
projects, media
materials,
accounting,
financial and fiscal
records
(copies), sales order files, written or electronic information
relating
to vendors, customer
lists and customer
records in any form
(and all
software related
to any such customer records, to the extent
transferable), whether of past or present customers or potential
future
customers, of the
business, advertiser
lists, receipts and computer
records, standard
operating procedures, correspondence, customer
relation information,
and any other trade
secrets, confidential or
proprietary
information ("BOOKS
AND RECORDS"), in each
case owned by
JLUS and pertaining to the current operation of JLUS' J.
Lindeberg(TM)
branded apparel wholesale business in the Territory (provided that
JLUS
shall be able to retain copies of any of the foregoing and use it for
its internal
purposes and as required by any applicable law or
governmental entity);
3.8 all ownership and
leasehold rights in the real property
and personal property used in or comprising the retail store
located at
126 Spring Street, New York, NY 10012 (the "RETAIL STORE"),
including,
but not limited
to: all leasehold interests, furniture, fixtures,
supplies, computer hardware, leasehold improvements and other
personal
property, and
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all related
warranties; all
inventory of J. Lindeberg(TM) branded
apparel located
at or owned by the
Retail Store; and all Books and
Records pertaining
to the operation of the Retail Store (the
"RETAIL
STORE ASSETS"); and
3.9 all ownership and
leasehold rights in the real property
and personal property
used in or
comprising
the office and
showroom
space located at 57 East 11th Street, Suite 8A, New York, NY 10003
(the
"SHOWROOM"),
including, but not
limited to: all leasehold interests,
furniture,
fixtures,
supplies,
computer
hardware,
leasehold
improvements and other personal property, and all related warranties
(the "SHOWROOM ASSETS").
JLUS agrees to execute, acknowledge (where appropriate) and deliver
such other or further
instruments of
transfer or assignment as the Company may
reasonably require to confirm the foregoing, or as may be otherwise
reasonably
requested by the
Company to carry out the intent and purposes hereof. To the
extent that the
assignment hereunder
of any contract or right or asset
shall
require the
consent of any other party (or in the event that any of
the same
shall be non-assignable), neither this Agreement nor any actions
taken hereunder
shall constitute an
assignment or an agreement to assign if such assignment or
attempted assignment
would constitute a breach thereof or
result in a loss or
diminution thereof;
PROVIDED, HOWEVER, that JLUS shall cooperate with the
Company to establish a
reasonable arrangement
designed to provide
the Company
with the benefits
and burdens of any
such assumed
contract, right or asset,
including appointing
the Company to act as its agent to
perform all of its
obligations under such
assumed contracts,
rights or assets and
to collect and
promptly remit to the Company all compensation received by JLUS
pursuant to such
assumed contracts,
rights or assets and to enforce, for the account and benefit
of the Company, any
and all rights of JLUS against any other person arising out
of the breach or cancellation of such assumed contract, right or asset by such
other person or otherwise (any and all of which arrangements shall constitute,
as between the Parties hereto, a deemed assignment or transfer).
In addition,
with respect to the assignment hereunder of any contract or right
or asset which
requires the consent of any other party and such consent has not been obtained
on or before the date hereof, JLUS shall use its reasonable efforts to obtain
such consent
(only to the
extent the other
party is willing to
provide such
consent without payment by the Company or JLUS of additional
consideration)
as
soon as practicable after the date hereof.
4. ASSUMPTION
OF LIABILITIES. In consideration of the transfer,
contribution and
delivery to Company of the BR Contribution and the JLUS
Contribution, the
Company hereby agrees
to assume, pay,
fulfill, perform or
otherwise discharge
when due in accordance with their respective terms to the
extent not paid,
performed, discharged
or fulfilled by JLUS on or before
the
date hereof (collectively, the "ASSUMED LIABILITIES"):
4.1 all liabilities and obligations relating to the operation
of, or relating to, the Retail Store and the Showroom from and after
July 1, 2008, other than those liabilities and obligations arising
from
and after July 1, 2008 with respect to transactions or events that
occurred prior to such date
4.2 all obligations
related to compensation and benefits
payable to JLUS'
employees from and
after July 1, 2008,
the date on
which such Persons will become employees of the Company.
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The Parties
hereby agree that with the exception of the
Assumed Liabilities
and as set forth in
Section 8, the Company is not
assuming
any liability or obligation of whatever kind or nature
(whether known or
unknown, whether
asserted or
unasserted,
whether
absolute or
contingent,
whether
accrued
or unaccrued, whether
liquidated or
unliquidated,
and whether due or to become due),
including any liability for taxes, of either BR or JLUS. JLUS
agrees to
discharge and pay when due, all liabilities and obligations
outstanding
on the date
hereof and relating to its J. Lindeberg(TM) branded
wholesale and retail apparel business (including those relating to
the
Retail Store) that are not expressly assumed by the Company
hereunder.
5. CAPITAL ACCOUNTS.
The Company, BR and JLUS hereby agree that
for
purposes of determining the opening Capital Accounts of each of
JLUS and BR, the
following values
shall be assigned to the BR Contribution and the JLUS
Contribution:
5.1 BR CONTRIBUTION.
The BR Contribution
shall be valued at
$20,000.
5.2 JLUS CONTRIBUTION.
The JLUS Contribution
shall be valued
as follows:
(a) For the
JLUS Cash Contribution, $20,000;
(b) For the
Existing Inventory, $488,700;
(c) For the
New Inventory, $1,002,669;
(d) For the
PPE, Retail Store
Assets, Showroom
Assets,
Packing Supplies,
Purchase Orders and Books and
Records, $50,000; and
(e) For the
Accounts Receivable,
an amount equal to
the
amount of cash or other consideration actually
received by the
Company on or before
December 31,
2008 in payment of such Accounts Receivable, after
giving effect to all
returns and
chargebacks
with
respect thereto.
6. JLUS'
REPRESENTATIONS AND
WARRANTIES. JLUS
represents and warrants
to the Company
and BR that the
statements
contained in this SECTION 6 are
correct and complete as of the date of this Agreement.
6.1 AUTHORIZATION
OF TRANSACTION. JLUS has full power and
authority (including full corporate power and authority) to execute
and
deliver this
Agreement and to perform its obligations hereunder.
Without limiting
the generality of the foregoing, the Board of
Directors of JLUS has duly authorized the execution, delivery, and
performance of this
Agreement by JLUS.
This Agreement
constitutes a
valid and legally b
